Front Page Titles (by Subject) CHAP. VI: Exportation. - An Essay of the Impolicy of a Bounty on the Exportation of Grain; and on the Principles which ought to regulate the Commerce of Grain
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CHAP. VI: Exportation. - James Mill, An Essay of the Impolicy of a Bounty on the Exportation of Grain; and on the Principles which ought to regulate the Commerce of Grain 
An Essay of the Impolicy of a Bounty on the Exportation of Grain; and on the Principles which ought to regulate the Commerce of Grain (London: C. and R. Baldwin, 1804).
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But though a bounty on exportation is thus clearly ineffectual to encourage agriculture, and thus particularly calculated to discourage every other branch of industry, and to produce the greatest mischief to the nation; a free exportation appears by no means to deserve the same condemnation. In the first place, “to hinder the farmer,” says Smith, whose language we are always happy to use on every subject of which he has treated, “from sending his goods at all times to the best market, is evidently to sacrifice the ordinary laws of justice, to an idea of public utility, to a sort of reasons of state; an act of legislative authority which ought to be exercised only, which can be pardoned only, in cases of the most urgent necessity.” It is evident that to subject the commerce of grain to any forced Conditions may naturally he expected to have effects very different from those produced by the free, natural, unrestrained course of the trade;, that while the one may be expected to be altogether salutary, the other may be suspected to be very prejudicial.
The effects, however, of an absolute prohibition of the exportation of grain, would be far different from those which are generally supposed, and from those which are held forth by those gentlemen of long views, who preach abroad the doctrine of the bounty on exportation.
It would have no effect whatever to discourage agriculture. It is abundantly evident from the principle of population, that to whatever height the general and medium produce of the land could be brought up, new inhabitants would be produced to consume it, and to give for it an equivalent.
For this medium produce there will always be a competent market, and a competent demand in the home consumption, the surplus produce of an extraordinarily plentiful year, would however regorge. That is never more than sufficient to make up for the deficiency of unfavourable years. However, during the plentiful years, though part of the surplus produce would be reserved to supply this deficiency of the years of scarcity; part would no doubt come into the market, and reduce the price. That part again which was reserved for the years of scarcity would hinder the price from rising so high as then it would otherwise do. By this means the price of corn would be at all times somewhat lower that if exportation were permitted. But what would be the consequence to the farmer? Why the landlord would be obliged to let his land cheaper, and the profits of the farmer would remain the same. It is evident that the natural migration of capital would infallibly produce this effect. But if the profits of the farmer remain the same, the encouragement of his business would remain also the same. What too would be the consequence to the landlord? Neither would he be a loser. The low price of corn would reduce the price of labour and of every thing else; he would find himself just as rich as he was before. He would be able to hire the same number of servants, to build as magnificent a house, to buy as many articles, either of necessity or of luxury as he did before.
What, in the next place, would be the effects of a free exportation? I have already established as an undeniable proposition, that in every country, in ordinary circumstances, where the principle of population is not checked by the vices of the government, no part of the medium produce of grain will ever be exported, but in consequence of some forced regulation. According to this proposition it is only the surplus of an extraordinary year that can go out of the country by a free exportation. Now it is abundantly evident that.whatever quantity of corn is exported in those favourable years, an equal quantity must be imported in unfavourable years. There is by the supposition, a sufficient number of people in the country to consume the whole produce of a medium year; therefore you cannot, by your exportation in a plentiful year, reduce the quantity of corn in the country below that medium produce, without destroying some of your people by hunger; and you must bring the produce of a scanty year up to that medium by importation; or you must allow some of your people to perish in this case too, from hunger.
What then would be the effects of these operations upon prices and produce? It is evident that the exportation of a plentiful year could not raise the price above that of a medium year; because it is the high price of a medium year, and the great demand at home, which prevents any part of that produce from going abroad. The importation in a scanty year would bring the price upon a level with the general free market, common to all the nations of the world, which would always be the same, or nearly the same, with the medium price at home. By this process the price of corn is preserved at all times very near that rate, which an exact proportion between the produce of the country, and the inhabitants of the country requires; a rate, and a process, which, by consequence, have, beyond all contrivances, the most powerful effect to produce that exact proportion. The progress of agriculture too, its gradual improvement, is, in this case, left to the impulse of the general circumstances of the country, to that powerful tendency in population to multiply, as fast as the circumstances of the country will permit.
It is easy to see in what manner this beautiful process is disturbed by the application of bounties. In the first place a bounty upon exportation carries more corn out of the country in the good years, than would go of its own accord. And in the next place, a bounty upon importation in bad years, brings more corn into the country than would come of its own accord. In the one case, we send abroad more corn than we can spare; and in the other, we bring home more than we have any occasion for. There is a direct loss of double freight, insurance, and profit, upon all that corn which is exported, only to be brought back again, and imported only to be sent out again. But this is the least part of the evil. By the one operation we produce for a time a much higher price, than would otherwise be produced, and a proportionate part of the miseries of scarcity. By the other, we produce a much lower price than would otherwise be produced. We thus maintain a perpetual fluctuation, and all the inconveniencies and miseries which violent fluctuation produces both to the farmer and to the people.
To the persons who plead even for a forced exportation, we need adduce no more in favour of a free exportation. But there are persons, and those too, of considerable profundity in the science of political economy, who think that the exportation of corn ought to be altogether, prohibited. If we prohibit the exportation without permitting importation, the effects will be as follows. It is impossible so to preserve the surplus produce of the good years, as to make it compensate the deficiency of the bad. Part of it will find its way into the market in the good years, and be wasted and consumed. This part will be wanting for the supply of the bad -years, and produce all the hardships of great scarcity. By this process too, the most violent fluctuation in prices, must be produced; as the surplus in the market must sink them very low in the good years, and the incurable deficiency raise them enormously high in the bad.
If we prohibit exportation, but allow importation, the deficiency left by the extravagant consumption and waste of the good years, remains always to be supplied by importation during the bad. This is a policy, therefore, directly calculated to render the average production of the country always inadequate to the consumption of the country. It is a policy, too, calculated to produce very great fluctuation; though not altogether so great as the non-importation scheme. The part of the surplus produce, which, during the good years finds its way into the market, must be much greater than under that scheme; since nobody will have nearly so great a motive to reserve it. The depreciation of prices, therefore, will be much greater. Importation, will, indeed, prevent the prices in the bad years from rising so high. But the expence of freight and insurance must render the imported corn considerably above the rate of medium years, and therefore very greatly above the enormously reduced prices of the years of great plenty.