The Corn Laws were laws passed by the British Parliament in 1815 to keep the prices of grain high so that British grain farmers would be favored in the market. England had different laws that affected the importation of grains dating back to the 12th century (The Editors of Encyclopædia Britannica), but it became a serious issue in the 1800s because of the costs of war; England had a rapidly expanding population and had a naval blockade imposed during the Napoleonic era that caused the price of grain to rise. The laws became a big issue between the landowning class and middle class manufacturers, as the manufacturers believed that high grain prices stopped their businesses from expanding as rapidly. Poor grain harvests led to many food riots during this time, and increased pressure caused the laws to be repealed in 1846. Two men stood on opposite sides of the debate in 1815: Thomas Malthus and David Ricardo. Malthus believed in taxing imported grain to protect British farmers, while Ricardo favored a free trade policy. Malthus’ group won the debate, but both sides had many good points. These two economists were famous during their time, and brought many good points to the debate table.
Malthus was most famous for his economic studies of populations, and his belief that populations usually do not have to worry about growing to a point where they will starve, as economics will change their behavior (Fund). He was born in 1766, and was usually considered an economic pessimist. He became friends with David Ricardo, another contemporary economist who was born in 1772. Ricardo quite possibly is more famous, as Ricardo described what later became known as the “law of diminishing marginal returns” and also brought monetarism into the economic dictionary after studying inflation in the United Kingdom.
Thomas Malthus had rarely argued against free trade before (Salvadori and Signirino). Malthus believed that political reasons, under cultivated fields, and an imagined technological advantage in agriculture made it necessary for Britain to put these laws into place. Malthus also believed that a dependence on foreign trade for grain products undermined Britain’s national security. Malthus, in his first book about economic policy, mentioned the comparative advantage some nations might have in agriculture, and implied that they should trade excess resources. Malthus used Europe as an example, but noted that trade between European countries was not free, making it difficult to compare.
Malthus believed that corn tariffs would actually help the manufacturing class by increasing foreign demand for British wares. This of course did not happen, but he used the concept of bartering to describe what he thought might happen. Malthus believed that the free importation of corn would have lowered agricultural wages and therefore lowered wages in the manufacturing sector, benefitting manufacturers who export abroad. The economist strongly believed that tariffs would destabilize the British agricultural sector, and it would be harmful to the very people it was trying to protect, the farmers. However, Malthus kind of contradicts himself by believing that tariffs are the best way to ensure the British citizens have a regular supply of agricultural goods during war time scenarios. He does mention in his writings that free-trade in agriculture would cause the agricultural sector in Britain to shrink, citing comparative advantage as the reason why, and furthering explaining his belief that Britain should be agriculturally stable.
Malthus in his later writings implied that it was silly for a nation to quit pursuing protectionist policies, as the revenue it would lose would be large. Malthus cited the great improvement in British farming as a result of the high prices of grain on the market, and believed it signified that the high price was a good thing, as it produced positive externalities.
The political risk for Thomas Malthus was too great a threat to Britain’s security. Malthus was writing during a time where Europe was just shaking off the remnants of an imperial France, one that had conquered the largest parts of Europe since the Roman era. Entire generations of Britons had been raised with the horrors of the French Revolution and the constant warfare and threat of invasion by Napoleon’s reign. Thus, the country was far less likely to take any risks that might damage their long term safety or threaten the status quo. It was only until much later, after a long period of relative stability in European affairs, that the British realized the Corn Laws had damaged their economy rather than boost it.
David Ricardo argued the point from a perspective of comparative advantage. Ricardo ignored the political argument that Malthus made, and instead said that different countries would produce more agricultural goods to meet British demand. Ricardo believed that by refusing to buy foreign imported grain, other countries would quit producing as much grain, pushing their agricultural sectors down. He believes that other countries would view the British market as unpredictable after the Corn Laws were passed, and while a good friend of Malthus, Ricardo made many arguments about Malthus’ theories about renting and how prices are affected. Ricardo blamed the law of diminishing returns to explain why agricultural output in Britain was falling, and he examined the issue of land rents in his arguing thesis. Ricardo showed that land rents rose exponentially along with the prices of agricultural goods, and rent rose higher for land that was considered more fertile. Thus, he also demonstrated the difference between the extensive and intensive margin. Ricardo also shared Malthus’ viewpoint that the population of Britain would directly affect her economic output in regards to agriculture, and the two shared their belief about Malthus’ theory of population expansion previously mentioned. Ricardo’s theory of trade would dominate the second half of the nineteenth century, after the Corn Laws were repealed, giving him the most lasting influence.
Malthus believed that France, England’s traditional enemy, would become the largest supplier of grain to Britain should the Corn Laws not be passed; Ricardo refutes this by saying that free trade would provide other countries an incentive to overproduce to sell on the British market. Ricardo also states that Britain has an almost unlimited supply of trading partners, as they had command of the seas and oceans. Ricardo refutes the supposed threat to national security by saying Britain would become a quasi-monopolist in the agricultural market, meaning that though there would be a competitor, the two would function in the economy the same as a monopoly. Thus, Ricardo’s arguing points were not as strong as his suggestion of comparative advantage.
Both economists brought many good points to the table, but the opinion of Malthus eventually won. The British Parliament considered the political risk of not being agriculturally independent, so they implemented the Corn Laws. History has judged this tariff act unfavorably, and the world may never know if history would have been substantially different without its passage.
Works Cited:
The Editors of Encyclopædia Britannica. “Corn Law | British History.” Encyclopædia Britannica. N.p.: Encyclopædia Britannica, 12 Feb. 2016. Web. 12 June 2016.
Fund, 2008 Liberty. “Thomas Robert Malthus.” Economic Library. n.d. Web. 12 June 2016.
Economic Library. “David Ricardo.” Economic Library. n.d. Web. 12 June 2016.
The Fed. “David Ricardo Theory of Free International Trade.” Federal Reserve Bank of Dallas. n.d. Web. 12 June 2016.
Salvadori, Neri, and Rodolfo Signirino. “The Malthus versus Ricardo 1815 Corn Laws Controversy: An appraisal.” Munich Personal RePEc Archive. n.d. Web. 12 June 2016.
