Bounties

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

In Great Britain, people often petition for export subsidies on goods produced by particular domestic industries. These subsidies are sometimes granted. Supposedly, they will enable our merchants and manufacturers to sell their goods as cheaply as, or cheaper than, their rivals abroad. It is said that more goods will be exported, turning the balance of trade further in our country’s favor. We cannot give our workers a monopoly in foreign markets, as we have done in the home market. We cannot force foreigners to buy their goods, as we have forced our own countrymen to do. The next best solution, therefore, has been thought to be to pay foreigners to buy them. This is how the mercantile system proposes to enrich the whole country and put money in all our pockets through the balance of trade.

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

It is agreed that bounties should be given only to trades that cannot be carried on without them. But a trade can be carried on without a bounty if the merchant can sell goods for enough to recover the full capital spent preparing them and sending them to market, along with the ordinary profit on that capital. Any such trade is clearly on the same footing as all other trades carried on without bounties. It therefore needs a bounty no more than they do. Only those trades need bounties in which the merchant must sell goods for less than the capital invested, plus the ordinary profit. In other words, the merchant must sell them for less than it really cost to send them to market. The bounty is given to make up this loss and encourage the merchant to continue, or perhaps begin, such a trade. The trade is supposed to cost more than it brings in, and every transaction consumes part of the capital invested in it. Its nature is such that if all other trades resembled it, soon there would be no capital left in the country.

The trades, it is to be observed, which are carried on by means of bounties, are the only ones which can be carried on between two nations for any considerable time together, in such a manner as that one of them shall always and regularly lose, or sell its goods for less than it really cost to send them to market. But if the bounty did not repay to the merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in another way, or to find out a trade in which the price of the goods would replace to him, with the ordinary profit, the capital employed in sending them to market. The effect of bounties, like that of all the other expedients of the mercantile system, can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally run of its own accord.

It is worth noting that only trade supported by bounties can continue between two nations for any considerable time while one nation consistently loses money. In such trade, that nation sells its goods for less than it really costs to bring them to market. But if the bounty did not repay the merchant for what he would otherwise lose on the price of his goods, his own interest would soon force him to use his capital differently. Or he would find a trade where the price of the goods would repay the capital spent bringing them to market, along with the usual profit. Bounties, like all the other measures of the mercantile system, can only force a country's trade into a far less advantageous course than it would naturally follow on its own.

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 ingenious and well-informed author of the Tracts upon the Corn Trade has shown something very clearly. Since the export bounty on corn was first established, exported corn has been worth more than imported corn. Even with exports valued moderately and imports valued very highly, the difference exceeds all the bounties paid during that period. He believes this clearly proves, according to the true principles of the mercantile system, that this artificially encouraged corn trade benefits the nation. The value of exports exceeds that of imports by much more than the extra public expense of encouraging exports. But he does not consider that the bounty is the smallest part of what exporting corn really costs society. The capital the farmer used to grow the corn must also be counted. The price received in foreign markets must cover not only the bounty but also this capital and the ordinary profits on it. Otherwise, society loses the difference, and the nation's stock is reduced by that amount. Yet the very reason a bounty was thought necessary was the belief that the price would not cover these costs.

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.

It has been said that the average price of corn has fallen considerably since the bounty was established. I have already tried to show that the average price began to fall somewhat toward the end of the last century. I have also tried to show that it continued to fall during the first sixty-four years of this century. But if this fall really happened, as I believe it did, it must have happened despite the bounty. It cannot possibly have happened because of it. The price fell in France as well as in England. Yet France had no bounty and, until 1764, generally prohibited the export of corn. This gradual fall in the average price of grain is therefore probably due to neither regulation. Instead, it is probably due to the gradual, almost imperceptible rise in the real value of silver. In the first book of this work, I tried to show that silver's real value has risen across the European market during this century. It seems altogether impossible that the bounty could ever help 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.

As already noted, in years of plenty, the bounty causes unusually large exports of grain. This necessarily keeps the domestic price of grain above the level it would naturally fall to. That was the stated purpose of the bounty. In years of scarcity, the bounty is often suspended. But the large exports it causes in years of plenty must often prevent the surplus of one year from relieving a later shortage, at least to some extent. So in both plentiful and scarce years, the bounty necessarily tends to raise the domestic money price of grain somewhat above what it would otherwise be.

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 do not think any reasonable person will dispute that the bounty must have this tendency at the current level of cultivation. But many people believe that it encourages cultivation in two ways. First, they think it opens a larger foreign market for the farmer’s grain. This, they believe, increases demand for grain and therefore its production. Second, they suppose it encourages cultivation by securing farmers a better price than they could otherwise expect at the current level of cultivation. They imagine that, over many years, this double encouragement must cause grain production to increase. This increase, they believe, may lower the domestic price far more than the bounty can raise it, given whatever level of cultivation exists at the end of that period.

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

I answer that any expansion of the foreign market caused by the export bounty must come entirely at the expense of the home market in each particular year. Every bushel of corn exported because of the bounty would otherwise have remained in the home market. There, it would have increased consumption and lowered the price of corn. The corn bounty, like every other export bounty, imposes two different taxes on the people. First, they must pay the tax that funds the bounty. Second, they must pay the higher price of corn in the home market. Since everyone buys corn, everyone must pay this second tax. For corn, the second tax is by far the heavier of the two. Suppose that, on average, the bounty of 5 shillings on each quarter of wheat exported raises the domestic price by only 6 pence a bushel. That is 4 shillings a quarter above what the price would otherwise have been, given the actual size of the crop. Even on this very moderate assumption, the great majority of people must pay two taxes. Besides contributing to the bounty of 5 shillings on every quarter exported, they must pay another 4 shillings on every quarter they consume themselves. But according to the very well informed author of the Tracts upon the Corn Trade, the average amount of corn exported is no more than one thirty-first of the amount consumed at home. For every 5 shillings the people contribute to the first tax, they must therefore contribute £6 and 4 shillings to the second. Such a heavy tax on the first necessity of life must either reduce what the working poor have to live on or cause their money wages to rise in proportion to the money price of their subsistence. To the extent that it reduces their subsistence, it must reduce their ability to educate and raise their children. It must therefore tend to restrain the country's population. To the extent that it raises their wages, it must reduce employers' ability to employ as many poor workers as they otherwise could. It must therefore tend to restrain the country's industry. The additional corn exports caused by the bounty therefore reduce the home market and its consumption each year by exactly as much as they expand the foreign market and its consumption. But by restraining the country's population and industry, these exports also tend ultimately to limit the gradual expansion of the home market. In the long run, they therefore tend to reduce rather than increase the total market for corn and its consumption.

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.

However, some have thought that this rise in the money price of corn must encourage its production by making it more profitable for farmers.

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.

I answer that this might be true if the bounty raised the real price of corn. It would have to enable the farmer to support more laborers with the same amount of corn. The farmer would have to support them as well as other laborers in the neighborhood are usually supported, whether generously, moderately, or poorly. But clearly, neither the bounty nor any other human institution can have that effect. The bounty can affect the nominal price of corn to any considerable degree, but not its real price. The tax that the bounty imposes on the whole population may be very burdensome to those who pay it. Yet it is of very little benefit 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.

The bounty’s real effect is not so much to raise the real value of corn as to lower the real value of silver. The same amount of silver will buy less corn and less of all other goods made at home. This is because the price of corn in money determines the price of all other goods made at home.

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 determines wages, which must always be enough for a worker to buy sufficient grain to support himself and his family. The level of support may be generous, moderate, or meager, depending on whether society is growing, stable, or declining. These conditions determine how well employers must support their workers.

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.

It determines the money price of all other raw produce from the land. At every stage of economic development, their prices must bear a certain proportion to the price of corn, though that proportion changes over time. For example, it determines the money price of grass and hay, meat, horses, and the cost of keeping horses. It therefore also determines the price of land transport, which accounts for most of the country’s inland trade.

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

By regulating the money price of all other raw products of the land, it regulates the price of materials for almost all manufactured goods. By regulating the money price of labor, it regulates the price of manufacturing skill and effort. By regulating both, it regulates the price of finished goods. The money price of labor and of everything produced by land or labor must rise or fall in proportion to the money price of grain.

Though in consequence of the bounty, therefore, the farmer should be enabled to sell his corn for 4s. the bushel, instead of 3s:6d. and to pay his landlord a money rent proportionable to this rise in the money price of his produce; yet if, in consequence of this rise in the price of corn, 4s. will purchase no more home made goods of any other kind than 3s. 6d. would have done before, neither the circumstances of the farmer, nor those of the landlord, will be much mended by this change. The farmer will not be able to cultivate much better; the landlord will not be able to live much better. In the purchase of foreign commodities, this enhancement in the price of corn may give them some little advantage. In that of home made commodities, it can give them none at all. And almost the whole expense of the farmer, and the far greater part even of that of the landlord, is in home made commodities.

The bounty may therefore allow the farmer to sell his corn for 4 shillings a bushel instead of 3 shillings and 6 pence. It may also allow him to pay his landlord a money rent that rises in proportion to his crop’s price. But the rise in the price of corn may mean that 4 shillings buys no more of any other kind of home-produced goods than 3 shillings and 6 pence bought before. If so, neither the farmer nor the landlord will be much better off. The farmer will not be able to farm much better, and the landlord will not be able to live much better. The higher price of corn may give them a small advantage when buying foreign goods. But it can give them no advantage at all when buying home-produced goods. And the farmer spends almost all his money on home-produced goods, while even the landlord spends the far greater part of his money on them.

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.

Productive mines lower the value of silver across most of the commercial world, almost equally everywhere. This decline matters very little to any particular country. As a result, all prices in money rise. But though people receive more money, they are no richer or poorer in real terms. A set of silver tableware becomes cheaper in real terms, while everything else remains at exactly 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.

But a fall in the value of silver confined to one country is a matter of great consequence. It may result from that country's particular circumstances or its political institutions. Far from making anyone truly richer, it tends to make everyone truly poorer. The resulting rise in the money price of all goods is peculiar to that country. It tends to discourage every kind of industry carried on there, to a greater or lesser degree. It also allows foreign nations to supply almost all kinds of goods for less silver than the country's own workers can afford to accept. Foreign nations can therefore undersell those workers, not only in foreign markets but even in their 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.

Because Spain and Portugal own the mines, they are in the unique position of supplying gold and silver to all the other countries of Europe. These metals should therefore naturally be somewhat cheaper in Spain and Portugal than anywhere else in Europe. The difference, however, should be no more than the cost of shipping and insurance. Gold and silver are highly valuable and take up little space, so shipping costs are not great. Insurance costs the same as for any other goods of equal value. Spain and Portugal would therefore suffer very little from their unique position if their political institutions did not make its disadvantages worse.

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.

Spain taxes the export of gold and silver, while Portugal prohibits it. Both countries therefore add the cost of smuggling to their export. This raises the value of those metals in other countries above their value at home by the full cost of smuggling. When you dam a stream, the water eventually fills the space behind the dam. Once it is full, just as much water must flow over the top as if there were no dam. Similarly, a ban on exports cannot keep more gold and silver in Spain and Portugal than they can afford to use. The amount they can use depends on what the annual produce of their land and labour allows them to devote to coins, plate, gilding, and other gold and silver ornaments. Once they have that amount, the dam is full, and the whole stream that flows in afterward must flow over. Despite these restrictions, the annual export of gold and silver from Spain and Portugal is, by all accounts, very nearly equal to their entire annual import. Water must always be deeper behind the dam than in front of it. Likewise, the restrictions must keep more gold and silver in Spain and Portugal than is found in other countries, in proportion to the annual produce of their land and labour. The higher and stronger the dam, the greater the difference in water depth on either side. In the same way, a higher tax or harsher penalties for breaking the ban must increase the difference between Spain and Portugal and other countries. More vigilant and severe policing of the law must also increase the difference. The difference lies in the amount of gold and silver each country has in proportion to the annual produce of its land and labour. The difference is said to be very considerable. In Spain and Portugal, houses are often said to contain an abundance of plate, but nothing else that would elsewhere be thought to match such magnificence. This excess of precious metals necessarily makes gold and silver cheap, or, what amounts to the same thing, makes all goods expensive. That discourages both agriculture and manufacturing in Spain and Portugal. It allows foreign nations to supply them with many kinds of raw produce and almost all kinds of manufactured goods. Foreign nations can supply these for less gold and silver than it costs Spain and Portugal to grow or make them at home. The tax and the ban work in two ways. They greatly lower the value of precious metals in Spain and Portugal. They also keep a certain amount of those metals there that would otherwise flow to other countries. This keeps their value in those countries somewhat higher than it would otherwise be, giving them a double advantage in trade with Spain and Portugal. Open the floodgates, and there will soon be less water above the dam and more below it. Before long, the water will reach the same level on both sides. Remove the tax and the ban, and the amount of gold and silver in Spain and Portugal will fall considerably. At the same time, it will increase somewhat in other countries. The value of those metals, and their proportion to the annual produce of land and labour, will soon become equal, or nearly equal, everywhere. Any loss Spain and Portugal might suffer from exporting their gold and silver would be entirely nominal and imaginary. The nominal value of their goods and of the annual produce of their land and labour would fall. It would be expressed or represented by a smaller amount of silver than before. But its real value would remain the same, and it would still be enough to maintain, command, and employ the same amount of labour. As the nominal value of their goods fell, the real value of their remaining gold and silver would rise. A smaller amount of those metals would serve all the same purposes of trade and circulation that had previously required more. The gold and silver sent abroad would not go for nothing. They would bring back goods of one kind or another of equal value. Nor would all those goods be mere luxuries to be consumed by idle people who produce nothing in return. This extraordinary export of gold and silver would not increase the real wealth and income of idle people. So it would not greatly increase their consumption either. Most of the goods would probably, and some certainly would, consist of materials, tools, and provisions. These would employ and support industrious people, who would reproduce the full value of what they consumed, with a profit. Part of society’s idle stock would thus become active stock and put more industry to work than before. The annual produce of their land and labour would immediately increase a little. Within a few years, it would probably increase a great deal, as their industry would be freed from one of its present most oppressive burdens.

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 export bounty on corn necessarily works in exactly the same way as this absurd policy of Spain and Portugal. Whatever the state of cultivation, the bounty makes our corn somewhat more expensive at home and somewhat cheaper abroad than it otherwise would be. The average money price of corn more or less regulates the price of all other goods. The bounty therefore considerably lowers the value of silver at home and tends to raise it slightly abroad. It enables foreigners, especially the Dutch, to eat our corn more cheaply than they otherwise could. Sometimes, they can even eat it more cheaply than our own people can on the same occasions. We have the word of an excellent authority, Sir Matthew Decker, for this. The bounty prevents our own workers from supplying their goods for as little silver as they otherwise could. At the same time, it enables the Dutch to supply theirs for less. It tends to make our manufactured goods somewhat more expensive in every market, and theirs somewhat cheaper, than they otherwise would be. As a result, it gives 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.

The bounty raises the nominal price of our grain in the domestic market more than its real price. It does not increase the amount of labor that a given quantity of grain can support and employ. It only increases the amount of silver that the grain will exchange for. As a result, the bounty discourages our manufacturing without providing any considerable benefit to our farmers or landowners. It does put a little more money in the pockets of both. Perhaps it would be somewhat difficult to persuade most of them that this is not a very considerable benefit. But the money may lose value as its quantity increases. If it loses enough value to buy proportionately less labor, food, and all kinds of domestic goods, the benefit will be little more than nominal and imaginary.

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

Perhaps only one group of people in the whole country benefited, or could have benefited, substantially from the bounty. These were the grain merchants, who exported and imported grain. In years of plenty, the bounty necessarily caused more grain to be exported than otherwise would have been. It thus prevented the abundance of one year from relieving the shortage of another. As a result, more grain had to be imported in years of shortage than would otherwise have been necessary. The bounty increased the grain merchants' business in both kinds of year. In years of shortage, it not only enabled them to import more grain, but also to sell it at a higher price. They consequently made a greater profit than they otherwise could have made. Without the bounty, the abundance of one year would not have been prevented, to some extent, from relieving the shortage of another. Accordingly, I have observed the greatest enthusiasm for continuing or renewing the bounty among these merchants.

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

Our country landowners seem to have copied the practices of our manufacturers. They imposed high duties on the export of foreign corn, which in times of moderate plenty amount to a ban. They also established a bounty on exports. The duties secured them a monopoly of the home market. With the bounty, they tried to prevent that market from ever being oversupplied with their corn. Both measures were intended to raise its real value. Our manufacturers had raised the real value of many manufactured goods through similar measures. Perhaps the landowners did not notice the great and essential difference nature has established between corn and almost every other kind of goods. Suppose you enable our woollen or linen manufacturers to sell their goods for a somewhat better price than they otherwise could. You might do this either through a monopoly of the home market or through a bounty on exports. You then raise not only the nominal price of those goods, but also their real price. You make the goods equivalent to a greater quantity of labour and subsistence. You increase not only the manufacturers’ nominal profit, but also their real profit, wealth, and income. You enable them either to live better themselves or to employ more labour in those particular manufactures. You truly encourage those manufactures and direct more of the country’s industry towards them than would naturally go there. But similar measures can raise the nominal or money price of corn without raising its real value. They do not increase the real wealth or income of either our farmers or country landowners. They do not encourage the growing of corn, because they do not enable farmers and landowners to maintain and employ more labourers to grow it. The nature of things has given corn a real value that cannot be changed merely by changing its money price. No export bounty or monopoly of the home market can raise that value. The freest competition cannot lower it. Throughout the world in general, the real value of corn equals the quantity of labour it can maintain. In any particular place, it equals the quantity of labour it can maintain in the customary way there, whether generous, moderate, or scanty. Woollen and linen cloth are not the commodities by which the real value of all other goods must ultimately be measured and determined. Corn is. The real value of every other commodity is ultimately measured and determined by how its average money price compares with the average money price of corn. The real value of corn does not change with the variations in its average money price that sometimes occur from one century to another. It is the real value of silver that changes with them.

Bounties upon the exportation of any homemade commodity are liable, first, to that general objection which may be made to all the different expedients of the mercantile system; the objection of forcing some part of the industry of the country into a channel less advantageous than that in which it would run of its own accord; and, secondly, to the particular objection of forcing it not only into a channel that is less advantageous, but into one that is actually disadvantageous; the trade which cannot be carried on but by means of a bounty being necessarily a losing trade. The bounty upon the exportation of corn is liable to this further objection, that it can in no respect promote the raising of that particular commodity of which it was meant to encourage the production. When our country gentlemen, therefore, demanded the establishment of the bounty, though they acted in imitation of our merchants and manufacturers, they did not act with that complete comprehension of their own interest, which commonly directs the conduct of those two other orders of people. They loaded the public revenue with a very considerable expense: they imposed a very heavy tax upon the whole body of the people; but they did not, in any sensible degree, increase the real value of their own commodity; and by lowering somewhat the real value of silver, they discouraged, in some degree, the general industry of the country, and, instead of advancing, retarded more or less the improvement of their own lands, which necessarily depend upon the general industry of the country.

Export subsidies for any domestically made commodity face two objections. First, like all the measures of the mercantile system, they direct some of the country’s industry into less profitable activities than it would naturally pursue. Second, they direct industry into activities that are not merely less profitable but actually unprofitable. A trade that cannot continue without a subsidy is necessarily a losing trade. The export subsidy for corn faces a further objection. It cannot in any way promote the growing of the very crop it was meant to encourage. So, when landowning gentlemen demanded the subsidy, they were imitating merchants and manufacturers. But they did not show the same full understanding of their own interests that usually guides those two groups. They burdened public revenue with a very considerable expense and imposed a very heavy tax on the entire population. Yet they did not appreciably increase the real value of their own crop. By lowering the real value of silver somewhat, they also discouraged the country’s industry to some degree. Instead of advancing the improvement of their own lands, they delayed it to some extent. That improvement necessarily depends on the country’s industry as a whole.

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.

To encourage production of a commodity, one would expect a bounty on production to work more directly than one on exports. It would also impose only one tax on the people: the money they must contribute to pay the bounty. Rather than raising the commodity’s price in the home market, it would tend to lower it. So, instead of imposing a second tax on the people, it might at least partly repay their first contribution. Bounties on production, however, have been granted very rarely. The prejudices established by the commercial system have taught us that national wealth comes more directly from exports than from production. Exports have therefore been favored as the more direct means of bringing money into the country. It has also been said that experience shows bounties on production are more vulnerable to fraud than bounties on exports. I do not know how true this is. It is very well known that export bounties have been abused for many fraudulent purposes. But merchants and manufacturers, the great inventors of all these expedients, have no interest in an oversupply of their goods in the home market. A bounty on production might sometimes cause such an oversupply. An export bounty effectively prevents it. The bounty enables merchants and manufacturers to send their surplus abroad and keep up the price of what remains at home. Accordingly, of all the expedients of the mercantile system, it is the one they favor most. I have known the owners of certain businesses to agree privately to pay an export bounty from their own pockets. They paid it on a certain proportion of the goods they dealt in. This expedient succeeded so well that it more than doubled the price of their goods in the home market. It did so despite a very considerable increase in production. The bounty on corn must have worked in a remarkably different way if it lowered the money price of corn.

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.

However, something like a production subsidy has been granted on some particular occasions. The tonnage subsidies given to the white herring and whale fisheries may perhaps be considered subsidies of this kind. They may be expected to make these goods cheaper in the home market than they would otherwise be. In other respects, it must be acknowledged, their effects are the same as those of export subsidies. Because of them, some of the country’s capital is used to bring goods to market. The price of these goods does not cover their cost plus the ordinary profit on capital.

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.

But although payments based on the tonnage of fishing vessels do not make the nation wealthier, they may contribute to its defense. They may do so by increasing the number of sailors and ships. It may be argued that such payments can sometimes achieve this at much less cost than maintaining a large standing navy. I use the expression “standing navy” in the same sense as “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:

Despite these favorable claims, the following considerations lead me to believe that the legislature was seriously misled when it granted at least one of these bounties:

First, The herring-buss bounty seems too large.

First, the subsidy for herring fishing boats seems too large.

From the commencement of the winter fishing 1771, to the end of the winter fishing 1781, the tonnage bounty upon the herring-buss fishery has been at thirty shillings the ton. During these eleven years, the whole number of barrels caught by the herring-buss fishery of Scotland amounted to 378,347. The herrings caught and cured at sea are called sea-sticks. In order to render them what are called merchantable herrings, it is necessary to repack them with an additional quantity of salt; and in this case, it is reckoned, that three barrels of sea-sticks are usually repacked into two barrels of merchantable herrings. The number of barrels of merchantable herrings, therefore, caught during these eleven years, will amount only, according to this account, to 252,231¼. During these eleven years, the tonnage bounties paid amounted to £155,463:11s. or 8s:2¼d. upon every barrel of sea-sticks, and to 12s:3¾d. upon every barrel of merchantable herrings.

From the start of the winter fishing season in 1771 to the end of the winter season in 1781, the tonnage bounty for the herring-buss fishery was thirty shillings per ton. Over those eleven years, the Scottish herring-buss fishery caught a total of 378,347 barrels of herrings. Herrings caught and cured at sea are called sea-sticks. To make them into what are called merchantable herrings, they must be repacked with extra salt. It is reckoned that three barrels of sea-sticks usually make two barrels of merchantable herrings. By this calculation, the catch over those eleven years amounted to only 252,231¼ barrels of merchantable herrings. During the same period, the tonnage bounties paid amounted to £155,463:11s. That was 8s:2¼d. for every barrel of sea-sticks, or 12s:3¾d. for every barrel of merchantable herrings.

The salt with which these herrings are cured is sometimes Scotch, and sometimes foreign salt; both which are delivered, free of all excise duty, to the fish-curers. The excise duty upon Scotch salt is at present 1s:6d., that upon foreign salt 10s. the bushel. A barrel of herrings is supposed to require about one bushel and one-fourth of a bushel foreign salt. Two bushels are the supposed average of Scotch salt. If the herrings are entered for exportation, no part of this duty is paid up; if entered for home consumption, whether the herrings were cured with foreign or with Scotch salt, only one shilling the barrel is paid up. It was the old Scotch duty upon a bushel of salt, the quantity which, at a low estimation, had been supposed necessary for curing a barrel of herrings. In Scotland, foreign salt is very little used for any other purpose but the curing of fish. But from the 5th April 1771 to the 5th April 1782, the quantity of foreign salt imported amounted to 936,974 bushels, at eighty-four pounds the bushel; the quantity of Scotch salt delivered from the works to the fish-curers, to no more than 168,226, at fifty-six pounds the bushel only. It would appear, therefore, that it is principally foreign salt that is used in the fisheries. Upon every barrel of herrings exported, there is, besides, a bounty of 2s:8d. and more than two-thirds of the buss-caught herrings are exported. Put all these things together, and you will find that, during these eleven years, every barrel of buss-caught herrings, cured with Scotch salt, when exported, has cost government 17s:11¾d.; and, when entered for home consumption, 14s:3¾d.; and that every barrel cured with foreign salt, when exported, has cost government £1:7:5¾d.; and, when entered for home consumption, £1:3:9¾d. The price of a barrel of good merchantable herrings runs from seventeen and eighteen to four and five-and-twenty shillings; about a guinea at an average. {See the accounts at the end of this Book.}

The salt used to cure these herrings is sometimes Scotch and sometimes foreign. Both are supplied to fish-curers free of excise duty. The current duty is 1s:6d. a bushel for Scotch salt and 10s. a bushel for foreign salt. A barrel of herrings is thought to require about one and one-fourth bushels of foreign salt. The estimated average for Scotch salt is two bushels. If the herrings are declared for export, none of this duty is paid. If they are declared for domestic consumption, only one shilling per barrel is paid, whether foreign or Scotch salt was used. That was the old Scotch duty on a bushel of salt. At a low estimate, one bushel had been thought necessary to cure a barrel of herrings. In Scotland, foreign salt is used for little besides curing fish. But from 5 April 1771 to 5 April 1782, 936,974 bushels of foreign salt were imported, at eighty-four pounds per bushel. Only 168,226 bushels of Scotch salt were supplied from the saltworks to fish-curers, at just fifty-six pounds per bushel. It therefore appears that foreign salt is used chiefly in the fisheries. In addition, a bounty of 2s:8d. is paid on every barrel of herrings exported. More than two-thirds of the herrings caught by busses are exported. Put all this together, and you will find the following costs to the government during those eleven years. Each exported barrel of buss-caught herrings cured with Scotch salt cost 17s:11¾d. Each barrel declared for domestic consumption cost 14s:3¾d. For herrings cured with foreign salt, each exported barrel cost £1:7:5¾d. Each barrel declared for domestic consumption cost £1:3:9¾d. A barrel of good, saleable herrings sells for between seventeen or eighteen shillings and twenty-four or twenty-five shillings. The average is about a guinea. {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.

Secondly, the bounty for the white-herring fishery is based on tonnage. It depends on the ship’s carrying capacity, not on how hard its crew works or how many fish it catches. I fear it has been too common for vessels to be fitted out solely to catch the bounty, not the fish. In 1759, the bounty was fifty shillings per ton. That year, Scotland’s entire buss fishery brought in only four barrels of sea-sticks. Each barrel of sea-sticks cost the government £113:15s. in bounties alone. Each barrel of merchantable herrings cost it £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.

Thirdly, the method of fishing supported by the tonnage bounty for the white herring fishery seems better suited to Holland than Scotland. This method uses busses, or decked vessels of twenty to eighty tons burden, and appears to have been borrowed from Holland. Holland is a great distance from the seas where herrings are known to gather in the greatest numbers. It can therefore fish for them only in decked vessels. These can carry enough water and provisions for a voyage to a distant sea. The Hebrides, or Western Islands, the islands of Shetland, and Scotland’s northern and northwestern coasts lie near the main herring fishing grounds. These places are crossed everywhere by arms of the sea that reach far inland. In the local language, they are called sea-lochs. Herrings gather mainly in these sea-lochs during the seasons when they visit these seas. Their visits are not entirely regular or constant, and I am assured that this is true of many other kinds of fish. Fishing from boats therefore seems best suited to Scotland’s particular situation. The fishers can carry the herrings ashore as soon as they are caught, to be cured or consumed fresh. But the bounty of 30 shillings per ton greatly encourages fishing by busses and necessarily discourages fishing by boats. The boat fishery receives no such bounty, so it cannot bring its cured fish to market on the same terms. Before the bounty for busses was established, the boat fishery was very considerable. It is said to have employed at least as many seamen as the buss fishery employs now. The boat fishery has now, however, almost entirely declined. I must acknowledge that I cannot speak with much precision about the former size of this now ruined and abandoned fishery. No bounty was paid to equip the boats, so customs and salt duty officers kept no record of the fishery.

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.

Fourthly, in many parts of Scotland, herring makes up a considerable part of ordinary people’s diet during certain seasons. A bounty that lowered its price in the domestic market might greatly help many of our fellow subjects who are far from wealthy. But the bounty for herring busses serves no such good purpose. It has ruined the boat fishery, which is by far the best suited to supplying the domestic market. The additional export bounty of 2 shillings and 8 pence per barrel sends most of the buss fishery’s catch abroad. Indeed, it sends more than two-thirds abroad. I have been assured that, thirty to forty years ago, white herring commonly cost 16 shillings a barrel. This was before the buss bounty was established. Ten to fifteen years ago, before the boat fishery was completely ruined, the price was said to range from 17 to 20 shillings a barrel. Over the past five years, it has averaged 25 shillings a barrel. This high price, however, may have been due to a real shortage of herring off the coast of Scotland. I must also note that the barrel is usually sold with the herring. Its price is included in all the prices given above. Since the American war began, the price of a barrel has roughly doubled, from about 3 shillings to about 6. I must also note that the accounts I have received of earlier prices have not been entirely consistent. An old man of great accuracy and experience has assured me that, more than fifty years ago, a barrel of good, saleable herring usually cost a guinea. I believe this may still be taken as the average price. All accounts, however, seem to agree that the buss bounty has not lowered the price in the domestic market.

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.

When fishing entrepreneurs continue to sell their catch at the same price as before, or even higher, despite receiving such generous subsidies, one might expect their profits to be very great. Some individuals may indeed have made very large profits. In general, however, I have every reason to believe their profits have been quite otherwise. Such subsidies usually encourage reckless entrepreneurs to enter a business they do not understand. Their losses from their own negligence and ignorance more than outweigh anything they can gain from the utmost government generosity. In 1750, an act first granted a subsidy of 30 shillings per ton to encourage the white herring fishery. The same act (23 Geo. II, chapter 24) established a joint-stock company with £500,000 in capital. Subscribers received all the other incentives: the tonnage subsidy just mentioned, an export subsidy of 2 shillings and 8 pence per barrel, and duty-free supplies of both British and foreign salt. In addition, for fourteen years, they were entitled to £3 a year for every £100 they subscribed and paid into the company’s stock. The receiver-general of customs was to pay this amount in equal half-yearly installments. The governor and directors of the great company were to reside in London. The act also allowed separate fishing chambers to be established in the kingdom’s other ports. Each chamber had to have at least £10,000 subscribed to its capital. Each was to be managed at its own risk and for its own profit or loss. The trade of these smaller chambers received the same annual payment and every other incentive given to the great company’s trade. The great company’s shares were soon fully subscribed, and several fishing chambers were established in other ports across the kingdom. Despite all these incentives, almost all the companies, both large and small, lost either all or most of their capital. Hardly any trace of them now remains. The white herring fishery is now carried on entirely, or almost entirely, by private entrepreneurs.

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.

If a particular industry was necessary for the defense of society, it might not always be wise to depend on our neighbors for supplies. If the industry could not otherwise survive at home, it might be reasonable to tax all other industries to support it. The subsidies for exporting British-made sailcloth and British-made gunpowder may perhaps both be justified on 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.

It can very rarely be reasonable to tax the work of most people to support a particular group of manufacturers. But in times of great prosperity, the public may have more revenue than it knows what to do with. In such times, giving subsidies to favored manufacturers may perhaps be as natural as any other wasteful expense. In public spending, as in private spending, great wealth may perhaps often be accepted as an excuse for great folly. But continuing such lavish spending in times of general hardship and distress must surely be extraordinarily absurd.

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.

What is called a bounty is sometimes only a drawback, or repayment of duties. It is therefore not open to the same objections as a true bounty. For example, the bounty on exported refined sugar may be seen as a drawback of the duties on the brown and Muscovado sugars used to make it. The bounty on exported manufactured silk may be seen as a drawback of the duties on imported raw and thrown silk. The bounty on exported gunpowder may be seen as a drawback of the duties on imported brimstone and saltpetre. In customs terminology, only allowances paid on goods exported in the same form in which they were imported are called drawbacks. When manufacturing changes goods enough to give them a new name, the allowances 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.

Public prizes for artists and manufacturers who excel in their trades do not raise the same objections as bounties. These prizes encourage exceptional skill and ingenuity, keeping workers in those trades striving to excel. They are not large enough to draw more of the country’s capital into any one trade than would naturally flow there. Rather than upsetting the natural balance among occupations, prizes make the work done in each as perfect and complete as possible. Besides, prizes cost very little, while bounties cost a great deal. The bounty on corn alone has sometimes cost the public more than £300,000 in a single year.

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.

Bounties are sometimes called premiums, just as drawbacks are sometimes called bounties. But in all cases, we must focus on what they are, not what they are called.

Digression concerning the Corn Trade and Corn Laws.

A Digression on the Grain Trade and Grain 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.

I cannot conclude this chapter on bounties without noting that the praise given to the law granting a bounty on grain exports is entirely undeserved. The same is true of the praise given to the system of regulations connected with the law. A close examination of the grain trade and the main British laws governing it will sufficiently demonstrate this claim. The great importance of the subject must justify the length of this 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.

The grain trade has four branches. Although one person may sometimes carry on all four, they are distinct trades. The first is the domestic grain trade. The second is importing grain for consumption at home. The third is exporting homegrown grain for consumption abroad. The fourth is the carrying trade, or importing grain to export it again.

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

I. The interests of the domestic grain dealer and the great majority of people may at first seem opposed. Yet even in years of the greatest scarcity, their interests are exactly the same. The dealer benefits by raising the price of his grain as high as the actual shortage requires. It can never benefit him to raise it higher. By raising the price, he discourages consumption. He leads everyone, especially poorer people, to be more or less careful and thrifty. But he may raise the price too high and discourage consumption too much. Then the season’s supply may exceed consumption and last until some time after the next harvest begins. He risks losing a considerable part of his grain to spoilage and other natural causes. He also risks having to sell the rest for much less than he could have received several months earlier. On the other hand, he may not raise the price enough and may discourage consumption too little. Then the season’s supply may fall short of consumption. He loses some of the profit he could otherwise have made. He also exposes the people to the dreadful horrors of famine before the season ends, rather than the hardships of scarcity. The people benefit when their daily, weekly, and monthly consumption matches the season’s supply as closely as possible. The domestic grain dealer benefits in the same way. If he supplies them in this proportion as closely as he can judge, he is likely to sell all his grain at the highest price and make the greatest profit. His knowledge of the harvest and of his daily, weekly, and monthly sales helps him judge how closely their supply matches this proportion. His judgment may be more or less accurate. The dealer does not intend to serve the people’s interests. Yet concern for his own interests necessarily leads him to treat them much as a prudent ship’s captain sometimes must treat his crew. This is true even in years of scarcity. When the captain foresees that provisions are likely to run short, he puts the crew on reduced rations. He may sometimes do this out of excessive caution, when there is no real need. Yet all the hardship his crew may suffer from reduced rations is slight by comparison. Less foresight could sometimes expose them to danger, misery, and ruin. In the same way, a domestic grain merchant may sometimes charge somewhat more than the season’s shortage requires, out of excessive greed. This conduct effectively protects the people from famine at the end of the season. All the hardship it causes them is slight compared with what they might have faced if he had dealt more generously at the beginning. The grain merchant himself is likely to suffer most from this excessive greed. It generally arouses indignation against him. But even if he escapes the effects of that indignation, his greed necessarily leaves him with grain on his hands at the end of the season. If the next season happens to be favorable, he must always sell it for much less than he could otherwise have received.

Were it possible, indeed, for one great company of merchants to possess themselves of the whole crop of an extensive country, it might perhaps be their interest to deal with it, as the Dutch are said to do with the spiceries of the Moluccas, to destroy or throw away a considerable part of it, in order to keep up the price of the rest. But it is scarce possible, even by the violence of law, to establish such an extensive monopoly with regard to corn; and wherever the law leaves the trade free, it is of all commodities the least liable to be engrossed or monopolised by the force a few large capitals, which buy up the greater part of it. Not only its value far exceeds what the capitals of a few private men are capable of purchasing; but, supposing they were capable of purchasing it, the manner in which it is produced renders this purchase altogether impracticable. As, in every civilized country, it is the commodity of which the annual consumption is the greatest; so a greater quantity of industry is annually employed in producing corn than in producing any other commodity. When it first comes from the ground, too, it is necessarily divided among a greater number of owners than any other commodity; and these owners can never be collected into one place, like a number of independent manufacturers, but are necessarily scattered through all the different corners of the country. These first owners either immediately supply the consumers in their own neighbourhood, or they supply other inland dealers, who supply those consumers. The inland dealers in corn, therefore, including both the farmer and the baker, are necessarily more numerous than the dealers in any other commodity; and their dispersed situation renders it altogether impossible for them to enter into any general combination. If, in a year of scarcity, therefore, any of them should find that he had a good deal more corn upon hand than, at the current price, he could hope to dispose of before the end of the season, he would never think of keeping up this price to his own loss, and to the sole benefit of his rivals and competitors, but would immediately lower it, in order to get rid of his corn before the new crop began to come in. The same motives, the same interests, which would thus regulate the conduct of any one dealer, would regulate that of every other, and oblige them all in general to sell their corn at the price which, according to the best of their judgment, was most suitable to the scarcity or plenty of the season.

If one great company of merchants could take possession of the entire crop of a large country, it might perhaps be in their interest to destroy or throw away a considerable part. They could do this to keep up the price of the rest, as the Dutch are said to do with the spices of the Moluccas. But it is hardly possible to establish such a vast monopoly over grain, even through force of law. Wherever the law leaves trade free, grain is the least likely of all commodities to be bought up or monopolized by a few wealthy people purchasing most of it. The value of the grain crop is far greater than a few private individuals can afford to buy. But even if they could afford it, the way grain is produced would make such a purchase altogether impracticable. In every civilized country, more grain is consumed each year than any other commodity. So more labor is employed each year in producing grain than in producing anything else. When grain first comes from the ground, it is necessarily divided among more owners than any other commodity. These owners can never be brought together in one place, like a number of independent manufacturers. They are necessarily scattered throughout every part of the country. These original owners either supply consumers in their own neighborhood directly or supply other domestic dealers, who then supply those consumers. Domestic grain dealers, including both farmers and bakers, are therefore necessarily more numerous than dealers in any other commodity. Because they are scattered, it is altogether impossible for them to form any general agreement. Suppose, then, that in a year of scarcity one dealer had much more grain on hand than he could expect to sell at the current price before the season ended. He would never think of keeping the price up at a loss to himself and solely for the benefit of his rivals and competitors. Instead, he would immediately lower the price to sell his grain before the new crop began to come in. The same motives and interests that would guide one dealer would guide every other dealer. They would generally oblige all dealers to sell their grain at the price they judged best suited to the season's scarcity or plenty.

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.

Anyone who carefully examines the history of shortages and famines in Europe over the present and two preceding centuries will, I believe, find the following. We have fairly accurate accounts of several of these shortages and famines. A shortage has never arisen from an agreement among domestic grain dealers, but only from an actual lack of grain. In some places, that lack may sometimes have resulted from the devastation of war. But in by far the greatest number of cases, it resulted from bad weather. A famine, on the other hand, has never arisen from any cause except forceful government action attempting to remedy a shortage’s hardships by improper means.

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.

In a large grain-growing country, trade and communication may flow freely between all its different parts. In such a country, even the worst seasons can never cause a shortage severe enough to produce a famine. If people use the smallest harvest sparingly and economically, it will feed them throughout the year. It will feed the same number of people as a moderately plentiful harvest would usually feed more generously. The worst seasons for crops are those of excessive drought or excessive rain. But grain grows on both high and low land, on soil prone to being too wet and soil prone to being too dry. So drought or rain that harms one part of the country benefits another. In both wet and dry seasons, the harvest is much smaller than in a more balanced season. Yet in both, what is lost in one part of the country is partly offset by what is gained in another. In rice-growing countries, the effects of drought are much more devastating. Rice requires very moist soil, and at one stage of its growth it must be covered with water. Even in such countries, however, drought is perhaps hardly ever so widespread that it must cause a famine, if the government allows free trade. The drought in Bengal a few years ago might probably have caused a severe shortage. But some improper rules and unwise restrictions imposed on the rice trade by servants of the East India Company perhaps helped turn that shortage 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.

When the government tries to ease a shortage, it may order all dealers to sell their grain at what it considers a reasonable price. This either discourages them from bringing grain to market, which may sometimes cause a famine even at the beginning of the season. Or, if they do bring it to market, the price allows people to consume it quickly and encourages them to do so. They consume it so quickly that a famine must result before the end of the season. Complete, unrestricted freedom in the grain trade is the only effective way to prevent the misery of famine. It is also the best way to ease the hardships of a shortage. The hardships of a real scarcity cannot be cured. They can only be eased. No trade deserves the full protection of the law more, and no trade needs it more. That is because no trade is more exposed to public hatred.

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.

In years of scarcity, poorer people blame their distress on the grain merchant’s greed. They come to hate and resent him. Instead of making a profit, he is often in danger of total ruin. Their violence may lead them to plunder and destroy his warehouses. Yet grain merchants expect to make their main profit in years of scarcity, when prices are high. A merchant usually contracts with farmers to supply a fixed quantity of grain at a fixed price for several years. The contract price is based on what is thought to be moderate and reasonable, meaning the usual or average price. Before the recent years of scarcity, this was commonly about 28 shillings for a quarter of wheat. Prices for other grains were in proportion. In years of scarcity, therefore, the merchant buys much of his grain at the usual price and sells it for much more. But this extraordinary profit seems only enough to put his trade on a fair level with others. It also compensates him for the many losses he suffers at other times. These losses arise both because grain can spoil and because its price changes frequently and unpredictably. One fact seems to make this clear: great fortunes are made no more often in this trade than in any other. Yet the trade attracts public hatred in years of scarcity, the only years when it can be very profitable. This keeps people of good character and wealth from entering it. It is left to a lower class of dealers. In the domestic market, almost the only middlemen between growers and consumers are millers, bakers, meal dealers, meal agents, and a number of miserable petty traders.

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.

In the past, European policy did not discourage public hostility toward this trade, though the trade greatly benefited the public. Instead, it seems to have sanctioned and encouraged that hostility.

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.

Under the law of the 5th and 6th years of Edward VI, chapter 14, anyone who bought corn or grain intending to resell it was deemed an unlawful engrosser. For a first offense, the person was imprisoned for two months and had to forfeit the value of the grain. For a second offense, the person was imprisoned for six months and had to forfeit twice its value. For a third offense, the person was put in the pillory and imprisoned for as long as the king wished. The person also had to forfeit all goods and possessions. The old policy in most other parts of Europe was no better than England’s.

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.

Our ancestors seem to have believed that people would buy corn more cheaply from the farmer than from the corn merchant. They feared that the merchant would demand an excessive profit on top of the price he paid the farmer. They therefore tried to eliminate his trade altogether. They even tried, as far as possible, to prevent any middleman from coming between the grower and the consumer. This was the purpose of the many restrictions they imposed on the trade of those they called kidders, or carriers of corn. No one was allowed to carry on this trade without a licence confirming that he was honest and dealt fairly. Under a statute of Edward VI, a licence required the approval of three justices of the peace. But even this restriction was later thought insufficient. Under a statute of Elizabeth, the power to grant licences 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.

In this way, Europe’s old policies tried to regulate agriculture, the main trade of the countryside, by principles quite different from those applied to manufacturing, the main trade of the towns. Farmers could sell only to consumers or to their immediate agents, the dealers and carriers of grain. This policy tried to force farmers to act not only as farmers, but also as grain merchants or retailers. In contrast, manufacturers were often forbidden to act as shopkeepers or sell their own goods directly to consumers. The first law was intended to serve the general interest of the country by making grain cheap. Perhaps, though, it was not well understood how the law would achieve this. The second law was intended to help a particular group, the shopkeepers. It was assumed that manufacturers could sell goods so much more cheaply that shopkeepers would be ruined if manufacturers were allowed to sell at 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.

Even if the manufacturer had been allowed to keep a shop and sell his own goods by retail, he could not have sold them for less than an ordinary shopkeeper. Any capital he put into his shop would have had to come out of his manufacturing business. To do as well as other businesspeople, he would have needed a manufacturer’s profit on one part of his capital and a shopkeeper’s profit on the other. Suppose, for example, that in his town the usual profit on capital was ten percent for both manufacturing and shopkeeping. He would then have had to charge a profit of twenty percent on every item of his own goods sold in his shop. When he carried the goods from his workshop to his shop, he would have had to value them at the price a dealer or shopkeeper would have paid for them wholesale. If he valued them lower, he would lose part of the profit on his manufacturing capital. When he sold them from his shop, he would also lose part of the profit on his shopkeeping capital unless he got the same price a shopkeeper would have charged. He might therefore appear to make a double profit on the same goods. Yet the goods had been part of two separate portions of capital, first one and then the other. So he made only a single profit on all the capital employed in producing and selling them. If he made less than that profit, he lost out. He did not use his total capital as advantageously as most of his neighbours did.

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

The farmer was, to some extent, required to do what the manufacturer was forbidden to do. He had to divide his capital between two different uses. He had to keep some in his granaries and stackyard to supply the market when needed. He had to use the rest to cultivate his land. But he could not afford to cultivate his land for less than the usual profit on farming capital. Nor could he afford to store grain for less than the usual profit on a merchant's capital. The capital that actually supported a grain merchant's business might belong to someone called a farmer or a grain merchant. In either case, the owner needed an equal profit to make this use of his capital worthwhile. He needed it to put his business on an equal footing with other trades. He also needed it so that he would not have an interest in changing to another trade as soon as possible. The farmer was therefore forced to act as a grain merchant. So he could not afford to sell his grain more cheaply than any other grain merchant would have had to under free competition.

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

A dealer who can use all his capital in one branch of business has an advantage. It is like the advantage of a worker who can spend all his labor on one task. The worker gains skill that allows him to do much more work with the same two hands. In the same way, the dealer learns to buy and sell goods with ease and speed. With the same capital, he can conduct much more business. The worker can usually offer his work much more cheaply than if he did a greater variety of tasks. Likewise, the dealer can usually offer his goods somewhat more cheaply than if he devoted his capital and attention to a greater variety of businesses. Most manufacturers could not afford to sell their own goods at retail as cheaply as an alert, active shopkeeper. The shopkeeper’s sole business is to buy goods wholesale and sell them at retail. Most farmers would find it even harder to sell their own grain at retail as cheaply as an alert, active grain merchant. They would have to supply the residents of a town perhaps four or five miles from most of their farms. The grain merchant’s sole business is to buy grain wholesale, collect it in a large storehouse, and sell it at retail.

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.

The law that prohibited manufacturers from trading as shopkeepers tried to speed up this division in the use of capital. The law that required farmers to trade as grain merchants tried to slow it down. Both laws clearly violated natural liberty and were therefore unjust. Both were also as unwise as they were unjust. It is in every society’s interest to neither force nor obstruct such changes. A person may use their labor or capital in more ways than their circumstances require. But they can never hurt their neighbor by selling at lower prices. They may hurt themselves, and they generally do. As the proverb says, a jack-of-all-trades will never be rich. But the law should always trust people to look after their own interests. In their own local circumstances, they can generally judge their interests better than the legislature can. However, the law requiring farmers to trade as grain merchants was by far the more harmful 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.

The law obstructed not only the division of capital among different trades, which benefits every society. It also obstructed the improvement and cultivation of land. By forcing the farmer to carry on two trades instead of one, it forced him to divide his capital. Only one part could be used to cultivate the land. But if he had been free to sell his whole crop to a grain merchant as soon as he threshed it, he could have put all his capital straight back into the land. He could have used it to buy more cattle and hire more workers to improve and cultivate the land better. Instead, he had to sell his grain at retail. This forced him to keep a large part of his capital in his granaries and storage yards throughout the year. He therefore could not cultivate the land as well as he otherwise could have with the same capital. The law, then, necessarily obstructed the improvement of the land. Instead of making grain cheaper, it must have tended to make grain scarcer and therefore more expensive than it otherwise would 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.

After farming, the grain trade would do the most to increase grain production, if properly protected and encouraged. The grain trade would support farmers just as wholesale dealers support manufacturers.

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.

The wholesaler provides the manufacturer with a ready market, buying goods as fast as they can be made. Sometimes the wholesaler even pays for goods before they are made. This allows the manufacturer to keep all their capital constantly employed in manufacturing, and sometimes even more than their own capital. As a result, the manufacturer can make far more goods than if they had to sell them directly to consumers or even to retailers. A wholesaler’s capital is also generally enough to replace the capital of many manufacturers. This relationship gives the owner of a large amount of capital an interest in supporting many owners of smaller amounts. The wholesaler can help them through losses and misfortunes that might otherwise ruin 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.

If the same kind of relationship were established everywhere between farmers and grain merchants, farmers would benefit equally. They could keep all their capital, and even more, constantly employed in cultivating land. Farming is more exposed to accidents than almost any other trade. When accidents occurred, farmers would find that their regular customer, the wealthy grain merchant, had both an interest in supporting them and the means to do so. They would not, as they are now, be entirely dependent on their landlord’s patience or his steward’s mercy. Perhaps it is not possible to establish this relationship everywhere at once. Suppose, however, that it were possible. Suppose, too, that all the kingdom’s farming capital could be put to its proper use at once, cultivating land, rather than being diverted to other activities as some of it now is. And suppose that another, almost equally large fund of capital could be provided at once to support and assist farming when needed. It is perhaps not easy to imagine how great, widespread, and sudden an improvement this change alone would bring to 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 statute of Edward VI therefore tried to keep middlemen from coming between growers and consumers as much as possible. In doing so, it tried to eliminate a trade that, when freely conducted, is the best way to relieve the hardships of a shortage. It is also the best way to prevent such a disaster. After farming, no trade contributes more to the growing of grain than the grain merchant’s trade.

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.

Later statutes gradually softened the severity of this law. They successively allowed the buying up of grain when wheat cost no more than 20s., 24s., 32s., and 40s. per quarter. Finally, the 15th of Charles II, c.7, made it lawful to buy grain for resale. This applied as long as wheat cost no more than 48s. per quarter, and other grain cost proportionately no more. Anyone could trade on these terms, provided they were not forestallers, meaning they did not resell in the same market within three months. This statute gave the inland grain trade all the freedom it has ever enjoyed. A statute from the twelfth year of the present king's reign repeals almost all the other ancient laws against engrossers and forestallers. But it does not repeal the restrictions in this particular statute, which therefore remain in force.

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

However, this law gives some support to 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.

First, it assumes that grain is likely to be bought up in quantities that harm the people when wheat reaches 48 shillings a quarter and other grain rises proportionately. But what has already been said makes it clear enough that domestic dealers cannot buy up enough grain to harm the people, whatever the price. Besides, though 48 shillings a quarter may be considered a very high price, it often occurs immediately after harvest in years of scarcity. At that point, hardly any of the new crop can have been sold. Even the ignorant could not suppose that any of it had been bought up in quantities sufficient to harm 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.

Second, it assumes that there is a price at which merchants are likely to forestall corn. That is, they buy it up to sell it again soon afterward in the same market, harming the people. But a merchant may buy up corn on its way to a particular market or already in that market. If he intends to sell it there again soon afterward, he must expect supplies to be less plentiful throughout the season. He therefore expects the price to rise soon. If he is wrong and the price does not rise, he loses all the profit from the capital he invested. He also loses part of the capital itself, because storing and keeping corn necessarily involves expense and loss. He therefore hurts himself much more seriously than he can hurt the people he may prevent from buying corn that market day. They can buy it just as cheaply on any later market day. If he is right, he does not hurt most people. Instead, he provides them with a most important service. He makes them feel the hardships of a shortage somewhat earlier than they otherwise might. In doing so, he prevents them from suffering as severely later. They would certainly suffer more if low prices encouraged them to consume corn faster than the season's actual shortage allowed. When the shortage is real, the best thing for the people is to spread its hardship as evenly as possible. It should be spread across all the months, weeks, and days of the year. The corn merchant's own interest leads him to spread the hardship as evenly as he can. No one else can have the same interest, knowledge, or ability to do it as precisely as he can. This most important operation of commerce should therefore be entrusted entirely to him. In other words, the corn trade should be left completely free, at least as far as supplying the home market is concerned.

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

Popular fears of engrossing and forestalling can be compared to popular fears and suspicions about witchcraft. The unfortunate people accused of witchcraft were no more innocent of the misfortunes blamed on them than those accused of engrossing and forestalling. The law ended all prosecutions for witchcraft. It prevented anyone from satisfying their own malice by accusing a neighbor of that imaginary crime. By removing the main cause that encouraged and sustained those fears and suspicions, the law seems to have effectively ended them. A law restoring complete freedom to the domestic grain trade would probably be equally effective in ending popular fears of engrossing and forestalling.

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

The 15th of Charles II, c. 7, however, has perhaps done more than any other law to ensure a plentiful supply for the home market and increase cultivation. This is so despite all its flaws. The domestic grain trade owes all the freedom and protection it has ever enjoyed to this law. And the domestic trade does much more than either imports or exports to supply the home market and promote cultivation.

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 author of the Tracts upon the Corn Trade estimated the average amount of all kinds of grain imported into Great Britain. He calculated that it does not exceed one five hundred and seventieth of the amount consumed. Therefore, for supplying the home market, the inland trade must be 570 times as important as the import trade.

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.

According to the same author, average grain exports from Great Britain do not exceed one thirty-first of annual production. Therefore, by providing a market for domestic grain, inland trade is thirty times as important as exports in encouraging farming.

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

I have little faith in political arithmetic, and I do not claim that either calculation is exact. I mention them only to show how much less important the foreign corn trade is than the domestic trade. That is the opinion of the most judicious and experienced people. Corn was very cheap in the years just before the bounty was established. This may perhaps reasonably be attributed in part to the effect of this statute of Charles II. The statute had been enacted about twenty-five years earlier, so it had plenty of time to take effect.

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

A few words are enough to explain all I have to say about the other three branches of the grain 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.

II. Merchants who import foreign grain for consumption at home clearly add to the immediate supply in the home market. To that extent, their trade must immediately benefit the great majority of people. It does tend to lower the average money price of grain somewhat. But it does not reduce grain’s real value, or the amount of labor it can support. Suppose imports were always unrestricted. Our farmers and country landowners would probably receive less money for their grain on average than they do now. At present, imports are effectively prohibited most of the time. But the money they received would be worth more. It would buy more goods of every other kind and pay for more labor. Their real wealth and real income would therefore remain the same, though expressed as a smaller amount of silver. They would be neither unable nor discouraged from growing as much grain as they do now. In fact, lowering the money price of grain raises the real value of silver. This rise also lowers the money price of all other goods somewhat. It gives the country’s industry some advantage in all foreign markets. It therefore tends to encourage and increase that industry. The size of the home market for grain depends on the country’s industry as a whole. It depends on the number of people who produce something else and can therefore exchange it for grain. It comes to the same thing if they exchange the price of what they produce for grain. In every country, the home market is the nearest and most convenient market for grain. It is also the largest and most important. Lowering the average money price of grain raises the real value of silver. This rise tends to enlarge the largest and most important market for grain. It therefore encourages, rather than discourages, its cultivation.

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:

Under the 22nd year of Charles II, chapter 13, imported wheat was subject to a duty of 16 shillings per quarter whenever its price in the home market did not exceed 53 shillings and 4 pence per quarter. The duty was 8 shillings whenever the price did not exceed £4. For more than a century, the lower price has occurred only in times of very great scarcity. The higher price, as far as I know, has not occurred at all. Yet under this law, imported wheat faced a very high duty until its price rose above the higher price. Until it rose above the lower price, the duty amounted to a prohibition. Imports of other kinds of grain were restricted by duties almost equally high in proportion to their value. Before the 13th year of the present king, the duties payable on imports of different kinds of grain were as follows:

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.

These different duties were imposed partly by an act passed in the 22nd year of Charles II, replacing the old subsidy. Others came from the new subsidy, the one-third and two-thirds subsidies, and the subsidy of 1747. Later laws increased these duties further.

The distress which, in years of scarcity, the strict execution of those laws might have brought upon the people, would probably have been very great; but, upon such occasions, its execution was generally suspended by temporary statutes, which permitted, for a limited time, the importation of foreign corn. The necessity of these temporary statutes sufficiently demonstrates the impropriety of this general one.

In years of scarcity, strictly enforcing those laws would probably have caused the people great hardship. But on such occasions, temporary statutes generally suspended enforcement and allowed foreign grain to be imported for a limited time. The need for these temporary statutes clearly shows that the general law was inappropriate.

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.

These restrictions on imports came before the bounty was established. But they were driven by the same spirit and principles that later brought about the bounty. However harmful the restrictions were in themselves, they or other import restrictions became necessary because of the bounty. Suppose wheat cost 48 shillings per quarter or less, or not much more. If foreign grain could have been imported duty free or with only a small duty, it could have been exported again with the benefit of the bounty. This would have caused great losses to public revenue and completely undermined the policy. Its purpose was to expand the market for homegrown grain, not grain grown in 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.

III. Merchants who export grain for foreign consumption certainly do not directly increase the supply in the home market. They do so indirectly, however. The home market may be supplied by domestic crops or foreign imports. But its supply can never be very plentiful unless the country usually grows or imports more grain than it consumes. In ordinary cases, growers and importers must be able to export the surplus. Otherwise, they will take care not to grow or import more than the home market requires for its bare consumption. The market will very seldom have too much grain, but it will generally have too little. Those who supply it are generally afraid that their goods will be left unsold. A ban on exports limits the country’s agricultural improvement and cultivation to what its own inhabitants need. Freedom to export allows the country to expand cultivation to supply foreign nations.

By the 12th of Charles II. c.4, the exportation of corn was permitted whenever the price of wheat did not exceed 40s. the quarter, and that of other grain in proportion. By the 15th of the same prince, this liberty was extended till the price of wheat exceeded 48s. the quarter; and by the 22d, to all higher prices. A poundage, indeed, was to be paid to the king upon such exportation; but all grain was rated so low in the book of rates, that this poundage amounted only, upon wheat to 1s., upon oats to 4d., and upon all other grain to 6d. the quarter. By the 1st of William and Mary, the act which established this bounty, this small duty was virtually taken off whenever the price of wheat did not exceed 48s. the quarter; and by the 11th and 12th of William III. c. 20, it was expressly taken off at all higher prices.

Under the 12th year of Charles II, chapter 4, grain could be exported whenever wheat cost no more than 40 shillings a quarter. The price limits for other grains were set in proportion. Under the 15th year of the same king, this permission was extended until wheat exceeded 48 shillings a quarter. Under his 22nd year, it was extended to all higher prices. A duty did have to be paid to the king on such exports. But all grain was valued so low in the book of rates that the duty was small. It amounted to only 1 shilling a quarter for wheat, 4 pence for oats, and 6 pence for all other grain. Under the act of the 1st year of William and Mary that established this bounty, this small duty was effectively removed whenever wheat cost no more than 48 shillings a quarter. Under the 11th and 12th years of William III, chapter 20, it was expressly removed at all higher prices.

The trade of the merchant-exporter was, in this manner, not only encouraged by a bounty, but rendered much more free than that of the inland dealer. By the last of these statutes, corn could be engrossed at any price for exportation; but it could not be engrossed for inland sale, except when the price did not exceed 48s. the quarter. The interest of the inland dealer, however, it has already been shown, can never be opposite to that of the great body of the people. That of the merchant-exporter may, and in fact sometimes is. If, while his own country labours under a dearth, a neighbouring country should be afflicted with a famine, it might be his interest to carry corn to the latter country, in such quantities as might very much aggravate the calamities of the dearth. The plentiful supply of the home market was not the direct object of those statutes; but, under the pretence of encouraging agriculture, to raise the money price of corn as high as possible, and thereby to occasion, as much as possible, a constant dearth in the home market. By the discouragement of importation, the supply of that market; even in times of great scarcity, was confined to the home growth; and by the encouragement of exportation, when the price was so high as 48s. the quarter, that market was not, even in times of considerable scarcity, allowed to enjoy the whole of that growth. The temporary laws, prohibiting, for a limited time, the exportation of corn, and taking off, for a limited time, the duties upon its importation, expedients to which Great Britain has been obliged so frequently to have recourse, sufficiently demonstrate the impropriety of her general system. Had that system been good, she would not so frequently have been reduced to the necessity of departing from it.

In this way, the merchant-exporter’s trade was not only encouraged by a bounty, but also made much freer than the domestic dealer’s trade. Under the last of these laws, grain could be bought up at any price for export. But it could be bought up for domestic sale only when the price was no more than 48 shillings per quarter. As already shown, the domestic dealer’s interest can never conflict with that of the great body of the people. The merchant-exporter’s interest can, and sometimes does, conflict with theirs. Suppose his own country is suffering a shortage while a neighboring country is afflicted by famine. It might then be in his interest to send grain there in quantities that would greatly worsen the shortage at home. Keeping the home market well supplied was not the direct aim of those laws. Under the pretext of encouraging agriculture, they aimed to raise the money price of grain as high as possible. In doing so, they sought to cause a constant shortage in the home market as far as possible. By discouraging imports, the laws confined the home market’s supply to grain grown at home, even during great scarcity. And by encouraging exports when the price was as high as 48 shillings per quarter, they deprived the home market of some of that crop, even during considerable scarcity. Great Britain has often had to resort to temporary laws banning grain exports and removing duties on imports. Those measures sufficiently demonstrate that her general system was unsound. Had the system been good, she would not so often have been forced to depart 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.

If all nations adopted a policy of free exports and imports, the states of a great continent would resemble the provinces of a great empire. Within a great empire, reason and experience both show that free trade between provinces is the best way to ease a shortage. It is also the most effective way to prevent a famine. Free trade in exports and imports would do the same among the states of a great continent. The larger the continent, the less likely any part would be to suffer either disaster. The easier communication was between its parts, by land and water, the less likely such disasters would be. A shortage in one country would then be more likely to be relieved by abundance in another. But very few countries have fully adopted this policy. Trade in grain is restricted almost everywhere, to a greater or lesser degree. In many countries, absurd regulations restrict it so severely that they often turn an unavoidable shortage into a dreadful famine. Such countries may come to need grain so badly and urgently that a small neighboring state cannot safely supply them. If that state is also suffering some shortage, supplying them could expose it to the same dreadful disaster. One country’s very bad policy may thus make it somewhat dangerous and unwise for another to adopt what would otherwise be the best policy. Unlimited freedom to export would be much less dangerous in large states. They grow much more grain, so the amount likely to be exported could seldom greatly affect their supply. In a Swiss canton, or in some of the small states in Italy, restricting grain exports may perhaps sometimes be necessary. In large countries such as France or England, it can hardly ever be necessary. Moreover, preventing farmers from sending their goods to the best market at all times clearly sacrifices ordinary rules of justice to an idea of public benefit, a kind of reason of state. Lawmakers should exercise such power only in cases of the most urgent necessity. Only then can it be excused. If grain exports are ever to be prohibited, the price at which the ban takes effect should always be very high.

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.

Laws about grain may everywhere be compared to laws about religion. People feel deeply concerned about both their livelihood in this life and their happiness in the next. Governments must therefore give way to their prejudices. To preserve public peace, governments must establish the system that people approve of. Perhaps this is why we so rarely find a reasonable system established for either of these two vital matters.

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.

IV. The trade of the merchant-carrier, who imports foreign grain to export it again, helps keep the home market well supplied. Selling grain at home is not the direct purpose of this trade. But the merchant will generally be willing to sell it there, even for much less than he might expect abroad. By doing so, he saves the costs of loading and unloading, freight, and insurance. A country that becomes a storehouse for supplying other countries through the carrying trade will very seldom lack grain itself. Although the carrying trade must reduce the average money price of grain in the home market, it would not lower its real value. It would only raise the real value of silver somewhat.

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

In Great Britain, high duties on imported foreign grain effectively prohibited the carrying trade under ordinary circumstances. Most of these duties were not refunded when the grain was exported. In extraordinary circumstances, shortages made it necessary to suspend the duties through temporary laws. But exports were always prohibited on those occasions. This system of laws therefore effectively prohibited the carrying trade.

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.

The system of laws connected with the bounty, therefore, seems to deserve none of the praise it has received. Great Britain’s growth and prosperity have often been attributed to those laws, but other causes can easily explain them. The laws of Great Britain guarantee every man the fruits of his own labor. That security alone is enough to make any country flourish, despite these and twenty other absurd trade regulations. The Revolution perfected this security at much the same time that the bounty was established. Every individual naturally strives to improve his own condition. When people are free and secure enough to do so, this effort is a powerful force. Without any help, it can lead society to wealth and prosperity. It can even overcome a hundred irrelevant obstacles that foolish human laws too often place in its way. But those obstacles always restrict freedom or diminish security to some degree. In Great Britain, industry is perfectly secure. Though it is far from perfectly free, it is as free as or freer than anywhere else in 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.

Great Britain’s period of greatest prosperity and progress came after the system of laws connected with the bounty. But we must not assume that those laws caused it. This period also came after the national debt, but the national debt was most certainly not its cause.

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 laws connected with the bounty tend to lower the value of precious metals in the country where they apply. In this respect, they have exactly the same tendency as the practices of Spain and Portugal. Yet Great Britain is certainly one of the richest countries in Europe, while Spain and Portugal are perhaps among the poorest. This difference, however, may easily be explained by two causes. First, Spain taxes exports of gold and silver, while Portugal prohibits them. Both countries have vigilant police to enforce these laws. Spain and Portugal are very poor countries, yet together they import over six million pounds sterling in gold and silver each year. Their laws must therefore reduce the value of those metals more directly and much more strongly than the corn laws do in Great Britain. Second, general liberty and security do not counterbalance this bad policy in Spain and Portugal. Industry is neither free nor secure there. The civil and ecclesiastical governments of both countries would alone be enough to perpetuate their present poverty. This would be true even if their trade regulations were wise, though most 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.

Chapter 43 of the present king's thirteenth year seems to have established a new system of corn laws. In many respects, it was better than the old system, but in one or two respects perhaps not quite as 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.

Under this law, the high duties on grain imported for domestic consumption are removed once prices reach certain levels. For medium-quality wheat, the threshold is 48 shillings per quarter. For medium-quality rye, peas, or beans, it is 32 shillings; for barley, 24 shillings; and for oats, 16 shillings. A small duty replaces the high duties: only 6 pence per quarter of wheat, with proportional duties on other grain. The domestic market is thus opened to foreign supplies of all these grains at considerably lower prices than before, especially for wheat.

By the same statute, the old bounty of 5s. upon the exportation of wheat, ceases so soon as the price rises to 44s. the quarter, instead of 48s. the price at which it ceased before; that of 2s:6d. upon the exportation of barley, ceases so soon as the price rises to 22s. instead of 24s. the price at which it ceased before; that of 2s:6d. upon the exportation of oatmeal, ceases so soon as the price rises to 14s. instead of 15s. the price at which it ceased before. The bounty upon rye is reduced from 3s:6d. to 3s. and it ceases so soon as the price rises to 28s. instead of 32s. the price at which it ceased before. If bounties are as improper as I have endeavoured to prove them to be, the sooner they cease, and the lower they are, so much the better.

Under the same law, the old export bounty of 5 shillings on wheat stops when the price rises to 44 shillings a quarter. Previously, it stopped at 48 shillings. The export bounty of 2 shillings and 6 pence on barley stops when the price rises to 22 shillings. Previously, it stopped at 24 shillings. The export bounty of 2 shillings and 6 pence on oatmeal stops when the price rises to 14 shillings. Previously, it stopped at 15 shillings. The export bounty on rye is reduced from 3 shillings and 6 pence to 3 shillings. It stops when the price rises to 28 shillings, rather than 32 shillings as before. If bounties are as improper as I have tried to prove, the sooner they stop and the lower they are, the better.

The same statute permits, at the lowest prices, the importation of corn in order to be exported again, duty free, provided it is in the mean time lodged in a warehouse under the joint locks of the king and the importer. This liberty, indeed, extends to no more than twenty-five of the different ports of Great Britain. They are, however, the principal ones; and there may not, perhaps, be warehouses proper for this purpose in the greater part of the others.

The same law allows corn to be imported duty-free for re-export, even when prices are at their lowest. The corn must be stored in a warehouse in the meantime, secured by locks held jointly by the king and the importer. This permission applies to only twenty-five ports in Great Britain. They are, however, the principal ports. Most of the others may not have suitable warehouses for this purpose.

So far this law seems evidently an improvement upon the ancient system.

In this respect, the law clearly seems to be an improvement over the old system.

But by the same law, a bounty of 2s. the quarter is given for the exportation of oats, whenever the price does not exceed fourteen shillings. No bounty had ever been given before for the exportation of this grain, no more than for that of pease or beans.

But the same law gives a bounty of two shillings per quarter for exporting oats whenever the price does not exceed fourteen shillings. No bounty had ever been given before for exporting oats, peas, or beans.

By the same law, too, the exportation of wheat is prohibited so soon as the price rises to forty-four shillings the quarter; that of rye so soon as it rises to twenty-eight shillings; that of barley so soon as it rises to twenty-two shillings; and that of oats so soon as they rise to fourteen shillings. Those several prices seem all of them a good deal too low; and there seems to be an impropriety, besides, in prohibiting exportation altogether at those precise prices at which that bounty, which was given in order to force it, is withdrawn. The bounty ought certainly either to have been withdrawn at a much lower price, or exportation ought to have been allowed at a much higher.

The same law also prohibits wheat exports as soon as the price reaches forty-four shillings per quarter. It prohibits rye exports at twenty-eight shillings, barley at twenty-two shillings, and oats at fourteen shillings. All these prices seem much too low. It also seems wrong to ban exports altogether at the very prices at which the bounty intended to encourage them is withdrawn. The bounty should certainly have been withdrawn at a much lower price, or exports should have been allowed at a much higher price.

So far, therefore, this law seems to be inferior to the ancient system. With all its imperfections, however, we may perhaps say of it what was said of the laws of Solon, that though not the best in itself, it is the best which the interest, prejudices, and temper of the times, would admit of. It may perhaps in due time prepare the way for a better.

So far, then, this law seems worse than the ancient system. Despite all its flaws, however, we might say what was said of Solon’s laws. Though not the best law in itself, it is the best that the interests, prejudices, and mood of the times would allow. In time, it may perhaps prepare the way for a better law.