CHAPTER I.

SIR ROBERT PEEL'S COMMERCIAL REFORMS.

Accession of Sir Robert Peel.-Inauguration of Economic Reforms.-The Corn Laws.-State of the Revenue and Expenditure.-The British Tariff. -The Income Tax.-More Commercial Reforms.-Reciprocity of Foreign Countries.-Export of Machinery.

THE day arrived when the government of the country had to be confided to the great Conservative party in the House. For some time past the administration of Lord Melbourne had shown unmistakable signs of inherent weakness, and its opponents, counting among them such men as Sir Robert Peel, Lord Stanley, Mr. Gladstone, and Mr. Disraeli, were decidedly gaining strength and influence. The Conservative party has been charged with thwarting and opposing the liberal tendencies of the nation, and they certainly resisted the passing of the Reform Bill, the repeal of the Test and Corporation Acts, and the emancipation of Roman Catholics. Yet a memorable Conservative administration is before us, which inaugurated an era of great prosperity, and one which, under the presiding genius of Sir Robert Peel, has ever since been held in grateful remembrance for the practical wisdom which it displayed, and the bold and vigorous commercial and financial policy it carried into effect. Sir Robert Peel had already gained for himself a high reputation as a statesman.' As a member of the Bullion Committee of 1810, as Under-Secretary for the Colonies during the most trying years of the Continental war, as Secretary for Ireland, in all these capacities, he proved himself an able minister and an economist of much practical wisdom; and it was a good omen for the country when, in September 1841, at a time. of much financial anxiety, Sir Robert Peel was once more called to take the helm of the state.

There was something novel and encouraging in the speech from the Throne which opened the labours of the new administration. Her Majesty is anxious that this object, viz. the

1 Sir Robert Peel's first administration was a short one. He formed his Cabinet on December 9, 1834, and forthwith dissolved Parliament. A new Parliament was summoned to meet on February 19, 1835, but an amendment to the address was carried in the House of Commons on February 26 by a majority of 309 to 302. Other adverse divisions immediately thereafter took place, and Sir Robert Peel announced his resignation of the ministry on April 8.

increase of the public revenue, should be effected in the manner least burdensome to her people; and it has appeared to her Majesty, after full deliberation, that you may at this juncture properly direct your attention to the revision of duties affecting the productions of foreign countries. It will be for you to consider, whether some of the duties are not so trifling in amount as to be unproductive to the revenue, while they are vexatious to commerce. You may further examine whether the principle of prohibition, in which others of these duties are founded, be not carried to an extent injurious alike to the income of the state and the interest of the people. Her Majesty is desirous that you should consider the laws which regulate the trade in corn. It will be for you to determine whether those laws do not aggravate the natural fluctuation of supply, whether they do not embarrass trade, derange currency, and by their operation diminish the comfort and increase the privations of the great body of the community.' Surely this was a programme more liberal than could have been expected from a Conservative ministry; but the temper of the people and the exigencies of the time demanded that and a great deal more. Gloom and discontent prevailed extensively throughout the manufacturing districts. The Anti-Corn-Law League had by this time become formidable. The demand was loud and imperious for cheap food, and the total repeal of the corn laws. And on the day fixed for the announcement of the ministerial measure some five hundred deputies from the Anti-Corn-Law Associations in the metropolis and provinces went in procession to the House of Commons, but were refused admittance. Yet with all this the Government was not disconcerted, and with imperturbable gravity on February 9, 1842, Sir Robert Peel exposed the policy of the Cabinet on the corn laws.

At first Sir Robert Peel did not attach much weight to the influence of these laws. In his speech in the House, he said that to his mind the question was not so much what was the price of food, as what was the command which the labouring classes of the population had of all that constituted the enjoyments of life. His belief and the belief of his colleagues was, that it was important for the country to take care that the main source of the supply of corn should be derived from domestic agriculture. And he contended that a certain amount of protection was absolutely required for that industry. But he made a most important avowal, one which no Protectionist minister had ever made, that protection should not be retained for the special benefit of any particular class, but only for the advantage of the nation at large, and in so far only as was consistent with the general welfare of all classes of society. Sir Robert Peel then entered on the extent of such protection, and having taken 548. to 588. per quarter, as the price at which corn should range for a fair remuneration to the agri

culturist, he asked-Shall the corn laws be based on a sliding scale, or on a fixed duty? Much might be said for the one and for the other. A sliding scale was introduced in France in 1819, one had been adopted in Belgium, the Netherlands, and other countries, and it seemed to have the advantage of adapting itself to every circumstance. But experience did not confirm the hopes entertained of its working. It did not hinder prices falling lower than was wanted in years of abundance, or rising higher than was desirable in years of scarcity; and it had the same prejudicial effect as every corn law of causing the cultivation of land to be regulated, not by its inherent capacity, but by the amount of forced stimulus given to it by the Legislature. Besides these radical defects, the objections urged against the sliding scale were, that the reduction of duty was so rapid as to hold out temptation to fraud; that it operated as an inducement to retain corn, or combine for the purpose of influencing the averages; that the rapid decline of the duty was injurious to the consumer, the producer, the revenue, and the commerce of the country; that it was injurious to the consumer because, when corn was at a high price-say, between 668. and 708. and just when it would be for the public advantage that corn should be liberated for the purpose of consumption, the joint operation of increased price and diminished duty induced the holders to keep it back, in the hope of realising the price of upwards of 708. and so paying only 18. duty; that it operated injuriously to the agricultural interest because it held out a temptation to keep back corn until it could be suddenly entered for consumption at the lowest amount of duty, when agriculture lost the protection which the law intended it should possess; that it was injurious to the revenue because, instead of corn being entered for home consumption when it arrived, it was retained until it could be introduced at 18., the revenue losing the difference between 18. and the amount of duty which would otherwise have been levied; that it was injurious to commerce because, when corn was grown at a distance-in America, for instance the grower was subject to the disadvantage, that before his cargo. arrived in this country the sudden entries of wheat at 18. duty from countries nearer England might have so diminished the price and increased the duty, as to cause his speculation to prove not only a failure but ruinous. These were formidable objections to any sliding scale, but between a gradual and a fixed rate of duty there was not a material difference. On the other hand, a fixed duty of 88. per quarter was too low as a protection in time of abundance, and was in effect a prohibitory duty in time of scarcity. Nor was it possible to maintain more than a nominal duty when prices began to rise. It was indeed difficult to strike the balance of advantage and inconvenience between the sliding scale and the fixed duty. So, on the whole, Sir Robert Peel favoured the prin

ciple of the sliding scale-that is, of making the duty upon corn vary inversely with the price in the home market, taking the average of the market prices from returns collected by excise officers. Having, therefore, decided on charging 208. duty when the average price of wheat was 50s. and 51s. per quarter, he proposed to make that duty fall by a reduction of 18. a quarter as the average price rose 18. with some slight modifications, so that the duty should be only 18. per quarter, when the price of wheat rose to 738. a quarter and upwards, and a bill so framed he presented to the House of Commons. The House was not prepared at the time for a very liberal measure. Lord John Russell made a motion in favour of a fixed duty, but it was not popular; and, notwithstanding a few expressions of dissatisfaction, the Government proposal was well received. Lord John Russell's amendment was lost by 226 to 349, and Sir Robert Peel's bill passed into law. But the country was not satisfied. Meetings continued to be held in the manufacturing districts, and Mr. Villiers, stimulated by the representations and efforts of the Anti-Corn-Law League, again brought forward his motion for the total repeal of the corn laws, which was again lost by the enormous majority of 90 to 393. The battle of the corn laws had by this time become violent both in and out of Parliament, and Mr. Villiers was not likely to be dispirited by the result of this division.

It is not, however, by the vain attempt to render a corn law acceptable that the commercial administration of Sir Robert Peel will be remembered. That was at best a temporary and transitory measure. It is when we consider his financial policy as a whole, and more especially the plan which he devised for improving the state of the finances, and imparting new life to commerce and