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Chapter 5



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

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 alway's 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

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 operate's 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

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

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

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, how.
ever, 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 nominaly
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

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 detemnined 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 252,231.
During these eleven years, the tonnage bounties paid amounted to
155,463:11s. or 8s:2d. upon every barrel of sea-sticks, and to
12s:3d. 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:11d.; and,
when entered for home consumption, 14s:3d.; and that every
barrel cured with foreign salt, when exported, has cost
government 1:7:5d. ; and, when entered for home consumption,
1:3:9d. 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 diliglence 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 twenry 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 Isdands, 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 he
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 countribute a good deal to the relief of a
great number of our fellow-subjects, whose circumstances are by
no means affuent. 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 likaly 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

Were it possible, indeed, for one great company of merchants to
possess themselves of the whole crop of an extensive country, it
might perhaps be their interest to deal with it, as the Dutch are
said to do with the spiceries of the Moluccas, to destroy or
throw away a considerable part of it, in order to keep up the
price of the rest. But it is scarce possible, even by the
violence of law, to establish such an extensive monopoly with
regard to corn ; and wherever the law leaves the trade free, it
is of all commodities the least liable to be engrossed or
monopolized by the forced 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 pruducing 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

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
shopkeper 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

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 he 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 mercliant 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 inconveniencics
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 successvely 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 afterwads 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

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, be ascribed in some measure
to the operation of this statute of Charles II. which had been
enacted about five-and-twenty years before, and which had,
therefore, full time to produce its effect.

A very few words will sufficiently explain all that I have to say
concerning the other three branches of the corn trade.

II. The trade of the merchant-importer of foreign corn for home
consumption, evidently contributes to the immediate supply of the
home market, and must so far be immediately beneficial to the
great body of the people. It tends, indeed, to lower somewhat the
average money price of corn, but not to diminish its real value,
or the quantity of labour which it is capable of maintaining. If
importation was at all times free, our farmers and country
gentlemen would probably, one year with another, get less money
for their corn than they do at present, when importation is at
most times in effect prohibited ; but the money which they got
would be of more value, would buy more goods of all other kinds,
and would employ more labour. Their real wealth, their real
revenue, therefore, would be the same as at present, though it
might be expressed by a smaller quantity of silver, and they
would neither be disabled nor discouraged from cultivating corn
as much as they do at present. On the contrary, as the rise in
the real value of silver, in consequence of lowering the money
price of corn, lowers somewhat the money price of all other
commodities, it gives the industry of the country where it takes
place some advantage in all foreign markets and thereby tends to
encourage and increase that industry. But the extent of the home
market for corn must be in proportion to the general industry of
the country where it grows, or to the number of those who produce
something else, and therefore, have something else, or, what
comes to the same thing, the price of something else, to give in
exchange for corn. But in every country, the home market, as it
is the nearest and most convenient, so is it likewise the
greatest and most important market for corn. That rise in the
real value of silver, therefore, which is the effect of lowering
the average money price of corn, tends to enlarge the greatest
and most important market for corn, and thereby to encourage,
instead of discouraging its growth.

By the 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 - 9d.
Pease to 40s. - 16s: 0d.after - 9d.
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

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 freedmn 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 he 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

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

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.

Adam Smith

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