---
id: book-4-chapter-04
title: "OF DRAWBACKS."
book: "4"
chapter: 4
artifact_type: content
---

CHAPTER IV.
OF DRAWBACKS.



      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 exportation.

      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, 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 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
      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 of 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.
