



Produced by Charles Aldarondo.  HTML version by Al Haines.









Observations on the Effects of the Corn Laws,
and of a Rise or Fall in the Price of Corn on the Agriculture
and General Wealth of the Country

by the Rev. T.R. Malthus,

Professor of Political Economy at the
East India College, Hertfordshire.



London: Printed for J. Johnson and Co., St. Paul's Church-Yard.

1814.





Observations, &c. &c.


A revision of the corn laws, it is understood, is immediately to
come under the consideration of the legislature. That the decision
on such a subject, should be founded on a correct and enlightened
view of the whole question, will be allowed to be of the utmost
importance, both with regard to the stability of the measures to be
adopted, and the effects to be expected from them.

For an attempt to contribute to the stock of information necessary
to form such a decision, no apology can be necessary. It may seem
indeed probable, that but little further light can be thrown on a
subject, which, owing to the system adopted in this country, has
been so frequently the topic of discussion; but, after the best
consideration which I have been able to give it, I own, it appears
to me, that some important considerations have been neglected on
both sides of the question, and that the effects of the corn laws,
and of a rise or fall in the price of corn, on the agriculture and
general wealth of the state, have not yet been fully laid before the
public.

If this be true, I cannot help attributing it in some degree to the
very peculiar argument brought forward by Dr Smith, in his
discussion of the bounty upon the exportation of corn. Those who are
conversant with the Wealth of nations, will be aware, that its great
author has, on this occasion, left entirely in the background the
broad, grand, and almost unanswerable arguments, which the general
principles of political economy furnish in abundance against all
systems of bounties and restrictions, and has only brought forwards,
in a prominent manner, one which, it is intended, should apply to
corn alone. It is not surprising that so high an authority should
have had the effect of attracting the attention of the advocates of
each side of the question, in an especial manner, to this particular
argument. Those who have maintained the same cause with Dr Smith,
have treated it nearly in the same way; and, though they may have
alluded to the other more general and legitimate arguments against
bounties and restrictions, have almost universally seemed to place
their chief reliance on the appropriate and particular argument
relating to the nature of corn.

On the other hand, those who have taken the opposite side of the
question, if they have imagined that they had combated this
particular argument with success, have been too apt to consider the
point as determined, without much reference to the more weighty and
important arguments, which remained behind.

Among the latter description of persons I must rank myself. I have
always thought, and still think, that this peculiar argument of Dr
Smith, is fundamentally erroneous, and that it cannot be maintained
without violating the great principles of supply and demand, and
contradicting the general spirit and scope of the reasonings, which
pervade the Wealth of nations.

But I am most ready to confess, that, on a former occasion, when I
considered the corn laws, my attention was too much engrossed by
this one peculiar view of the subject, to give the other arguments,
which belong to it, their due weight.

I am anxious to correct an error, of which I feel conscious. It is
not however my intention, on the present occasion, to express an
opinion on the general question. I shall only endeavour to state,
with the strictest impartiality, what appear to me to be the
advantages and disadvantages of each system, in the actual
circumstances of our present situation, and what are the specific
consequences, which may be expected to result from the adoption of
either. My main object is to assist in affording the materials for a
just and enlightened decision; and, whatever that decision may be,
to prevent disappointment, in the event of the effects of the
measure not being such as were previously contemplated. Nothing
would tend so powerfully to bring the general principles of
political economy into disrepute, and to prevent their spreading, as
their being supported upon any occasion by reasoning, which constant
and unequivocal experience should afterwards prove to be fallacious.

We must begin, therefore, by an inquiry into the truth of Dr Smith's
argument, as we cannot with propriety proceed to the main question,
till this preliminary point is settled.

The substance of his argument is, that corn is of so peculiar a
nature, that its real price cannot be raised by an increase of its
money price; and that, as it is clearly an increase of real price
alone which can encourage its production, the rise of money price,
occasioned by a bounty, can have no such effect.

It is by no means intended to deny the powerful influence of the
price of corn upon the price of labour, on an average of a
considerable number of years; but that this influence is not such as
to prevent the movement of capital to, or from the land, which is
the precise point in question, will be made sufficiently evident by
a short inquiry into the manner in which labour is paid and brought
into the market, and by a consideration of the consequences to which
the assumption of Dr Smith's proposition would inevitably lead.

In the first place, if we inquire into the expenditure of the
labouring classes of society, we shall find, that it by no means
consists wholly in food, and still less, of course, in mere bread or
grain. In looking over that mine of information, for everything
relating to prices and labour, Sir Frederick Morton Eden's work on
the poor, I find, that in a labourer's family of about an average
size, the articles of house rent, fuel, soap, candles, tea, sugar,
and clothing, are generally equal to the articles of bread or meal.
On a very rough estimate, the whole may be divided into five parts,
of which two consist of meal or bread, two of the articles above
mentioned, and one of meat, milk, butter, cheese, and potatoes.
These divisions are, of course, subject to considerable variations,
arising from the number of the family, and the amount of the
earnings. But if they merely approximate towards the truth, a rise
in the price of corn must be both slow and partial in its effects
upon labour. Meat, milk, butter, cheese, and potatoes are slowly
affected by the price of corn; house rent, bricks, stone, timber,
fuel, soap, candles, and clothing, still more slowly; and, as far as
some of them depend, in part or in the whole, upon foreign materials
(as is the case with leather, linen, cottons, soap, and candles),
they may be considered as independent of it; like the two remaining
articles of tea and sugar, which are by no means unimportant in
their amount.

It is manifest therefore that the whole of the wages of labour can
never rise and fall in proportion to the variations in the price of
grain. And that the effect produced by these variations, whatever
may be its amount, must be very slow in its operation, is proved by
the manner in which the supply of labour takes place; a point, which
has been by no means sufficiently attended to.

Every change in the prices of commodities, if left to find their
natural level, is occasioned by some change, actual or expected, in
the state of the demand or supply. The reason why the consumer pays
a tax upon any manufactured commodity, or an advance in the price of
any of its component parts, is because, if he cannot or will not pay
this advance of price, the commodity will not be supplied in the
same quantity as before; and the next year there will only be such a
proportion in the market, as is accommodated to the number of
persons who will consent to pay the tax. But, in the case of labour,
the operation of withdrawing the commodity is much slower and more
painful. Although the purchasers refuse to pay the advanced price,
the same supply will necessarily remain in the market, not only the
next year, but for some years to come. Consequently, if no increase
take place in the demand, and the advanced price of provisions be
not so great, as to make it obvious that the labourer cannot support
his family, it is probable, that he will continue to pay this
advance, till a relaxation in the rate of the increase of population
causes the market to be under-supplied with labour; and then, of
course, the competition among the purchasers will raise the price
above the proportion of the advance, in order to restore the supply.
In the same manner, if an advance in the price of labour has taken
place during two or three years of great scarcity, it is probable
that, on the return of plenty, the real recompense of labour will
continue higher than the usual average, till a too rapid increase of
population causes a competition among the labourers, and a
consequent diminution of the price of labour below the usual rate.

This account of the manner in which the price of corn may be
expected to operate upon the price of labour, according to the laws
which regulate the progress of population, evidently shows, that
corn and labour rarely keep an even pace together; but must often be
separated at a sufficient distance and for a sufficient time, to
change the direction of capital.

As a further confirmation of this truth, it may be useful to
consider, secondly, the consequences to which the assumption of Dr
Smith's proposition would inevitably lead.

If we suppose, that the real price of corn is unchangeable, or not
capable of experiencing a relative increase or decrease of value,
compared with labour and other commodities, it will follow, that
agriculture is at once excluded from the operation of that
principle, so beautifully explained and illustrated by Dr Smith, by
which capital flows from one employment to another, according to the
various and necessarily fluctuating wants of society. It will follow,
that the growth of corn has, at all times, and in all countries,
proceeded with a uniform unvarying pace, occasioned only by the
equable increase of agricultural capital, and can never have been
accelerated, or retarded, by variations of demand. It will follow,
that if a country happened to be either overstocked or understocked
with corn, no motive of interest could exist for withdrawing capital
from agriculture, in the one case, or adding to it in the other, and
thus restoring the equilibrium between its different kinds of
produce. But these consequences, which would incontestably follow
from the doctrine, that the price of corn immediately and entirely
regulates the prices of labour and of all other commodities, are so
directly contrary to all experience, that the doctrine itself cannot
possibly be true; and we may be assured, that, whatever influence
the price of corn may have upon other commodities, it is neither so
immediate nor so complete, as to make this kind of produce an
exception to all others.

That no such exception exists with regard to corn, is implied in all
the general reasonings of the Wealth of nations. Dr Smith evidently
felt this; and wherever, in consequence, he does not shift the
question from the exchangeable value of corn to its physical
properties, he speaks with an unusual want of precision, and
qualifies his positions by the expressions much, and in any
considerable degree. But it should be recollected, that, with these
qualifications, the argument is brought forward expressly for the
purpose of showing, that the rise of price, acknowledged to be
occasioned by a bounty, on its first establishment, is nominal and
not real. Now, what is meant to be distinctly asserted here is, that
a rise of price occasioned by a bounty upon the exportation or
restrictions upon the importation of corn, cannot be less real than
a rise of price to the same amount, occasioned by a course of bad
seasons, an increase of population, the rapid progress of commercial
wealth, or any other natural cause; and that, if Dr Smith's
argument, with its qualifications, be valid for the purpose for
which it is advanced, it applies equally to an increased price
occasioned by a natural demand.

Let us suppose, for instance, an increase in the demand and the
price of corn, occasioned by an unusually prosperous state of our
manufactures and foreign commerce; a fact which has frequently come
within our own experience. According to the principles of supply and
demand, and the general principles of the Wealth of nations, such an
increase in the price of corn would give a decided stimulus to
agriculture; and a more than usual quantity of capital would be laid
out upon the land, as appears obviously to have been the case in
this country during the last twenty years. According to the peculiar
argument of Dr Smith, however, no such stimulus could have been
given to agriculture. The rise in the price of corn would have been
immediately followed by a proportionate rise in the price of labour
and of all other commodities; and, though the farmer and landlord
might have obtained, on an average, seventy five shillings a quarter
for their corn, instead of sixty, yet the farmer would not have been
enabled to cultivate better, nor the landlord to live better. And
thus it would appear, that agriculture is beyond the operation of
that principle, which distributes the capital of a nation according
to the varying profits of stock in different employments; and that
no increase of price can, at any time or in any country, materially
accelerate the growth of corn, or determine a greater quantity of
capital to agriculture.

The experience of every person, who sees what is going forward on
the land, and the feelings and conduct both of farmers and
landlords, abundantly contradict this reasoning.

Dr Smith was evidently led into this train of argument, from his
habit of considering labour as the standard measure of value, and
corn as the measure of labour. But, that corn is a very inaccurate
measure of labour, the history of our own country will amply
demonstrate; where labour, compared with corn, will be found to have
experienced very great and striking variations, not only from year
to year, but from century to century; and for ten, twenty, and
thirty years together;(1*) and that neither labour nor any other
commodity can be an accurate measure of real value in exchange, is
now considered as one of the most incontrovertible doctrines of
political economy, and indeed follows, as a necessary consequence,
from the very definition of value in exchange. But to allow that
corn regulates the prices of all commodities, is at once to erect it
into a standard measure of real value in exchange; and we must
either deny the truth of Dr Smith's argument, or acknowledge, that
what seems to be quite impossible is found to exist; and that a
given quantity of corn, notwithstanding the fluctuations to which
its supply and demand must be subject, and the fluctuations to which
the supply and demand of all the other commodities with which it is
compared must also be subject, will, on the average of a few years,
at all times and in all countries, purchase the same quantity of
labour and of the necessaries and conveniences of life.

There are two obvious truths in political economy, which have not
infrequently been the sources of error.

It is undoubtedly true, that corn might be just as successfully
cultivated, and as much capital might be laid out upon the land, at
the price of twenty shillings a quarter, as at the price of one
hundred shillings, provided that every commodity, both at home and
abroad, were precisely proportioned to the reduced scale. In the
same manner as it is strictly true, that the industry and capital of
a nation would be exactly the same (with the slight exception at
least of plate), if, in every exchange, both at home or abroad, one
shilling only were used, where five are used now.

But to infer, from these truths, that any natural or artificial
causes, which should raise or lower the values of corn or silver,
might be considered as matters of indifference, would be an error of
the most serious magnitude. Practically, no material change can take
place in the value of either, without producing both lasting and
temporary effects, which have a most powerful influence on the
distribution of property, and on the demand and supply of particular
commodities. The discovery of the mines of America, during the time
that it raised the price of corn between three and four times, did
not nearly so much as double the price of labour; and, while it
permanently diminished the power of all fixed incomes, it gave a
prodigious increase of power to all landlords and capitalists. In a
similar manner, the fall in the price of corn, from whatever cause
it took place, which occurred towards the middle of the last
century, accompanied as it was by a rise, rather than a fall in the
price of labour, must have given a great relative check to the
employment of capital upon the land, and a great relative stimulus
to population; a state of things precisely calculated to produce the
reaction afterwards experienced, and to convert us from an exporting
to an importing nation.

It is by no means sufficient for Dr Smith's argument, that the price
of corn should determine the price of labour under precisely the
same circumstances of supply and demand. To make it applicable to
his purpose, he must show, in addition, that a natural or artificial
rise in the price of corn, or in the value of silver, will make no
alteration in the state of property, and in the supply and demand
of corn and labour; a position which experience uniformly
contradicts.

Nothing then can be more evident both from theory and experience,
than that the price of corn does not immediately and generally
regulate the prices of labour and all other commodities; and that
the real price of corn is capable of varying for periods of
sufficient length to give a decided stimulus or discouragement to
agriculture. It is, of course, only to a temporary encouragement or
discouragement, that any commodity, where the competition is free,
can be subjected. We may increase the capital employed either upon
the land or in the cotton manufacture, but it is impossible
permanently to raise the profits of farmers or particular
manufacturers above the level of other profits; and, after the
influx of a certain quantity of capital, they will necessarily be
equalized. Corn, in this respect, is subjected to the