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

present disturbances, {This paragraph was written in the year

1775.} may serve as a proof that this is by no means an

impossible supposition.

CHAPTER IV.

OF DRAWBACKS.

Merchants and manufacturers are not contented with the monopoly

of the home market, but desire likewise the most extensive

foreign sale for their goods. Their country has no jurisdiction

in foreign nations, and therefore can seldom procure them any

monopoly there. They are generally obliged, therefore, to content

themselves with petitioning for certain encouragements to

exportation.

Of these encouragements, what are called drawbacks seem to be the

most reasonable. To allow the merchant to draw back upon

exportation, either the whole, or a part of whatever excise or

inland duty is imposed upon domestic industry, can never occasion

the exportation of a greater quantity of goods than what would

have been exported had no duty been imposed. Such encouragements

do not tend to turn towards any particular employment a greater

share of the capital of the country, than what would go to that

employment of its own accord, but only to hinder the duty from

driving away any part of that share to other employments. They

tend not to overturn that balance which naturally establishes

itself among all the various employments of the society, but to

hinder it from being overturned by the duty. They tend not to

destroy, but to preserve, what it is in most cases advantageous

to preserve, the natural division and distribution of labour in

the society.

The same thing may be said of the drawbacks upon the

re-exportation of foreign goods imported, which, in Great

Britain, generally amount to by much the largest part of the duty

upon importation. By the second of the rules, annexed to the act

of parliament, which imposed what is now called the old subsidy,

every merchant, whether English or alien. was allowed to draw

back half that duty upon exportation ; the English merchant,

provided the exportation took place within twelve months; the

alien, provided it took place within nine months. Wines,

currants, and wrought silks, were the only goods which did not

fall within this rule, having other and more advantageous

allowances. The duties imposed by this act of parliament were, at

that time, the only duties upon the importation of foreign goods.

The term within which this, and all other drawbacks could be

claimed, was afterwards (by 7 Geo. I. chap. 21. sect. 10.)

extended to three years.

The duties which have been imposed since the old subsidy, are,

the greater part of them, wholly drawn back upon exportation.

This general rule, however, is liable to a great number of

exceptions; and the doctrine of drawbacks has become a much less

simple matter than it was at their first institution.

Upon the exportation of some foreign goods, of which it was

expected that the importation would greatly exceed what was

necessary for the home consumption, the whole duties are drawn

back, without retaining even half the old subsidy. Before the

revolt of our North American colonies, we had the monopoly of the

tobacco of Maryland and Virginia. We imported about ninety-six

thousand hogsheads, and the home consumption was not supposed to

exceed fourteen thousand. To facilitate the great exportation

which was necessary, in order to rid us of the rest, the whole

duties were drawn back, provided the exportation took place

within three years.

We still have, though not altogether, yet very nearly, the

monopoly of the sugars of our West Indian islands. If sugars are

exported within a year, therefore, all the duties upon

importation are drawn back; and if exported within three years,

all the duties, except half the old subsidy, which still

continues to be retained upon the exportation of the greater part

of goods. Though the importation of sugar exceeds a good deal

what is necessary for the home consumption, the excess is

inconsiderable, in comparison of what it used to be in tobacco.

Some goods, the particular objects of the jealousy of our own

manufacturers, are prohibited to be imported for home

consumption. They may, however, upon paying certain duties,be

imported and warehoused for exportation. But upon such

exportation no part of these duties is drawn back. Our

manufacturers are unwilling, it seems, that even this restricted

importation should be encouraged, and are afraid lest some part

of these goods should be stolen out of the warehouse, and thus

come into competition with their own. It is under these

regulations only that we can import wrought silks, French

cambrics and lawns, calicoes, painted, printed, stained, or dyed,

etc.

We are unwilling even to be the carriers of French goods, and

choose rather to forego a profit to ourselves than to suffer

those whom we consider as our enemies to make any profit by our

means. Not only half the old subsidy, but the second twentyfive

per cent. is retained upon the exportation of all French goods.

By the fourth of the rules annexed to the old subsidy, the

drawback allowed upon the exportation of all wines amounted to a

great deal more than half the duties which were at that time paid

upon their importation ; and it seems at that time to have been

the object of the legislature to give somewhat more than ordinary

encouragement to the carrying trade in wine. Several of the other

duties, too which were imposed either at the same time or

subsequent to the old subsidy, what is called the additional

duty, the new subsidy, the one-third and two-thirds subsidies,

the impost 1692, the tonnage on wine, were allowed to be wholly

drawn back upon exportation. All those duties, however, except

the additional duty and impost 1692, being paid down in ready

money upon importation, the interest of so large a sum occasioned

an expense, which made it unreasonable to expect any profitable

carrying trade in this article. Only a part, therefore of the

duty called the impost on wine, and no part of the twentyfive

pounds the ton upon French wines, or of the duties imposed in

1745, in 1763, and in 1778, were allowed to be drawn back upon

exportation. The two imposts of five per cent. imposed in 1779

and 1781, upon all the former duties of customs, being allowed to

be wholly drawn back upon the exportation of all other goods,

were likewise allowed to be drawn back upon that of wine. The

last duty that has been particularly imposed upon wine, that of

1780, is allowed to be wholly drawn back ; an indulgence which,

when so many heavy duties are retained, most probably could never

occasion the exportation of a single ton of wine. These rules

took place with regard to all places of lawful exportation,

except the British colonies in America.

The 15th Charles II, chap. 7, called an act for the encouragement

of trade, had given Great Britain the monopoly of supplying the

colonies with all the commodities of the growth or manufacture of

Europe, and consequently with wines. In a country of so extensive

a coast as our North American and West Indian colonies, where our

authority was always so very slender, and where the inhabitants

were allowed to carry out in their own ships their non-enumerated

commodities, at first to all parts of Europe, and afterwards to

all parts of Europe south of Cape Finisterre, it is not very

probable that this monopoly could ever be much respected ; and

they probably at all times found means of bringing back some

cargo from the countries to which they were allowed to carry out

one. They seem, however, to have found some difficulty in

importing European wines from the places of their growth; and

they could not well import them from Great Britain, where they

were loaded with many heavy duties, of which a considerable part

was not drawn back upon exportation. Madeira wine, not being an

European commodity, could be imported directly into America and

the West Indies, countries which, in all their non-enumerated

commodities, enjoyed a free trade to the island of Madeira. These

circumstances had probably introduced that general taste for

Madeira wine, which our officers found established in all our

colonies at the commencement of the war which began in 1755, and

which they brought back with them to the mother country, where

that wine had not been much in fashion before. Upon the

conclusion of that war, in 1763 (by the 4th Geo. III, chap. 15,

sect. 12), all the duties except �3, 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 drawbacks 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 ship 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 to 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