Front Page Titles (by Subject) CHAP. III: Effects of the Bounty on the Rent of Land - Selected Economic Writings
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CHAP. III: Effects of the Bounty on the Rent of Land - James Mill, Selected Economic Writings 
Selected Economic Writings, ed. Donald Winch (Edinburgh: Oliver Boyd for the Scottish Economic Society, 1966).
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Effects of the Bounty on the Rent of Land
The Intention of the bounty on the exportation of corn is to prevent the price of corn from ever falling so low as otherwise it would often naturally do. This either raises the average price of corn in the country, or it does not. The advocates for the bounty sometimes express themselves as if it did not; for they are not very consistent with themselves on this point, sometimes endeavouring to recommend their doctrine by the popular promise of average cheapness; though at other times it suits their argument to shew the opposite face of the subject. If the bounty however does not raise the average price of corn, it is impossible it can encourage the production. This is a proposition which I think I may save myself the trouble of proving. It is not the having a greater price than usual for a commodity one year, compensated by as great a deficiency the next, which tends to encourage the production of any commodity. It is the average profit on the trade which determines the value of the trade. A high average profit encourages it. A low average profit the contrary. If the bounty then lowers the average price of corn, it must of necessity discourage the raising of corn.
I believe, however, that the advocates for the bounty will easily give up this opinion. They will admit that the bounty raises to a certain degree the average price of corn. This high price they say would so encourage the raising of corn, that we should have a considerable quantity to export, which would bring us a good deal of money in all good years, and save us from scarcity in all bad ones. Let us consider how far these effects can be produced by the bounty. We only desire too the advocates to consider a very obvious principle. It is nothing but that common competition which regulates every trade, and of which it is astonishing that they should be so unable to perceive the effects. This high price of corn immediately raises the profit of farming stock and labour somewhat above the ordinary rate of profit in other employments. This as immediately creates a competition. The demand for farms becomes greater. The landlords are enabled to let their land higher, till farming profit comes again on a level with the profit of the general business of the country. Here then we are again in the very situation we were in before. Agriculture is a little more animated for a few years, till things find their proper level; and then it returns exactly to the condition from which it set out. The value of land is somewhat raised; and the price of corn has become higher; and these are the only effects. The first is an effect neither good nor bad, but as it is connected with the other; the last is one of the most unfortunate events that can befall any country. Nothing is more certain than that the landlords have it in their power to prevent the profits of the farmers from ever remaining any long time above the lowest, which is consistent with the nature of their business; that is, the rate common in the same country in other businesses equally agreeable. But surely no man in his senses can say that the farmer, if his profits are always the same, is in the smallest degree more encouraged when the price of corn is high than when it is low. The bounty then has no permanent influence to increase the production of corn. Its sole effect is to put money into the pockets of the proprietors of land, by taking it out of the pockets of all the other classes of the people; and to enrich a few present farmers who happen to have long leases; who will waste the ground with all their might to bring corn out of it, while these leases last; but will beware not to execute any expensive improvements, because they know they will be obliged to pay dearly for all their advantages, as soon as they have the lease to renew.