Digression on the wheat trade and wheat laws: Foreign wheat market

⁶² The 15th of Charles 2nd Chapter 7 authorizes two very absurd popular prejudices.

⁶³ It supposes that when wheat prices rise to 576 pence the quarter, wheat is likely to be so engrossed as to hurt the people.

• But it is evident that wheat cannot be so engrossed by the inland dealers to hurt the people.

576 pence the quarter is a very high price.

• But in years of scarcity, it is the common price immediately after harvest.
  • After such a harvest, none of the new crop can be sold off.
• Thus, it is impossible that the crop can be so engrossed as to hurt the people.

⁶⁴ It supposes that there is a certain price at which wheat will be forestalled or bought to be re-sold in the same market, to hurt the people.

If a merchant ever buys up wheat to sell it again in the same market, it is because he judges that the market cannot be so liberally supplied through the whole season and that the price must soon rise.
    If he judges wrong and the price does not rise, he loses= 
        his whole profit
        some of the stock itself by the loss from storing wheat
            He hurts himself much more than he can hurt the people who were supposed to buy wheat on that day.
                Because the people can buy cheaper wheat on any other day.
    If he judges right, he renders them a most important service.
        He makes them feel the dearth earlier.
        He prevents them from consuming wheat as fast as before, when prices were cheap.
            He thus prevents them from feeling the dearth so severely afterwards.
When the scarcity is real, the best thing that can be done is to divide its inconveniencies as equally as possible through all the months, weeks, and days of the year.
    The wheat merchant's interest makes him study this as exactly as he can.
        No other person can have the same interest, knowledge, or abilities to do it as he.
        This most important operation of commerce should be trusted entirely to him.
The wheat trade which supplies the home market should be left perfectly free.

65 “The popular fear of engrossing and forestalling may be compared to the popular terrors and suspicions of witchcraft.”

Those accused of witchcraft were as innocent as those who were accused of engrossing.
The law which ended all prosecutions against witchcraft, ended those fears and suspicions by removing the great cause of the fear.
    It prevented men from gratifying their own malice in accusing others of imaginary crimes.
The law which restores the entire freedom of the inland wheat trade would probably end the popular fears of engrossing and forestalling.

66 Despite all the imperfections of the 15th of Charles II. c. 7, it has perhaps contributed more than any other law in the statute book to increase the=

home market's supply, and
tillage.

The inland wheat trade has derived all the liberty and protection from this law.

The home market's supply and the interest of tillage are much more effectively promoted by the inland trade than by the external trade.

67 According to Charles Smith, the proportion of grain imported into Great Britain to the grain consumed does not exceed 1= 570.

For supplying the home market, the importance of the inland trade must be 570= 1 to the importance of the importation trade.
68 The grain exported from Great Britain does not exceed one-and-thirtieth part of the annual produce.
For the encouragement of tillage, the importance of the inland trade must be 30 times the importance of the exportation trade.

69 I have no great faith in political arithmetic computations.

I only mention them to show how much less consequence the foreign trade of wheat is than the home trade.
The great cheapness of wheat in the years immediately before the bounty's establishment, may reasonably be ascribed to this statute of Charles II.
    This statute was enacted 25 years before.
    It had full time to produce its effect.

70 A few words will explain the wheat trade’s other three branches.

71  The merchant importer of foreign wheat for home consumption contributes to the home market's immediate supply.

It is immediately beneficial to the people.
    It lowers somewhat the average money price of wheat, but does not reduce its real value.
    If importation were always free, our farmers would probably get less money for their wheat than at present.
        But the money they will get would be of more value.
            It would buy more goods and employ more labour.
        Their real wealth and revenue would be the same, but expressed by fewer silver.
            They would not be disabled nor discouraged from cultivating wheat as at present.
    Such lowering of wheat's money price would naturally mean a rise in the real value of silver.
        The rise in the real value of silver lowers somewhat the money price of all other commodities.
        It gives the country's industry some advantage in all foreign markets.
            It encourages and increases that industry.
But the extent of the home market for wheat must be proportional to the general industry of the country where it grows.
    It must be proportional to the number of people who have something else to give for wheat.
But in every country, the home market is the nearest and most convenient market.
    The home market is the greatest and most important market for wheat.
    The rise in the real value of silver caused by the lowering of the money price of wheat= 
        enlarges this greatest wheat market and
        encourages its growth.

72 The 22nd of Charles II. c. 13, imposed a duty of 192 pence the quarter on wheat imports whenever the home price did not exceed 640 pence the quarter.

It imposed a duty of 96 pence whenever the home price did not exceed 960 pence.
The price of 640 pence the quarter happened only during very great scarcity.
    The price of 960 pence has not happened at all.
Yet this statute subjected wheat to a very high duty when it rises above 960 pence.
    If wheat rose above 640 pence, it subjected it to a very high duty equal to a ban.
The importation of other grain was restrained by high rates and duties in proportion to the grain's value.
    Subsequent laws further increased those duties.

Footnote

Before the 13th of the present king, the following were the duties payable upon the importation of the different sorts of grain= Grain. Duties. Beans to 336 pence per qr. Barley to 336 pence 238 pence after till 480 pence 238 pence after till 384 pence 200 pence then 12 pence 192 pence then 12 pence Malt is prohibited by the annual Malt-tax Bill. Oats to 192 pence Peas to 480 pence Rye to 432 pence Wheat to 528 pence 5s. 10d. after 16s. 0d. after 19s. 10d. till 40s. 21s. 9d. till 53s. 4d. 9 1 / 2 d. 9 3 / 4 d. 16s. 8d. then 12d. 17s. then 8s. till 4l. and after that about 1.s 4d. Buck wheat to 32s. per qr. to pay 16s.

These duties were imposed, partly by:

• the 22nd of Charles II, in place of the Old Subsidy,
• the New Subsidy
• the 1/3 and 2/3 Subsidy
• the Subsidy 1747

The table of duties in this note is an exact copy of that in Charles Smith, Three Tracts on the Corn Trade , 2nd ed., 1766. p. 83

That author:

• took the figures from “Mr. Saxby, in his Book of Rates” ( i.e. Henry Saxby, The British Customs, containing an Historical and Practical Account of each branch of that Revenue , 1757, pp. 111-114)
• rounded off Saxby’s fractions of a penny in an inaccurate and inconsistent way
• miscopied:
  • the second duty on barley
  • the first duty on peas
  • the third duty on wheat

The “Old Subsidy” consisted of the 5% or 1s. poundage imposed by 12 Car. II., c. 4, on to the Act According to this, imported beans, barely and malt were to be rated at 26s. 8d. the quarter when the actual price at the place of importation did not exceed 28s. When the actual price was higher than that, they were to be rated at 5s. the quarter. Oats and peas were to be rated at 4s. the quarter. Rye when not over 36s. was to be rated at 26s. 8d., and when over that price at 5s. Wheat when not over 44s. was to be rated at 40s., and when over that price at 6s. 8d.

So under the Old Subsidy=

Beans, barley and malt at prices up to 28s. were to pay 1. 4d., and when above that price 3 pence
Oats and pease to pay 2.4d
Rye up to 36s. to pay 1s. 4d., and when above, 3 pence
Wheat up to 44s. to pay 2s., and when above, 4 pence.

The Act 22 Car. II., c. 13, took off these duties and substited the following scheme=

Beans to 40s to pay 16s., and above that price, 3d.
Barley and malt to 32s. to pay 16s., and above, 3d.
Oats 16s. to pay 5s. 4d., and above, 2.4d.
Pease and rye the same as beans.
Wheat to 53s. 4d. to pay 16s., then to 80s. to pay 8s., and above that price, 4d.
Buckwheat to 32s. to pay 16s.

But 9 and 10 Will. III., c. 23, imposed a “New Subsidy” exactly equal to the Old, so that=

duties equal to those of 12 Car. II., c.4, were superimposed on those of 22 Car. II, c. 13.
By 2 and 3 Ann., c. 9, an additional third
by 3 and 4 Ann., c. 5, an additional two-thirds of the Old Subsidy were imposed,
by 21 Geo. II., c. 2, another amount equal to the Old Subsidy ("the impost 1747") was further imposed

So between 1747 and 1773 the dtuies were those of 22 Car. II., c. 13, plus three times those of 12 Car. II., c. 4

This gives the following scheme=

Beans to 28s. pay 20s. and after till 40s. pay 16s. 9d. then 1s.
Barley to 28s. pays 20s. and after till 32s. pays 16s. 9d. then 1s.
Oats to 16s. pay 5s. 11.2d. and then pay 9.6d.
Pease to 40s. pay 16s. 7.2d. and then pay 9.6d.
Rye to 36s. pays 20s. and after till 40s. pays 16s. 9d. then 1s.
Wheat to 44s. pays 22s. and after till 53s. 4d. pays 17s. then 9s. till 80s., and after that 1s. 4d.

Saxby’s figures are slightly less, as they take into account a 5% discount obtainable on all the subisdies except one.