DUTIES ON COTTON AND WOOL. (Hansard, 6 April 1843)

§ Lord Monteagle
said, he rose, pursuant to the notice which he had given on a former evening, to move for accounts relative to the amount of cotton and wool imported during each of the last seven years, and the duties paid thereon. He understood that no objection would be offered to his motion; but still he thought it was right that he should state to their Lordships, as briefly as the nature of the subject would admit, his reasons for calling their Lordships' attention to it. He had last year endeavoured to impress on their Lordships how much better it would be to remove the duty on the importation of wool and cotton, and thus, by benefitting the woollen and cotton trade, raise a larger revenue in other ways than they derived from the tax on those articles. He still maintained the same opinion that he held on the former occasion. This question was not, in his opinion, difficult to be dealt with. It was unlike the question of the Corn-laws. There was no adverse interest here to deal with. The only interest that could at all be considered adverse was that of the public, as it related to the revenue. Looking to the article of cotton, it was evident that there was no home interest to protect. With regard to wool, no good argument could be adduced against its importation; for it had been proved, from the experience of 1828, to the present time, that the manufacturer himself was not more interested in procuring wool cheap than was the British wool-grower in procuring a better and readier market for his produce. He should, in the first instance, confine himself to the article of cotton; and he should endeavour to show the dangerous consequences that had flowed, and that were likely to flow, from the imposition of a duty on the importation of cotton wool. Undoubtedly the duty on cotton produced a large amount of duty, but he would call the attention of their Lordships to the dangerous con- 473 sequences which flowed from that duty. If we had no foreign trade, the duty of 5–16ths of a penny would be of less importance than it now is; but the great importance of the duty and the danger, and if he might use a stronger term, the calamity which impended over the trade of this country, arose from the fact that we had great foreign trade in manufactured cottons. It was a duty paid upon raw cotton introduced into this country, and there was no drawback on the manufactured cotton exported. The manufactured goods of England, therefore, had to meet other countries in foreign markets at a disadvantage of the amount of duty paid here on the raw cotton. The duty was laid upon the raw material, and it was carried through every stage of the process of manufacture, and it was enhanced at each stage by the ordinary rate of interest and of profit. Therefore, the effect of the duty in raising price, was by no means measured by the amount of duty paid to the Customs. Another consideration of importance he would mention. If they looked at the papers laid before Parliament, they would find that, from some cause or another, a considerable change had taken place in the nature of both these articles exported. Whereas in former times the larger proportion of the articles exported were manufactured goods, the great pro portion now was of unfinished articles. It was obvious that the duty on the raw material pressed more severely on the unfinished article, than on the article in the finished state. The duty was therefore larger and a more oppressive burthen to the trade of this country now than it was a few years ago, and consequently we experienced a more active competition in our foreign trade than formerly. On comparing our exports of cotton goods, between the years 1840 and 1842, he found a falling off in the declared value of 3,600,000l. He had not the amount of the official value, so that he could not tell the quantities; but it was evident that in the markets of the world, less manufactured British cottons were sold in 1842 than in 1840. The enormous foreign competition was greatly prejudicial to British interests. In what branches of manufacture, however, was it that we could stand foreign competition best? It was in the higher description of articles, into which the improvements of machinery largely entered. In the coarser articles, into which these improvements 474 entered but little, foreigners could more easily enter into competition with us. What effect, then, had this tax? It became the most burthensome in proportion to the nature of the articles in which the foreigners could best compete with us. The tax was as nothing on the higher class of articles, but was most oppressive on the coarser class. Let him take the case of America. The coarser articles the Americans can produce with success at a lower price than we can. Now, let their Lordships see what was the condition of foreign countries with which we had to stand in competition. It was true that in France there was a duty on the importation of raw cotton, but there was a bounty on the exportation, and he would call it a bounty rather than a drawback, because it was more than the amount of duty paid on the raw material. In the third or neutral markets, therefore, to which we exported our manufactures, they were more than equal to us, having this bounty over and above the duty. In the Prussian league, embracing the whole of the Ger man States, they were too wise to impose a duty on the raw material. They exported goods and "they produced largely for their own consumption, and yet we expected our goods to meet theirs upon equal terms. In Switzerland it was the same. In the United States of America, they had the raw materials on the spot, and could it be sup posed that we could long continue a successful competion with them, if we continued to impose a duty on the raw material? A diminution of our foreign trade must ensue, and it could not take place without pressing severely on a great portion of the manufacturing population of this country. Perhaps a little more daylight had been thrown upon their condition, but in what degree there were signs of permanent improvement it was not for him to say; but he did say that the Legislature was not justified in aggravating that distress in any the slightest degree. The Legislature and the public were complaining of adverse tariffs, but when they put a duty of this kind upon our own manufactures, and compelled our manufacturers to pay that duty before they could export, we ourselves were creating an adverse tariff, we were aggravating the mischief which came from foreign powers of which we were the first to com plain. It was calculated that the wages paid in the cotton trade amounted to 475 18,000,000l. a-year. This was a most enormous amount, and their Lordships could imagine that a reduction of 12 per cent, would create an immense abridgment of the comforts of this large body; and the falling off of 3,600,000l. a-year in the value of the article exported, must produce that reduction. In the distressed state of the manufacturing districts, he found the key to the immense falling-off in the revenue of the country. This case had been discussed in former Parliaments and in another House, and if he wished to condense all his observations upon this part of the subject, he would do so by reading what was then said. In 1836, the duty on raw cotton was thus spoken of in the other House:— With regard to the duty on the importation of raw cotton, he would just state, that in the year ending 5th April, 1835, the duty collected upon that article, which undoubtedly was one of the main sources of the prosperity of the country, amounted to 374,000l.; and in the year ending the 5th April, 1836, the amount levied was 400,000l.; the rate of duty being, he believed, only five-sixteenths of a penny per pound. But it hehoved the House to bear in mind that the manufacturers of this country were exposed—and so long as peace continued, they would be exposed—to vigorous foreign competition. He, therefore, would say, that to levy such a duty as 400,000l. upon a raw material which formed the staple of our chief manufactures was most unwise. On the one hand, no advantage could be gained from so small a revenue; on the other, it would be most dearly purchased if by retaining it we should increase the advantages of an increasing and successful competition by foreign countries. That was the statement of the right hon. Gentleman, the present First Lord of the Treasury. It was not for him to say how much of the public revenue could be abandoned, but he said, that if there were means for abolishing duties, there were no duties which could more advantageously be repealed than the duties on raw materials. All the general objections to the duties on raw materials applied equally to the duty on the raw material of wool, but there were some peculiarities on that duty. He was speaking in the presence of the noble Duke (the Duke of Wellington), who, in 1828, held communication with different parties on this trade, and understood it, and of the noble Lord, the President of the Council (Lord Wharncliffe), whose connexion with Yorkshire made him fully acquainted with the trade. 476 He might remind their Lordships, that the wool trade was composed of two separate and entirely different branches: with one alone he was about to deal; and it was that which usually paid the most important part of the duty, the wool used in the manufacture of fine cloths. So far from the introduction of foreign wool having displaced the wool of the home growers, they had benefitted by the reduction of duty. The legislative proceedings with respect to the duties on wool furnished an example of the advantages of applying sound principles, and of adhering steadily to what was called the principles of free-trade. No doubt it appeared rational in former times to prohibit the export of wool, and to put high duties on the import; that rule had been since departed from, and both the British and foreign trade had improved, notwithstanding an increased export of British, and an increased import of foreign wool. The recent state of our foreign woollen trade showed that we had met abroad with an increased and active competition, which we were unable to cope with. The returns showed, first, a diminution of the quantity of wool exported from this country, and next, a diminishing import trade. It appeared, that on sheep's wool imported in 1842 the amount of duty paid wag 130,000l., whilst in 1843 it was only 95,000l., the reduction in the quantity being from 53,000,000 lbs. to 44,611,000 lbs. The export trade showed a reduction also. The gross amount might continue to increase, but, there was a decrease in those articles on which the highest duty was paid. The exports of cloths from this country, comparing 1833 with 1840,—and he admitted this was not altogether a fair comparison, for it was comparing one of the highest with one of the lowest years—had fallen off in the finer articles which were manufactured of foreign wool, from 352,000 pieces to 104,000 pieces, while in the trade in articles made of English wool the falling off had only been from 760,000 to 604,000 pieces. The alteration in the declared value had been, in round numbers, from 3,000,000l. to 2,000,000l., showing a falling off of one-third in our foreign trade. Now, what had been the state of things in France during the same period? If they compared the condition of the trade in a country where there was no duty upon this article, with its condition in a country where a duty was imposed, 477 their Lordships would be able in some degree to judge of the consequences of imposing such duties. In the period during which the British woollen trade—once our greatest staple manufacture—had fallen from 3,000,000l. to 2,000,000l., the French woollen trade had increased from 555,000l. to 1,064,000l. The English trade, burthened with a duty on the raw material, had fallen off one-third, whilst the French trade, which was free from duty, had doubled. We were accustomed to say, that we had peculiar advantages; but, presuming that we had only equal advantages, we should have great difficulties to overcome, on account of the difference between the two countries in respect to the duty on the raw material in one country and not in the other. He had stated that 18,000,000l. were expended in wages in the manufacture of cotton in this country. He believed the calculation of the cost of labour used in the woollen manufacture was between 8,000,000l. and 9,000,000l. Let noble Lords imagine what a mass of the comforts of life to the humbler classes was contained in this amount of wages. Let them consider how that amount might be augmented but for these most impolitic duties on the raw material. In advocating this reduction he was only supporting the principle adopted last year in the new tariff. That principle was to reduce the duty on all raw materials, so that they should not exceed 5 per cent. Now the duty on the lower descriptions of wool, owing to the dirty state in which they were imported, greatly exceeded this amount. The amount of wools imported from South America was much augmented, and, in consequence of the low character of the wools, the duty approached to 13 per cent. The duty was levied by the weight, and, though it was only one-halfpenny per lb., yet the value of the raw material was but 4d. He did not expect any pledges on the subject from the Government, but he hoped that the case would be duly considered, and he was persuaded that very few steps could be taken by those in power more satisfactory to the great bulk of persons now struggling against difficulties, than to take off the duties now levied on raw materials; they would then see, that where Parliament had the power of giving relief, and of enabling our manufacturers the better to compete with foreigners, it had not failed in its duty. The noble Lord 478 concluded by moving for returns of the quantities of cotton and wool imported during the last seven years.

§ The Duke of Wellington
regretted that his noble Friend the President of the Board of Trade could not be present to speak upon a subject with which he was necessarily much better acquainted than himself. He admitted that the noble Lord (Lord Monteagle) was perfectly justified by the practice of the House in the course he had pursued, only he lamented that he was not so well qualified to follow the noble Lord through the various topics to which he had directed the attention of their Lordships. The noble Lord had said that he did not expect from the Government any declaration of their purpose with respect to the tax; but the noble Lord had said, likewise, that it could not be continued without inconvenience to trade. Their Lordships would, however, remember that it was a tax which had existed for many years; and he rather thought that it was not quite so injurious as might be imagined from the speech of the noble Lord, He wished that the noble Lord, instead of calling for return and accounts of importations for only a few years, had carried back his motion for the last nine or ten years; for bad he done so, it would have afforded a fairer, as well as a clearer view of the subject. The result would, in that case, have been some what different; nevertheless, the general argument of the noble Lord deserved consideration. The noble Lord had commenced by adverting to what passed in the last Session; and true it was that the noble Lord had then recommended that taxes on the raw material should either be repealed or reduced. But the object of Parliament and of the Government was, at that time, to provide for a deficient revenue, and to equalise, if possible, the revenue and the expenditure. With this view measures were taken to lower the duties on several large articles of import, and to establish a new tariff. It was certainly desirable to proceed in this matter with the greatest caution, in order to take care that, in the endeavour to supply a deficit, that deficit were not made more considerable. At all events it was important to raise the revenue to the expenditure; but the course proposed by the noble Lord, instead of supplying an increase, would have caused a diminution in the revenue to the extent of 800,000l. 479 It was thought not desirable, last year, to add that sum to the 1,200,000l. already wanting, and this year the diminution would be to nearly the same amount. He begged to remind their Lordships of the state of the revenue at this moment, and he entreated them to do nothing that might tend to break down a system which only last Session had been established, and a perseverance in which would at least afford a chance of the repeal of the income-tax, at the end of the three years for which it had been imposed. He begged the House to wait a little while, until the precise state of the income and the expenditure was known. If in another place, to which those matters peculiarly belonged, it were thought fit that this or any other tax should be reduced, he was sure that their Lordships would be too happy to concur in such a proposition. But he entreated their Lordships not to encourage an idea of the reduction of duties on different articles until the general state of the income and expenditure had been ascertained. He confessed that he did not think the article of cotton one which particularly required a reduction of duty; at the same time he was perfectly persuaded of the truth of what the noble Lord had advanced respecting the operation of the duty on different stages of the manufacture of the article. He begged, with reference to the papers moved for, to show that in reality, in the course of years during which the duty had existed, that there had been a gradual increase, and a gradually growing increase, of the trade of the country in the article of cotton. The import of cotton wool in 1833 had been 330,606,000lbs., and in 1842 it had ascended to 532,798,000lbs., or on an average of nine years it was420,639,0001bs. In the same way the declared value had risen from thirteen millions to sixteen millions sterling. The inference was, therefore, that the cotton trade had at least not been overborne by the amount of duty. It might perhaps be much better if there were no duty at all upon cotton wool, but as it was, it seemed necessary to maintain it, especially as the trade had so prospered under it. As to sheep's wool, there was this fallacy which ran through the speech of the noble Lord—that he omitted to state that the imports of colonial wool were subject to no duty, and colonial wool formed a large proportion of the fine wool introduced into this country. 480 Upon the whole, he was of opinion that the returns as moved for would not give a fair view of the case; and, as he was desirous that every information upon the subject should be in the hands of their Lordships, he should move to extend the proposed returns over ten years, that colonial wool should be distinguished in them from foreign wool, and that they should also state which kind paid a high and which a low amount of duty.

§ Lord Monteagle
was quite ready to withdraw his motion, and to substitute for it that of the noble Duke. It would answer his purpose better to have the returns for ten years, only he wished to save trouble by requiring them for only seven years. He also wished that the countries from which the articles were imported should be distinguished.

§ The Duke of Wellington
assented to that suggestion.

§ Lord Ashburton
observed, that since the last war the attention of Parliament had constantly been called to the subject of the tax on cotton and wool. He had himself always looked with suspicion at the tax on the raw material, and he thought it was at all times necessary to watch most cautiously and carefully that it did not press unfairly on the manufacturing interest of the country. In principle all such taxes were to be deprecated, and he believed they had only been allowed to continue, especially the tax on raw cotton, because the manufacture of the article had continued, year after year, to increase. The consumption of raw cotton was now nearly double what it was at the close of the war; and even the consumption of 1842, as compared with 1841, presented an increase. The consumption of 1841 was 440,000,000lbs., while that of 1842 was 477,000,000lbs. In fact, although there had been an occasional fluctuation, there had been the increase he had stated, since the war. When the noble Lord himself was Chancellor of the Exchequer, the consumption fell from, in 1833, 430,000,000lbs., to in 1839 350,000,000lbs. It was not fair to take the decreased consumption of any one year as a ground for altering the duty, or the noble Lord ought to have reduced it in the latter year. The noble Lord had founded his statements on the decrease according to the declared value. But the declared value was not the official value. The declared value might fall off 481 considerably with out any corresponding decrease in the official value; because the official value had reference to the quantity, the value being fixed and settled, while the declared value denoted the actual value of the thing in the market as declared by the exporting merchant. It was well known that there had been a great decline in the value of all articles of manufacture, more especially cotton—although a greater amount of cotton had been worked up, and therefore a greater number of manufacturers employed. It was, therefore, obviously not just to connect the distress of the people with the falling-off in the declared value. The noble Lord had also observed that the tax bore heavily in proportion to the less amount of labour bestowed in the manufacture of the article. The tax, therefore, would bear more heavily on yarn than on manufactured goods. The export of yarn had increased in January, 1843, to 7,700,000lbs. from 7,200,000lbs., in the previous January. Here was an additional 500,000lbs. precisely where the tax was most severely felt.

§ Lord Monteagle
observed that, during the periods to which the noble Lord had referred, the money amount of wages paid had fallen off in a greater proportion than the amount of the declared value of wool. With regard to these duties, he begged to remind their Lordships that in 1824, when a reduction of the duties was made, the exporters and importers were put on an equal footing. In 1828, however, when another reduction was made, the inequality was restored, and then Lord Bathurst held out a hope that at the earliest possible opportunity the parties should be relieved.