CHAP. V.

Of Bounties.

BOUNTIES upon exportation are, in Great, CHAP.

Britain, frequently petitioned for, and fometimes granted to the produce of particular branches of domeftic induftry. By means of them our merchants and manufacturers, it is pretended, will be enabled to fell their goods as cheap or cheaper than their rivals in the foreign market. A greater quantity, it is faid, will thus be exported, and the balance of trade confequently turned more 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 beft expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile fyftem propofes 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 thofe branches of trade only which cannot be carried on without them. But every branch of trade in which the merchant can fell his goods for a price which replaces to him, with the ordinary profits of stock, the whole capital employed in preparing and fending them to market, can be carried

$ 3

V.

IV.

BOOK carried on without a bounty. Every fuch 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. Thofe trades only require bounties in which the merchant is obliged to fell 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 fell them for less than it really cofts him to fend them to market. The bounty is given in order to make up this lofs, and to encourage him to continue, or perhaps to begin, a trade of which the expence 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 refembled it, there would foon be no capital left in the country.

The trades, it is to be obferved, which are carried on by means of bounties, are the only ones which can be carried on between two nations for any confiderable time together, in fuch a manner as that one of them shall always and regularly lofe, or fell its goods for less than it really cofts to fend them to market. But if the bounty did not repay to the merchant what he would otherwife lofe upon the price of his goods, his own intereft would foon 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 fending them to market. The effect of bounties, like that of all the other expedients

V.

expedients of the mercantile fyftem, can only be CHA P. 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 fince the bounty upon the exportation of corn was firft established, the price of the corn exported, valued moderately enough, has exceeded that of the corn imported, valued very high, by a much greater fum than the amount of the whole bounties which have been paid during that period. This, he imagines, upon the true principles of the mercantile fyftem, 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 fum than the whole extraordinary expence which the public has been at in order to get it exported, He does not confider that this extraordinary expence, or the bounty, is the smallest part of the expence which the exportation of corn really costs the fociety. The capital which the farmer employed in raising it, must likewise be taken into the account. Unless the price of the corn when fold in the foreign markets replaces, not only the bounty, but this capital, together with the ordinary, profits of flock, the fociety is a lofer by the difference, or the national ftock is fo much diminished. But the very reafon for which it has been thought neceffary to grant a bounty, is the fuppofed infufficiency of the price to do this.

BOOK

IV.

The average price of corn, it has been faid, has fallen confiderably fince the establishment of the bounty. That the average price of corn began to fall fomewhat towards the end of the last century, and has continued to do fo during the course of the fixty-four firft years of the present, I have already endeavoured to fhow. But this event, fuppofing it to be as real as I believe it to be, must have happened in spite of the bounty, and cannot poffibly have happened in confe quence 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 fubjected 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 infenfible rife in the real value of filver, which, in the first book of this difcourfe, I have endeavoured to show has taken place in 'the general market of Europe, during the courfe of the present century. It feems to be altogether impoffible that the bounty could ever contribute to lower the price of grain.

In years of plenty, it has already been obferved, the bounty, by occafioning an extraor dinary exportation, neceffarily keeps up the price of corn in the home market above what it would naturally fall to. To do fo was the avowed purpose of the inftitution. In years of fcarcity, though the bounty is frequently fufpended, yet the great exportation which it occafions in years

of

V.

of plenty, muft frequently hinder more or lefs CHA P. the plenty of one year from relieving the scarcity of another. Both in years of plenty, and in years of fcarcity, therefore, the bounty neceffarily tends to raise the money price of corn fomewhat higher than it otherwife would be in the home market.

That, in the actual state of tillage, the bounty muft neceffarily have this tendency, will not, I apprehend, be disputed by any reasonable perfon. But it has been thought by many people that it tends to encourage tillage, and that in two different ways; firft, by opening a more extenfive foreign market to the corn of the farmer, it tends, they imagine, to increase the demand for, and confequently the production of that com modity; and fecondly, by fecuring to him a better price than he could otherwise expect in the actual ftate of tillage, it tends, they fuppofe, to encourage tillage. This double encouragement muft, they imagine, in a long period of years, occafion fuch 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 ftate which tillage may, at the end of that period, happen to be in.

I answer, that whatever extenfion of the foreign market can be occafioned by the bounty, muft, in every particular year, be altogether at the expence 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