CHAPTER II.

FREE TRADE LEGISLATION.

Before considering the subsequent legislation of 1842, and the Acts of 1845 and 1846, it may be well to point out some of the general features of the regulations then in existence, and show how they affected the various industries of the country.

Every government, whether practicing protection or free trade, derives at least a part of its revenues from duties on imports. A free trade country maintains its custom houses and enacts tariff laws, solely for revenue purposes, while a country practicing protection has a double purpose in view : first, to provide an income for the government, and secondly, to shield its domestic industries from foreign competition. The custom tariffs of Great

Britain at this time were divided into two general branches :

Duties levied for the purpose of raising revenue.

I.

For purposes of revenue, duties were imposed on two classes of arti- Revenue cles, as follows:

1. Upon those food products, the like of which could not be produced in Great Britain, such as tea, coffee, sugar, rice, cocoa, spices, lemons, oranges and tropical fruits; also on ale, beer, wines, liquors, tobacco, diamonds and other luxuries. Commodities of this class were regarded by both protectionists and free traders as proper objects of taxation. The large income which it was necessary for the English government to raise each year forbade those distinctions which have since been made by protectionists in other countries, between those commodities like tea, coffee, sugar, etc., which have now become articles of involuntary consumption, and beer, wine, liquors, tobacco, etc., which are concededly luxuries.

2. The second class of articles upon which duties were imposed solely for the purpose of raising revenue, were those raw materials which could not be produced at home in sufficient quantities to supply the demand of their factories. At the close of the Napoleonic wars every conceivable article of this class was a subject of taxation. During the struggle new import duties had been imposed or existing duties increased upon raw silk, cotton, wool, hemp, jute, flax, rubber, dye stuffs, timber and materials for ship building. In fact, the exigencies of the war had made it necessary to subject to taxation every conceivable species of property and branch of industry. The monopoly held by the British manufacturers

tariffs.

Duties on terials that produced

raw ma

could not be

at home.

Protective policy opposed to duties on this class

of articles.

during the Napoleonic wars was so complete that the duties on these raw materials did not conflict with their ability to control foreign markets and extend their trade; but when the United States and Continental countries imposed protective barriers, the question of cheapness became so important to English manufacturers in competing with rivals in those countries where protective tariffs had been set up, that the greatest economy in production became necessary. As soon, however, as the necessities of the government would permit, protectionists and free traders united in placing them on the free list, and giving to English manufacturers the full advantage of their cheapness. Neither protectionists nor free traders, in England or in any other country, have ever placed duties on this class of articles, excepting for revenue purposes and under circumstances which required a resort to extraordinary means of taxation. The policy of protection in England prior to the Napoleonic wars, gave every encouragement possible to home manufacturers, both by shielding them from competition, and by admitting those raw materials which could not be produced in England, either free or by the payment of low duties. By the legislation of Walpole, in 1721, thirty-eight articles of raw materials were placed on the free list.1

Even bounties were offered to encourage the import of spars, masts, pitch, tar, and other materials for ship building, from the colonies. The only justification for departing from this policy was the revenue necessities occasioned by the long struggle between 1793 and 1815, and the burdensome debt which hung over the English people after its close. The advocates of free trade have constantly paraded before the world this feature of the tariff laws of England as being “unjust," "arbitrary," "burdensome" and "unscientific," and claim great credit for wiping from the statute books such hindrances to English industries. Not the slightest credit is due to the advocates of free trade in England for placing these articles on the free list, because before the Anti-Corn League was organized the duties imposed on them had been reduced to a minimum by protectionists, and in a short time they would all have been placed on the free list. During the great rebellion in the United States in 1861, a protectionist Congress was compelled to impose taxes on this class of articles, to provide for the expenses of the government in carrying on the war. They were known as war taxes." As soon, however, as the national debt was in part paid off, and by a system of refunding the interest account was lessened, these articles were restored to the free list. The protectionists of the United States do not impose duties on such articles of raw materials, as have been described.

It is worthy of note that the free trade movement in England encountered no opposition from protectionists in the legislation which affected the two classes of articles above named. They did not enter into

1 English Trade and Finance, p. 145.

the controversy at the time. The duties on raw materials would have been repealed if a free trade party had not arisen in England. The policy of claiming credit for everything that was done by protectionist parliaments, before a free trade organization was effected, has created an erroneous impression as to the facts connected with the legislation which preceded the organization of the Anti-Corn Law League.

The policy of protection as it had been practiced since the time of Protective Elizabeth embraced three general divisions, as follows:

1. Protection to domestic industries.

2. Protection to shipping.

3. Protection to agriculture.

As we have already shown, the principal part, if not all of the manufacturers of England had become so efficient, that they were able to defy all competitors at home and to undersell all rivals in every market open to the free admission of their goods. Not only this, but they were scaling the tariff walls of foreign countries and invading the chief industrial centres of the world. They were selling their wares at the very doors of the factories in the United States, and on the Continent, and dividing the market with native producers after paying a duty at the custom house. In considering the ability of the English manufacturers to supplant all rivals, a distinction should be made between cotton, woolen, linen and metal industries, in which their supremacy was unquestioned, and those of gloves, boots and shoes, silks, and a few others which were still carried on in part by hand workmanship. The latter, however, were insignificant when compared with the great textile, metal, and pottery industries. Their ability to hold their own markets, even in all branches, was proven by the test applied between 1826 and 1846, when duties were reduced to a very low point. Imports did not increase and hence it was demonstrated by nearly twenty years of experience, that they were quite independent of foreign competition in these great branches of production.

tariffsIndustries

terials for manufactures.

Another feature of the policy of protection to home industries, is found Raw ma in the situation of those raw materials produced in England. The iron mines of England at this time were supposed to be inexhaustible, and by their nearness to the coal fields, the smelting of iron ore could be carried on cheaper than in any other place in the world. In salt mines England also had a supremacy. With lead, copper and tin so accessible, there was no necessity for any protective duties on raw materials for the metal indusWith the superior and abundant supply of clay for her potteries, none need be imported. In these raw materials, England occupied practically the same position as the United States now holds in the production of cotton. Another element of great importance was the coal mines. It would have been the height of folly for England to impose a duty on the importation of coal, when she was prepared almost to supply the world.

tries.

The necessity for continuing duties on most manufactured goods, had

Manufac turers urge the repeal of protec

tive duties.

The free trade program.

practically ceased. It is therefore absurd to say that the duties then imposed on those manufactured goods were a burden to the English people. They did not affect the price of a single article. Their manufacturing supremacy was such, that an entire removal of those duties which had been imposed for the purpose of protection in former times and under different conditions would scarcely affect the volume of importation one way or the other, because under free trade English manufacturers would still hold a monopoly of their own market. Free trade was not adopted for the purpose of increasing importations of this character or of supplying the home consumers or for any of the reasons now urged by free traders to induce the people of the United States to abandon protection. They intended only to enlarge their trade by an exchange of finished goods for raw materials and agricultural products. It was by importing wheat, rye, barley, meat, and other farm produce in payment for cotton, woolens, linens, metals, etc., that they expected to enlarge their trade.

With the manufacturers persistently urging a repeal of those duties which had formerly been imposed for the protection of manufactures, it could hardly be expected that the agriculturists, ship owners, and other classes, would raise any serious objection. That there was not the slightest fear on the part of the manufacturers, of injurious competition at home, from other countries, and that they were demanding a repeal of protection to their own industries, is shown by Mr. Mongredien, an eminent free trade authority, and formerly an attaché of the Cobden Club. He says, "True these Manchester manufacturers have declared over and over again, that they did not want for themselves any protective duties, whatever. That they disclaimed and repudiated them."

Disregarding all considerations of the future, ignoring that broadminded policy which for centuries had guarded and fostered every department of industry, looking at the question solely in the light of present advantages to the English manufacturer, the commercial classes were becoming imbued with the idea that they could safely repeal all protective laws and embark on the policy of free trade. The external forces which were operating upon the industries of the country, the loss of markets by the building up of industries under protection in other countries, were constantly pressing home to the manufacturers and shippers the advantage which they might derive from foreign trade.

The textile manufacturers had become settled in the conviction that the only means by which they could get into the best markets of the world, and induce other countries to repeal those protective laws which were standing as a constant hindrance to an unlimited expansion of their trade was, first, by abandoning the policy of protection, and then by proclaiming to the world the advantages of free trade as a policy universal in its

1 History of Free Trade, p. 33.

application and advantageous to all nations. A bold and comprehensive plan! With this step once taken, they could direct the energy and intellectual forces of their country to a denunciation of the policy of protection, and thus bring it into disrepute. Pointing to their own example, they could herald the new doctrine as one having the approval of the greatest commercial nation in Christendom. They could advocate it on moral, political, scientific or other grounds, suiting their arguments to the conditions of the various localities of the world.

They well knew that with protective tariffs abandoned in other countries, they could annihilate every industrial rival and thus perpetuate the monopoly of markets, which their vast wealth, superior machinery and the efficiency of their labor would enable them at once to seize. While they could easily convert the shipping interests of the country to any policy that would increase the carrying trade; while they could win over all people living on fixed incomes and foreign investments (and this was a large class), to a policy which they might be convinced would reduce the price of agricultural products and give them cheaper food; the great body which stood in the way of a consummation of this policy was the farmers.

cultural

It would be a difficult matter to convince them that they could The agricompete with foreign countries under free competition. The soil of Eng-interest. land was most productive. It had been one of the chief agricultural regions of Europe for centuries, well suited to the growth of all grains and coarser vegetables. The raising of sheep and cattle had been an important industry. Agriculture was carried on like every other branch of business, and the profits derived from it depended upon the question of the investment of capital and employment of labor, affected only by favorable or unfavorable seasons. Agriculture carried on under these. circumstances, they well knew could not compete with the almost spontaneous productions of the fertile and virgin soils of new countries. Up to 1839 crops had been good, the country prosperous and very moderate prices for wheat prevailed. There was no special condition favorable to the free trade agitator. Waiting for a time of distress, looking forward to a failure of crops or to some great calamity which would bring misfortune to the people, the manufacturers were preparing to attack the agricultural interests and force the country into the policy of free trade. Mongredien says: "The very abundant harvest of 1835 had given the people comparatively cheap bread, and the voice of complaint was hushed for a time.

The partial failure of the wheat harvest in 1838-39-40, brought to free traders the very opportunity which they desired. Other circumstances at this time also favored the inauguration of a free trade movement. The Anti-Corn Law League, in its history of the causes which brought the 1 History of Free Trade, p. 15.