e diminished rate of
interest under 5 per cent.: they would have no advantage from so paying
the holder of 3 per cent. stock, till the market rate of interest had
fallen below 3 per cent. per annum. To pay the interest on the national
debt, large sums of money are withdrawn from circulation four times in
the year for a few days. These demands for money being only temporary,
seldom affect prices; they are generally surmounted by the payment of a
large rate of interest.[36]

CHAPTER XX.

BOUNTIES ON EXPORTATION, AND PROHIBITIONS OF IMPORTATION.

A bounty on the exportation of corn tends to lower its price to the
foreign consumer, but it has no permanent effect on its price in the
home market.

Suppose that to afford the usual and general profits of stock, the price
of corn should in England be 4_l._ per quarter; it could not then be
exported to foreign countries where it sold for 3_l._ 15_s._ per
quarter. But if a bounty of 10_s._ per quarter were given on
exportation, it could be sold in the foreign market at 3_l._ 10_s._, and
consequently the same profit would be afforded to the corn grower,
whether he sold it at 3_l._ 10_s._ in the foreign, or at 4_l._ in the
home market.

A bounty then, which should lower the price of British corn in the
foreign country, below the cost of producing corn in that country, would
naturally extend the demand for British, and diminish the demand for
their own corn. This extension of demand for British corn could not fail
to raise its price for a time in the home market, and during that time
to prevent also its falling so low in the foreign market as the bounty
has a tendency to effect. But the causes which would thus operate on the
market price of corn in England would produce no effect whatever on its
natural price, on its real cost of production. To grow corn would
neither require more labour nor more capital, and, consequently, if the
profits of the farmer's stock were before only equal to the profits of
the stock of other traders, they will, after the rise of price, be
considerably above them. By raising the profits of the farmer's stock,
the bounty will operate as an encouragement to agriculture, and capital
will be withdrawn from manufactures to be employed on the land, till the
enlarged demand for the foreign market has been supplied, when the price
of corn will again fall in the home market to its natural and necessary
price, and profits will be again at their ordinary