prior probability

Here are parts 1 (intro), 2 (Letter #109), and 3 (Letter #112). The next piece of official customs-house correspondence in my sample of Adam Smith letters from 1784-1785 is Letter #118. This letter, which is dated 1 November 1784, is an official administrative order issued by the Board of Customs Commissioners in Scotland and is signed by three of the commissioners: Adam Smith (top signature), Basil Cochrane (middle), and David Reid (bottom). The letter, which deals with a routine personnel matter, reads as follows:

“Having in pursuance of a Warrant of the Lords Commissioners of the Treasury issued our Commission to Mr. Farquhar Macdonald to be a Landwaiter and Searcher in the room of John Ogilvie Superannuated. And when he has perfected the inclosed Bond with two Sureties (whose sufficiency you are to certify to the Examiner of Officers Securities) you are to admit him to his Employment taking care to administer to him the Oath of Office signifying at the same time that he must also take the said Oath de fideli before two Justices of the Peace as required by the Act 6th & 7th of William and Mary Cap. 1st Sec. 5th & 6th letting him know that he must likewise qualify himself within three Months as further directed by the 1st Geo. 1st Stat. 2d Cap. 13th and to send us Certificates &c. of his compliance with the directions of the said Acts and in your next List of Officers the time of his admission is to be certified.”

Before proceeding, notice how the first sentence of this order refers to a “Warrant of the Lords Commissioners of the Treasury.” (Letter #118) This treasury warrant was a formal legal instrument instructing the Board of Customs to issue an official Commission to a specific person. (See Hoon 1968, pp. 196-197.) In other words, although the Commissioners of Customs (including Smith) in Edinburgh managed the day-to-day operations of Scottish customs, they did not have the authority to create positions or appoint individuals on their own authority. The appointment of customs officers was a power held solely by the Crown and exercised through the Treasury in London.

Here (Letter #118), the commissioners are instructing local customs officers to admit a new hire (“Mr. Farquhar Macdonald”) as a land-waiter and searcher — i.e. an official customs inspector responsible for examining and clearing landed cargo (see Hoon 1968, pp. 11-12) — to replace another employee, who has retired (“John Ogilvie Superannuated“), but for this replacement to become effective, the new hire must do two things first and he must do them within 90 days: (1) he must obtain insurance, i.e. an indemnity bond with two approved financial sureties, and (2) he must take an official oath of office in front of two magistrates (“Justices of the Peace”).

In the course of describing these requirements, the letter refers to two separate statutes or written laws, for these are statutory requirements. One is “Act 6th & 7th of William and Mary Cap. 1st Sec. 5th & 6th.” This law was enacted on 22 December 1694 and its full title was “An Act for granting to Their Majesties a Subsidy of Tonnage and Poundage and other Sums of Money payable upon Merchandizes Exported and Imported.” (See here; scroll down to the Taxation (No. 2) Act 1694. Note: this law was repealed by Statute Law Revision Act 1867 (30 & 31 Vict. c. 59).) Among other things, this law established revenue-collection guidelines and required customs officers and inspectors to take an explicit oath de fideli administratione (an oath of fidelity and faithful execution of office) before two local magistrates (“Justices of the Peace”) prior to assuming duties. Sections 5 and 6 spelled out the required procedure for swearing in port officers and recording their certificates of compliance.

The other statute is “1st Geo. 1st Stat. 2d Cap. 13th.” This law was enacted on 20 August 1715, shortly after the accession of King George I and the Jacobite rising of 1715, and was titled “An Act for the further security of His Majesty’s person and government, and the succession of the Crown in the heirs of the late Princess Sophia, being Protestants, and for extinguishing the hopes of the pretended Prince of Wales.” (See here, scroll down to the Security of the Sovereign Act. Note: this law was subsequently repealed by section 8 of the Universities Tests Act of 1871 (34 & 35 Vict. c. 26).) This law required all civil and military officers to take — not one, not two, but three! — three separate oaths within three months of their appointment:

1. The Oath of Allegiance: Swearing loyalty to the reigning Hanoverian monarch.
2. The Oath of Supremacy: Denouncing the spiritual and temporal authority of any foreign prince, person, or papal jurisdiction within the realm.
3. The Oath of Abjuration: Explicitly renouncing any allegiance to the Jacobite Stuart pretenders to the throne.

Failure to take these statutory oaths within the specified three-month window rendered the appointment null and void and subjected the would-be officer to severe legal penalties. (See generally Sir William Blackstone, Commentaries on the Laws of England, Book IV, Ch. 4 (Of Offences Against God and Religion), available here.) For his part, no doubt Adam Smith would have taken these three oaths after he was appointed a Commissioner of Customs in November of 1777, but might Smith have otherwise sympathized (perhaps secretly) with the lost cause of the Jacobites?

Here are parts 1 (my intro) and 2 (Letter #109). Now, without further ado, let’s proceed to the next piece of official customs-house correspondence in my Smithian sample: Letter #112, which is dated __ October 1784 (alas, the day is cut out of my copy of the letter) and is signed by three members of the Board of Customs of Scotland: Adam Smith (top signature), Basil Cochrane (middle), and James Edgar (bottom). This letter is short and sweet, for it reads as follows:

“It appearing by a List of Balances at the 5th. Ultimo laid before us by the Compt. General, that there is sufficient Money in the Collector’s hands, he is forthwith to remit the sum of Four hundred Pounds to the Receiver General, or to assign his reasons for not complying with this order.”

In other words, after taking notice of a recent financial statement (“List of Balances”) prepared by the board’s chief financial accounting officer (“the Compt. General”), the board (here composed of Smith, Cochrane, and Edgar) orders a local port collector to remit £400 (over £77,000 in today’s money; see here) to the main customs office in Edinburgh. This order thus refers to three different customs officials in all:

1. The “Compt[roller] General”, i.e. the chief financial accounting officer and auditor of accounts who prepared the List of Balances referred to above;
2. A local or regional port official (“the Collector[]”), whose job it was to collect duties, manage local officers, and seize smuggled or illegal goods; and
3. The “Receiver General”, the treasurer or chief cashier for the central customs office in Edinburgh.

This letter also poses two questions in my mind. One is administrative: why couldn’t the Comptroller General himself directly order the local port official to remit the 400 pounds? That is, why did the Comptroller have to go through the Board of Customs to make this request? The other question is specific to Adam Smith: how much time did he spend reviewing the List of Balances prepared by the Comptroller General, or was he able to delegate this tedious task to an underling?

Either way, this little letter illustrates the strict separation of duties between the accounting, book-keeping, and audit functions of the Comptroller General on the one hand and the actual handling of cash by the Receiver General and the local port collectors on the other, a sophisticated system of financial checks and balances designed to prevent fraud and corruption in the customs bureaucracy. (See generally Elizabeth E. Hoon, The Organization of the English Customs System, 1696-1786. Reprint ed.: A. M. Kelley (1968), available here.)

In my previous post, I mentioned that we would take a closer look at a small sample of 34 letters that Adam Smith signed in his official capacity as Commissioner of Scotland’s Board of Customs. The first piece of official correspondence in my sample is Letter #109, which is dated 16 September 1784 and is signed by three members of the Board of Customs: Basil Cochrane (top signature), Adam Smith (middle), and James Edgar (bottom). In this letter, the Board instructs a local customs official to account for a sum of money from a recent seizure and sale of contraband wine.

More specifically, the letter refers to “Ten Guineas of Freight paid by the Collector for bringing twenty eight Hogsheads of Wine from Lossiemouth [see map pictured below], and securing it in the King’s warehouse ….” (Letter #109; punctuation in the original) The “Collector” in this letter most likely refers to a local port officer called the Collector of Customs, who was responsible for collecting duties, managing local officers, seizing smuggled or illegal goods, handling local operational expenses, and recording these expenses in an “Incident Account.” (A complete record from 1742 to 1830 of these local Incident Accounts are stored by the National Records of Scotland or NRS; see Item E510 here or here.)

In this particular case, it appears that a local customs collector had originally paid a sum of money (“Ten Guineas”) to transport and secure some contraband 28 casks of wine in a government warehouse. (I had to look this up: a “hogshead” is a large cask.) After the wine was sold off at auction [*], the local collector must have deducted and retained those 10 guineas (or about 10 pounds and 10 shillings, worth almost 2000 pounds in today’s money; see here) from the proceeds of the sale to reimburse himself. This accounting matter must have then come to the attention of the Board of Customs, for the members of the board (including Adam Smith) order the collector to update his ledger books: “We direct you to bring the Ten Guineas to Account this current Quarter by a special Entry ….” (Letter #109)

Why is this mere accounting matter of any interest to us today? In short, it provides a direct glimpse into the daily activities of Adam Smith once he became a Commissioner of Customs: resolving accounting anomalies, ensuring strict revenue reporting, and managing the seizure of goods like wine along the Scottish coast. To what extent Smith himself was personally bogged down in this daily administrative oversight is unclear, however.

[*] Nota bene: The buyer at the auction would still have to pay the applicable excise taxes or duties on the wine; see here, for example.

Nota bene: Last month (see here), I mentioned that I would begin two new series on Adam Smith. I have already completed my first series on “Adam Smith and the ‘Absurd Prescriptions’ of Doctors“; now, as promised, it’s time to start my other series: “Adam Smith: Bureaucrat“.

In an ironic twist of fate, Adam Smith, the champion of free trade, was somehow appointed to the post of Commissioner of Customs(!) in November of 1778 — two years after the publication of his free-market manifesto, The Wealth of Nations — a position he held from February 1778 until his death in July of 1790. Smith was thus a pro-mercantilist, protectionist bureaucrat for as many years as he was a professor and moral philosopher at the University of Glasgow, but what was the promoter of perfect liberty actually doing during this final incongruous phase of his life?

To shed light on this lesser-known side of Smith’s biography, I have been patiently conducting some time-consuming and meticulous archival research in my spare time: collecting, reading, transcribing, and summarizing more than 1,100 letters signed by Smith in his official capacity as customs commissioner. Let’s begin by taking a closer look at a batch of customs letters corresponding to the middle period of Smith’s 12-year stint as customs official, i.e. from the middle of September 1784 to the beginning of March 1785.

In summary, during this precise period of time (16 September 1784 to 9 March 1785) Smith signed a total of 34 separate letters and orders in his capacity as Commissioner of Scotland’s Board of Customs. What do these almost-three dozen pieces of customs correspondence teach us? Some of the letters involve core customs-enforcement actions, such as seizures of contraband and prosecutions of smugglers, while others concern internal accounting or administrative matters, such as employee reprimands and reimbursements of expenses. Starting tomorrow, then, I will survey each of these letters (one or two at a time) in greater detail to reveal this unsung side of Smith’s biography: his life as a British bureaucrat.

Update: I will begin a new Adam Smith series in my next post; in the meantime, allow me to share this “oldie but goodie” by the legend George Benson, which was playing on my car radio (shout out WUCF Jazz), brightening up my otherwise wet-and-dreary Monday-morning blues:

Friday (16 October) would have been my father’s 83rd birthday. Here is a link to his obituary, along with some additional photos.

Alternate title: Dog bites man

According to this recent report (see also here) from the Federal Reserve Bank of New York’s Research and Statistics Group (Mary Amiti, Sebastian Heise, and David E. Weinstein, “The Anatomy of Tariff Pass-Through into Consumer Prices“), Trump’s tariffs raised consumer goods price inflation in the U.S. by [only!] 2.6%. File under “Department of Underestimation.”

I already knew that the Effective Altruism movement is the biggest scam since snake oil, i.e. a kind of secular absolution for the amoral among us. (See here, here or here, for example.) But check out this brutal takedown of the logic of longtermism — and of consequentialist moral theory more generally! — over at the parody website More Wrong (https://morewrong.lol/; hat tip: Kottke), “Overdose Offsets: Why Every Bag of Fentanyl I Sell Is Net Life-Positive“:

ΔL = D/G − p
D = donation per bag of fentanyl sold ($1.80)
G = GiveWell cost per life saved (~$5,500)
p = probability a given bag is fatal (~1/4,000)

Trigger warning: Today’s post will be deliberately provocative and inflammatory!

Instead of recognizing an econ giant like Richard A. Posner or Thomas Sowell, the 2026 Nobel Prize in “economic sciences” (see here) went to Robert Hall (Stanford) and Michael Woodford (Columbia). Alas, this year’s prize will be all but forgotten by the end of this week, if not sooner. (For a contrary view, see here, but feel free to compare all four of their Wikipedia pages linked above if you don’t believe me.)