Sir,—In the conversation which I had the honor of having with your Excellency, a few days ago, on the importance of placing, at this time, the commerce between France and America on the best footing possible, among other objects of this commerce, that of tobacco was mentioned, as susceptible of greater encouragement and advantage to the two nations. Always distrusting what I say in a language I speak so imperfectly, I will beg your permission to state, in English, the substance of what I had then the honor to observe, adding some more particular details for your consideration.
I find the consumption of tobacco in France estimated at from fifteen to thirty millions of pounds. The most probable estimate, however, places it at twenty-four millions.
| This costing eight sous the pound, delivered in a port of France, amounts to | 9,600,000 | livres. |
| Allow six sous a pound, as the average cost of the different manufactures | 7,200,000 | |
| The revenue which the King derives from this, is something less than | 30,000,000 | |
| Which would make the cost of the whole | 46,800,000 | |
| But it is sold to the consumers at an average of three livres the pound | 72,000,000 | |
| There remain, then, for the expenses of collection | 25,200,000 | livres. |
This is within a sixth as much as the King receives, and so gives nearly one half for collecting the other. It would be presumption in me, a stranger, to suppose my numbers perfectly accurate. I have taken them from the best and most disinterested authorities I could find. Your Excellency will know how far they are wrong; and should you find them considerably wrong, yet I am persuaded you will find, after strictly correcting them, that the collection of this branch of the revenue still absorbs too much.
My apology for making these remarks will, I hope, be found in my wishes to improve the commerce between the two nations, and the interest which my own country will derive from this improvement. The monopoly of the purchase of tobacco in France discourages both the French and American merchant from bringing it here, and from taking in exchange the manufactures and productions of France. It is contrary to the spirit of trade, and to the dispositions of merchants, to carry a commodity to any market where but one person is allowed to buy it, and where, of course, that person fixes its price, which the seller must receive, or re-export his commodity, at the loss of his voyage thither. Experience accordingly shows, that they carry it to other markets, and that they take in exchange the merchandise of the place where they deliver it. I am misinformed, if France has not been furnished from a neighboring nation with considerable quantities of tobacco since the peace, and been obliged to pay there in coin, what might have been paid here in manufactures, had the French and American merchants brought the tobacco originally here. I suppose, too, that the purchases made by the Farmers General, in America, are paid for chiefly in coin, which coin is also remitted directly hence to England, and makes an important part of the balance supposed to be in favor of that nation against this. Should the Farmers General, by themselves, or by the company to whom they may commit the procuring these tobaccos from America, require, for the satisfaction of government on this head, the exportation of a proportion of merchandise in exchange for them, it would be an unpromising expedient. It would only commit the exports, as well as imports, between France and America, to a monopoly, which, being secure against rivals in the sale of the merchandise of France, would not be likely to sell at such moderate prices as might encourage its consumption there, and enable it to bear a competition with similar articles from other countries. I am persuaded this exportation of coin may be prevented, and that of commodities effected, by leaving both operations to the French and American merchants, instead of the Farmers General. They will import a sufficient quantity of tobacco, if they are allowed a perfect freedom in the sale; and they will receive in payment, wines, oils, brandies, and manufactures, instead of coin; forcing each other, by their competition, to bring tobaccos of the best quality; to give to the French manufacturer the full worth of his merchandise, and to sell to the American consumer at the lowest price they can afford; thus encouraging him to use, in preference, the merchandise of this country.
It is not necessary that this exchange should be favored by any loss of revenue to the King. I do not mean to urge anything which shall injure either his Majesty or his people. On the contrary, the measure I have the honor of proposing, will increase his revenue, while it places both the seller and buyer on a better footing. It is not for me to say, what system of collection may be best adapted to the organization of this government; nor whether any useful hints may be taken from the practice of that country, which has heretofore been the principal entrepôt for this commodity. Their system is simple and little expensive. The importer, there, pays the whole duty to the King; and as this would be inconvenient for him to do before he has sold his tobacco, he is permitted, on arrival, to deposit it in the King's warehouse, under the locks of the King's officer. As soon as he has sold it, he goes with the purchaser to the warehouse, the money is there divided between the King and him, to each his proportion, and the purchaser takes out the tobacco. The payment of the King's duty is thus ensured in ready money. What is the expense of its collection, I cannot say; but it certainly need not exceed six livres a hogshead of one thousand pounds. That government levies a higher duty on tobacco than is levied here. Yet so tempting and so valuable is the perfect liberty of sale, that the merchant carries it there, and finds his account in doing so.
If, by a simplification of the collection of the King's duty on tobacco, the cost of that collection can be reduced even to five per cent., or a million and a half, instead of twenty-five millions; the price to the consumer will be reduced from three to two livres the pound. For thus I calculate:
| The cost, manufacture, and revenue, on twenty-four million pounds of tobacco being (as before stated) | 46,800,000 | livres. |
| Five per cent. on thirty millions of livres, expenses of collection | 1,500,000 | |
| Give what the consumers would pay, being about two livres a pound | 48,300,000 | |
| But they pay at present three livres a pound | 72,000,000 | |
| The difference is | 23,700,000 |
The price, being thus reduced one-third, would be brought within the reach of a new and numerous circle of the people, who cannot, at present, afford themselves this luxury. The consumption, then, would probably increase, and perhaps, in the same if not a greater proportion, with the reduction of the price; that is to say, from twenty-four to thirty-six millions of pounds; and the King, continuing to receive twenty-five sous on the pound, as at present, would receive forty-five instead of thirty millions of livres, while his subjects would pay but two livres for an object which has heretofore cost them three. Or if, in event, the consumption were not to be increased, he would levy only forty-eight millions on his people, where seventy-two millions are now levied, and would leave twenty-four millions in their pockets, either to remain there, or to be levied in some other form, should the state of revenue require it. It will enable his subjects, also, to dispose of between nine and ten millions worth of their produce and manufactures, instead of sending nearly that sum annually, in coin, to enrich a neighboring nation.
I have heard two objections made to the suppression of this monopoly. 1. That it might increase the importation of tobacco in contraband. 2. That it would lessen the abilities of the Farmers General to make occasional loans of money to the public treasury. These objections will surely be better answered by those who are better acquainted than I am with the details and circumstances of the country. With respect to the first, however, I may observe, that contraband does not increase on lessening the temptations to it. It is now encouraged by those who engage in it being able to sell for sixty sous what cost but fourteen, leaving a gain of forty-six sous. When the price shall be reduced from sixty to forty sous, the gain will be but twenty-six, that is to say, a little more than one-half of what it is at present. It does not seem a natural consequence then, that contraband should be increased by reducing its gain nearly one-half. As to the second objection, if we suppose (for elucidation and without presuming to fix) the proportion of the farm on tobacco, at one-eighth of the whole mass farmed, the abilities of the Farmers General to lend, will be reduced one-eighth, that is, they can hereafter lend only seven millions, where heretofore they have lent eight. It is to be considered then, whether this eighth (or other proportion, whatever it be) is worth the annual sacrifice of twenty-four millions, or if a much smaller sacrifice to other moneyed men, will not produce the same loans of money in the ordinary way.