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An Inquiry Into The Nature And Causes Of The Wealth Of Nations - Chapter 5 continue

1. Introduction And Plan Of The Work

2. Book 1, Chapter 1

3. Chapter 2

4. Chapter 3

5. Chapter 4

6. Chapter 5

7. Chapter 6

8. Chapter 7

9. Chapter 8

10. Chapter 8 continue

11. Chapter 9

12. Chapter 10

13. Chapter 10 continue

14. Chapter 11

15. Chapter 11 continue

16. Chapter 11 continue.

17. Chapter 11 continue..

18. Chapter 11 continue...

19. Conclusion of the Chapter 11

20. Book 2 Introduction

21. Chapter 1

22. Chapter II

23. Chapter II continue

24. Chapter II continue

25. Chapter 3

26. Chapter 4

27. Chapter 5

28. Book 3, Chapter 1

29. Chapter 2

30. Chapter 3

31. Chapter 4

32. Book 4, Chapter 1

33. Chapter 1 continue

34. Chapter 2

35. Chapter 3, Part 1

36. Chapter 3, Part 2

37. Chapter 4

38. Chapter 5

39. Chapter 5 continue

40. Chapter 6

41. Chapter 7, Part 1

42. Chapter 7, Part 2

43. Chapter 7, Part 3

44. Chapter 7, Part 3 continue

45. Chapter 8

46. Chapter 9

47. Book 5, Chapter 1, Part 1

48. Chapter 1, Part 2

49. Chapter 1, Part 3

50. Chapter 1, Part 3 continue

51. Chapter 1, Part 3 continue B

52. Chapter 1, Part 4

53. Chapter 2, Part 1

54. Chapter 2, Part 2

55. Chapter 2, Part 2 continue

56. Chapter 2, Part 2 continue B

57. Chapter 2, Part 2 continue C

58. Chapter 2, Part 2 continue D

59. Chapter 3

60. Chapter 3 continue

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 carry
on two trades instead of one, it forced him to divide his capital into
two parts, of which one only could be employed in cultivation. But if he
had been at liberty to sell his whole crop to a corn merchant as fast
as he could thresh it out, his whole capital might have returned
immediately to the land, and have been employed in buying more cattle,
and hiring more servants, in order to improve and cultivate it better.
But by being obliged to sell his corn by retail, he was obliged to keep
a great part of his capital in his granaries and stack-yard through the
year, and could not therefore cultivate so well as with the same
capital he might otherwise have done. This law, therefore, necessarily
obstructed the improvement of the land, and, instead of tending
to render corn cheaper, must have tended to render it scarcer, and
therefore dearer, than it would otherwise have been.

After the business of the farmer, that of the corn merchant is in
reality the trade which, if properly protected and encouraged, would
contribute the most to the raising of corn. It would support the trade
of the farmer, in the same manner as the trade of the wholesale dealer
supports that of the manufacturer.

The wholesale dealer, by affording a ready market to the manufacturer,
by taking his goods off his hand as fast as he can make them, and by
sometimes even advancing their price to him before he has made them,
enables him to keep his whole capital, and sometimes even more than his
whole capital, constantly employed in manufacturing, and consequently to
manufacture a much greater quantity of goods than if he was obliged
to dispose of them himself to the immediate consumers, or even to the
retailers. As the capital of the wholesale merchant, too, is generally
sufficient to replace that of many manufacturers, this intercourse
between him and them interests the owner of a large capital to support
the owners of a great number of small ones, and to assist them in those
losses and misfortunes which might otherwise prove ruinous to them.

An intercourse of the same kind universally established between the
farmers and the corn merchants, would be attended with effects equally
beneficial to the farmers. They would be enabled to keep their whole
capitals, and even more than their whole capitals constantly employed in
cultivation. In case of any of those accidents to which no trade is
more liable than theirs, they would find in their ordinary customer,
the wealthy corn merchant, a person who had both an interest to support
them, and the ability to do it; and they would not, as at present, be
entirely dependent upon the forbearance of their landlord, or the mercy
of his steward. Were it possible, as perhaps it is not, to establish
this intercourse universally, and all at once; were it possible to
turn all at once the whole farming stock of the kingdom to its proper
business, the cultivation of land, withdrawing it from every other
employment into which any part of it may be at present diverted; and
were it possible, in order to support and assist, upon occasion, the
operations of this great stock, to provide all at once another stock
almost equally great; it is not, perhaps, very easy to imagine how
great, how extensive, and how sudden, would be the improvement which
this change of circumstances would alone produce upon the whole face of
the country.

The statute of Edward VI. therefore, by prohibiting as much as possible
any middle man from coming in between the grower and the consumer,
endeavoured to annihilate a trade, of which the free exercise is not
only the best palliative of the inconveniencies of a dearth, but the
best preventive of that calamity; after the trade of the farmer, no
trade contributing so much to the growing of corn as that of the corn

The rigour of this law was afterwards softened by several subsequent
statutes, which successively permitted the engrossing of corn when
the price of wheat should not exceed 20s. and 24s. 32s. and 40s. the
quarter. At last, by the 15th of Charles II. c.7, the engrossing or
buying of corn, in order to sell it again, as long as the price of wheat
did not exceed 48s. the quarter, and that of other grain in proportion,
was declared lawful to all persons not being forestallers, that is, not
selling again in the same market within three months. All the freedom
which the trade of the inland corn dealer has ever yet enjoyed was
bestowed upon it by this statute. The statute of the twelfth of the
present king, which repeals almost all the other ancient laws against
engrossers and forestallers, does not repeal the restrictions of this
particular statute, which therefore still continue in force.

This statute, however, authorises in some measure two very absurd
popular prejudices.

First, It supposes, that when the price of wheat has risen so high as
48s. the quarter, and that of other grain in proportion, corn is likely
to be so engrossed as to hurt the people. But, from what has been
already said, it seems evident enough, that corn can at no price be
so engrossed by the inland dealers as to hurt the people; and 48s. the
quarter, besides, though it may be considered as a very high price,
yet, in years of scarcity, it is a price which frequently takes place
immediately after harvest, when scarce any part of the new crop can be
sold off, and when it is impossible even for ignorance to suppose that
any part of it can be so engrossed as to hurt the people.

Secondly, It supposes that there is a certain price at which corn is
likely to be forestalled, that is, bought up in order to be sold again
soon after in the same market, so as to hurt the people. But if a
merchant ever buys up corn, either going to a particular market, or in
a particular market, in order to sell it again soon after in the same
market, it must be because he judges that the market cannot be so
liberally supplied through the whole season as upon that particular
occasion, and that the price, therefore, must soon rise. If he judges
wrong in this, and if the price does not rise, he not only loses the
whole profit of the stock which he employs in this manner, but a part of
the stock itself, by the expense and loss which necessarily attend the
storing and keeping of corn. He hurts himself, therefore, much more
essentially than he can hurt even the particular people whom he may
hinder from supplying themselves upon that particular market day,
because they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the great body
of the people, he renders them a most important service. By making
them feel the inconveniencies of a dearth somewhat earlier than they
otherwise might do, he prevents their feeling them afterwards so
severely as they certainly would do, if the cheapness of price
encouraged them to consume faster than suited the real scarcity of the
season. When the scarcity is real, the best thing that can be done for
the people is, to divide the inconvenience of it as equally as possible,
through all the different months and weeks and days of the year. The
interest of the corn merchant makes him study to do this as exactly as
he can; and as no other person can have either the same interest, or the
same knowledge, or the same abilities, to do it so exactly as he, this
most important operation of commerce ought to be trusted entirely to
him; or, in other words, the corn trade, so far at least as concerns the
supply of the home market, ought to be left perfectly free.

The popular fear of engrossing and forestalling may be compared to the
popular terrors and suspicions of witchcraft. The unfortunate wretches
accused of this latter crime were not more innocent of the misfortunes
imputed to them, than those who have been accused of the former. The law
which put an end to all prosecutions against witchcraft, which put
it out of any man's power to gratify his own malice by accusing his
neighbour of that imaginary crime, seems effectually to have put an
end to those fears and suspicions, by taking away the great cause
which encouraged and supported them. The law which would restore entire
freedom to the inland trade of corn, would probably prove as effectual
to put an end to the popular fears of engrossing and forestalling.

The 15th of Charles II. c. 7, however, with all its imperfections, has,
perhaps, contributed more, both to the plentiful supply of the home
market, and to the increase of tillage, than any other law in the
statute book. It is from this law that the inland corn trade has derived
all the liberty and protection which it has ever yet enjoyed; and both
the supply of the home market and the interest of tillage are much more
effectually promoted by the inland, than either by the importation or
exportation trade.

The proportion of the average quantity of all sorts of grain imported
into Great Britain to that of all sorts of grain consumed, it has been
computed by the author of the Tracts upon the Corn Trade, does not
exceed that of one to five hundred and seventy. For supplying the home
market, therefore, the importance of the inland trade must be to that of
the importation trade as five hundred and seventy to one.

The average quantity of all sorts of grain exported from Great Britain
does not, according to the same author, exceed the one-and-thirtieth
part of the annual produce. For the encouragement of tillage, therefore,
by providing a market for the home produce, the importance of the inland
trade must be to that of the exportation trade as thirty to one.

I have no great faith in political arithmetic, and I mean not to warrant
the exactness of either of these computations. I mention them only in
order to show of how much less consequence, in the opinion of the most
judicious and experienced persons, the foreign trade of corn is than
the home trade. The great cheapness of corn in the years immediately
preceding the establishment of the bounty may, perhaps with reason, he
ascribed in some measure to the operation of this statute of Charles
II. which had been enacted about five-and-twenty years before, and which
had, therefore, full time to produce its effect.

A very few words will sufficiently explain all that I have to say
concerning the other three branches of the corn trade.

II. The trade of the merchant-importer of foreign corn for home
consumption, evidently contributes to the immediate supply of the home
market, and must so far be immediately beneficial to the great body of
the people. It tends, indeed, to lower somewhat the average money price
of corn, but not to diminish its real value, or the quantity of labour
which it is capable of maintaining. If importation was at all times
free, our farmers and country gentlemen would probably, one year with
another, get less money for their corn than they do at present, when
importation is at most times in effect prohibited; but the money which
they got would be of more value, would buy more goods of all other
kinds, and would employ more labour. Their real wealth, their real
revenue, therefore, would be the same as at present, though it might
be expressed by a smaller quantity of silver, and they would neither
be disabled nor discouraged from cultivating corn as much as they do at
present. On the contrary, as the rise in the real value of silver, in
consequence of lowering the money price of corn, lowers somewhat the
money price of all other commodities, it gives the industry of the
country where it takes place some advantage in all foreign markets and
thereby tends to encourage and increase that industry. But the extent of
the home market for corn must be in proportion to the general industry
of the country where it grows, or to the number of those who produce
something else, and therefore, have something else, or, what comes to
the same thing, the price of something else, to give in exchange for
corn. But in every country, the home market, as it is the nearest and
most convenient, so is it likewise the greatest and most important
market for corn. That rise in the real value of silver, therefore, which
is the effect of lowering the average money price of corn, tends to
enlarge the greatest and most important market for corn, and thereby to
encourage, instead of discouraging its growth.

By the 22d of Charles II. c. 13, the importation of wheat, whenever
the price in the home market did not exceed 53s:4d. the quarter, was
subjected to a duty of 16s. the quarter; and to a duty of 8s. whenever
the price did not exceed 4. The former of these two prices has, for
more than a century past, taken place only in times of very great
scarcity; and the latter has, so far as I know, not taken place at
all. Yet, till wheat has risen above this latter price, it was, by this
statute, subjected to a very high duty; and, till it had risen above the
former, to a duty which amounted to a prohibition. The importation
of other sorts of grain was restrained at rates and by duties, in
proportion to the value of the grain, almost equally high. Before the
13th of the present king, the following were the duties payable upon the
importation of the different sorts of grain:

Grain. Duties. Duties Duties.
Beans to 28s. per qr. 19s:10d. after till 40s. 16s:8d. then 12d.
Barley to 28s. - 19s:10d. - 32s. 16s. - 12d.
Malt is prohibited by the annual malt-tax bill.
Oats to 16s. - 5s:10d. after - 9d.
Pease to 40s. - 16s: 0d. after - 9d.
Rye to 36s. - 19s:10d. till 40s. 16s:8d - 12d.
Wheat to 44s. - 21s: 9d. till 53s:4d. 17s. - 8s.
till 4, and after that about 1s:4d.
Buck-wheat to 32s. per qr. to pay 16s.

These different duties were imposed, partly by the 22d of Charles II.
in place of the old subsidy, partly by the new subsidy, by the one-third
and two-thirds subsidy, and by the subsidy 1747. Subsequent laws 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

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 freedom
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 be 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

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

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

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 millions
sterling, operate not only more directly, but much more forcibly, in
reducing the value of those metals there, than the corn laws can do in
Great Britain. And, secondly, this bad policy is not in those countries
counterbalanced by the general liberty and security of the people.
Industry is there neither free nor secure; and the civil and
ecclesiastical governments of both Spain and Portugal are such as would
alone be sufficient to perpetuate their present state of poverty, even
though their regulations of commerce were as wise as the greatest part
of them are absurd and foolish.

The 13th of the present king, c. 43, seems to have established a new
system with regard to the corn laws, in many respects better than the
ancient one, but in one or two respects perhaps not quite so good.

By this statute, the high duties upon importation for home consumption
are taken off, so soon as the price of middling wheat rises to 48s. the
quarter; that of middling rye, pease, or beans, to 32s.; that of barley
to 24s.; and that of oats to 16s.; and instead of them, a small duty
is imposed of only 6d upon the quarter of wheat, and upon that or other
grain in proportion. With regard to all those different sorts of grain,
but particularly with regard to wheat, the home market is thus opened to
foreign supplies, at prices considerably lower than before.

By the same statute, the old bounty of 5s. upon the exportation of
wheat, ceases so soon as the price rises to 44s. the quarter, instead
of 48s. the price at which it ceased before; that of 2s:6d. upon the
exportation of barley, ceases so soon as the price rises to 22s. instead
of 24s. the price at which it ceased before; that of 2s:6d. upon the
exportation of oatmeal, ceases so soon as the price rises to 14s.
instead of 15s. the price at which it ceased before. The bounty upon rye
is reduced from 3s:6d. to 3s. and it ceases so soon as the price rises
to 28s. instead of 32s. the price at which it ceased before. If bounties
are as improper as I have endeavoured to prove them to be, the sooner
they cease, and the lower they are, so much the better.

The same statute permits, at the lowest prices, the importation of corn
in order to be exported again, duty free, provided it is in the mean
time lodged in a warehouse under the joint locks of the king and the
importer. This liberty, indeed, extends to no more than twenty-five of
the different ports of Great Britain. They are, however, the principal
ones; and there may not, perhaps, be warehouses proper for this purpose
in the greater part of the others.

So far this law seems evidently an improvement upon the ancient system.

But by the same law, a bounty of 2s. the quarter is given for the
exportation of oats, whenever the price does not exceed fourteen
shillings. No bounty had ever been given before for the exportation of
this grain, no more than for that of pease or beans.

By the same law, too, the exportation of wheat is prohibited so soon as
the price rises to forty-four shillings the quarter; that of rye so
soon as it rises to twenty-eight shillings; that of barley so soon as it
rises to twenty-two shillings; and that of oats so soon as they rise to
fourteen shillings. Those several prices seem all of them a good deal
too low; and there seems to be an impropriety, besides, in prohibiting
exportation altogether at those precise prices at which that bounty,
which was given in order to force it, is withdrawn. The bounty ought
certainly either to have been withdrawn at a much lower price, or
exportation ought to have been allowed at a much higher.

So far, therefore, this law seems to be inferior to the ancient system.
With all its imperfections, however, we may perhaps say of it what was
said of the laws of Solon, that though not the best in itself, it is
the best which the interest, prejudices, and temper of the times, would
admit of. It may perhaps in due time prepare the way for a better.

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