The Wealth of Nations

F BOUNTIES.

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 cost 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 cost 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 employed 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 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 of 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
heaviest of the two. Let us suppose that, taking one year with another,
the bounty of 5s. upon the exportation of the quarter of wheat raises the
price of that commodity in the home market only 6d. the bushel, or 4s. 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 5s.
upon every quarter of wheat exported, must pay another of 4s. 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 5s. therefore, which they contribute to the
payment of the first tax, they must contribute £6:4s. 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 stint
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, than 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
home made 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 every thing 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 4s. the bushel, instead of 3s:6d. 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,
4s. will purchase no more home made goods of any other kind than 3s. 6d.
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 home made commodities.

That degradation in the value of silver, which is the effect of the
fertility of the mines, and which operates equally, or very nearly
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 not make them really poorer. A service of plate becomes
really cheaper, and every thing 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 every body 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 distributers 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 other. 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 home-made 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 the 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 the 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
exportation 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 properly 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 depend 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 their 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 to 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 252,231¼. During these
eleven years, the tonnage bounties paid amounted to £155,463:11s. or
8s:2¼d. upon every barrel of sea-sticks, and to 12s:3¾d. 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 17s:11¾d.; and, when entered for home consumption, 14s:3¾d.;
and that every barrel cured with foreign salt, when exported, has cost
government £1:7:5¾d.; and, when entered for home consumption, £1:3:9¾d.
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. {See the accounts at the end of this Book.}

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 the 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, £113:15s.; each barrel of merchantable herrings £159:7:6.

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 burden ), 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 north-western 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 these 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 30s. 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
to 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 common 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-bus 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, 16s. 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 was 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 3s. to
about 6s. 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 30s. the ton for the encouragement of the white herring
fishery (the 23d Geo. II. chap. 24), a joint stock company was erected,
with a capital of £500,000, to which the subscribers (over and above all
other encouragements, the tonnage bounty just now mentioned, the
exportation bounty of 2s:8d. 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 into 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 out-ports of the kingdom, provided a sum not less
than £10,000 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 out-ports 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 sail-cloth, 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 £300,000.

Bounties are sometimes called premiums, as drawbacks are sometimes called
bounties. But we must, in all cases, attend to the nature of the thing,
without paying any regard to the word.

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 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 every body 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, enables 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 inconveniencies 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
inconveniencies 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 monopolised by the force
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 altogether impracticable.
As, in every civilized 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 inconveniencies 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 in 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 inconveniencies 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 preventive of the miseries of a famine, so it is
the best palliative of the inconveniencies of a dearth; for the
inconveniencies 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 28s. 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, meal-men, 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 authorised and encouraged it.

By the 5th and 6th of Edward VI cap. 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 a 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 shop-keeping 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, and 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 a 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 on 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 by 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 he 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 legislature 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 them, and by
sometimes even advancing 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 in between the grower and the consumer,
endeavoured to annihilate a trade, of which the free exercise is not only
the best palliative of the inconveniencies of a dearth, but the best
preventive 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 20s. and 24s. 32s. and 40s. 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
48s. 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 twelfth 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, authorises in some measure two very absurd popular
prejudices.

First, It supposes, that when the price of wheat has risen so high as 48s.
the quarter, and that of other grain 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 48s. 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 inconvenience 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 would 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 trade as thirty to one.

I have no great faith in political arithmetic, and I mean not to warrant
the exactness of either of these 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, he 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 22d of Charles II. c. 13, the importation of wheat, whenever the
price in the home market did not exceed 53s:4d. the quarter, was subjected
to a duty of 16s. the quarter; and to a duty of 8s. whenever the price did
not exceed £4. 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 has risen
above this latter price, it was, by this statute, subjected to a very high
duty; and, till 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. 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 - 9½d.
Pease to 40s. - 16s: 0d. after - 9¾d.
Rye to 36s. - 19s:10d. till 40s. 16s:8d - 12d.
Wheat to 44s. - 21s: 9d. till 53s:4d. 17s. - 8s.
till £4, and after that about 1s:4d.
Buck-wheat to 32s. per qr. to pay 16s.

These different duties were imposed, partly by the 22d 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. Subsequent laws still further
increased those duties.

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 48s. 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
maybe 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 require. 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 40s. 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 48s. the quarter; and by the
22d, 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 1s., upon oats to
4d., and upon all other grain to 6d. the quarter. By the 1st of William
and Mary, the act which established this bounty, this small duty was
virtually taken off whenever the price of wheat did not exceed 48s. the
quarter; and by the 11th and 12th 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 48s. 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 48s. 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 preventive 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 or corn that was likely to be exported. In a
Swiss canton, or in some of the little states in 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 or legislative authority
which ought to be exercised only, which can be pardoned only, in cases of
the most urgent necessity. The price at which 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 to 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 must 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.

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 encumbers its operations: though the effect of those 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 with the practice 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 amongst the most beggarly.
This difference of situation, however, may easily be accounted for from
two different causes. First, the tax in 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 greatest 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 importation for home consumption are
taken off, so soon as the price of middling wheat rises to 48s. the
quarter; that of middling rye, pease, or beans, to 32s.; that of barley to
24s.; and that of oats to 16s.; and instead of them, a small duty is
imposed of only 6d upon the quarter of wheat, and upon that or other grain
in proportion. With regard to all those 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 5s. upon the exportation of wheat,
ceases so soon as the price rises to 44s. the quarter, instead of 48s. the
price at which it ceased before; that of 2s:6d. upon the exportation of
barley, ceases so soon as the price rises to 22s. instead of 24s. the
price at which it ceased before; that of 2s:6d. upon the exportation of
oatmeal, ceases so soon as the price rises to 14s. instead of 15s. the
price at which it ceased before. The bounty upon rye is reduced from
3s:6d. to 3s. and it ceases so soon as the price rises to 28s. instead of
32s. 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 mean time
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 2s. 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 interest, prejudices, and temper of the times, would admit
of. It may perhaps in due time prepare the way for a better.