An Inquiry into the Nature and Causes of the Wealth of Nations
Adam Smith

Part 10 out of 19

capitals can maintain. Both the capital of the country, therefore, and
the quantity of industry which can be annually maintained in it, must
generally be augmented by this exchange. It would, indeed, be more
advantageous for England that it could purchase the wines of France
with its own hardware and broad cloth, than with either the tobacco of
Virginia, or the gold and silver of Brazil and Peru. A direct foreign
trade of consumption is always more advantageous than a round-about
one. But a round-about foreign trade of consumption, which is carried
on with gold and silver, does not seem to be less advantageous than
any other equally round-about one. Neither is a country which has no
mines, more likely to be exhausted of gold and silver by this annual
exportation of those metals, than one which does not grow tobacco by
the like annual exportation of that plant. As a country which has
wherewithal to buy tobacco will never be long in want of it, so
neither will one be long in want of gold and silver which has
wherewithal to purchase those metals.

It is a losing trade, it is said, which a workman carries on with the
alehouse; and the trade which a manufacturing nation would naturally
carry on with a wine country, may be considered as a trade of the same
nature. I answer, that the trade with the alehouse is not necessarily
a losing trade. In its own nature it is just as advantageous as any
other, though, perhaps, somewhat more liable to be abused. The
employment of a brewer, and even that of a retailer of fermented
liquors, are as necessary division's of labour as any other. It will
generally be more advantageous for a workman to buy of the brewer the
quantity he has occasion for, than to brew it himself; and if he is a
poor workman, it will generally be more advantageous for him to buy it
by little and little of the retailer, than a large quantity of the
brewer. He may no doubt buy too much of either, as he may of any other
dealers in his neighbourhood; of the butcher, if he is a glutton; or
of the draper, if he affects to be a beau among his companions. It is
advantageous to the great body of workmen, notwithstanding, that all
these trades should be free, though this freedom may be abused in all
of them, and is more likely to be so, perhaps, in some than in others.
Though individuals, besides, may sometimes ruin their fortunes by an
excessive consumption of fermented liquors, there seems to be no risk
that a nation should do so. Though in every country there are many
people who spend upon such liquors more than they can afford, there
are always many more who spend less. It deserves to be remarked, too,
that if we consult experience, the cheapness of wine seems to be a
cause, not of drunkenness, but of sobriety. The inhabitants of the
wine countries are in general the soberest people of Europe; witness
the Spaniards, the Italians, and the inhabitants of the southern
provinces of France. People are seldom guilty of excess in what is
their daily fare. Nobody affects the character of liberality and good
fellowship, by being profuse of a liquor which is as cheap as small
beer. On the contrary, in the countries which, either from excessive
heat or cold, produce no grapes, and where wine consequently is dear
and a rarity, drunkenness is a common vice, as among the northern
nations, and all those who live between the tropics, the negroes, for
example on the coast of Guinea. When a French regiment comes from some
of the northern provinces of France, where wine is somewhat dear, to
be quartered in the southern, where it is very cheap, the soldiers, I
have frequently heard it observed, are at first debauched by the
cheapness and novelty of good wine; but after a few months residence,
the greater part of them become as sober as the rest of the
inhabitants. Were the duties upon foreign wines, and the excises upon
malt, beer, and ale, to be taken away all at once, it might, in the
same manner, occasion in Great Britain a pretty general and temporary
drunkenness among the middling and inferior ranks of people, which
would probably be soon followed by a permanent and almost universal
sobriety. At present, drunkenness is by no means the vice of people of
fashion, or of those who can easily afford the most expensive liquors.
A gentleman drunk with ale has scarce ever been seen among us. The
restraints upon the wine trade in Great Britain, besides, do not so
much seem calculated to hinder the people from going, if I may say so,
to the alehouse, as from going where they can buy the best and
cheapest liquor. They favour the wine trade of Portugal, and
discourage that of France. The Portuguese, it is said, indeed, are
better customers for our manufactures than the French, and should
therefore be encouraged in preference to them. As they give us their
custom, it is pretended we should give them ours. The sneaking arts of
underling tradesmen are thus erected into political maxims for the
conduct of a great empire; for it is the most underling tradesmen only
who make it a rule to employ chiefly their own customers. A great
trader purchases his goods always where they are cheapest and best,
without regard to any little interest of this kind.

By such maxims as these, however, nations have been taught that their
interest consisted in beggaring all their neighbours. Each nation has
been made to look with an invidious eye upon the prosperity of all the
nations with which it trades, and to consider their gain as its own
loss. Commerce, which ought naturally to be, among nations as among
individuals, a bond of union and friendship, has become the most
fertile source of discord and animosity. The capricious ambition of
kings and ministers has not, during the present and the preceding
century, been more fatal to the repose of Europe, than the impertinent
jealousy of merchants and manufacturers. The violence and injustice of
the rulers of mankind is an ancient evil, for which, I am afraid, the
nature of human affairs can scarce admit of a remedy: but the mean
rapacity, the monopolizing spirit, of merchants and manufacturers, who
neither are, nor ought to be, the rulers of mankind, though it cannot,
perhaps, be corrected, may very easily be prevented from disturbing
the tranquillity of anybody but themselves.

That it was the spirit of monopoly which originally both invented and
propagated this doctrine, cannot be doubted and they who first taught
it, were by no means such fools as they who believed it. In every
country it always is, and must be, the interest of the great body of
the people, to buy whatever they want of those who sell it cheapest.
The proposition is so very manifest, that it seems ridiculous to take
any pains to prove it; nor could it ever have been called in question,
had not the interested sophistry of merchants and manufacturers
confounded the common sense of mankind. Their interest is, in this
respect, directly opposite to that of the great body of the people. As
it is the interest of the freemen of a corporation to hinder the rest
of the inhabitants from employing any workmen but themselves; so it is
the interest of the merchants and manufacturers of every country to
secure to themselves the monopoly of the home market. Hence, in Great
Britain, and in most other European countries, the extraordinary
duties upon almost all goods imported by alien merchants. Hence the
high duties and prohibitions upon all those foreign manufactures which
can come into competition with our own. Hence, too, the extraordinary
restraints upon the importation of almost all sorts of goods from
those countries with which the balance of trade is supposed to be
disadvantageous; that is, from those against whom national animosity
happens ta be most violently inflamed.

The wealth of neighbouring nations, however, though dangerous in war
and politics, is certainly advantageous in trade. In a state of
hostility, it may enable our enemies to maintain fleets and armies
superior to our own; but in a state of peace and commerce it must
likewise enable them to exchange with us to a greater value, and to
afford a better market, either for the immediate produce of our own
industry, or for whatever is purchased with that produce. As a rich
man is likely to be a better customer to the industrious people in his
neighbourhood, than a poor, so is likewise a rich nation. A rich man,
indeed, who is himself a manufacturer, is a very dangerous neighbour
to all those who deal in the same way. All the rest of the
neighbourhood, however, by far the greatest number, profit by the good
market which his expense affords them. They even profit by his
underselling the poorer workmen who deal in the same way with him. The
manufacturers of a rich nation, in the same manner, may no doubt be
very dangerous rivals to those of their neighbours. This very
competition, however, is advantageous to the great body of the people,
who profit greatly, besides, by the good market which the great
expense of such a nation affords them in every other way. Private
people, who want to make a fortune, never think of retiring to the
remote and poor provinces of the country, but resort either to the
capital, or to some of the great commercial towns. They know, that
where little wealth circulates, there is little to be got; but that
where a great deal is in motion, some share of it may fall to them.
The same maxim which would in this manner direct the common sense of
one, or ten, or twenty individuals, should regulate the judgment of
one, or ten, or twenty millions, and should make a whole nation regard
the riches of its neighbours, as a probable cause and occasion for
itself to acquire riches. A nation that would enrich itself by foreign
trade, is certainly most likely to do so, when its neighbours are all
rich, industrious and commercial nations. A great nation, surrounded
on all sides by wandering savages and poor barbarians, might, no
doubt, acquire riches by the cultivation of its own lands, and by its
own interior commerce, but not by foreign trade. It seems to have been
in this manner that the ancient Egyptians and the modern Chinese
acquired their great wealth. The ancient Egyptians, it is said,
neglected foreign commerce, and the modern Chinese, it is known, hold
it in the utmost contempt, and scarce deign to afford it the decent
protection of the laws. The modern maxims of foreign commerce, by
aiming at the impoverishment of all our neighbours, so far as they are
capable of producing their intended effect, tend to render that very
commerce insignificant and contemptible.

It is in consequence of these maxims, that the commerce between France
and England has, in both countries, been subjected to so many
discouragements and restraints. If those two countries, however, were
to consider their real interest, without either mercantile jealousy or
national animosity, the commerce of France might be more advantageous
to Great Britain than that of any other country, and, for the same
reason, that of Great Britain to France. France is the nearest
neighbour to Great Britain. In the trade between the southern coast of
England and the northern and north-western coast of France, the
returns might be expected, in the same manner as in the inland trade,
four, five, or six times in the year. The capital, therefore, employed
in this trade could, in each of the two countries, keep in motion
four, five, or six times the quantity of industry, and afford
employment and subsistence to four, five, or six times the number of
people, which all equal capital could do in the greater part of the
other branches of foreign trade. Between the parts of France and Great
Britain most remote from one another, the returns might be expected,
at least, once in the year; and even this trade would so far be at
least equally advantageous, as the greater part of the other branches
of our foreign European trade. It would be, at least, three times more
advantageous than the boasted trade with our North American colonies,
in which the returns were seldom made in less than three years,
frequently not in less than four or five years. France, besides, is
supposed to contain 24,000,000 of inhabitants. Our North American
colonies were never supposed to contain more than 3,000,000; and
France is a much richer country than North America; though, on account
of the more unequal distribution of riches, there is much more poverty
and beggary in the one country than in the other. France, therefore,
could afford a market at least eight times more extensive, and, on
account of the superior frequency of the returns, four-and-twenty
times more advantageous than that which our North American colonies
ever afforded. The trade of Great Britain would be just as
advantageous to France, and, in proportion to the wealth, population,
and proximity of the respective countries, would have the same
superiority over that which France carries on with her own colonies.
Such is the very great difference between that trade which the wisdom
of both nations has thought proper to discourage, and that which it
has favoured the most.

But the very same circumstances which would have rendered an open and
free commerce between the two countries so advantageous to both, have
occasioned the principal obstructions to that commerce. Being
neighbours, they are necessarily enemies, and the wealth and power of
each becomes, upon that account, more formidable to the other; and
what would increase the advantage of national friendship, serves only
to inflame the violence of national animosity. They are both rich and
industrious nations; and the merchants and manufacturers of each dread
the competition of the skill and activity of those of the other.
Mercantile jealousy is excited, and both inflames, and is itself
inflamed, by the violence of national animosity, and the traders of
both countries have announced, with all the passionate confidence of
interested falsehood, the certain ruin of each, in consequence of that
unfavourable balance of trade, which, they pretend, would be the
infallible effect of an unrestrained commerce with the other.

There is no commercial country in Europe, of which the approaching
ruin has not frequently been foretold by the pretended doctors of this
system, from all unfavourably balance of trade. After all the anxiety,
however, which they have excited about this, after all the vain
attempts of almost all trading nations to turn that balance in their
own favour, and against their neighbours, it does not appear that any
one nation in Europe has been, in any respect, impoverished by this
cause. Every town and country, on the contrary, in proportion as they
have opened their ports to all nations, instead of being ruined by
this free trade, as the principles of the commercial system would lead
us to expect, have been enriched by it. Though there are in Europe
indeed, a few towns which, in same respects, deserve the name of free
ports, there is no country which does so. Holland, perhaps, approaches
the nearest to this character of any, though still very remote from
it; and Holland, it is acknowledged, not only derives its whole
wealth, but a great part of its necessary subsistence, from foreign

There is another balance, indeed, which has already been explained,
very different from the balance of trade, and which, according as it
happens to be either favourable or unfavourable, necessarily occasions
the prosperity or decay of every nation. This is the balance of the
annual produce and consumption. If the exchangeable value of the
annual produce, it has already been observed, exceeds that of the
annual consumption, the capital of the society must annually increase
in proportion to this excess. The society in this case lives within
its revenue; and what is annually saved out of its revenue, is
naturally added to its capital, and employed so as to increase still
further the annual produce. If the exchangeable value of the annual
produce, on the contrary, fall short of the annual consumption, the
capital of the society must annually decay in proportion to this
deficiency. The expense of the society, in this case, exceeds its
revenue, and necessarily encroaches upon its capital. Its capital,
therefore, must necessarily decay, and, together with it, the
exchangeable value of the annual produce of its industry.

This balance of produce and consumption is entirely different from
what is called the balance of trade. It might take place in a nation
which had no foreign trade, but which was entirely separated from all
the world. It may take place in the whole globe of the earth, of which
the wealth, population, and improvement, may be either gradually
increasing or gradually decaying.

The balance of produce and consumption may be constantly in favour of
a nation, though what is called the balance of trade be generally
against it. A nation may import to a greater value than it exports for
half a century, perhaps, together; the gold and silver which comes
into it during all this time, may be all immediately sent out of it;
its circulating coin may gradually decay, different sorts of paper
money being substituted in its place, and even the debts, too, which
it contracts in the principal nations with whom it deals, may be
gradually increasing; and yet its real wealth, the exchangeable value
of the annual produce of its lands and labour, may, during the same
period, have been increasing in a much greater proportion. The state
of our North American colonies, and of the trade which they carried on
with Great Britain, before the commencement of the present
disturbances, {This paragraph was written in the year 1775.} may serve
as a proof that this is by no means an impossible supposition.



Merchants and manufacturers are not contented with the monopoly of the
home market, but desire likewise the most extensive foreign sale for
their goods. Their country has no jurisdiction in foreign nations, and
therefore can seldom procure them any monopoly there. They are
generally obliged, therefore, to content themselves with petitioning
for certain encouragements to exportation.

Of these encouragements, what are called drawbacks seem to be the most
reasonable. To allow the merchant to draw back upon exportation,
either the whole, or a part of whatever excise or inland duty is
imposed upon domestic industry, can never occasion the exportation of
a greater quantity of goods than what would have been exported had no
duty been imposed. Such encouragements do not tend to turn towards any
particular employment a greater share of the capital of the country,
than what would go to that employment of its own accord, but only to
hinder the duty from driving away any part of that share to other
employments. They tend not to overturn that balance which naturally
establishes itself among all the various employments of the society,
but to hinder it from being overturned by the duty. They tend not to
destroy, but to preserve, what it is in most cases advantageous to
preserve, the natural division and distribution of labour in the

The same thing may be said of the drawbacks upon the re-exportation of
foreign goods imported, which, in Great Britain, generally amount to
by much the largest part of the duty upon importation. By the second
of the rules, annexed to the act of parliament, which imposed what is
now called the old subsidy, every merchant, whether English or alien.
was allowed to draw back half that duty upon exportation; the English
merchant, provided the exportation took place within twelve months;
the alien, provided it took place within nine months. Wines, currants,
and wrought silks, were the only goods which did not fall within this
rule, having other and more advantageous allowances. The duties
imposed by this act of parliament were, at that time, the only duties
upon the importation of foreign goods. The term within which this, and
all other drawbacks could be claimed, was afterwards (by 7 Geo. I.
chap. 21. sect. 10.) extended to three years.

The duties which have been imposed since the old subsidy, are, the
greater part of them, wholly drawn back upon exportation. This general
rule, however, is liable to a great number of exceptions; and the
doctrine of drawbacks has become a much less simple matter than it was
at their first institution.

Upon the exportation of some foreign goods, of which it was expected
that the importation would greatly exceed what was necessary for the
home consumption, the whole duties are drawn back, without retaining
even half the old subsidy. Before the revolt of our North American
colonies, we had the monopoly of the tobacco of Maryland and Virginia.
We imported about ninety-six thousand hogsheads, and the home
consumption was not supposed to exceed fourteen thousand. To
facilitate the great exportation which was necessary, in order to rid
us of the rest, the whole duties were drawn back, provided the
exportation took place within three years.

We still have, though not altogether, yet very nearly, the monopoly of
the sugars of our West Indian islands. If sugars are exported within a
year, therefore, all the duties upon importation are drawn back; and
if exported within three years, all the duties, except half the old
subsidy, which still continues to be retained upon the exportation of
the greater part of goods. Though the importation of sugar exceeds a
good deal what is necessary for the home consumption, the excess is
inconsiderable, in comparison of what it used to be in tobacco.

Some goods, the particular objects of the jealousy of our own
manufacturers, are prohibited to be imported for home consumption.
They may, however, upon paying certain duties,be imported and
warehoused for exportation. But upon such exportation no part of these
duties is drawn back. Our manufacturers are unwilling, it seems, that
even this restricted importation should be encouraged, and are afraid
lest some part of these goods should be stolen out of the warehouse,
and thus come into competition with their own. It is under these
regulations only that we can import wrought silks, French cambrics and
lawns, calicoes, painted, printed, stained, or dyed, etc.

We are unwilling even to be the carriers of French goods, and choose
rather to forego a profit to ourselves than to suffer those whom we
consider as our enemies to make any profit by our means. Not only half
the old subsidy, but the second twenty-five per cent. is retained upon
the exportation of all French goods.

By the fourth of the rules annexed to the old subsidy, the drawback
allowed upon the exportation of all wines amounted to a great deal
more than half the duties which were at that time paid upon their
importation; and it seems at that time to have been the object of the
legislature to give somewhat more than ordinary encouragement to the
carrying trade in wine. Several of the other duties, too which were
imposed either at the same time or subsequent to the old subsidy, what
is called the additional duty, the new subsidy, the one-third and
two-thirds subsidies, the impost 1692, the tonnage on wine, were
allowed to be wholly drawn back upon exportation. All those duties,
however, except the additional duty and impost 1692, being paid down
in ready money upon importation, the interest of so large a sum
occasioned an expense, which made it unreasonable to expect any
profitable carrying trade in this article. Only a part, therefore of
the duty called the impost on wine, and no part of the twenty-five
pounds the ton upon French wines, or of the duties imposed in 1745, in
1763, and in 1778, were allowed to be drawn back upon exportation. The
two imposts of five per cent. imposed in 1779 and 1781, upon all the
former duties of customs, being allowed to be wholly drawn back upon
the exportation of all other goods, were likewise allowed to be drawn
back upon that of wine. The last duty that has been particularly
imposed upon wine, that of 1780, is allowed to be wholly drawn back;
an indulgence which, when so many heavy duties are retained, most
probably could never occasion the exportation of a single ton of wine.
These rules took place with regard to all places of lawful
exportation, except the British colonies in America.

The 15th Charles II, chap. 7, called an act for the encouragement of
trade, had given Great Britain the monopoly of supplying the colonies
with all the commodities of the growth or manufacture of Europe, and
consequently with wines. In a country of so extensive a coast as our
North American and West Indian colonies, where our authority was
always so very slender, and where the inhabitants were allowed to
carry out in their own ships their non-enumerated commodities, at
first to all parts of Europe, and afterwards to all parts of Europe
south of Cape Finisterre, it is not very probable that this monopoly
could ever be much respected; and they probably at all times found
means of bringing back some cargo from the countries to which they
were allowed to carry out one. They seem, however, to have found some
difficulty in importing European wines from the places of their
growth; and they could not well import them from Great Britain, where
they were loaded with many heavy duties, of which a considerable part
was not drawn back upon exportation. Madeira wine, not being an
European commodity, could be imported directly into America and the
West Indies, countries which, in all their non-enumerated commodities,
enjoyed a free trade to the island of Madeira. These circumstances had
probably introduced that general taste for Madeira wine, which our
officers found established in all our colonies at the commencement of
the war which began in 1755, and which they brought back with them to
the mother 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 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.

The same act which, in the drawbacks upon all wines, except French
wines, thus favoured the colonies so much more than other countries,
in those upon the greater part of other commodities, favoured them
much less. Upon the exportation of the greater part of commodities to
other countries, half the old subsidy was drawn back. But this law
enacted, that no part of that duty should be drawn back 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.

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 be peculiarly fitted for
bringing gold and silver into the country. But though the carrying
trade certainly deserves no peculiar encouragement, though the motive
of the institution was, perhaps, abundantly foolish, the institution
itself seems reasonable enough. Such drawbacks cannot force into this
trade a greater share of the capital of the country than what would
have gone to it of its own accord, had there been no duties upon
importation; they only prevent its being excluded 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.

These reasons seem sufficiently to justify drawbacks, and would
justify them, though the whole duties, whether upon the produce of
domestic industry or upon foreign goods, were always drawn back upon
exportation. The revenue of excise would, in this case indeed, 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.

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
exportation than what would have taken place without it. By means of
the monopoly which our merchants and manufacturers enjoy there, the
same quantity might frequently, perhaps, be sent thither, though the
whole duties were retained. The drawback, therefore, may frequently be
pure loss to the revenue of excise and customs, without altering the
state of the trade, or rendering it in any respect more extensive. 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 colonies.

Drawbacks, however, it must always be understood, are useful only in
those cases in which the goods, for the exportation of which they are
given, are really exported to some foreign country, and not
clandestinely re-imported into our own. That some drawbacks,
particularly those upon tobacco, have frequently been abused in this
manner, and have given occasion to many frauds, equally hurtful both
to the revenue and to the fair trader, is well known.



Bounties upon exportation are, in Great Britain, frequently petitioned
for, and sometimes granted, to the produce of particular branches of
domestic industry. By means of them, our merchants and manufacturers,
it is pretended, will be enabled to sell their goods as cheap or
cheaper than their rivals in the foreign market. A greater quantity,
it is said, will thus be exported, and the balance of trade
consequently turned more in favour of our own country. We cannot give
our workmen a monopoly in the foreign, as we have done in the home
market. We cannot force foreigners to buy their goods, as we have done
our own countrymen. The next best expedient, it has been thought,
therefore, is to pay them for buying. It is in this manner that the
mercantile system proposes to enrich the whole country, and to put
money into all our pockets, by means of the balance of trade.

Bounties, it is allowed, ought to be given to those branches of trade
only which cannot be carried on without them. But every branch of
trade in which the merchant can sell his goods for a price which
replaces to him, with the ordinary profits of stock, the whole capital
employed in preparing and sending them to market, can be carried on
without a bounty. Every such branch is evidently upon a level with all
the other branches of trade which are carried on without bounties, and
cannot, therefore, require one more than they. Those trades only
require bounties, in which the merchant is obliged to sell his goods
for a price which does not replace to him his capital, together with
the ordinary profit, or in which he is obliged to sell them for less
than it really cost him to send them to market. The bounty is given in
order to make up this loss, and to encourage him to continue, or,
perhaps, to begin a trade, of which the expense is supposed to be
greater than the returns, of which every operation eats up a part of
the capital employed in it, and which is of such a nature, that if all
other trades resembled it, there would soon be no capital left in the

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 market.

That in the actual state of tillage the bounty must necessarily have
this tendency, will not, I apprehend, be disputed by any reasonable
person. But it has been thought by many people, that it tends to
encourage tillage, and that in two different ways; first, by opening a
more extensive foreign market to the corn of the farmer, it tends,
they imagine, to increase the demand for, and consequently the
production of, that commodity; and, secondly by securing to him a
better price than he could otherwise expect in the actual state of
tillage, it tends, they suppose, to encourage tillage. This double
encouragement must they imagine, in a long period of years, occasion
such an increase in the production of corn, as may lower its price in
the home market, much more than the bounty can raise it in the actual
state which tillage may, at the end of that period, happen to be in.

I answer, that whatever extension of the foreign market can be
occasioned by the bounty must, in every particular year, be altogether
at the expense of the home market; as every bushel of corn, which is
exported by means of the bounty, and which would not have been
exported without the bounty, would have remained in the home market to
increase the consumption, and to lower the price of that commodity.
The corn bounty, it is to be observed, as well as every other bounty
upon exportation, imposes two different taxes upon the people; first,
the tax which they are obliged to contribute, in order to pay the
bounty; and, secondly, the tax which arises from the advanced price of
the commodity in the home market, and which, as the whole body of the
people are purchasers of corn, must, in this particular commodity, be
paid by the whole body of the people. In this particular commodity,
therefore, this second tax is by much the heaviest of the two. Let us
suppose that, taking one year with another, the bounty of 5s. upon the
exportation of the quarter of wheat raises the price of that commodity
in the home market only 6d. the bushel, or 4s. the quarter higher than
it otherwise would have been in the actual state of the crop. Even
upon this very moderate supposition, the great body of the people,
over and above contributing the tax which pays the bounty of 5s. upon
every quarter of wheat exported, must pay another of 4s. upon every
quarter which they themselves consume. But according to the very well
informed author of the Tracts upon the Corn Trade, the average
proportion of the corn exported to that consumed at home, is not more
than that of one to thirty-one. For every 5s. therefore, which they
contribute to the payment of the first tax, they must contribute
6:4s. to the payment of the second. So very heavy a tax upon the
first necessary of life-must either reduce the subsistence of the
labouring poor, or it must occasion some augmentation in their
pecuniary wages, proportionable to that in the pecuniary price of
their subsistence. So far as it operates in the one way, it must
reduce the ability of the labouring poor to educate and bring up their
children, and must, so far, tend to restrain the population of the
country. So far as it 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 corn.

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

I answer, that this might be the case, if the effect of the bounty was
to raise the real price of corn, or to enable the farmer, with an
equal quantity of it, to maintain a greater number of labourers in the
same manner, whether liberal, moderate, or scanty, than other
labourers are commonly maintained in his neighbourhood. But neither
the bounty, it is evident, nor any other human institution, can have
any such effect. It is not the real, but the nominal price of corn,
which can in any considerable degree be affected by the bounty. And
though the tax, which that institution imposes upon the whole body of
the people, may be very burdensome to those who pay it, it is of very
little advantage to those who receive it.

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

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

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

By regulating the money price of all the other parts of the rude
produce of land, it regulates that of the materials of almost all
manufactures; by regulating the money price of labour, it regulates
that of manufacturing art and industry; and by regulating both, it
regulates that of the complete manufacture. The money price of labour,
and of every thing that is the produce, either of land or labour, must
necessarily either rise or fall in proportion to the money price of

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, however, should be no more than the amount
of the freight and insurance; and, on account of the great value and
small bulk of those metals, their freight is no great matter, and
their insurance is the same as that of any other goods of equal value.
Spain and Portugal, therefore, could suffer very little from their
peculiar situation, if they did not aggravate its disadvantages by
their political institutions.

Spain by taxing, and Portugal by prohibiting, the exportation of gold
and silver, load that exportation with the expense of smuggling, and
raise the value of those metals in other countries so much more above
what it is in their own, by the whole amount of this expense. When you
dam up a stream of water, as soon as the dam is full, as much water
must run over the dam-head as if there was no dam at all. The
prohibition of exportation cannot detain a greater quantity of gold
and silver in Spain and Portugal, than what they can afford to employ,
than what the annual produce of their land and labour will allow them
to employ, in coin, plate, gilding, and other ornaments of gold and
silver. When they have got this quantity, the dam is full, and the
whole stream which flows in afterwards must run over. The annual
exportation of gold and silver from Spain and Portugal, accordingly,
is, by all accounts, notwithstanding these restraints, very near equal
to the whole annual importation. As the water, however, must always be
deeper behind the dam-head than before it, so the quantity of gold and
silver which these restraints detain in Spain and Portugal, must, in
proportion to the annual produce of their land and labour, be greater
than what is to be found in other countries. The higher and stronger
the dam-head, the greater must be the difference in the depth of water
behind and before it. The higher the tax, the higher the penalties
with which the prohibition is guarded, the more vigilant and severe
the police which looks after the execution of the law, the greater
must be the difference in the proportion of gold and silver to the
annual produce of the land and labour of Spain and Portugal, and to
that of other countries. It is said, accordingly, to be very
considerable, and that you frequently find there a profusion of plate
in houses, where there is nothing else which would in other countries
be thought suitable or correspondent to this sort of magnificence. The
cheapness of gold and silver, or, what is the same thing, the dearness
of all commodities, which is the necessary effect of this redundancy
of the precious metals, discourages both the agriculture and
manufactures of Spain and Portugal, and enables foreign nations to
supply them with many sorts of rude, and with almost all sorts of
manufactured produce, for a smaller quantity of gold and silver than
what they themselves can either raise or make them for at home. The
tax and prohibition operate in two different ways. They not only lower
very much the value of the precious metals in Spain and Portugal, but
by detaining there a certain quantity of those metals which would
otherwise flow over other countries, they keep up their value in those
other countries somewhat above what it otherwise would be, and thereby
give those countries a double advantage in their commerce with Spain
and Portugal. Open the flood-gates, and there will presently be less
water above, and more below the dam-head, and it will soon come to a
level in both places. Remove the tax and the prohibition, and as the
quantity of gold and silver will diminish considerably in Spain and
Portugal, so it will increase somewhat in other countries; and the
value of those metals, their proportion to the annual produce of land
and labour, will soon come to a level, or very near to a level, in
all. The loss which Spain and Portugal could sustain by this
exportation of their gold and silver, would be altogether nominal and
imaginary. The nominal value of their goods, and of the annual produce
of their land and labour, would fall, and would be expressed or
represented by a smaller quantity of silver than before; but their
real value would be the same as before, and would be sufficient to
maintain, command, and employ the same quantity of labour. As the
nominal value of their goods would fall, the real value of what
remained of their gold and silver would rise, and a smaller quantity
of those metals would answer all the same purposes of commerce and
circulation which had employed a greater quantity before. The gold and
silver which would go abroad would not go abroad for nothing, but
would bring back an equal value of goods of some kind or other. Those
goods, too, would not be all matters of mere luxury and expense, to be
consumed by idle people, who produce nothing in return for their
consumption. As the real wealth and revenue of idle people would not
be augmented by this extraordinary exportation of gold and silver, so
neither would their consumption be much augmented by it. Those goods
would probably, the greater part of them, and certainly some part of
them, consist in materials, tools, and provisions, for the employment
and maintenance of industrious people, who would reproduce, with a
profit, the full value of their consumption. A part of the dead stock
of the society would thus be turned into active stock, and would put
into motion a greater quantity of industry than had been employed
before. The annual produce of their land and labour would immediately
be augmented a little, and in a few years would probably be augmented
a great deal; their industry being thus relieved from one of the most
oppressive burdens which it at present labours under.

The bounty upon the exportation of corn necessarily operates exactly
in the same way as this absurd policy of Spain and Portugal. Whatever
be the actual state of tillage, it renders our corn somewhat dearer in
the home market than it otherwise would be in that state, and somewhat
cheaper in the foreign; and as the average money price of corn
regulates, more or less, that of all other commodities, it lowers the
value of silver considerably in the one, and tends to raise it a
little in the other. It enables foreigners, the Dutch in particular,
not only to eat our corn cheaper than they otherwise could do, but
sometimes to eat it cheaper than even our own people can do upon the
same occasions; as we are assured by an excellent authority, that of
Sir Matthew Decker. It hinders our own workmen from furnishing their
goods for so small a quantity of silver as they otherwise might do,
and enables the Dutch to furnish theirs for a smaller. It tends to
render our manufactures somewhat dearer in every market, and theirs
somewhat cheaper, than they otherwise would be, and consequently to
give their industry a double advantage over our own.

The bounty, as it raises in the home market, not so much the real, as
the nominal price of our corn; as it augments, not the quantity of
labour which a certain quantity of corn can maintain and employ, but
only the quantity of silver which it will exchange for; it discourages
our manufactures, without rendering any considerable service, either
to our farmers or country gentlemen. It puts, indeed, a little more
money into the pockets of both, and it will perhaps be somewhat
difficult to persuade the greater part of them that this is not
rendering them a very considerable service. But if this money sinks in
its value, in the quantity of labour, provisions, and home-made
commodities of all different kinds which it is capable of purchasing,
as much as it rises in its quantity, the service will be little more
than nominal and imaginary.

There is, perhaps, but one set of men in the whole commonwealth to
whom the bounty either was or could be essentially serviceable. These
were the corn merchants, the exporters and importers of corn. In years
of plenty, the bounty necessarily occasioned a greater exportation
than would otherwise have taken place; and by hindering the plenty of
the one year from relieving the scarcity of another, it occasioned in
years of scarcity a greater importation than would otherwise have been
necessary. It increased the business of the corn merchant in both; and
in the years of scarcity, it not only enabled him to import a greater
quantity, but to sell it for a better price, and consequently with a
greater profit, than he could otherwise have made, if the plenty of
one year had not been more or less hindered from relieving the
scarcity of another. It is in this set of men, accordingly, that I
have observed the greatest zeal for the continuance or renewal of the

Our country gentlemen, when they imposed the high duties upon the
exportation of foreign corn, which in times of moderate plenty amount
to a prohibition, and when they established the bounty, seem to have
imitated the conduct of our manufacturers. By the one institution,
they secured to themselves the monopoly of the home market, and by the
other they endeavoured to prevent that market from ever being
overstocked with their commodity. By both they endeavoured to raise
its real value, in the same manner as our manufacturers had, by the
like institutions, raised the real value of many different sorts of
manufactured goods. They did not, perhaps, attend to the great and
essential difference which nature has established between corn and
almost every other sort of goods. When, either by the monopoly of the
home market, or by a bounty upon exportation, you enable our woollen
or linen manufacturers to sell their goods for somewhat a better price
than they otherwise could get for them, you raise, not only the
nominal, but the real price of those goods; you render them equivalent
to a greater quantity of labour and subsistence; you increase not only
the nominal, but the real profit, the real wealth and revenue of those
manufacturers; and you enable them, either to live better themselves,
or to employ a greater quantity of labour in those particular
manufactures. You really encourage those manufactures, and direct
towards them a greater quantity of the industry of the country than
what would properly go to them of its own accord. But when, by the
like institutions, you raise the nominal or money price of corn, you
do not raise its real value; you do not increase the real wealth, the
real revenue, either of our farmers or country gentlemen; you do not
encourage the growth of corn, because you do not enable them to
maintain and employ more labourers in raising it. The nature of things
has stamped upon corn a real value, which cannot be altered by merely
altering its money price. No bounty upon exportation, no monopoly of
the home market, can raise that value. The freest competition cannot
lower it, Through the world in general, that value is equal to the
quantity of labour which it can maintain, and in every particular
place it is equal to the quantity of labour which it can maintain in
the way, whether liberal, moderate, or scanty, in which labour is
commonly maintained in that place. Woollen or linen cloth are not the
regulating commodities by which the real value of all other
commodities must be finally measured and determined; corn is. The real
value of every other commodity is finally measured and determined by
the proportion which its average money price bears to the average
money price of corn. The real value of corn does not vary with those
variations in its average money price, which sometimes occur from one
century to another; it is the real value of silver which varies with

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

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

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
diligence or success in the fishery; and it has, I am afraid, been
too common for the vessels to fit out for the sole purpose of
catching, not the fish but the bounty. In the year 1759, when the
bounty was at fifty shillings the ton, the whole buss fishery of
Scotland brought in only four barrels of sea-sticks. In that year,
each barrel of sea-sticks cost government, in bounties alone,
113:15s.; each barrel of merchantable herrings 159:7:6.

Thirdly, The mode of fishing, for which this tonnage bounty in the
white herring fishery has been given (by busses or decked vessels from
twenty to eighty tons burden ), seems not so well adapted to the
situation of Scotland, as to that of Holland, from the practice of
which country it appears to have been borrowed. Holland lies at a
great distance from the seas to which herrings are known principally
to resort, and can, therefore, carry on that fishery only in decked
vessels, which can carry water and provisions sufficient for a voyage
to a distant sea; but the Hebrides, or Western Islands, the islands of
Shetland, and the northern and north-western coasts of Scotland, the
countries in whose neighbourhood the herring fishery is principally
carried on, are everywhere intersected by arms of the sea, which run
up a considerable way into the land, and which, in the language of the
country, are called sea-lochs. It is to these sea-lochs that the
herrings principally resort during the seasons in which they visit
these seas; for the visits of this, and, I am assured, of many other
sorts of fish, are not quite regular and constant. A boat-fishery,
therefore, seems to be the mode of fishing best adapted to the
peculiar situation of Scotland, the fishers carrying the herrings on
shore as fast as they are taken, to be either cured or consumed fresh.
But the great encouragement which a bounty of 30s. the ton gives to
the buss-fishery, is necessarily a discouragement to the boat-fishery,
which, having no such bounty, cannot bring its cured fish to market
upon the same terms as the buss-fishery. The boat-fishery;
accordingly, which, before the establishment of the buss-bounty, was
very considerable, and is said to have employed a number of seamen,
not inferior to what the buss-fishery employs at present, is now gone
almost entirely to decay. Of the former extent, however, of this now
ruined and abandoned fishery, I must acknowledge that I cannot pretend
to speak with much precision. As no bounty was-paid upon the outfit of
the boat-fishery, no account was taken of it by the officers of the
customs or salt duties.

Fourthly, In many parts of Scotland, during certain seasons of the
year, herrings make no inconsiderable part of the food of the common
people. A bounty which tended to lower their price in the home market,
might contribute a good deal to the relief of a great number of our
fellow-subjects, whose circumstances are by no means affluent. But the
herring-bus bounty contributes to no such good purpose. It has ruined
the boat fishery, which is by far the best adapted for the supply of
the home market; and the additional bounty of 2s:8d. the barrel upon
exportation, carries the greater part, more than two-thirds, of the
produce of the buss-fishery abroad. Between thirty and forty years
ago, before the establishment of the buss-bounty, 16s. the barrel, I
have been assured, was the common price of white herrings. Between ten
and fifteen years ago, before the boat-fishery was entirely ruined,
the price was said to have run from seventeen to twenty shillings the
barrel. For these last five years, it has, at an average, been at
twenty-five shillings the barrel. This high price, however, may have
been owing to the real scarcity of the herrings upon the coast of
Scotland. I must observe, too, that the cask or barrel, which is
usually sold with the herrings, and of which the price is included in
all the foregoing prices, has, since the commencement of the American
war, risen to about double its former price, or from about 3s. to
about 6s. I must likewise observe, that the accounts I have received
of the prices of former times, have been by no means quite uniform and
consistent, and an old man of great accuracy and experience has
assured me, that, more than fifty years ago, a guinea was the usual
price of a barrel of good merchantable herrings; and this, I imagine,
may still be looked upon as the average price. All accounts, however,
I think, agree that the price has not been lowered in the home market
in consequence of the buss-bounty.

When the undertakers of fisheries, after such liberal bounties have
been bestowed upon them, continue to sell their commodity at the same,
or even at a higher price than they were accustomed to do before, it
might be expected that their profits should be very great; and it is
not improbable that those of some individuals may have been so. In
general, however, I have every reason to believe they have been quite
otherwise. The usual effect of such bounties is, to encourage rash
undertakers to adventure in a business which they do not understand;
and what they lose by their own negligence and ignorance, more than
compensates all that they can gain by the utmost liberality of
government. In 1750, by the same act which first gave the bounty of
30s. the ton for the encouragement of the white herring fishery (the
23d Geo. II. chap. 24), a joint stock company was erected, with a
capital of 500,000, to which the subscribers (over and above all
other encouragements, the tonnage bounty just now mentioned, the
exportation bounty of 2s:8d. the barrel, the delivery of both British
and foreign salt duty free) were, during the space of fourteen years,
for every hundred pounds which they subscribed and paid into the stock
of the society, entitled to three pounds a-year, to be paid by the
receiver-general of the customs in equal half-yearly payments. Besides
this great company, the residence of whose governor and directors was
to be in London, it was declared lawful to erect different fishing
chambers in all the different out-ports of the kingdom, provided a sum
not less than 10,000 was subscribed into the capital of each, to be
managed at its own risk, and for its own profit and loss. The same
annuity, and the same encouragements of all kinds, were given to the
trade of those inferior chambers as to that of the great company. The
subscription of the great company was soon filled up, and several
different fishing chambers were erected in the different out-ports of
the kingdom. In spite of all these encouragements, almost all those
different companies, both great and small, lost either the whole or
the greater part of their capitals; scarce a vestige now remains of
any of them, and the white-herring fishery is now entirely, or almost
entirely, carried on by private adventurers.

If any particular manufacture was necessary, indeed, for the defence
of the society, it might not always be prudent to depend upon our
neighbours for the supply; and if such manufacture could not otherwise
be supported at home, it might not be unreasonable that all the other
branches of industry should be taxed in order to support it. The
bounties upon the exportation of British made sail-cloth, and British
made gunpowder, may, perhaps, both be vindicated upon this principle.

But though it can very seldom be reasonable to tax the industry of the
great body of the people, in order to support that of some particular
class of manufacturers; yet, in the wantonness of great prosperity,
when the public enjoys a greater revenue than it knows well what to do
with, to give such bounties to favourite manufactures, may, perhaps,
be as natural as to incur any other idle expense. In public, as well
as in private expenses, great wealth, may, perhaps, frequently be
admitted as an apology for great folly. But there must surely be
something more than ordinary absurdity in continuing such profusion in
times of general difficulty and distress.

What is called a bounty, is sometimes no more than a drawback, and,
consequently, is not liable to the same objections as what is properly
a bounty. The bounty, for example, upon refined sugar exported, may be
considered as a drawback of the duties upon the brown and Muscovado
sugars, from which it is made; the bounty upon wrought silk exported,
a drawback of the duties upon raw and thrown silk imported; the bounty
upon gunpowder exported, a drawback of the duties upon brimstone and
saltpetre imported. In the language of the customs, those allowances
only are called drawbacks which are given upon goods exported in the
same form in which they are imported. When that form has been so
altered by manufacture of any kind as to come under a new
denomination, they are called bounties.

Premiums given by the public to artists and manufacturers, who excel
in their particular occupations, are not liable to the same objections
as bounties. By encouraging extraordinary dexterity and ingenuity,
they serve to keep up the emulation of the workmen actually employed
in those respective occupations, and are not considerable enough to
turn towards any one of them a greater share of the capital of the
country than what would go to it of its own accord. Their tendency is
not to overturn the natural balance of employments, but to render the
work which is done in each as perfect and complete as possible. The
expense of premiums, besides, is very trifling, that of bounties very
great. The bounty upon corn alone has sometimes cost the public, in
one year, more than 300,000.

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

Digression concerning the Corn Trade and Corn Laws.

I cannot conclude this chapter concerning bounties, without observing,
that the praises which have been bestowed upon the law which
establishes the bounty upon the exportation of corn, and upon that
system of regulations which is connected with it, are altogether
unmerited. A particular examination of the nature of the corn trade,
and of the principal British laws which relate to it, will
sufficiently demonstrate the truth of this assertion. The great
importance of this subject must justify the length of the digression.

The trade of the corn merchant is composed of four different branches,
which, though they may sometimes be all carried on by the same person,
are, in their own nature, four separate and distinct trades. These
are, first, the trade of the inland dealer; secondly, that of the
merchant-importer for home consumption; thirdly, that of the
merchant-exporter of home produce for foreign consumption; and,
fourthly, that of the merchant-carrier, or of the importer of corn, in
order to export it again.

I. The interest of the inland dealer, and that of the great body of
the people, how opposite soever they may at first appear, are, even in
years of the greatest scarcity, exactly the same. It is his interest
to raise the price of his corn as high as the real scarcity of the
season requires, and it can never be his interest to raise it higher.
By raising the price, he discourages the consumption, and puts every
body more or less, but particularly the inferior ranks of people, upon
thrift and good management If, by raising it too high, he discourages
the consumption so much that the supply of the season is likely to go
beyond the consumption of the season, and to last for some time after
the next crop begins to come in, he runs the hazard, not only of
losing a considerable part of his corn by natural causes, but of being
obliged to sell what remains of it for much less than what he might
have had for it several months before. If, by not raising the price
high enough, he discourages the consumption so little, that the supply
of the season is likely to fall short of the consumption of the
season, he not only loses a part of the profit which he might
otherwise have made, but he exposes the people to suffer before the
end of the season, instead of the hardships of a dearth, the dreadful
horrors of a famine. It is the interest of the people that their
daily, weekly, and monthly consumption should be proportioned as
exactly as possible to the supply of the season. The interest of the
inland corn dealer is the same. By supplying them, as nearly as he can
judge, in this proportion, he is likely to sell all his corn for the
highest price, and with the greatest profit; and his knowledge of the
state of the crop, and of his daily, weekly, and monthly sales,
enables him to judge, with more or less accuracy, how far they really
are supplied in this manner. Without intending the interest of the
people, he is necessarily led, by a regard to his own interest, to
treat them, even in years of scarcity, pretty much in the same manner
as the prudent master of a vessel is sometimes obliged to treat his
crew. When he foresees that provisions are likely to run short, he
puts them upon short allowance. Though from excess of caution he
should sometimes do this without any real necessity, yet all the
inconveniencies which his crew can thereby suffer are inconsiderable,
in comparison of the danger, misery, and ruin, to which they might
sometimes be exposed by a less provident conduct. Though, from excess
of avarice, in the same manner, the inland corn merchant should
sometimes raise the price of his corn somewhat higher than the
scarcity of the season requires, yet all the inconveniencies which the
people can suffer from this conduct, which effectually secures them
from a famine in the end of the season, are inconsiderable, in
comparison of what they might have been exposed to by a more liberal
way of dealing in the beginning of it the corn merchant himself is
likely to suffer the most by this excess of avarice; not only from the
indignation which it generally excites against him, but, though he
should escape the effects of this indignation, from the quantity of
corn which it necessarily leaves upon his hands in the end of the
season, and which, if the next season happens to prove favourable, he
must always sell for a much lower price than he might otherwise have

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 producing corn than in producing any other
commodity. When it first comes from the ground, too, it is necessarily
divided among a greater number of owners than any other commodity; and
these owners can never be collected into one place, like a number of
independent manufacturers, but are necessarily scattered through all
the different corners of the country. These first owners either
immediately supply the consumers in their own neighbourhood, or they
supply other inland dealers, who supply those consumers. The inland
dealers in corn, therefore, including both the farmer and the baker,
are necessarily more numerous than the dealers in any other commodity;
and their dispersed situation renders it altogether impossible for
them to enter into any general combination. If, in a year of scarcity,
therefore, any of them should find that he had a good deal more corn
upon hand than, at the current price, he could hope to dispose of
before the end of the season, he would never think of keeping up this
price to his own loss, and to the sole benefit of his rivals and
competitors, but would immediately lower it, in order to get rid of
his corn before the new crop began to come in. The same motives, the
same interests, which would thus regulate the conduct of any one
dealer, would regulate that of every other, and oblige them all in
general to sell their corn at the price which, according to the best
of their judgment, was most suitable to the scarcity or plenty of the

Whoever examines, with attention, the history of the dearths and
famines which have afflicted any part of Europe during either the
course of the present or that of the two preceding centuries, of
several of which we have pretty exact accounts, will find, I believe,
that a dearth never has arisen from any combination among the inland
dealers in corn, nor from any other cause but a real scarcity,
occasioned sometimes, perhaps, and in some particular places, by the
waste of war, but in by far the greatest number of cases by the fault
of the seasons; and that a famine has never arisen from any other
cause but the violence of government attempting, by improper means, to
remedy the inconveniencies of a dearth.

In an extensive corn country, between all the different parts of which
there is a free commerce and communication, the scarcity occasioned by
the most unfavourable seasons can never be so great as to produce a
famine; and the scantiest crop, if managed with frugality and economy,
will maintain, through the year, the same number of people that are
commonly fed in a more affluent manner by one of moderate plenty. The
seasons most unfavourable to the crop are those of excessive drought
or excessive rain. But as corn grows equally upon high and low lands,
upon grounds that are disposed to be too wet, and upon those that are
disposed to be too dry, either the drought or the rain, which is
hurtful to one part of the country, is favourable to another; and
though, both in the wet and in the dry season, the crop is a good deal
less than in one more properly tempered; yet, in both, what is lost in
one part of the country is in some measure compensated by what is
gained in the other. In rice countries, where the crop not only
requires a very moist soil, but where, in a certain period of its
growing, it must be laid under water, the effects of a drought are
much more dismal. Even in such countries, however, the drought is,
perhaps, scarce ever so universal as necessarily to occasion a famine,
if the government would allow a free trade. The drought in Bengal, a
few years ago, might probably have occasioned a very great dearth.
Some improper regulations, some injudicious restraints, imposed by the
servants of the East India Company upon the rice trade, contributed,
perhaps, to turn that dearth into a famine.

When the government, in order to remedy the inconveniencies of a
dearth, orders all the dealers to sell their corn at what it supposes
a reasonable price, it either hinders them from bringing it to market,
which may sometimes produce a famine even in the beginning of the
season; or, if they bring it thither, it enables the people, and
thereby encourages them to consume it so fast as must necessarily
produce a famine before the end of the season. The unlimited,
unrestrained freedom of the corn trade, as it is the only effectual
preventive of the miseries of a famine, so it is the best palliative
of the inconveniencies of a dearth; for the inconveniencies of a real
scarcity cannot be remedied; they can only be palliated. No trade
deserves more the full protection of the law, and no trade requires it
so much; because no trade is so much exposed to popular odium.

In years of scarcity, the inferior ranks of people impute their
distress to the avarice of the corn merchant, who becomes the object
of their hatred and indignation. Instead of making profit upon such
occasions, therefore, he is often in danger of being utterly ruined,
and of having his magazines plundered and destroyed by their violence.
It is in years of scarcity, however, when prices are high, that the
corn merchant expects to make his principal profit. He is generally in
contract with some farmers to furnish him, for a certain number of
years, with a certain quantity of corn, at a certain price. This
contract price is settled according to what is supposed to be the
moderate and reasonable, that is, the ordinary or average price,
which, before the late years of scarcity, was commonly about 28s. for
the quarter of wheat, and for that of other grain in proportion. In
years of scarcity, therefore, the corn merchant buys a great part of
his corn for the ordinary price, and sells it for a much higher. That
this extraordinary profit, however, is no more than sufficient to put
his trade upon a fair level with other trades, and to compensate the
many losses which he sustains upon other occasions, both from the
perishable nature of the commodity itself, and from the frequent and
unforeseen fluctuations of its price, seems evident enough, from this
single circumstance, that great fortunes are as seldom made in this as
in any other trade. The popular odium, however, which attends it in
years of scarcity, the only years in which it can be very profitable,
renders people of character and fortune averse to enter into it. It is
abandoned to an inferior set of dealers; and millers, bakers,
meal-men, and meal-factors, together with a number of wretched
hucksters, are almost the only middle people that, in the home market,
come between the grower and the consumer.

The ancient policy of Europe, instead of discountenancing this popular
odium against a trade so beneficial to the public, seems, on the
contrary, to have authorised and encouraged it.

By the 5th and 6th of Edward VI cap. 14, it was enacted, that whoever
should buy any corn or grain, with intent to sell it again, should be
reputed an unlawful engrosser, and should, for the first fault, suffer
two months imprisonment, and forfeit the value of the corn; for the
second, suffer six months imprisonment, and forfeit double the value;
and, for the third, be set in the pillory, suffer imprisonment during
the king's pleasure, and forfeit all his goods and chattels. The
ancient policy of most other parts of Europe was no better than that
of England.

Our ancestors seem to have imagined, that the people would buy their
corn cheaper of the farmer than of the corn merchant, who, they were
afraid, would require, over and above the price which he paid to the
farmer, an exorbitant profit to himself. They endeavoured, therefore,
to annihilate his trade altogether. They even endeavoured to hinder,
as much as possible, any middle man of any kind from coming in between
the grower and the consumer; and this was the meaning of the many
restraints which they imposed upon the trade of those whom they called
kidders, or carriers of corn; a trade which nobody was allowed to
exercise without a licence, ascertaining his qualifications as a man
of probity and fair dealing. The authority of three justices of the
peace was, by the statute of Edward VI. necessary in order to grant
this licence. But even this restraint was afterwards thought
insufficient, and, by a statute of Elizabeth, the privilege of
granting it was confined to the quarter-sessions.

The ancient policy of Europe endeavoured, in this manner, to regulate
agriculture, the great trade of the country, by maxims quite different
from those which it established with regard to manufactures, the great
trade of the towns. By leaving a farmer no other customers but either
the consumers or their immediate factors, the kidders and carriers of
corn, it endeavoured to force him to exercise the trade, not only of a
farmer, but of a corn merchant, or corn retailer. On the contrary, it,
in many cases, prohibited the manufacturer from exercising the trade
of a shopkeeper, or from selling his own goods by retail. It meant, by
the one law, to promote the general interest of the country, or to
render corn cheap, without, perhaps, its being well understood how
this was to be done. By the other, it meant to promote that of a
particular order of men, the shopkeepers, who would be so much
undersold by the manufacturer, it was supposed, that their trade would
be ruined, if he was allowed to retail at all.

The manufacturer, however, though he had been allowed to keep a shop,
and to sell his own goods by retail, could not have undersold the
common shopkeeper. Whatever part of his capital he might have placed
in his shop, he must have withdrawn it from his manufacture. In order
to carry on his business on a level with that of other people, as he
must have had the profit of a manufacturer on the one part, so he must
have had that of a shopkeeper upon the other. Let us suppose, for
example, that in the particular town where he lived, ten per cent. was
the ordinary profit both of manufacturing and shopkeeping stock; he
must in this case have charged upon every piece of his own goods,
which he sold in his shop, a profit of twenty per cent. When he
carried them from his workhouse to his shop, he must have valued them
at the price for which he could have sold them to a dealer or
shopkeeper, who would have bought them by wholesale. If he valued them
lower, he lost a part of the profit of his manufacturing capital.
When, again, he sold them from his shop, unless he got the same price
at which a shopkeeper would have sold them, he lost a part of the
profit of his shop-keeping capital. Though he might appear,
therefore, to make a double profit upon the same piece of goods, yet,
as these goods made successively a part of two distinct capitals, he
made but a single profit upon the whole capital employed about them;
and if he made less than his profit, he was a loser, and did not
employ his whole capital with the same advantage as the greater part
of his neighbours.

What the manufacturer was prohibited to do, the farmer was in some
measure enjoined to do; to divide his capital between two different
employments; to keep one part of it in his granaries and stack-yard,
for supplying the occasional demands of the market, and to employ the
other in the cultivation of his land. But as he could not afford to
employ the latter for less than the ordinary profits of farming stock,
so he could as little afford to employ the former for less than the
ordinary profits of mercantile stock. Whether the stock which really
carried on the business of a corn merchant belonged to the person who
was called a farmer, or to the person who was called a corn merchant,
an equal profit was in both cases requisite, in order to indemnify its
owner for employing it in this manner, in order to put his business on
a level with other trades, and in order to hinder him from having an
interest to change it as soon as possible for some other. The farmer,
therefore, who was thus forced to exercise the trade of a corn
merchant, could not afford to sell his corn cheaper than any other
corn merchant would have been obliged to do in the case of a free

The dealer who can employ his whole stock in one single branch of
business, has an advantage of the same kind with the workman who can
employ his whole labour in one single operation. As the latter
acquires a dexterity which enables him, with the same two hands, to
perform a much greater quantity of work, so the former acquires so
easy and ready a method of transacting his business, of buying and
disposing of his goods, that with the same capital he can transact a
much greater quantity of business. As the one can commonly afford his
work a good deal cheaper, so the other can commonly afford his goods
somewhat cheaper, than if his stock and attention were both employed
about a greater variety of objects. The greater part of manufacturers
could not afford to retail their own goods so cheap as a vigilant and
active shopkeeper, whose sole business it was to buy them by wholesale
and to retail them again. The greater part of farmers could still less
afford to retail their own corn, to supply the inhabitants of a town,
at perhaps four or five miles distance from the greater part of them,
so cheap as a vigilant and active corn merchant, whose sole business
it was to purchase corn by wholesale, to collect it into a great
magazine, and to retail it again.

The law which prohibited the manufacturer from exercising the trade of
a shopkeeper, endeavoured to force this division in the employment of
stock to go on faster than it might otherwise have done. The law which
obliged the farmer to exercise the trade of a corn merchant,
endeavoured to hinder it from going on so fast. Both laws were evident
violations of natural liberty, and therefore unjust; and they were
both, too, as impolitic as they were unjust. It is the interest of
every society, that things of this kind should never either he forced
or obstructed. The man who employs either his labour or his stock in a
greater variety of ways than his situation renders necessary, can
never hurt his neighbour by underselling him. He may hurt himself, and
he generally does so. Jack-of-all-trades will never be rich, says the
proverb. But the law ought always to trust people with the care of
their own interest, as in their local situations they must generally
be able to judge better of it than the legislature can do. The law,
however, which obliged the farmer to exercise the trade of a corn
merchant was by far the most pernicious of the two.

It obstructed not only that division in the employment of stock which
is so advantageous to every society, but it obstructed likewise the
improvement and cultivation of the land. By obliging the farmer to
carry on two trades instead of one, it forced him to divide his
capital into two parts, of which one only could be employed in
cultivation. But if he had been at liberty to sell his whole crop to a
corn merchant as fast as he could thresh it out, his whole capital
might have returned immediately to the land, and have been employed in
buying more cattle, and hiring more servants, in order to improve and
cultivate it better. But by being obliged to sell his corn by retail,
he was obliged to keep a great part of his capital in his granaries
and stack-yard through the year, and could not therefore cultivate so
well as with the same capital he might otherwise have done. This law,
therefore, necessarily obstructed the improvement of the land, and,
instead of tending to render corn cheaper, must have tended to render
it scarcer, and therefore dearer, than it would otherwise have been.

After the business of the farmer, that of the corn merchant is in
reality the trade which, if properly protected and encouraged, would
contribute the most to the raising of corn. It would support the trade
of the farmer, in the same manner as the trade of the wholesale dealer
supports that of the manufacturer.

The wholesale dealer, by affording a ready market to the manufacturer,
by taking his goods off his hand as fast as he can make them, and by
sometimes even advancing their price to him before he has made them,
enables him to keep his whole capital, and sometimes even more than
his whole capital, constantly employed in manufacturing, and
consequently to manufacture a much greater quantity of goods than if
he was obliged to dispose of them himself to the immediate consumers,
or even to the retailers. As the capital of the wholesale merchant,
too, is generally sufficient to replace that of many manufacturers,
this intercourse between him and them interests the owner of a large
capital to support the owners of a great number of small ones, and to
assist them in those losses and misfortunes which might otherwise
prove ruinous to them.

An intercourse of the same kind universally established between the
farmers and the corn merchants, would be attended with effects equally
beneficial to the farmers. They would be enabled to keep their whole
capitals, and even more than their whole capitals constantly employed
in cultivation. In case of any of those accidents to which no trade is
more liable than theirs, they would find in their ordinary customer,
the wealthy corn merchant, a person who had both an interest to
support them, and the ability to do it; and they would not, as at
present, be entirely dependent upon the forbearance of their landlord,
or the mercy of his steward. Were it possible, as perhaps it is not,
to establish this intercourse universally, and all at once; were it
possible to turn all at once the whole farming stock of the kingdom to
its proper business, the cultivation of land, withdrawing it from
every other employment into which any part of it may be at present
diverted; and were it possible, in order to support and assist, upon
occasion, the operations of this great stock, to provide all at once
another stock almost equally great; it is not, perhaps, very easy to
imagine how great, how extensive, and how sudden, would be the
improvement which this change of circumstances would alone produce
upon the whole face of the country.

The statute of Edward VI. therefore, by prohibiting as much as
possible any middle man from coming in between the grower and the
consumer, endeavoured to annihilate a trade, of which the free
exercise is not only the best palliative of the inconveniencies of a
dearth, but the best preventive of that calamity; after the trade of
the farmer, no trade contributing so much to the growing of corn as
that of the corn merchant.

The rigour of this law was afterwards softened by several subsequent
statutes, which successively permitted the engrossing of corn when the
price of wheat should not exceed 20s. and 24s. 32s. and 40s. the
quarter. At last, by the 15th of Charles II. c.7, the engrossing or
buying of corn, in order to sell it again, as long as the price of
wheat did not exceed 48s. the quarter, and that of other grain in
proportion, was declared lawful to all persons not being forestallers,
that is, not selling again in the same market within three months. All
the freedom which the trade of the inland corn dealer has ever yet
enjoyed was bestowed upon it by this statute. The statute of the
twelfth of the present king, which repeals almost all the other
ancient laws against engrossers and forestallers, does not repeal the
restrictions of this particular statute, which therefore still
continue in force.

This statute, however, authorises in some measure two very absurd
popular prejudices.

First, It supposes, that when the price of wheat has risen so high
as 48s. the quarter, and that of other grain in proportion, corn is
likely to be so engrossed as to hurt the people. But, from what has
been already said, it seems evident enough, that corn can at no price
be so engrossed by the inland dealers as to hurt the people; and 48s.
the quarter, besides, though it may be considered as a very high
price, yet, in years of scarcity, it is a price which frequently takes
place immediately after harvest, when scarce any part of the new crop
can be sold off, and when it is impossible even for ignorance to
suppose that any part of it can be so engrossed as to hurt the people.

Secondly, It supposes that there is a certain price at which corn
is likely to be forestalled, that is, bought up in order to be sold
again soon after in the same market, so as to hurt the people. But if
a merchant ever buys up corn, either going to a particular market, or
in a particular market, in order to sell it again soon after in the
same market, it must be because he judges that the market cannot be so
liberally supplied through the whole season as upon that particular
occasion, and that the price, therefore, must soon rise. If he judges
wrong in this, and if the price does not rise, he not only loses the
whole profit of the stock which he employs in this manner, but a part
of the stock itself, by the expense and loss which necessarily attend
the storing and keeping of corn. He hurts himself, therefore, much
more essentially than he can hurt even the particular people whom he
may hinder from supplying themselves upon that particular market day,
because they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the great
body of the people, he renders them a most important service. By
making them feel the inconveniencies of a dearth somewhat earlier than
they otherwise might do, he prevents their feeling them afterwards so
severely as they certainly would do, if the cheapness of price
encouraged them to consume faster than suited the real scarcity of the
season. When the scarcity is real, the best thing that can be done for
the people is, to divide the inconvenience of it as equally as
possible, through all the different months and weeks and days of the
year. The interest of the corn merchant makes him study to do this as
exactly as he can; and as no other person can have either the same
interest, or the same knowledge, or the same abilities, to do it so
exactly as he, this most important operation of commerce ought to be
trusted entirely to him; or, in other words, the corn trade, so far at
least as concerns the supply of the home market, ought to be left
perfectly free.

The popular fear of engrossing and forestalling may be compared to the
popular terrors and suspicions of witchcraft. The unfortunate wretches
accused of this latter crime were not more innocent of the misfortunes
imputed to them, than those who have been accused of the former. The
law which put an end to all prosecutions against witchcraft, which put
it out of any man's power to gratify his own malice by accusing his
neighbour of that imaginary crime, seems effectually to have put an
end to those fears and suspicions, by taking away the great cause
which encouraged and supported them. The law which would restore
entire freedom to the inland trade of corn, would probably prove as
effectual to put an end to the popular fears of engrossing and

The 15th of Charles II. c. 7, however, with all its imperfections,
has, perhaps, contributed more, both to the plentiful supply of the
home market, and to the increase of tillage, than any other law in the
statute book. It is from this law that the inland corn trade has
derived all the liberty and protection which it has ever yet enjoyed;
and both the supply of the home market and the interest of tillage are
much more effectually promoted by the inland, than either by the
importation or exportation trade.

The proportion of the average quantity of all sorts of grain imported
into Great Britain to that of all sorts of grain consumed, it has been
computed by the author of the Tracts upon the Corn Trade, does not
exceed that of one to five hundred and seventy. For supplying the home
market, therefore, the importance of the inland trade must be to that
of the importation trade as five hundred and seventy to one.

The average quantity of all sorts of grain exported from Great Britain
does not, according to the same author, exceed the one-and-thirtieth
part of the annual produce. For the encouragement of tillage,
therefore, by providing a market for the home produce, the importance
of the inland trade must be to that of the exportation trade as thirty
to one.

I have no great faith in political arithmetic, and I mean not to
warrant the exactness of either of these computations. I mention them
only in order to show of how much less consequence, in the opinion of
the most judicious and experienced persons, the foreign trade of corn
is than the home trade. The great cheapness of corn in the years
immediately preceding the establishment of the bounty may, perhaps
with reason, he ascribed in some measure to the operation of this
statute of Charles II. which had been enacted about five-and-twenty
years before, and which had, therefore, full time to produce its

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

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
freedom of the inland trade appears, both from reason and experience,
not only the best palliative of a dearth, but the most effectual
preventive of a famine; so would the freedom of the exportation and
importation trade be among the different states into which a great
continent was divided. The larger the continent, the easier the
communication through all the different parts of it, both by land and
by water, the less would any one particular part of it ever be exposed
to either of these calamities, the scarcity of any one country being
more likely to be relieved by the plenty of some other. But very few
countries have entirely adopted this liberal system. The freedom of
the corn trade is almost everywhere more or less restrained, and in
many countries is confined by such absurd regulations, as frequently
aggravate the unavoidable misfortune of a dearth into the dreadful
calamity of a famine. The demand of such countries for corn may
frequently become so great and so urgent, that a small state in their
neighbourhood, which happened at the same time to be labouring under
some degree of dearth, could not venture to supply them without
exposing itself to the like dreadful calamity. The very bad policy of
one country may thus render it, in some measure, dangerous and
imprudent to establish what would otherwise be the best policy in
another. The unlimited freedom of exportation, however, would be much
less dangerous in great states, in which the growth being much
greater, the supply could seldom be much affected by any quantity or
corn that was likely to be exported. In a Swiss canton, or in some of
the little states in Italy, it may, perhaps, sometimes be necessary to
restrain the exportation of corn. In such great countries as France or
England, it scarce ever can. To hinder, besides, the farmer from
sending his goods at all times to the best market, is evidently to
sacrifice the ordinary laws of justice to an idea of public utility,
to a sort of reasons of state; an act or legislative authority which
ought to be exercised only, which can be pardoned only, in cases of
the most urgent necessity. The price at which exportation of corn is
prohibited, if it is ever to be prohibited, ought always to be a very
high price.

The laws concerning corn may everywhere be compared to the laws
concerning religion. The people feel themselves so much interested in
what relates either to their subsistence in this life, or to their
happiness in a life to come, that government must yield to their
prejudices, and, in order to preserve the public tranquillity,
establish that system which they approve of. It is upon this account,
perhaps, that we so seldom find a reasonable system established with
regard to either of those two capital objects.

IV. The trade of the merchant-carrier, or of the importer of foreign
corn, in order to export it again, contributes to the plentiful supply
of the home market. It is not, indeed, the direct purpose of his trade
to sell his corn there; but he will generally be willing to do so, and
even for a good deal less money than he might expect in a foreign
market; because he saves in this manner the expense of loading and
unloading, of freight and insurance. The inhabitants of the country
which, by means of the carrying trade, becomes the magazine and
storehouse for the supply of other countries, can very seldom be in
want themselves. Though the carrying trade must thus contribute to
reduce the average money price of corn in the home market, it would
not thereby lower its real value; it would only raise somewhat the
real value of silver.

The carrying trade was in effect prohibited in Great Britain, upon all
ordinary occasions, by the high duties upon the importation of foreign
corn, of the greater part of which there was no drawback; and upon
extraordinary occasions, when a scarcity made it necessary to suspend
those duties by temporary statutes, exportation was always prohibited.
By this system of laws, therefore, the carrying trade was in effect

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

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


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