Chapter 10 Free Trade and the Foundations of British Power

In 1820, the British Parliament adopted a statement of principles designed to drive a series of changes that, as a result, led a century later to the First World War, with its tragic aftermath. Prompted by London shipping and banking interests centered on the Bank of England, Alexander Baring of Baring Brothers Commercial Bank, Parliament passed a statement of principle in support of what it called "absolute free trade".The concept was coined decades ago by the Scottish economist Adam Smith. The proclamation did not come into force until 1846, after Congress repealed the famous Corn Laws designed to protect domestic farmers.The repeal of the Corn Laws was primarily concerned with the interests of the City of London's financial and trading blocs, whose monopoly over world finance and trade gave them a decisive advantage, which they took to the extreme.If they monopolize world trade, "free trade" will give them an increasing advantage, at the same time trade less developed countries will pay the price.

Under the hegemony of free trade, British merchant banks made huge profits in the Indo-Turkish-Chinese opium trade.During the Opium War, the British Foreign Office blatantly asked China to open "free trade" ports to increase the interests of the British banking industry. In 1843, a new weekly journal, The Economist, reflecting the commercial and financial interests of the City of London, was launched.The purpose of this weekly magazine is to agitate for the repeal of the Corn Laws. In May 1846, under the leadership of Sir Robert Peel, the British Conservative Party pushed for the repeal of the Corn Laws.This was the beginning of a recession not only in British history but also in world history.The repeal of the Corn Laws opened the door to a large-scale trade in cheap agricultural products, with disastrous consequences for farmers in Britain, and elsewhere. The simple businessman's maxim of "buy low, sell high" rose to national economic strategy.Consumption becomes the sole purpose of production.

British native agriculture and farmers were devastated by the repeal of the Corn Laws, which lost their protection.Irish farmers also suffered, as the repeal of the Corn Laws led to a sudden collapse in food prices in their largest export market. The peasant famines and mass emigration in Ireland of the late 1840s—such as the appalling Irish Potato Famine of 1845–46 and its aftermath—were a direct consequence of Britain's "free trade" policies.Britain's earlier policy on Ireland was to prohibit Ireland from developing its own manufacturing industry and maintain an economically dependent status to meet Britain's "vegetable blue" needs.However, in the process of pursuing the so-called free trade, this "vegetable blue child" was overturned.

After 1846, the meager incomes of farmers in British colonial India competed with British and Irish farmers for the British "consumer" market.Wages in Britain fell in tandem with the price of bread.When providing subsidies to workers whose wage income is below basic human survival needs, British law allows the amount of subsidies to be linked to the price of bread.Therefore, once the price of bread fell, so did the British standard of living. Repealing the protectionist policy of the Corn Laws effectively opened the floodgates of the "cheap labor policy" throughout the British Empire.After cheap food first fell sharply, the only ones who benefited were the large international trading companies in London and the commercial banks that financed them.The gap between the rich and the poor has widened, the very few rich are opposed to the vast majority of the poor, and British social classes are further divided. This is "free trade." About the British free trade policy in 1851, American economics that once helped Abraham Lincoln design economic strategies Henry Carey commented:

The system is neither natural nor perfect, nor are the theories developed to explain undeserved poverty and misery.Ireland's misfortunes are held to be caused by overpopulation, though there are still millions of acres in the most productive part of the world that could be fertile with little irrigation, and though the people of Ireland are compelled to waste their labour, and Spend several times as much for clothes and steel... Overpopulation is the best excuse for the consequences of a wrong system, and so the error will continue until the wrong system is nearly over.In order to maintain this system, the price of labor in England must be kept low for a long time, so that it can have an advantage in freight and tariffs over India, Germany, and the United States...

For a long time the mechanical trade was monopolized by England, and she possessed talent which her rivals could not easily possess; at the same time, by inappropriate classification of the population, she maintained relatively low prices of capital and labor compared to her neighbours. ... Her businesses are large corporations, ready to thwart rivals who try to compete with her; she is constantly altering her financial arrangements, exploiting the colonial system, and rapidly passing her losses on to all the countries with which she is connected. Carey cited the example of the 1837 depression in the United States.This depression started with a banking panic. After the 1820s, credit in the United States was increasingly controlled by banks in the City of London, which completely deviated from Lister's concept of national economy.

In England, regarding the effect of free trade on labour, he wrote: "Women have replaced male workers, and even most of the underage children have replaced women, and working hours have been extended as far as possible. Parliamentary intervention is absolutely necessary." .He lashed out at the dire consequences of trying to use the machinery of monopoly to tax the world.The implications for morality are equally unspeakable.Even using sawdust as cotton...their general practice is to reduce the quality, with the aim of driving other countries out of the production of the same commodity, iron being an example of this.

Carey cites the repeal of the Corn Laws in 1846 as a policy watershed: Immediately after the repeal of the Corn Laws in 1846, Ireland showed its dependence on Britain, and let us first look at the results.Along with the huge amount of food imports, the lives of the Irish people were devastated.After losing manufacturing and commerce, the people of Ireland could only live on agriculture.Living off farming is barely enough, and it's up to her neighbors to please her.There is a difference between the price of Irish products and what is imported from the rest of the world, and the UK needs to subsidize the labor that makes the difference, and the UK has to be willing to pay that subsidy... Regarding the repeal of the corn law, the reason is wrong and the result is poverty , misery and starvation, it became the responsibility of the Irish landowners to keep the people alive, whether they worked or not; it was one of the conditions of re-establishing slavery in an unhappy country.A food exporting country has now become a major importing country.The largest market for Indian cotton is Ireland - the country that produces food for its own consumption only... The whole system is aimed at increasing the number of people mediating between producers and consumers... So a country like Ireland, if it produces iron at its full capacity and uses The exchange of iron for the garments of English cotton and wool saves about three times the labour.

Regarding the impact of the free trade hegemony of the British Empire on the world economy in the 1850s, the American economist Pease Smith, who was a strong opponent of the British free trade policy, concluded in his writings at that time: the free trade policy still controls the United Kingdom the legislative body.In fact, it sees the country as a whole as a great merchant doing business with the rest of the world, commanding a vast stock of goods not for use but only for sale.The giant strives to reduce the cost of production so that it can sell its goods at a lower price than its competitors, while seeing the wages paid to its people as a loss of profit.

Peasey-Smith compares the "state is one big merchant" doctrine of the British such as Adam Smith to the growing attention to national economic thought that emerged in continental Europe in the 1850s, especially with the idea of ​​the German customs union and Friedrich List's other national economic policies: their policy would be governed by the instincts of producers rather than merchants.As a measure of national prosperity, they looked only at the total volume of production, not the rate of profit in trade.Thus, large continental countries like France, Russia, and Germany joined together to form a customs union, or customs union—in effect a repudiation of the mercantilist ideas that had long dominated England.A learned and respected English writer, Joseph Kay, described: Apart from savage Russia and Turkey, Italy in enslavement, Portugal in disorderly government, and Spain in revolution, what England gained from the policies of Mercantilism Yes, "the aristocratic class is richer and more powerful than other countries in the world, the poor are more oppressed and poorer than other European countries, more numerous, less religious and less educated than other classes".

Thus, in 1851, a campaign to establish a dominant ideology in England began.In this battle of ideas, the false Malthusian idea of ​​overpopulation was used without confronting the fact that new production technologies were underinvested.Taking ruthless economic policy for granted and calling such a political dogma British liberalism.Essentially, it was not until the end of the nineteenth century that the concept of British liberalism was really defined, a concept that justified the development of an imperial elite that was stronger than ever.This elite class governs on behalf of countless vulgar and ignorant masses, because these ignorant masses cannot govern themselves. However, the fundamental purpose of the liberal elites in British government and public affairs in the 19th century was to protect and serve the interests of a small number of private power holders.In the late 19th century, these private powers were concentrated in the hands of a small number of banks and institutions in the City of London.