ThereisnocommercialcountryinEuropeofwhichtheapproachingruinhasnotfrequentlybeenforetoldbythepretendeddoctorsofthissystemfromanunfavourablebalanceoftrade。Afteralltheanxiety，however，whichtheyhaveexcitedaboutthis，afterallthevainattemptsofalmostalltradingnationstoturnthatbalanceintheirownfavourandagainsttheirneighbours，itdoesnotappearthatanyonenationinEuropehasbeeninanyrespectimpoverishedbythiscause。Everytownandcountry，onthecontrary，inproportionastheyhaveopenedtheirportstoallnations，insteadofbeingruinedbythisfreetrade，astheprinciplesofthecommercialsystemwouldleadustoexpect，havebeenenrichedbyit。ThoughthereareinEurope，indeed，afewtownswhichinsomerespectsdeservethenameoffreeports，thereisnocountrywhichdoesso。Holland，perhaps，approachesthenearesttothischaracterofanythoughstillveryremotefromit;andHolland，itisacknowledged，notonlyderivesitswholewealth，butagreatpartofitsnecessarysubsistence，fromforeigntrade。
Thereisanotherbalance，indeed，whichhasalreadybeenexplained，verydifferentfromthebalanceoftrade，andwhich，accordingasithappenstobeeitherfavourableorunfavourable，necessarilyoccasionstheprosperityordecayofeverynation。
Thisisthebalanceoftheannualproduceandconsumption。Iftheexchangeablevalueoftheannualproduce，ithasalreadybeenobserved，exceedsthatoftheannualconsumption，thecapitalofthesocietymustannuallyincreaseinproportiontothisexcess。
Thesocietyinthiscaseliveswithinitsrevenue，andwhatisannuallysavedoutofitsrevenueisnaturallyaddedtoitscapital，andemployedsoastoincreasestillfurthertheannualproduce。Iftheexchangeablevalueoftheannualproduce，onthecontrary，failshortoftheannualconsumption，thecapitalofthesocietymustannuallydecayinproportiontothisdeficiency。
Theexpenseofthesocietyinthiscaseexceedsitsrevenue，andnecessarilyencroachesuponitscapital。Itscapital，therefore，mustnecessarilydecay，andtogetherwithittheexchangeablevalueoftheannualproduceofitsindustry。
Thisbalanceofproduceandconsumptionisentirelydifferentfromwhatiscalledthebalanceoftrade。Itmighttakeplaceinanationwhichhadnoforeigntrade，butwhichwasentirelyseparatedfromalltheworld。Itmaytakeplaceinthewholeglobeoftheearth，ofwhichthewealth，population，andimprovementmaybeeithergraduallyincreasingorgraduallydecaying。
Thebalanceofproduceandconsumptionmaybeconstantlyinfavourofanation，thoughwhatiscalledthebalanceoftradebegenerallyagainstit。Anationmayimporttoagreatervaluethanitexportsforhalfacentury，perhaps，together;thegoldandsilverwhichcomesintoitduringanthistimemaybeallimmediatelysentoutofit;itscirculatingcoinmaygraduallydecay，differentsortsofpapermoneybeingsubstitutedinitsplace，andeventhedebts，too，whichitcontractsintheprincipalnationswithwhomitdeals，maybegraduallyincreasing;andyetitsrealwealth，theexchangeablevalueoftheannualproduceofitslandsandlabour，may，duringthesameperiod，havebeenincreasinginamuchgreaterproportion。ThestateofourNorthAmericancolonies，andofthetradewhichtheycarriedonwithGreatBritain，beforethecommencementofthepresentdisturbances，mayserveasaproofthatthisisbynomeansanimpossiblesupposition。
CHAPTERIV
OfDrawbacksMERCHANTSandmanufacturersarenotcontentedwiththemonopolyofthehomemarket，butdesirelikewisethemostextensiveforeignsalefortheirgoods。Theircountryhasnojurisdictioninforeignnations，andthereforecanseldomprocurethemanymonopolythere。Theyaregenerallyobliged，therefore，tocontentthemselveswithpetitioningforcertainencouragementstoexportation。
OftheseencouragementswhatarecalledDrawbacksseemtobethemostreasonable。Toallowthemerchanttodrawbackuponexportation，eitherthewholeorapartofwhateverexciseorinlanddutyisimposedupondomesticindustry，canneveroccasiontheexportationofagreaterquantityofgoodsthanwhatwouldhavebeenexportedhadnodutybeenimposed。Suchencouragementsdonottendtoturntowardsanyparticularemploymentagreatershareofthecapitalofthecountrythanwhatwouldgotothatemploymentofitsownaccord，butonlytohinderthedutyfromdrivingawayanypartofthatsharetootheremployments。Theytendnottooverturnthatbalancewhichnaturallyestablishesitselfamongallthevariousemploymentsofthesociety;buttohinderitfrombeingoverturnedbytheduty。Theytendnottodestroy，buttopreservewhatitisinmostcasesadvantageoustopreserve，thenaturaldivisionanddistributionoflabourinthesociety。
Thesamethingmaybesaidofthedrawbacksuponthere—exportationofforeigngoodsimported，whichinGreatBritaingenerallyamounttobymuchthelargestpartofthedutyuponimportation。BythesecondoftherulesannexedtotheActofParliamentwhichimposedwhatisnowcalledtheOldSubsidy，everymerchant，whetherEnglishoralien，wasallowedtodrawbackhalfthatdutyuponexportation;theEnglishmerchant，providedtheexportationtookplacewithintwelvemonths;thealien，providedittookplacewithinninemonths。Wines，currants，andwroughtsilksweretheonlygoodswhichdidnotfallwithinthisrule，havingotherandmoreadvantageousallowances。ThedutiesimposedbythisActofParliamentwereatthattimetheonlydutiesupontheimportationofforeigngoods。
Thetermwithinwhichthisandallotherdrawbackscouldbeclaimedwasafterwards（bythe7thGeorgeI，c。21，sect。10）
extendedtothreeyears。
ThedutieswhichhavebeenimposedsincetheOldSubsidyare，thegreaterpartofthem，whollydrawnbackuponexportation。Thisgeneralrule，however，isliabletoagreatnumberofexceptions，andthedoctrineofdrawbackshasbecomeamuchlesssimplematterthanitwasattheirfirstinstitution。
Upontheexportationofsomeforeigngoods，ofwhichitwasexpectedthattheimportationwouldgreatlyexceedwhatwasnecessaryforthehomeconsumption，thewholedutiesaredrawnback，withoutretainingevenhalftheOldSubsidy。BeforetherevoltofourNorthAmericancolonies，wehadthemonopolyofthetobaccoofMarylandandVirginia。Weimportedaboutninety—sixthousandhogsheads，andthehomeconsumptionwasnotsupposedtoexceedfourteenthousand。Tofacilitatethegreatexportationwhichwasnecessary，inordertoridusoftherest，thewholedutiesweredrawnback，providedtheexportationtookplacewithinthreeyears。
Westillhave，thoughnotaltogether，yetverynearly，themonopolyofthesugarsofourWestIndianIslands。Ifsugarsareexportedwithinayear，therefore，allthedutiesuponimportationaredrawnback，andifexportedwithinthreeyearsalltheduties，excepthalftheOldSubsidy，whichstillcontinuestoberetainedupontheexportationofthegreaterpartofgoods。Thoughtheimportationofsugarexceeds，agooddeal，whatisnecessaryforthehomeconsumption，theexcessisinconsiderableincomparisonofwhatitusedtobeintobacco。
Somegoods，theparticularobjectsofthejealousyofourownmanufacturers，areprohibitedtobeimportedforhomeconsumption。Theymay，however，uponpayingcertainduties，beimportedandwarehousedforexportation。Butuponsuchexportation，nopartofthesedutiesaredrawnback。Ourmanufacturersareunwilling，itseems，thateventhisrestrictedimportationshouldbeencouraged，andareafraidlestsomepartofthesegoodsshouldbestolenoutofthewarehouse，andthuscomeintocompetitionwiththeirown。Itisundertheseregulationsonlythatwecanimportwroughtsilks，Frenchcambricsandlawns，calicoespainted，printed，stainedordyed，etc。
WeareunwillingeventobethecarriersofFrenchgoods，andchooserathertoforegoaprofittoourselvesthantosufferthose，whomweconsiderasourenemies，tomakeanyprofitbyourmeans。NotonlyhalftheOldSubsidy，butthesecondtwenty—fivepercent，isretainedupontheexportationofallFrenchgoods。
BythefourthoftherulesannexedtotheOldSubsidy，thedrawbackallowedupontheexportationofallwinesamountedtoagreatdealmorethanhalfthedutieswhichwere，atthattime，paidupontheirimportation;anditseems，atthattime，tohavebeentheobjectofthelegislaturetogivesomewhatmorethanordinaryencouragementtothecarryingtradeinwine。Severaloftheotherdutiestoo，whichwereimposedeitheratthesametime，orsubsequenttotheOldSubsidy—whatiscalledtheadditionalduty，theNewSubsidy，theOne—thirdandTwo—thirdsSubsidies，theimpost1692，thecoinageonwine—wereallowedtobewhollydrawnbackuponexportation。Allthoseduties，however，excepttheadditionaldutyandimpost1692，beingpaiddowninreadymoney，uponimportation，theinterestofsolargeasumoccasionedanexpense，whichmadeitunreasonabletoexpectanyprofitablecarryingtradeinthisarticle。Onlyapart，therefore，ofthedutycalledtheimpostonwine，andnopartofthetwenty—fivepoundsthetonuponFrenchwines，orofthedutiesimposedin1745，in1763，andin1778，wereallowedtobedrawnbackuponexportation。Thetwoimpostsoffivepercent，imposedin1779and1781，uponalltheformerdutiesofcustoms，beingallowedtobewhollydrawnbackupontheexportationofallothergoods，werelikewiseallowedtobedrawnbackuponthatofwine。Thelastdutythathasbeenparticularlyimposeduponwine，thatof1780，isallowedtobewhollydrawnback，anindulgencewhich，whensomanyheavydutiesareretained，mostprobablycouldneveroccasiontheexportationofasingletonofwine。
Theserulestakeplacewithregardtoallplacesoflawfulexportation，excepttheBritishcoloniesinAmerica。
The15thCharlesII，c。7，calledAnActfortheEncouragementofTrade，hadgivenGreatBritainthemonopolyofsupplyingthecolonieswithallthecommoditiesofthegrowthormanufactureofEurope;andconsequentlywithwines。InacountryofsoextensiveacoastasourNorthAmericanandWestIndiancolonies，whereourauthoritywasalwayssoveryslender，andwheretheinhabitantswereallowedtocarryout，intheirownships，theirnon—enumeratedcommodities，atfirsttoallpartsofEurope，andafterwardstoallpartsofEuropesouthofCapeFinisterre，itisnotveryprobablethatthismonopolycouldeverbemuchrespected;andtheyprobably，atalltimes，foundmeansofbringingbacksomecargofromthecountriestowhichtheywereallowedtocarryoutone。Theyseem，however，tohavefoundsomedifficultyinimportingEuropeanwinesfromtheplacesoftheirgrowth，andtheycouldnotwellimportthemfromGreatBritainwheretheywereloadedwithmanyheavyduties，ofwhichaconsiderablepartwasnotdrawnbackuponexportation。Maderiawine，notbeingaEuropeancommodity，couldbeimporteddirectlyintoAmericaandtheWestIndies，countrieswhich，inalltheirnon—enumeratedcommodities，enjoyedafreetradetotheislandofMaderia。ThesecircumstanceshadprobablyintroducedthatgeneraltasteforMaderiawine，whichourofficersfoundestablishedinallourcoloniesatthecommencementofthewar，whichbeganin1755，andwhichtheybroughtbackwiththemtothemothercountry，wherethatwinehadnotbeenmuchinfashionbefore。
Upontheconclusionofthatwar，in1763（bythe4thGeorgeIII，c。15，sect。12），alltheduties，exceptL310s。，wereallowedtobedrawnbackupontheexportationtothecoloniesofallwines，exceptFrenchwines，tothecommerceandconsumptionofwhichnationalprejudicewouldallownosortofencouragement。TheperiodbetweenthegrantingofthisindulgenceandtherevoltofourNorthAmericancolonieswasprobablytooshorttoadmitofanyconsiderablechangeinthecustomsofthosecountries。
Thesameact，which，inthedrawbackuponallwines，exceptFrenchwines，thusfavouredthecoloniessomuchmorethanothercountries;inthoseuponthegreaterpartofothercommoditiesfavouredthemmuchless。Upontheexportationofthegreaterpartofcommoditiestoothercountries，halftheoldsubsidywasdrawnback。Butthislawenactedthatnopartofthatdutyshouldbedrawnbackupontheexportationtothecoloniesofanycommodities，ofthegrowthormanufactureeitherofEuropeortheEastIndies，exceptwines，whitecalicoes，andmuslins。
Drawbackswere，perhaps，originallygrantedfortheencouragementofthecarryingtrade，which，asthefreightoftheshipsisfrequentlypaidbyforeignersinmoney，wassupposedtobepeculiarlyfittedforbringinggoldandsilverintothecountry。Butthoughthecarryingtradecertainlydeservesnopeculiarencouragement，thoughthemotiveoftheinstitutionwasperhapsabundantlyfoolish，theinstitutionitselfseemsreasonableenough。Suchdrawbackscannotforceintothistradeagreatershareofthecapitalofthecountrythanwhatwouldhavegonetoitofitsownaccordhadtherebeennodutiesuponimportation。Theyonlypreventitsbeingexcludedaltogetherbythoseduties。Thecarryingtrade，thoughitdeservesnopreference，oughtnottobeprecluded，buttobeleftfreelikeallothertrades。Itisanecessaryresourceforthosecapitalswhichcannotfindemploymenteitherintheagricultureorinthemanufacturesofthecountry，eitherinitshometradeorinitsforeigntradeofconsumption。
Therevenueofthecustoms，insteadofsuffering，profitsfromsuchdrawbacksbythatpartofthedutywhichisretained。
Ifthewholedutieshadbeenretained，theforeigngoodsuponwhichtheyarepaidcouldseldomhavebeenexported，norconsequentlyimported，forwantofamarket。Theduties，therefore，ofwhichapartisretainedwouldneverhavebeenpaid。
Thesereasonsseemsufficientlytojustifydrawbacks，andwouldjustifythem，thoughthewholeduties，whetherupontheproduceofdomesticindustry，oruponforeigngoods，werealwaysdrawnbackuponexportation。Therevenueofexcisewouldinthiscase，indeed，sufferalittle，andthatofthecustomsagooddealmore;butthenaturalbalanceofindustry，thenaturaldivisionanddistributionoflabour，whichisalwaysmoreorlessdisturbedbysuchduties，wouldbemorenearlyre—establishedbysucharegulation。
Thesereasons，however，willjustifydrawbacksonlyuponexportinggoodstothosecountrieswhicharealtogetherforeignandindependent，nottothoseinwhichourmerchantsandmanufacturersenjoyamonopoly。Adrawback，forexample，upontheexportationofEuropeangoodstoourAmericancolonieswillnotalwaysoccasionagreaterexportationthanwhatwouldhavetakenplacewithoutit。Bymeansofthemonopolywhichourmerchantsandmanufacturersenjoythere，thesamequantitymightfrequently，perhaps，besentthither，thoughthewholedutieswereretained。Thedrawback，therefore，mayfrequentlybepurelosstotherevenueofexciseandcustoms，withoutalteringthestateofthetrade，orrenderingitinanyrespectmoreextensive。Howfarsuchdrawbackscanbejustified，asaproperencouragementtotheindustryofourcolonies，orhowfaritisadvantageoustothemothercountry，thattheyshouldbeexemptedfromtaxeswhicharepaidbyalltherestoftheirfellowsubjects，willappearhereafterwhenIcometotreatthecolonies。
Drawbacks，however，itmustalwaysbeunderstood，areusefulonlyinthosecasesinwhichthegoodsfortheexportationofwhichtheyaregivenarereallyexportedtosomeforeigncountry;
andnotclandestinelyre—importedintoourown。Thatsomedrawbacks，particularlythoseupontobacco，havefrequentlybeenabusedinthismanner，andhavegivenoccasiontomanyfraudsequallyhurtfulbothtotherevenueandtothefairtrader，iswellknown。
CHAPTERV
OfBountiesBOUNTIESuponexportationare，inGreatBritain，frequentlypetitionedfor，andsometimesgrantedtotheproduceofparticularbranchesofdomesticindustry。Bymeansofthemourmerchantsandmanufacturers，itispretended，willbeenabledtoselltheirgoodsascheap，orcheaperthantheirrivalsintheforeignmarket。Agreaterquantity，itissaid，willthusbeexported，andthebalanceoftradeconsequentlyturnedmoreinfavourofourowncountry。Wecannotgiveourworkmenamonopolyintheforeignaswehavedoneinthehomemarket。Wecannotforceforeignerstobuytheirgoodsaswehavedoneourowncountrymen。Thenextbestexpedient，ithasbeenthought，therefore，istopaythemforbuying。Itisinthismannerthatthemercantilesystemproposestoenrichthewholecountry，andtoputmoneyintoallourpocketsbymeansofthebalanceoftrade。
Bounties，itisallowed，oughttobegiventothosebranchesoftradeonlywhichcannotbecarriedonwithoutthem。Buteverybranchoftradeinwhichthemerchantcansellhisgoodsforapricewhichreplacestohim，withtheordinaryprofitsofstock，thewholecapitalemployedinpreparingandsendingthemtomarket，canbecarriedonwithoutabounty。Everysuchbranchisevidentlyuponalevelwithalltheotherbranchesoftradewhicharecarriedonwithoutbounties，andcannotthereforerequireonemorethanthey。Thosetradesonlyrequirebountiesinwhichthemerchantisobligedtosellhisgoodsforapricewhichdoesnotreplacetohimhiscapital，togetherwiththeordinaryprofit;orinwhichheisobligedtosellthemforlessthanitreallycostshimtosendthemtomarket。Thebountyisgiveninordertomakeupthisloss，andtoencouragehimtocontinue，orperhapstobegin，atradeofwhichtheexpenseissupposedtobegreaterthanthereturns，ofwhicheveryoperationeatsupapartofthecapitalemployedinit，andwhichisofsuchanaturethat，ifallothertradesresembledit，therewouldsoonbenocapitalleftinthecountry。
Thetrades，itistobeobserved，whicharecarriedonbymeansofbounties，aretheonlyoneswhichcanbecarriedonbetweentwonationsforanyconsiderabletimetogether，insuchamannerasthatoneofthemshallalwaysandregularlylose，orsellitsgoodsforlessthanitreallycoststosendthemtomarket。Butifthebountydidnotrepaytothemerchantwhathewouldotherwiseloseuponthepriceofhisgoods，hisowninterestwouldsoonobligehimtoemployhisstockinanotherway，ortofindoutatradeinwhichthepriceofthegoodswouldreplacetohim，withtheordinaryprofit，thecapitalemploymentinsendingthemtomarket。Theeffectofbounties，likethatofalltheotherexpedientsofthemercantilesystem，canonlybetoforcethetradeofacountryintoachannelmuchlessadvantageousthanthatinwhichitwouldnaturallyrunofitsownaccord。
Theingeniousandwell—informedauthorofthetractsuponthecorntradehasshownveryclearlythat，sincethebountyupontheexportationofcornwasfirstestablished，thepriceofthecornexported，valuedmoderatelyenough，hasexceededthatofthecornimported，valuedveryhigh，byamuchgreatersumthantheamountofthewholebountieswhichhavebeenpaidduringthatperiod。This，heimagines，uponthetrueprinciplesofthemercantilesystem，isaclearproofthatthisforcedcorntradeisbeneficialtothenation;thevalueoftheexportationexceedingthatoftheimportationbyamuchgreatersumthanthewholeextraordinaryexpensewhichthepublichasbeenatinordertogetitexported。Hedoesnotconsiderthatthisextraordinaryexpense，orthebounty，isthesmallestpartoftheexpensewhichtheexportationofcornreallycoststhesociety。Thecapitalwhichthefarmeremployedinraisingitmustlikewisebetakenintotheaccount。Unlessthepriceofthecornwhensoldintheforeignmarketsreplaces，notonlythebounty，butthiscapital，togetherwiththeordinaryprofitsofstock，thesocietyisaloserbythedifference，orthenationalstockissomuchdiminished。Buttheveryreasonforwhichithasbeenthoughtnecessarytograntabountyisthesupposedinsufficiencyofthepricetodothis。
Theaveragepriceofcorn，ithasbeensaid，hasfallenconsiderablysincetheestablishmentofthebounty。Thattheaveragepriceofcornbegantofallsomewhattowardstheendofthelastcentury，andhascontinuedtodosoduringthecourseofthesixty—fourfirstyearsofthepresent，Ihavealreadyendeavouredtoshow。Butthisevent，supposingittobeasrealasIbelieveittobe，musthavehappenedinspiteofthebounty，andcannotpossiblyhavehappenedinconsequenceofit。IthashappenedinFrance，aswellasinEngland，thoughinFrancetherewasnotonlynobounty，but，till1764，theexportationofcornwassubjectedtoageneralprohibition。Thisgradualfallintheaveragepriceofgrain，itisprobable，therefore，isultimatelyowingneithertotheoneregulationnortotheother。buttothatgradualandinsensibleriseintherealvalueofsilver，which，inthefirstbookinthisdiscourse，IhaveendeavouredtoshowhastakenplaceinthegeneralmarketofEuropeduringthecourseofthepresentcentury。Itseemstobealtogetherimpossiblethatthebountycouldevercontributetolowerthepriceofgrain。
Inyearsofplenty，ithasalreadybeenobserved，thebounty，byoccasioninganextraordinaryexportation，necessarilykeepsupthepriceofcorninthehomemarketabovewhatitwouldnaturallyfallto。Todosowastheavowedpurposeoftheinstitution。Inyearsofscarcity，thoughthebountyisfrequentlysuspended，yetthegreatexportationwhichitoccasionsinyearsofplentymustfrequentlyhindermoreorlesstheplentyofoneyearfromrelievingthescarcityofanother。
Bothinyearsofplentyandinyearsofscarcity，therefore，thebountynecessarilytendstoraisethemoneypriceofcornsomewhathigherthanitotherwisewouldbeinthehomemarket。
That，intheactualstateoftillage，thebountymustnecessarilyhavethistendencywillnot，Iapprehend，bedisputedbyanyreasonableperson。Butithasbeenthoughtbymanypeoplethatittendstoencouragetillage，andthatintwodifferentways;first，byopeningamoreextensiveforeignmarkettothecornofthefarmer，ittends，theyimagine，toincreasethedemandfor，andconsequentlytheproductionofthatcommodity;
andsecondly，bysecuringtohimabetterpricethanhecouldotherwiseexpectintheactualstateoftillage，ittends，theysuppose，toencouragetillage。Thisdoubleencouragementmust，theyimagine，inalongperiodofyears，occasionsuchanincreaseintheproductionofcornasmayloweritspriceinthehomemarketmuchmorethanthebountycanraiseit，intheactualstatewhichtillagemay，attheendofthatperiod，happentobein。
Ianswer，thatwhateverextensionoftheforeignmarketcanbeoccasionedbythebountymust，ineveryparticularyear，bealtogetherattheexpenseofthehomemarket;aseverybushelofcornwhichisexportedbymeansofthebounty，andwhichwouldnothavebeenexportedwithoutthebounty，wouldhaveremainedinthehomemarkettoincreasetheconsumptionandtolowerthepriceofthatcommodity。Thecornbounty，itistobeobserved，aswellaseveryotherbountyuponexportation，imposestwodifferenttaxesuponthepeople;first，thetaxwhichtheyareobligedtocontributeinordertopaythebounty;andsecondly，thetaxwhicharisesfromtheadvancedpriceofthecommodityinthehomemarket，andwhich，asthewholebodyofthepeoplearepurchasersofcorn，must，inthisparticularcommodity，bepaidbythewholebodyofthepeople。Inthisparticularcommodity，therefore，thissecondtaxisbymuchtheheavierofthetwo。Letussupposethat，takingoneyearwithanother，thebountyoffiveshillingsupontheexportationofthequarterofwheatraisesthepriceofthatcommodityinthehomemarketonlysixpencethebushel，orfourshillingsthequarter，higherthanitotherwisewouldhavebeenintheactualstateofthecrop。Evenuponthisverymoderatesupposition，thegreatbodyofthepeople，overandabovecontributingthetaxwhichpaysthebountyoffiveshillingsuponeveryquarterofwheatexported，mustpayanotheroffourshillingsuponeveryquarterwhichtheythemselvesconsume。But，accordingtotheverywellinformedauthorofthetractsuponthecorntrade，theaverageproportionofthecornexportedtothatconsumedathomeisnotmorethanthatofonetothirty—one。Foreveryfiveshillings，therefore，whichtheycontributetothepaymentofthefirsttax，theymustcontributesixpoundsfourshillingstothepaymentofthesecond。Soveryheavyataxuponthefirstnecessaryoflifemusteitherreducethesubsistenceofthelabouringpoor，oritmustoccasionsomeaugmentationintheirpecuniarywagesproportionabletothatinthepecuniarypriceoftheirsubsistence。Sofarasitoperatesintheoneway，itmustreducetheabilityofthelabouringpoortoeducateandbringuptheirchildren，andmust，sofar，tendtorestrainthepopulationofthecountry。Sofarasitoperatesintheother，itmustreducetheabilityoftheemployersofthepoortoemploysogreatanumberastheyotherwisemightdo，andmust，sofar，tendtorestraintheindustryofthecountry。Theextraordinaryexportationofcorn，therefore，occasionedbythebounty，notonly，ineveryparticularyear，diminishesthehome，justasmuchasitextendstheforeign，marketandconsumption，but，byrestrainingthepopulationandindustryofthecountry，itsfinaltendencyistostuntandrestrainthegradualextensionofthehomemarket;andthereby，inthelongrun，rathertodiminish，thantoaugment，thewholemarketandconsumptionofcorn。
Thisenhancementofthemoneypriceofcorn，however，ithasbeenthought，byrenderingthatcommoditymoreprofitabletothefarmer，mustnecessarilyencourageitsproduction。
Ianswer，thatthismightbethecaseiftheeffectofthebountywastoraisetherealpriceofcorn，ortoenablethefarmer，withanequalquantityofit，tomaintainagreaternumberoflabourersinthesamemanner，whetherliberal，moderate，orscanty，thatotherlabourersarecommonlymaintainedinhisneighbourhood。Butneitherthebounty，itisevident，noranyotherhumaninstitutioncanhaveanysucheffect。Itisnotthereal，butthenominalpriceofcorn，whichcaninanyconsiderabledegreebeaffectedbythebounty。Andthoughthetaxwhichthatinstitutionimposesuponthewholebodyofthepeoplemaybeveryburdensometothosewhopayit，itisofverylittleadvantagetothosewhoreceiveit。
Therealeffectofthebountyisnotsomuchtoraisetherealvalueofcornastodegradetherealvalueofsilver，ortomakeanequalquantityofitexchangeforasmallerquantity，notonlyofcorn，butofallotherhomemadecommodities:forthemoneypriceofcornregulatesthatofallotherhome—madecommodities。
Itregulatesthemoneypriceoflabour，whichmustalwaysbesuchastoenablethelabourertopurchaseaquantityofcornsufficienttomaintainhimandhisfamilyeitherintheliberal，moderate，orscantymannerinwhichtheadvancing，stationary，ordecliningcircumstancesofthesocietyobligehisemployerstomaintainhim。
Itregulatesthemoneypriceofalltheotherpartsoftherudeproduceofland，which，ineveryperiodofimprovement，mustbearacertainproportiontothatofcorn，thoughthisproportionisdifferentindifferentperiods。Itregulates，forexample，themoneypriceofgrassandhay，ofbutcher’smeat，ofhorses，andthemaintenanceofhorses，oflandcarriageconsequently，orofthegreaterpartoftheinlandcommerceofthecountry。
Byregulatingthemoneypriceofalltheotherpartsoftherudeproduceofland，itregulatesthatofthematerialsofalmostallmanufactures。Byregulatingthemoneypriceoflabour，itregulatesthatofmanufacturingartandindustry。Andbyregulatingboth，itregulatesthatofthecompletemanufacture。
Themoneypriceoflabour，andofeverythingthatistheproduceeitheroflandorlabour，mustnecessarilyeitherriseorfallinproportiontothemoneypriceofcorn。
Thoughinconsequenceofthebounty，therefore，thefarmershouldbeenabledtosellhiscornforfourshillingsabushelinsteadofthree—and—sixpence，andtopayhislandlordamoneyrentproportionabletothisriseinthemoneypriceofhisproduce，yetif，inconsequenceofthisriseinthepriceofcorn，fourshillingswillpurchasenomorehomemadegoodsofanyotherkindthanthree—and—sixpencewouldhavedonebefore，neitherthecircumstancesofthefarmernorthoseofthelandlordwillbemuchmendedbythischange。Thefarmerwillnotbeabletocultivatemuchbetter:thelandlordwillnotbeabletolivemuchbetter。Inthepurchaseofforeigncommoditiesthisenhancementinthepriceofcornmaygivethemsomelittleadvantage。Inthatofhome—madecommoditiesitcangivethemnoneatall。Andalmostthewholeexpenseofthefarmer，andthefargreaterpartevenofthatofthelandlord，isinhomemadecommodities。
Thatdegradationinthevalueofsilverwhichistheeffectofthefertilityofthemines，andwhichoperatesequally，orverynearequally，throughthegreaterpartofthecommercialworld，isamatterofverylittleconsequencetoanyparticularcountry。Theconsequentriseofallmoneyprices，thoughitdoesnotmakethosewhoreceivethemreallyricher，doesmakethemreallypoorer。Aserviceofplatebecomesreallycheaper，andeverythingelseremainspreciselyofthesamerealvalueasbefore。
Butthatdegradationinthevalueofsilverwhich，beingtheeffecteitherofthepeculiarsituationorofthepoliticalinstitutionsofaparticularcountry，takesplaceonlyinthatcountry，isamatterofverygreatconsequence，which，farfromtendingtomakeanybodyreallyricher，tendstomakeeverybodyreallypoorer。Theriseinthemoneypriceofallcommodities，whichisinthiscasepeculiartothatcountry，tendstodiscouragemoreorlesseverysortofindustrywhichiscarriedonwithinit，andtoenableforeignnations，byfurnishingalmostallsortsofgoodsforasmallerquantityofsilverthanitsownworkmencanaffordtodo，toundersellthem，notonlyintheforeign，buteveninthehomemarket。
ItisthepeculiarsituationofSpainandPortugalasproprietorsoftheminestobethedistributorsofgoldandsilvertoalltheothercountriesofEurope。Thosemetalsoughtnaturally，therefore，tobesomewhatcheaperinSpainandPortugalthaninanyotherpartofEurope。Thedifference，however，shouldbenomorethantheamountofthefreightandinsurance;and，onaccountofthegreatvalueandsmallbulkofthosemetals，theirfreightisnogreatmatter，andtheirinsuranceisthesameasthatofanyothergoodsofequalvalue。
SpainandPortugal，therefore，couldsufferverylittlefromtheirpeculiarsituation，iftheydidnotaggravateitsdisadvantagesbytheirpoliticalinstitutions。
Spainbytaxing，andPortugalbyprohibitingtheexportationofgoldandsilver，loadthatexportationwiththeexpenseofsmuggling，andraisethevalueofthosemetalsinothercountriessomuchmoreabovewhatitisintheirownbythewholeamountofthisexpense。Whenyoudamupastreamofwater，assoonasthedamisfullasmuchwatermustrunoverthedam—headasiftherewasnodamatall。TheprohibitionofexportationcannotdetainagreaterquantityofgoldandsilverinSpainandPortugalthanwhattheycanaffordtoemploy，thanwhattheannualproduceoftheirlandandlabourwillallowthemtoemploy，incoin，plate，gilding，andotherornamentsofgoldandsilver。Whentheyhavegotthisquantitythedamisfull，andthewholestreamwhichflowsinafterwardsmustrunover。TheannualexportationofgoldandsilverfromSpainandPortugalaccordinglyis，byallaccounts，notwithstandingtheserestraints，verynearequaltothewholeannualimportation。Asthewater，however，mustalwaysbedeeperbehindthedam—headthanbeforeit，sothequantityofgoldandsilverwhichtheserestraintsdetaininSpainandPortugalmust，inproportiontotheannualproduceoftheirlandandlabour，begreaterthanwhatistobefoundinothercountries。Thehigherandstrongerthedam—head，thegreatermustbethedifferenceinthedepthofwaterbehindandbeforeit。Thehigherthetax，thehigherthepenaltieswithwhichtheprohibitionisguarded，themorevigilantandseverethepolicewhichlooksaftertheexecutionofthelaw，thegreatermustbethedifferenceintheproportionofgoldandsilvertotheannualproduceofthelandandlabourofSpainandPortugal，andtothatofothercountries。Itissaidaccordinglytobeveryconsiderable，andthatyoufrequentlyfindthereaprofusionofplateinhouseswherethereisnothingelsewhichwould，inothercountries，bethoughtsuitableorcorrespondenttothissortofmagnificence。Thecheapnessofgoldandsilver，orwhatisthesamething，thedearnessofallcommodities，whichisthenecessaryeffectofthisredundancyofthepreciousmetals，discouragesboththeagricultureandmanufacturesofSpainandPortugal，andenablesforeignnationstosupplythemwithmanysortsofrude，andwithalmostallsortsofmanufacturedproduce，forasmallerquantityofgoldandsilverthanwhattheythemselvescaneitherraiseormakethemforathome。Thetaxandprohibitionoperateintwodifferentways。TheynotonlylowerverymuchthevalueofthepreciousmetalsinSpainandPortugal，butbydetainingthereacertainquantityofthosemetalswhichwouldotherwiseflowoverothercountries，theykeepuptheirvalueinthoseothercountriessomewhatabovewhatitotherwisewouldbe，andtherebygivethosecountriesadoubleadvantageintheircommercewithSpainandPortugal。Opentheflood—gates，andtherewillpresentlybelesswaterabove，andmorebelow，thedam—head，anditwillsooncometoalevelinbothplaces。Removethetaxandtheprohibition，andasthequantityofgoldandsilverwilldiminishconsiderablyinSpainandPortugal，soitwillincreasesomewhatinothercountries，andthevalueofthosemetals，theirproportiontotheannualproduceoflandandlabour，willsooncometoalevel，orveryneartoalevel，inall。ThelosswhichSpainandPortugalcouldsustainbythisexportationoftheirgoldandsilverwouldbealtogethernominalandimaginary。Thenominalvalueoftheirgoods，andoftheannualproduceoftheirlandandlabour，wouldfall，andwouldbeexpressedorrepresentedbyasmallerquantityofsilverthanbefore;buttheirrealvaluewouldbethesameasbefore，andwouldbesufficienttomaintain，command，andemploy，thesamequantityoflabour。Asthenominalvalueoftheirgoodswouldfall，therealvalueofwhatremainedoftheirgoldandsilverwouldrise，andasmallerquantityofthosemetalswouldanswerallthesamepurposesofcommerceandcirculationwhichhademployedagreaterquantitybefore。Thegoldandsilverwhichwouldgoabroadwouldnotgoabroadfornothing，butwouldbringbackanequalvalueofgoodsofsomekindoranother。Thosegoods，too，wouldnotbeallmattersofmereluxuryandexpense，tobeconsumedbyidlepeoplewhoproducenothinginreturnfortheirconsumption。Astherealwealthandrevenueofidlepeoplewouldnotbeaugmentedbythisextraordinaryexportationofgoldandsilver，soneitherwouldtheirconsumptionbemuchaugmentedbyit。Thosegoodswould，probably，thegreaterpartofthem，andcertainlysomepartofthem，consistinmaterials，tools，andprovisions，fortheemploymentandmaintenanceofindustriouspeople，whowouldreproduce，withaprofit，thefullvalueoftheirconsumption。Apartofthedeadstockofthesocietywouldthusbeturnedintoactivestock，andwouldputintomotionagreaterquantityofindustrythanhadbeenemployedbefore。Theannualproduceoftheirlandandlabourwouldimmediatelybeaugmentedalittle，andinafewyearswould，probably，beaugmentedagreatdeal;theirindustrybeingthusrelievedfromoneofthemostoppressiveburdenswhichitatpresentlaboursunder。