BOUNTY, signifies a pecuniary gratification paid from the public revenue of a state, for the en couragement of navigation and shipping ; or of some particular branch of agriculture, trade, or ma nufacture.
Bounties may be divided into two sorts ; as they relate to the defence, and as they relate to the com mercial prosperity, of a state. The first may be call ed their political, in contradistinction to the second, their commercial object. A bounty of the former de scription may be politically right, while it is commer cially wrong. A bounty of the latter description can never be right, either in the one way or the other.
First, From the insular situation of Great Britain, the bounties which relate to the defence of the state, are chiefly those given for the direct and avowed pur pose of encouraging its navigation and shipping. Bounties of this description seem, on the whole, ex pedient. It is certain, that, like all other bounties, their effect is to force a greater proportion of the ge neral capital into that sort of employment than would otherwise go into it, and thus to stunt other occupa tions of the capital, which would naturally tend thi ther without any national premium. In a ,commer cial point of view, therefore, bounties of this nature produce a double disadvantage. They produce a negative disadvantage, by drawing capital from its na tural, and therefore productive, employment, to one that is losing; and they occasion a positive disadvan tage, in the tax which must be raised upon the peo ple to defray the bounties themselves. The principle of this description of bounties, however, is still poli tically good. The defence of the country depends mainly on its maritime force. The superabundant capital invested in navigation and shipping, by the encouragement of the bounties, necessarily implies a certain correspondent superabundance of seafaring men. But it is chiefly in this school of hardiness, dexterity, and maritime attachment, that the national security is raised, cherished, and preserved. To ac complish, therefore, this essential object, or at least to render it as much as possible independent of the power of accident, must be a political good, greatly counterbalancing the commercial disadvantages to which we have alluded.
The bounties given directly and avowedly for the purpose of augmenting the navigation and shipping of the country, are principally the tonnage bounty on the white herring, and that on the whale fishery. The injudicious manner in which these bounties, par ticularly the former, have been granted, as well as their unnecessary extent, has been clearly pointed out by intelligent ceconomists. It has been thought that the commercial disadvantages attending every species of bounty, if not prevented, might at least have been palliated. To connect with the tonnage bounty up
on the white-herring fishery, a bounty upon the her rings exported, was the direct way to raise the price in the home market, and thus, by a very plain opera tion, to embarrass the poorer sort of people with an increased price, more or less, for all the necessaries of life. Nor was a high rate of the tonnage bounty necessary. It could only bribe the indolence of the fishers, and, as has been smartly said, make them more intent on catching the bounty than the fish.
Second, The other, and by far the greater class of bounties, comprehends those which relate more di rectly to the commercial prosperity of a state. These, therefore, have, or profess to have, for their object, the encouragement of some particular branch of agri culture, trade, or manufacture. For this purpose, direct bounties upon production have seldom been re sorted to by the British legislature. Those upon exportation have been the favourite, and almost exclu sive mode.
Among custom-house people, the term, as connect ed with exportation, and as we are now using it, is frequently confounded with that of drawback. Ac cording to them, every payment made by the govern ment to the exporter of a commodity which has un dergone any change since its importation, is bounty, although it should, in fact, he only a return of the duty formerly advanced upon it, when under another shape. Thus, what is called a bounty upon the ex portation of wrought silk, is, in truth, nothing else than a return or drawback of the duties upon raw silk imported. The term drawback they confine to the return of duties upon those commodities which remain the same as when imported. The two things, however, are in their nature clearly distinct. Nor in our reasonings upon them, is there any difficulty in preventing this impropriety in the use of the terms from affecting the accuracy of our conclusions. Boun ty upon exportation, denotes a clear advance from the public treasury, without reference to any import du ties formerly exacted upon the commodity itself, or the raw material of which it is composed. In the loose sense of the custom-house, it can frequently be the subject of little approbation or censure. In that sense, it often implies nothing else than a refunding, more or less, of a duty formerly exacted, and there fore so far only tends to restore things to their for mer equilibrium. In the sense, however, in which the term is properly used, a bounty upon exportation must produce some positive effect, either good or evil.