c。 15； sect。 12）； all the duties； except L3 10s。； were allowed to
be drawn back upon the exportation to the colonies of all wines；
except French wines； to the commerce and consumption of which
national prejudice would allow no sort of encouragement。 The
period between the granting of this indulgence and the revolt of
our North American colonies was probably too short to admit of
any considerable change in the customs of those countries。
The same act； which； in the drawback upon all wines； except
French wines； thus favoured the colonies so much more than other
countries； in those upon the greater part of other commodities
favoured them much less。 Upon the exportation of the greater part
of commodities to other countries； half the old subsidy was drawn
back。 But this law enacted that no part of that duty should be
drawn back upon the exportation to the colonies of any
commodities； of the growth or manufacture either of Europe or the
East Indies； except wines； white calicoes； and muslins。
Drawbacks were； perhaps； originally granted for the
encouragement of the carrying trade； which； as the freight of the
ships is frequently paid by foreigners in money； was supposed to
be peculiarly fitted for bringing gold and silver into the
country。 But though the carrying trade certainly deserves no
peculiar encouragement； though the motive of the institution was
perhaps abundantly foolish； the institution itself seems
reasonable enough。 Such drawbacks cannot force into this trade a
greater share of the capital of the country than what would have
gone to it of its own accord had there been no duties upon
importation。 They only prevent its being excluded altogether by
those duties。 The carrying trade； though it deserves no
preference； ought not to be precluded； but to be left free like
all other trades。 It is a necessary resource for those capitals
which cannot find employment either in the agriculture or in the
manufactures of the country； either in its home trade or in its
foreign trade of consumption。
The revenue of the customs； instead of suffering； profits
from such drawbacks by that part of the duty which is retained。
If the whole duties had been retained； the foreign goods upon
which they are paid could seldom have been exported； nor
consequently imported； for want of a market。 The duties；
therefore； of which a part is retained would never have been
paid。
These reasons seem sufficiently to justify drawbacks； and
would justify them； though the whole duties； whether upon the
produce of domestic industry； or upon foreign goods； were always
drawn back upon exportation。 The revenue of excise would in this
case； indeed； suffer a little； and that of the customs a good
deal more； but the natural balance of industry； the natural
division and distribution of labour； which is always more or less
disturbed by such duties； would be more nearly re…established by
such a regulation。
These reasons； however； will justify drawbacks only upon
exporting goods to those countries which are altogether foreign
and independent； not to those in which our merchants and
manufacturers enjoy a monopoly。 A drawback； for example； upon the
exportation of European goods to our American colonies will not
always occasion a greater exportation than what would have taken
place without it。 By means of the monopoly which our merchants
and manufacturers enjoy there； the same quantity might
frequently； perhaps； be sent thither； though the whole duties
were retained。 The drawback； therefore； may frequently be pure
loss to the revenue of excise and customs； without altering the
state of the trade； or rendering it in any respect more
extensive。 How far such drawbacks can be justified； as a proper
encouragement to the industry of our colonies； or how far it is
advantageous to the mother country； that they should be exempted
from taxes which are paid by all the rest of their fellow
subjects； will appear hereafter when I come to treat the
colonies。
Drawbacks； however； it must always be understood； are useful
only in those cases in which the goods for the exportation of
which they are given are really exported to some foreign country；
and not clandestinely re…imported into our own。 That some
drawbacks； particularly those upon tobacco； have frequently been
abused in this manner； and have given occasion to many frauds
equally hurtful both to the revenue and to the fair trader； is
well known。
CHAPTER V
Of Bounties
BOUNTIES upon exportation are； in Great Britain； frequently
petitioned for； and sometimes granted to the produce of
particular branches of domestic industry。 By means of them our
merchants and manufacturers； it is pretended； will be enabled to
sell their goods as cheap； or cheaper than their rivals in the
foreign market。 A greater quantity； it is said； will thus be
exported； and the balance of trade consequently turned more in
favour of our own country。 We cannot give our workmen a monopoly
in the foreign as we have done in the home market。 We cannot
force foreigners to buy their goods as we have done our own
countrymen。 The next 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 as 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 in 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