An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader macos .TXT) 📕

contracts for a certain number of years to deliver a certain quantity of

corn to a dealer. As a contract of this kind saves the farmer the expense

and trouble of marketing, the contract price is generally lower than what is

supposed to be the average market price. Mr King had judged eight-and-twenty

shillings the quarter to be at that time the ordinary contract price in

years of moderate plenty. Before the scarcity occasioned by the late

extraordinary course of bad seasons, it was, I have been assured, the

ordinary contract price in all common years.

In 1688 was granted the parliamentary bounty upon the exportation of corn.

The country gentlemen, who then composed a still greater proportion of the

legislature than they do at present, had felt that the money price of corn

was falling. The bounty was an expedient to raise it artificially to the

high price at which it had frequently been sold in the times of Charles I.

and II. It was to take place, therefore, till wheat was so high as

fortyeight shillings the quarter; that is, twenty shillings, or 5-7ths

dearer than Mr King had, in that very year, estimated the grower’s price to

be in times of moderate plenty. If his calculations deserve any part of the

reputation which they have obtained very universally, eight-and-forty

shillings the quarter was a price which, without some such expedient as the

bounty, could not at that time be expected, except in years of extraordinary

scarcity. But the government of King William was not then fully settled. It

was in no condition to refuse anything to the country gentlemen, from whom

it was, at that very time, soliciting the first establishment of the annual

land-tax,

The value of silver, therefore, in proportion to that of corn, had probably

risen somewhat before the end of the last century; and it seems to have

continued to do so during the course of the greater part of the present,

though the necessary operation of the bounty must have hindered that rise

from being so sensible as it otherwise would have been in the actual state

of tillage.

In plentiful years, the bounty, by occasioning an extraordinary exportation,

necessarily raises the price of corn above what it otherwise would be in

those years. To encourage tillage, by keeping up the price of corn, even in

the most plentiful years, was the avowed end of the institution.

In years of great scarcity, indeed, the bounty has generally been suspended.

It must, however, have had some effect upon the prices of many of those

years. By the extraordinary exportation which it occasions in years of

plenty, it must frequently hinder the plenty of one year from compensating

the scarcity of another.

Both in years of plenty and in years of scarcity, therefore, the bounty

raises the price of corn above what it naturally would be in the actual

state of tillage. If during the sixty-four first years of the present

century, therefore, the average price has been lower than during the

sixty-four last years of the last century, it must, in the same state of

tillage, have been much more so, had it not been for this operation of the

bounty.

But, without the bounty, it may be said the state of tillage would not have

been the same. What may have been the effects of this institution upon the

agriculture of the country, I shall endeavour to explain hereafter, when I

come to treat particularly of bounties. I shall only observe at present,

that this rise in the value of silver, in proportion to that of corn, has

not been peculiar to England. It has been observed to have taken place in

France during the same period, and nearly in the same proportion, too, by

three very faithful, diligent, and laborious collectors of the prices of

corn, Mr Dupr� de St Maur, Mr Messance, and the author of the Essay on the

Police of Grain. But in France, till 1764, the exportation of grain was by

law prohibited ; and it is somewhat difficult to suppose, that nearly the

same diminution of price which took place in one country, notwithstanding

this prohibition. should, in another, be owing to the extraordinary

encouragement given to exportation.

It would be more proper, perhaps, to consider this variation in the average

money price of corn as the effect rather of some gradual rise in the real

value of silver in the European market, than of any fall in the real average

value of corn. Corn, it has already been observed, is, at distant periods of

time, a more accurate measure of value than either silver or, perhaps, any

other commodity. When, after the discovery of the abundant mines of America,

corn rose to three and four times its former money price, this change was

universally ascribed, not to any rise in the real value of corn, but to a

fall in the real value of silver. If, during the sixty-four first years of

the present century, therefore, the average money price of corn has fallen

somewhat below what it had been during the greater part of the last century,

we should, in the same manner, impute this change, not to any fall in the

real value of corn, but to some rise in the real value of silver in the

European market.

The high price of corn during these ten or twelve years past, indeed, has

occasioned a suspicion that the real value of silver still continues to fall

in the European market. This high price of corn, however. seems evidently to

have been the effect of the extraordinary unfavourableness of the seasons,

and ought, therefore, to be regarded, not as a permanent, but as a

transitory and occasional event. The seasons, for these ten or twelve years

past, have been unfavourable through the greater part of Europe; and the

disorders of Poland have very much increased the scarcity in all those

countries, which, in dear years, used to be supplied from that market. So

long a course of bad seasons, though not a very common event, is by no means

a singular one; and whoever has inquired much into the history of the prices

of corn in former times, will be at no loss to recollect several other

examples of the same kind. Ten years of extraordinary scarcity, besides, are

not more wonderful than ten years of extraordinary plenty. The low price of

corn, from 1741 to 1750, both inclusive, may very well be set in opposition

to its high price during these last eight or ten years. From 1741 to 1750,

the average price of the quarter of nine bushels of the best wheat, at

Windsor market, it appears from the accounts of Eton college, was only �

1:13:9 4/5, which is nearly 6s.3d. below the average price of the sixty-four

first years of the present century. The average price of the quarter of

eight bushels of middle wheat comes out, according to this account, to have

been, during these ten years, only � 1:6:8.

Between 1741 and 1750, however, the bounty must have hindered the price of

corn from falling so low in the home market as it naturally would have done.

During these ten years, the quantity of all sorts of grain exported, it

appears from the custom-house books, amounted to no less than 8,029,156

quarters, one bushel. The bounty paid for this amounted to � 1,514,962:17:4

1/2. In 1749, accordingly, Mr Pelham, at that time prime minister, observed

to the house of commons, that, for the three years preceding, a very

extraordinary sum had been paid as bounty for the exportation of corn. He

had good reason to make this observation, and in the following year he might

have had still better. In that single year, the bounty paid amounted to no

less than � 324,176:10:6. {See Tracts on the Corn Trade, Tract 3,} It is

unnecessary to observe how much this forced exportation must have raised the

price of corn above what it otherwise would have been in the home market.

At the end of the accounts annexed to this chapter the reader will find the

particular account of those ten years separated from the rest. He will find

there, too, the particular account of the preceding ten years, of which the

average is likewise below, though not so much below, the general average of

the sixty-four first years of the century. The year 1740, however, was a

year of extraordinary scarcity. These twenty years preceding 1750 may very

well be set in opposition to the twenty preceding 1770. As the former were a

good deal below the general average of the century, notwithstanding the

intervention of one or two dear years; so the latter have been a good deal

above it, notwithstanding the intervention of one or two cheap ones, of

1759, for example. If the former have not been as much below the general

average as the latter have been above it, we ought probably to impute it to

the bounty. The change has evidently been too sudden to he ascribed to any

change in the value of silver, which is always slow and gradual. The

suddenness of the effect can be accounted for only by a cause which can

operate suddenly, the accidental variations of the seasons.

The money price of labour in Great Britain has, indeed, risen during the

course of the present century. This, however, seems to be the effect, not so

much of any diminution in the value of silver in the European market, as of

an increase in the demand for labour in Great Britain, arising from the

great, and almost universal prosperity of the country. In France, a country

not altogether so prosperous, the money price of labour has, since the

middle of the last century, been observed to sink gradually with the average

money price of corn. Both in the last century and in the present, the day

wages of common labour are there said to have been pretty uniformly about

the twentieth part of the average price of the septier of wheat ; a measure

which contains a little more than four Winchester bushels. In Great Britain,

the real recompence of labour, it has already been shewn, the real

quantities of the necessaries and conveniencies of life which are given to

the labourer, has increased considerably during the course of the present

century. The rise in its money price seems to have been the effect, not of

any diminution of the value of silver in the general market of Europe, but

of a rise in the real price of labour, in the particular market of Great

Britain, owing to the peculiarly happy circumstances of the country.

For some time after the first discovery of America, silver would continue to

sell at its former, or not much below its former price. The profits of

mining would for some time be very great, and much above their natural rate.

Those who imported that metal into Europe, however, would soon find that the

whole annual importation could not be disposed of at this high price. Silver

would gradually exchange for a smaller and a smaller quantity of goods. Its

price would sink gradually lower and lower, till it fell to its natural

price ; or to what was just sufficient to pay, according to their natural

rates, the wages of the labour, the profits of the stock, and the rent of

the land, which must be paid in order to bring it from the mine to the

market. In the greater part of the silver mines of Peru, the tax of the king

of Spain, amounting to a tenth of the gross produce, eats up, it has already

been observed, the whole rent of the land. This tax was originally a half;

it soon afterwards fell to a third, then