Bounties upon exportation are, in Great Britain, frequently petitioned
for, and sometimes granted to the produce of particular branches
of domestic industry. By means of them our merchants and manufacturers,
it is pretended, will be enabled to sell their goods as cheap,
or cheaper than their rivals in the foreign market. A greater
quantity, it is said, will thus be exported, and the balance
of trade consequently turned more in favour of our own country.
We cannot give our workmen a monopoly in the foreign as we have
done in the home market. We cannot force foreigners to buy their
goods as we have done our own countrymen. The next best expedient,
it has been thought, therefore, is to pay them for buying. It
is in this manner that the mercantile system proposes to enrich
the whole country, and to put money into all our pockets by means
of the balance of trade.
Bounties, it is allowed, ought to be given to those branches
of trade only which cannot be carried on without them. But
every branch of trade in which the merchant can sell his goods
for a price which replaces to him, with the ordinary profits
of stock, the whole capital employed in preparing and sending
them to market, can be carried on without a bounty. Every such
branch is evidently upon a level with all the other branches
of trade which are carried on without bounties, and cannot
therefore require one more than they. Those trades only require
bounties in which the merchant is obliged to sell his goods
for a price which does not replace to him his capital, together
with the ordinary profit; or in which he is obliged to sell
them for less than it really costs him to send them to market.
The bounty is given in order to make up this loss, and to encourage
him to continue, or perhaps to begin, a trade of which the
expense is supposed to be greater than the returns, of which
every operation eats up a part of the capital employed in it,
and which is of such a nature that, if all other trades resembled
it, there would soon be no capital left in the country.
The trades, it is to be observed, which are carried on by
means of bounties, are the only ones which can be carried on
between two nations for any considerable time together, in
such a manner as that one of them shall always and regularly
lose, or sell its goods for less than it really costs to send
them to market. But if the bounty did not repay to the merchant
what he would otherwise lose upon the price of his goods, his
own interest would soon oblige him to employ his stock in another
way, or to find out a trade in which the price of the goods
would replace to him, with the ordinary profit, the capital
employment in sending them to market. The effect of bounties,
like that of all the other expedients of the mercantile system,
can only be to force the trade of a country into a channel
much less advantageous than that in which it would naturally
run of its own accord.
The ingenious and well-informed author of the tracts upon
the corn trade has shown very clearly that, since the bounty
upon the exportation of corn was first established, the price
of the corn exported, valued moderately enough, has exceeded
that of the corn imported, valued very high, by a much greater
sum than the amount of the whole bounties which have been paid
during that period. This, he imagines, upon the true principles
of the mercantile system, is a clear proof that this forced
corn trade is beneficial to the nation; the value of the exportation
exceeding that of the importation by a much greater sum than
the whole extraordinary expense which the public has been at
in order to get it exported. He does not consider that this
extraordinary expense, or the bounty, is the smallest part
of the expense which the exportation of corn really costs the
society. The capital which the farmer employed in raising it
must likewise be taken into the account. Unless the price of
the corn when sold in the foreign markets replaces, not only
the bounty, but this capital, together with the ordinary profits
of stock, the society is a loser by the difference, or the
national stock is so much diminished. But the very reason for
which it has been thought necessary to grant a bounty is the
supposed insufficiency of the price to do this.
The average price of corn, it has been said, has fallen considerably
since the establishment of the bounty. That the average price
of corn began to fall somewhat towards the end of the last
century, and has continued to do so during the course of the
sixty-four first years of the present, I have already endeavoured
to show. But this event, supposing it to be as real as I believe
it to be, must have happened in spite of the bounty, and cannot
possibly have happened in consequence of it. It has happened
in France, as well as in England, though in France there was
not only no bounty, but, till 1764, the exportation of corn
was subjected to a general prohibition. This gradual fall in
the average price of grain, it is probable, therefore, is ultimately
owing neither to the one regulation nor to the other. but to
that gradual and insensible rise in the real value of silver,
which, in the first book in this discourse, I have endeavoured
to show has taken place in the general market of Europe during
the course of the present century. It seems to be altogether
impossible that the bounty could ever contribute to lower the
price of grain.
In years of plenty, it has already been observed, the bounty,
by occasioning an extraordinary exportation, necessarily keeps
up the price of corn in the home market above what it would
naturally fall to. To do so was the avowed purpose of the institution.
In years of scarcity, though the bounty is frequently suspended,
yet the great exportation which it occasions in years of plenty
must frequently hinder more or less the plenty of one year
from relieving the scarcity of another. Both in years of plenty
and in years of scarcity, therefore, the bounty necessarily
tends to raise the money price of corn somewhat higher than
it otherwise would be in the home market.
That, in the actual state of tillage, the bounty must necessarily
have this tendency will not, I apprehend, be disputed by any
reasonable person. But it has been thought by many people that
it tends to encourage tillage, and that in two different ways;
first, by opening a more extensive foreign market to the corn
of the farmer, it tends, they imagine, to increase the demand
for, and consequently the production of that commodity; and
secondly, by securing to him a better price than he could otherwise
expect in the actual state of tillage, it tends, they suppose,
to encourage tillage. This double encouragement must, they
imagine, in a long period of years, occasion such an increase
in the production of corn as may lower its price in the home
market much more than the bounty can raise it, in the actual
state which tillage may, at the end of that period, happen
to be in.
I answer, that whatever extension of the foreign market can
be occasioned by the bounty must, in every particular year,
be altogether at the expense of the home market; as every bushel
of corn which is exported by means of the bounty, and which
would not have been exported without the bounty, would have
remained in the home market to increase the consumption and
to lower the price of that commodity. The corn bounty, it is
to be observed, as well as every other bounty upon exportation,
imposes two different taxes upon the people; first, the tax
which they are obliged to contribute in order to pay the bounty;
and secondly, the tax which arises from the advanced price
of the commodity in the home market, and which, as the whole
body of the people are purchasers of corn, must, in this particular
commodity, be paid by the whole body of the people. In this
particular commodity, therefore, this second tax is by much
the heavier of the two. Let us suppose that, taking one year
with another, the bounty of five shillings upon the exportation
of the quarter of wheat raises the price of that commodity
in the home market only sixpence the bushel, or four shillings
the quarter, higher than it otherwise would have been in the
actual state of the crop. Even upon this very moderate supposition,
the great body of the people, over and above contributing the
tax which pays the bounty of five shillings upon every quarter
of wheat exported, must pay another of four shillings upon
every quarter which they themselves consume. But, according
to the very well informed author of the tracts upon the corn
trade, the average proportion of the corn exported to that
consumed at home is not more than that of one to thirty-one.
For every five shillings, therefore, which they contribute
to the payment of the first tax, they must contribute six pounds
four shillings to the payment of the second. So very heavy
a tax upon the first necessary of life must either reduce the
subsistence of the labouring poor, or it must occasion some
augmentation in their pecuniary wages proportionable to that
in the pecuniary price of their subsistence. So far as it operates
in the one way, it must reduce the ability of the labouring
poor to educate and bring up their children, and must, so far,
tend to restrain the population of the country. So far as it
operates in the other, it must reduce the ability of the employers
of the poor to employ so great a number as they otherwise might
do, and must, so far, tend to restrain the industry of the
country. The extraordinary exportation of corn, therefore,
occasioned by the bounty, not only, in every particular year,
diminishes the home, just as much as it extends the foreign,
market and consumption, but, by restraining the population
and industry of the country, its final tendency is to stunt
and restrain the gradual extension of the home market; and
thereby, in the long run, rather to diminish, than to augment,
the whole market and consumption of corn.
This enhancement of the money price of corn, however, it has
been thought, by rendering that commodity more profitable to
the farmer, must necessarily encourage its production.
I answer, that this might be the case if the effect of the
bounty was to raise the real price of corn, or to enable the
farmer, with an equal quantity of it, to maintain a greater
number of labourers in the same manner, whether liberal, moderate,
or scanty, that other labourers are commonly maintained in
his neighbourhood. But neither the bounty, it is evident, nor
any other human institution can have any such effect. It is
not the real, but the nominal price of corn, which can in any
considerable degree be affected by the bounty. And though the
tax which that institution imposes upon the whole body of the
people may be very burdensome to those who pay it, it is of
very little advantage to those who receive it.
The real effect of the bounty is not so much to raise the
real value of corn as to degrade the real value of silver,
or to make an equal quantity of it exchange for a smaller quantity,
not only of corn, but of all other homemade commodities: for
the money price of corn regulates that of all other home-made
commodities.
It regulates the money price of labour, which must always
be such as to enable the labourer to purchase a quantity of
corn sufficient to maintain him and his family either in the
liberal, moderate, or scanty manner in which the advancing,
stationary, or declining circumstances of the society oblige
his employers to maintain him.
It regulates the money price of all the other parts of the
rude produce of land, which, in every period of improvement,
must bear a certain proportion to that of corn, though this
proportion is different in different periods. It regulates,
for example, the money price of grass and hay, of butcher's
meat, of horses, and the maintenance of horses, of land carriage
consequently, or of the greater part of the inland commerce
of the country.
By regulating the money price of all the other parts of the
rude produce of land, it regulates that of the materials of
almost all manufactures. By regulating the money price of labour,
it regulates that of manufacturing art and industry. And by
regulating both, it regulates that of the complete manufacture.
The money price of labour, and of everything that is the produce
either of land or labour, must necessarily either rise or fall
in proportion to the money price of corn.
Though in consequence of the bounty, therefore, the farmer
should be enabled to sell his corn for four shillings a bushel
instead of three-and-sixpence, and to pay his landlord a money
rent proportionable to this rise in the money price of his
produce, yet if, in consequence of this rise in the price of
corn, four shillings will purchase no more homemade goods of
any other kind than three-and-sixpence would have done before,
neither the circumstances of the farmer nor those of the landlord
will be much mended by this change. The farmer will not be
able to cultivate much better: the landlord will not be able
to live much better. In the purchase of foreign commodities
this enhancement in the price of corn may give them some little
advantage. In that of home-made commodities it can give them
none at all. And almost the whole expense of the farmer, and
the far greater part even of that of the landlord, is in homemade
commodities.
That degradation in the value of silver which is the effect
of the fertility of the mines, and which operates equally,
or very near equally, through the greater part of the commercial
world, is a matter of very little consequence to any particular
country. The consequent rise of all money prices, though it
does not make those who receive them really richer, does make
them really poorer. A service of plate becomes really cheaper,
and everything else remains precisely of the same real value
as before.
But that degradation in the value of silver which, being the
effect either of the peculiar situation or of the political
institutions of a particular country, takes place only in that
country, is a matter of very great consequence, which, far
from tending to make anybody really richer, tends to make everybody
really poorer. The rise in the money price of all commodities,
which is in this case peculiar to that country, tends to discourage
more or less every sort of industry which is carried on within
it, and to enable foreign nations, by furnishing almost all
sorts of goods for a smaller quantity of silver than its own
workmen can afford to do, to undersell them, not only in the
foreign, but even in the home market.
It is the peculiar situation of Spain and Portugal as proprietors
of the mines to be the distributors of gold and silver to all
the other countries of Europe. Those metals ought naturally,
therefore, to be somewhat cheaper in Spain and Portugal than
in any other part of Europe. The difference, however, should
be no more than the amount of the freight and insurance; and,
on account of the great value and small bulk of those metals,
their freight is no great matter, and their insurance is the
same as that of any other goods of equal value. Spain and Portugal,
therefore, could suffer very little from their peculiar situation,
if they did not aggravate its disadvantages by their political
institutions.
Spain by taxing, and Portugal by prohibiting
the exportation of gold and silver, load that exportation
with the expense
of smuggling, and raise the value of those metals in other
countries so much more above what it is in their own by the
whole amount of this expense. When you dam up a stream of water,
as soon as the dam is full as much water must run over the
dam-head as if there was no dam at all. The prohibition of
exportation cannot detain a greater quantity of gold and silver
in Spain and Portugal than what they can afford to employ,
than what the annual produce of their land and labour will
allow them to employ, in coin, plate, gilding, and other ornaments
of gold and silver. When they have got this quantity the dam
is full, and the whole stream which flows in afterwards must
run over. The annual exportation of gold and silver from Spain
and Portugal accordingly is, by all accounts, notwithstanding
these restraints, very near equal to the whole annual importation.
As the water, however, must always be deeper behind the dam-head
than before it, so the quantity of gold and silver which these
restraints detain in Spain and Portugal must, in proportion
to the annual produce of their land and labour, be greater
than what is to be found in other countries. The higher and
stronger the dam-head, the greater must be the difference in
the depth of water behind and before it. The higher the tax,
the higher the penalties with which the prohibition is guarded,
the more vigilant and severe the police which looks after the
execution of the law, the greater must be the difference in
the proportion of gold and silver to the annual produce of
the land and labour of Spain and Portugal, and to that of other
countries. It is said accordingly to be very considerable,
and that you frequently find there a profusion of plate in
houses where there is nothing else which would, in other countries,
be thought suitable or correspondent to this sort of magnificence.
The cheapness of gold and silver, or what is the same thing,
the dearness of all commodities, which is the necessary effect
of this redundancy of the precious metals, discourages both
the agriculture and manufactures of Spain and Portugal, and
enables foreign nations to supply them with many sorts of rude,
and with almost all sorts of manufactured produce, for a smaller
quantity of gold and silver than what they themselves can either
raise or make them for at home. The tax and prohibition operate
in two different ways. They not only lower very much the value
of the precious metals in Spain and Portugal, but by detaining
there a certain quantity of those metals which would otherwise
flow over other countries, they keep up their value in those
other countries somewhat above what it otherwise would be,
and thereby give those countries a double advantage in their
commerce with Spain and Portugal. Open the flood-gates, and
there will presently be less water above, and more below, the
dam-head, and it will soon come to a level in both places.
Remove the tax and the prohibition, and as the quantity of
gold and silver will diminish considerably in Spain and Portugal,
so it will increase somewhat in other countries, and the value
of those metals, their proportion to the annual produce of
land and labour, will soon come to a level, or very near to
a level, in all. The loss which Spain and Portugal could sustain
by this exportation of their gold and silver would be altogether
nominal and imaginary. The nominal value of their goods, and
of the annual produce of their land and labour, would fall,
and would be expressed or represented by a smaller quantity
of silver than before; but their real value would be the same
as before, and would be sufficient to maintain, command, and
employ, the same quantity of labour. As the nominal value of
their goods would fall, the real value of what remained of
their gold and silver would rise, and a smaller quantity of
those metals would answer all the same purposes of commerce
and circulation which had employed a greater quantity before.
The gold and silver which would go abroad would not go abroad
for nothing, but would bring back an equal value of goods of
some kind or another. Those goods, too, would not be all matters
of mere luxury and expense, to be consumed by idle people who
produce nothing in return for their consumption. As the real
wealth and revenue of idle people would not be augmented by
this extraordinary exportation of gold and silver, so neither
would their consumption be much augmented by it. Those goods
would, probably, the greater part of them, and certainly some
part of them, consist in materials, tools, and provisions,
for the employment and maintenance of industrious people, who
would reproduce, with a profit, the full value of their consumption.
A part of the dead stock of the society would thus be turned
into active stock, and would put into motion a greater quantity
of industry than had been employed before. The annual produce
of their land and labour would immediately be augmented a little,
and in a few years would, probably, be augmented a great deal;
their industry being thus relieved from one of the most oppressive
burdens which it at present labours under.
The bounty upon the exportation of corn necessarily operates
exactly in the same way as this absurd policy of Spain and
Portugal. Whatever be the actual state of tillage, it renders
our corn somewhat dearer in the home market than it otherwise
would be in that state, and somewhat cheaper in the foreign;
and as the average money price of corn regulates more or less
that of all other commodities, it lowers the value of silver
considerably in the one, and tends to raise it a little in
the other. It enables foreigners, the Dutch in particular,
not only to eat our corn cheaper than they otherwise could
do, but sometimes to eat it cheaper than even our own people
can do upon the same occasions, as we are assured by an excellent
authority, that of Sir Matthew Decker. It hinders our own workmen
from furnishing their goods for so small a quantity of silver
as they otherwise might do; and enables the Dutch to furnish
theirs for a smaller. It tends to render our manufactures somewhat
dearer in every market, and theirs somewhat cheaper than they
otherwise would be, and consequently to give their industry
a double advantage over our own.
The bounty, as it raises in the home market not so much the
real as the nominal price of our corn, as it augments, not
the quantity of labour which a certain quantity of corn can
maintain and employ but only the quantity of silver which it
will exchange for, it discourages our manufactures, without
rendering any considerable service either to our farmers or
country gentlemen. It puts, indeed, a little more money into
the pockets of both, and it will perhaps be somewhat difficult
to persuade the greater part of them that this is not rendering
them a very considerable service. But if this money sinks in
its value, in the quantity of labour, provisions, and homemade
commodities of all different kinds which it is capable of purchasing
as much as it rises in its quantity, the service will be little
more than nominal and imaginary.
There is, perhaps, but one set of men in the whole commonwealth
to whom the bounty either was or could be essentially serviceable.
These were the corn merchants, the exporters and importers
of corn. In years of plenty the bounty necessarily occasioned
a greater exportation than would otherwise have taken place;
and by hindering the plenty of one year from relieving the
scarcity of another, it occasioned in years of scarcity a greater
importation than would otherwise have been necessary. It increased
the business of the corn merchant in both; and in years of
scarcity, it not only enabled him to import a greater quantity,
but to sell it for a better price, and consequently with a
greater profit than he could otherwise have made, if the plenty
of one year had not been more or less hindered from relieving
the scarcity of another. It is in this set of men, accordingly,
that I have observed the greatest zeal for the continuance
or renewal of the bounty.
Our country gentlemen, when they imposed the high duties upon
the importation of foreign corn, which in times of moderate
plenty amount to a prohibition, and when they established the
bounty, seem to have imitated the conduct of our manufacturers.
By the one institution, they secured to themselves the monopoly
of the home market, and by the other they endeavoured to prevent
that market from ever being overstocked with their commodity.
By both they endeavoured to raise its real value, in the same
manner as our manufacturers had, by the like institutions,
raised the real value of many different sorts of manufactured
goods. They did not perhaps attend to the great and essential
difference which nature has established between corn and almost
every other sort of goods. When, either by the monopoly of
the home market, or by a bounty upon exportation, you enable
our woollen or linen manufacturers to sell their goods for
somewhat a better price than they otherwise could get for them,
you raise, not only the nominal, but the real price of those
goods. You render them equivalent to a greater quantity of
labour and subsistence, you increase not only the nominal,
but the real profit, the real wealth and revenue of those manufacturers,
and you enable them either to live better themselves, or to
employ a greater quantity of labour in those particular manufactures.
You really encourage those manufactures, and direct towards
them a greater quantity of the industry of the country than
what would probably go to them of its own accord. But when
by the like institutions you raise the nominal or money-price
of corn, you do not raise its real value. You do not increase
the real wealth, the real revenue either of our farmers or
country gentlemen. You do not encourage the growth of corn
because you do not enable them to maintain and employ more
labourers in raising it. The nature of things has stamped upon
corn a real value which cannot be altered by merely altering
its money price. No bounty upon exportation, no monopoly of
the home market, can raise that value. The freest competition
cannot lower it. Through the world in general that value is
equal to the quantity of labour which it can maintain, and
in every particular place it is equal to the quantity of labour
which it can maintain in the way, whether liberal, moderate,
or scanty, in which labour is commonly maintained in that place.
Woollen or linen cloth are not the regulating commodities by
which the real value of all other commodities must be finally
measured and determined; corn is. The real value of every other
commodity is finally measured and determined by the proportion
which its average money price bears to the average money price
of corn. The real value of corn does not vary with those variations
in its average money price, which sometimes occur from one
century to another. It is the real value of silver which varies
with them.
Bounties upon the exportation of any homemade commodity are
liable, first to that general objection which may be made to
all the different expedients of the mercantile system; the
objection of forcing some part of the industry of the country
into a channel less advantageous than that in which it would
run of its own accord: and, secondly, to the particular objection
of forcing it, not only into a channel that is less advantageous,
but into one that is actually disadvantageous; the trade which
cannot be carried on but by means of a bounty being necessarily
a losing trade. The bounty upon the exportation of corn is
liable to this further objection, that it can in no respect
promote the raising of that particular commodity of which it
was meant to encourage the production. When our country gentlemen,
therefore, demanded the establishment of the bounty, though
they acted in imitation of our merchants and manufacturers,
they did not act with that complete comprehension of their
own interest which commonly directs the conduct of those two
other orders of people. They loaded the public revenue with
a very considerable expense; they imposed a very heavy tax
upon the whole body of the people; but they did not, in any
sensible degree, increase the real value of their own commodity;
and by lowering somewhat the real value of silver, they discouraged
in some degree, the general industry of the country, and, instead
of advancing, retarded more or less the improvement of their
own lands, which necessarily depends upon the general industry
of the country.
To encourage the production of any commodity, a bounty upon
production, one should imagine, would have a more direct operation
than one upon exportation. It would, besides, impose only one
tax upon the people, that which they must contribute in order
to pay the bounty. Instead of raising, it would tend to lower
the price of the commodity in the home market; and thereby,
instead of imposing a second tax upon the people, it might,
at least, in part, repay them for what they had contributed
to the first. Bounties upon production, however, have been
very rarely granted. The prejudices established by the commercial
system have taught us to believe that national wealth arises
more immediately from exportation than from production. It
has been more favoured accordingly, as the more immediate means
of bringing money into the country. Bounties upon production,
it has been said too, have been found by experience more liable
to frauds than those upon exportation. How far this is true,
I know not. That bounties upon exportation have been abused
to many fraudulent purposes is very well known. But it is not
the interest of merchants and manufacturers, the great inventors
of all these expedients, that the home market should be overstocked
with their goods, an event which a bounty upon production might
sometimes occasion. A bounty upon exportation, by enabling
them to send abroad the surplus part, and to keep up the price
of what remains in the home market, effectually prevents this.
Of all the expedients of the mercantile system, accordingly,
it is the one of which they are the fondest. I have known the
different undertakers of some particular works agree privately
among themselves to give a bounty out of their own pockets
upon the exportation of a certain proportion of the goods which
they dealt in. This expedient succeeded so well that it more
than doubled the price of their goods in the home market, notwithstanding
a very considerable increase in the produce. The operation
of the bounty upon corn must have been wonderfully different
if it has lowered the money price of that commodity.
Something like a bounty upon production, however, has been
granted upon some particular occasions. The tonnage bounties
given to the white-herring and whale fisheries may, perhaps,
be considered as somewhat of this nature. They tend directly,
it may be supposed, to render the goods cheaper in the home
market than they otherwise would be. In other respects their
effects, it must be acknowledged, are the same as those of
bounties upon exportation. By means of them a part of the capital
of the country is employed in bringing goods to market, of
which the price does not repay the cost together with the ordinary
profits of stock.
But though the tonnage bounties of those fisheries do not
contribute to the opulence of the nation, it may perhaps be
thought that they contribute to its defence by augmenting the
number of its sailors and shipping. This, it may be alleged,
may sometimes be done by means of such bounties at a much smaller
expense than by keeping up a great standing navy, if I may
use such an expression, in the same way as a standing army.
Notwithstanding these favourable allegations, however, the
following considerations dispose me to believe that, in granting
at least one of these bounties, the legislature has been very
grossly imposed upon.
First, the herring buss bounty seems too large.
From the commencement of the winter fishing, 1771, to the
end of the winter fishing, 1781, the tonnage bounty upon the
herring buss fishery has been at thirty shillings the ton.
During these eleven years the whole number of barrels caught
by the herring buss fishery of Scotland amounted to 378,347.
The herrings caught and cured at sea are called sea-sticks.
In order to render them what are called merchantable herrings,
it is necessary to repack them with an additional quantity
of salt; and in this case, it is reckoned that three barrels
of sea-sticks are usually repacked into two barrels of merchantable
herrings. The number of barrels of merchantable herrings, therefore,
caught during these eleven years will amount only, according
to this account, to 252,231 1/3. During these eleven years
the tonnage bounties paid amounted to L155,463 11s. or to 8s.
2 1/4d. upon every barrel of seasticks, and to 12s. 3 3/4d.
upon every barrel of merchantable herrings.
The salt with which these herrings are cured is sometimes
Scotch and sometimes foreign salt, both which are delivered
free of all excise duty to the fish-curers. The excise duty
upon Scotch salt is at present 1s. 6d., that upon foreign salt
10s. the bushel. A barrel of herrings is supposed to require
about one bushel and one-fourth of a bushel foreign salt. Two
bushels are the supposed average of Scotch salt. If the herrings
are entered for exportation, no part of this duty is paid up;
if entered for home consumption, whether the herrings were
cured with foreign or with Scotch salt, only one shilling the
barrel is paid up. It was the old Scotch duty upon a bushel
of salt, the quantity which, at a low estimation, had been
supposed necessary for curing a barrel of herrings. In Scotland,
foreign salt is very little used for any other purpose but
the curing of fish. But from the 5th April 1771 to the 5th
April 1782, the quantity of foreign salt imported amounted
to 936,974 bushels, at eighty-four pounds the bushel: the quantity
of Scotch salt, delivered from the works to the fish-curers,
to no more than 168,226, at fifty-six pounds the bushel only.
It would appear, therefore, that it is principally foreign
salt that is used in the fisheries. Upon every barrel of herrings
exported there is, besides, a bounty of 2s. 8d., and more than
two-thirds of the buss caught herrings are exported. Put all
these things together and you will find that, during these
eleven years, every barrel of buss caught herrings, cured with
Scotch salt when exported, has cost government L1 7s. 5 3/4d.;
and when entered for home consumption 14s. 3 3/4d.; and that
every barrel cured with foreign salt, when exported, has cost
government L1 7s. 5 3/4d.; and when entered for home consumption
L1. 3s. 9 3/4d. The price of a barrel of good merchantable
herrings runs from seventeen and eighteen to four and five
and twenty shillings, about a guinea at an average.
Secondly, the bounty to the white-herring fishery is a tonnage
bounty; and is proportioned to the burden of the ship, not
to her diligence or success in the fishery; and it has, I am
afraid, been too common for vessels to fit out for the sole
purpose of catching, not the fish, but the bounty. In the year
1759, when the bounty was at fifty shillings the ton, the whole
buss fishery of Scotland brought in only four barrels of sea-sticks.
In that year each barrel of sea-sticks cost government in bounties
alone L113 15s.; each barrel of merchantable herrings L159
7s. 6d.
Thirdly, the mode of fishing for which this tonnage bounty
in the white-herring fishery has been given (by busses or decked
vessels from twenty to eighty tons burthen), seems not so well
adapted to the situation of Scotland as to that of Holland,
from the practice of which country it appears to have been
borrowed. Holland lies at a great distance from the seas to
which herrings are known principally to resort, and can, therefore,
carry on that fishery only in decked vessels, which can carry
water and provisions sufficient for a voyage to a distant sea.
But the Hebrides or western islands, the islands of Shetland,
and the northern and northwestern coasts of Scotland, the countries
in whose neighbourhood the herring fishery is principally carried
on, are everywhere intersected by arms of the sea, which run
up a considerable way into the land, and which, in the language
of the country, are called sea-lochs. It is to these sea-lochs
that the herrings principally resort during the seasons in
which they visit those seas; for the visits of this and, I
am assured, of many other sorts of fish are not quite regular
and constant. A boat fishery, therefore, seems to be the mode
of fishing best adapted to the peculiar situation of Scotland,
the fishers carrying the herrings on shore, as fast as they
are taken, to be either cured or consumed fresh. But the great
encouragement which a bounty of thirty shillings the ton gives
to the buss fishery is necessarily a discouragement to the
boat fishery, which, having no such bounty, cannot bring its
cured fish to market upon the same terms as the buss fishery.
The boat fishery, accordingly, which before the establishment
of the buss bounty was very considerable, and is said have
employed a number of seamen not inferior to what the buss fishery
employs at present, is now gone almost entirely to decay. Of
the former extent, however, of this now ruined and abandoned
fishery, I must acknowledge that I cannot pretend to speak
with much precision. As no bounty was paid upon the outfit
of the boat fishery, no account was taken of it by the officers
of the customs or salt duties.
Fourthly, in many parts of Scotland, during certain seasons
of the year, herrings make no inconsiderable part of the food
of the people. A bounty, which tended to lower their price
in the home market, might contribute a good deal to the relief
of a great number of our fellow-subjects, whose circumstances
are by no means affluent. But the herring buss bounty contributes
to no such good purpose. It has ruined the boat fishery, which
is, by far, the best adapted for the supply of the home market,
and the additional bounty of 2s. 8d. the barrel upon exportation
carries the greater part, more than two-thirds, of the produce
of the buss fishery abroad. Between thirty and forty years
ago, before the establishment of the buss bounty, fifteen shillings
the barrel, I have been assured, was the common price of white
herrings. Between ten and fifteen years ago, before the boat
fishery was entirely ruined, the price is said to have run
from seventeen to twenty shillings the barrel. For these last
five years, it has, at an average, been at twenty-five shillings
the barrel. This high price, however, may have been owing to
the real scarcity of the herrings upon the coast of Scotland.
I must observe, too, that the cask or barrel, which is usually
sold with the herrings, and of which the price is included
in all the foregoing prices, has, since the commencement of
the American war, risen to about double its former price, or
from about three shillings to about six shillings. I must likewise
observe that the accounts I have received of the prices of
former times have been by no means quite uniform and consistent;
and an old man of great accuracy and experience has assured
me that, more than fifty years ago, a guinea was the usual
price of a barrel of good merchantable herrings; and this,
I imagine, may still be looked upon as the average price. All
accounts, however, I think, agree that the price has not been
lowered in the home market in consequence of the buss bounty.
When the undertakers of fisheries, after such liberal bounties
have been bestowed upon them, continue to sell their commodity
at the same, or even at a higher price than they were accustomed
to do before, it might be expected that their profits should
be very great; and it is not improbable that those of some
individuals may have been so. In general, however, I have every
reason to believe they have been quite otherwise. The usual
effect of such bounties is to encourage rash undertakers to
adventure in a business which they do not understand, and what
they lose by their own negligence and ignorance more than compensates
all that they can gain by the utmost liberality of government.
In 1750, by the same act, which first gave the bounty of thirty
shillings the ton for the encouragement of the white-herring
fishery (the 23rd George II, c. 24), a joint-stock company
was erected, with a capital of five hundred thousand pounds,
to which the subscribers (over and above all other encouragements,
the tonnage bounty just now mentioned, the exportation bounty
of two shillings and eightpence the barrel, the delivery of
both British and foreign salt duty free) were, during the space
of fourteen years, for every hundred pounds which they subscribed
and paid in to the stock of the society, entitled to three
pounds a year, to be paid by the receiver-general of the customs
in equal half-yearly payments. Besides this great company,
the residence of whose governor and directors was to be in
London, it was declared lawful to erect different fishing-chambers
in all the different outports of the kingdom, provided a sum
not less than ten thousand pounds was subscribed into the capital
of each, to be managed at its own risk, and for its own profit
and loss. The same annuity, and the same encouragements of
all kinds, were given to the trade of those inferior chambers
as to that of the great company. The subscription of the great
company was soon filled up, and several different fishing-chambers
were erected in the different outports of the kingdom. In spite
of all these encouragements, almost all those different companies,
both great and small, lost either the whole, or the greater
part of their capitals; scarce a vestige now remains of any
of them, and the white-herring fishery is now entirely, or
almost entirely, carried on by private adventurers.
If any particular manufacture was necessary, indeed, for the
defence of the society, it might not always be prudent to depend
upon our neighbours for the supply; and if such manufacture
could not otherwise be supported at home, it might not be unreasonable
that all the other branches of industry should be taxed in
order to support it. The bounties upon the exportation of British-made
sailcloth and British-made gunpowder may, perhaps, both be
vindicated upon this principle.
But though it can very seldom be reasonable to tax the industry
of the great body of the people in order to support that of
some particular class of manufacturers, yet in the wantonness
of great prosperity, when the public enjoys a greater revenue
than it knows well what to do with, to give such bounties to
favourite manufactures may, perhaps, be as natural as to incur
any other idle expense. In public as well as in private expenses,
great wealth may, perhaps, frequently be admitted as an apology
for great folly. But there must surely be something more than
ordinary absurdity in continuing such profusion in times of
general difficulty and distress.
What is called a bounty is sometimes no more than a drawback,
and consequently is not liable to the same objections as what
is properly a bounty. The bounty, for example, upon refined
sugar exported may be considered as a drawback of the duties
upon the brown and muscovado sugars from which it is made.
The bounty upon wrought silk exported, a drawback of the duties
upon raw and thrown silk imported. The bounty upon gunpowder
exported, a drawback of the duties upon brimstone and saltpetre
imported. In the language of the customs those allowances only
are called drawbacks which are given upon goods exported in
the same form in which they are imported. When that form has
been so altered by manufacture of any kind as to come under
a new denomination, they are called bounties.
Premiums given by the public to artists and manufacturers
who excel in their particular occupations are not liable to
the same objections as bounties. By encouraging extraordinary
dexterity and ingenuity, they serve to keep up the emulation
of the workmen actually employed in those respective occupations,
and are not considerable enough to turn towards any one of
them a greater share of the capital of the country than what
would go to it of its own accord. Their tendency is not to
overturn the natural balance of employments, but to render
the work which is done in each as perfect and complete as possible.
The expense of premiums, besides, is very trifling; that of
bounties very great. The bounty upon corn alone has sometimes
cost the public in one year more than three hundred thousand
pounds.
DIGRESSION CONCERNING THE CORN TRADE AND CORN LAWS
I cannot conclude this chapter concerning bounties without observing
that the praises which have been bestowed upon the law which
establishes the bounty upon the exportation of corn, and upon
that system of regulations which is connected with it, are altogether
unmerited. A particular examination of the nature of the corn
trade, and of the principal British laws which relate to it.
will sufficiently demonstrate the truth of this assertion. The
great importance of this subject must justify the length of the
digression.
The trade of the corn merchant is composed of four different
branches, which, though they may sometimes be all carried on
by the same person, are in their own nature four separate and
distinct trades. These are, first, the trade of the inland
dealer; secondly, that of the merchant importer for home consumption;
thirdly, that of the merchant exporter of home produce for
foreign consumption; and, fourthly, that of the merchant carrier,
or of the importer of corn in order to export it again.
I. The interest of the inland dealer, and
that of the great body of the people, how opposite soever they
may at first sight appear, are, even in years of the greatest
scarcity, exactly the same. It is his interest to raise the
price of his corn as high as the real scarcity of the season
requires, and it can never be his interest to raise it higher.
By raising the price he discourages the consumption, and puts
everybody more or less, but particularly the inferior ranks
of people, upon thrift and good management. If, by raising
it too high, he discourages the consumption so much that the
supply of the season is likely to go beyond the consumption
of the season, and to last for some time after the next crop
begins to come in, he runs the hazard, not only of losing a
considerable part of his corn by natural causes, but of being
obliged to sell what remains of it for much less than what
he might have had for it several months before. If by not raising
the price high enough he discourages the consumption so little
that the supply of the season is likely to fall short of the
consumption of the season, he not only loses a part of the
profit which he might otherwise have made, but he exposes the
people to suffer before the end of the season, instead of the
hardships of a dearth, the dreadful horrors of a famine. It
is the interest of the people that their daily, weekly, and
monthly consumption should be proportioned as exactly as possible
to the supply of the season. The interest of the inland corn
dealer is the same. By supplying them, as nearly as he can
judge, in this proportion, he is likely to sell all his corn
for the highest price, and with the greatest profit; and his
knowledge of the state of the crop, and of his daily, weekly,
and monthly sales, enable him to judge, with more or less accuracy,
how far they really are supplied in this manner. Without intending
the interest of the people, he is necessarily led, by a regard
to his own interest, to treat them, even in years of scarcity,
pretty much in the same manner as the prudent master of a vessel
is sometimes obliged to treat his crew. When he foresees that
provisions are likely to run short, he puts them upon short
allowance. Though from excess of caution he should sometimes
do this without any real necessity, yet all the inconveniences
which his crew can thereby suffer are inconsiderable in comparison
of the danger, misery, and ruin to which they might sometimes
be exposed by a less provident conduct. Though from excess
of avarice, in the same manner, the inland corn merchant should
sometimes raise the price of his corn somewhat higher than
the scarcity of the season requires, yet all the inconveniences
which the people can suffer from this conduct, which effectually
secures them from a famine in the end of the season, are inconsiderable
in comparison of what they might have been exposed to by a
more liberal way of dealing in the beginning of it. The corn
merchant himself is likely to suffer the most by this excess
of avarice; not only from the indignation which it generally
excites against him, but, though he should escape the effects
of this indignation, from the quantity of corn which it necessarily
leaves upon his hands in the end of the season, and which,
if the next season happens to prove favourable, he must always
sell for a much lower price than he might otherwise have had.
Were it possible, indeed, for one great company of merchants
to possess themselves of the whole crop of an extensive country,
it might, perhaps, be their interest to deal with it as the
Dutch are said to do with the spiceries of the Moluccas, to
destroy or throw away a considerable part of it in order to
keep up the price of the rest. But it is scarce possible, even
by the violence of law, to establish such an extensive monopoly
with regard to corn; and, wherever the law leaves the trade
free, it is of all commodities the least liable to be engrossed
or monopolized by the force of a few large capitals, which
buy up the greater part of it. Not only its value far exceeds
what the capitals of a few private men are capable of purchasing,
but, supposing they were capable of purchasing it, the manner
in which it is produced renders this purchase practicable.
As in every civilised country it is the commodity of which
the annual consumption is the greatest, so a greater quantity
of industry is annually employed in producing corn than in
producing any other commodity. When it first comes from the
ground, too, it is necessarily divided among a greater number
of owners than any other commodity; and these owners can never
be collected into one place like a number of independent manufacturers,
but are necessarily scattered through all the different corners
of the country. These first owners either immediately supply
the consumers in their own neighbourhood, or they supply other
inland dealers who supply those consumers. The inland dealers
in corn, therefore, including both the farmer and the baker,
are necessarily more numerous than the dealers in any other
commodity, and their dispersed situation renders it altogether
impossible for them to enter into any general combination.
If in a year of scarcity, therefore, any of them should find
that he had a good deal more corn upon hand than, at the current
price, he could hope to dispose of before the end of the season,
he would never think of keeping up this price to his own loss,
and to the sole benefit of his rivals and competitors, but
would immediately lower it, in order to get rid of his corn
before the new crop began to come in. The same motives, the
same interests, which would thus regulate the conduct of any
one dealer, would regulate that of every other, and oblige
them all in general to sell their corn at the price which,
according to the best of their judgment, was most suitable
to the scarcity or plenty of the season.
Whoever examines with attention the history of the dearths
and famines which have afflicted any part of Europe, during
either the course of the present or that of the two preceding
centuries, of several of which we have pretty exact accounts,
will find, I believe, that a dearth never has arisen from any
combination among the inland dealers in corn, nor from any
other cause but a real scarcity, occasioned sometimes perhaps,
and in some particular places, by the waste of war, but in
by far the greatest number of cases by the fault of the seasons;
and that a famine has never arisen from any other cause but
the violence of government attempting, by improper means, to
remedy the inconveniences of a dearth.
In an extensive corn country, between all the different parts
of which there is a free commerce and communication, the scarcity
occasioned by the most unfavourable seasons can never be so
great as to produce a famine; and the scantiest crop, if managed
with frugality and economy, will maintain through the year
the same number of people that are commonly fed on a more affluent
manner by one of moderate plenty. The seasons most unfavourable
to the crop are those of excessive drought or excessive rain.
But as corn grows equally upon high and low lands, upon grounds
that are disposed to be too wet, and upon those that are disposed
to be too dry, either the drought or the rain which is hurtful
to one part of the country is favourable to another; and though
both in the wet and in the dry season the crop is a good deal
less than in one more properly tempered, yet in both what is
lost in one part of the country is in some measure compensated
by what is gained in the other. In rice countries, where the
crop not only requires a very moist soil, but where in a certain
period of its growing it must be laid under water, the effects
of a drought are much more dismal. Even in such countries,
however, the drought is, perhaps, scarce ever so universal
as necessarily to occasion a famine, if the government would
allow a free trade. The drought in Bengal, a few years ago,
might probably have occasioned a very great dearth. Some improper
regulations, some injudicious restraints imposed by the servants
of the East India Company upon the rice trade, contributed,
perhaps, to turn that dearth into a famine.
When the government, in order to remedy the inconveniences
of a dearth, orders all the dealers to sell their corn at what
it supposes a reasonable price, it either hinders them from
bringing it to market, which may sometimes produce a famine
even in the beginning of the season; or if they bring it thither,
it enables the people, and thereby encourages them to consume
it so fast as must necessarily produce a famine before the
end of the season. The unlimited, unrestrained freedom of the
corn trade, as it is the only effectual preventative of the
miseries of a famine, so it is the best palliative of the inconveniences
of a dearth; for the inconveniences of a real scarcity cannot
be remedied, they can only be palliated. No trade deserves
more the full protection of the law, and no trade requires
it so much, because no trade is so much exposed to popular
odium.
In years of scarcity the inferior ranks of people impute their
distress to the avarice of the corn merchant, who becomes the
object of their hatred and indignation. Instead of making profit
upon such occasions, therefore, he is often in danger of being
utterly ruined, and of having his magazines plundered and destroyed
by their violence. It is in years of scarcity, however, when
prices are high, that the corn merchant expects to make his
principal profit. He is generally in contract with some farmers
to furnish him for a certain number of years with a certain
quantity of corn at a certain price. This contract price is
settled according to what is supposed to be the moderate and
reasonable, that is, the ordinary or average price, which before
the late years of scarcity was commonly about eight-and-twenty
shillings for the quarter of wheat, and for that of other grain
in proportion. In years of scarcity, therefore, the corn merchant
buys a great part of his corn for the ordinary price, and sells
it for a much higher. That this extraordinary profit, however,
is no more than sufficient to put his trade upon a fair level
with other trades, and to compensate the many losses which
he sustains upon other occasions, both from the perishable
nature of the commodity itself, and from the frequent and unforeseen
fluctuations of its price, seems evident enough, from this
single circumstance, that great fortunes are as seldom made
in this as in any other trade. The popular odium, however,
which attends it in years of scarcity, the only years in which
it can be very profitable, renders people of character and
fortune averse to enter into it. It is abandoned to an inferior
set of dealers; and millers, bakers, mealmen, and meal factors,
together with a number of wretched hucksters, are almost the
only middle people that, in the home market, come between the
grower and the consumer.
The ancient policy of Europe, instead of discountenancing
this popular odium against a trade so beneficial to the public,
seems, on the contrary, to have authorized and encouraged it.
By the 5th and 6th of Edward VI, c. 14, it was enacted that
whoever should buy any corn or grain with intent to sell it
again, should be reputed an unlawful engrosser, and should,
for the first fault, suffer two months' imprisonment, and forfeit
the value of the corn; for the second, suffer six months' imprisonment,
and forfeit double the value; and for the third, be set in
the pillory, suffer imprisonment during the king's pleasure,
and forfeit all his goods and chattels. The ancient policy
of most other parts of Europe was no better than that of England.
Our ancestors seem to have imagined that the people would
buy their corn cheaper of the farmer than of the corn merchant,
who, they were afraid, would require, over and above the price
which he paid to the farmer, an exorbitant profit to himself.
They endeavoured, therefore, to annihilate his trade altogether.
They even endeavoured to hinder as much as possible any middle
man of any kind from coming in between the grower and the consumer;
and this was the meaning of the many restraints which they
imposed upon the trade of those whom they called kidders or
carriers of corn, a trade which nobody was allowed to exercise
without a licence ascertaining his qualifications as a man
of probity and fair dealing. The authority of three justices
of the peace was, by the statute of Edward VI, necessary in
order to grant this licence. But even this restraint was afterwards
thought insufficient, and by a statute of Elizabeth the privilege
of granting it was confined to the quarter-sessions.
The ancient policy of Europe endeavoured in this manner to
regulate agriculture, the great trade of the country, by maxims
quite different from those which it established with regard
to manufactures, the great trade of the towns. By leaving the
farmer no other customers but either the consumers or their
immediate factors, the kidders and carriers of corn, it endeavoured
to force him to exercise the trade, not only of a farmer, but
of a corn merchant or corn retailer. On the contrary, it in
many cases prohibited the manufacturer from exercising the
trade of a shopkeeper, or from selling his own goods by retail.
It meant by the one law to promote the general interest of
the country, or to render corn cheap, without, perhaps, its
being well understood how this was to be done. By the other
it meant to promote that of a particular order of men, the
shopkeepers, who would be so much undersold by the manufacturer,
it was supposed, that their trade would be ruined if he was
allowed to retail at all.
The manufacturer, however, though he had been allowed to keep
a shop, and to sell his own goods by retail, could not have
undersold the common shopkeeper. Whatever part of his capital
he might have placed in his shop, he must have withdrawn it
from his manufacture. In order to carry on his business on
a level with that of other people, as he must have had the
profit of a manufacturer on the one part, so he must have had
that of a shopkeeper upon the other. Let us suppose, for example,
that in the particular town where he lived, ten per cent was
the ordinary profit both of manufacturing and shopkeeping stock;
he must in this case have charged upon every piece of his own
goods which he sold in his shop, a profit of twenty per cent.
When he carried them from his workhouse to his shop, he must
have valued them at the price for which he could have sold
them to a dealer or shopkeeper, who would have bought them
by wholesale. If he valued them lower, he lost a part of the
profit of his manufacturing capital. When again he sold them
from his shop, unless he got the same price at which a shopkeeper
would have sold them, he lost a part of the profit of his shopkeeping
capital. Though he might appear, therefore, to make a double
profit upon the same piece of goods, yet as these goods made
successively a part of two distinct capitals, he made but a
single profit upon the whole capital employed about them; and
if he made less than his profit, he was a loser, or did not
employ his whole capital with the same advantage as the greater
part of his neighbours.
What the manufacturer was prohibited to do, the farmer was
in some measure enjoined to do; to divide his capital between
two different employments; to keep one part of it in his granaries
and stack yard, for supplying the occasional demands of the
market; and to employ the other in the cultivation of his land.
But as he could not afford to employ the latter for less than
the ordinary profits of farming stock, so he could as little
afford to employ the former for less than the ordinary profits
of mercantile stock. Whether the stock which really carried
on the business of the corn merchant belonged to the person
who was called a farmer, or to the person who was called a
corn merchant, an equal profit was in both cases requisite
in order to indemnify its owner for employing it in this manner;
in order to put his business upon a level with other trades,
and in order to hinder him from having an interest to change
it as soon as possible for some other. The farmer, therefore,
who was thus forced to exercise the trade of a corn merchant,
could not afford to sell his corn cheaper than any other corn
merchant would have been obliged to do in the case of a free
competition.
The dealer who can employ his whole stock in one single branch
of business has an advantage of the same kind with the workman
who can employ his whole labour in one single operation. As
the latter acquires a dexterity which enables him, with the
same two hands, to perform a much greater quantity of work;
so the former acquires so easy and ready a method of transacting
his business, of buying and disposing of his goods, that with
the same capital he can transact a much greater quantity of
business. As the one can commonly afford his work a good deal
cheaper, so the other can commonly afford his goods somewhat
cheaper than if his stock and attention were both employed
about a greater variety of objects. The greater part of manufacturers
could not afford to retail their own goods so cheap as a vigilant
and active shopkeeper, whose sole business it was to buy them
at wholesale and to retail them again. The greater part of
farmers could still less afford to retail their own corn, to
supply the inhabitants of a town, at perhaps four or five miles
distance from the greater part of them, so cheap as a vigilant
and active corn merchant, whose sole business it was to purchase
corn by wholesale, to collect it into a great magazine, and
to retail it again.
The law which prohibited the manufacturer from exercising
the trade of a shopkeeper endeavoured to force this division
in the employment of stock to go on faster than it might otherwise
have done. The law which obliged the farmer to exercise the
trade of a corn merchant endeavoured to hinder it from going
on so fast. Both laws were evident violations of natural liberty,
and therefore unjust; and they were both, too, as impolitic
as they were unjust. It is the interest of every society that
things of this kind should never either be forced or obstructed.
The man who employs either his labour or his stock in a greater
variety of ways than his situation renders necessary can never
hurt his neighbour by underselling him. He may hurt himself,
and he generally does so. Jack of all trades will never be
rich, says the proverb. But the law ought always to trust people
with the care of their own interest, as in their local situations
they must generally be able to judge better of it than the
legislator can do. The law, however, which obliged the farmer
to exercise the trade of a corn merchant was by far the most
pernicious of the two.
It obstructed not only that division in the employment of
stock which is so advantageous to every society, but it obstructed
likewise the improvement and cultivation of the land. By obliging
the farmer to carry on two trades instead of one, it forced
him to divide his capital into two parts, of which one only
could be employed in cultivation. But if he had been at liberty
to sell his whole crop to a corn merchant as fast as he could
thresh it out, his whole capital might have returned immediately
to the land, and have been employed in buying more cattle,
and hiring more servants, in order to improve and cultivate
it better. But by being obliged to sell his corn by retail,
he was obliged to keep a great part of his capital in his granaries
and stack yard through the year, and could not, therefore,
cultivate so well as with the same capital he might otherwise
have done. This law, therefore, necessarily obstructed the
improvement of the land, and, instead of tending to render
corn cheaper, must have tended to render it scarcer, and therefore
dearer, than it would otherwise have been.
After the business of the farmer, that of the corn merchant
is in reality the trade which, if properly protected and encouraged,
would contribute the most to the raising of corn. It would
support the trade of the farmer in the same manner as the trade
of the wholesale dealer supports that of the manufacturer.
The wholesale dealer, by affording a ready market to the manufacturer,
by taking his goods off his hand as fast as he can make their
price to him before he has made them, enables him to keep his
whole capital, and sometimes even more than his whole capital,
constantly employed in manufacturing, and consequently to manufacture
a much greater quantity of goods than if he was obliged to
dispose of them himself to the immediate consumers, or even
to the retailers. As the capital of the wholesale merchant,
too, is generally sufficient to replace that of many manufacturers,
this intercourse between him and them interests the owner of
a large capital to support the owners of a great number of
small ones, and to assist them in those losses and misfortunes
which might otherwise prove ruinous to them.
An intercourse of the same kind universally established between
the farmers and the corn merchants would be attended with effects
equally beneficial to the farmers. They would be enabled to
keep their whole capitals, and even more than their whole capitals,
constantly employed in cultivation. In case of any of those
accidents, to which no trade is more liable than theirs, they
would find in their ordinary customer, the wealthy corn merchant,
a person who had both an interest to support them, and the
ability to do it, and they would not, as at present, be entirely
dependent upon the forbearance of their landlord, or the mercy
of his steward. Were it possible, as perhaps it is not, to
establish this intercourse universally, and all at once, were
it possible to turn all at once the whole farming stock of
the kingdom to its proper business, the cultivation of land,
withdrawing it from every other employment into which any part
of it may be at present diverted, and were it possible, in
order to support and assist upon occasion the operations of
this great stock, to provide all at once another stock almost
equally great, it is not perhaps very easy to imagine how great,
how extensive, and how sudden would be the improvement which
this change of circumstances would alone produce upon the whole
face of the country.
The statute of Edward VI, therefore, by prohibiting as much
as possible any middle man from coming between the grower and
the consumer, endeavoured to annihilate a trade, of which the
free exercise is not only the best palliative of the inconveniences
of a dearth but the best preventative of that calamity: after
the trade of the farmer, no trade contributing so much to the
growing of corn as that of the corn merchant.
The rigour of this law was afterwards softened by several
subsequent statutes, which successively permitted the engrossing
of corn when the price of wheat should not exceed twenty, twenty-four,
thirty-two, and forty shillings the quarter. At last, by the
15th of Charles II, c. 7, the engrossing or buying of corn
in order to sell it again, as long as the price of wheat did
not exceed forty-eight shillings the quarter, and that of other
grain in proportion, was declared lawful to all persons not
being forestallers, that is, not selling again in the same
market within three months. All the freedom which the trade
of the inland corn dealer has ever yet enjoyed was bestowed
upon it by this statute. The statute of the 12th of the present
king, which repeals almost all the other ancient laws against
engrossers and forestallers, does not repeal the restrictions
of this particular statute, which therefore still continue
in force.
This statute, however, authorizes in some measure two very
absurd popular prejudices.
First, it supposes that when the price of wheat has risen
so high as forty-eight shillings the quarter, and that of other
grains in proportion, corn is likely to be so engrossed as
to hurt the people. But from what has been already said, it
seems evident enough that corn can at no price be so engrossed
by the inland dealers as to hurt the people: and forty-eight
shillings the quarter, besides, though it may be considered
as a very high price, yet in years of scarcity it is a price
which frequently takes place immediately after harvest, when
scarce any part of the new crop can be sold off, and when it
is impossible even for ignorance to suppose that any part of
it can be so engrossed as to hurt the people.
Secondly, it supposes that there is a certain price at which
corn is likely to be forestalled, that is, bought up in order
to be sold again soon after in the same market, so as to hurt
the people. But if a merchant ever buys up corn, either going
to a particular market or in a particular market, in order
to sell it again soon after in the same market, it must be
because he judges that the market cannot be so liberally supplied
through the whole season as upon that particular occasion,
and that the price, therefore, must soon rise. If he judges
wrong in this, and if the price does not rise, he not only
loses the whole profit of the stock which he employs in this
manner, but a part of the stock itself, by the expense and
loss which necessarily attend the storing and keeping of corn.
He hurts himself, therefore, much more essentially than he
can hurt even the particular people whom he may hinder from
supplying themselves upon that particular market day, because
they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the
great body of the people, he renders them a most important
service. By making them feel the inconveniencies of a dearth
somewhat earlier than they otherwise might do, he prevents
their feeling them afterwards so severely as they certainly
would do, if the cheapness of price encouraged them to consume
faster than suited the real scarcity of the season. When the
scarcity is real, the best thing that can be done for the people
is to divide the inconveniencies of it as equally as possible
through all the different months, and weeks, and days of the
year. The interest of the corn merchant makes him study to
do this as exactly as he can: and as no other person can have
either the same interest, or the same knowledge, or the same
abilities to do it so exactly as he, this most important operation
of commerce ought to be trusted entirely to him; or, in other
words, the corn trade, so far at least as concerns the supply
of the home market, ought to be left perfectly free.
The popular fear of engrossing and forestalling may be compared
to the popular terrors and suspicions of witchcraft. The unfortunate
wretches accused of this latter crime were not more innocent
of the misfortunes imputed to them than those who have been
accused of the former. The law which put an end to all prosecutions
against witchcraft, which put it out of any man's power to
gratify his own malice by accusing his neighbour of that imaginary
crime, seems effectually to have put an end to those fears
and suspicions by taking away the great cause which encouraged
and supported them. The law which should restore entire freedom
to the inland trade of corn would probably prove as effectual
to put an end to the popular fears of engrossing and forestalling.
The 15th of Charles II, c. 7, however, with all its imperfections,
has perhaps contributed more both to the plentiful supply of
the home market, and to the increase of tillage, than any other
law in the statute book. It is from this law that the inland
corn trade has derived all the liberty and protection which
it has ever yet enjoyed; and both the supply of the home market,
and the interest of tillage, are much more effectually promoted
by the inland than either by the importation or exportation
trade.
The proportion of the average quantity of all sorts of grain
imported into Great Britain to that of all sorts of grain consumed,
it has been computed by the author of the tracts upon the corn
trade, does not exceed that of one to five hundred and seventy.
For supplying the home market, therefore, the importance of
the inland trade must be to that of the importation trade as
five hundred and seventy to one.
The average quantity of all sorts of grain exported from Great
Britain does not, according to the same author, exceed the
one-and-thirtieth part of the annual produce. For the encouragement
of tillage, therefore, by providing a market for the home produce,
the importance of the inland trade must be to that of the exportation.
I have no great faith in political arithmetic, computations.
I mention them only in order to show of how much less consequence,
in the opinion of the most judicious and experienced persons,
the foreign trade of corn is than the home trade. The great
cheapness of corn in the years immediately preceding the establishment
of the bounty may perhaps, with reason, be ascribed in some
measure to the operation of this statute of Charles II, which
had been enacted about five-and-twenty years before, and which
had therefore full time to produce its effect.
A very few words will sufficiently explain all that I have
to say concerning the other three branches of the corn trade.
II. The trade of the merchant importer of
foreign corn for home consumption evidently contributes to
the immediate supply of the home market, and must so far be
immediately beneficial to the great body of the people. It
tends, indeed, to lower somewhat the average money price of
corn, but not to diminish its real value, or the quantity of
labour which it is capable of maintaining. If importation was
at all times free, our farmers and country gentlemen would,
probably, one year with another, get less money for their corn
than they do at present, when importation is at most times
in effect prohibited; but the money which they got would be
of more value, would buy more goods of all other kinds, and
would employ more labour. Their real wealth, their real revenue,
therefore, would be the same as at present, though it might
be expressed by a smaller quantity of silver; and they would
neither be disabled nor discouraged from cultivating corn as
much as they do at present. On the contrary, as the rise in
the real value of silver, in consequence of lowering the money
price of corn, lowers somewhat the money price of all other
commodities, it gives the industry of the country, where it
takes place, some advantage in all foreign markets, and thereby
tends to encourage and increase that industry. But the extent
of the home market for corn must be in proportion to the general
industry of the country where it grows, or to the number of
those who produce something else, and therefore have something
else, or what comes to the same thing, the price of something
else, to give in exchange for corn. But in every country the
home market, as it is the nearest and most convenient, so is
it likewise the greatest and most important market for corn.
That rise in the real value of silver, therefore, which is
the effect of lowering the average money price of corn, tends
to enlarge the greatest and most important market for corn,
and thereby to encourage, instead of discouraging, its growth.
By the 22nd of Charles II, c. 13, the importation of wheat,
whenever the price in the home market did not exceed fifty-three
shillings and fourpence the quarter, was subjected to a duty
of sixteen shillings the quarter, and to a duty of eight shillings
whenever the price did not exceed four pounds. The former of
these two prices has, for more than a century past, taken place
only in times of very great scarcity; and the latter has, so
far as I know, not taken place at all. Yet, till wheat had
risen above this latter price, it was by this statute subjected
to a very high duty; and, tin it had risen above the former,
to a duty which amounted to a prohibition. The importation
of other sorts of grain was restrained at rates, and by duties,
in proportion to the value of the grain, almost equally high.*
Subsequent laws still further increased those duties.
* Before the 13th of the present king, the following were the duties
payable upon the importation of the different sorts of grain:-
Grain Duties Duties Duties
Beans to 28s. per qr. 19s. 10d. after till 40s. 16s. 8d. then 12d.
Barley to 28s. 19s. 10d. 32s. 16s. 12d.
Malt is prohibited by the annual Malt-tax Bill.
Oats to 16s. 5s. 10d. after 9 1/2d.
Pease to 40s. 16s. 10d. after 9 3/4d.
Rye to 36s. 19s. 10d. till 40s. 16s. 8d. then 12d.
Wheat to 44s. 21s. 10d. till 53s. 4d. 17s. then 8s.
till 4 l. and after that about 1s. 4d.
Buckwheat to 32s. per qr. to pay 16s.
These different duties were imposed, partly by the 92nd of
Charles II, in place of the Old Subsidy, partly by the New
Subsidy, by the One-third and Two-thirds Subsidy, and by the
Subsidy, 1747.
The distress which, in years of scarcity, the strict execution
of those laws might have brought upon the people, would probably
have been very great. But, upon such occasions, its execution
was generally suspended by temporary statutes, which permitted,
for a limited time, the importation of foreign corn. The necessity
of these temporary statutes sufficiently demonstrates the impropriety
of this general one.
These restraints upon importation, though prior to the establishment
of the bounty, were dictated by the same spirit, by the same
principles, which afterwards enacted that regulation. How hurtful
soever in themselves, these or some other restraints upon importation
became necessary in consequence of that regulation. If, when
wheat was either below forty-eight shillings the quarter, or
not much above it, foreign corn could have been imported either
duty free, or upon paying only a small duty, it might have
been exported again, with the benefit of the bounty, to the
great loss of the public revenue, and to the entire perversion
of the institution, of which the object was to extend the market
for the home growth, not that for the growth of foreign countries.
III. The trade of the merchant exporter of
corn for foreign consumption certainly does not contribute
directly to the plentiful supply of the home market. It does
so, however, indirectly. From whatever source this supply may
be usually drawn, whether from home growth or from foreign
importation, unless more corn is either usually grown, or usually
imported into the country, than what is usually consumed in
it, the supply of the home market can never be very plentiful.
But unless the surplus can in all ordinary cases be exported,
the growers will be careful never to grow more, and the importers
never to import more, than what the bare consumption of the
home market requires. That market will very seldom be overstocked;
but it will generally be understocked, the people whose business
it is to supply it being generally afraid lest their goods
should be left upon their hands. The prohibition of exportation
limits the improvement and cultivation of the country to what
the supply of its own inhabitants requires. The freedom of
exportation enables it to extend cultivation for the supply
of foreign nations.
By the 12th of Charles II, c. 4, the exportation of corn was
permitted whenever the price of wheat did not exceed forty
shillings the quarter, and that of other grain in proportion.
By the 15th of the same prince, this liberty was extended till
the price of wheat exceeded forty-eight shillings the quarter;
and by the 22nd, to all higher prices. A poundage, indeed,
was to be paid to the king upon such exportation. But all grain
was rated so low in the book of rates that this poundage amounted
only upon wheat to a shilling, upon oats to fourpence, and
upon all other grain to sixpence the quarter. By the 1st of
William and Mary, the act which established the bounty, this
small duty was virtually taken off whenever the price of wheat
did not exceed, forty-eight shillings the quarter; and by the
11th and l2th of William III, c. 20, it was expressly taken
off at all higher prices.
The trade of the merchant exporter was, in this manner, not
only encouraged by a bounty, but rendered much more free than
that of the inland dealer. By the last of these statutes, corn
could be engrossed at any price for exportation, but it could
not be engrossed for inland sale except when the price did
not exceed forty-eight shillings the quarter. The interest
of the inland dealer, however, it has already been shown, can
never be opposite to that of the great body of the people.
That of the merchant exporter may, and in fact sometimes is.
If, while his own country labours under a dearth, a neighbouring
country should be afflicted with a famine, it might be his
interest to carry corn to the latter country in such quantities
as might very much aggravate the calamities of the dearth.
The plentiful supply of the home market was not the direct
object of those statutes; but, under the pretence of encouraging
agriculture, to raise the money price of corn as high as possible,
and thereby to occasion, as much as possible, a constant dearth
in the home market. By the discouragement of importation, the
supply of that market, even in times of great scarcity, was
confined to the home growth; and by the encouragement of exportation,
when the price was so high as forty-eight shillings the quarter,
that market was not, even in times of considerable scarcity,
allowed to enjoy the whole of that growth. The temporary laws,
prohibiting for a limited time the exportation of corn, and
taking off for a limited time the duties upon its importation,
expedients to which Great Britain has been obliged so frequently
to have recourse, sufficiently demonstrate the impropriety
of her general system. Had that system been good, she would
not so frequently have been reduced to the necessity of departing
from it.
Were all nations to follow the liberal system of free exportation
and free importation, the different states into which a great
continent was divided would so far resemble the different provinces
of a great empire. As among the different provinces of a great
empire the freedom of the inland trade appears, both from reason
and experience, not only the best palliative of a dearth, but
the most effectual preventative of a famine; so would the freedom
of the exportation and importation trade be among the different
states into which a great continent was divided. The larger
the continent, the easier the communication through all the
different parts of it, both by land and by water, the less
would any one particular part of it ever be exposed to either
of these calamities, the scarcity of any one country being
more likely to be relieved by the plenty of some other. But
very few countries have entirely adopted this liberal system.
The freedom of the corn trade is almost everywhere more or
less restrained, and, in many countries, is confined by such
absurd regulations as frequently aggravate the unavoidable
misfortune of a dearth into the dreadful calamity of a famine.
The demand of such countries for corn may frequently become
so great and so urgent that a small state in their neighbourhood,
which happened at the same time to be labouring under some
degree of dearth, could not venture to supply them without
exposing itself to the like dreadful calamity. The very bad
policy of one country may thus render it in some measure dangerous
and imprudent to establish what would otherwise be the best
policy in another. The unlimited freedom of exportation, however,
would be much less dangerous in great states, in which the
growth being much greater, the supply could seldom be much
affected by any quantity of corn that was likely to be exported.
In a Swiss canton, or in some of the little states of Italy,
it may perhaps sometimes be necessary to restrain the exportation
of corn. In such great countries as France or England it scarce
ever can. To hinder, besides, the farmer from sending his goods
at all times to the best market is evidently to sacrifice the
ordinary laws of justice to an idea of public utility, to a
sort of reasons of state; an act of legislative authority which
ought to be exercised only, which can be pardoned only in cases
of the most urgent necessity. The price at which the exportation
of corn is prohibited, if it is ever to be prohibited, ought
always to be a very high price.
The laws concerning corn may everywhere be compared to the
laws concerning religion. The people feel themselves so much
interested in what relates either of their subsistence in this
life, or to their happiness in a life to come, that government
must yield to their prejudices, and, in order to preserve the
public tranquillity, establish that system which they approve
of. It is upon this account, perhaps, that we so seldom find
a reasonable system established with regard to either of those
two capital objects.
IV. The trade of the merchant carrier, or
of the importer of foreign corn in order to export it again,
contributes to the plentiful supply of the home market. It
is not indeed the direct purpose of his trade to sell his corn
there. But he will generally be willing to do so, and even
for a good deal less money than he might expect in a foreign
market; because he saves in this manner the expense of loading
and unloading, of freight and insurance. The inhabitants of
the country which, by means of the carrying trade, becomes
the magazine and storehouse for the supply of other countries
can very seldom be in want themselves. Though the carrying
trade might thus contribute to reduce the average money price
of corn in the home market, it would not thereby lower its
real value. It would only raise somewhat the real value of
silver.
The carrying trade was in effect prohibited in Great Britain,
upon all ordinary occasions, by the high duties upon the importation
of foreign corn, of the greater part of which there was no
drawback; and upon extraordinary occasions, when a scarcity
made it necessary to suspend those duties by temporary statutes,
exportation was always prohibited. By this system of laws,
therefore, the carrying trade was in effect prohibited upon
all occasions.
That system of laws, therefore, which is connected with the
establishment of the bounty, seems to deserve no part of the
praise which has been bestowed upon it. The improvement and
prosperity of Great Britain, which has been so often ascribed
to those laws, may very easily be accounted for by other causes.
That security which the laws in Great Britain give to every
man that he shall enjoy the fruits of his own labour is alone
sufficient to make any country flourish, notwithstanding these
and twenty other absurd regulations of commerce; and this security
was perfected by the revolution much about the same time that
the bounty was established. The natural effort of every individual
to better his own condition, when suffered to exert itself
with freedom and security is so powerful a principle that it
is alone, and without any assistance, not only capable of carrying
on the society to wealth and prosperity, but of surmounting
a hundred impertinent obstructions with which the folly of
human laws too often incumbers its operations; though the effect
of these obstructions is always more or less either to encroach
upon its freedom, or to diminish its security. In Great Britain
industry is perfectly secure; and though it is far from being
perfectly free, it is as free or freer than in any other part
of Europe.
Though the period of the greatest prosperity and improvement
of Great Britain has been posterior to that system of laws
which is connected with the bounty, we must not upon that account
impute it to those laws. It has been posterior likewise to
the national debt. But the national debt has most assuredly
not been the cause of it.
Though the system of laws which is connected with the bounty
has exactly the same tendency of tendency with the police of
Spain and Portugal, to lower somewhat the value of the precious
metals in the country where it takes place, yet Great Britain
is certainly one of the richest countries in Europe, while
Spain and Portugal are perhaps among the most beggarly. This
difference of situation, however, may easily be accounted for
from two different causes. First, the tax of Spain, the prohibition
in Portugal of exporting gold and silver, and the vigilant
police which watches over the execution of those laws, must,
in two very poor countries, which between them import annually
upwards of six millions sterling, operate not only more directly
but much more forcibly in reducing the value of those metals
there than the corn laws can do in Great Britain. And, secondly,
this bad policy is not in those countries counterbalanced by
the general liberty and security of the people. Industry is
there neither free nor secure, and the civil and ecclesiastical
governments of both Spain and Portugal are such as would alone
be sufficient to perpetuate their present state of poverty,
even though their regulations of commerce were as wise as the
greater part of them are absurd and foolish.
The 13th of the present king, c. 43, seems to have established
a new system with regard to the corn laws in many respects
better than the ancient one, but in one or two respects perhaps
not quite so good.
By this statute the high duties upon importations for home
consumption are taken off so soon as the price of middling
wheat rises to forty-eight shillings the quarter; that of middling
rye, pease or beans, to thirty-two shillings; that of barley
to twenty-four shillings; and that of oats to sixteen shillings;
and instead of them a small duty is imposed of only sixpence
upon the quarter of wheat, and upon that of other grain in
proportion. With regard to all these different sorts of grain,
but particularly with regard to wheat, the home market is thus
opened to foreign supplies at prices considerably lower than
before.
By the same statute the old bounty of five shillings upon
the exportation of wheat ceases so soon as the price rises
to forty-four shillings the quarter, instead of forty-eight,
the price at which it ceased before; that of two shillings
and sixpence upon the exportation of barley ceases so soon
as the price rises to twenty-two shillings, instead of twenty-four,
the price at which it ceased before; that of two shillings
and sixpence upon the exportation of oatmeal ceases so soon
as the price rises to fourteen shillings, instead of fifteen,
the price at which it ceased before. The bounty upon rye is
reduced from three shillings and sixpence to three shillings,
and it ceases so soon as the price rises to twenty-eight shillings
instead of thirty-two, the price at which it ceased before.
If bounties are as improper as I have endeavoured to prove
them to be, the sooner they cease, and the lower they are,
so much the better.
The same statute permits, at the lowest prices, the importation
of corn, in order to be exported again duty free, provided
it is in the meantime lodged in a warehouse under the joint
locks of the king and the importer. This liberty, indeed, extends
to no more than twenty-five of the different ports of Great
Britain. They are, however, the principal ones, and there may
not, perhaps, be warehouses proper for this purpose in the
greater part of the others.
So far this law seems evidently an improvement upon the ancient
system.
But by the same law a bounty of two shillings the quarter
is given for the exportation of oats whenever the price does
not exceed fourteen shillings. No bounty had ever been given
before for the exportation of this grain, no more than for
that of pease or beans.
By the same law, too, the exportation of wheat is prohibited
so soon as the price rises to forty-four shillings the quarter;
that of rye so soon as it rises to twenty-eight shillings;
that of barley so soon as it rises to twenty-two shillings;
and that of oats so soon as they rise to fourteen shillings.
Those several prices seem all of them a good deal too low,
and there seems to be an impropriety, besides, in prohibiting
exportation altogether at those precise prices at which that
bounty, which was given in order to force it, is withdrawn.
The bounty ought certainly either to have been withdrawn at
a much lower price, or exportation ought to have been allowed
at a much higher.
So far, therefore, this law seems to be inferior to the ancient
system. With all its imperfections, however, we may perhaps
say of it what was said of the laws of Solon, that, though
not the best in itself, it is the best which the interests,
prejudices, and temper of the times would admit of. It may
perhaps in due time prepare the way for a better.
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