Raising The Natural Price Artificially

Whatever police tends to raise the market price above the natural, tends to reduce public opulence.

Dearness and scarcity are the same thing. When commodities are abundant, they can be sold to the inferior ranks of people.

They can afford to give less for them, but not if commodities are scarce. Goods are a convenience to society.

Society thus lives less happily when only the few can have goods.

Therefore, whatever keeps goods above their natural price permanently, reduces a nation’s opulence, such as all taxes on:

• industry, leather, and shoes.
  • People grudge these the most.
• salt, beer, or whatever is the strong drink of the country.
  • All countries have some kind of it.

Man is an anxious animal.

It must have his care swept off by something that can exhilarate the spirits. It is alleged that this tax on beer is an artificial security against drunkenness. But the tax does not prevent drunkeness.

In countries where strong liquors are cheap, such as France and Spain, the people are generally sober. But in northern countries, where they are dear, they do get with spirituous liquors, not with beer.
Monopolies also destroy public opulence.

The price of the monopolized goods is raised above what is sufficient to encourage labour.

Less of a commodity is imported when only certain persons can import it. Its price becomes higher.

Fewer people are supported by it. The concurrence of different labourers, always brings down the price. Monopolies can make whatever price they want.

Examples are the Hudson’s Bay and East India companies. Exclusive privileges of corporations have the same effect. The butchers and bakers can raise the prices of their goods as they please, because only their [180] own corporation is allowed to sell in the market.

Their meat must be taken, whether good or not. Because of this, a magistrate is always needed to fix the prices. For any free commodity, such as broad cloth, there is no need for this. But it is necessary with bakers.

They may agree among themselves to make whatever quantity and price. Even a magistrate is not a good enough expedient for this.

He must always settle the price at the outside, otherwise the remedy would be worse than the disease. Because nobody would apply to these businesses and a famine would ensue. Thus, bakers and brewers always have profitable trades. Whatever raises the market price above the natural price reduces public opulence.

Whatever lowers the market price below the natural price raises public opulence. This can usually be done by any law only on exported manufactures.

An example is the bounty on coarse linen. It makes linen exportable when they are under 12 pence a yard. The public pays most of the price.

It can be sold cheaper to foreigners than what is sufficient for encouraging the labour. In the same way, by the bounty of 5 shillings on the quarter of corn when sold under 40 shillings, as the public pays 1/8 of the price.

It can be sold just so much cheaper at a foreign market. By this bounty, the commodity is rendered more comeatable. More corn is produced.

But then it breaks the natural balance of industry. The disposition to apply to [181] produce corn is not proportioned to the natural cause of the demand, but to both that and the annexed bounty.

It has not only this effect with regard to the particular commodity. but likewise people are called from other productions which are less encouraged, and thus the balance of industry is broken. In the ages of hunting and fishing, provisions were the immediate produce of human labour.

When manufactures were introduced, everything produced needed a lot of time. The weaver needed a long time before he could carry the cloth. which he bought in flax, to the market. Every trade therefore, requires a stock of food, clothes, and lodging to carry it on. Suppose that there is a stock of food, clothes, and lodging in store. The number of people that are employed must be proportional to it. If the price of one commodity is sunk below its natural price, while another is above it, there would be fewer of the stored stock left to support the whole.

On account of the natural connection of all trades in the stock, by allowing bounties to one you take away the stock from the rest. This has been the real consequence of the corn bounty. The price of corn was sunk.

The rent of the farms sinks also. The bounty on corn was laid on at the time of the taxes and was intended to raise the rent. It had the effect for some time, because the tenants were assured of a price for their corn at home and abroad. It encouraged agriculture and lowered the price of corn.

But it raised the price of grass, since the more the corn, the less the grass. The price of grass went up.

Meat prices also went up, because of its dependence on grass. So that if the price of corn is reduced, the price of other commodities is necessarily raised.

The price of corn has fallen from 42 to 35. But the price of hay has risen from 25 to near 50 shillings. This price affects horses which are not so easily kept. Therefore, the price of transportation also went up.

Whatever increases the price of transportation reduces the plenty in the market.

On the whole, therefore, the best police by far is to=

• leave things to their natural course,
• allow no bounties,
• impose no taxes on commodities.