British Commerce (September 1860)

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London, Sept. 8, 1860

The Tribune was the first paper which called attention to the serious decline of the British export trade to the East Indies, a decline most conspicuous in the great staple articles, viz.: cotton goods and cotton yarns. The reaction hence arising has begun to be felt in Lancashire and Yorkshire, at the very moment when the home market is contracting in consequence of a harvest which is full five weeks later than that of last year, and, despite the improving prospects since Thursday, the 30th of August, will, at all events, fall below an average yield. The British Chambers of Commerce have, consequently, taken the alarm, and assailed the central government with protests against the New Indian Customs' Act, by which the duty upon the staple imports from Great Britain was increased from 5 to 10 per cent.; that is to say, at a rate of 100 per cent. The English press, which, till then, had cautiously abstained from touching this point, has thus at last been compelled to break through its reserve. The London Economist treats us to the "Trade of India", and "The Cause of its Depression". Apart from the circumstance of The Economist being considered the first English authority in matters of this kind, its articles on India derive peculiar interest from their connexion with the writing-desk of Mr. Wilson, the present Indian Chancellor of the Exchequer. The first part of the article, an attempt at disengaging the late Indian customs legislation from all responsibility for the present contraction of the Indian market, is best answered by the necessity to which the Governor-General at Calcutta has been put, of convening, at Calcutta, a committee, to consist of representatives of the Revenue Boards of Calcutta, Bombay, and Madras, and their respective Chambers of Commerce, and to be charged with the task of revising and readjusting the tariff lately introduced. That tariff, as I stated when first introducing this subject to your readers, did not create the Indian commercial crisis, whose outbreak it, however, accelerated by its sudden introduction at a time when the Indian commerce was already bloated to a size beyond its natural capacity. The glut of British commodities in the Indian market and of Indian commodities in the English market is avowed by The Economist.

"We believe," he says, "it will be admitted on all hands that the enormous profits made in the Indian trade during a portion of last year, led to a sudden and large increase of supplies to the market, more than was required for any consumption, as far as this country was concerned, and to a very extensive speculative trade by the native capitalists for the supply of the markets in the interior from the seaports. For example, the exports of cotton piece goods to British India amounted [...] in 1859 to the value of £12,043,000 against £9,299,000 in 1858 and £5,714,000 in 1857; and of yarns the exports were in 1859 £2,546,000 against £1,969,000 in 1858, and £1,147,000 in 1857. For a long time goods were taken off as rapidly as they arrived, and as long as prices continued to rise, there was no lack of speculative Mahajuns to make purchases and to consign to the markets of the interior; and there is no doubt, from the best information we can obtain, that large stocks of goods accumulated at all the markets in the North-West. Upon this point the testimony of Mirzapur, Allahabad, Lucknow, Agra, Delhi, Amritsar and Lahore is uniform."

The Economist then proceeds to detail some circumstances which contributed to consolidate in a certain sense the glut in the Indian markets. The main cause—the continuance of large supplies from England—he does not even allude to. In the first instance, then, the Autumn crops of 1859 throughout northern India, consequent upon the drouth generally prevailing, fell much below an average, and were affected both as to quality and quantity. Hence a high range of the prices of provisions through the Winter and Spring, which, later on in the season, was still more enhanced by famine prospects. Furthermore, with scarcity and high prices, there was raging the disease.

"Throughout the whole of the North-West, the cholera prevailed to so alarming an extent among the densely-peopled cities, that the ordinary business of life was in many cases suspended, and the population fled as from an invading enemy".

But, worst of all,

"Upper India was threatened, for a month or six weeks before the departure of the last mail, with a misfortune most appalling. The rains, upon which alone the Autumn crops depend, usually fall by the middle or at latest the end of June. This year, up to the middle of July, not a drop of rain had fallen. From the north-west frontier down to Lower Bengal, from the Khyber pass to Benares, including the great Doabs of the Sutlej, the Jumna, and the Ganges, all was one arid, hard, and immovable surface of parched earth. It was only in the few exceptional places which were moistened by the rivers passing through them, or by the tributaries of the great irrigation works, the Jumna and Ganges canals, that any cultivation was possible. The prospect of a famine equal to that of 1837 and 1838 created on all hands the greatest apprehension. Prices rose still more. Cattle were dying in numbers or being drawn to the hills in place of tilling the soil, and the people are described as being on the borders of starvation."

The worst apprehensions, however, have been set to rest, according to the telegraphic accounts received and published at Calcutta during the eight days previous to the departure of the last mail, which left on the 27th of July. Rains had at last fallen copiously, and in proper time to avert a famine, if not to secure a good crop.

The details given by The Economist go far to prove that for the next future there exists not the least prospect of a revival in the Indian trade, which had already fallen off about £2,000,000 for the first half year of 1860 as compared with the first half year of 1859. The Australian markets exhibit also all the symptoms of contraction consequent upon over-trade. The trade with France, which was all at once to assume immense proportions by virtue of the Commercial Treaty, has on the contrary declined by more than £1,000,000, as will be seen by the following statement:

Six months ended June 30,	1859.	1860.
Imports from France	£9,615,065	£8,523,983
Exports to France	2,358,912	2,324,665
Total	£11,973,977	£10,848,648

The heavy decline in the British import trade from France- may . be accounted for by the high prices of provisions in France during this year, while in 1859 corn and meal had formed a principal item in the French exports to England. Great stress is laid on the increased rate at which the United States, in return for the present large exports of provisions to the United Kingdom, are presumed to become consumers of English manufactures. But though there will always be some proportion between the exports and the imports of a country, the above conclusion seems somewhat rash, if we are to judge from the movements of the Anglo-American trade in the first half years of 1859 and 1860. There we shall find:

	1859.	1860.
British Export to the United States...	£11,625,920	£9,366,647
British Imports from United States...	17,301,790	25,618,472

so that during the same epoch, in which the British imports from the United States increased by more than 8,000,000, the British exports to the United States decreased by more than 2,000,000. The only branches of international British trade which have enlarged are the Anglo-Turkish trade, the Anglo-Chinese trade, and the Anglo-German trade. Now Turkey is just being convulsed by Russian and French interference. China is convulsed by the English themselves, and Germany, while suffering in many parts from a deficient harvest, stands on the eve of grave political convulsions at home, and serious collisions abroad. As to the Anglo-Chinese trade, I still remark that some part of its increase is certainly due to the war demand; that part of the increased exports to China were only so many goods abstracted from the Indian market, and thrown, by way of experiment, on the Chinese market, and, lastly, that the import from China continues to be of much more importance than the export to China, as will be seen from the following figures[i]:

Six months ending June 30.

	1859.	1860.
Imports from China, including Hong Kong	£5,070,691	£5,526,054
Exports to China, exclusive of Hong Kong	1,001,709	1,622,525
Exports to Hong Kong	976,703	1,236,262
Total	£7,049,103	£8,384,841

Meanwhile, unexpected failures in most branches of business continue to feed a general feeling of distrust. The subjoined summary of the till-now-ascertained liabilities and assets of the late failures in the leather trade will show that the assets, on an average, but amount to 5s. 6d. in the pound, leaving to the holders of the bills of the fallen firms a loss of £1,471,589.

LIABILITIES.

Firms.
In bankruptcy	9	£1,530,991
Winding up or compromised	15	499,806
Particulars not published	10	...
Total	34	£2,030,797

ASSETS.

		Amounts.	In the £.	Defic'y
In bankruptcy	9	£342,652	4s. 6d.	£1,188,339
Winding up or compromised	15	216,556	8s. 8d.	283,250
Particulars not published	10	...	...	...
Total	34	£559,208	5s. 6d.	£1,471,589