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How the British began a free trade bonanza
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The idea of more open, global trade has been sold as necessary for economic success. Yet today we hear calls to “build a wall” and to break up trading partnerships. Turns out we’ve seen the pendulum swing between free trade and protectionism many times before. Our series Trade Off looks at key moments when trade barriers have been built up or torn down and at globalization’s winners and losers.
Free trade. It sounds American, doesn’t it? The natural urge of the world’s most powerful, industrial nation. But, in fact, the movement toward lowering tariff and other trade barriers was born abroad. In Britain, to be precise. Specifically, in the city of Manchester, which is in the northwest corner of the United Kingdom. This was the world’s first industrial city, where the cotton industry was once so dominant that the place was called “Cottonopolis.” This was where the modern free trade movement grew out of a campaign against legislation known as the Corn Laws, which protected the interests of the landed aristocracy.
This is a story about class, cotton and corn.
The story begins in 1815 when the Napoleonic Wars ended and European trade resumed with a vengeance. Imports of corn (a catch-all term for grain) flooded into Britain. With the influx, prices collapsed, and in order to push them back up and to restore their revenues, the big aristocratic landowners engineered a series of laws slapping tariffs on all grain imports.
The Corn Laws, as they were called, did just that, but in the process they pushed up the price of bread with devastating consequences for the poor. Hundreds of thousands went hungry. Manchester’s emerging class of merchants and manufacturers — they were known as “the Manchester Men” — were incensed, and not only for humanitarian reasons.
“They didn’t like the high price of bread because it meant they had to pay higher wages to their workers to keep them going,” said Elizabeth Sibbering, a cultural tour guide in Manchester. “They could see the problems it was causing their workers. Also, many of the Manchester Men were self-made and didn’t appreciate the fact that the aristocracy were running the country. People who’d inherited all their land and money.”
The campaign to repeal the laws turned into a totemic struggle with Britain’s ruling class. Factory bosses and their workers, bankers and lawyers, politicians, churchmen and social reformers joined the crusade. But it was not only a battle against what were widely seen as greedy and selfish aristocrats; for the textile tycoons, in particular, it was also a drive toward free trade. They wanted other countries to scrap their tariffs and throw open their markets to British goods.
The case against the Corn Laws proved irresistible. The laws were repealed in 1846. Foreign corn began to pour into Britain. Much of it came eventually from the former colony that supplied the Manchester mills with most of their raw cotton.
“America was having a lot of innovations in its farming at the time on the prairies, and what this meant was that for the U.K., huge quantities of grain could be imported relatively inexpensively,” said Max Rangeley of the Cobden Centre, a free trade think tank, named after one of the leaders of the anti-Corn Laws campaign.
American grain was significantly cheaper than the stuff that British aristocrat landowners were growing. As they’d feared, the aristocrats’ revenues and power began to shrink, said Will Ashworth, author of a new book about the Industrial Revolution.
“The rapid influx of American prairie grain had a major impact on the social structure of Britain,” he said. “You saw the demise of the landowner and the rise of the British manufacturing class.”
But the repeal of the Corn Laws did not persuade the rest of the world to immediately follow suit. With the exception of a brief interlude before the outbreak of the Civil War, America, which benefited most from the repeal of the Corn Laws, did not embark on the same program of tariff scrapping.
“We think of America as being the great capitalist power, but in fact America was opposed to free trade right the way through the rest of the 19th century and all the way up to 1945,” said Adrian Wooldridge, political editor of The Economist magazine, which was founded in 1843 as the voice of the anti-Corn Laws crusade. “Britain was the first country to embrace free trade and to say: The best way to create universal prosperity is to have freedom of commerce and trade. Britain led that in a world where that was disapproved of by practically everyone,” Wooldridge said.
Britain may not have been as high-minded in embracing free trade as it might seem, however. Some historians suggest that the U.K.’s main aim was to exploit its industrial dominance, flood other countries with its manufactured goods, while they focused their energies on agriculture.
If that was the plan, it has, in the long term, spectacularly backfired: Britain today has a huge trade deficit; its manufacturing is a pale shadow of its former self, and more than half of its food (including grain) comes from abroad.
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