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 Mathew Decker. It hinders our own workmen from furnishing their goods for so small a quantity of silver as they otherwise might do; and enables the Dutch to furnish theirs for a smaller. It tends to render our manufactures somewhat dearer in every market, and theirs somewhat cheaper than they otherwise would be, and consequently to give their industry a double advantage over our own.

"The bounty, as it raises in the home market, not so much the real, as the nominal price of our corn, as it augments, not the quantity of labour which a certain quantity of corn can maintain and employ, but only the quantity of silver which it will exchange for, it discourages our manufactures, without rendering any considerable service ei ther 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

"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 the importers of corn. In years of plenty, the bounty necessarily occasioned a greaterexportation 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 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.

"Our country gentlemen, when they imposed the high duties upon the importation of foreign corn, which, in times of moderate plenty, amount to a prohibition, and when they established the bounty, seemed 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 endea voured to prevent that market from ever being overstocked with their commodity. By both they endeavour, ed to raise its real value, in the same manner as our manufacturers had, by the like institution, raised the real value of many different sorts of manufac tured goods. They did not, perhaps, attend to the great and essential dif

ference 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 supply 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 probably 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

VOL. V. PART II.

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.

"Bounties upon the exportation of any home-made 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 expence; 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, in

have

stead of advancing, retarded more or less the improvement of their own lands, which necessarily depends upon the general industry of the country. "To encourage the production of any commodity, a bounty upon production, one should imagine, would e 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 par

This ex

ticular 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. pedient 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."

It may be remarked, in general, of this celebrated argument, which Dr Smith has thus carefully expanded and illustrated, that, if it were sound, it would prove the utter impossibility of giving, in any circumstances, the slightest encouragement to agriculture. Such encouragement can be given only by adding to the profits of the farmer; but Dr Smith maintains, that it is impossible to add to these profits,-to accomplish any thing more than a nominal rise in the price of corn, or to confer more than a nominal advantage on the farmer. If this opinion were just, cultivation must for ever be at a stand; for to what does Dr Smith's argument amount? That neither the bounty, nor any other human institution, can have the effect of rendering corn more profitable to the farmer, and of encouraging its production. But the rapid progress of agriculture in this island, affords a sufficient practical refutation of this doctrine, and creates a strong suspicion, that there is something fundamentally erroneous in the whole of the author's train of reasoning.

The price of labour enters materially into the value of all commodities; but it does not form the sole criterion of this value. The profits of stock and the rent of land are also important ingredients; but neither of them are chiefly or directly influenced by the price of corn. The profits of stock

are regulated, as every one knows, by the relative proportions of the supply and demand; and thus we have one considerable ingredient in the price of all articles which is not influenced by the price of corn.-But the value of labour itself is not entirely regulated by the price of corn. If the labourer required or consumed nothing but corn there might be some truth in Dr Smith's position, although even in this case we should only have an approximation to accuracy-It is well known, that in different periods of the history of this and of all other countries, the rewards of labour have been very dif. ferently proportioned; that they have sometimes been so ample as to enable the lower orders to live in comparative affluence, and at other seasons so scanty, as to render it difficult for the poor even to subsist. We speak at present not of the nominal but of the real price of labour; of its price not in money but in corn; and the truth of the observation may be illustrated by reference to what has often occurred, both in the remote and in the recent periods of our annals. The truth is, that the price of labour, like that of all other commodities, is chiefly regulated by the proportion betwixt the supply and demand; and must for ever be thus regulated until the reward shall sink beneath the necessary wants of man. Even if the labourer, therefore, required nothing but unmanufactured corn to subsist upon, his wages would not be entirely regulated by the price of this article; for while, in a season of universal prosperity, he might be able to command a large surplus, a thousand circumstances, which it is impossible to controul, may entirely change his condition and prospects. Dr Smith's argument proceeds on the erroneous assumption, that the wages of labour are entirely expended on

corn, from which he infers, that their amount must be regulated by the price of that article; but as horses seem to be the only class of labourers to whom his hypothesis strictly applies, his conclusions can be extended no farther, and can never embrace those who require something more than unmanu. factured corn for their subsistence.. The British labourer, in the present state of society, consumes many things besides corn, and requires many articles on which the price of British corn can have no possible influence, The profits of stock, for example, which are not regulated by the price of corn, yet enter into the prices of all sorts of merchandise; while there are many articles in universal demand even among the lower orders, of which the raw material or the finished manufacture comes from distant countries, upon the price of which it will not be said, that the price of British corn can have any influence. It has been supposed by some very accurate enquirers, that two only of the five parts into which the wages of the British labourer may be divided, are expended in the purchase of corn, the remaining three being required to procure other articles of necessity or convenience. Dr Smith's argument, there. fore, is just only to a very limited exteat, and does not warrant the sweeping conclusions which he has deduced from it.

Some excellent observations, which tend very much to illustrate and confirm the opinions which have just been stated, have been made in a pamphlet lately published by Mr Malthus, the author of the Essay on Population.*

"The substance of his (Dr Smith's) argument is, that corn is of so peculiar a nature, that its real price cannot be raised by an increase of its money price; and that, as it is clearly an in

crease of real price alone which can encourage its production, the rise of money price, occasioned by a bounty, can have no such effect.

"It is by no means intended to deny the powerful influence of the price of corn upon the price of labour, on an average of a considerable number of years; but that this influence is not such as to prevent the movement of capital to, or from the land, which is the precise point in question, will be made sufficiently evident by a short enquiry into the manner in which labour is paid and brought into the mar. ket, and by a consideration of the consequences to which the assumption of Dr Smith's proposition would inevita bly lead.

"In the first place, if we enquire into the expenditure of the labouring classes of society, we shall find that it by no means consists wholly in food, and still less, of course, in mere bread or grain. In looking over that mine of information for every thing relating to prices and labour, Sir Frederick Morton Eden's work on the Poor, I find, that in a labourer's family of about an average size, the articles of house-rent, fuel, soap, candles, tea, sugar, and clothing, are generally equal to the articles of bread or meal. On a very rough estimate, the whole may be divided into five parts, of which two consist of meal or bread, two of the articles above-mentioned, and one of meat, milk, butter, cheese, and potatoes. These divisions are, of course, subject to considerable variations, arising from the number of the family, and the amount of the earnings. But if they merely approximate towards the truth, a rise in the price of corn must be both slow and partial in its èffect upon labour. Meat, milk, butter, cheese, and potatoes, are slowly affected by the price of corn. House rent, bricks, stone, timber, fuel, soap, candles, and clothing, still more slow

ly; and, as far as some of them depend, in part or in whole, upon foreign materials, (as is the case with leather, linen, cottons, soap, and candles,) they may be considered as independent of it; like the two remaining articles of tea and sugar, which are by no means unimportant in their amount.

"It is manifest, therefore, that the whole of the wages of labour can never rise and fall in proportion to the variations in the price of grain. And that the effect produced by these va riations, whatever may be its amount, must be very slow in its operation, is proved by the manner in which the supply of labour takes place, a point which has been by no means sufficiently attended to.

"Every change in the prices of commodities, if left to find their natu ral level, is occasioned by some change, actual or expected, in the state of the demand or supply. The reason why the consumer pays a tax upon any manufactured commodity, or an advance in the price of any of its component parts, is because, if he cannot or will not pay this advance of price, the commodity will not be supplied in the same quantity as before, and the next year there will be only such a proportion in the market as is accommodated to the number of persons who will consent to pay the tax; but, in the case of labour, the operation of withdrawing the commodity is much slower and more painful. Although the purchasers refuse to pay the advanced price, the same supply will necessarily remain in the market not only the next year, but for some years come; consequently, if no increase take place in the demand, and the advanced price of provisions be not so great as to make it obvious that the labourer cannot support his family, it is probable that he will continue to pay this advance till a relaxation in the rate of the increase of population

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