Of 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
br /> in favour of our own country. We cannot give our workmen a monopoly

in the foreign, as we have done in the home market. We cannot force

foreigners to buy their goods, as we have done our own countrymen. The

next best expedient, it has been thought, therefore, is to pay them

for buying. It is in this manner that the mercantile system proposes

to enrich the whole country, and to put money into all our pockets, by

means of the balance of trade.

Bounties, it is allowed, ought to be given to those branches of trade

only which cannot be carried on without them. But every branch of trade

in which the merchant can sell his goods for a price which replaces to

him, with the ordinary profits of stock, the whole capital employed

in preparing and sending them to market, can be carried on without a

bounty. Every such branch is evidently upon a level with all the other

branches of trade which are carried on without bounties, and cannot,

therefore, require one more than they. Those trades only require

bounties, in which the merchant is obliged to sell his goods for a price

which does not replace to him his capital, together with the ordinary

profit, or in which he is obliged to sell them for less than it really

cost him to send them to market. The bounty is given in order to make

up this loss, and to encourage him to continue, or, perhaps, to begin a

trade, of which the expense is supposed to be greater than the returns,

of which every operation eats up a part of the capital employed in it,

and which is of such a nature, that if all other trades resembled it,

there would soon be no capital left in the 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 alway's and regularly lose, or sell its goods for less than it

really cost to send them to market. But if the bounty did not repay to

the merchant what he would otherwise lose upon the price of his goods,

his own interest would soon oblige him to employ his stock in another

way, or to find out a trade in which the price of the goods would

replace to him, with the ordinary profit, the capital employed in

sending them to market. The effect of bounties, like that of all the

other expedients of the mercantile system, can only be to force the

trade of a country into a channel much less advantageous than that in

which it would naturally run of its own accord.

The ingenious and well-informed author of the Tracts upon the Corn Trade

has shown very clearly, that since the bounty upon the exportation

of corn was first established, the price of the corn exported, valued

moderately enough, has exceeded that of the corn imported, valued very

high, by a much greater sum than the amount of the whole bounties which

have been paid during that period. This, he imagines, upon the true

principles of the mercantile system, is a clear proof that this forced

corn trade is beneficial to the nation, the value of the exportation

exceeding that of the importation by a much greater sum than the whole

extraordinary expense which the public has been at in order to get it

exported. He does not consider that this extraordinary expense, or the

bounty, is the smallest part of the expense which the exportation of

corn really costs the society. The capital which the farmer employed in

raising it must likewise be taken into the account. Unless the price

of the corn, when sold in the foreign markets, replaces not only the

bounty, but this capital, together with the ordinary profits of stock,

the society is a loser by the difference, or the national stock is

so much diminished. But the very reason for which it has been thought

necessary to grant a bounty, is the supposed insufficiency of the price

to do this.

The average price of corn, it has been said, has fallen considerably

since the establishment of the bounty. That the average price of corn

began to fall somewhat towards the end of the last century, and has

continued to do so during the course of the sixty-four first years

of the present, I have already endeavoured to show. But this event,

supposing it to be real, as I believe it to be, must have happened in

spite of the bounty, and cannot possibly have happened in consequence of

it. It has happened in France, as well as in England, though in France

there was not only no bounty, but, till 1764, the exportation of corn

was subjected to a general prohibition. This gradual fall in the average

price of grain, it is probable, therefore, is ultimately owing neither

to the one regulation nor to the other, but to that gradual and

insensible rise in the real value of silver, which, in the first book

of this discourse, I have endeavoured to show, has taken place in the

general market of Europe during the course of the present century. It

seems to be altogether impossible that the bounty could ever contribute

to lower the price of grain.

In years of plenty, it has already been observed, the bounty, by

occasioning an extraordinary exportation, necessarily keeps up the price

of corn in the home market above what it would naturally fall to. To

do so was the avowed purpose of the institution. In years of scarcity,

though the bounty is frequently suspended, yet the great exportation

which it occasions in years of plenty, must frequently hinder, more or

less, the plenty of one year from relieving the scarcity of another.

Both in years of plenty and in years of scarcity, therefore, the bounty

necessarily tends to raise the money price of corn somewhat higher than

it otherwise would be in the home market.

That in the actual state of tillage the bounty must necessarily have

this tendency, will not, I apprehend, be disputed by any reasonable

person. But it has been thought by many people, that it tends to

encourage tillage, and that in two different ways; first, by opening a

more extensive foreign market to the corn of the farmer, it tends, they

imagine, to increase the demand for, and consequently the production of,

that commodity; and, secondly by securing to him a better price than he

could otherwise expect in the actual state of tillage, it tends, they

suppose, to encourage tillage. This double encouragement must they

imagine, in a long period of years, occasion such an increase in the

production of corn, as may lower its price in the home market, much more

than the bounty can raise it in the actual state which tillage may, at

the end of that period, happen to be in.

I answer, that whatever extension of the foreign market can be

occasioned by the bounty must, in every particular year, be altogether

at the expense of the home market; as every bushel of corn, which is

exported by means of the bounty, and which would not have been exported

without the bounty, would have remained in the home market to increase

the consumption, and to lower the price of that commodity. The corn

bounty, it is to be observed, as well as every other bounty upon

exportation, imposes two different taxes upon the people; first, the tax

which they are obliged to contribute, in order to pay the bounty; and,

secondly, the tax which arises from the advanced price of the commodity

in the home market, and which, as the whole body of the people are

purchasers of corn, must, in this particular commodity, be paid by the

whole body of the people. In this particular commodity, therefore, this

second tax is by much the heaviest of the two. Let us suppose that,

taking one year with another, the bounty of 5s. upon the exportation

of the quarter of wheat raises the price of that commodity in the home

market only 6d. the bushel, or 4s. the quarter higher than it otherwise

would have been in the actual state of the crop. Even upon this very

moderate supposition, the great body of the people, over and above

contributing the tax which pays the bounty of 5s. upon every quarter of

wheat exported, must pay another of 4s. upon every quarter which they

themselves consume. But according to the very well informed author

of the Tracts upon the Corn Trade, the average proportion of the corn

exported to that consumed at home, is not more than that of one to

thirty-one. For every 5s. therefore, which they contribute to the

payment of the first tax, they must contribute £6:4s. to the payment of

the second. So very heavy a tax upon the first necessary of life-must

either reduce the subsistence of the labouring poor, or it must occasion

some augmentation in their pecuniary wages, proportionable to that in

the pecuniary price of their subsistence. So far as it operates in the

one way, it must reduce the ability of the labouring poor to educate

and bring up their children, and must, so far, tend to restrain the

population of the country. So far as it operate's in the other, it must

reduce the ability of the employers of the poor, to employ so great a

number as they otherwise might do, and must so far tend to restrain

the industry of the country. The extraordinary exportation of corn,

therefore occasioned by the bounty, not only in every particular year

diminishes the home, just as much as it extends the foreign market and

consumption, but, by restraining the population and industry of the

country, its final tendency is to stint and restrain the gradual

extension of the home market; and thereby, in the long-run, rather to

diminish than to augment the whole market and consumption of corn.

This enhancement of the money price of corn, however, it has been

thought, by rendering that commodity more profitable to the farmer, must

necessarily encourage its production.

I answer, that this might be the case, if the effect of the bounty was

to raise the real price of corn, or to enable the farmer, with an equal

quantity of it, to maintain a greater number of labourers in the same

manner, whether liberal, moderate, or scanty, than other labourers are

commonly maintained in his neighbourhood. But neither the bounty, it is

evident, nor any other human institution, can have any such effect.

It is not the real, but the nominal price of corn, which can in any

considerable degree be affected by the bounty. And though the tax, which

that institution imposes upon the whole body of the people, may be very

burdensome to those who pay it, it is of very little advantage to those

who receive it.

The real effect of the bounty is not so much to raise the real value

of corn, as to degrade the real value of silver; or to make an equal

quantity of it exchange for a smaller quantity, not only of corn, but of

all other home made commodities; for the money price of corn regulates

that of all other home made commodities.

It regulates the money price of labour, which must always be such as

to enable the labourer to purchase a quantity of corn sufficient to

maintain him and his family, either in the liberal, moderate, or scanty

manner, in which the advancing, stationary, or declining, circumstances

of the society, oblige his employers to maintain him.

It regulates the money price of all the other parts of the rude produce

of land, which, in every period of improvement, must bear a certain

proportion to that of corn, though this proportion is different in

different periods. It regulates, for example, the money price of grass

and hay, of butcher's meat, of horses, and the maintenance of horses,

of land carriage consequently, or of the greater part of the inland

commerce of the country.

By regulating the money price of all the other parts of the rude produce

of land, it regulates that of the materials of almost all manufactures;

by regulating the money price of labour, it regulates that of

manufacturing art and industry; and by regulating both, it regulates

that of the complete manufacture. The money price of labour, and

of every thing that is the produce, either of land or labour, must

necessarily either rise or fall in proportion to the money price of


Though in consequence of the bounty, therefore, the farmer should be

enabled to sell his corn for 4s. the bushel, instead of 3s:6d. and to

pay his landlord a money rent proportionable to this rise in the money

price of his produce; yet if, in consequence of this rise in the price

of corn, 4s. will purchase no more home made goods of any other kind

than 3s. 6d. would have done before, neither the circumstances of the

farmer, nor those of the landlord, will be much mended by this change.

The farmer will not be able to cultivate much better; the landlord will

not be able to live much better. In the purchase of foreign commodities,

this enhancement in the price of corn may give them some little

advantage. In that of home made commodities, it can give them none at

all. And almost the whole expense of the farmer, and the far greater

part even of that of the landlord, is in home made commodities.

That degradation in the value of silver, which is the effect of the

fertility of the mines, and which operates equally, or very nearly

equally, through the greater part of the commercial world, is a matter

of very little consequence to any particular country. The consequent

rise of all money prices, though it does not make those who receive

them really richer, does not make them really poorer. A service of plate

becomes really cheaper, and every thing else remains precisely of the

same real value as before.

But that degradation in the value of silver, which, being the effect

either of the peculiar situation or of the political institutions of

a particular country, takes place only in that country, is a matter of

very great consequence, which, far from tending to make anybody really

richer, tends to make every body really poorer. The rise in the money

price of all commodities, which is in this case peculiar to that

country, tends to discourage more or less every sort of industry which

is carried on within it, and to enable foreign nations, by furnishing

almost all sorts of goods for a smaller quantity of silver than its own

workmen can afford to do, to undersell them, not only in the foreign,

but even in the home market.

It is the peculiar situation of Spain and Portugal, as proprietors of

the mines, to be the distributers of gold and silver to all the other

countries of Europe. Those metals ought naturally, therefore, to be

somewhat cheaper in Spain and Portugal than in any other part of Europe.

The difference, however, should be no more than the amount of the

freight and insurance; and, on account of the great value and small bulk

of those metals, their freight is no great matter, and their insurance

is the same as that of any other goods of equal value. Spain and

Portugal, therefore, could suffer very little from their peculiar

situation, if they did not aggravate its disadvantages by their

political institutions.

Spain by taxing, and Portugal by prohibiting, the exportation of gold

and silver, load that exportation with the expense of smuggling, and

raise the value of those metals in other countries so much more above

what it is in their own, by the whole amount of this expense. When you

dam up a stream of water, as soon as the dam is full, as much water must

run over the dam-head as if there was no dam at all. The prohibition of

exportation cannot detain a greater quantity of gold and silver in Spain

and Portugal, than what they can afford to employ, than what the annual

produce of their land and labour will allow them to employ, in coin,

plate, gilding, and other ornaments of gold and silver. When they have

got this quantity, the dam is full, and the whole stream which flows in

afterwards must run over. The annual exportation of gold and silver from

Spain and Portugal, accordingly, is, by all accounts, notwithstanding

these restraints, very near equal to the whole annual importation.

As the water, however, must always be deeper behind the dam-head than

before it, so the quantity of gold and silver which these restraints

detain in Spain and Portugal, must, in proportion to the annual produce

of their land and labour, be greater than what is to be found in other

countries. The higher and stronger the dam-head, the greater must be the

difference in the depth of water behind and before it. The higher the

tax, the higher the penalties with which the prohibition is guarded, the

more vigilant and severe the police which looks after the execution of

the law, the greater must be the difference in the proportion of gold

and silver to the annual produce of the land and labour of Spain and

Portugal, and to that of other countries. It is said, accordingly, to

be very considerable, and that you frequently find there a profusion

of plate in houses, where there is nothing else which would in

other countries be thought suitable or correspondent to this sort of

magnificence. The cheapness of gold and silver, or, what is the same

thing, the dearness of all commodities, which is the necessary effect of

this redundancy of the precious metals, discourages both the agriculture

and manufactures of Spain and Portugal, and enables foreign nations

to supply them with many sorts of rude, and with almost all sorts of

manufactured produce, for a smaller quantity of gold and silver than

what they themselves can either raise or make them for at home. The tax

and prohibition operate in two different ways. They not only lower very

much the value of the precious metals in Spain and Portugal, but by

detaining there a certain quantity of those metals which would otherwise

flow over other countries, they keep up their value in those other

countries somewhat above what it otherwise would be, and thereby give

those countries a double advantage in their commerce with Spain and

Portugal. Open the flood-gates, and there will presently be less water

above, and more below the dam-head, and it will soon come to a level in

both places. Remove the tax and the prohibition, and as the quantity of

gold and silver will diminish considerably in Spain and Portugal, so

it will increase somewhat in other countries; and the value of those

metals, their proportion to the annual produce of land and labour, will

soon come to a level, or very near to a level, in all. The loss which

Spain and Portugal could sustain by this exportation of their gold and

silver, would be altogether nominal and imaginary. The nominal value of

their goods, and of the annual produce of their land and labour, would

fall, and would be expressed or represented by a smaller quantity of

silver than before; but their real value would be the same as before,

and would be sufficient to maintain, command, and employ the same

quantity of labour. As the nominal value of their goods would fall, the

real value of what remained of their gold and silver would rise, and a

smaller quantity of those metals would answer all the same purposes of

commerce and circulation which had employed a greater quantity before.

The gold and silver which would go abroad would not go abroad for

nothing, but would bring back an equal value of goods of some kind or

other. Those goods, too, would not be all matters of mere luxury and

expense, to be consumed by idle people, who produce nothing in return

for their consumption. As the real wealth and revenue of idle people

would not be augmented by this extraordinary exportation of gold and

silver, so neither would their consumption be much augmented by it.

Those goods would probably, the greater part of them, and certainly

some part of them, consist in materials, tools, and provisions, for the

employment and maintenance of industrious people, who would reproduce,

with a profit, the full value of their consumption. A part of the dead

stock of the society would thus be turned into active stock, and would

put into motion a greater quantity of industry than had been employed

before. The annual produce of their land and labour would immediately

be augmented a little, and in a few years would probably be augmented

a great deal; their industry being thus relieved from one of the most

oppressive burdens which it at present labours under.

The bounty upon the exportation of corn necessarily operates exactly in

the same way as this absurd policy of Spain and Portugal. Whatever be

the actual state of tillage, it renders our corn somewhat dearer in

the home market than it otherwise would be in that state, and somewhat

cheaper in the foreign; and as the average money price of corn

regulates, more or less, that of all other commodities, it lowers the

value of silver considerably in the one, and tends to raise it a little

in the other. It enables foreigners, the Dutch in particular, not only

to eat our corn cheaper than they otherwise could do, but sometimes to

eat it cheaper than even our own people can do upon the same occasions;

as we are assured by an excellent authority, that of Sir Matthew Decker.

It hinders our own workmen from furnishing their goods for so small a

quantity of silver as they otherwise might do, and enables the Dutch

to furnish theirs for a smaller. It tends to render our manufactures

somewhat dearer in every market, and theirs somewhat cheaper, than they

otherwise would be, and consequently to give their industry a double

advantage over our own.

The bounty, as it raises in the home market, not so much the real,

as the nominal price of our corn; as it augments, not the quantity of

labour which a certain quantity of corn can maintain and employ, but

only the quantity of silver which it will exchange for; it discourages

our manufactures, without rendering any considerable service, either to

our farmers or country gentlemen. It puts, indeed, a little more money

into the pockets of both, and it will perhaps be somewhat difficult to

persuade the greater part of them that this is not rendering them a

very considerable service. But if this money sinks in its value, in

the quantity of labour, provisions, and home-made commodities of all

different kinds which it is capable of purchasing, as much as it rises

in its quantity, the service will be little more than nominal and


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.

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.

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.

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


Something like a bounty upon production, however, has been granted

upon some particular occasions. The tonnage bounties given to the white

herring and whale fisheries may, perhaps, be considered as somewhat of

this nature. They tend directly, it may be supposed, to render the

goods cheaper in the home market than they otherwise would be. In other

respects, their effects, it must be acknowledged, are the same as those

of bounties upon exportation. By means of them, a part of the capital of

the country is employed in bringing goods to market, of which the price

does not repay the cost, together with the ordinary profits of stock.

But though the tonnage bounties to those fisheries do not contribute

to the opulence of the nation, it may, perhaps, be thought that they

contribute to its defence, by augmenting the number of its sailors and

shipping. This, it may be alleged, may sometimes be done by means of

such bounties, at a much smaller expense than by keeping up a great

standing navy, if I may use such an expression, in the same way as a

standing army.

Notwithstanding these favourable allegations, however, the following

considerations dispose me to believe, that in granting at least one of

these bounties, the legislature has been very grossly imposed upon:

First, The herring-buss bounty seems too large.

From the commencement of the winter fishing 1771, to the end of the

winter fishing 1781, the tonnage bounty upon the herring-buss fishery

has been at thirty shillings the ton. During these eleven years, the

whole number of barrels caught by the herring-buss fishery of Scotland

amounted to 378,347. The herrings caught and cured at sea are called

sea-sticks. In order to render them what are called merchantable

herrings, it is necessary to repack them with an additional quantity of

salt; and in this case, it is reckoned, that three barrels of sea-sticks

are usually repacked into two barrels of merchantable herrings. The

number of barrels of merchantable herrings, therefore, caught during

these eleven years, will amount only, according to this account, to

252,231¼. 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.

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.}

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


Thirdly, The mode of fishing, for which this tonnage bounty in the white

herring fishery has been given (by busses or decked vessels from twenty

to eighty tons burden ), seems not so well adapted to the situation of

Scotland, as to that of Holland, from the practice of which country it

appears to have been borrowed. Holland lies at a great distance from

the seas to which herrings are known principally to resort, and can,

therefore, carry on that fishery only in decked vessels, which can carry

water and provisions sufficient for a voyage to a distant sea; but the

Hebrides, or Western Islands, the islands of Shetland, and the

northern and north-western coasts of Scotland, the countries in whose

neighbourhood the herring fishery is principally carried on, are

everywhere intersected by arms of the sea, which run up a considerable

way into the land, and which, in the language of the country, are called

sea-lochs. It is to these sea-lochs that the herrings principally resort

during the seasons in which they visit these seas; for the visits of

this, and, I am assured, of many other sorts of fish, are not quite

regular and constant. A boat-fishery, therefore, seems to be the mode of

fishing best adapted to the peculiar situation of Scotland, the fishers

carrying the herrings on shore as fast as they are taken, to be either

cured or consumed fresh. But the great encouragement which a bounty of

30s. the ton gives to the buss-fishery, is necessarily a discouragement

to the boat-fishery, which, having no such bounty, cannot bring its

cured fish to market upon the same terms as the buss-fishery. The

boat-fishery; accordingly, which, before the establishment of the

buss-bounty, was very considerable, and is said to have employed a

number of seamen, not inferior to what the buss-fishery employs at

present, is now gone almost entirely to decay. Of the former extent,

however, of this now ruined and abandoned fishery, I must acknowledge

that I cannot pretend to speak with much precision. As no bounty

was-paid upon the outfit of the boat-fishery, no account was taken of it

by the officers of the customs or salt duties.

Fourthly, In many parts of Scotland, during certain seasons of the year,

herrings make no inconsiderable part of the food of the common people.

A bounty which tended to lower their price in the home market,

might contribute a good deal to the relief of a great number of our

fellow-subjects, whose circumstances are by no means affluent. But the

herring-bus bounty contributes to no such good purpose. It has ruined

the boat fishery, which is by far the best adapted for the supply of

the home market; and the additional bounty of 2s:8d. the barrel upon

exportation, carries the greater part, more than two-thirds, of the

produce of the buss-fishery abroad. Between thirty and forty years ago,

before the establishment of the buss-bounty, 16s. the barrel, I have

been assured, was the common price of white herrings. Between ten and

fifteen years ago, before the boat-fishery was entirely ruined, the

price was said to have run from seventeen to twenty shillings the

barrel. For these last five years, it has, at an average, been at

twenty-five shillings the barrel. This high price, however, may have

been owing to the real scarcity of the herrings upon the coast of

Scotland. I must observe, too, that the cask or barrel, which is usually

sold with the herrings, and of which the price is included in all the

foregoing prices, has, since the commencement of the American war, risen

to about double its former price, or from about 3s. to about 6s. I must

likewise observe, that the accounts I have received of the prices of

former times, have been by no means quite uniform and consistent, and an

old man of great accuracy and experience has assured me, that, more

than fifty years ago, a guinea was the usual price of a barrel of good

merchantable herrings; and this, I imagine, may still be looked upon as

the average price. All accounts, however, I think, agree that the

price has not been lowered in the home market in consequence of the


When the undertakers of fisheries, after such liberal bounties have been

bestowed upon them, continue to sell their commodity at the same, or

even at a higher price than they were accustomed to do before, it might

be expected that their profits should be very great; and it is not

improbable that those of some individuals may have been so. In general,

however, I have every reason to believe they have been quite otherwise.

The usual effect of such bounties is, to encourage rash undertakers to

adventure in a business which they do not understand; and what they lose

by their own negligence and ignorance, more than compensates all that

they can gain by the utmost liberality of government. In 1750, by

the same act which first gave the bounty of 30s. the ton for the

encouragement of the white herring fishery (the 23d Geo. II. chap. 24),

a joint stock company was erected, with a capital of £500,000, to which

the subscribers (over and above all other encouragements, the tonnage

bounty just now mentioned, the exportation bounty of 2s:8d. the barrel,

the delivery of both British and foreign salt duty free) were, during

the space of fourteen years, for every hundred pounds which they

subscribed and paid into the stock of the society, entitled to three

pounds a-year, to be paid by the receiver-general of the customs in

equal half-yearly payments. Besides this great company, the residence of

whose governor and directors was to be in London, it was declared lawful

to erect different fishing chambers in all the different out-ports of

the kingdom, provided a sum not less than £10,000 was subscribed into

the capital of each, to be managed at its own risk, and for its own

profit and loss. The same annuity, and the same encouragements of all

kinds, were given to the trade of those inferior chambers as to that of

the great company. The subscription of the great company was soon filled

up, and several different fishing chambers were erected in the different

out-ports of the kingdom. In spite of all these encouragements, almost

all those different companies, both great and small, lost either the

whole or the greater part of their capitals; scarce a vestige now

remains of any of them, and the white-herring fishery is now entirely,

or almost entirely, carried on by private adventurers.

If any particular manufacture was necessary, indeed, for the defence

of the society, it might not always be prudent to depend upon our

neighbours for the supply; and if such manufacture could not otherwise

be supported at home, it might not be unreasonable that all the other

branches of industry should be taxed in order to support it. The

bounties upon the exportation of British made sail-cloth, and British

made gunpowder, may, perhaps, both be vindicated upon this principle.

But though it can very seldom be reasonable to tax the industry of the

great body of the people, in order to support that of some particular

class of manufacturers; yet, in the wantonness of great prosperity, when

the public enjoys a greater revenue than it knows well what to do with,

to give such bounties to favourite manufactures, may, perhaps, be as

natural as to incur any other idle expense. In public, as well as in

private expenses, great wealth, may, perhaps, frequently be admitted as

an apology for great folly. But there must surely be something more

than ordinary absurdity in continuing such profusion in times of general

difficulty and distress.

What is called a bounty, is sometimes no more than a drawback, and,

consequently, is not liable to the same objections as what is properly

a bounty. The bounty, for example, upon refined sugar exported, may

be considered as a drawback of the duties upon the brown and Muscovado

sugars, from which it is made; the bounty upon wrought silk exported,

a drawback of the duties upon raw and thrown silk imported; the bounty

upon gunpowder exported, a drawback of the duties upon brimstone and

saltpetre imported. In the language of the customs, those allowances

only are called drawbacks which are given upon goods exported in the

same form in which they are imported. When that form has been so altered

by manufacture of any kind as to come under a new denomination, they are

called bounties.

Premiums given by the public to artists and manufacturers, who excel in

their particular occupations, are not liable to the same objections as

bounties. By encouraging extraordinary dexterity and ingenuity, they

serve to keep up the emulation of the workmen actually employed in those

respective occupations, and are not considerable enough to turn towards

any one of them a greater share of the capital of the country than what

would go to it of its own accord. Their tendency is not to overturn the

natural balance of employments, but to render the work which is done

in each as perfect and complete as possible. The expense of premiums,

besides, is very trifling, that of bounties very great. The bounty

upon corn alone has sometimes cost the public, in one year, more than


Bounties are sometimes called premiums, as drawbacks are sometimes

called bounties. But we must, in all cases, attend to the nature of the

thing, without paying any regard to the word.

Digression concerning the Corn Trade and Corn Laws.

I cannot conclude this chapter concerning bounties, without observing,

that the praises which have been bestowed upon the law which establishes

the bounty upon the exportation of corn, and upon that system of

regulations which is connected with it, are altogether unmerited. A

particular examination of the nature of the corn trade, and of the

principal British laws which relate to it, will sufficiently demonstrate

the truth of this assertion. The great importance of this subject must

justify the length of the digression.

The trade of the corn merchant is composed of four different branches,

which, though they may sometimes be all carried on by the same person,

are, in their own nature, four separate and distinct trades. These

are, first, the trade of the inland dealer; secondly, that of

the merchant-importer for home consumption; thirdly, that of the

merchant-exporter of home produce for foreign consumption; and,

fourthly, that of the merchant-carrier, or of the importer of corn, in

order to export it again.

I. The interest of the inland dealer, and that of the great body of the

people, how opposite soever they may at first appear, are, even in years

of the greatest scarcity, exactly the same. It is his interest to

raise the price of his corn as high as the real scarcity of the season

requires, and it can never be his interest to raise it higher. By

raising the price, he discourages the consumption, and puts every body

more or less, but particularly the inferior ranks of people, upon thrift

and good management If, by raising it too high, he discourages the

consumption so much that the supply of the season is likely to go beyond

the consumption of the season, and to last for some time after the

next crop begins to come in, he runs the hazard, not only of losing a

considerable part of his corn by natural causes, but of being obliged to

sell what remains of it for much less than what he might have had for

it several months before. If, by not raising the price high enough, he

discourages the consumption so little, that the supply of the season is

likely to fall short of the consumption of the season, he not only loses

a part of the profit which he might otherwise have made, but he exposes

the people to suffer before the end of the season, instead of the

hardships of a dearth, the dreadful horrors of a famine. It is the

interest of the people that their daily, weekly, and monthly consumption

should be proportioned as exactly as possible to the supply of the

season. The interest of the inland corn dealer is the same. By supplying

them, as nearly as he can judge, in this proportion, he is likely to

sell all his corn for the highest price, and with the greatest profit;

and his knowledge of the state of the crop, and of his daily, weekly,

and monthly sales, enables him to judge, with more or less accuracy,

how far they really are supplied in this manner. Without intending the

interest of the people, he is necessarily led, by a regard to his own

interest, to treat them, even in years of scarcity, pretty much in the

same manner as the prudent master of a vessel is sometimes obliged

to treat his crew. When he foresees that provisions are likely to run

short, he puts them upon short allowance. Though from excess of caution

he should sometimes do this without any real necessity, yet all the

inconveniencies which his crew can thereby suffer are inconsiderable,

in comparison of the danger, misery, and ruin, to which they might

sometimes be exposed by a less provident conduct. Though, from excess of

avarice, in the same manner, the inland corn merchant should sometimes

raise the price of his corn somewhat higher than the scarcity of the

season requires, yet all the inconveniencies which the people can suffer

from this conduct, which effectually secures them from a famine in the

end of the season, are inconsiderable, in comparison of what they might

have been exposed to by a more liberal way of dealing in the beginning

of it the corn merchant himself is likely to suffer the most by this

excess of avarice; not only from the indignation which it generally

excites against him, but, though he should escape the effects of this

indignation, from the quantity of corn which it necessarily leaves

upon his hands in the end of the season, and which, if the next season

happens to prove favourable, he must always sell for a much lower price

than he might otherwise have had.

Were it possible, indeed, for one great company of merchants to possess

themselves of the whole crop of an extensive country, it might perhaps

be their interest to deal with it, as the Dutch are said to do with the

spiceries of the Moluccas, to destroy or throw away a considerable

part of it, in order to keep up the price of the rest. But it is scarce

possible, even by the violence of law, to establish such an extensive

monopoly with regard to corn; and wherever the law leaves the trade

free, it is of all commodities the least liable to be engrossed or

monopolized by the forced a few large capitals, which buy up the greater

part of it. Not only its value far exceeds what the capitals of a few

private men are capable of purchasing; but, supposing they were capable

of purchasing it, the manner in which it is produced renders this

purchase altogether impracticable. As, in every civilized country, it

is the commodity of which the annual consumption is the greatest; so a

greater quantity of industry is annually employed in producing corn than

in producing any other commodity. When it first comes from the ground,

too, it is necessarily divided among a greater number of owners than any

other commodity; and these owners can never be collected into one

place, like a number of independent manufacturers, but are necessarily

scattered through all the different corners of the country. These

first owners either immediately supply the consumers in their own

neighbourhood, or they supply other inland dealers, who supply those

consumers. The inland dealers in corn, therefore, including both the

farmer and the baker, are necessarily more numerous than the dealers in

any other commodity; and their dispersed situation renders it altogether

impossible for them to enter into any general combination. If, in a year

of scarcity, therefore, any of them should find that he had a good deal

more corn upon hand than, at the current price, he could hope to dispose

of before the end of the season, he would never think of keeping up

this price to his own loss, and to the sole benefit of his rivals and

competitors, but would immediately lower it, in order to get rid of his

corn before the new crop began to come in. The same motives, the same

interests, which would thus regulate the conduct of any one dealer,

would regulate that of every other, and oblige them all in general

to sell their corn at the price which, according to the best of their

judgment, was most suitable to the scarcity or plenty of the season.

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


In an extensive corn country, between all the different parts of which

there is a free commerce and communication, the scarcity occasioned

by the most unfavourable seasons can never be so great as to produce a

famine; and the scantiest crop, if managed with frugality and economy,

will maintain, through the year, the same number of people that are

commonly fed in a more affluent manner by one of moderate plenty. The

seasons most unfavourable to the crop are those of excessive drought or

excessive rain. But as corn grows equally upon high and low lands,

upon grounds that are disposed to be too wet, and upon those that are

disposed to be too dry, either the drought or the rain, which is hurtful

to one part of the country, is favourable to another; and though, both

in the wet and in the dry season, the crop is a good deal less than in

one more properly tempered; yet, in both, what is lost in one part of

the country is in some measure compensated by what is gained in the

other. In rice countries, where the crop not only requires a very moist

soil, but where, in a certain period of its growing, it must be laid

under water, the effects of a drought are much more dismal. Even in such

countries, however, the drought is, perhaps, scarce ever so universal as

necessarily to occasion a famine, if the government would allow a free

trade. The drought in Bengal, a few years ago, might probably have

occasioned a very great dearth. Some improper regulations, some

injudicious restraints, imposed by the servants of the East India

Company upon the rice trade, contributed, perhaps, to turn that dearth

into a famine.

When the government, in order to remedy the inconveniencies of a

dearth, orders all the dealers to sell their corn at what it supposes

a reasonable price, it either hinders them from bringing it to market,

which may sometimes produce a famine even in the beginning of the

season; or, if they bring it thither, it enables the people, and thereby

encourages them to consume it so fast as must necessarily produce a

famine before the end of the season. The unlimited, unrestrained

freedom of the corn trade, as it is the only effectual preventive of

the miseries of a famine, so it is the best palliative of the

inconveniencies of a dearth; for the inconveniencies of a real scarcity

cannot be remedied; they can only be palliated. No trade deserves

more the full protection of the law, and no trade requires it so much;

because no trade is so much exposed to popular odium.

In years of scarcity, the inferior ranks of people impute their distress

to the avarice of the corn merchant, who becomes the object of their

hatred and indignation. Instead of making profit upon such occasions,

therefore, he is often in danger of being utterly ruined, and of having

his magazines plundered and destroyed by their violence. It is in years

of scarcity, however, when prices are high, that the corn merchant

expects to make his principal profit. He is generally in contract with

some farmers to furnish him, for a certain number of years, with a

certain quantity of corn, at a certain price. This contract price is

settled according to what is supposed to be the moderate and reasonable,

that is, the ordinary or average price, which, before the late years of

scarcity, was commonly about 28s. for the quarter of wheat, and for that

of other grain in proportion. In years of scarcity, therefore, the corn

merchant buys a great part of his corn for the ordinary price, and sells

it for a much higher. That this extraordinary profit, however, is no

more than sufficient to put his trade upon a fair level with other

trades, and to compensate the many losses which he sustains upon other

occasions, both from the perishable nature of the commodity itself,

and from the frequent and unforeseen fluctuations of its price, seems

evident enough, from this single circumstance, that great fortunes

are as seldom made in this as in any other trade. The popular odium,

however, which attends it in years of scarcity, the only years in which

it can be very profitable, renders people of character and fortune

averse to enter into it. It is abandoned to an inferior set of dealers;

and millers, bakers, meal-men, and meal-factors, together with a number

of wretched hucksters, are almost the only middle people that, in the

home market, come between the grower and the consumer.

The ancient policy of Europe, instead of discountenancing this popular

odium against a trade so beneficial to the public, seems, on the

contrary, to have authorised and encouraged it.

By the 5th and 6th of Edward VI cap. 14, it was enacted, that whoever

should buy any corn or grain, with intent to sell it again, should be

reputed an unlawful engrosser, and should, for the first fault, suffer

two months imprisonment, and forfeit the value of the corn; for the

second, suffer six months imprisonment, and forfeit double the value;

and, for the third, be set in the pillory, suffer imprisonment during

the king's pleasure, and forfeit all his goods and chattels. The ancient

policy of most other parts of Europe was no better than that of England.

Our ancestors seem to have imagined, that the people would buy their

corn cheaper of the farmer than of the corn merchant, who, they were

afraid, would require, over and above the price which he paid to the

farmer, an exorbitant profit to himself. They endeavoured, therefore,

to annihilate his trade altogether. They even endeavoured to hinder, as

much as possible, any middle man of any kind from coming in between the

grower and the consumer; and this was the meaning of the many restraints

which they imposed upon the trade of those whom they called kidders, or

carriers of corn; a trade which nobody was allowed to exercise without

a licence, ascertaining his qualifications as a man of probity and

fair dealing. The authority of three justices of the peace was, by the

statute of Edward VI. necessary in order to grant this licence. But even

this restraint was afterwards thought insufficient, and, by a statute

of Elizabeth, the privilege of granting it was confined to the


The ancient policy of Europe endeavoured, in this manner, to regulate

agriculture, the great trade of the country, by maxims quite different

from those which it established with regard to manufactures, the great

trade of the towns. By leaving a farmer no other customers but either

the consumers or their immediate factors, the kidders and carriers of

corn, it endeavoured to force him to exercise the trade, not only of a

farmer, but of a corn merchant, or corn retailer. On the contrary, it,

in many cases, prohibited the manufacturer from exercising the trade of

a shopkeeper, or from selling his own goods by retail. It meant, by the

one law, to promote the general interest of the country, or to render

corn cheap, without, perhaps, its being well understood how this was to

be done. By the other, it meant to promote that of a particular order

of men, the shopkeepers, who would be so much undersold by the

manufacturer, it was supposed, that their trade would be ruined, if he

was allowed to retail at all.

The manufacturer, however, though he had been allowed to keep a shop,

and to sell his own goods by retail, could not have undersold the common

shopkeeper. Whatever part of his capital he might have placed in his

shop, he must have withdrawn it from his manufacture. In order to carry

on his business on a level with that of other people, as he must have

had the profit of a manufacturer on the one part, so he must have had

that of a shopkeeper upon the other. Let us suppose, for example, that

in the particular town where he lived, ten per cent. was the ordinary

profit both of manufacturing and shopkeeping stock; he must in this case

have charged upon every piece of his own goods, which he sold in

his shop, a profit of twenty per cent. When he carried them from his

workhouse to his shop, he must have valued them at the price for which

he could have sold them to a dealer or shopkeeper, who would have bought

them by wholesale. If he valued them lower, he lost a part of the profit

of his manufacturing capital. When, again, he sold them from his shop,

unless he got the same price at which a shopkeeper would have sold them,

he lost a part of the profit of his shop-keeping capital. Though he

might appear, therefore, to make a double profit upon the same piece

of goods, yet, as these goods made successively a part of two distinct

capitals, he made but a single profit upon the whole capital employed

about them; and if he made less than his profit, he was a loser, and did

not employ his whole capital with the same advantage as the greater part

of his neighbours.

What the manufacturer was prohibited to do, the farmer was in some

measure enjoined to do; to divide his capital between two different

employments; to keep one part of it in his granaries and stack-yard, for

supplying the occasional demands of the market, and to employ the other

in the cultivation of his land. But as he could not afford to employ the

latter for less than the ordinary profits of farming stock, so he could

as little afford to employ the former for less than the ordinary profits

of mercantile stock. Whether the stock which really carried on the

business of a corn merchant belonged to the person who was called a

farmer, or to the person who was called a corn merchant, an equal

profit was in both cases requisite, in order to indemnify its owner for

employing it in this manner, in order to put his business on a level

with other trades, and in order to hinder him from having an interest to

change it as soon as possible for some other. The farmer, therefore,

who was thus forced to exercise the trade of a corn merchant, could not

afford to sell his corn cheaper than any other corn merchant would have

been obliged to do in the case of a free 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.

The law which prohibited the manufacturer from exercising the trade of

a shopkeeper, endeavoured to force this division in the employment of

stock to go on faster than it might otherwise have done. The law which

obliged the farmer to exercise the trade of a corn merchant, endeavoured

to hinder it from going on so fast. Both laws were evident violations

of natural liberty, and therefore unjust; and they were both, too, as

impolitic as they were unjust. It is the interest of every society, that

things of this kind should never either he forced or obstructed. The man

who employs either his labour or his stock in a greater variety of ways

than his situation renders necessary, can never hurt his neighbour

by underselling him. He may hurt himself, and he generally does so.

Jack-of-all-trades will never be rich, says the proverb. But the law

ought always to trust people with the care of their own interest, as in

their local situations they must generally be able to judge better of it

than the legislature can do. The law, however, which obliged the farmer

to exercise the trade of a corn merchant was by far the most pernicious

of the two.

It obstructed not only that division in the employment of stock which

is so advantageous to every society, but it obstructed likewise the

improvement and cultivation of the land. By obliging the farmer to c