Later Royal Commissions

Following the bad weather of 1879 and the urging of Henry Chaplin MP, the government established the Royal Commission on the Depressed State of the Agricultural Interest (1879-1882).

A preliminary report of 1881 concentrated on Ireland where there was ‘the most conspicuous difference between the relations of landlord and tenant' (Royal Commission on Agriculture 1881: 5). The report found that the effect of the agricultural depression had been made worse by a lack of manufactur­ing industries and alternative sources of employment. In particular, the impact had been the greatest for smaller farmers. The reasons for the depression lay in the poor weather leading to the failure of the potato crop; foreign competi­tion; an undue inflation of credit due partly to the increased security afforded by the 1870 Land Act; and excessive competition for land, leading to rent increases, higher payments for tenant-right, overcrowding and the minute subdivision of farms. One obvious solution was some managed process of migration and emigration, but also a programme of public works and, the most contentious issue, an examination of the land tenure system, where it was felt that some legislation would be useful to protect tenants from arbitrary rent increases. The Commissioners had heard much evidence on the so-called Three Fs: fixity of tenure, free sale and fair rents, but found mainly that their implementation would be an injustice to landlords.

For his part, Price wrote a dissenting memorandum to the report on the suggestion of additional legislation for rents. He argued that the 1870 Land Act already gave protection against arbitrary rent increases as these could only be enforced by eviction which could then be challenged in court as capricious.

a direct violation of the fundamental principle of all soundly constituted indus­try, freedom of contract; and soundly constituted industry is the root of national prosperity. The State might as well dictate what the price of corn, or coals, or cloth shall be. Such an idea would be held to be irrational; why is it less irratio­nal in the business of farming? (ibid.: 10).

He then addressed each of the Three Fs.

Fixity of tenure, Price observed, would effectively deprive landowners of their property without compensation, turning them, in effect, into a mort­gagee, as nominal absentee landlords. Furthermore, owners would be discour­aged from making any improvements to their estates, further reducing the injection of capital and ‘intelligent agriculture' that Ireland needed. It would also perpetuate the number of small-holdings and subdivided farms that engendered poor farming practices.

Price found free sale to be a curious concept as the only thing that a tenant had to sell was improvements to the land and ‘goodwill'. This goodwill, as something over and above the value of any improvements, Price described as a ‘myth' (ibid.: 11). He pointed out there is no security that the purchasing tenant would know how to farm, whilst the cost of purchasing a tenancy reduced the capital available to invest by any incoming farmer. Finally, as with the first F, free sale ‘perpetuates the land miseries of Ireland as they actually exist—the starvation holdings, the bad farming, the wretched dwellings, the living on the verge of starvation' (ibid.).

Finally, on fair rents, Price argued that no government machinery could ever justly value rents. Nor should rents be based on affordability:

What a particular tenant can pay is no rule for determining the fair rent—the rent which, if he understood his business, he ought to and would be able to pay... [T]his determination of fair rent other than by free contract—strikes at the root of all improvement in the agriculture of Ireland.

The Three Fs were thus fundamentally flawed and ultimately counter­productive. Whilst there had been some great abuses in raising rents by some landlords, the solution lay in education and cooperation, not in ‘a legal inter­ference with business, which is unnatural and mischievous' (ibid.).

By February 1881, Price's comments had been republished as a separate pamphlet by the Irish Land Committee (a patrician landowners' organisation) with an explanatory preface, including other opposition to the Three Fs (see Price 1881b).

By contrast, Prime Minister William Gladstone in his speech to Parliament supporting the first reading of the Land Law (Ireland) Bill in 1881, ridiculed, somewhat unfairly, Price's opposition and famously remarked:

Mr. Bonamy Price, is the only man—and to his credit be it spoken—who has had the resolution to apply, in all their unmitigated authority, the principles of abstract political economy to the people and circumstances of Ireland exactly as if he had been proposing to legislate for the inhabitants of Saturn or Jupiter.^[57]

The Commission's final report, the following year, found that whilst all areas of the country had been affected by economic downturn, there were considerable regional variations. The Commissioners also found that depres­sion was not limited to the UK, but had been international. As to the causes, the report concluded that the immediate problem was bad weather (too little sun and too much rain); yields and quality of output were thus lower. After the weather, there was the impact of new competition from abroad that meant prices no longer rose when a bad harvest reduced domestic production. Among the complaints discussed were rates, rents, tenant rights and the effects of security on investment.

Price served on another of the inquiries engendered by the Long Depression of 1873-1896. The Royal Commission on the Depression in Trade and Industry was set up by the minority Conservative government of Lord Salisbury in August 1885 and completed its work in December 1886. The Commission was seen as a move to ameliorate the pressure on the Conservatives of the “fair traders” against the prevailing “free trade” orthodoxy.

There were many pages of dissenting views to the final report. Price's was short and to the point^[58]:

I beg to express my dissent from paragraph 82. It contains a specific repudiation of the great doctrine of free trade. Shorter hours of labour do not, and cannot, compensate to a nation for increased cost of production or diminished output. They tax the community with dearer goods in order to confer special advantages on the working man. They protect him, and that is a direct repudiation of free trade. The country is sentenced to dearer and fewer goods (Royal Commission Appointed to Inquire into the Depression of Trade and Industry 1886: xlii).

This is the same argument on free trade that Price had made earlier which had been referenced in Parliament in 1877 during a debate on the cot­ton trade:

[B]ut what said Professor Bonamy Price in a pamphlet which he wrote a short time ago? Talking of Protectionists, he said—What is it they seek to accomplish? Nothing less than to raise a charity tax on the whole people for the benefit of those employed in a few particular trades. Protection, under the plausible dis­guises of not throwing poor people out of work...sends round a begging cap to all buyers of goods to make charitable contributions to particular individuals.^[59]

On the causes of depression itself, Price had declared himself an over- consumptionist both in his Principles and in an 1879 article (Price 1879a). Over-consumption caused a shortfall in savings and net consumption rather than the creation of wealth. If capital spending continued in excess of savings, it destroyed net wealth; like digging holes and filling them in again, it pro­duced nothing physically extra in the world. Put another way, Price proposed a theory of over-investment, and his railway boom example has exactly that flavour (save for the effect on interest rates). The excessive investment boom leads to the subsequent depression. But it is not so much the stopping of the investment projects and the subsequent fall off in other orders that he sees as the cause of depression, but rather the destruction of net wealth; the boom fails to produce real things in some lasting sense.

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