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    Book IV: Chapter 4

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    Chapter 27
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    Merchants and manufacturers are not contented with the monopoly
    of the home market, but desire likewise the most extensive
    foreign sale for their goods. Their country has no jurisdiction
    in foreign nations, and therefore can seldom procure them any
    monopoly there. They are generally obliged, therefore, to content
    themselves with petitioning for certain encouragements to

    Of these encouragements, what are called drawbacks seem to be the
    most reasonable. To allow the merchant to draw back upon
    exportation, either the whole, or a part of whatever excise or
    inland duty is imposed upon domestic industry, can never occasion
    the exportation of a greater quantity of goods than what would
    have been exported had no duty been imposed. Such encouragements
    do not tend to turn towards any particular employment a greater
    share of the capital of the country, than what would go to that
    employment of its own accord, but only to hinder the duty from
    driving away any part of that share to other employments. They
    tend not to overturn that balance which naturally establishes
    itself among all the various employments of the society, but to
    hinder it from being overturned by the duty. They tend not to
    destroy, but to preserve, what it is in most cases advantageous
    to preserve, the natural division and distribution of labour in
    the society.

    The same thing may be said of the drawbacks upon the
    re-exportation of foreign goods imported, which, in Great
    Britain, generally amount to by much the largest part of the duty
    upon importation. By the second of the rules, annexed to the act
    of parliament, which imposed what is now called the old subsidy,
    every merchant, whether English or alien. was allowed to draw
    back half that duty upon exportation ; the English merchant,
    provided the exportation took place within twelve months; the
    alien, provided it took place within nine months. Wines,
    currants, and wrought silks, were the only goods which did not
    fall within this rule, having other and more advantageous
    allowances. The duties imposed by this act of parliament were, at
    that time, the only duties upon the importation of foreign goods.
    The term within which this, and all other drawbacks could be
    claimed, was afterwards (by 7 Geo. I. chap. 21. sect. 10.)
    extended to three years.

    The duties which have been imposed since the old subsidy, are,
    the greater part of them, wholly drawn back upon exportation.
    This general rule, however, is liable to a great number of
    exceptions; and the doctrine of drawbacks has become a much less
    simple matter than it was at their first institution.

    Upon the exportation of some foreign goods, of which it was
    expected that the importation would greatly exceed what was
    necessary for the home consumption, the whole duties are drawn
    back, without retaining even half the old subsidy. Before the
    revolt of our North American colonies, we had the monopoly of the
    tobacco of Maryland and Virginia. We imported about ninety-six
    thousand hogsheads, and the home consumption was not supposed to
    exceed fourteen thousand. To facilitate the great exportation
    which was necessary, in order to rid us of the rest, the whole
    duties were drawn back, provided the exportation took place
    within three years.

    We still have, though not altogether, yet very nearly, the
    monopoly of the sugars of our West Indian islands. If sugars are
    exported within a year, therefore, all the duties upon
    importation are drawn back; and if exported within three years,
    all the duties, except half the old subsidy, which still
    continues to be retained upon the exportation of the greater part
    of goods. Though the importation of sugar exceeds a good deal
    what is necessary for the home consumption, the excess is
    inconsiderable, in comparison of what it used to be in tobacco.

    Some goods, the particular objects of the jealousy of our own
    manufacturers, are prohibited to be imported for home
    consumption. They may, however, upon paying certain duties,be
    imported and warehoused for exportation. But upon such
    exportation no part of these duties is drawn back. Our
    manufacturers are unwilling, it seems, that even this restricted
    importation should be encouraged, and are afraid lest some part
    of these goods should be stolen out of the warehouse, and thus
    come into competition with their own. It is under these
    regulations only that we can import wrought silks, French
    cambrics and lawns, calicoes, painted, printed, stained, or dyed,

    We are unwilling even to be the carriers of French goods, and
    choose rather to forego a profit to ourselves than to suffer
    those whom we consider as our enemies to make any profit by our
    means. Not only half the old subsidy, but the second twenty-five
    per cent. is retained upon the exportation of all French goods.

    By the fourth of the rules annexed to the old subsidy, the
    drawback allowed upon the exportation of all wines amounted to a
    great deal more than half the duties which were at that time paid
    upon their importation ; and it seems at that time to have been
    the object of the legislature to give somewhat more than ordinary
    encouragement to the carrying trade in wine. Several of the other
    duties, too which were imposed either at the same time or
    subsequent to the old subsidy, what is called the additional
    duty, the new subsidy, the one-third and two-thirds subsidies,
    the impost 1692, the tonnage on wine, were allowed to be wholly
    drawn back upon exportation. All those duties, however, except
    the additional duty and impost 1692, being paid down in ready
    money upon importation, the interest of so large a sum occasioned
    an expense, which made it unreasonable to expect any profitable
    carrying trade in this article. Only a part, therefore of the
    duty called the impost on wine, and no part of the twenty-five
    pounds the ton upon French wines, or of the duties imposed in
    1745, in 1763, and in 1778, were allowed to be drawn back upon
    exportation. The two imposts of five per cent. imposed in 1779
    and 1781, upon all the former duties of customs, being allowed to
    be wholly drawn back upon the exportation of all other goods,
    were likewise allowed to be drawn back upon that of wine. The
    last duty that has been particularly imposed upon wine, that of
    1780, is allowed to be wholly drawn back ; an indulgence which,
    when so many heavy duties are retained, most probably could never
    occasion the exportation of a single ton of wine. These rules
    took place with regard to all places of lawful exportation,
    except the British colonies in America.

    The 15th Charles II, chap. 7, called an act for the encouragement
    of trade, had given Great Britain the monopoly of supplying the
    colonies with all the commodities of the growth or manufacture of
    Europe, and consequently with wines. In a country of so extensive
    a coast as our North American and West Indian colonies, where our
    authority was always so very slender, and where the inhabitants
    were allowed to carry out in their own ships their non-enumerated
    commodities, at first to all parts of Europe, and afterwards to
    all parts of Europe south of Cape Finisterre, it is not very
    probable that this monopoly could ever be much respected ; and
    they probably at all times found means of bringing back some
    cargo from the countries to which they were allowed to carry out
    one. They seem, however, to have found some difficulty in
    importing European wines from the places of their growth; and
    they could not well import them from Great Britain, where they
    were loaded with many heavy duties, of which a considerable part
    was not drawn back upon exportation. Madeira wine, not being an
    European commodity, could be imported directly into America and
    the West Indies, countries which, in all their non-enumerated
    commodities, enjoyed a free trade to the island of Madeira. These
    circumstances had probably introduced that general taste for
    Madeira wine, which our officers found established in all our
    colonies at the commencement of the war which began in 1755, and
    which they brought back with them to the mother country, where
    that wine had not been much in fashion before. Upon the
    conclusion of that war, in 1763 (by the 4th Geo. III, chap. 15,
    sect. 12), all the duties except £3, 10s. were allowed to be
    drawn back upon the exportation to the colonies of all wines.
    except French wines, to the commerce and consumption of which
    national prejudice would allow no sort of encouragement. The
    period between the granting of this indulgence and the revolt of
    our North American colonies, was probably too short to admit of
    any considerable change in the customs of those countries.

    The same act which, in the drawbacks upon all wines, except
    French wines, thus favoured the colonies so much more than other
    countries, in those upon the greater part of other commodities,
    favoured them much less. Upon the exportation of the greater part
    of commodities to other countries, half the old subsidy was drawn
    back. But this law enacted, that no part of that duty should be
    drawn back upon the exportation to the colonies of any
    commodities of the growth or manufacture either of Europe or the
    East Indies, except wines, white calicoes, and muslins.

    Drawbacks were, perhaps, originally granted for the encouragement
    of the carrying trade, which, as the freight of the ship is
    frequently paid by foreigners in money, was supposed to be
    peculiarly fitted for bringing gold and silver into the country.
    But though the carrying trade certainly deserves no peculiar
    encouragement, though the motive of the institution was, perhaps,
    abundantly foolish, the institution itself seems reasonable
    enough. Such drawbacks cannot force into this trade a greater
    share of the capital of the country than what would have gone to
    it of its own accord, had there been no duties upon importation;
    they only prevent its being excluded altogether by those duties.
    The carrying trade, though it deserves no preference, ought not
    to be precluded, but to be left free, like all other trades. It
    is a necessary resource to those capitals which cannot find
    employment, either in the agriculture or in the manufactures of
    the country, either in its home trade, or in its foreign trade of

    The revenue of the customs, instead of suffering, profits from
    such drawbacks, by that part of the duty which is retained. If
    the whole duties had been retained, the foreign goods upon which
    they are paid could seldom have been exported, nor consequently
    imported, for want of a market. The duties, therefore, of which a
    part is retained, would never have been paid.

    These reasons seem sufficiently to justify drawbacks, and would
    justify them, though the whole duties, whether upon the produce
    of domestic industry or upon foreign goods, were always drawn
    back upon exportation. The revenue of excise would, in this case
    indeed, suffer a little, and that of the customs a good deal
    more; but the natural balance of industry, the natural division
    and distribution of labour, which is always more or less
    disturbed by such duties, would be more nearly re-established by
    such a regulation.

    These reasons, however, will justify drawbacks only upon
    exporting goods to those countries which are altogether foreign
    and independent, not to those in which our merchants and
    manufacturers enjoy a monopoly. A drawback, for example, upon the
    exportation of European goods to our American colonies, will not
    always occasion a greater exportation than what would have taken
    place without it. By means of the monopoly which our merchants
    and manufacturers enjoy there, the same quantity might
    frequently, perhaps, be sent thither, though the whole duties
    were retained. The drawback, therefore, may frequently be pure
    loss to the revenue of excise and customs, without altering the
    state of the trade, or rendering it in any respect more
    extensive. How far such drawbacks can be justified as a proper
    encouragement to the industry of our colonies, or how far it is
    advantageous to the mother country that they should be exempted
    from taxes which are paid by all the rest of their
    fellow-subjects, will appear hereafter, when I come to treat of

    Drawbacks, however, it must always be understood, are useful only
    in those cases in which the goods, for the exportation of which
    they are given, are really exported to some foreign country, and
    not clandestinely re-imported into our own. That some drawbacks,
    particularly those upon tobacco, have frequently been abused in
    this manner, and have given occasion to many frauds, equally
    hurtful both to the revenue and to the fair trader, is well
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