porary rise in the price of corn, produced by an increased
demand from abroad, would have no effect on the money price of wages.
The rise of corn is occasioned by a competition for that supply which
was before exclusively appropriated to the home market. By raising
profits, additional capital is employed in agriculture, and the
increased supply is obtained; but till it be obtained, the high price is
absolutely necessary to proportion the consumption to the supply, which
would be counteracted by a rise of wages. The rise of corn is the
consequence of its scarcity, and is the means by which the demand of the
home purchasers is diminished. If wages were increased, the competition
would increase, and a further rise of the price of corn would become
necessary. In this account of the effects of a bounty, nothing has been
supposed to occur to raise the natural price of corn, by which its
market price is ultimately governed; for it has not been supposed that
any additional labour would be required on the land to insure a given
production, and this alone can raise natural price. If the natural price
of cloth were 20_s._ per yard, a great increase in the foreign demand
might raise the price to 25_s._, or more, but the profits which would
then be made by the clothier would not fail to attract capital in that
direction, and although the demand should be doubled, trebled, or
quadrupled, the supply would ultimately be obtained, and cloth would
fall to its natural price of 20_s._ So in the supply of corn, although
we should export 2, 3, or 800,000 quarters, annually, it would
ultimately be produced at its natural price, which never varies unless a
different quantity of labour becomes necessary to production.

Perhaps in no part of Adam Smith's justly celebrated work are his
conclusions more liable to objection, than in the chapter on bounties.
In the first place, he speaks of corn as of a commodity of which the
production cannot be increased in consequence of a bounty on
exportation; he supposes invariably that it acts only on the quantity
actually produced, and is no stimulus to further production. "In years
of plenty," he says, "by occasioning an extraordinary exportation, it
necessarily keeps up the price of corn in the home market above what it
would naturally fall to. In years of scarcity, though the bounty is
frequently suspended, yet the great exportation which it occasions in
years of plenty, must frequently hinder, more or les