deed, suffer a little, and that of the customs a good deal more; but the natural balance of industry, the natural division and distribution of labour, which is always more or less disturbed by such duties, would be more nearly re-established by such a regulation.

ment of the war which began in 1755, and were always drawn back upon exportation. which they brought back with them to the The revenue of excise would, in this case inmother country, where that wine had not been much in fashion before. Upon the conclusion of that war, in 1763 (by the 4th Geo. III, chap. 15, sect. 12), all the duties except L.3, 10s. were allowed to be drawn back upon the exportation to the colonies of all wines, except French wines, to the commerce and consumption of which national prejudice would allow no sort of encouragement. The period between the granting of this indulgence and the revolt of our North American colonies, was probably too short to admit of any considerable change in the customs of those countries.

These reasons, however, will justify drawbacks only upon exporting goods to those countries which are altogether foreign and independent, not to those in which our merchants and manufacturers enjoy a monopoly. A drawback, for example, upon the exportation of European goods to our American colonies, will not always occasion a greater exThe same act which, in the drawbacks upon portation than what would have taken place all wines, except French wines, thus favoured without it. By means of the monopoly which the colonies so much more than other coun- our merchants and manufacturers enjoy there, tries, in those upon the greater part of other the same quantity might frequently, perhaps, commodities, favoured them much less. Up- be sent thither, though the whole duties were on the exportation of the greater part of com- retained. The drawback, therefore, may fremodities to other countries, half the old sub-quently be pure loss to the revenue of excise sidy was drawn back. But this law enacted, and customs, without altering the state of the that no part of that duty should be drawn trade, or rendering it in any respect more exback upon the exportation to the colonies of any commodities of the growth or manufacture either of Europe or the East Indies, except wines, white calicoes, and muslins.

tensive. How far such drawbacks can be justified as a proper encouragement to the industry of our colonies, or how far it is advantageous to the mother country that they should be exempted from taxes which are paid by all the rest of their fellow-subjects, will appear hereafter, when I come to treat of co

Drawbacks were, perhaps, originally granted for the encouragement of the carrying trade, which, as the freight of the ship is frequently paid by foreigners in money, was supposed to lonies. be peculiarly fitted for bringing gold and sil- Drawbacks, however, it must always be unver into the country. But though the carry-derstood, are useful only in those cases in ing trade certainly deserves no peculiar en-which the goods, for the exportation of which couragement, though the motive of the insti- they are given, are really exported to some tution was, perhaps, abundantly foolish, the foreign country, and not clandestinely re-iminstitution itself seems reasonable enough. ported into our own. That some drawbacks, Such drawbacks cannot force into this trade a particularly those upon tobacco, have fregreater share of the capital of the country than quently been abused in this manner, and have what would have gone to it of its own ac- given occasion to many frauds, equally hurtcord, had there been no duties upon importa-ful both to the revenue and to the fair trader, tion; they only prevent its being excluded is well known.

altogether by those duties. The carrying trade, though it deserves no preference, ought not to be precluded, but to be left free, like all other trades. It is a necessary resource to those capitals which cannot find employment, either in the agriculture or in the manufactures of the country, either in its home trade, or in its foreign trade of consumption.

The revenue of the customs, instead of suffering, profits from such drawbacks, by that part of the duty which is retained. If the whole duties had been retained, the foreign goods upon which they are paid could seldom have been exported, nor consequently imported, for want of a market. The duties, therefore, of which a part is retained, would never have been paid.

CHAP. V.

OF BOUNTIES.

BOUNTIES upon exportation are, in Great Britain, frequently petitioned for, and sometimes granted, to the produce of particular branches of domestic industry. By means of them, our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap or cheaper than their rivals in the foreign market. A greater quantity, it is said, will thus These reasons seem sufficiently to justify be exported, and the balance of trade consedrawbacks, and would justify them, though quently turned more in favour of our own he whole duties, whether upon the produce country. We cannot give our workmen a moof domestic industry or upon foreign goods,nopoly in the foreign, as we have done in the

home market. We cannot force foreigners of the mercantile system, is a clear proof that to buy their goods, as we have done our this forced corn trade is beneficial to the naown countrymen. The next best expedient, tion, the value of the exportation exceeding it has been thought, therefore, is to pay them that of the importation by a much greater sum for buying. It is in this manner that the than the whole extraordinary expense which mercantile system proposes to enrich the whole the public has been at in order to get it excountry, and to put money into all our pock- ported. He does not consider that this ex ets, by means of the balance of trade. traordinary 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.

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 The average price of corn, it has been said, price which does not replace to him his capi- has fallen considerably since the establishtal, together with the ordinary profit, or in ment of the bounty. That the average price which he is obliged to sell them for less than of corn began to fall somewhat towards the it really cost him to send them to market. end of the last century, and has continued to The bounty is given in order to make up this do so during the course of the sixty-four first loss, and to encourage him to continue, or, years of the present, I have already endeaperhaps, to begin a trade, of which the ex-voured to show. But this event, supposing it pense is supposed to be greater than the re- to be real, as I believe it to be, must have turns, 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 resem. bled it, there would soon be no capital left in the country.

happened in spite of the bounty, and cannot possibly have happened in consequence of it. It has happened in France, as well as in Eng| land, 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 nave 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.

The trades, it is to be observed, which are carried on by means of bounties, are the only ones which can be carried on between two nations for any considerable time together, in such a manner as that one of them shall always and regularly lose, or sell its goods for less than it really cost to send them to market. But if the bounty did not repay to the merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in another way, or to find out a trade in which the price of the goods would replace to him, with the In years of plenty, it has already been ob ordinary profit, the capital employed in send- served, the bounty, by occasioning an extraing them to market. The effect of bounties, ordinary exportation, necessarily keeps up the like that of all the other expedients of the mer-price of corn in the home market above what cantile system, can only be to force the trade it would naturally fall to. To do so was the of a country into a channel much less advan- avowed purpose of the institution. In years tageous than that in which it would naturally of scarcity, though the bounty is frequently run of its own accord. |suspended, yet the great exportation which it The ingenious and well-informed author of occasions in years of plenty, must frequently the Tracts upon the Corn Trade has shown hinder, more or less, the plenty of one year very clearly, that since the bounty upon the from relieving the scarcity of another. Both exportation of corn was first established, the in years of plenty and in years of scarcity, price of the corn exported, valued moderately therefore, the bounty necessarily tends to raise enough, has exceeded that of the corn im- the money price of corn somewhat higher ported, valued very high, by a much greater than it otherwise would be in the home marsum than the amount of the whole bounties ket.

which have been paid during that period. That in the actual state of tillage the bounty This, he imagines, upon the true principles must necessarily have this tendency, will not,

I apprehend, be disputed by any reasonable | far as it operates in the one way, it must reperson. But it has been thought by many duce the ability of the labouring poor to edupeople, that it tends to encourage tillage, and cate and bring up their children, and must, that in two different ways; first, by opening a so far, tend to restrain the population of the more extensive foreign market to the corn of country. So far as it operates in the other, the farmer, it tends, they imagine, to increase it must reduce the ability of the employers of the demand for, and consequently the pro- the poor, to employ so great a number as they duction of, that commodity; and, secondly, otherwise might do, and must so far tend to by securing to him a better price than he restrain the industry of the country. The excould otherwise expect in the actual state of traordinary exportation of corn, therefore, octillage, it tends, they suppose, to encourage casioned by the bounty, not only in every tillage. This double encouragement must, particular year diminishes the home, just as they imagine, in a long period of years, occa- much as it extends the foreign market and sion such an increase in the production of consumption, but, by restraining the populacorn, as may lower its price in the home mar- tion and industry of the country, its final tenket, much more than the bounty can raise it, dency is to stint and restrain the gradual exin the actual state which tillage may, at the tension of the home market; and thereby, in end of that period, happen to be in. the long-run, rather to diminish than to augment the whole market and consumption of corn.

I answer, that whatever extension of the foreign market can be occasioned by the bounty must, in every particular year, be altogether This enhancement of the money price of at the expense of the home market; as every corn, however, it has been thought, by renbushel of corn, which is exported by means of dering that commodity more profitable to the the bounty, and which would not have been farmer, must necessarily encourage its proexported without the bounty, would have re-duction. mained in the home market to increase the I answer, that this might be the case, if the consumption, and to lower the price of that effect of the bounty was to raise the real price commodity. The corn bounty, it is to be ob- of corn, or to enable the farmer, with an equal served, as well as every other bounty upon ex- quantity of it, to maintain a greater number portation, imposes two different taxes upon of labourers in the same manner, whether lithe people; first, the tax which they are ob- beral, moderate, or scanty, than other labourliged to contribute, in order to pay the boun- ers are commonly maintained in his neighty; and, secondly, the tax which arises from bourhood. But neither the bounty, it is evithe advanced price of the commodity in the dent, nor any other human institution, can home market, and which, as the whole body have any such effect. It is not the real, but of the people are purchasers of corn, must, in the nominal price of corn, which can in any 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 com- The real effect of the bounty is not so much modity in the home market only 6d. the bu- to raise the real value of corn, as to degrade chel, or 4s. the quarter higher than it other-the real value of silver; or to make an equal wise would have been in the actual state of quantity of it exchange for a smaller quantity, the crop. Even upon this very moderate sup- not only of corn, but of all other home made position, the great body of the people, over commodities; for the money price of corn reand above contributing the tax which pays gulates that of all other home made commothe bounty of 5s. upon every quarter of wheat dities.

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.

exported, must pay another of 4s. upon every It regulates the money price of labour, quarter which they themselves consume. But which must always be such as to enable the according to the very well informed author of labourer to purchase a quantity of corn suffithe Tracts upon the Corn Trade, the average cient to maintain him and his family, either proportion of the corn exported to that con- in the liberal, moderate, or scanty manner, in sumed at home, is not more than that of one which the advancing, stationary, or declining to thirty-one. For every 5s. therefore, which circumstances of the society, oblige his emthey contribute to the payment of the first ployers to maintain him. tax, they must contribute L.6, 4s. to the pay- It regulates the money price of all the ment of the second. So very heavy a tax other parts of the rude produce of land, upon the first necessary of life must either re- which, in every period of improvement, must duce the subsistence of the labouring poor, bear a certain proportion to that of corn, or it must occasion some augmentation in though this proportion is different in different their pecuniary wages, proportionable to that periods. It regulates, for example, the money in the pecuniary price of their subsistence. So price of grass and hay, of butcher's meat, of

horses, and the maintenance of horses, of land | the distributers of gold and silver to all the carriage consequently, or of the greater part other countries of Europe. Those metals 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.

ought naturally, therefore, to be somewhat cheaper in Spain and Portugal than in any other part of Europe. The difference, however, should be no more than the amount of the freight and insurance; and, on account of the great value and small bulk of those metals, their freight is no great matter, and their in. surance 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.

pense.

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 an

Though in consequence of the bounty, Spain by taxing, and Portugal by prohibittherefore, the farmer should be enabled to selling, the exportation of gold and silver, load his corn for 4s. the bushel, instead of 3s. 6d. that exportation with the expense of smugand to pay his landlord a money rent propor-gling, and raise the value of those metals in tionable to this rise in the money price of his other countries so much more above what it is produce; yet if, in consequence of this rise in their own, by the whole amount of this exin the price of corn, 4s. will purchase no more When you dam up a stream of water, 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 fo-nual produce of their land and labour will alreign commodities, this enhancement in the price of corn may give them some little advantage. In that of home made commodities, it can give them none at all. And almost the whole expense of the farmer, and the far greater part even of that of the landlord, is in home made commodities.

low 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 Portu gal, accordingly, is, by all accounts, notwithstanding these restraints, very near equal to the whole annual importation. As the water,

That degradation in the value of silver, which is the effect of the fertility of the mines, and which operates equally, or very nearly however, must always be deeper behind the equally, through the greater part of the com-dam-head than before it, so the quantity of gold mercial world, is a matter of very little conse- and silver which these restraints detain in Spain quence to any particular country. The con- and Portugal, must, in proportion to the annual sequent rise of all money prices, though it produce of their land and labour, be greater does not make those who receive them really than what is to be found in other countries. richer, does not make them really poorer. A The higher and stronger the dam-head, the service of plate becomes really cheaper, and greater must be the difference in the depth of every thing else remains precisely of the same water behind and before it. The higher the tax, real value as before. the higher the penalties with which the prohibiBut that degradation in the value of silver, tion is guarded, the more vigilant and severe which, being the effect either of the peculiar the police which looks after the execution of situation or of the political institutions of a the law, the greater must be the difference in particular country, takes place only in that the proportion of gold and silver to the ancountry, is a matter of very great consequence, nual produce of the land and labour of Spain which, far from tending to make any body and Portugal, and to that of other countries. really richer, tends to make every body really It is said, accordingly, to be very considerable, poorer. The rise in the money price of all and that you frequently find there a profusion commodities, which is in this case peculiar to of plate in houses, where there is nothing else that country, tends to discourage more or less which would in other countries be thought every sort of industry which is carried on with- suitable or correspondent to this sort of magin it, and to enable foreign nations, by fur-nificence. The cheapness of gold and silver, nishing almost all sorts of goods for a smaller or, what is the same thing, the dearness of all quantity of silver than its own workmen can commodities, which is the necessary effect of 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

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

The The bounty upon the exportation of corn

factures somewhat dearer in every market, and theirs somewhat cheaper, than they otherwise would be, and consequently to give their industry a double advantage over our own.

of rude, and with almost all sorts of manu- industry being thus relieved from one of the factured produce, for a smaller quantity of most oppressive burdens which it at present gold and silver than what they themselves can labours under. either raise or make them for at home. tax and prohibition operate in two different necessarily operates exactly in the same way ways. They not only lower very much the as this absurd policy of Spain and Portugal. value of the precious metals in Spain and Por- Whatever be the actual state of tillage, it rentugal, but by detaining there a certain quan- ders our corn somewhat dearer in the home tity of those metals which would otherwise market than it otherwise would be in that flow over other countries, they keep up their state, and somewhat cheaper in the foreign; value in those other countries somewhat above and as the average money price of corn reguwhat it otherwise would be, and thereby give lates, more or less, that of all other commodithose countries a double advantage in their ties, it lowers the value of silver considerably commerce with Spain and Portugal. Open in the one, and tends to raise it a little in the the flood-gates, and there will presently be other. It enables foreigners, the Dutch in less water above, and more below the dam- particular, not only to eat our corn cheaper head, and it will soon come to a level in both than they otherwise could do, but sometimes places. Remove the tax and the prohibition, to eat it cheaper than even our own people and as the quantity of gold and silver will di- can do upon the same occasions; as we are minish considerably in Spain and Portugal, assured by an excellent authority, that of Sir so it will increase somewhat in other coun- Matthew Decker. It hinders our own worktries; and the value of those metals, their pro- men from furnishing their goods for so small portion to the annual produce of land and la-a quantity of silver as they otherwise might bour, will soon come to a level, or very near do, and enables the Dutch to furnish theirs to a level, in all. The loss which Spain and for a smaller. It tends to render our manuPortugal 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 The bounty, as it raises in the home marbe expressed or represented by a smaller quan- ket, not so much the real, as the nominal tity of silver than before; but their real value price of our corn; as it augments, not the would be the same as before, and would be quantity of labour which a certain quantity of sufficient to maintain, command, and employ corn can maintain and employ, but only the the same quantity of labour. As the nominal quantity of silver which it will exchange for; value of their goods would fall, the real value of it discourages our manufactures, without renwhat remained of their gold and silver would dering any considerable service, either to our rise, and a smaller quantity of those metals farmers or country gentlemen. It puts, inwould answer all the same purposes of com-deed, a little more money into the pockets of merce and circulation which had employed a both, and it will perhaps be somewhat diffigreater quantity before. The gold and silver cult to persuade the greater part of them that which would go abroad would not go abroad this is not rendering them a very considerable for nothing, but would bring back an equal service. But if this money sinks in its value, value of goods of some kind or other. Those in the quantity of labour, provisions, and goods, too, would not be all matters of mere home-made commodities of all different kinds luxury and expense, to be consumed by idle which it is capable of purchasing, as much as people, who produce nothing in return for it rises in its quantity, the service will be little their consumption. As the real wealth and more than nominal and imaginary. revenue of idle people would not be augment- There is, perhaps, but one set of men in ed by this extraordinary exportation of gold the whole commonwealth to whom the bounty and silver, so neither would their consump- either was or could be essentially serviceable. tion be much augmented by it. Those goods These were the corn merchants, the exporters would probably, the greater part of them, and and importers of corn. In years of plenty, certainly some part of them, consist in mate- the bounty necessarily occasioned a greater rials, tools, and provisions, for the employ-exportation than would otherwise have taken ment and maintenance of industrious people, place; and by hindering the plenty of the one who would reproduce, with a profit, the full year from relieving the scarcity of another, it value of their consumption. A part of the occasioned in years of scarcity a greater imdead stock of the society would thus be turned portation than would otherwise have been neinto active stock, and would put into motion cessary. It increased the business of the corn a greater quantity of industry than had been merchant in both; and in the years of scaremployed before. The annual produce of city, it not only enabled him to import a greattheir land and labour would immediately be er quantity, but to sell it for a better price, augmented a little, and in a few years would and consequently with a greater profit, than probably be auginented a great deal; their he could otherwise have made, if the plenty