1902 Encyclopedia > Corn Trade

Corn Trade




CORN TRADE. The effect of the opening of the ports of the United Kingdom freely to the agricultural produce of all parts of the world has been to extend the foreign trade in corn, both more rapidly in point of time and more largely in measure than could have been pre-conceived. This result was promoted by the more liberal policy which began at the same time to be generally adopted with respect to the export and import of grain, and by the active efforts of the great corn-producing countries not only to extend their cultivation, but to increase the facilities of transport both inland and seawards. The consequence is that a commodity which, though of the first necessity, had long been the most difficult to move under the prevailing laws and conditions of trade, has become one of the princi-pal articles of commerce. It is carried as far as any other article of merchandize, and yet is greater in bulk and in difficulty of transport than any other principal commodity with which it may be compared in value. It may be said, indeed, that if the immense imports of foreign grain into the United Kingdom, during the last thirty years, could have been foreseen when the British corn laws were repealed, the most ardent believer in the creative and compensatory-resources of free trade could scarcely have reconciled the figures with anything short of an overwhelming decline of British agriculture. Yet the home production and trade of corn have not lost ground during this period, while agricul tural improvement has made more progress, and the total value of the products of the soil been more signally increased than in any previous thirty years that could be named. We propose in this notice to show the progress of the

foreign trade in corn, and the cnanges in the principal sources of foreign supply since 1846, as well as the effect of this unlimited competition on British agriculture and on the home trade in corn, and then to add some information as to the relation of home and foreign supply, expenses of transport, and other incidents of the trade in various principal centres.
Barley.
Quantities and Sources of Foreign Supply of Corn in 1841-45 and 1871-75.—The following are the average annual quantities of com and flour imported into the United Kingdom in the five years preceding 1846, by the various countries which were then importers :—

== TABLE ==

The most cursory observation of these figures will disclose results surprising to the present generation. It is to be remarked, for example, that down to 1846 Prussia and other countries of Germany supplied more than one-half the whole import of wheat into the United Kingdom, that the little country of Denmark had greatly more traffic in export of grain to British ports than the whole Russian empire, and that the transatlantic trade in wheat and flour or other corn with the United Kingdom, apart from Canada, had barely begun to exist. Nor can it fail to be noticed how wide-spread the commerce in corn had become even in these circumstances, and that it was usual to send cargoes of wheat and flour to England from places so distant as Chili and La Plata, and Australia and the East Indies.
The statistics of the corn tiade have become much more voluminous since 1846, and it is necessary to give some distinction to wheat and wheat flour, and the sources of their supply. It has also followed from the great trade in foreign grain that the measure should be weight, and not quantity in local bushels or quarters. The Board of Trade for many years has thus given its returns of wheat and other raw grain, as well as meal and flour, in cwts. The cwt. would be equal to two bushels of 56 lb; but the weight of a bushel being usually 61 lb, the quarter (or eight bushels) is 448 lb. The following are the average annual quantities of corn and flour imported into the United Kingdom in the five years 1871-75 :—

== TABLE ==

The import of foreign wheat and flour into the United Kingdom has increased more than sevenfold, and of all foreign grain nearly ten-fold, in the thirty years of free trade. The United States, from a small and unsteady commerce in grain, have risen to the first place, not only in wheat and flour, but in Indian corn, of which they contribute two-thirds of the supply. Russia stands second on the list, the great bulk of her export of wheat be-ing now received from the southern ports of the empire. Canada, while scarcely sustaining its former supply of flour, has increased its average annual export of wheat to the United Kingdom from 110,000 cwts. to 3,230,000 cwts. The trade in corn has not only been extended over vast territories in various quarters of the world which thirty years ago were comparatively uncultivated or absolute deserts, but no former exporting country appears to have lost ground. All have shared more or less in the general progress, though a decline in wheat is perceptible from Denmark and other countries on the northern verge of the wheat region, which now require more for home con-sumption. The increased import of barley, which is not so great as that of wheat, but still remarkable, comes chiefly from Northern Europe and France. It will be observed, from the figures denoting the ratio in which foreign supplies were taken up in the home consumption and the overplus sent to other markets in the two quinquennial periods above compared, that the re-export of foreign grain and flour from the United Kingdom has not increased with the magnitude of the supplies, but on the contrary has much diminished. This result can only be attributed to the organization of the trade, and the intelligence with which this vast move-ment of grain is directed.

Effect of Foreign Competition on British Agriculture and Corn-Production.—The acreage of the various crops, and the numbers of live stock in the United Kingdom, ar,e now given with all desirable accuracy in the annual agri-cultural returns, for which the country is indebted to a motion in the House of Commons in 1862 by Mr Caird.

Previous to the adoption of free trade in corn, this in-formation was a subject, not of official inquiry from farm to farm, but of general estimate, which could not but err considerably. There is thus a difficulty in tracing the exact effect of a free and increasing import of foreign grain on the domestic tillage ; but the difficulty is not so great as might be supposed, nor is it of much impor-tance in view of the authentic data available during the greater part of the period in question. M'Culloch, in his article on the Corn Trade, in the eighth edition of this work, estimated the acreage under wheat in England in 1852-53 at 3,000,000 acres, in Scotland 350,000, and in Ireland 400,000 acres—or 3,750,000 acres for the three kingdoms. The agricultural returns for 1867 gave 3,640,000 as the total wheat acreage of the United King-dom. M'Culloch's estimate of the extent under barley in England, viz., 1,000,000 acres, was probably wider of the mark than his estimate of the area of wheat crops. The agricultural returns for 1867 at least gave 2,000,000 acres of barley in England ; it must be remembered, however, that in the intervening years British barley had been in increasing demand for malting, and had been commanding higher prices relatively to the prices of wheat. There is a medium authority, between M'Culloch's estimate and the undisputed agricultural returns, in the estimates of Mr Caird, who had peculiar advantages of ascertaining the acreage under every condition of crop in England as early as 1850. The result of his estimate of the agricultural arrangement in England and the ascertained facts in the returns of 1867 was that, in the interval, there had been a diminution in wheat of 280,000 acres, in oats 450,000, in beans and pease 320,000, and in bare fallow 247,000— in all, under these heads, a diminution of 1,297,000 acres; but, on the other hand, an increase of barley 500,000 acres, of root crops 300,000, and of clover 20,000—in all an increase of 820,000 acres, leaving a net diminution under tillage of 477,000 acres, which may be supposed to have gone into permanent pasture. In Scotland and Ireland the effects on the area of tillage were more marked than in England. The production of wheat fell off in these countries about one-half. The loss in production of wheat in Scotland appears to have been recovered by a nearly equal increase in barley and oats ; but in Ireland, besides the decrease in wheat, there was a decline of about one-sixth both in barley and oats. The returns conducted by the registrar-general of Ireland since 1848 show that the estimated yield of corn of all kinds fell from 11,500,000 quarters in 1857 to 8,800,000 quarters in 1866, and of potatoes from 3,500,000 to 3,000,000 tons in these ten years. But in the same period there was a great increase of live stock—120,000 head of cattle, 1,000,000 of sheep, and 278,000 swine. The growth of flax and of various green crops had also been extended ; and the number of population depending upon agriculture had been diminished by a constant emigration to England and Scotland and abroad. There can be no doubt that the greatest change under free trade in corn fell upon the agriculture of Ireland; but there is no reason to believe that the total value of the produce of the soil in Ireland lost ground, while it is cer-tain that in the later development it has greatly increased. The annual produce of land is shown in one of Mr Caird's tables to be £52, 17s. in Ireland, £60, 12s. in England, and £66, 15s. in Scotland, per head of all persons owning, farming, or assisting in the cultivation of farms.
Kingdom. Mr Caird, at the request of the Statistical Society of London, prepared a paper on " Our Daily Food," which was published; and he contributed a second paper on the same subject, which appeared in the Journal of the Statistical Society, March 1869. Both of these papers contain valuable information.
The diminution of tillage in the United Kingdom under
unlimited competition with foreign corn is so small as, when closely examined, to become almost imperceptible. For it must be borne in mind that the extension of large towns in these thirty years has occupied in building area alone what would form a considerable county, and has been spreading market gardens over always increasing spaces of what was formerly agricultural land. What has happened is that the poorer class of lands, from which crops of wheat and other corn were systematically taken, have been turned partially into pasture, and in still larger proportion into a more various and profitable culture both of white and green crops, barley in some instances having the preference over wheat, and bare fallow in others being economized in favour of the general productive interests of the farms. Nor have the British farmers hesitated to extend greatly their wheat area from time to time, when the state of supply and the rate of prices gave a necessary stimulus. After deficient harvests and higher prices, the acreage under wheat was increased from 3,640,000 in 1867 to 3,951,000 in 1868, the harvest of which latter year was so bountiful that, what with the increased acreage, the larger average crop, and the greater weight per bushel of the finer grain, the total produce of wheat was 16,436,000 quarters of 488 lb as compared with 9,380,000 quarters in 1867. The increase of one harvest, indeed, was equal to one-third of the total annual consumption of home and foreign wheat. The average price, which in May of that year, when it reached its maximum, was 73s. 8d., had fallen in December to 50s. Id. The acres under wheat in Great Britain have fallen from 3,630,300 in 1874 to 2,994,958 in 1876, but the acres under barley have increased in the same period from 2,287,987 to 2,533,106, and under oats from 2,596,384 to 2,789,583.
If the price of corn under free trade be considered, it will be seen, indeed, how little reason there could be for any material displacement of the domestic production ; for though there has been a small decline of the price of wheat, it has been more than met by the increase of the price of barley and oats, to the surprise of those alarmists who forget that corn can nowhere be produced without much cost, that nowhere is the average produce per acre so great as in England and Scotland, and that to its cost of production in the most fertile or distant regions there have to be added freight and other charges, besides the ordinary rate of mercantile profit. This is clearly shown by a com-parison of the septennial average prices of grains, returned in the Gazette by the tithe commissioners. In the 6even years ending Christmas 1846, the prices per imperial bushel were—

== TABLE ==

The average Gazette prices per imperial bushel in the seven years ending 1875 were—

== TABLE ==

When the various elements of agricultural improvement are taken into account—amelioration of the soil by drainage and manure, better methods, improved implements, and not least (since this has involved but little capital outlay) the greater economy, speed, and safety with which harvests are gathered, as well as sent to market—the production of wheat in England must be held to be as profitable now as it ever was, though the greater consumption and the rise in the price of barley have made that grain a more remunerative crop than wheat on soils suited to the produc-tion of fine quality.
This would not in itself account, however, for what all are cognizant of, viz., a great increase of agricultural pros-perity since 1846 ; and the truth is that the free trade

policy, and the general movement with which it was asso-ciated, opened an extraordinary demand for other farm produce than corn, of which our agriculturists were not slow to avail themselves. The estimate of live stock in the United Kingdom, antecedent to 1846, did not approach the accuracy to which M'Culloch, by his careful analysis, had reduced the estimate of acreage under corn and its produce. Conjectural enumerations of the various kinds of live stock were current which, on the first agricultural census, were found to have been almost double what could possibly have existed. The agricultural returns will reduce all uncertainty of this kind to a minimum in future. But there has been no uncertainty as to the increasing value of live stock and its produce on farms, or as to the remarkable degree in which this appreciation has tended to modify and enrich the agricultural system of the kingdom, during the whole period of free trade. The price of meat, of dairy produce, and of wool, as well as other minor articles in the same category, has increased at least 50 per cent. ; nor has there been any sign of abatement in this rise of value, notwithstanding increasing imports of foreign live animals, and of preserved and more or less manufactured produce of foreign live stock. Mr Caird in 1868 estimated the annual value of home produce of corn consumed at £84,700,000; of the foreign supply of corn consumed at £25,000,000 ; of home beef and mutton, £47,200,000 ; of foreign supply, £6,500,000 ; of home butter and cheese, £30,100,000 ; of foreign supply, £8,400,000. And this does not include wool (£8,000,000), green crop not used on farms, and various other considerable articles of domestic farm produce, which have, and always must have, a great superiority in English markets.

Relation of Home and Foreign Supply.—Since the home produce of corn stands in the general proportion to foreign supply of 84 to 25, the yield of the domestic harvests continues mainly to regulate price, and in conse-quence also the amount of import for home consumption. One or two successive inferior harvests in the United Kingdom are accompanied with a rise of price, amounting in extreme cases to 20s. or 25s. per quarter of wheat. These higher prices bring out more extensively the surplus pro-duce of other countries than lower prices would do; but with fairly abundant domestic harvests, and the resulting lower range of prices, the import from abroad does not abruptly cease, but continues fully equal to the supply of the domestic consumption, on an equilibrium of value, which appears to have satisfied on the whole both domestic and foreign producers. According to all the authorities on the subject, the consumption of bread in the United Kingdom does not vary much from one year to another, and certainly does not vary in the ratio of the price of bread. The difference, however, between a 6d. and 9d. quartern loaf is so considerable that it must have some effect in the house-hold economy. In 1863, when the price of bread was at the highest, the average annual consumption of 20,800,000 quarters of wheat in the previous six years fell to 19,780,000 quarters, which is about equal to a fall of 1 per cent, of consumption for 10 per cent, rise in price. It is difficult to give any mercantile problems of such magnitude a definite solution, but the necessary consumption of corn in the United Kingdom, under all variations of price, rests on a solid basis; and given the number of acres under crop, and the average produce per acre in weight, it would not be impossible to determine the amount of foreign corn for which there would be an effective demand in the United Kingdom in any year within calculable ranges of value. The trade has been solving these questions in its own practical way. Many vessels laden with corn, from trans-atlantic and other distant countries to England, are stopped at Cork or Ealmouth for orders from the consignees in
England as to what port in Western Europe they shall dis-charge at. It is necessary to read the markets to the latest points of time; and imports are made into the United Kingdom for re-export as well as home consumption. The great markets for import of corn in Western Europe exhibit little variation owing to the convenience with which supplies may be sent from one port to another; but even in this limited though densely peopled sphere, there are elements of disturbance in supply and demand which have to be taken into account. France, for example, has pro-bably the largest wheat area, in proportion to population, of any European country; and yet the average produce of wheat per acre in France is so low—15J bushels—that a bad harvest makes France a large importer, and an abundant harvest a large exporter, of wheat and flour. An increase of 1 bushel per acre in France is equal to 2,000,000 quarters. Were the average produce of wdieat, by any better system of culture, to be increased in France from 15 to 18 bushels—a not immoderate attainment—she would be able alone to supply all the requirements, so far as they have been developed, of the United Kingdom. This sur-prising effect of the difference of a bushel or two per acre in the average yield of any harvest applies equally to all the large exporting countries, such as Russia or the United States. The latter country was even an importer of wheat, from England so late as 1859, but the great extension of agriculture in the Western States and in California, and the extending practice in the Southern States of raising corn as well as cotton, may be believed to have placed a similar abnormal occurrence at a great distance.
The question naturally arises how, from such widespread sources and under such immense effects of good or bad harvests in increasing or diminishing supply, the trade is so adjusted as to produce any equable degree of value and steady production of grain? Of this apparent difficulty there are two explanations—first, the regions favourable to the culture of wheat in both hemispheres are so extensive that it seldom or rather never occurs that there is a general abundance or general failure of harvests. Nature distributes this inequality so variously that the more the commerce in corn is extended, the less is abundance or scarcity of harvest felt in any one part of the world. And secondly, the large corn-exporting countries, though they may have no market so extensive as the United Kingdom for their surplus produce, have many other markets, not only in Western Europe, but within their own more im-mediate spheres—the ports of the Black Sea, for example, having the countries of the Mediterranean to supply, and the United States not only the inequalities of production within its own vast area, but parts of Canada, the West Indies, Mexico, and South America.
Cost of Transport.—Harbour dues, freight, and insurance form an important element in the transport of grain. Their amount affects directly the price accruing to the producers, while at the same time they require careful calculation on the part of the merchants or shippers. Where large crops have to be moved many vessels have to be chartered beforehand, and if the rates fixed in the charters be lower or higher than what turn out to be available rates of freight in the ports, the charterers will experience an advantage or disadvantage in the price of the grain, and the sellers of corn vice versa. This difficulty is chiefly felt in the more distant voyages. From Antwerp, for example, the average expense of carrying corn to England is about Is. to Is. 6d. per quarter. From Spain, in addition to a difficult inland carriage, the average freight to England is about 4s. per quarter. In the United States, where corn is carried hundreds of miles by railways and canals, and over 3000 miles of sea, the cost of transport bears a large proportion to the price at which the farmers can afford to sell or the merchants to buy—the latter being always ruled by the price to be realized in the great centres where corn, alike of near and distant production, finds a common level of value. At San Francisco, though the question of transport is almost wholly maritime, there is annually much speculation, turning chiefly on rates of freight. The harvests of California and Oregon yield a surplus produce of from 700,000 to 800,000 tons. An immense shipping is thus required at San Francisco every autumn and winter, and the rates of freight to Europe vary as much as from £2, 15s. to £3, 10s. per ton. (E. SO.)



Footnotes

1 Compiled from the parliamentary returns of "Revenue, Popula-tion, and Commerce," Sessions 1843-47.

Mr Caird, afterwards M.P. for Stirling, a landowner and prac tical agriculturist, travelled through Ireland on a tour of inquiry in the year immediately subsequent to the great failure of the potato crops, and in 1850-51 visited nearly every county in England as the commissioner of the Times. He has since pursued the same course of investigation with practised powers of judgment, which have been well verified in the actual results of the corn trade in the United

M. de Lavergne, whose valuable work on the Rural Economy of Great Britain and Ireland is well known, has given the following f explanation, in a letter to Mr Caird, of the state of wheat culture in France: —" The official returns give a mean yield of 14J hectolitres per hectare, the actual yield being more above than below the estimate. Eight departments — Le Nord, Oise, Aisne, Somme, Seine-et-Oise, Seine-et-Marne, Seine, and Eure-et-Loire have a yield equal to the English average ; but the forty-five departments which form the southern part of the territory do not yield more than 10 hectolitres to the hectare. This feeble yield is caused in many of the departments by bad cultivation, and in the south by the dryness of the climate in spring. The statistical returns also show 5,148,000 hectares of fallow (say 12,000,000 acres), which is in fact the third of the surface, sown with cereals." The proportion of bare fallow in England is greatly less, and has been undergoing reduction.







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