An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

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 homemade commodities of

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

it rises in its quantity, the service will be little more than

nominal and imaginary.

 

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 detemnined 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 commodity.

 

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 252,231�.

During these eleven years, the tonnage bounties paid amounted to

�155,463:11s. or 8s:2�d. upon every barrel of sea-sticks, and to

12s:3�d. 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,