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straints.

rance be such as tempts them to store subject to certain and effectual reit for another year. This case must suppose that our produce is redundant and useless to ourselves; and, therefore, the profit of exportation pro

duces no inconvenience.

"When they want corn, they must buy of us, and buy at a higher price; in this case, if we have corn more than enough for ourselves, we are again benefited by supplying them.

"But they may want, when we have no superfluity. When our markets rise, the bounty ceases; and, therefore, produces no evil. They cannot buy our corn but at a higher rate than it is sold at home. If their necessities, as now has happened, force them to give a higher price, that event is no longer to be charged upon the bounty. We may then stop our corn in our ports, and pour it back upon

our own markets.

"It is in all cases to be considered, what events are physical and certain, and what are political and arbitrary.

"The first effect of the bounty is the increase of agriculture, and by consequence the promotion of plenty. This is an effect physically good, and morally certain. While men are desirous to be rich, where there is profit there will be diligence. If much corn can be sold, much will be raised.

"The second effect of the bounty is the diminution by exportation of that product which it occasioned. But this effect is political and arbitrary; we have it wholly in our own hands; we can prescribe its limits, and regulate its quantity. When we feel want or fear it, we retain our corn, and feed ourselves upon that which was sown

and raised to feed other nations.

"It is perhaps impossible for human wisdom to go farther, than to contrive a law of which the good is certain and uniform; and the evil, though possible in itself, yet always

"This is the true state of the bounty upon corn; it certainly and neces sarily increases our crops, and can never lessen them, but by our own permission."

Such is the mode of operation, and such are the advantages of the bounty on exported corn. But has it not also its inconveniences? Unquestionably it has, and they shall here be fairly stated and appreciated.

It is a maxim among political economists, that any trade which requires special encouragements,-which demands the aid of drawbacks, bounties, or prohibitions, must necessarily be a losing trade, since the capital which it absorbs might be otherwise employed with a profit, and without artificial aid. If a bounty be necessary, the trade cannot support itself by its own profits; and to sustain such a trade by artifices of any kind, is to depress others which demand not such extraordinary assistance. The loss thus incurred is precisely the loss of the bounty; and, to this extent, it must be admitted, that a foreign trade in corn, with the assistance of a boun ty, is, indeed, a losing trade.

The question therefore is, whether an abundant supply of corn is not an ob ject of so much consequence to every great state, as to justify the sacrifice of a few thousand pounds a-year out of the public treasury, that the evils of scarcity may be prevented; that the spirit of discontent and turbulence," which scarcity never fails to occasion, may be restrained; and that a great empire may be rendered independent of its neighbours in that article on which it depends for its very existence.-Let it be remembered, that corn is not an ordinary commodity; not a common article of merchandise with which the people can easily dispense. It has an

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absolute and pre-eminent value as the The author of the Wealth of Nations great article of subsistence over every has remarked, that "* bounties, it is thing which ministers only to conve- allowed, ought to be given to those nience or luxury; and the prosperity branches of trade only which cannot of agriculture may well be considered, be carried on without them. But for this single reason, as deserving of every branch of trade on which the special encouragement. The evils of merchant can sell his goods for a price scarcity, the dangers of popular in which replaces to him, with the ordisurrection, the hazards of depend- nary profits of stock, the whole capience, in so essential a point, on foreign tal employed in preparing and sending powers, cannot be questioned. Secu- them to market, can be carried on rity must for ever be of greater im- without a bounty. Every such branch portance than wealth; and when the is evidently upon a level with all the question is about establishing the na- other branches of trade which are cartional security on the firmest basis, ried on without bounties, and cannot, with the sacrifice of a comparatively therefore, require one more than they. small proportion of wealth, who can Those trades only require bounties in hesitate as to the decision? The pro- which the merchant is obliged to sell sperity of commerce is greatly to be his goods for a price which does not desired; but the progress of agricul- replace to him his capital, together ture is of still higher importance; with the ordinary profit; or in which and if the alternative were put to us, he is obliged to sell them for less than that we should either import the whole it really cost him to send them to marof the manufactures, or the whole of ket. The bounty is given in order the corn which we consume, little dif- to make up this loss, and to encourage ficulty could be felt in making the elec- him to continue, or perhaps to begin, tion. We are not, indeed, approach a trade of which the expence is suping this extremity; but the justice posed to be greater than the returns ; of the principle is not less obvious, of which every operation eats up a that, if a sacrifice is to be made in part, part of the capital employed in it, and it will be wiser to make it of the na- which is of such a nature, that, if all tional wealth, than of the public secu- other trades resembled it, there would rity; of our commerce and manufac- soon be no capital left in the country." tures, than of our agriculture. Small In this passage, Dr Smith has accu states, which excite no envy, may be rately summed up the objections to allowed to depend on their neighbours bounties; and if he had stopped here, for subsistence; but a great nation the soundness of his argument could can never be secured by such policy. not have been impeached. According It has been observed by an eloquent to the above statement, the loss suswriter, that "a great state is too tained is precisely that of the bounty ; much envied, too much dreaded, to and when the advantages of having an find safety in humiliation;" and it export trade in corn are considered, may be added, that neither can it find few will doubt the expediency of masafety in dependence on its neighbours king so trifling a sacrifice. for that which is necessary not only to its prosperity, but to its very exist

ence.

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But Dr Smith has offered various other objections to bounties which are not so well founded. "In years of

*Wealth of Nations, B. iv. c. v. p. 262. Wealth of Nations, B. iv. c. v. p. 264, et seq.

plenty," says he, "it has already been observed, the bounty, by occasioning an extraordinary exportation, neccssarily keeps up the price of corn in the home market above what it would naturally fall to. To do so was the avowed purpose of the institution. In years of scarcity, though the bounty is frequently suspended, yet the great exportation which it occasions in years of plenty, must frequently hinder more or less the plenty of one year from relieving the scarcity of another. Both in years of plenty, and in years of scarcity, therefore, the bounty necessarily tends to raise the money price of corn somewhat higher than it otherwise would be in the home market.

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

"I answer, that whatever extension of the foreign market can be occasioned by the bounty, must, in every particular year, be altogether at the expence 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 much the heaviest of the two. Let us suppose that, taking one year with another, the bounty of five shillings upon the exportation of the quar ter of wheat, raises the price of that commodity in the home market only sixpence the bushel, or four shillings 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 five shillings upon every quarter of wheat exported, must pay another of four shillings upon every quarter which they themselves consume. But, according to the very well-informed author of the Tracts upon the 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 five shillings, therefore, which they contribute to the payment of the first tax, they must contribute six pounds four shillings to the payment of the second. So very heavy a tax upon the first necessary of life, must either reduce the subsistence of the labouring poor, or it must occasion some augmentation in their pecu niary wages, proportionable to that in the pecuniary price of their subsist

ence.

that even in years of scarcity the boun ty is injurious, by hindering the abundance of one year from relieving the scarcity of another, is not less apparent; for the abundance of which he speaks would not have existed but for the bounty:

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 diminish es 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 ten-mained in the home market to increase dency 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.”

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In this passage, Dr Smith has committed many obvious errors." It was the avowed purpose of the bounty," he says, to raise the price of corn in the home market;" but this its enlightened advocates firmly deny. The bounty is intended to place the foreign in circumstances equally favourable with the home market; and it is inconceivable how the price, to the domestic consumer, (who will always, for many obvious reasons, have the preference) should thus be increased.When Dr Smith affirms, that the extraordinary exportation in years of plenty keeps up the price of corn in the home market, he assumes that the bounty occasions no increase in the quantity of corn produced, and forgets that but for the bounty, the corn exported would never have been raised.— It is a mistake, therefore, to say, that the exportation is at the expence of the home market. The fallacy in that part of his argument in which he supposes

It is singular that Dr Smith should, in the second paragraph quoted above, have anticipated and immediately overlooked this very objection to his whole argument. In the beginning of the paragraph, which follows, he remarks, that " every bushel of corn which is exported by means of the bounty, and which would not have been exported without the bounty, would have re

the consumption, and to lower the price of that commodity." But, if it be true, that the bounty, by enlarging the market, increases the quantity of corn produced, this argument, with all the inferences deduced from it, must be erroneous. If again it be an error to suppose that the bounty does increase the quantity of corn produced, it follows, of course, that by no encouragement can the growth of corn be increased, and that the business of the farmer stands in a different predicament from all others, and is not susceptible either of encouragement or depression-of growth or of decay. But as this is an hypothesis, which reason, no less than experience, contradicts, the whole of Dr Smith's argument, as to the double tax on the people, and the necessity thence arising of either limiting the subsistence, or increasing the wages of the poor, must fall to the ground.

But Dr Smith takes yet another view of the subject, which, if it were sound, might help to support his general conclusion. * "The enhancement," says he, "of the money price of corn, however, it has been thought, by rendering that commodity more pro

* Wealth of Nations, Book IV. Chap. V. p. 267, &c.

fitable to the farmer, must necessarily encourage its production.

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

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

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

"It regulates the money price of all the other parts of the rude produce of land, which, in every period of improvement, must bear a certain propor. tion to that of corn, although this proportion is different in different periods. It regulates, for example, the money price of grass and hay, of butcher

meat, of horses, and the maintenance of horses, of land carriage consequently, or of the greater part of the inland commerce of the country.

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

"Though in consequence of the bounty, therefore, the farmer should be enabled to sell his corn for four shillings the bushel instead of three and six-pence, 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, four shillings will purchase no more home-made goods of any other kind than three and six-pence 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 homemade commodities, it can give them none at all; and almost the whole expence of the farmer, and the far great er part even of that of the landlord, is in home-made commodities."-Dr Smith then proceeds to draw a parallel betwixt the British bounty on the exportation of corn, and the prohibition in Spain and Portugal to export the precious metals; after which he says:*

* Wealth of Nations, Book IV. Chap. V. p. 274:

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