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 costs 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 always
and regularly lose, or sell its goods for
less than it really costs 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 employment 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