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Therefore, the whole retail profit which is gained on these Irish commodities when they are consumed abroad, is lost to the Irish tradesmen, and is gained by foreign tradesmen.
So that, if the expenditure of Irish absentees abroad be three millions sterling a year, the retail profit on the whole three millions is given to other countries, and lost to Ireland.
This, however, neither the facetious correspondent of the Morning Chronicle, nor the Ricardo lecturer himself, have been able to perceive.
The profits of the retail trade vary according to the nature of the commodities; perhaps from 5 or 71 per cent. to 50 or 100 per cent. on common articles of consumption, particularly most kinds of groceries, and on the lower qualities of linen-drapery, they are generally very moderate on fancy goods, especially of the higher class of fashionable articles, they are necessarily immoderate, in consequence of the great loss on what may remain unsold. I think the average profit of the retail trade, taking all its branches, may be safely estimated at 20, or perhaps 25 per cent.; thus, according to this estimate, there is a loss to Ireland, by absenteeism, of 600,000l. a year, but more probably 750,000l. a year, by the expenditure of three millions of Irish revenue abroad. But as it is chiefly the higher classes of society who become absentees, the profits on whose consumption of commodities considerably exceed the average rate of profits, it is probable that the loss to Ireland by absenteeism exceeds one million sterling a year.
The next question that occurs, is:
"Would not the population of the country be benefited by the expenditure among them of a certain portion of the rent which has been remitted?" This, really, is petitioning hard for some mitigation of Mr. McCulloch's doctrine; but the relentless philosopher will not budge an inch. He says,
"No; I do not see how it could be benefited in the least. If you have a certain value laid out against Irish commodities in the one case, you will have a certain value laid out against them in the other. The cattle are either exported to England, or they stay at home; if they are exported, the landlord will receive an equivalent for them in English commodities; if they are not, he will receive an equivalent for them in Irish commodities. So that in both cases the landlord lives on the cattle, or on the value of the cattle; and whether he lives in Ireland or England, there is obviously just the same amount of commodities for the people of Ireland to subsist on; for by the supposition which is made, the raising of cattle is the most advantageous mode in which the farmers can pay their rents."
Nothing can more strikingly portray the singular confusion.
of ideas which prevails in the Ricardo school, than this reply; in which, except the simple negation it begins with, there is not one single word that applies to the main point of the question. Every body knows that it makes no more difference to the landlord, whether he eats the revenue derived from the sale of the cattle in London, or in Dublin, than it does to the cattle where they are eaten and it is undoubtedly true, that in either case," there is obviously, just the same amount of commodities for the people of Ireland to subsist on;" but why the population of the country would not be benefited by the expenditure among them of a certain portion of the rent," remains unexplained.
Whoever will trace the progress of commodities from their production to their consumption, and note where, and to whom, the profits derived from the distribution of them fall, will be at no loss to perceive where the difference to Ireland lies, by the cattle being eaten in London instead of Dublin: but, if he should find any difficulty in the solution of this problem, every salesman in Smithfield, and every butcher in London, or in Dublin, can solve it for him.
To the next question, viz.
"Would it result from the principles laid down by you, that confining the question to those considerations which have been adverted to, it would be the same thing, in point of fact to Ireland, whether the whole gentry of the country were absentees or not, as far as these considerations go ?"
Mr. McCulloch replied:
"I think very nearly the same thing. If I may be allowed to explain, I will state one point in which I think there would be a small difference. I think, so far as regards the purchase of all sorts of labor, except that of mere menial servants, absentee expenditure is never injurious to a country. The only injury, as it appears to me, that a country can ever sustain with reference to wealth from absentee expenditure, is, that there may be a few menial servants thrown out of employment when landlords leave the country, unless they take their servants along with them; but to whatever extent menials may be thrown out of employment, if they have the effect to reduce the rate of wages, they will increase the rate of profit. In a country, however, where absenteeism has been so long prevalent as in Ireland, I should say that this circumstance cannot have any perceptible effect."
This, indeed, is at least consistent; for certainly, if the absence of one hundred landlords be not injurious, the absence of a thousand will not, or of ten thousand. But the Ricardo school is here (no unusual thing) at variance with itself. It is one of its distinguishing doctrines, that, "the benefit which is derived from exchanging one commodity for another, arises, in all cases, from
the commodity received, not from the commodity given. When one country exchanges; in other words, when one country traffics with another, the whole of its advantages consists in the commodities imported. It benefits by the importation, and by nothing else." Perhaps, gallant champion of the Morning Chronicle, you may be able to tell us what Ireland receives for the expenditure of absentees." Perhaps you may-but if you can, you can do more than I can." " 2
"The only injury," as it appears to Mr. McCulloch, "that a country can ever sustain with reference to wealth from absentee expenditure, is, that there may be a few menial servants thrown out of employment:" but he comforts us with the assurance, that, if it should "have the effect to reduce the rate of wages, will increase the rate of profit."
It is a favorite doctrine of Mr. Ricardo, "that the rate of profits can never be increased but by a fall in wages, and that there can be no permanent fall of wages but in consequence of a fall of the necessaries on which wages are expended" (ch. 7). Unluckily for the menials thus thrown out of employment, no fall of the necessaries on which wages are expended takes place; and, I am unable to discover what benefit it would be to Ireland, even if the rate of profit were increased, at the expense of the laborers.
But, it does seem to be questionable, whether a fall in wages, from whatever cause, can permanently increase the rate of profits. The competition which universally takes place in business will always prevent a permanent increase of the rate of profits. The discussion of this subject, however, would lead beyond the bounds which I have prescribed to myself.
The idea, that because absenteeism has been so long prevalent in Ireland, it cannot have any perceptible effect," may excite a smile, but requires no comment.
The next question that occurs is,
"When an agent wishes to remit, suppose 10007. of Irish rent to a landlord not resident in the country, and buys a bill of exchange in Dublin, has not that bill of exchange been actually sold, and does it not represent at the time, a previous exportation of Irish produce?"
To this knotty question Mr. M'Culloch replied;
"It may not represent a previous exportation of Irish produce; but it will either represent a previous or a subsequent exportation."
It is perfectly true that the bill "will either represent a previous or a subsequent exportation;" but which does it generally
Mr. Mill's Elements of Political Economy, ch. 3. sect. 5.
Morning Chronicle, Sept. 16th, 1825. Letter signed J. S.
represent? which ought it to represent? assuredly, a previous exportation; and if so, it cannot be "drawn against commodities that are to be exported from Ireland." The truth is, this previous exportation is a very troublesome thing to Mr. McCulloch, because the commodities which have been exported can never be the same commodities which are to be exported, or that must be exported.
The next question, and the last which I shall notice, is,
"Then in every instance in which a demand arises for a bill of exchange to remit rents, it is, in point of fact, a demand for exportation of Irish produce, that would not otherwise have existed?"-Mr. McCulloch replied,
"Undoubtedly."-It is here assumed, in the first place, that a demand arises for a bill of exchange to remit rents; and, secondly, that the demand for this bill of exchange is the cause of a demand for exportation of Irish produce that would not otherwise have existed. Let us examine these two positions.
First, a demand arises for a bill of exchange to remit rents : -very well;-now, a bill of exchange ought to represent a bonâ fide transaction: it ought to represent an exportation of Irish produce previously to its being drawn; and if there was a previous exportation, (without which no such bill ought to exist,) the buying of that bill cannot have been the cause of that previous exportation. I do not mean to say that bills of exchange are never drawn in Ireland in anticipation of shipments; but I do mean to say that it is not the regular, established mode of business. There are few factors who will not grant occasional facilities, and, in some instances, even standing credits, to correspondents in whom they have perfect confidence; but it is not usual to make such accommodations a system, and the basis of their whole business.
Secondly, it is assumed that a demand for a bill of exchange to remit rents is the cause of a demand for exportation of Irish produce that would not otherwise have existed.
The advocates for absenteeism seem to be strangely haunted by an exportation of Irish produce, which they fancy must necessarily take place in consequence of a demand for bills of exchange to remit rents. Now, always excepting his own particular consumption, which would be just the same at home, I should like to know, what Irish commodities are exported when a landlord is an absentee, that would not be exported if he were to stay at home.
I admit that an absentee's consumption of Irish produce in a foreign country is the cause of an increase of the exports of Ireland to that extent, but necessarily accompanied, let it be always remembered, by an equivalent decrease of imports into Ireland.
The subject seems hardly tangible: it is so perfectly visionary that it is like fighting a shadow. One can find no connection between the sale of a bill of exchange to remit rents, and a subsequent exportation of Irish produce; or conceive how it can be the cause of a demand for exportation that would not otherwise have existed, if any thing more is meant than the absentee's particular consumption of Irish produce; and I suppose it will hardly be contended that the whole revenue of absentees is expended in Irish produce. The demand for Irish produce exists just the same whether the landlord resides in London or in Dublin: when he becomes an absentee, the export demand is increased, and the home trade diminished, to the extent of the consumption of his own establishment; but the exportation for the supply of others remains the same: the English horses continue to eat Irish oats, and the English men continue to eat Irish wheat, butter, and bacon; and they would be supplied with these articles whether the landlords live in Dublin or at the Antipodes.
The sale of a bill of exchange to remit rents cannot be the cause of a demand for exportation of articles which would be exported whether there were any bills required to remit rents, or
But if I were to concede the point as respects the exportation of Irish produce to the full extent contended for by Mr. McCulloch, it would still leave the main point at issue undecided; namely, whether the expenditure of Irish revenue at home would not be more beneficial to Ireland than if it were expended abroad? Mr. McCulloch, with more courage than discretion, says, in so many words, "the revenue of a landlord when he is an absentee is as much expended in Ireland as if he were living in it.". There is no qualifying such language as this; it leaves no possibility of retreat. The fact is, Mr. McCulloch has fallen into an error. Finding that there is the same quantity of labor, and of capital employed in producing the commodities, whether they are consumed abroad, or at home, and that, consequently, it can make no difference, either to the landlords, or to tenants, or to the agricultural laborers, he has not thought it necessary to inquire any further; but, contented with these indisputable truths, too hastily concluded that absenteeism cannot possibly be injurious to a country. It is surprising that Mr. McCulloch should have overlooked, or not thought it worth while to consider, what occurs between production and consumption. Had he examined the subject of distribution, and remarked where the profits of the retail trade fall, when goods are consumed abroad, and when they are consumed at home, he could not have failed to discover that Ireland loses the whole of the profits of the retail trade on the whole amount expended by absentees.