Trade being an exchange of equal values, a nation that refuses to buy cannot sell, and all restrictions to imports constitute an obstacle to exports.

William Pitt, translated by Frédéric Bastiat
Complete Works, Volume 3, pages 309 to 326 (in French)
Covent Garden, May 15th 1844

Two speeches are translated here, one by John Bright and one by James Wilson. The former is an attempt at explaining how the enrichment of Lancashire through industry was not at the detriment of agriculture. The latter rests on this idea to show that the price system is complex and subject to various forces. Abundance and scarcity drive the prices but demand and supply as well. If it is true that scarcity (the aim of the corn laws) increases the selling prices to the benefit of landlords, the following decrease in demand drive them down. Therefore, commercial freedom that enables a “natural” price discovery is superior to restriction, which immediate effect is a price increase that is not sustainable. Thus, James Wilson tells us: “I maintain that the corn laws, or any other restrictive measures, are missing their target and cease, on the long term, to benefit the very people who were supposed to take advantage of them”.

Today’s quote is extracted from a speech pronounced in parliament eighty years before by Lord Chatham, cited by James Wilson. He was already exposing the absurdity of the mercantilist approach, which is attempting to get rich through exports while limiting imports. The wealth is created by trade, which is a two-way phenomenon of buying and selling; to suppress one of the terms of the exchange leads to the elimination of the trade itself and thus, to the elimination of wealth creation itself.

Leave a Reply

Your email address will not be published. Required fields are marked *