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

still further increased those duties.

 

The distress which, in years of scarcity, the strict execution of

those laws might have brought upon the people, would probably

have been very great ; but, upon such occasions, its execution

was generally suspended by temporary statutes, which permitted,

for a limited time, the importation of foreign corn. The

necessity of these temporary statutes sufficiently demonstrates

the impropriety of this general one.

 

These restraints upon importation, though prior to the

establishment of the bounty, were dictated by the same spirit, by

the same principles, which afterwards enacted that regulation.

How hurtful soever in themselves, these, or some other restraints

upon importation, became necessary in consequence of that

regulation. If, when wheat was either below 48s. the quarter, or

not much above it, foreign corn could have been imported, either

duty free, or upon paying only a small duty, it might have been

exported again, with the benefit of the bounty, to the great loss

of the public revenue, and to the entire perversion of the

institution, of which the object was to extend the market for the

home growth, not that for the growth of foreign countries.

 

III. The trade of the merchant-exporter of corn for foreign

consumption, certainly does not contribute directly to the

plentiful supply of the home market. It does so, however,

indirectly. From whatever source this supply maybe usually drawn,

whether from home growth, or from foreign importation, unless

more corn is either usually grown, or usually imported into the

country, than what is usually consumed in it. the supply of the

home market can never be very plentiful. But unless the surplus

can, in all ordinary cases, be exported, the growers will be

careful never to grow more, and the importers never to import

more, than what the bare consumption of the home market requires.

That market will very seldom be overstocked; but it will

generally be understocked ; the people, whose business it is to

supply it, being generally afraid lest their goods should be left

upon their hands. The prohibition of exportation limits the

improvement and cultivation of the country to what the supply of

its own inhabitants require. The freedom of exportation enables

it to extend cultivation for the supply of foreign nations.

 

By the 12th of Charles II. c.4, the exportation of corn was

permitted whenever the price of wheat did not exceed 40s. the

quarter, and that of other grain in proportion. By the 15th of

the same prince, this liberty was extended till the price of

wheat exceeded 48s. the quarter; and by the 22d, to all higher

prices. A poundage, indeed, was to be paid to the king upon such

exportation; but all grain was rated so low in the book of rates,

that this poundage amounted only, upon wheat to 1s., upon oats to

4d., and upon all other grain to 6d. the quarter. By the 1st of

William and Mary, the act which established this bounty, this

small duty was virtually taken off whenever the price of wheat

did not exceed 48s. the quarter; and by the 11th and 12th of

William III. c. 20, it was expressly taken off at all higher

prices.

 

The trade of the merchant-exporter was, in this manner, not only

encouraged by a bounty, but rendered much more free than that of

the inland dealer. By the last of these statutes, corn could be

engrossed at any price for exportation ; but it could not be

engrossed for inland sale, except when the price did not exceed

48s. the quarter. The interest of the inland dealer, however, it

has already been shown, can never be opposite to that of the

great body of the people. That of the merchant-exporter may, and

in fact sometimes is. If, while his own country labours under a

dearth, a neighbouring country should be afflicted with a famine,

it might be his interest to carry corn to the latter country, in

such quantities as might very much aggravate the calamities of

the dearth. The plentiful supply of the home market was not the

direct object of those statutes; but, under the pretence of

encouraging agriculture, to raise the money price of corn as high

as possible, and thereby to occasion, as much as possible, a

constant dearth in the home market. By the discouragement of

importation, the supply of that market; even in times of great

scarcity, was confined to the home growth ; and by the

encouragement of exportation, when the price was so high as 48s.

the quarter, that market was not, even in times of considerable

scarcity, allowed to enjoy the whole of that growth. The

temporary laws, prohibiting, for a limited time, the exportation

of corn, and taking off, for a limited time, the duties upon its

importation, expedients to which Great Britain has been obliged

so frequently to have recourse, sufficiently demonstrate the

impropriety of her general system. Had that system been good, she

would not so frequently have been reduced to the necessity of

departing from it.

 

Were all nations to follow the liberal system of free exportation

and free importation, the different states into which a great

continent was divided, would so far resemble the different

provinces of a great empire. As among the different provinces of

a great empire, the freedmn of the inland trade appears, both

from reason and experience, not only the best palliative of a

dearth, but the most effectual preventive of a famine; so would

the freedom of the exportation and importation trade be among the

different states into which a great continent was divided. The

larger the continent, the easier the communication through all

the different parts of it, both by land and by water, the less

would any one particular part of it ever be exposed to either of

these calamities, the scarcity of any one country being more

likely to be relieved by the plenty of some other. But very few

countries have entirely adopted this liberal system. The freedom

of the corn trade is almost everywhere more or less restrained,

and in many countries is confined by such absurd regulations, as

frequently aggravate the unavoidable misfortune of a dearth into

the dreadful calamity of a famine. The demand of such countries

for corn may frequently become so great and so urgent, that a

small state in their neighbourhood, which happened at the same

time to be labouring under some degree of dearth, could not

venture to supply them without exposing itself to the like

dreadful calamity. The very bad policy of one country may thus

render it, in some measure, dangerous and imprudent to establish

what would otherwise be the best policy in another. The unlimited

freedom of exportation, however, would be much less dangerous in

great states, in which the growth being much greater, the supply

could seldom be much affected by any quantity or corn that was

likely to he exported. In a Swiss canton, or in some of the

little states in Italy, it may, perhaps, sometimes be necessary

to restrain the exportation of corn. In such great countries as

France or England, it scarce ever can. To hinder, besides, the

farmer from sending his goods at all times to the best market, is

evidently to sacrifice the ordinary laws of justice to an idea of

public utility, to a sort of reasons of state ; an act or

legislative authority which ought to be exercised only, which can

be pardoned only, in cases of the most urgent necessity. The

price at which exportation of corn is prohibited, if it is ever

to be prohibited, ought always to be a very high price.

 

The laws concerning corn may everywhere be compared to the laws

concerning religion. The people feel themselves so much

interested in what relates either to their subsistence in this

life, or to their happiness in a life to come, that government

must yield to their prejudices, and, in order to preserve the

public tranquillity, establish that system which they approve of.

It is upon this account, perhaps. that we so seldom find a

reasonable system established with regard to either of those two

capital objects.

 

IV. The trade of the merchant-carrier, or of the importer of

foreign corn, in order to export it again, contributes to the

plentiful supply of the home market. It is not, indeed, the

direct purpose of his trade to sell his corn there ; but he will

generally be willing to do so, and even for a good deal less

money than he might expect in a foreign market; because he saves

in this manner the expense of loading and unloading, of freight

and insurance. The inhabitants of the country which, by means of

the carrying trade, becomes the magazine and storehouse for the

supply of other countries, can very seldom be in want themselves.

Though the carrying trade must thus contribute to reduce the

average money price of corn in the home market, it would not

thereby lower its real value; it would only raise somewhat the

real value of silver.

 

The carrying trade was in effect prohibited in Great Britain,

upon all ordinary occasions, by the high duties upon the

importation of foreign corn, of the greater part of which there

was no drawback; and upon extraordinary occasions, when a

scarcity made it necessary to suspend those duties by temporary

statutes, exportation was always prohibited. By this system of

laws, therefore, the carrying trade was in effect prohibited.

 

That system of laws, therefore, which is connected with the

establishment of the bounty, seems to deserve no part of the

praise which has been bestowed upon it. The improvement and

prosperity of Great Britain, which has been so often ascribed to

those laws, may very easily be accounted for by other causes.

That security which the laws in Great Britain give to every man,

that he shall enjoy the fruits of his own labour, is alone

sufficient to make any country flourish, notwithstanding these

and twenty other absurd regulations of commerce ; and this

security was perfected by the Revolution, much about the same

time that the bounty was established. The natural effort of every

individual to better his own condition, when suffered to exert

itself with freedom and security, is so powerful a principle,

that it is alone, and without any assistance, not only capable of

carrying on the society to wealth and prosperity, but of

surmounting a hundred impertinent obstructions, with which the

folly of human laws too often encumbers its operations: though

the effect of those obstructions is always, more or less, either

to encroach upon its freedom, or to diminish its security. In

Great Britain industry is perfectly secure; and though it is far

from being perfectly free, it is as free or freer than in any

other part of Europe.

 

Though the period of the greatest prosperity and improvement of

Great Britain has been posterior to that system of laws which is

connected with the bounty, we must not upon that account, impute

it to those laws. It has been posterior likewise to the national

debt ; but the national debt has most assuredly not been the

cause of it.

 

Though the system of laws which is connected with the bounty, has

exactly the same tendency with the practice of Spain and

Portugal, to lower somewhat the value of the precious metals in

the country where it takes place; yet Great Britain is certainly

one of the richest countries in Europe, while Spain and Portugal

are perhaps amongst the most beggarly. This difference of

situation, however, may easily be accounted for from two

different causes. First, the tax in Spain, the prohibition in

Portugal of exporting gold and silver, and the vigilant police

which watches over the execution of those laws, must, in two very

poor countries, which between them import annually upwards of six