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 the 7th George I, c. 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 are 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, etc.
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 coinage 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 take place
with regard to all places of lawful exportation, except the British colonies
The 15th Charles II, c. 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. Maderia wine,
not being a 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 Maderia. These circumstances had probably
introduced that general taste for Maderia 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 George III, c. 15, sect. 12), all the duties, except
L3 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 drawback 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 ships 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 for 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 consumption.
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 the colonies.
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 known.