Production Bounties -- Herring Bounty

²⁵ A bounty on production would more directly encourage the production of any commodity than an export bounty.

It would impose only one tax on the people which is paid as the bounty. It would lower the price of the commodity in the home market. Instead of imposing a second tax on the people, it might at least repay them for the first tax they paid.

Production bounties have been very rarely granted.

The prejudices established by the commercial system taught us to believe that national wealth arises more from exportation than from production. Exportation has thus been more favoured as the more immediate means of bringing money into the country. Production bounties were found to be more liable to frauds than bounties on exportation. I do not know how far this is true. Export bounties are known to have been abused to many frauds.

Merchants and manufacturers were the great inventors of all these expedients. They do not want the home market to be overstocked with their goods. A production bounty might create this oversupply.

An export bounty prevents this oversupply by:

• sending the surplus abroad and
• keeping up the price of what remains at home

Of all the expedients of the mercantile system, export bounties are their favorite.

I knew undertakers who agree privately among themselves to give a bounty out of their own pockets to export their goods.

This expedient succeeded so well. It more than doubled the price of their goods in the home market despite a very big increase in production.

The bounty on corn production must have been wonderfully different if it lowered the money price of corn.

²⁶ Production bounties have been granted sometimes.

The tonnage bounties given to the white-herring and whale-fisheries are examples of production bounties. They render those goods cheaper at home than normal.

In other respects, they have the same effects as export bounties.

• They cause some of the country’s capital to be employed in bringing goods which do not repay their cost.

²⁷ Those tonnage bounties do not contribute to the nation’s opulence.

However, it is perhaps thought to contribute to the nation’s defence by increasing the number of its sailors and shipping. This could be done through such bounties at a much smaller cost than by keeping up a big navy.

²⁸ Despite these favourable allegations, I believe the legislature was very grossly imposed on, because of the following.

²⁹ The herring buss bounty seems too large.

³⁰ From the start of the winter fishing in 1771 to its end in 1781, the tonnage bounty on the herring buss fishery was 360 pence the ton.

During these 11 years, Scotland’s herring buss fishery caught a total of 378,347 barrels.

The herrings caught and cured at sea are called sea sticks. They must be repacked with salt to convert them to merchantable herrings.

Three barrels of sea sticks are usually repacked into two barrels of merchantable herrings.

During these 11 years:

• only 252,231.33 barrels of merchantable herrings were caught. [378,347 * 2/3]
• the tonnage bounties paid was 37,311,252 pence

This equated to:

• 98.25 pence on every barrel of sea sticks, or [37,311,252 / 378,347]
• 147.75 pence on every barrel of merchantable herrings [37,311,252 / 252,231]

³¹ Scotch and foreign salt are used to cure these herrings.

Both salts are delivered duty-free to the fish-curers.

• The excise duty on Scotch salt is presently 18 pence.
• The excise duty on foreign salt is 120 pence the bushel.

A barrel of herrings requires about 1.25 bushels of foreign salt or 2 bushels of Scotch salt.

If the herrings are to be exported, this duty is not paid.

If they are to be consumed at home, only 12 pence per barrel is paid, regardless of the salt used. The 12 pence was based on the excise duty on Scotch salt.

In Scotland, foreign salt is mostly used for the curing of fish. From April 5, 1771 to the April 5, 1782, 936,974 bushels of foreign salt was imported, at 84 pounds the bushel. 168,226 barrels of Scotch salt were delivered to the fish-curers, at 56 pounds the bushel.

It appears that foreign salt is mainly used in the fisheries. There is a bounty of 32 pence on every barrel of herrings exported. More than 2/3 of the buss-caught herrings are exported.

Put all these together and you will find that, during these 11 years, buss-caught herrings cured with Scotch salt and exported, cost government 215.75 pence per barrel.

When entered for home consumption, it cost the government 171.75 pence.
Every barrel cured with foreign salt and exported has cost government 329.75 pence.
When entered for home consumption, it cost the government 285.75 pence.

The price of a barrel of good merchantable herrings is about a guinea at an average.