The Effects of the Corn Laws

The Legislature is immediately considering a revision of the corn laws.

The followers of Adam Smith have argued against bounties and restrictions.

I am against Adam Smith who I think was wrong.

Smith believed that corn is of so peculiar a nature that:

• its real price cannot be raised by an increase of its money price
• only an increase of real price can encourage its production
  • This is why the rise of money price from a bounty, can have no such effect.

I agree that the price of corn has a powerful influence on the price of labour.

But this influence does not prevent the movement of capital to, or from the land.

This is because the working classes do not spend everything on food.

They spend equally on food as on the articles of house rent, fuel, soap, candles, tea, sugar, and clothing.

• 2/5 is spent on grains or bread
• 2/5 is spent on rent, clothing, and consumables
• 1/5 is on meat, milk, butter, cheese, and potatoes.

It follows that:

• the whole of the wages of labour can never rise and fall in proportion to the variations in the price of grain.*
• 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.

It is 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.