1960s >> 1962 >> no-698-october-1962

The Common Market and the old Corn Laws

The Economist in a recent article on the difficulty Macmillan will face in trying to get Parliamentary approval for entry into the Common Market, described it as potentially “the most explosive internal situation since the repeal of the Corn Laws in 1846.” The writer was warning of the possibility that the Tory Party might split and the Government suffer defeat by an alliance between “Tory reactionaries seeking disentanglement from Europe,” and the Labour Party seeking to win an election on anti-Common Market votes.
It is an interesting parallel. The repeal of the Corn Laws (duties on imported corn), and the removal of the import duties on a wide range of other goods and the earlier abolition of duties on exports, marked the great changeover of British trading policy from high protection to free trade. Among other consequences it was expected to bring speedy ruin to farmers and landlords as floods of cheap imported food started coming in. These agricultural interests were influential in the Conservative Party which was then in power with Sir Robert Peel as Prime Minister. He however favoured Repeal, both on general grounds and because of the disastrous potato famine that occurred in Ireland in 1845, but his fellow ministers in the Cabinet would not agree. He thereupon resigned, but the Liberal leader. Sir John Russell, was unable to get enough support in Parliament for a Liberal government and Peel was soon back in office. He then forced the Repeal of the Corn Laws through the House of Commons against the will of his own Party. He was able to do this because the Liberal opposition M.P.’s who voted for it were joined by over a hundred Conservative “free-traders,” many of whom later joined the Liberal Party. Peel had got his way, but it cost him his Premiership, and the Government for the next six years was Liberal.
The British industrial and commercial capitalists had truly come into their own. British manufacturers and British-owned ships dominated the markets and shipping lanes of the world. The Free-trader, Dr. Bowring, might declare “Jesus Christ is Free Trade and Free Trade is Jesus Christ.” But what the manufacturers were aiming at was low-priced raw material and food imports so that wages could be reduced, selling prices of manufacturers kept down and profits raised. They hid their real aim under promises of benefits for everybody — for the worker, cheap food and high wages; and for the whole human race, the dawn of an era of brotherhood and peace. They were, however, not able to convince the farmers and landowners that it would be good for them also, but as things turned out the repeal of the import duties on food did not have the feared disastrous effects at once. For one thing the duties on imported corn were not abolished at one stroke, but by stages over a period of years. Secondly, it took time to organise the import of food from abroad and it was not till many years later that the floods of cheap food started coming in from across the Atlantic. Also the big discoveries of easily-mined gold in California and Australia had the effect of raising the general price level,
The enthusiasts for Free Trade convinced themselves that it was a doctrine for universal application and were surprised to find that it was not everywhere accepted. Free Trade suited the triumphant British exporters of manufactured goods, but not their less successful rivals on the Continent.

  On the Continent—the backbone of the Protectionist Party was formed by the manufacturers who feared the English imports; the Free-Trade Party were the agriculturalists who wanted cheap manufactures. Thus in Germany the Agrarians or Junkers were Free-Trade, so were the great landowners of Russia, the wine-producers of France and the cotton growers of the South in the United States. They were all exporters and wanted markets abroad and were willing to take manufactures in return.
(Knowles, Industrial and Commercial Revolutions in Great Britain during the 19th Century. P.I32).

Later on when British capitalists ceased to determine the world market for manufactured goods and had to face thrusting competitors from overseas, many of them abandoned Free Trade.
In 1923 the Baldwin Tory Government and its big business backers had decided to go over to Protection. They fought an election on the issue, but were defeated and it was not until nine years later under the Import Duties Act, 1932. that a general ten per cent. import duty was imposed on all imported goods except raw materials and foodstuffs.
Baldwin’s failure to carry the electors with him in 1923 (his policy was opposed by both Liberals and Labour) is a reminder of the different political situation in 1846. At that time the workers had no votes and the electorate was well under a million in a population of 18 million; now it is about 36 million in a population of 52 million.
One other difference is that nowadays hardly anyone can be found in this country crusading for Free Trade in the way the old Corn Law abolitionists did. The supporters of the European Common Market (including the formerly Free Trade Liberals) want Free Trade inside the Market, but a quite high tariff wall against imports from outside; and their opponents who want to keep out of the Market and develop Commonwealth trade are likewise supporters of Protective Tariffs.
Where some big backing for Free Trade can be found now is in the United States, and the reason is the same as that which operated in Britain in 1846. The Kennedy Administration has been trying to move towards freer trade; naturally against the opposition of those groups that favour high tariff protection for their own products. A correspondent writing in the Financial Times (11/9/62) says:

  In fighting for freer trade the President has enjoyed the support of the most progressive section of American industry—capital goods—which have been chiefly responsible for expanding the U.S. export surplus in recent years. While the U.S. is now a net importer of finished consumer goods, exports of capital equipment- construction machinery, rolling machinery, and the like—are some 6,000 million dollars larger than imports.

One factor does not change. All of the industrial and commercial groups whose financial interest leans this way or that over free trade, protection, common market and the like will go on proclaiming that all they are concerned with is the well-being of the workers—just as it was in 1846.
Edgar Hardcastle

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