The Carrying Trade of wheat

⁸⁰ The merchant carrier imports foreign wheat and re-exports it.

He contributes to the plentiful supply of the home market. His direct purpose is not to sell wheat at home. He will be willing to do so, even for much less money than in a foreign market, because he saves freight and insurance cost.

The country becomes the storehouse for other countries through the carrying trade. Its people can very seldom be in want themselves.

The carrying trade might reduce the average money price of wheat in the home market.

• It would not lower the real value of wheat.
• It would only somewhat raise the real value of silver.

⁸¹ The carrying trade was banned in Great Britain on all ordinary occasions by high wheat import duties, without a drawback.

On extraordinary occasions, exportation was always banned. The carrying trade was in effect banned on all occasions.

The Real Cause of Britain’s Wealth

⁸² That system of laws connected with the bounty deserves no praise.

Great Britain’s improvement and prosperity was often ascribed to those laws. In reality, it may easily be attributed to other causes. That security which British laws give to every man, that he shall enjoy the fruits of his own labour is alone sufficient to make any country flourish, despite the absurd regulations of commerce. This security was perfected by the revolution about the same time the bounty was established.

The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle that it is alone capable of:

• carrying society to wealth and prosperity
• surmounting obstructions imposed by the folly of human laws.
  • These obstructions always:
    • encroaches on its freedom or
    • reduces its security

In Great Britain, industry is perfectly secure, though it is far from being perfectly free.

But it is freer than in any other part of Europe.

⁸³ Great Britain’s greatest prosperity was posterior to the laws connected with the bounty.

However, we must not impute it to those laws. Prosperity was also posterior to the national debt. But the national debt certainly was not the cause of the prosperity.

⁸⁴ The laws connected with the bounty has exactly the same tendency as the police of Spain and Portugal.

It lowers the value of the precious metals in the country where it is produced. Yet Great Britain is one of the richest countries in Europe, while Spain and Portugal are among the poorest. This difference may easily be attributed to two causes.

The following policies must more forcibly reduce the value of those metals in Spain and Portugal than the wheat laws can do in Great Britain:

• The tax in Spain
• The ban in Portugal of exporting gold and silver
• The vigilant police which executes those laws

This bad policy is not counter-balanced by the liberty and security of the people in Spain and Portugal.

Industry is neither free nor secure there.
Their absurd and foolish civil and ecclesiastical governments would alone be sufficient to perpetuate their present state of poverty, even though their commercial regulations were wise.

⁸⁵ The 13th of George 3rd, Chapter 43, established a new system regarding the wheat laws, better than the ancient one.

However, it was perhaps not so good in one or two respects.

⁸⁶ This statute removed the high import duties for home consumption when:

• middling wheat prices rose to 576 pence the quarter
• middling rye, peas or beans rose to 384 pence
• barley rose to 288 pence
• oats rose to 192 pence

A small duty of 6 pence was imposed on the quarter of wheat and other grains in proportion. The home market is thus opened to foreign grain at much lower prices.

⁸⁷ By the same statute:

The old bounty of 60 pence on wheat exports ceases as soon as its price rises to 528 pence the quarter, instead of 576 pence which was the price at which it ceased before.

The bounty of 30 pence on barley exports ceases as soon as its price rises to 264 pence instead of 288 pence.
The bounty of 30 pence on oatmeal exports ceases so soon as its price rises to 168 shillings, instead of 180.
The bounty on rye is reduced from 42 pence to 36 pence.
    It ceases as soon as the price rises to 336 pence instead of 384.
The sooner export bounties cease and the lower they are, so much the better.

88 The same statute permits wheat imports at the lowest prices to be exported again duty free, as long as it was lodged in a warehouse in 25 British ports under the joint locks of the king and the importer. Perhaps there are no proper warehouses in other British ports.

⁸⁹ This law seems an improvement of the ancient system.

⁹⁰ By the same law:

• a bounty of 24 pence the quarter is given for oats exportation whenever its price does not exceed 168 pence. No bounty had ever been given before for oats exports, no more than bounties for peas or beans.

⁹¹ wheat exportation is banned as soon as wheat prices rise to 528 pence the quarter. rye exportation is banned as soon as it rises to 336 pence. barley exportation is banned as soon as it rises to 264 pence. oats exportation is banned as soon as it rises to 168 pence.

Those prices seem too low. It seems improper to ban exportation at those precise prices at which that bounty, which was given to force it, is withdrawn:

• the bounty should certainly be withdrawn at a much lower price or
• exportation should be allowed at a much higher price.

⁹² So far, this law seems inferior to the ancient system.

With all its imperfections, we may say that it was like the laws of Solon. Though not the best in itself, it is the best which the interests, prejudices, and temper of the times admitted. It may perhaps prepare the way for a better law in due time.