causes the market to be under-supplied with labour; and then, of course, the competition among the purchasers will raise the price above the proportion of the advance, in order to restore the supply. In the same manner, if an advance in the price of labour has taken place during two or three years of great scarcity, it is probable that, on the return of plenty, the real recom pence of labour will continue higher than the usual average, till a too rapid increase of population causes a competition among the labourers, and a consequent diminution of the price of labour below the usual rate.

"This account of the manner in which the price of corn may be expected to operate upon the price of labour, according to the laws which regulate the progress of population, evidently shews, that corn and labour rarely keep an even pace together, but must often be separated at a sufficient distance, and for a sufficient time, to change the direction of capital.

"Dr Smith was evidently led into this train of argument, from his habit of considering labour as the standard measure of value, and corn as the measure of labour. But that corn is a very inaccurate measure of labour, the history of our own country will amply demonstrate, where labour, compared with corn, will be found to have experienced very great and striking variations, not only from year to year, but from century to century, and for ten, twenty, and thirty years together.t And that neither labour nor any other commodity can be an accurate measure of real value in exchange, is now considered as one of the most incontrovertible doctrines of political economy; and indeed follows, as a necessary consequence, from the very definition of

value in exchange. But to allow that corn regulate the prices of all commo. dities, is at once to erect it into a standard measure of real value in exchange; and we must either deny the truth of Dr Smith's argument, or acknowledge, that what seems to be quite impossible is found to exist; and that a given quantity of corn, notwithstanding the fluctuations to which its supply and demand must be subject, and the fluctuation to which the sup ply and demand of all the other com. modities, with which it is compared, must also be subject, will, on the ave rage of a few years, at all times, and in all countries, purchase the same quantity of labour, and of the neces saries and conveniences of life.

"There are two obvious truths in

political economy which have not unfrequently been the sources of error.

"It is undoubtedly true, that corn might be just as successfully cultivated, and as much capital might be laid out upon the land, at the price of 20 shillings a quarter, as at the price of 100 shillings, provided that every commodity, both at home and abroad, were precisely proportioned to the reduced scale, in the same manner, as it is strictly true, that the industry and capital of a nation would be exactly the same, (with the slight exception, at least, of plate,) if in every exchange, both at home and abroad, one shilling only were used where five are used now.

But to infer from these truths, that any natural or artificial causes, which should raise or lower the values of corn or silver, might be considered as matters of indifference, would be an error of the most serious magnitude. Practically, no material change can take place in the value of either, with

out producing both lasting and temporary effects, which have a most powerful influence on the distribution of property, and on the demand and supply of particular commodities. The discovery of the mines of America, during the time that it raised the price of corn between three and four times, did not nearly so much as double the price of labour; and while it permanently diminished the power of all fixed incomes, it gave a prodigious increase of power to all landlords and capitalists. In a similar manner, the fall in the price of corn, from whatever cause it took place, which occur. red towards the middle of the last century, accompanied as it was by a rise, rather than a fall, in the price of labour, must have given a great relative check to the employment of capital upon the land, and a great relative stimulus to population;-a state of things precisely calculated to produce the reaction afterwards experienced, and to convert us from an exporting to an importing nation.

"It is by no means sufficient for Dr Smith's argument, that the price of corn should determine the price of labour under precisely the same circumstances of supply and demand. To make it applicable to his purpose, he must shew, in addition, that a natural or artificial rise in the price of corn, or in the value of silver, will make no alteration in the state of property, and in the supply and demand of corn and labour;-a position which experience uniformly contradicts.

"Nothing then can be more evident, both from theory and experience, than that the price of corn does not immediately and generally regulate the prices of labour and all other commodities; and that the real price of corn is capable of varying for periods of sufficient length to give a decided sti

mulus or discouragement to agriculture. It is, of course, only to a temporary encouragement, or discouragement, that any commodity, where the competition is free, can be subjected. We may increase the capital employed either upon the land or in the cotton manufacture, but it is impossible permanently to raise the profits of farmers, or particular manufacturers, above the level of other profits; and, after the influx of a certain quantity of capital, they will necessarily be equalized. Corn, in this respect, is subjected to the same laws as other commodities; and the difference be tween them is by no means so great as stated by Dr Smith.”

It were superfluous, after what has been already said on the subject of a bounty on production, to enter into any analysis of Dr Smith's reasoning on that point. A bounty on produc tion could never attain the objects of a bounty on exportation, and could, in no circumstances, serve any good pur pose. Sounder views, therefore, influenced the legislature to confer a bounty on exportation than that preposterous regard for the mercantile system, which is imputed to them by the author of the Wealth of Nations. But if the bounty on exported corn, which Dr Smith reprobates with so much severity, be, in truth, a branch of this exploded system, it affords perhaps the only instance in which the principles of that system can be recognised with advantage.

A very elaborate paper on the subject of bounties appeared some time ago in a well known periodical publication. After a minute account of the effects of a bounty on production, the following observations were made as to the nature of a bounty on exportation.

"A bounty granted out of the public revenue upon the exportation only

of corn, will operate according to the same principles; but, from the different manner in which the bounty is then applied, its effects will be considerably different. It will produce no immediate change of prices in the home market. The national consumer will continue to pay what he did before; no part of this payment being made for him by the public, there will be no diminution to him of the real price of corn, consequently no enlargement of consumption and demand, and therefore no new encouragement on this side to agricultural investments. But every foreigner, who shall purchase part of the exported grain, will pay so much less for it as the bounty amounts to, than he otherwise would have paid. Whether he will purchase any part of it or not, will, of course, depend upon this condition, that the price of the exported grain, reduced as it is by the bounty, is, at the most, not greater than the price of other grain in the market. Now, the price at which the exported grain could be sold in the foreign market, independently of a bounty, may either be equal, or less, or greater, compared with the price of other grain in that market. If equal, the bounty will enable the exporter to undersell the foreign dealer by the whole amount of that bounty. If less, he would be able, without a bounty, to undersell him by the whole difference of the prices; and the bounty will enable him to undersell by the sum of that difference and the bounty added together. If the price at which the exported grain could be sold in the foreign market, independently of a bounty, is greater than the price of other grain in that market, then, to enable the exporter to undersell the dealer in that other grain, the bounty must be more than sufficient to compensate the difference of the prices; and a bounty may no doubt be made large enough to do

more than compensate that difference. In all these cases, too, it is to be observed, the exporter will actually undersell the foreign dealer by very nearly the whole difference by which he can afford to undersell him. He would be willing enough to do it by as small a portion of that difference as possible, in order that the remainder might be added to his profits; but the force of competition, as upon all other occasions, will restrict his profits very nearly to the lowest rate at which he can afford to trade. They will not be brought quite down to this rate, however; the exporter will not be forced to undersell the foreign dealer by quite the whole difference by which he could afford to do it, in consequence of a competition that will act in the oppo site direction; for, by the reduction of the real price to the foreign consumers, their effective demand will be enlarged, and this enlarged demand will prevent that reduction, which the bounty has a tendency to effect, from being wholly completed. The difference will be received by the exporter in an addition to the adjusted rate of his profits; and the extension of foreign demand being communicated to the home market, will raise at home both the price of corn and the profits of farming. By raising the profits of farming, it will operate as an encou ragement to husbandry ; by raising the price of corn to the consumers at home, it will diminish, for the time, their power of purchasing this necessary of life, and thus abridge their real wealth. It is evident, however, that this last effect must be temporary: the wages of the labouring con sumers had been adjusted before by competition, and the same principle will adjust them again to the same rate, by raising the money-price of labour, and, through that, of other commodities, to the money price of corn. The bounty upon exportation, there.

fore, will ultimately raise the moneyprice of corn in the home market; not directly however, but through the medium of an extended demand in the foreign market, and a consequent enhancement of the real price at home; and this rise of its money-price, when it has once been communicated to other commodities, will, of course, become fixed.

“The fixed advance of the moneyprice at home, will necessarily affect the price at which the exported corn can afterwards be sold in the foreign market.

It will of course diminish that difference, whatever it is, by which the exporter can undersell the dealer in foreign grain. That difference, however, may still be large enough, with the assistance of the bounty, to allow the exporter still to undersell that dealer; and to occasion, in the same manner as before, a farther extension of demand. This will be followed as before by a series of effects, ultimately terminating in a farther advance of the money-price at home. And this series will be constantly renewed, until the advance of that money-price becomes so high as to cover the whole difference by which the exporter was before able to undersell other dealers abroad. By a new bounty, however, granted in addition to the former, a new range may be created for the repetition of another series of the same effects. But, whatever limits we suppose to the amount of the bounty, its complete and ultimate effect will always be found to be a corresponding rise of the moneyprice in the home market, both of corn, of labour, and of all commodities. In the interval that must each time elapse before wages are equalized with each successive rise in the price of corn, there will be a certain degree of new encouragement held out to husbandry, and some diminution in the wealth and comfortable subsistence of

the labouring consumers. That encouragement to husbandry will not be followed by any increase of the number of the people, because the additional production is excited by a foreign demand. And this diminution of the comforts of the labouring people, from being temporary, may become almost a permanent diminution, if the successive advances of the price of corn shall follow each other without interruption, and so keep always a-head of the successive advances in the wages of labour.

"If it should be felt expedient to remove such a bounty as this upon exportation, and to restore the commerce and production of grain to their natu ral order, such a repeal would be attended with some temporary inconveniences. The sudden destruction of that part of the foreign demand, which had been forced by the bounty, would throw an excess upon the home market, and would reduce the profits of farming for a time below their actual and just rate. The national con

sumers would for a time be more easily and plentifully supplied; until, by the abstraction of capital from tillage, the supply of corn was once more ac commodated to the real demand, and the profits of the farmer raised again to their natural rate."

Those who have followed this very elaborate analysis with attention, will be at no loss to discover the fallacy on which the whole reasoning turns. "The price," it is said, "at which the exported grain could be sold in the foreign market, independently of a bounty, may either be equal or less, or greater, compared with the price of the grain in that market. If equal, the bounty will enable the exporter to undersell the foreign dealer by the whole amount of that bounty. If less, he would be able, without a boun. ty, to undersell him by the whole difference of the prices; and the bounty

will enable him to undersell by the sum of that difference and the bounty added together. If the price at which the exported grain could be sold in the foreign market, independently of a bounty, is greater than the price of other grain in that market, then, to enable the exporter to undersell the dealer in that other grain, the bounty must be more than sufficient to compensate the difference of the price.". All this parade of distinctions, how ever, is unnecessary, since in practice we can have no other case to consider, except that which is last put by the writer. If the British exporter can, without a bounty, sell his corn for less in foreign markets than the foreign merchants can do, it were absurd of course to think of granting him a bounty; if he can even afford to sell at the same price, the aid of a bounty can scarcely be required. If a bounty in such a case were bestowed at all, it could never exceed the sum required to compensate to the British exporter the small reduction of price, which would be necessary to give him an advantage over the foreign merchant in his own market; an advantage evidently attainable by a very trifling sacrifice. What would be the result of this measure? The British merchant would in the foreign markets receive exactly the same price for his corn which he obtains at home; since the bounty, by the hypothesis, would merely compen sate to him the slight difference by which he might undersell foreigners. But how could this raise the prices in the home market, as the author has supposed? It will require a very ingenious argument to prove, that the British corn merchant, by receiving precisely the same gains in a foreign market, which he can obtain at home, will prefer the remote to the contiguous market, and thus narrow the supply of corn required for the con2

sumption of his own country.-On the supposition again, that the price at which the exported corn can be sold in the foreign market is greater than the price of other grain in that market, the bounty must be such as to compensate the difference of price betwixt the foreign and home markets--the expence of carriage--and the slight difference also by which it will be necessary for the British exporter to undersell the foreign merchant. Yet the British exporter could not, even in this case, put more in his pocket by exporting his corn, than by selling it at home; and he would of course carry abroad only that surplus, which could not be disposed of in his own country. When the author says, that "the exporter will actually undersell the for reign dealer by very nearly the whole difference by which he can afford to undersell him," he assumes that the bounty is so preposterously large, az to give the British merchant a great latitude in this respect, and to commu nicate to the foreign a great advantage over the home market. The whole of his reasoning, therefore, applies to bounties, which are fixed without regard to the circumstances of the country; not to those which have been ac curately calculated with reference to the state of the British and foreign markets, the details of which may at all times be well known to the legisla ture. Nor is it necessary to give the foreign this assumed advantage over the home market, with the view of encouraging the growth of a surplus of grain; for the same temptationthe same profits which induced the farmer to raise corn for the home mar ket, will tempt him to raise the surplus required to answer a more extended demand. The inferences deduced in the above passage as to the increase of prices in the home market-the rise in the wages of labour-and all the other imaginary evils so carefully