Case Memo: Corn Laws

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                   Dongdong Chen

Case Memo: Corn Laws

Summary: The Corn Laws, introduced in 1815 and repealed in 1846, was originally aim to protect landlords’ profits. The law encourages export and prevent import when corn price was low. Its establishment enhanced landlords’ political power and its abolishment brought the free trade.

The British Situation Before 1815

Britain’s rapid economic development, due to industrialization during the 17th and 18th century, lead to a requirement strong agricultural protection.

• Economic Background: British industrial development made it a strong country during 17th and 18th century.

• Important technology innovation such as spinning jenny, water frame, power loom, and steam engine.
• British Global colonization brought them abundant raw material and guaranteed the market for output.
• Powerful navy supported British colonization and industrialization.

• Political Background: Agricultural industries needed protection as industrial manufactures did.

• Protection to Agricultural Producers: the focus of law switched from internal to worldwide. Before 1660, laws were set to prevent customers from getting “unfair price.” After 1660, laws benefited producers more than customers. For example, exporters got subsidy.
• The end of the war brought a lot imported goods. Falling commodities price hurt farmers and landlords harmfully.

The Corn Laws of 1815

The harvest of corn caused the decrease of corn price. Farmers’ incomes were harmed and led to the decline of landlords’ benefits. Protectionist suggested to set up the Corn Laws to protect farmers and landowners’benefits.

• Purpose of the Corn Laws: Keep corn price and output comparatively stable at the same time in order to prevent farmers’ loss from the price decreasing.

• Corn price significantly fell from 117s to 69s from June1813 to May 1814 due to the harvest. The harvest of corn made farmers lose money, which is ironic. (EXIBIT 1)

• Henry Parnell’s resolution:

• Want agriculture protection by increasing corn price and rent. Failed in 1814 with the end of David Ricardo’s disagreement that “the interest of the landlord is always opposed to the interest of every other class in the community.”

• Although the resolution was failed, the demand for agricultural protection was still very strong.  

• Protectionist: Protectionist’s aim was to keep a stable corn price and output. Neither making the corn price too high or too low.

• Farmers would be overwhelmed if corn price decreased. Many farmers levered to invest machine and land and they pay a fixed interest rate. Once the corn price fell down, farmers’ income could not even afford their rent.
• Even David Ricardo, a brilliant economist and one of the leading advocates of free trade in 19th century, thought protection was necessary. At least until the end of farmers’ current lease.
• Without an effective Corn Law, not many farmers were willing to farm. This will cause Britain depend on imported corns and could harmfully threaten its national security.

Against the Corn Laws: 1815-1845

As it was showed by evidence, the Corn Laws did not efficiently stabilize the price.

• Farmers Lost Faith: The Corn Laws protected corn price not lower than 80s, but it did not work.

• Landlords set up rent based on the average price of corn was 80 shearlings per quarter. If corn price could not stay above 80s, farmers would lose money. And the reality was the corn price was lower 80s for most of time during 1815 to 1844. (Exhibit 2)

• Free Trade was proposed: David Ricardo mentioned the comparative advantage, which means Britain should take the advantage of its advanced industries and use its commodities to trade for cheap imported corns.
• Anti-Corn Laws Association: Established by manufacturers in Manchester after the corn price jumped up from 55s to 73s due to the poor crop in 1837.

• Want a lower corn price. Workers needed less money to feed themselves if price of food is low. That means manufacturers could pay less wages and earn more money.

Robert Peel’s Decision

The potato famine of Ireland in 1845 forced the government to repeal the Corn Laws. This probably the only choice to prevent the increase of corn price during that time.