prior probability

Nota bene: For reference, here are my previous installments — parts 1, 2, 3, 4, 5, 6, and 7 — in my multi-part series on Adam Smith’s day-to-day duties as a commissioner of the Board of Customs of Scotland.

In one of my previous posts (see here), I repeated the oft-quoted words of Sir Walter Scott about smugglers — “Smuggling was almost universal in Scotland, for people unaccustomed to imposts and regarding them as an unjust aggression upon their ancient liberties, made no scruple to elude them …” — and I then asked, “What scruples, if any, did Smith have in prosecuting them?” As it happens, if Order #123 is any indication, Smith and his fellow commissioners on the Board of Customs may have had quite a few such scruples. Let me explain:

To begin, Order #123 is dated 9 November 1784 and is signed by James Edgar (top signature), Adam Smith (middle), and Basil Cochrane (bottom). In addition, this order refers to the same local customs official as the previous two orders in my sample (#121 & #120): Mr. George Henderson, the tide-surveyor who was stationed at Cromarty in North East Scotland.

In summary, Henderson had suspected four local boats of illicitly offloading contraband from another vessel along the coast of Caithness, an even more remote area of Scotland located north of Cromarty (see map pictured below). Henderson wrote up a report describing his observations, and his report was forwarded to the Board of Customs on 2 November (“the 2nd Instant“). The board then issued its ruling seven days later:

“We have considered your Letter of the 2nd Instant, with a Letter from Mr. George Henderson Tide Surveyor relative to four Boats concerned in smuggling goods out of a Vessel on the Coast of Caithness; And we do not think proper at this time, and under the Circumstances of the Case, to seize the Boats, but Mr. Henderson is to continue his endeavours to come at the full knowledge of this transaction for our information.”

In other words, despite the report of illicit activity, the board orders the local customs officers to stand down: “we do not think proper at this time, and under the Circumstances of the Case, to seize the Boats“! So, instead of seizing or impounding the boats, the board instructs Henderson to continue gathering more evidence and to report back (“to come at the full knowledge of this transaction for our information”).

This non-order thus poses a minor puzzle: why was the board so reluctant to order the seizure of the four boats suspected of smuggling? It is true that government agents in 18th-century Britain were personally liable for their actions under ordinary private law. (Unlike today, British public officials who committed private wrongs or “torts” could not assert “sovereign immunity.” See generally Jennifer L. Mascott & R. Trent McCotter, “Federal Officer Suits by Common Law,” Cato Supreme Court Review, (2021-2022), pp. 111-140.) An order wrongfully impounding someone’s property could thus expose Henderson, who would be the one to carry out the board’s order, to a lawsuit for damages.

But at the same time, Parliament had enacted a special statute specifically for customs officials like Henderson, shielding them from liability when they acted with probable cause. Among other things, this law, known as the “Offences against Customs or Excise Act” (19 Geo. 2. c. 34), authorized judges in seizure trials to formally certify whether there was probable cause for the seizure. If the judge found probable cause, the statute limited the plaintiff’s recovery to the return of the seized goods (or their bare value) or a symbolic one pence (1d.) of damages, while also barring any costs of suit against the officer. (See Francis Buller, An Introduction to the Law relative to Trials at Nisi Prius, London: Strahan & Woodfall (1790), available here or here, at p. 45.) Although we have no way of knowing for sure, perhaps it was Adam Smith who counselled caution in this case.

Nota bene: For reference, here are the previous installments — parts 1, 2, 3, 4, 5, and 6 — of my multi-part series on Adam Smith’s day-to-day duties as a commissioner of the Board of Customs of Scotland.

The next piece of correspondence signed by Adam Smith in his official capacity as a Commissioner of Customs is Order #121, which is dated __ November 1784 (alas, the day on my copy of the document is cut off) and is signed by Adam Smith (top signature), Basil Cochrane (middle), and James Edgar (bottom). Here, the Board of Customs approves a payment in the amount of “Three pounds, nineteen shillings & eight pence” for “Incidental Charges” incurred by a local customs officer:

“Having receiv’d your Letter of the 26th of last Month [26 October 1784], inclosing an Account of Incidental Charges by Mr. George Henderson Tidesurveyor at Cromarty, amounting to Three pounds, nineteen shillings & eight pence; — We agree to your paying the said Account to be plac’d to Incidents, annexing this order and proper receipts as vouchers.”

What were these “Incidental Charges”? What was this payment for? The authorization in this order refers to the same customs officer (Mr. George Henderson) as in the previous order of the Board of Customs (Order #120), which authorized the payment of 9d. per diem to each of Henderson’s boatmen for a 22-day deployment. Perhaps, then, this letter (#121) must be read alongside the board’s previous order, and the amount of “Three pounds, nineteen shillings & eight pence” (£3 19s. 8d.) in this order might represent the sum total of the per diem allowances referred to in the previous order.

Another clue is that the board orders both sets of expenses — i.e. the per diem allowances approved in the previous order as well as the incidental charges approved in this one — to be placed under the “Incidents” account, the designated ledger category for contingent, non-salary operational expenses. Note, however, that the instant letter was signed by Smith, Cochrane, and Edgar, while the previous order was signed by Smith, Cochrane, and Reid.

Also worth noting is that Order #121 provides an additional geographical detail about George Henderson: he is described as the tide-surveyor at Cromarty, a remote outport located on the Cromarty Firth in the Highlands region of North East Scotland. (See the maps pictured below.) As it happens, Henderson had been stationed at Cromarty since January of 1773. He was thus a seasoned customs officer, but not a blameless one, for he had been admonished by the Board of Customs on at least two or three previous occasions. (See pages 141-142 of Derek Charles Janes’s PhD thesis “The Business of Smuggling in south-east Scotland: John and David Nisbet and Their Associates c.1740–1790” (University of Exeter, 2018), available here.)

More generally, how pervasive was smuggling in Cromarty and in the Highlands more generally? By all accounts (see here, here, and here, for example), this was the golden age of smuggling, and according to another source (Cromarty History Society, n.d.), “In the 18th and early 19th centuries, Cromarty was a major port, rivalling Inverness, importing hemp from the Baltic to be woven in a factory by the shore as well as exporting the produce of the farms on the fertile Black Isle. Population peaked in the 1830s at over 2,000.” What fraction of this small population were smugglers, however, is hard to say.

Nota bene: This is part 6 of my multi-part series on Adam Smith’s day-to-day duties as a member of the Board of Customs of Scotland. For reference, here are parts 1 (intro), 2 (Order #109), 3 (Order #112), 4 (Order #118), and 5 (Order #119).

The sixth piece of correspondence in my sample of Smithian letters is Order #120. This order appears in a letter dated __ November 1784 (the day is cut off), and like the previous two orders (#118 and #119), it is signed by Adam Smith (top signature), Basil Cochrane (middle), and David Reid (bottom). In this letter, the three commissioners of the Board of Customs formally approve a payroll claim submitted by a local customs official at one of Scotland’s ports:

“Having receiv’d your Letter of the 26th of last Month, inclosing a Memorial from Mr. Geo. Henderson Tidesurveyor at your Port, stating that in consequence of the liberty given him by our Order of the 12th of February 1783, he had [lounged] with the King’s boat & crew, during the different periods therein mention’d, making in all twenty two days, when he had advice of some Smuggl’s being expected on the Coast, and praying an Allowance to the Boatmen during that period. — We agree to your Paying the Boatmen at the rate of ninepence p. diem each for the respective Periods mention’d making in all twenty two days, and to place the amount to Incidents, annexing this order and proper discharges as vouchers.”

In summary, a tide-surveyor was a water-guard officer responsible for boarding incoming vessels, inspecting cargoes, and patrolling coastal waters to intercept smugglers. (See generally Elizabeth E. Hoon, The Organization of the English Customs System, 1696-1786 (1968), available here.) The local tide-surveyor mentioned in this letter, Mr. George Henderson, acting under prior legal authority granted to him by an order of the Board of Customs dated 12 February 1783, had deployed a vessel and hired several boatmen (“the King’s boat & crew”) to conduct coastal surveillance after receiving some intelligence that smugglers were planning to land contraband on the coast.

(By way of additional background, the term “King’s boat” in this order refers to an official, government-owned service vessel assigned to a regional port for local customs enforcement and other “water-guard” activities, including anti-smuggling operations. See generally the index entry for “water-guard” in Hoon 1968. See also chapters 6, 7, and 12 of E. Keble Chatterton, King’s Cutters and Smugglers, 1700-1855 (1912), available here. In this particular anti-smuggling operation, Henderson and his crew spent a cumulative total of 22 days on active patrol.)

After completing this special anti-smuggling operation, Henderson had formally requested an extra daily allowance for his boat crew, and upon his request, the Board of Customs agrees to authorize the payment of ninepence (9d) per day to each of Henderson’s boatmen for each of the 22 days on patrol, i.e. 0.75 shillings per day for a total of 16 shillings and 6 pence (16s 6d) or £1.98 (over £155 in today money; see here) for each boatman. In addition, the board orders the total amount paid out to be charged to the Incidents account of Henderson’s local customs/port office. (“Incidents” was the budget category designated for contingent, non-salary operational expenses. See, e.g., Hoon 1968, p. 145.) To clear this expenditure, the local port officer must attach the board’s order (Letter #120), along with the boatmen’s signed receipts (“discharges as vouchers“).

Also, like the previous order in my sample (Order #119, which authorized the payment of £2 for a Bath stove), this letter (#120) demonstrates the strict and rigid administrative centralization of 18th-century revenue collection. An extra daily allowance of ninepence per man could not simply be disbursed on the spot; it required writing up a formal petition (“Memorial”), sending it to the Board of Customs in Edinburgh for review, and the approval/signature of three commissioners. But what makes this letter even more fascinating is that it presents another facet of Adam Smith’s work, for it not only shows us a scrupulous bureaucrat meticulously auditing public expenditures; it also reveals an establishment figure who is deeply involved in the micro-level logistics of Britain’s mercantilist trade policy, a Smith who is managing frontline anti-smuggling operations!

But how pervasive was smuggling in Scotland? In the oft-quoted words of Sir Walter Scott (1771-1832) in his 1818 novel The Heart of Midlothian, “Smuggling was almost universal in Scotland, for people unaccustomed to imposts and regarding them as an unjust aggression upon their ancient liberties, made no scruple to elude them whenever it was possible to do so.” For his part, what scruples, if any, did Smith have in prosecuting them?

Congratulations to the University of Central Florida: our college football team defeated #2 BYU yesterday in double OT, the biggest win in our school’s athletic history. (If you know, you know!) Added bonus: BYU had been undefeated until yesterday.

Nota bene: This is part 5 of my multi-part series on Adam Smith’s day-to-day duties as a member of the Board of Customs of Scotland. (Here are parts 1 (intro), 2 (Order #109), 3 (Order #112), and 4 (Order #118).) Works cited are below the fold.

Next up is Order #119. This order is dated 1 November 1784, is signed by the same three customs commissioners who signed Order #118 (also dated 1 Nov. 1784) — Adam Smith (top signature), Basil Cochrane (middle), and David Reid (bottom) — and involves a routine port office expense:

“We have receiv’d your Letter of the 26th Ultimo, inclosing an Account of the Expence of a New Bath Stove provided for the use of the Customhouse, in pursuance of our Order of the 29th of September last, Amounting to Two Pounds. — And we agree to your Paying the said Account, to be plac’d to Incidents annexing this Order, and a proper Receipt as Vouchers.”

This order thus illustrates a routine office expense in which a customs officer at a local port had sent a letter on 26 October (“26th Ultimo“) to the Board of Customs in Edinburgh, attaching an invoice for £2 (less than £200 today; see here) for a newly acquired “Bath Stove” (such as the one pictured below) to heat up a local customshouse. In reply, Smith and his fellow commissioners (Basil Cochrane and David Reid) formally approve paying the £2 invoice and instruct the local customs officer to charge this expenditure to the “Incidents“ account, i.e. the account for petty/contingent operational expenses. (See Hoon 1978, pp. 76-84.)

As an historical aside, Bath stoves were very popular in Britain at the time because they were a major technological improvement over traditional open fireplaces or wood-burning stoves. (See, e.g., Rumford 1796, pp. 312-314, explaining why most of the heat generated by an open fireplace is “lost”.) Such stoves, also known as “Bath grates” (Shuffrey 1912, p. 214) or “hob grates” (Kelly 1968, p. 71), were designed to fit directly into the opening of existing brick or stone fireplaces. By blocking off the chimney opening, a Bath stove/hob grate reduced smoke drafts and allowed heat to radiate into the room via the stove’s thick cast-iron front plates.

To my mind, however, what is most remarkable about this particular piece of correspondence (i.e. Order #119) is the mind-boggling levels of internal bureaucracy required to consummate such a quotidian transaction. First, the local official has to request permission from the Board of Customs in Edinburgh to purchase the needed equipment (a Bath stove). Once the board grants this permission on 29 September, the local officer is able to order the Bath stove from a vendor, but to actually pay for it, he must next obtain an invoice from the vendor and then forward it to the board, which he does on 26 October. Only after the board approves the invoice is the local official able to acquire the equipment!

In other words, even a relatively modest expenditure made by a local office required formal board review in Edinburgh (twice!) and the approval of at least three commissioners, followed by a rigorous auditing protocol and strict record-keeping. Yet the total amount of time, ink, parchment, and postage required to process this routine transaction across multiple levels of government most likely exceeded the £2 purchase price of the equipment itself! Was the economic irony of this situation lost on Adam Smith himself? Not if the “optimal level” of public corruption is zero.

Here are parts 1 (intro), 2 (Order #109), and 3 (Order #112). The next piece of official customs-house correspondence in my sample of Adam Smith letters from 1784-1785 is Order #118. This order, which is set forth in a letter 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). This order, 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.” (Order #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 (Order #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 (Order #109). Now, without further ado, let’s proceed to the next piece of official customs-house correspondence in my Smithian sample: Order #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 order is short and to the point:

“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 £30,000 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 piece of correspondence 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 official order 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 Order #109, which is contained in a letter 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 order, 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, this order 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 ….” (Order #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: