Chap. 5b: Bounties and Corn Valuation

16 The degradation in the value of silver caused by the fertility of the mines has very little consequence to any country.

  • The consequent rise of all money prices, does not make sellers of silver richer.
    • It makes them really poorer.
    • A service of plate becomes really cheaper.
    • Everything else remains precisely of the same real value as before.


17 But that local degradation in the value of silver caused by a country’s political institutions has a very great consequence which makes everybody really poorer.

  • The rise in the money price of all commodities in a country discourages its industry.
  • It allows foreign nations to:
    • produce those commodities with less money, and
    • consequently, undersell the country in the foreign and home markets.


18 This is the situation of Spain and Portugal.

  • They are the proprietors of the mines and the distributors of gold and silver to all European countries.
  • Those metals are naturally cheaper in Spain and Portugal than in any part of Europe.
  • The difference should be no more than the cost of the freight and insurance.
    • The freight of gold and silver is no great matter due to their small bulk.
    • Their insurance is the same as other goods of equal value.
  • Spain and Portugal could suffer very little from their situation if their institutions did not aggravate its disadvantages.

19 Spain taxes the exportation of gold and silver while Portugal bans it.

  • They load that exportation with the cost of smuggling.
    • They raise the value of those metals in other countries by this cost.


  • When you dam up a stream of water, water must run over as soon as the dam is full, as much as if there was no dam at all.
    • The ban on exportation cannot keep more gold and silver in Spain and Portugal than what is needed for coin, plate, gilding, and other ornaments.
      • When they have got this amount, the dam is full.
      • The stream which flows in must run over.
  • Despite the restraints, the exports of gold and silver from Spain and Portugal is nearly equal to its imports.
    • The water must always be deeper behind the dam-head than before it.
    • Likewise, the amount of gold and silver detained in Spain and Portugal must be more than the gold and silver in other countries, relative to their national annual produce.
    • The higher and stronger the dam-head, the greater the difference in the depth of water inside and outside of it.
    • The higher the tax:
      • the higher the penalties imposed by the ban
      • the more vigilant and severe must the police be
      • the greater must be the difference in the proportion of gold and silver to the national produce of Spain and Portugal compared to that of other countries.
    • The difference is very considerable.
      • There is a profusion of plate in houses in Spain and Portugal where nothing could be suitable in other countries.
  • The cheapness of gold and silver is the same thing as the dearness of all commodities.
    • The cheapness of those metals is the effect of this redundancy of those metals.
    • It discourages the agriculture and manufactures of Spain and Portugal.
    • It enables foreign nations to supply them rude and manufactured produce for fewer gold and silver than what Spain and Portugal can themselves raise or make at home.
  • The tax and prohibition operate in two ways:
    1. They very much lower the value of the precious metals in Spain and Portugal
      • They detain an amount which would have flown to other countries.
    2. They keep up the value of gold and silver in other countries higher than natural
      • They give those countries a double advantage in their commerce with Spain and Portugal.
  • Open the floodgates, and there will be less water above and more below the dam-head.
    • It will soon come to a level in both places.
  • Remove the tax and the prohibition and the amount of gold and silver will:
    • reduce considerably in Spain and Portugal
    • increase in other countries
  • The value of those metals will soon come to a level in all countries, proportional to the national annual produce of each.
    • The loss which Spain and Portugal sustains by this exportation would be nominal and imaginary.
    • The nominal value of their goods and their national annual produce would fall.
      • It would be expressed in fewer silver than before.
    • But their real value would be the same.
      • It would maintain, command, and employ, the same amount of labour.
    • As the nominal value of their goods would fall, the real value of the remaining gold and silver would rise.
      • Fewer of those metals would be needed for commerce and for circulating commodities than before.
  • The gold and silver which would go abroad would not go abroad for nothing.
    • They would would bring back goods of equal value.
    • Those goods would not all be goods of luxury and expense to be consumed by idle people who produce nothing in return.
      • This exportation of gold and silver will not increase the real wealth and revenue of idle people.
      • It will not increase their consumption.
    • Most of the imported goods would probably consist in raw materials, tools, and provisions, for the employment of industrious people.
      • Those people would reproduce the full value of their consumption, with a profit.
  • A part of society’s dead stock would thus be turned into active stock.
    • It would mobilize more industry than before.
  • Their national annual produce would immediately increase a little, but would increase very much after a few years.
    • Their industry would be relieved from a very oppressive burden.


20 The bounty on corn exportation operates exactly as this absurd policy of Spain and Portugal.

  • It renders our corn dearer in the home market and cheaper overseas.
    • The expensive local corn raises the value of silver a little at home.
      • It hinders our own workers from furnishing their goods for fewer silver.
      • This renders our manufactures dearer in every market.
    • The cheap local corn lowers the value of silver considerably overseas
      • This enables foreigners, particularly the Dutch, to eat our corn cheaper than our own people can do.
        • This is assured by the excellent authority of Sir Matthew Decker.
      • It enables the Dutch to furnish their goods for fewer silver.
        • This renders Dutch manufactures cheaper in every market.
        • It gives Dutch industry a double advantage over our own.


21 The bounty raises the nominal price of our corn in the home market more than its real value.

  • It only increases the amount of silver which it will exchange for.
  • It discourages our manufactures without rendering any considerable service to our farmers or country gentlemen, other than to put a little more money into their pockets.
    • Perhaps it will be difficult to persuade them that this is not rendering them a very considerable service.
    • But if this money sinks in its value as it rises in its quantity, the service will be nominal and imaginary.


22 Perhaps only the corn merchant, the exporter and importer of corn, gain advantage from the bounty.

  • In years of plenty, the bounty created a more exportation than without the bounty.
  • By hindering the plenty of one year from relieving the scarcity of another, it created more importation in years of scarcity than what was necessary.
  • It increased the business of the corn merchant in both cases.
  • In years of scarcity, the bounty enabled the corn merchant:
    • to import more corn
    • to sell more corn at a higher price and get a bigger profit because the plenty of one year was hindered from relieving the scarcity of another
  • I have observed the greatest zeal for the continuance of the bounty in corn merchants.


Corn Valuation

23 Our farmers seem to have imitated our manufacturers when they established the bounty.

  • By high duties, they secured to themselves the monopoly of the home market.
  • By export bounties, they tried to prevent that market from being overstocked.
    • By both, they tried to raise their commodity’s real value, in the same way our manufacturers raised the real value of their manufactured goods through duties and export bounties.
  • Perhaps they did not understand the great natural difference between corn and manufactured goods.
    • You raise the nominal and real price of manufactured goods when you enable our manufacturers to sell their goods for a better price through:
      • the monopoly of the home market, or
      • an export bounty
    • You increase the nominal and real profit, the real wealth and revenue of those manufacturers.
      • You enable them to live better or employ more labour.
      • You really encourage those manufactures.
      • You direct more of the country’s industry towards them.
    • But when you raise the nominal or money-price of corn through bounties or home monopolies, you do not raise its real value.
      • You do not:
        • increase the real wealth or revenue of our farmers
        • encourage the growth of corn
          • Because you do not enable farmers to maintain and employ more labourers in raising it.
  • “The nature of things has stamped upon corn a real value which cannot be altered by merely altering its money price.”
    • “No bounty upon exportation, no monopoly of the home market, can raise that value.”
    • “The freest competition cannot lower it.”
    • That value is equal to the amount of labour which it can maintain.
    • That value depends on the liberal, moderate, or scanty way, in which labour is commonly maintained in a place.
  • Cloth is not the regulating commodity by which the real value of all other commodities must be finally measured and determined.
    • “corn is.”
  • “The real value of every other commodity is finally measured and determined by the proportion which its average money price bears to the average money price of corn.”
    • “The real value of corn does not vary with those variations in its average money price, which sometimes occur from one century to another.”
    • “It is the real value of silver which varies with them.”


24 Export bounties on any home-made commodity are liable to:

  1. The general objection made to all the expedients of the mercantile system
    • The objection of forcing some of the country’s industry into a less advantageous channel.
  1. The particular objection of forcing it into a channel that is actually disadvantageous
    • The trade which cannot be carried on without a bounty is a losing trade.
    • The bounty on corn exports is liable to this further objection.
      • It cannot promote the raising of a particular commodity.
    • When our farmers demanded the bounty, they imitated our merchants and manufacturers.
      • They did not completely comprehend their own interest as the merchants and manufacturers understood their own.
      • They:
        • loaded the public revenue with a very big expence,
        • imposed a very heavy tax on the people,
        • did not increase the real value of their own commodity,
        • somewhat discouraged the country’s general industry by lowering the real value of silver, and
        • retarded the improvement of their own lands which depend on that industry.


Production Bounties

25 A bounty on production would more directly encourage the production of any commodity than an export bounty.

  • It would impose only one tax on the people which is paid as the bounty.
    • It would lower the price of the commodity in the home market.
    • Instead of imposing a second tax on the people, it might at least repay them for the first tax they paid.
  • Production bounties have been very rarely granted.
    • The prejudices established by the commercial system taught us to believe that national wealth arises more from exportation than from production.
      • Exportation has thus been more favoured as the more immediate means of bringing money into the country.
      • Production bounties were found to be more liable to frauds than bounties on exportation.
        • I do not know how far this is true.
        • Export bounties are known to have been abused to many frauds.
  • Merchants and manufacturers were the great inventors of all these expedients.
    • They do not want the home market to be overstocked with their goods.
      • A production bounty might create this oversupply.
      • An export bounty prevents this oversupply by:
        • sending the surplus abroad and
        • keeping up the price of what remains at home
    • Of all the expedients of the mercantile system, export bounties are their favorite.
      • I knew undertakers who agree privately among themselves to give a bounty out of their own pockets to export their goods.
      • This expedient succeeded so well.
        • It more than doubled the price of their goods in the home market despite a very big increase in production.
  • The bounty on corn production must have been wonderfully different if it lowered the money price of corn.

26 Production bounties have been granted sometimes.

  • The tonnage bounties given to the white-herring and whale-fisheries are examples of production bounties.
    • They render those goods cheaper at home than normal.
  • In other respects, they have the same effects as export bounties.
    • They cause some of the country’s capital to be employed in bringing goods which do not repay their cost.

27 Those tonnage bounties do not contribute to the nation’s opulence.

  • However, it is perhaps thought to contribute to the nation’s defence by increasing the number of its sailors and shipping.
  • This could be done through such bounties at a much smaller cost than by keeping up a big navy.

28 Despite these favourable allegations, I believe the legislature was very grossly imposed on, because of the following.

  1. 29 The herring buss bounty seems too large.
  • 30 From the start of the winter fishing in 1771 to its end in 1781, the tonnage bounty on the herring buss fishery was 360 pence the ton.
    • During these 11 years, Scotland’s herring buss fishery caught a total of 378,347 barrels.
  • The herrings caught and cured at sea are called sea sticks.
    • They must be repacked with salt to convert them to merchantable herrings.
  • Three barrels of sea sticks are usually repacked into two barrels of merchantable herrings.
  • During these 11 years:
    • only 252,231.33 barrels of merchantable herrings were caught. [378,347 * 2/3]
    • the tonnage bounties paid was 37,311,252 pence
      • This equated to:
        • 98.25 pence on every barrel of sea sticks, or [37,311,252 / 378,347]
        • 147.75 pence on every barrel of merchantable herrings [37,311,252 / 252,231]

31 Scotch and foreign salt are used to cure these herrings.

  • Both salts are delivered duty-free to the fish-curers.
    • The excise duty on Scotch salt is presently 18 pence.
    • The excise duty on foreign salt is 120 pence the bushel.
  • A barrel of herrings requires about 1.25 bushels of foreign salt or 2 bushels of Scotch salt.
  • If the herrings are to be exported, this duty is not paid.
    • If they are to be consumed at home, only 12 pence per barrel is paid, regardless of the salt used.
    • The 12 pence was based on the excise duty on Scotch salt.
  • In Scotland, foreign salt is mostly used for the curing of fish.
    • From April 5, 1771 to the April 5, 1782, 936,974 bushels of foreign salt was imported, at 84 pounds the bushel.
    • 168,226 barrels of Scotch salt were delivered to the fish-curers, at 56 pounds the bushel.
  • It appears that foreign salt is mainly used in the fisheries.
  • There is a bounty of 32 pence on every barrel of herrings exported.
    • More than 2/3 of the buss-caught herrings are exported.
  • Put all these together and you will find that, during these 11 years, buss-caught herrings cured with Scotch salt and exported, cost government 215.75 pence per barrel.
    • When entered for home consumption, it cost the government 171.75 pence.
    • Every barrel cured with foreign salt and exported has cost government 329.75 pence.
    • When entered for home consumption, it cost the government 285.75 pence.
  • The price of a barrel of good merchantable herrings is about a guinea at an average.
  1. 32 The bounty to the white-herring fishery is a tonnage bounty.
  • It is proportioned to the burden of the ship, not to her diligence or success in the fishery.
  • Vessels too commonly fit out for catching the bounty, not the fish.
  • In 1759, the bounty was at 600 pence the ton.
    • The whole Scotland buss fishery brought in only four barrels of sea sticks.
    • In that year, each barrel of sea sticks cost the government 27,300 pence in bounties.
    • Each barrel of merchantable herrings cost 38,250 pence.


  1. 33 The tonnage bounty is given to the fishing of white-herrings, which is not well adapted to Scotland’s situation.
Herring buss fishery

A Herring buss (ship)

  • This mode of fishing was borrowed from Holland.
    • It used busses or decked vessels from 20 to 80 tons burden.
  • Holland lies far from where herrings abound.
    • They can only fish them from decked vessels which can carry water and provisions for a distant voyage.
  • But the Hebrides, the islands of Shetland, and the northern coasts of Scotland, where herrings abound, are intersected by arms of the sea.
    • These arms run into the land and are called sea-lochs.
    • The herrings live in these sea-lochs in certain seasons.
    • I am assured that the visits of herrings and other fishes are not regular and constant.
  • A boat fishery seems the best mode adapted to Scotland’s situation.
    • In boat fishery, the fishers carry the herrings on shore to be cured or consumed fresh as fast as they are taken.
  • But the great encouragement of a bounty of 360 pence the ton to the buss fishery is necessarily a discouragement to the boat fishery.
    • The boat fishery has no bounty.
      • It cannot bring its cured fish to market on the same terms as the buss fishery.
    • Before the establishment of the buss bounty, the boat fishery was very big.
      • It employed the same number of seamen as the buss fishery presently employs.
      • The boat fishery is almost entirely gone now.
  • I do not know exactly how large the boat fishery was before the bounty because no account was taken by the customs officers.


  1. 34 In many parts of Scotland during certain seasons, herrings make a big part of the people’s food.
  • A bounty which lowered their price in the home market might contribute much to the relief of many people.
    • But the herring buss bounty contributes to no such good purpose.
      • It has ruined the boat fishery which was best adapted to supply the home market.
  • The additional bounty of 32 pence the barrel on exportation carries more than 2/3 of the produce of the buss fishery abroad.
    • Before the establishment of the buss bounty 30-40 years ago, the common price of white herrings was 180 pence the barrel.
    • Before the boat fishery was entirely ruined 10-15 years ago, the price was from 204-240 pence the barrel.
    • In the last five years, it has been at an average of 300 pence the barrel.
      • This high price may have been due to the real scarcity of the herrings on the coast of Scotland.
  • I must observe too that:
    • The cask or barrel is usually sold with the herrings.
    • The price of casks has doubled from 36 pence to 72 pence since the start of the American war.
  • These former prices are not uniform and consistent.
  • I was assured that more than 50 years ago, a guinea or 252 pence was the usual price of a barrel of good merchantable herrings.
    • This may still be its average price.
  • I think all accounts agree that the price was not lowered in the home market in consequence of the buss bounty.


35 When the undertakers of fisheries sell their fish at a higher price because of such bounties, we might expect that their profits would be very great.

  • I believe their profits are generally very small.
  • “The usual effect of such bounties is to encourage rash undertakers to adventure in a business which they do not understand.”
    • What they lose by their own negligence more than compensates what they can gain by the government’s liberality.
  • In 1750, the 23rd George II chap. 24. created a joint-stock company.
    • Before that, the same act gave the bounty of 360 pence the ton to encourage the white herring fishery.
    • This company had a capital of £500,000.
    • Its subscribers were entitled to £3 a year for 14 years, for every £100 they subscribed and paid in.
      • This £3 was to be paid by the receiver-general of the customs in equal half-yearly payments.
      • This was above all the other encouragements:
        • the tonnage bounty,
        • the export bounty of 32 pence the barrel, and
        • the delivery of British and foreign salt duty free.
  • Besides this big company, the residence of its governor and directors was to be in London.
    • It was declared lawful to form different fishing-chambers in all the kingdom’s outports provided:
      • not less than £10,000 was subscribed into the capital of each chamber, and
      • the amount subscribed was to be managed at its own risk, profit, and loss.
    • The same annuity and the same encouragements of the big company were given to those inferior chambers.
  • The subscription of the big company was soon filled up.
    • Several fishing-chambers were formed.
  • Despite all these encouragements, almost all those big and small companies lost all or most of their capitals.
    • The white-herring fishery is now almost entirely done by private adventurers.


36 If any manufacture was necessary for national defence, it might not always be prudent to depend on our neighbours for its supply.

  • If such manufacture could not be supported at home, it might be reasonable to tax all other industries to support it.
  • The export bounties on British-made sail-cloth and gunpowder may perhaps be vindicated on this principle.


37 It can very seldom be reasonable to tax the people’s industry to support some class of manufacturers.

  • Yet in the wantonness of great prosperity, the public enjoys a greater revenue than it knows what to do with it.
    • Giving such bounties to their favourite manufactures may be as natural as to incur any other idle expence.
  • In public and private expences, great wealth may frequently be admitted as an apology for great folly.
    • But it would be absurd to continue such profusion in times of difficulty and distress.


38 A bounty is sometimes no more than a drawback.

  • A drawback is not liable to the same objections as a proper bounty.
  • For example, the bounty on exported refined sugar may be considered as a drawback of the duties on brown and muscovado sugars from which it is made.
    • The bounty on exported processed silk may be considered a drawback of the duties on imported raw silk.
    • The bounty on exported gunpowder may be considered a drawback of the duties on imported brimstone and saltpetre.
  • In the language of the customs, those allowances are only called drawbacks when they are given to goods exported in the same form as they were imported.
    • When that form has been altered as to come under a new denomination, they are called bounties.


39 Premiums given by the public to artists and manufacturers who excel in their occupations are not liable to the same objections as bounties.

  • Premiums keep up the emulation of those workers by encouraging extraordinary dexterity and ingenuity.
  • Premiums are not big enough to turn more of the country’s capital towards any employment than normal.
    • They do not overturn the natural balance of employments.
    • They render the work done in each employment as perfect and complete as possible.
  • The cost of premiums is very trifling.
  • The cost of bounties is very great.
    • The corn bounty alone has cost the public more than £300,000 in one year.


Words: 3,788

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