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203.: To [WILLIAM EDEN] - Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 6 Correspondence of Adam Smith [1740]

Edition used:

Correspondence of Adam Smith, ed. E. C. Mossner and I. S. Ross, vol. VI of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1987).

Part of: The Glasgow Edition of the Works and Correspondence of Adam Smith, 7 vols.

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


203.

To [WILLIAM EDEN]

MS., Lincoln Savings and Loan Association, Los Angeles 17; unpubl.

Edinburgh, 3 Jan. 1780

Dear Sir

It gives me very great pleasure to hear of the success of your Letters to Lord Carlyle.1 I acknowledge I was not a little anxious about the success of a pamphlet which abused no party and no person and which represented the state of public affairs as less desperate than it is commonly believed to be. The Nation, I hope, is coming both into better humour and better spirits than I believed it to be. Besides the Editions you mention your letters have gone thro’ an edition even in this narrow country.2 I do not know how to thank you for the very honourable mention you have made of me.

It does not occur to me that much can be added to what you have already said. The difficulty of either inventing new taxes or increasing the old, is, I apprehend, the principal cause of our embarrassment. Besides a strict attention to Oeconomy, there appears to me to be three very obvious methods by which the public revenue can be increased without laying any new burthen upon the people.3

The first is a repeal of all bounties upon exportation. These in Scotland and England together amount to about £300,000 a year; exclusive of the Bounty upon Corn which in some years has amounted to a sum equal to all the other bounties. It will probably amount to a very considerable sum this year. When we cannot find taxes to carry on a defensive war; our Merchants ought not to complain if we refuse to tax ourselves any longer in order to support a few feeble and languishing branches of their commerce.

The second is a repeal of all prohibitions of importation, whether absolute or circumstantial, and the substitution of moderate and reasonable duties in the room of them. A prohibition can answer no purpose but that of monopoly. No revenue can arise from it, but in consequence of its violation and of the forfeiture of the prohibited goods. Instead of encouraging, it commonly prevents the improvement and extension of the branch of industry it is meant to promote. Dutch cured Herrings cannot be imported upon forfeiture of Ship and cargo. They are, however, vastly superior to British cured you can scarce imagine the difference. The price of a barrel of british cured Herrings is about a guinea and that of the Dutch, I imagine, is nearly the same. Instead of the prohibition, lay a tax of half a guinea a barrel upon dutch Herrings. Dutch Herrings will, in this case, sell in great Britain at S. 33 or Sh 34 Shillings, a circumstance which will confine them altogether to the tables of the better sort of people. The British curers will immediately endeavour to get this high price, and by superior care and cleanliness to raise their goods to an equality with the Dutch, and this emulation will, probably, in five or six years time raise the manufacture to a degree of improvement, which at present I despair of its attaining to in fifty or Sixty years. Our fisheries may then rival the Dutch in forreign Markets, where at present they cannot come into competition with them, and the manufacture may not only be much improved, but greatly extended. Prohibitions do not prevent the importation of the prohibited goods. They are bought everywhere, in the fair way of trade, by people who are not in the least aware that they are buying them. About a week after I was made a Commissioner of the Customs,4 upon looking over the list of prohibited goods, (which is hung up in every Customhouse and which is well worth your considering) and upon examining my own wearing apparel, I found, to my great astonishment, that I had scarce a stock, a cravat, a pair of ruffles, or a pocket handkerchief which was not prohibited to be worn or used in Great Britain. I wished to set an example and burnt them all. I will not advise you to examine either your own or Mrs. Edens apparel or household furniture, least you be brought into a scrape of the same kind. The sole effect of a prohibition is to hinder the revenue from profiting by the importation. All those high duties, which make it scarce possible to trade fairly in the goods upon which they are imposed, are equally hurtful to the revenue and equally favourable to smuggling, as absolute prohibitions. It is difficult to say what such a repeal of all prohibitions and of such exorbitant duties as are scarce ever fairly paid, might produce. I imagine it would produce a still greater sum than the repeal of all bounties; provided a reasonable tax was always substituted in the room both of the exorbitant tax and of the prohibition.5

The third is a repeal of the prohibition of exporting wool and a substitution of a pretty high duty in the room of it. The Price of wool is now lower than in the time of Edward III; because now it is confined to the market of Great Britain; whereas then the market of the world was open to it. The low price of wool tends to debase the [qua]lity6 of the commodity, and may thus hurt the woollen manufacture in one way, as much as it may benefit it in another. By this prohibition, besides, the interest of the [grower] is evidently sacrificed to the interest of the manufacturer. A real tax is laid upon the one for the benefit of the other. In old times a duty upon the exportation of wool was the most important branch of the Custom.

I heartily congratulate you upon the unexpected good temper of Ireland. I trust in God that Administrators will be wise and steady enough not to disappoint the people in any one thing they have given them reason to expect. Give them as much more as you will, but never throw out a single hint that you wish to give them anything less. Remember me to all friends and believe me to be, with great esteem and regard,

Dear Sir, Most entirely yours

Adam Smith

[1 ]Four Letters to the Earl of Carlisle (London, 1779), in which Eden defended the Government’s American policy.

[2 ]At least three London editions of Eden’s Letters had appeared in 1779. As yet no Scottish edition has been traced.

[3 ]The strength of the views expressed in this letter about bounties and prohibitions is reflected in the additions Smith made to WN ed. 3 (1784) concerning the absurdity of restrictions on trade with France, the herring fishing bounty, and the corn bounty; see the note to Letter 222 addressed to Cadell, dated 7 Dec. 1782; also WN IV.v.a. 29–31.

[4 ]Smith was appointed a Commissioner of Customs for Scotland in Jan. 1778.

[5 ]See Appendix D, comment on No. 11.

[6 ]Torn MS.