nations for any considerable time together, in such a manner as that one of them shall always and regularly lose, or sell its goods for less than it really costs to send them to market. But if the bounty did not repay to the merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in another way, or to find out a trade in which the price of the goods would replace to him, with the ordinary profit, the capital 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

The author of these tracts, which Smith lauds so highly, was Charles Smith, a miller in an extensive way of business in Barking. See Chalmers' edition, 1804. On the principles of the mercantile system, and in accordance with the theory, that the only trade worth encourage. ment is that which assists the accumulation of gold and silver in countries which do not naturally possess them; and on the assumption that the exported corn sold at a higher price, independent of the bounty, than it would have sold for if no such stimulus had been applied to trade, it is difficult to argue that the bounty did

not create a new market, since prices on an emergency, and on the theory that the corn was exchanged for the precious metals, increase the stock of these articles. But the real significance of this expedient is, that it was intended to bolster up the rents of the landlords by mulcting the general public, who were made to pay, first, for the machinery by which their home-grown stock of provisions was diminished; next, for the unnatural increase in the price of that which they consumed. The gain of the bounty, too, for obvious reasons, was appropriated solely by the landowners.

only the bounty, but this capital, together with the ordinary profits of stock, the society is a loser by the difference, or the national stock is so much diminished. But the very reason for which it has been thought necessary to grant a bounty, is the supposed insufficiency of the price to do this.

The average price of corn, it has been said, has fallen considerably since the establishment of the bounty. That the average price of corn began to fall somewhat towards the end of the last century, and has continued to do so during the course of the sixty-four first years of the present, I have already endeavoured to show. But this event, supposing it to be as real as I believe it to be, must have happened in spite of the bounty, and cannot possibly have happened in consequence of it. It has happened in France, as well as in England, though in France there was not only no bounty, but, till 1764, the exportation of corn was subjected to a general prohibition. This gradual fall in the average price of grain, it is probable, therefore, is ultimately owing neither to the one regulation nor to the other, but to that gradual and insensible rise in the real value of silver, which, in the first book 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.

1 It does not seem that Adam Smith had any other reason on which to explain this low price of corn during the period referred to, except the fact itself. There does not appear, however, to be any evidence that the supply of silver declined below the wants of the European market at this time, still less that it was insufficient to fill up the void created by wear. On the contrary, the silver currency seems to have been considerably supplemented by the use of gold.

The true explanation of the fact commented on is, that towards the end of the seventeenth century the art of agriculture was rapidly developed. It was at this time that the employment of winter roots became general, and that artificial grasses were discovered and adapted to English agriculture. The newspapers of the time contain numerous advertisements of the seeds of these roots and grasses, in which attention is invited to their value and VOL. II.

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novelty. These improvements were assisted by a cycle of exceedingly favourable seasons. That such was the fact is plain, partly from the rapid increase of population in England and Wales; for it is calculated on very substantial grounds, that the inhabitants of the southern king. dom were not much more than 5,000,000 at the close of the seventeenth, and reached nearly 10,000,000 at the middle of the eighteenth century. During this period too, notwithstanding the low price of corn, rents rose considerably, and the landed gentry became much more opulent than before. Now the facts of a low price of corn, an increased rate of wages, a rapidly increasing population, and a great enlargement of rent, cannot be the result of an enhanced price of silver, but must have been caused by a great and sudden development in the art of agriculture.

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 institutiou. In years of scarcity, though the bounty is frequently suspended, yet the great exportation which it occasions in years of plenty must frequently hinder more or less the plenty of one year from relieving the scarcity of another. Both in years of plenty and in years of scarcity, therefore, the bounty necessarily tends to raise the money price of corn somewhat higher than it otherwise would be in the home market.

That, in the actual state of tillage, the bounty must necessarily have this tendency, will not, I apprehend, be disputed by any reasonable person. But it has been thought by many people that it tends to encourage tillage, and that in two different ways: first, by opening a more extensive foreign market to the corn of the farmer, it tends, they imagine, to increase the demand for, and consequently the production of that commodity; and secondly, by securing to him a better price than he could otherwiso 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 five shillings upon the exportation of the quarter of wheat, raises the price of that commodity in the home market only sixpence the bushel, or four shillings the quarter, higher than it otherways would have been in the actual state of the crop. Even upon this very moderate supposition, the great body of the people, over and above contributing the tax which pays the bounty of five shillings upon every quarter of wheat exported, must pay another of four shillings upon every quarter which they themselves consume. But, according to the very well-informed author of the tracts upon the corntrade, the average proportion of the corn exported to that consumed at home, is not more than that of one to thirty-one. For every five shillings, therefore, which they contribute to the payment of the first tax, they must contribute six pounds four shillings to the payment of the second. So very heavy a tax upon the first necessary of life, must either reduce the subsistence of the labouring poor, or it must occasion some augmentation in their pecuniary wages, proportionable to that in the pecuniary price of their subsistence. So far as it operates in the one way, it must reduce the ability of the labouring poor to educate and bring up their children, and must, so far, tend to restrain the population of the country. So far as it operates in the other, it must reduce the ability of the employers of the poor to employ so great a number as they otherwise might do, and must, so far, tend to restrain the industry of the country. The extraordinary exportation of corn, therefore, occasioned by the bounty, not only, in every particular year, diminishes the home, just as much as it extends the foreign market and consumption, but, by restraining the population and industry of the country, its final tendency is to stunt and restrain the gradual extension of the home market; and thereby, in the long run, rather to diminish than to augment the whole market and consumption of corn.

This enhancement of the money price of corn however, it has been thought, by rendering that commodity more profitable to the farmer, must necessarily encourage its production.

I answer, that this might be the case if the effect of the bounty was to raise the real price of corn, or to enable the farmer, with an equal quantity of it, to maintain a greater number of labourers in

the same manner, whether liberal, moderate, or scanty, that other labourers are commonly maintained in his neighbourhood. But neither the bounty, it is evident, nor any other human institution, can have any such effect. It is not the real but the nominal price of corn, which can in any considerable degree be affected by the bounty. And though the tax which that institution imposes upon the whole body of the people, may be very burdensome to those who pay it, it is of very little advantage to those who receive it.

The real effect of the bounty is not so much to raise the real value of corn, as to degrade the real value of silver; or to make an equal quantity of it exchange for a smaller quantity, not only of corn, but of all other home-made commodities: for the money price of corn regulates that of all other home-made commodities.

It regulates the money price of labour, which must always be such as to enable the labourer to purchase a quantity of corn sufficient to maintain him and his family either in the liberal, moderate, or scanty manner in which the advancing, stationary, or declining circumstances of the society oblige his employers to maintain him.

It regulates the money price of all the other parts of the rude produce of land, which, in every period of improvement, must bear a certain proportion to that of corn, though this proportion is different in different periods. It regulates, for example, the money price of grass and hay, of butcher's-meat, of horses, and the maintenance of horses, of land carriage consequently, or of the greater part of the inland commerce of the country.'

By regulating the money price of all the other parts of the rude produce of land, it regulates that of the materials of almost all manufactures. By regulating the money price of labour, it regulates that of manufacturing art and industry. And by regulating both, it regulates that of the complete manufacture. The money price of labour, and of everything that is the produce either of

If the bounty on corn heightened its price, the tendency of the bounty would be to diminish the price of other agricultural produce, by narrowing the area of consumption. When bread is dear, meat is generally cheap. It is probable therefore that, as far as the bounty operated, it was a heavy tax on the consumer, and no great boon, if it were not, on the other hand, a real injury to the

producer. If therefore it regulated other prices, it did so adversely. It artificially lowered the value of silver in one direction, to artificially heighten it in other directions. The effect of this unnatural disturbance of prices was all the more iniquitous, as the enhancement was of the necessaries of life, the depreciation of its luxuries.