Chap 5d: Corn Policy History

48 Europe’s ancient policy authorized and encouraged this popular odium against the corn trade, even if the corn trade is so beneficial to the public.


49 The 5th and 6th of Edward VI cap. 14 enacted that anyone who buys any corn or grain with intent to sell it again would be an unlawful engrosser.

  • For the first fault:
    • he would be imprisoned for two months, and
    • the value of his corn would be forfeited.
  • For the second:
    • he would be imprisoned for six months, and
    • the double value of his corn would be forfeited.
  • For the third:
    • he would be imprisoned in the pillory, and
    • all his goods and chattels would be forfeited.
  • The ancient policy of other European countries was no better than that of England.


50 Our ancestors imagined that people could buy their corn cheaper from the farmer than from the corn merchant.

  • They were afraid that the corn merchant would require an exorbitant profit to himself.
    • They tried to:
      • annihilate his trade altogether, and
      • hinder any middle man from coming in between the grower and the consumer, by imposing many restraints.
  • A corn carrier could only exercise his trade with a licence proving that he was fair.
    • Edward VI’s statute required three justices of the peace to grant this licence.
    • The privilege of granting it was further confined to the quarter-sessions by a statute of Elizabeth.


51 In this way, Europe’s ancient policy tried to regulate agriculture by maxims different from those which regulated manufactures.

  • In agriculture, this policy forced the farmer to be both the corn farmer and merchant or retailer.
    • It made the end consumers and their corn carriers as his only customers.
    • In manufactures on the contrary, this policy banned the manufacturer from selling his own goods by retail or by being his own shopkeeper.
  • In agriculture, this policy aimed to render corn cheap without understanding how this was to be done.
    • In manufactures, this policy protected the shopkeeper’s interest by preventing manufacturers from doing retail and underselling them.


Loss of Competitve Advantage From the Division of Capital

52 The manufacturer was allowed to keep a shop and sell his own goods by retail, but he could not have undersold the common shopkeeper.

  • Whatever capital he placed in his shop must have been withdrawn from his manufacture.
  • To carry on his business on a level with other manufacturers and shopkeepers, he must have profits from his:
    • manufacturing capital, and
    • retail capital.
  • Let us suppose that 10% was the ordinary profit of manufacturing and shopkeeping in his town.
    • In this case, he must have added a profit of 20% on each of his goods in his shop.
    • When he carried them from his workhouse to his shop, he must have priced them at a wholesale price.
      • The wholesale price is the price he sells them to shopkeepers.
    • If he valued them lower than the wholesale price, he would lose some of his manufacturing capital’s profit.
    • When he sold them from his shop, he would lose some of the profit of his shopkeeping capital if he sold them cheaper than the retail price of other shopkeepers.
    • He might appear to make a double profit on the same goods.
    • But as these goods came from two distinct capitals, he made only a single profit on the whole capital employed.
      • If he made less than his usual profit, he was a loser.


53 The manufacturer was banned from dividing his capital into two employments.

  • However, the farmer was forced to divide his capital into two.
    • One part was in his granaries and stack yard for supplying the market.
    • Another part was in land cultivation.
  • He could not afford cultivation for less than the ordinary profits of farming stock.
    • He could as little afford granaries for less than the ordinary profits of mercantile stock.
  • Whether the stock used in corn trading belonged to the farmer or the corn merchant, an equal profit is needed by the owner to:
    • put his business on a level with other trades
    • hinder him from changing his business to something more profitable
  • The farmer was forced to exercise the trade of a corn merchant.
    • He could not afford to sell his corn cheaper than any other corn merchant, in the case of a free competition.


54 The dealer who can employ his whole stock in one single business has the same advantage as the worker who can employ his whole labour in one single operation.

  • As the worker acquires the dexterity to perform more work, so the merchant acquires readier methods of buying and disposing of goods.
    • With the same capital, the merchant can transact more business.
  • As the merchant can afford the worker’s labour cheaper, so the worker can afford the merchant’s goods cheaper than if his stock and attention were employed in many various objects.
  • Most manufacturers would not be able to retail their own goods as cheaply and effectively as an active shopkeeper.
    • An active shopkeeper’s sole business is to buy at wholesale and sell at retail.
  • Most farmers would be less able to retail their own corn.
    • They could not afford to supply the town 4-5 miles away as cheap and as vigilant as an active corn merchant.



55 The law, which banned the manufacturer from being a shopkeeper, forced this division in the employment of stock faster.

  • The law, which obliged the farmer to be a corn merchant, hindered the division of the employment of stock from going on so fast.
    • Both laws were violations of natural liberty and were therefore unjust and impolitic.
  • “It is the interest of every society that things of this kind should never either be forced or obstructed.”
    • The man who employs his labour or stock in more ways than necessary, can never hurt his neighbour through underselling.
      • He may hurt himself by underselling, and he generally does so.
    • “Jack of all trades will never be rich, says the proverb.”
      • The law should always trust people with the care of their own interest.
      • Because in their local situations, they must generally be able to judge better of their interest than the legislator.
  • The law which obliged the farmer to be a corn merchant was the most harmful of those two laws by far.




56 It obstructed:

  • the division in the employment of stock which is so advantageous to every society
  • land improvement and cultivation

By obliging the farmer to do two trades, it forced him to divide his capital into two.

  • Only one of his capitals could be employed in cultivation.
  • If he were free to sell his crops to a corn merchant as fast as he could thresh it out, his whole capital might have returned immediately to the land.
    • His capital could have been used in:
      • buying more cattle
      • hiring more servants to improve it better
  • By being obliged to sell his corn by retail, he was obliged to keep most of his capital in his granaries and stack yard through the year.
    • He could not cultivate so well with the same capital.
  • This law:
    • obstructed land improvement, and
    • must have rendered corn scarcer and dearer.


The Trade Between The Farmer and The Corn Merchant

57 After the farmer, the corn merchant contributes the most to the raising of corn, if his trade is properly protected and encouraged.

  • He would support the farmer in the same way the wholesale dealer supports the manufacturer.


58 The wholesale dealer affords a ready market to the manufacturer by taking the manufacturer’s goods as fast as the manufacturer can make them.

  • It enables the manufacturer to keep his whole capital constantly employed in manufacturing.
    • He can manufacture more goods than if he sold them himself to end consumers or retailers.
  • The wholesaler’s capital is generally enough to replace the capital of many manufacturers.
  • This intercourse between the dealers and the manufacturers interests the owner of a large capital to support the many owners of small capitals.
    • The merchant is interested in assisting the manufacturers in their losses which might be ruinous.


59 The same intercourse universally established between farmers and corn merchants would equally benefit the farmers.

  • The farmers would be enabled to keep their whole capitals constantly employed in cultivation.
  • In case of any accidents, they would find that their wealthy corn merchant customer has an interest and the ability to support them.
    • The farmers would not be entirely dependent on their landlord, as at present.
  • It is not very easy to imagine how great, extensive, and sudden would be the improvement to the entire countryside if it were possible to establish this intercourse between farmers and merchants universally and all at once:
    • If it were possible to withdraw the nation’s whole farming stock from other employments and divert it towards land cultivation.
    • If it were possible to provide another, almost equally great, stock of trading to support this great farming stock.
    • Perhaps it is not possible.


60 The statute of Edward VI banned any middleman from coming between the grower and the consumer.

  • It tried to annihilate a trade which, when freely exercised, is the best palliative and preventative of a dearth.


61 This law was softened by several subsequent statutes.

  • They permitted the engrossing of corn when the wheat prices should not exceed 240, 288, 384, and 480 pence the quarter.
  • Finally, the 15th of Charles II. c. 7 declared the engrossing or buying of corn for re-sale lawful to all, except to forestallers, as long as wheat prices did not exceed 576 pence the quarter relative to other grains.
    • Forestallers sold corn again in the same market within three months.
    • This statute restored all the inland corn dealer’s freedom.
  • The statute of the 12th of George III repeals almost all the other ancient laws against engrossers and forestallers.
    • It does not repeal the restrictions of the 15th of Charles II. c 7, which are still in force.


62 The 15th of Charles II. c 7 authorizes two very absurd popular prejudices.

  1. 63 It supposes that when wheat prices rise to 576 pence the quarter, corn is likely to be so engrossed as to hurt the people.
  • But it is evident that corn 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.
  1. 64 It supposes that there is a certain price at which corn will be forestalled or bought to be re-sold in the same market, to hurt the people.
  • If a merchant ever buys up corn 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 corn
        • He hurts himself much more than he can hurt the people who were supposed to buy corn on that day.
          • Because the people can buy cheaper corn 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 corn 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 corn 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 corn 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 corn 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 corn 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 corn is than the home trade.
  • The great cheapness of corn 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 corn trade’s other three branches.

  1. 71 The merchant importer of foreign corn 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 corn, but does not reduce its real value.
    • If importation were always free, our farmers would probably get less money for their corn 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 corn as at present.
    • Such lowering of corn’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 corn 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 corn.
  • 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 corn.
    • The rise in the real value of silver caused by the lowering of the money price of corn:
      • enlarges this greatest corn 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.


73 In years of scarcity, the distress caused by the strict execution of those laws was probably very great.

  • But sometimes, its execution was suspended by temporary statutes which allowed corn imports for a limited time.
  • The necessity of these temporary statutes demonstrates the impropriety of this general one.


74 These restraints on importation came before the bounty’s establishment.

  • They were dictated by the same spirit and principles of those bounties.
  • No matter how hurtful the import restraints were, they became necessary because of the bounties.
    • If wheat prices rose around 576 pence the quarter, foreign corn could be imported duty-free.
    • But the bounty would cause this corn to be re-exported.
      • It would be a great loss of public revenue and the perversion of the entire institution.
      • The bounties would be used for extending the growth of foreign countries and not the market for home growth.

Words: 2,794


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