The slow progress of arts and commerce is owing to causes of a like kind. In all places where slavery took place, the manufactures were carried on by slaves. It is impossible that they can be so well carried on by slaves as by freemen, because they can have no motive to labour but the dread of punishment, and can never invent any machine for facilitating their business. Freemen who have a stock of their own, can get anything accomplished which they think maybe expedient for carrying on labour. If a carpenter think that a plane will serve his purpose better than a knife, he may go to a smith and get it made; but if a slave make any such proposal he is called a lazy rascal, and no experiments are made to give him ease. At present the Turks and Hungarians work mines of the same kind, situated upon opposite sides of the same range of mountains, but the Hungarians make a great deal more of them than the Turks, because they employ free men, while the Turks employ slaves. When the Hungarians meet with any obstacle every invention is on work to find out some easy way of surmounting it; but the Turks think of no other expedient but to set a greater number of slaves to work l. In the ancient world, as the arts were all carried on by slaves, no machinery could be invented, because they had no stock; after the fall of the Roman Empire, too, this was the case all over Europe.
In a rude society nothing is honourable but war. In 1 'On peut, par la commodite leurs esclaves.' Montesquieu, des machines que 1'art invente Esprit des lots, liv. xv. ch. viii. In ou applique, suppleer au travail W. of N. bk. iv. ch. ix. vol. ii. p. force qu'ailleurs on fait faire aux 269, Montesquieu is named as esclaves. Les mines des Turcs, the authority for the statement, dans le bannat de Temeswar, and ' neighbourhood ' replaces etaient plus riches que celles de the ' opposite sides of the same Hongrie; et elles ne produisaient range of mountains,' which must pas tant, parce qu'ils n'imagi- have been obtained from some naient jamais que les bras de other source.
232 PART II! POLICE the Odyssey, Ulysses is sometimes asked, by way of affront, whether he be a pirate or a merchant1. At that time a merchant was reckoned odious and despicable; but a pirate or robber, as he was a man of military bravery, was treated with honour. We may observe that those principles of the human mind which are most beneficial to society, are by no means marked by nature as the most honourable. Hunger, thirst, and the passion for sex are the great supports of the human species, yet almost every expression of these excites contempt. In the same manner, that principle in the mind which prompts to truck, barter, and exchange, though it is the great foundation of arts, commerce, and the division of labour, yet it is not marked with anything amiable. To perform anything, or to give anything without a reward, is always generous and noble, but to barter one thing for another is mean. The plain reason for this is that these principles are so strongly im planted by nature that they have no occasion for that additional force which the weaker principles need. In rude ages this contempt rises to the highest pitch, and even in a refined society it is not utterly extinguished.
In this country a small retailer is even in some degree odious at this day. When the trade of a merchant or mechanic was thus depreciated in the beginnings of society, no wonder that it was confined to the lowest ranks of people. Even when emancipated slaves began to practice these trades, it was impossible that much stock could accumulate in their hands, for the government oppressed them severely, and they were obliged to pay licences for their liberty of trading. In Doomsday-book we have an account of all the different traders in every 1 Odyssey, ix. 252-255. Thucy- similar passages as evidence of dides (i. 5), who is quoted by the honourable character of Grotius, De iure belli et pacts, lib. ii. piracy, but not as evidence of the cap. xv. § 5, refers to this and despicable character of commerce.
county, how many of them were under the king, and how many under such a bishop, and what acknowledgments they were obliged to pay for their liberty of trading1.
This mean and despicable idea which they had of merchants greatly obstructed the progress of commerce. The merchant is, as it were, the mean between the manu facturer and the consumer; the weaver must not goto the market himself, there must be somebody to do this for him. This person must be possessed of a considerable stock, to buy up the commodity and maintain the manufacturer; but when merchants were so despicable and laid under so great taxations for liberty of trade, they could never amass that degree of stock which is necessary for making the division of labour, and improving manufactures. The only persons in those days who made any money by trade were the Jews, who, as they were considered as vagabonds, had no liberty of purchasing lands, and had no other way to dispose of themselves but by becoming mechanics or merchants; their character could not be spoiled by merchandise, because they could not be more odious than their religion made them. Even they were grievously oppressed, and consequently the progress of opulence [was] greatly retarded.
Another thing which greatly retarded commerce was the imperfection of the law with regard to contracts, which were the last species of rights that sustained action, for originally the law gave no redress for any but those concluded on the spot2. At present all con siderable commerce is carried on by commissions, and unless these sustained action, little could be done. The first action on contracts extended only to the moveable goods of the contractor, neither his lands nor his person could be touched; his goods were often very incon- 1 W. of N. bk. iii. ch. iii. vol. the order in which the different i. pp. 399, 400. kinds of contracts became en- 2 See above, pp. 132, 133, for forceable.
siderable, and probity is none of the most prevalent virtues among a rude people. It is commerce that in troduces probity and punctuality.
Another obstacle to the improvement of commerce was the difficulty of conveyance from one place to another. The country was then filled with retainers, a species of idle people who depended on the lords, whose violence and disorders rendered the going from one place to another very difficult. Besides, there were then no good highways. The want of navigable rivers in many places was1 also an inconvenience. This is still the case in Asia and other Eastern countries: all inland commerce is carried on by great caravans, consisting of several thousands, for mutual defence, with waggons, &c. In our own country a man made his testament before he set out from Edinburgh to Aberdeen, and it was still more dangerous to go to foreign countries. The laws of every country to aliens and strangers are far from being favourable. It is difficult, or rather impossible, for them to obtain satisfaction. After this was a little remedied still conveyance by sea re mained difficult. Piracy was an honourable occupation. Men were ignorant of navigation, and exposed to dangers on this account. The price of all these risks was laid upon the goods, and by this means they were so much raised above the natural price that the improvement of commerce was greatly retarded.
Another piece of police which was thought a wrise institution by our forefathers had the same effect. This was the fairs and markets all over Europe. Till the sixteenth century all commerce was carried on by fairs. The fairs of Bartholomew2, of Leipzig, of Troy in Champaigne, and even of Glasgow, are much talked of in antiquity. These 1 MS. reads ' were.' Postlethwayt, Dictionary of Trade 2 ' Bartholomew fair at London and Commerce, 1751, s. v. Fair, for lean and Welsh black cattle.'
were the most centrical places, and best fitted for carrying on business. All linen and black cattle were brought in from the country to these assignations or trysts, and, lest the purchaser should be disappointed, they were all brought on a certain day, and were not allowed to be sold on any other day. Forestallers, who went up and down the country buying up commodities, were severely punished, as this was a temptation not to bring them to the market. This might be necessary when it was not safe to go anywhere alone, but though you make no fairs, buyers and sellers will find a way to each other. Easy conveyance and other conveniences of trafficking will be of more advantage than the bringing them to a fixed market and thereby confining buying and selling to a certain season. All fairs, however necessary they then were, are now real nuisances. It is absurd to preserve in people a regard for their old customs, when the causes of them are removed.
Another obstacle to commerce was staple towns, which had the exclusive privilege of selling a certain commodity within that district. Calais, when it belonged to the English, was long the staple for wool l. As men were obliged to carry their wool to such a distance, its price was very high. It was however a very great advantage to any town to have the staple, and therefore the king gave it to that town with which he was best pleased, and took it away whenever it disobliged him 2. Staple towns had all the disadvantages of fairs and markets with this additional one, that the staple commodity could be sold at no fair nor market except one. By this the liberty of 1 Sell. ' exported.' The next that all wool, whether for sentence possibly refers not to foreign or domestic consumption, Calais in particular, but to staple had to be carried there, towns in general, since if ' such * See John Smith, Memoirs a distance ' applies to Calais it of Wool, 1747, ch. vii. esp. §§ 15, would seem to indicate a belief 16.
exchange, and consequently the division of labour, was diminished.
All taxes upon exportation and importation of goods also hinder commerce. Merchants at first were in so contemptible a state that the law, as it were, abandoned them, and it was no matter what they obliged them to pay. They, however, must lay the tax upon their goods, their price is raised, fewer of them are bought, manufactures are discouraged, and the division of labour hindered.
All monopolies and exclusive privileges of corporations, for whatever good ends they were at first instituted, have the same bad effect. In like manner the statute of appren ticeship, which was originally an imposition on government, has a bad tendency. It was imagined that the cause of so much bad cloth was that the weaver had not been properly educated, and therefore they made a statute that he should serve a seven years apprenticeship before he pretended to make any. But this is by no means a sufficient security against bad cloth. You yourself cannot inspect a large piece of cloth, this must be left to the stampmaster, whose credit must be depended upon l. Above all other causes the giving bounties for one commodity, and the discouraging another, diminishes the concurrence of opulence, and hurts the natural state of commerce.
Before we treat of the effects of police upon the manners of a people, we propose to consider taxes or revenue, which is in reality one of the causes that the progress of opulence has been so slow.
1 W. of N. bk. i. ch. x. pt. ii. vol. i. pp. 125-130.
[PART III: OF REVENUE] {Introduction^ IN the beginnings of society all public offices were performed by the magistrate without any reward, and he was fully satisfied with the eminence of his station. This is the case among the Tartars, Arabs, and Hottentots even to this day. Voluntary presents only are accepted, which have always a bad effect, but cannot be prevented while one is willing to give, and another to receive. It was in this manner, too, that the governors of the Roman provinces got their revenues. When government becomes so complex as to take up the whole attention of the public magistrate, he must undoubtedly have some reward, and if this be not given him by the public, he will fall upon some more dangerous method of obtaining it; few will be so generous as to exact nothing1. When applications are made, everyone must bring his present, and the man who pays best will be best heard.
When government is a little farther advanced, magazines must be provided, ships built, palaces and other public buildings erected and kept up, and consequently a public revenue levied. At first indeed among the Romans there was no revenue levied for carrying on war, because the soldiers required no pay. In savage nations this is always the case; every one of the Athenians went out to war at his own expense. The same was the case with our feudal lords; the burden of going to war was connected with the duty of the tenant or vassal. Such a practice cannot be of long duration, and accordingly we find that it ceased at Rome, and was the great cause of the dissolution of that republic. The governors of provinces made such grievous exactions from the people, that they alienated their affections, so that they gave no assistance in defending the state when it stood in need of assistance.
[$ i. Of Taxes on Possessions] After the appropriation of land property, a portion of lands was commonly assigned for the maintenance of government. The free states of Greece had land set apart for this purpose, and we find Aristotle giving his opinion that private property should surround the royal lands, because those who were near a city were always for war, because they were sure of defence, and as the enemy would first come upon those lands which were near the boundaries l. In all [barbarous] countries we find lands appropriated to the purposes of sovereignty, and therefore little occasion for taxes and customs. We shall show that this is a bad police, and one cause of the slow progress of opulence.
Let us conceive what an immense tract of land would be required to support the British government. The annual expense of it in times of peace amounts to 3 millions, the whole land rents amount 2 to 24 millions 3. Therefore 1 He recommends that half zen should have one lot in each the private property should be portion. Politics, 1330 a 14-23.
near the city, and the other half 2 MS. reads ' amounts.'
on the border, and that each citi- 3 Above, p. 224.
TAXES ON POSSESSIONS 239 the government must have an eighth part in its own hands. If we conceive, further, how such a tract of land would be cultivated, the quantity requisite would be prodigious. Allow it but to be half as well cultivated as the rest, which for many reasons would not be the case, the government would have in its hands a fourth of the whole country. By this therefore the stock of the country would be greatly diminished, and fewer people maintained. After government becomes expensive, it is the worst possible method to support it by a land rent. We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that the one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich. There are many expenses necessary in a civilized country for which there is no occasion in one that is barbarous. Armies, fleets, fortified places, and public buildings, judges, and officers of the revenue must be supported, and if they be neglected, disorder will ensue. A land rent, to serve all these purposes, would be the most improper thing in the world.
All taxes may be considered under two divisions, to wit, taxes upon possessions and taxes upon consump tions. These are the two ways of making the subjects contribute to the support of government. The land tax is of the former kind, and all taxes upon commodities of the latter.
Possessions are of three kinds, to wit, land, stock, and money. It is easy to levy a tax upon land, because it is evident what quantity every one possesses, but it is very difficult to lay a tax upon stock or money without very arbitrary proceedings1. It is a hardship upon a man in trade to oblige him to show his books, which is the 1 W, ofN. bk. v. ch. ii. pt. ii. art. 2, vol. ii. p. 442.
240 PART III I REVENUE only way in which we can know how much he is worth. It is a breach of liberty, and may be productive of very bad consequences by ruining his credit; the circum stances of people in trade are at some times far worse than at others. But if on account of this difficultyyou were to tax land, and neither tax money nor stock, ye would do a piece of very great injustice. But though it be a difficult thing to tax money or stock without being oppressive, yet this method is used in several countries. In France, for example, in order to ascertain the circumstances of the subject, every bill is assigned, and all business transacted in presence of a public notary, and entered into his books, so that land, stock, and money are there all taxed in the same manner. Of these three only land is taxed in England l, because to tax the other two has some appearance of despotism, and would greatly enrage a free people. Excepting the land tax, our taxes are generally upon commodities, and in these there is a much greater inequality than in the taxes on land possession. The consumptions of people are not always according to what they possess, but in proportion to their liberality. When taxes are laid upon commodities, their prices must rise, the concurrence of tradesmen must be prevented, an artificial dearth occa sioned, less industry excited, and a smaller quantity of goods produced.
Taxes upon land possessions have this great advantage, that they are levied without any great expense; the whole land tax of England does not cost the government above eight or ten thousand pounds. Collectors are chosen by the gentlemen of the county, and are obliged to 1 ' By what is called the land land is, perhaps, scarce rated at tax in England it was intended the fiftieth part of itsannual value.'
that stock should be taxed in the W. of N. bk. v. ch. ii. pt. 2, art. 2, same proportion as land...the vol. ii. pp. 443, 444.
greater part of the stock of Eng- 2 Ibid. art. i, vol. ii. p. 418.
TAXES ON POSSESSIONS 241 produce proper security for their carrying safely to the exchequer the money which they collect. The taxes of customs and excise, which produce such immense sums, are almost eaten up by the legions of officers that are employed in collecting them. These officers must have supervisors over them to examine their proceedings. The supervisors have over them collectors, who are under the commissioners, who have to account to the exchequer; to support these officers there must be levied a great deal more than the government requires, which is a manifest disadvantage.
Another advantage of a land tax is, that it does not tend to raise the price of commodities, as it is not paid in proportion to the corn and cattle, but in proportion to the rent. If the tenant pay the tax, he pays just so much less rent. Excise raises the price of commodities, and makes fewer people able to carry on business. If a man purchase £1000 worth of tobacco, he has an hundred pounds of tax to pay, and therefore cannot deal to such an extent as he would otherwise do; thus, as it requires greater stock to carry on trade, the dealers must be fewer, and the rich have, as it were, a monopoly against the poor. It was observed before that in England, from a kind of delicacy with regard to examin ing into the circumstances of particular persons, which is apparently an infringement upon liberty, no tax is laid upon stock or money, but all upon consumptions. Whatever advantages this method may have, there is evidently in it an inequality. The landlord who pays his annual land tax pays also a great part of the taxes on consumptions. On this account the landed interest complains first of a war, thinking the burden of it falls upon them, while on the other hand the monied men are gainers, arrd therefore oppose them. This per haps occasions the continuance of what is called the Tory interest.
R [02. Of Taxes on Consumptions^ Taxes upon possessions are naturally equal, but those upon consumptions naturally unequal, as they are sometimes paid by the merchant, sometimes by the consumer, and sometimes by the importer, who must be repaid it by the consumer. In Holland all goods are deposited in a public warehouse, one key of which is kept by the commissioner of the customs, and another by the owner of the goods.
If the goods are exported, no tax is advanced, but if they go into the country the consumer pays down the price to the merchant and the custom to the commissioner. This method is much the same with the famous excise scheme of Sir Robert Walpole, which was at last his ruin. It was to this effect, that a general excise should be established, and all goods imported deposited in a public warehouse, and the tax should only be paid upon the inland sale of them1. Though this scheme be liable to inconveniences, such as subjecting the owner to anxiety from not having his goods entirely in his own power, yet it is plainly this which gives the Dutch so great an advantage over all the other nations of Europe. The Dutch are in a manner the carriers of the other Europeans; they bring corn from the Baltic and those places where it is cheap, and wines from those places where there has been a good vintage, and keep them by them till they hear of a dearth, and then export them to the places where it is. But in England the moment you bring the commodities to the country, you must pay the tax and sell them where you please. Thus the merchant may lie out of his interest for a long time, and therefore must sell his commodities dearer. The Dutch, having no tax to pay but upon inland sale, are enabled to sell cheaper than the English or any other nation.
Taxes on consumptions have however some advantage over those on possessions. They are not felt, being paid 1 W. of N. bk. v. ch. ii. pt. ii. art. 4, vol. ii. pp. 481-484.
TAXES ON CONSUMPTIONS 243 imperceptibly; but a person possessed of a thousand pounds of land-rent feels very sensibly an hundred pounds going from him. The taxes on consumptions are not so much murmured against, because they are laid upon the merchant, who lays them on the price of goods, and thus they are insensibly paid by the people. When we buy a pound of tea we do not reflect that the most part of the price is a duty paid to the government, and therefore pay it contentedly, as though it were only the natural price of the commodity. In the same manner when an additional tax is laid upon beer, the price of it must be raised, but the mob do not directly vent their malice against the govern ment, who are the proper objects of it, but upon the brewers, as they confound the tax price with the natural one. Taxes upon consumptions therefore, which are paid by the merchant, seem most to favour liberty, and will always be favoured by this government. In Holland they buy a hogshead of wine and first pay the price to the merchant, and then so much to the officers of excise, as it were to get leave to drink it. We in reality do the very same thing, but as we do not feel it immediately, we imagine it all one price, and never reflect that we might drink port wine below sixpence a bottle, were it not for the duty.
Taxes on consumptions have still another advantage over those on possessions. If a person be possessed of a land-rent of an hundred pounds per annum, and this estate be valued at a high rate, he perhaps pays £20 to the government. The collector must be paid at a certain time of the year, and few people have so much selfcommand as to lay up money to be ready. He has therefore £20 to borrow to answer his present demands. When next payment comes, he has not only the tax to pay, but also the interest of the money borrowed the former year. He begins to encumber his estate; and thus upon examination it will be found that man)' landholders have been ruined. The best method of preventing this is to make the tenant pay the land tax in part payment of his rent 1. The taxes on consumptions are not liable to this inconvenience. When a person finds that he is spending too much on the elegancies of life, he can immediately diminish his consumption. Taxes upon consumptions are therefore more eligible than taxes upon possessions, as they have not so great a tendency to ruin the circumstances of individuals.
It is to be observed that taxes both on consumptions and possessions are more or less advantageous to in dustry according to the manner in which they are levied. The land tax in England is permanent and uniform, and does not rise with the rent, wrhich is regulated by the improvement of the land2; notwith standing modern improvements it is the same that it was formerly. In France the tax rises proportionably to the rent, which is a great discouragement to the landholder. It has much the same effect with the tithes in England. When we know that the produce is to be divided with those who lay out nothing, it hinders us from laying out what we would otherwise do upon the improvement of our lands. We are better financiers than the French 3, as we have also the advantage of them in the following particulars.
In the method of levying our customs we have an advantage over the French. Our customs are all paid at once by the merchants, and goods, after their entry in the custom house books, may be carried by a permit through any part of the country without molestation and expense, except some trifles upon tolls, &c. In France a duty is paid at the end of almost every town they go into, equal, if not greater, to what is paid by us at first; inland 1 W. of N. bk. v. ch. ii. pt. ii. art. increased in consequence of his i, vol. ii. p. 418. improvements.
2 Ibid., with, however, the 3 'The French system of taxaqualification that the owner of tion seems in every respect a portion only of a parish may inferior to the British.1 Ibid. art. find his land tax very slightly 4 ad fin., vol. ii. p. 504.
TAXES ON CONSUMPTIONS 245 industry is embarrassed by theirs, and only foreign trade by ours.
We have another advantage in levying our taxes by com mission, while theirs are levied by farm, by which means not one half of what they raise goes into the hands of the government. In England the whole expense of levying above seven millions does not come to £300,000. In France twenty-four millions are levied every year, and not above twelve goes to the expense of the government, the rest goes for defraying the expense of levying it, and for the profit of the farmer l. In England no excise officers are requisite but at the seaports, except a few up and down the country. The profits of the farmers in France would pay the expense of them all. In the collecting of our excise there is a regular subordination of officers who have their fixed salaries and nothing more, but in France the highest bidder has the place, and, as the man who undertakes it must advance the sum at a certain time, and runs a risk of not getting it up, he deserves a very high profit: besides, in an auction of this kind there are few bidders, as none are capable of undertaking the office but those who are brought up to business, and are possessed both of a great stock and credit, and can produce good security. When there are few bidders they can easily enter into an association among themselves, and have the whole at a very easy rate'-. Upon the whole we may observe that the English are the best financiers in Europe, and their taxes are levied with more propriety than those of any country whatever:J.
Upon this subject it is in general to be observed that taxes upon exportation are much more hurtful than 1 The amount paid into the 2 Ibid. pp. 499-504.
treasury ' did not amount to 3 ' Our state is not perfect, and fifteen millions sterling' in 1765, might be mended, but it is as and the amount levied must have good or better than that of most been about double. W. ofN. bk. of our neighbours.' Ibid. p. 497. v. ch. ii. ad fin., vol. ii. p. 504.
246 PART III I REVENUE those upon importation. When the inhabitants of a country are in a manner prohibited by high taxes from exporting the produce of their industry, they are confined to home consumption, and their motives to industry are diminished. Taxes upon importation, on the contrary, encourage the manufacturing of these particular commodities. The tax upon Hamburgh linen, for example, hinders the importation of great quantities of it, and causes more linen to be manufactured at home. In general, however, all taxes upon importation are hurtful in this respect, that they divert the industry of the country to an unnatural channel. The more stock there is employed in one way, there is the less to be employed in another; but the effects of taxes upon exportation are still more pernicious. This is one great cause of the poverty of Spain; they have imposed a high tax on the exportation of every commodity, and think that by this means the taxes are paid by foreigners, whereas, if they were to impose a tax on importation, it would be paid by their own subjects \ not reflecting that by bringing a burden on the exportation of commodities, they so far confine the con sumption of them, and diminish industry2.
To conclude all that is to be said of taxes, we may observe that the common prejudice that wealth consists in money has not been in this respect so hurtful as might have been imagined, and has even given occasion 3 to regulations not very inconvenient. Those nations to whom we give more goods than we receive, generally send us 1 ' I have found ministers and subjects are at the charge of others, both in their conversation them.' Uztariz, Theory and Pracand writings, maintain the erro- tice of Commerce and Maritime neous maxim that high duties are Affairs, transl. by John Kippax, to be laid upon commodities ex- 1751, vol. ii. p. 52; cp. vol. i. p.
ported, because foreigners pay xiii.
them; and, on the contrary, very 'L W. of N. bk. v. ch. ii. pt. ii.
moderate ones on such as are art. 4, vol. ii. pp. 495, 496.
imported, because his majesty's 3 MS. reads ' occasions.'
STOCKS 247 manufactured goods; those on the contrary, from whom we receive more goods than we give, or with respect to whom the balance is in our favour, generally send us unmanufactured goods. To Russia, for example, we send fine linen and other manufactured goods, and for a small quantity of these receive, in return, great quantities of un manufactured goods. This kind of trade is very advan tageous, because goods in an unmanufactured and rude state afford employment and maintenance to a great number of persons. It is merely from the absurd notion that wealth consists in money, that the British encourage most of those branches of foreign trade, where the balance is paid in money.
There are still some other species of taxes, but as their nature is much the same, it is unnecessary to mention them.
Having thus given a general view of taxes, it will not be improper here, on account of their connexion, to con sider the nature of stocks, and the causes of their rising and falling.
[§3. Of Stocks.}