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Home -> Adam Smith -> An Inquiry Into The Nature And Causes Of The Wealth Of Nations -> Chapter 2, Part 2 continue D

An Inquiry Into The Nature And Causes Of The Wealth Of Nations - Chapter 2, Part 2 continue D

1. Introduction And Plan Of The Work

2. Book 1, Chapter 1

3. Chapter 2

4. Chapter 3

5. Chapter 4

6. Chapter 5

7. Chapter 6

8. Chapter 7

9. Chapter 8

10. Chapter 8 continue

11. Chapter 9

12. Chapter 10

13. Chapter 10 continue

14. Chapter 11

15. Chapter 11 continue

16. Chapter 11 continue.

17. Chapter 11 continue..

18. Chapter 11 continue...

19. Conclusion of the Chapter 11

20. Book 2 Introduction

21. Chapter 1

22. Chapter II

23. Chapter II continue

24. Chapter II continue

25. Chapter 3

26. Chapter 4

27. Chapter 5

28. Book 3, Chapter 1

29. Chapter 2

30. Chapter 3

31. Chapter 4

32. Book 4, Chapter 1

33. Chapter 1 continue

34. Chapter 2

35. Chapter 3, Part 1

36. Chapter 3, Part 2

37. Chapter 4

38. Chapter 5

39. Chapter 5 continue

40. Chapter 6

41. Chapter 7, Part 1

42. Chapter 7, Part 2

43. Chapter 7, Part 3

44. Chapter 7, Part 3 continue

45. Chapter 8

46. Chapter 9

47. Book 5, Chapter 1, Part 1

48. Chapter 1, Part 2

49. Chapter 1, Part 3

50. Chapter 1, Part 3 continue

51. Chapter 1, Part 3 continue B

52. Chapter 1, Part 4

53. Chapter 2, Part 1

54. Chapter 2, Part 2

55. Chapter 2, Part 2 continue

56. Chapter 2, Part 2 continue B

57. Chapter 2, Part 2 continue C

58. Chapter 2, Part 2 continue D

59. Chapter 3

60. Chapter 3 continue

Under the old malt tax, indeed, is comprehended a tax of four shillings
upon the hogshead of cyder, and another of ten shillings upon the
barrel of mum. In 1774, the tax upon cyder produced only £3,083:6:8.
It probably fell somewhat short of its usual amount; all the different
taxes upon cyder, having, that year, produced less than ordinary. The
tax upon mum, though much heavier, is still less productive, on account
of the smaller consumption of that liquor. But to balance whatever may
be the ordinary amount of those two taxes, there is comprehended
under what is called the country excise, first, the old excise of six
shillings and eightpence upon the hogshead of cyder; secondly, a like
tax of six shillings and eightpence upon the hogshead of verjuice;
thirdly, another of eight shillings and ninepence upon the hogshead of
vinegar; and, lastly, a fourth tax of elevenpence upon the gallon of
mead or metheglin. The produce of those different taxes will probably
much more than counterbalance that of the duties imposed, by what is
called the annual malt tax, upon cyder and mum.

Malt is consumed, not only in the brewery of beer and ale, but in the
manufacture of low wines and spirits. If the malt tax were to be raised
to eighteen shillings upon the quarter, it might be necessary to make
some abatement in the different excises which are imposed upon those
particular sorts of low wines and spirits, of which malt makes any part
of the materials. In what are called malt spirits, it makes commonly
but a third part of the materials; the other two-thirds being either raw
barley, or one-third barley and one-third wheat. In the distillery of
malt spirits, both the opportunity and the temptation to smuggle
are much greater than either in a brewery or in a malt-house; the
opportunity, on account of the smaller bulk and greater value of the
commodity, and the temptation, on account of the superior height of
the duties, which amounted to 3s. 10 2/3d. upon the gallon of spirits.
{Though the duties directly imposed upon proof spirits amount only to
2s. 6d per gallon, these, added to the duties upon the low wines, from
which they are distilled, amount to 3s 10 2/3d. Both low wines and proof
spirits are, to prevent frauds, now rated according to what they gauge
in the wash.}

By increasing the duties upon malt, and reducing those upon the
distillery, both the opportunities and the temptation to smuggle would
be diminished, which might occasion a still further augmentation of

It has for some time past been the policy of Great Britain to discourage
the consumption of spiritous liquors, on account of their supposed
tendency to ruin the health and to corrupt the morals of the common
people. According to this policy, the abatement of the taxes upon the
distillery ought not to be so great as to reduce, in any respect, the
price of those liquors. Spiritous liquors might remain as dear as ever;
while, at the same time, the wholesome and invigorating liquors of beer
and ale might be considerably reduced in their price. The people might
thus be in part relieved from one of the burdens of which they at
present complain the most; while, at the same time, the revenue might be
considerably augmented.

The objections of Dr. Davenant to this alteration in the present system
of excise duties, seem to be without foundation. Those objections are,
that the tax, instead of dividing itself, as at present, pretty equally
upon the profit of the maltster, upon that of the brewer and upon that
of the retailer, would so far as it affected profit, fall altogether
upon that of the maltster; that the maltster could not so easily get
back the amount of the tax in the advanced price of his malt, as the
brewer and retailer in the advanced price of their liquor; and that so
heavy a tax upon malt might reduce the rent and profit of barley land.

No tax can ever reduce, for any considerable time, the rate of profit in
any particular trade, which must always keep its level with other trades
in the neighbourhood. The present duties upon malt, beer, and ale, do
not affect the profits of the dealers in those commodities, who all get
back the tax with an additional profit, in the enhanced price of their
goods. A tax, indeed, may render the goods upon which it is imposed so
dear, as to diminish the consumption of them. But the consumption
of malt is in malt liquors; and a tax of eighteen shillings upon the
quarter of malt could not well render those liquors dearer than the
different taxes, amounting to twenty-four or twenty-five shillings,
do at present. Those liquors, on the contrary, would probably become
cheaper, and the consumption of them would be more likely to increase
than to diminish.

It is not very easy to understand why it should be more difficult for
the maltster to get back eighteen shillings in the advanced price of his
malt, than it is at present for the brewer to get back twenty-four or
twenty-five, sometimes thirty shillings, in that of his liquor. The
maltster, indeed, instead of a tax of six shillings, would be obliged
to advance one of eighteen shilling upon every quarter of malt. But
the brewer is at present obliged to advance a tax of twenty-four or
twenty-five, sometimes thirty shillings, upon every quarter of malt which
he brews. It could not be more inconvenient for the maltster to advance
a lighter tax, than it is at present for the brewer to advance a heavier
one. The maltster does not always keep in his granaries a stock of malt,
which it will require a longer time to dispose of than the stock of beer
and ale which the brewer frequently keeps in his cellars. The former,
therefore, may frequently get the returns of his money as soon as the
latter. But whatever inconveniency might arise to the maltster from
being obliged to advance a heavier tax, it could easily be remedied,
by granting him a few months longer credit than is at present commonly
given to the brewer.

Nothing could reduce the rent and profit of barley land, which did not
reduce the demand for barley. But a change of system, which reduced the
duties upon a quarter of malt brewed into beer and ale, from twentyfour
and twenty-five shillings to eighteen shillings, would be more likely to
increase than diminish that demand. The rent and profit of barley land,
besides, must always be nearly equal to those of other equally fertile
and equally well cultivated land. If they were less, some part of the
barley land would soon be turned to some other purpose; and if they were
greater, more land would soon be turned to the raising of barley. When
the ordinary price of any particular produce of land is at what may be
called a monopoly price, a tax upon it necessarily reduces the rent
and profit of the land which grows it. A tax upon the produce of
those precious vineyards, of which the wine falls so much short of the
effectual demand, that its price is always above the natural proportion
to that of the produce of other equally fertile and equally well
cultivated land, would necessarily reduce the rent and profit of those
vineyards. The price of the wines being already the highest that could
be got for the quantity commonly sent to market, it could not be raised
higher without diminishing that quantity; and the quantity could not be
diminished without still greater loss, because the lands could not be
turned to any other equally valuable produce. The whole weight of the
tax, therefore, would fall upon the rent and profit; properly upon the
rent of the vineyard. When it has been proposed to lay any new tax upon
sugar, our sugar planters have frequently complained that the whole
weight of such taxes fell not upon the consumer, but upon the producer;
they never having been able to raise the price of their sugar after the
tax higher than it was before. The price had, it seems, before the tax,
been a monopoly price; and the arguments adduced to show that sugar
was an improper subject of taxation, demonstrated perhaps that it was
a proper one; the gains of monopolists, whenever they can be come at,
being certainly of all subjects the most proper. But the ordinary price
of barley has never been a monopoly price; and the rent and profit of
barley land have never been above their natural proportion to those of
other equally fertile and equally well cultivated land. The different
taxes which have been imposed upon malt, beer, and ale, have never
lowered the price of barley; have never reduced the rent and profit of
barley land. The price of malt to the brewer has constantly risen in
proportion to the taxes imposed upon it; and those taxes, together with
the different duties upon beer and ale, have constantly either raised
the price, or, what comes to the same thing, reduced the quality of
those commodities to the consumer. The final payment of those taxes has
fallen constantly upon the consumer, and not upon the producer.

The only people likely to suffer by the change of system here proposed,
are those who brew for their own private use. But the exemption, which
this superior rank of people at present enjoy, from very heavy taxes
which are paid by the poor labourer and artificer, is surely most unjust
and unequal, and ought to be taken away, even though this change was
never to take place. It has probably been the interest of this superior
order of people, however, which has hitherto prevented a change of
system that could not well fail both to increase the revenue and to
relieve the people.

Besides such duties as those of custom and excise above mentioned, there
are several others which affect the price of goods more unequally and
more indirectly. Of this kind are the duties, which, in French, are
called peages, which in old Saxon times were called the duties of
passage, and which seem to have been originally established for the
same purpose as our turnpike tolls, or the tolls upon our canals and
navigable rivers, for the maintenance of the road or of the navigation.
Those duties, when applied to such purposes, are most properly imposed
according to the bulk or weight of the goods. As they were originally
local and provincial duties, applicable to local and provincial
purposes, the administration of them was, in most cases, entrusted to
the particular town, parish, or lordship, in which they were levied;
such communities being, in some way or other, supposed to be accountable
for the application. The sovereign, who is altogether unaccountable, has
in many countries assumed to himself the administration of those duties;
and though he has in most cases enhanced very much the duty, he has in
many entirely neglected the application. If the turnpike tolls of Great
Britain should ever become one of the resources of government, we may
learn, by the example of many other nations, what would probably be the
consequence. Such tolls, no doubt, are finally paid by the consumer; but
the consumer is not taxed in proportion to his expense, when he pays,
not according to the value, but according to the bulk or weight of what
he consumes. When such duties are imposed, not according to the bulk or
weight, but according to the supposed value of the goods, they become
properly a sort of inland customs or excise, which obstruct very much
the most important of all branches of commerce, the interior commerce of
the country.

In some small states, duties similar to those passage duties are imposed
upon goods carried across the territory, either by land or by water,
from one foreign country to another. These are in some countries called
transit-duties. Some of the little Italian states which are situated
upon the Po, and the rivers which run into it, derive some revenue from
duties of this kind, which are paid altogether by foreigners, and which,
perhaps, are the only duties that one state can impose upon the subjects
of another, without obstruction in any respect, the industry or commerce
of its own. The most important transit-duty in the world, is that levied
by the king of Denmark upon all merchant ships which pass through the

Such taxes upon luxuries, as the greater part of the duties of customs
and excise, though they all fall indifferently upon every different
species of revenue, and are paid finally, or without any retribution, by
whoever consumes the commodities upon which they are imposed; yet they
do not always fall equally or proportionally upon the revenue of
every individual. As every man's humour regulates the degree of his
consumption, every man contributes rather according to his humour, than
proportion to his revenue: the profuse contribute more, the parsimonious
less, than their proper proportion. During the minority of a man of
great fortune, he contributes commonly very little, by his consumption,
towards the support of that state from whose protection he derives a
great revenue. Those who live in another country, contribute nothing by
their consumption towards the support of the government of that country,
in which is situated the source of their revenue. If in this latter
country there should be no land tax, nor any considerable duty upon the
transference either of moveable or immoveable property, as is the
case in Ireland, such absentees may derive a great revenue from
the protection of a government, to the support of which they do not
contribute a single shilling. This inequality is likely to be greatest
in a country of which the government is, in some respects, subordinate
and dependant upon that of some other. The people who possess the most
extensive property in the dependant, will, in this case, generally
chuse to live in the governing country. Ireland is precisely in this
situation; and we cannot therefore wonder, that the proposal of a tax
upon absentees should be so very popular in that country. It might,
perhaps, be a little difficult to ascertain either what sort, or what
degree of absence, would subject a man to be taxed as an absentee, or
at what precise time the tax should either begin or end. If you
except, however, this very peculiar situation, any inequality in the
contribution of individuals which can arise from such taxes, is much
more than compensated by the very circumstance which occasions that
inequality; the circumstance that every man's contribution is altogether
voluntary; it being altogether in his power, either to consume, or
not to consume, the commodity taxed. Where such taxes, therefore, are
properly assessed, and upon proper commodities, they are paid with less
grumbling than any other. When they are advanced by the merchant
or manufacturer, the consumer, who finally pays them, soon comes to
confound them with the price of the commodities, and almost forgets that
he pays any tax. Such taxes are, or may be, perfectly certain; or may
be assessed, so as to leave no doubt concerning either what ought to be
paid, or when it ought to be paid; concerning either the quantity or the
time of payment. What ever uncertainty there may sometimes be, either in
the duties of customs in Great Britain, or in other duties of the
same kind in other countries, it cannot arise from the nature of those
duties, but from the inaccurate or unskilful manner in which the law
that imposes them is expressed.

Taxes upon luxuries generally are, and always may be, paid piece-meal,
or in proportion as the contributors have occasion to purchase the goods
upon which they are imposed. In the time and mode of payment, they are,
or may be, of all taxes the most convenient. Upon the whole, such taxes,
therefore, are perhaps as agreeable to the three first of the four
general maxims concerning taxation, as any other. They offend in every
respect against the fourth.

Such taxes, in proportion to what they bring into the public treasury of
the state, always take out, or keep out, of the pockets of the people,
more than almost any other taxes. They seem to do this in all the four
different ways in which it is possible to do it.

First, the levying of such taxes, even when imposed in the most
judicious manner, requires a great number of custom-house and excise
officers, whose salaries and perquisites are a real tax upon the people,
which brings nothing into the treasury of the state. This expense,
however, it must be acknowledged, is more moderate in Great Britain than
in most other countries. In the year which ended on the 5th of July,
1775, the gross produce of the different duties, under the management
of the commissioners of excise in England, amounted to £5,507,308:18:8¼,
which was levied at an expense of little more than five and a-half per
cent. From this gross produce, however, there must be deducted what was
paid away in bounties and drawbacks upon the exportation of exciseable
goods, which will reduce the neat produce below five millions. {The
neat produce of that year, after deducting all expenses and allowances,
amounted to £4,975,652:19:6.} The levying of the salt duty, and excise
duty, but under a different management, is much more expensive. The neat
revenue of the customs does not amount to two millions and a-half, which
is levied at an expense of more than ten per cent., in the salaries
of officers and other incidents. But the perquisites of custom-house
officers are everywhere much greater than their salaries; at some ports
more than double or triple those salaries. If the salaries of officers,
and other incidents, therefore, amount to more than ten per cent. upon
the neat revenue of the customs, the whole expense of levying that
revenue may amount, in salaries and perquisites together, to more than
twenty or thirty per cent. The officers of excise receive few or no
perquisites; and the administration of that branch of the revenue being
of more recent establishment, is in general less corrupted than that
of the customs, into which length of time has introduced and authorised
many abuses. By charging upon malt the whole revenue which is at present
levied by the different duties upon malt and malt liquors, a saving, it
is supposed, of more than £50,000, might be made in the annual expense
of the excise. By confining the duties of customs to a few sorts of
goods, and by levying those duties according to the excise laws, a
much greater saving might probably be made in the annual expense of the

Secondly, such taxes necessarily occasion some obstruction or
discouragement to certain branches of industry. As they always raise the
price of the commodity taxed, they so far discourage its consumption,
and consequently its production. If it is a commodity of home growth or
manufacture, less labour comes to be employed in raising and producing
it. If it is a foreign commodity of which the tax increases in this
manner the price, the commodities of the same kind which are made at
home may thereby, indeed, gain some advantage in the home market, and
a greater quantity of domestic industry may thereby be turned toward
preparing them. But though this rise of price in a foreign commodity,
may encourage domestic industry in one particular branch, it necessarily
discourages that industry in almost every other. The dearer the
Birmingham manufacturer buys his foreign wine, the cheaper he
necessarily sells that part of his hardware with which, or, what comes
to the same thing, with the price of which, he buys it. That part of
his hardware, therefore, becomes of less value to him, and he has less
encouragement to work at it. The dearer the consumers in one country pay
for the surplus produce of another, the cheaper they necessarily sell
that part of their own surplus produce with which, or, what comes to the
same thing, with the price of which, they buy it. That part of their
own surplus produce becomes of less value to them, and they have less
encouragement to increase its quantity. All taxes upon consumable
commodities, therefore, tend to reduce the quantity of productive labour
below what it otherwise would be, either in preparing the commodities
taxed, if they are home commodities, or in preparing those with which
they are purchased, if they are foreign commodities. Such taxes, too,
always alter, more or less, the natural direction of national industry,
and turn it into a channel always different from, and generally less
advantageous, than that in which it would have run of its own accord.

Thirdly, the hope of evading such taxes by smuggling, gives frequent
occasion to forfeitures and other penalties, which entirely ruin the
smuggler; a person who, though no doubt highly blameable for violating
the laws of his country, is frequently incapable of violating those of
natural justice, and would have been, in every respect, an excellent
citizen, had not the laws of his country made that a crime which nature
never meant to be so. In those corrupted governments, where there is
at least a general suspicion of much unnecessary expense, and great
misapplication of the public revenue, the laws which guard it are little
respected. Not many people are scrupulous about smuggling, when, without
perjury, they can find an easy and safe opportunity of doing so. To
pretend to have any scruple about buying smuggled goods, though a
manifest encouragement to the violation of the revenue laws, and to the
perjury which almost always attends it, would, in most countries, be
regarded as one of those pedantic pieces of hypocrisy which, instead of
gaining credit with anybody, serve only to expose the person who affects
to practise them to the suspicion of being a greater knave than most of
his neighbours. By this indulgence of the public, the smuggler is often
encouraged to continue a trade, which he is thus taught to consider as
in some measure innocent; and when the severity of the revenue laws
is ready to fall upon him, he is frequently disposed to defend with
violence, what he has been accustomed to regard as his just property.
From being at first, perhaps, rather imprudent than criminal, he at last
too often becomes one of the hardiest and most determined violators of
the laws of society. By the ruin of the smuggler, his capital, which
had before been employed in maintaining productive labour, is absorbed
either in the revenue of the state, or in that of the revenue officer;
and is employed in maintaining unproductive, to the diminution of the
general capital of the society, and of the useful industry which it
might otherwise have maintained.

Fourthly, such taxes, by subjecting at least the dealers in the taxed
commodities, to the frequent visits and odious examination of the
tax-gatherers, expose them sometimes, no doubt, to some degree of
oppression, and always to much trouble and vexation; and though
vexation, as has already been said, is not strictly speaking expense,
it is certainly equivalent to the expense at which every man would
be willing to redeem himself from it. The laws of excise, though more
effectual for the purpose for which they were instituted, are, in this
respect, more vexatious than those of the customs. When a merchant has
imported goods subject to certain duties of customs; when he has paid
those duties, and lodged the goods in his warehouse; he is not, in most
cases, liable to any further trouble or vexation from the custom-house
officer. It is otherwise with goods subject to duties of excise. The
dealers have no respite from the continual visits and examination of
the excise officers. The duties of excise are, upon this account, more
unpopular than those of the customs; and so are the officers who levy
them. Those officers, it is pretended, though in general, perhaps, they
do their duty fully as well as those of the customs; yet, as that
duty obliges them to be frequently very troublesome to some of their
neighbours, commonly contract a certain hardness of character, which the
others frequently have not. This observation, however, may very probably
be the mere suggestion of fraudulent dealers, whose smuggling is either
prevented or detected by their diligence.

The inconveniencies, however, which are, perhaps, in some degree
inseparable from taxes upon consumable communities, fall as light upon
the people of Great Britain as upon those of any other country of which
the government is nearly as expensive. Our state is not perfect, and
might be mended; but it is as good, or better, than that of most of our

In consequence of the notion, that duties upon consumable goods
were taxes upon the profits of merchants, those duties have, in some
countries, been repeated upon every successive sale of the goods. If the
profits of the merchant-importer or merchant-manufacturer were taxed,
equality seemed to require that those of all the middle buyers, who
intervened between either of them and the consumer, should likewise be
taxed. The famous alcavala of Spain seems to have been established upon
this principle. It was at first a tax of ten per cent. afterwards of
fourteen per cent. and it is at present only six per cent. upon the
sale of every sort of property whether moveable or immoveable; and it
is repeated every time the property is sold. {Memoires concernant les
Droits, etc. tom. i, p. 15} The levying of this tax requires a multitude
of revenue officers, sufficient to guard the transportation of goods,
not only from one province to another, but from one shop to another. It
subjects, not only the dealers in some sorts of goods, but those in all
sorts, every farmer, every manufacturer, every merchant and shopkeeper,
to the continual visit and examination of the tax-gatherers. Through the
greater part of the country in which a tax of this kind is established,
nothing can be produced for distant sale. The produce of every part
of the country must be proportioned to the consumption of the
neighbourhood. It is to the alcavala, accordingly, that Ustaritz imputes
the ruin of the manufactures of Spain. He might have imputed to it,
likewise, the declension of agriculture, it being imposed not only upon
manufactures, but upon the rude produce of the land.

In the kingdom of Naples, there is a similar tax of three per cent. upon
the value of all contracts, and consequently upon that of all contracts
of sale. It is both lighter than the Spanish tax, and the greater part
of towns and parishes are allowed to pay a composition in lieu of it.
They levy this composition in what manner they please, generally in a
way that gives no interruption to the interior commerce of the place.
The Neapolitan tax, therefore, is not near so ruinous as the Spanish

The uniform system of taxation, which, with a few exception of no
great consequence, takes place in all the different parts of the united
kingdom of Great Britain, leaves the interior commerce of the country,
the inland and coasting trade, almost entirely free. The inland trade is
almost perfectly free; and the greater part of goods may be carried from
one end of the kingdom to the other, without requiring any permit or
let-pass, without being subject to question, visit or examination, from
the revenue officers. There are a few exceptions, but they are such as
can give no interruption to any important branch of inland commerce of
the country. Goods carried coastwise, indeed, require certificates or
coast-cockets. If you except coals, however, the rest are almost
all duty-free. This freedom of interior commerce, the effect of the
uniformity of the system of taxation, is perhaps one of the principal
causes of the prosperity of Great Britain; every great country being
necessarily the best and most extensive market for the greater part of
the productions of its own industry. If the same freedom in consequence
of the same uniformity, could be extended to Ireland and the
plantations, both the grandeur of the state, and the prosperity of every
part of the empire, would probably be still greater than at present.

In France, the different revenue laws which take place in the different
provinces, require a multitude of revenue officers to surround, not
only the frontiers of the kingdom, but those of almost each particular
province, in order either to prevent the importation of certain goods,
or to subject it to the payment of certain duties, to the no small
interruption of the interior commerce of the country. Some provinces are
allowed to compound for the gabelle, or salt tax; others are exempted
from it altogether. Some provinces are exempted from the exclusive sale
of tobacco, which the farmers-general enjoy through the greater part of
the kingdom. The aides, which correspond to the excise in England, are
very different in different provinces. Some provinces are exempted from
them, and pay a composition or equivalent. In those in which they take
place, and are in farm, there are many local duties which do not extend
beyond a particular town or district. The traites, which correspond
to our customs, divide the kingdom into three great parts; first, the
provinces subject to the tariff of 1664, which are called the provinces
of the five great farms, and under which are comprehended Picardy,
Normandy, and the greater part of the interior provinces of the kingdom;
secondly, the provinces subject to the tariff of 1667, which are called
the provinces reckoned foreign, and under which are comprehended the
greater part of the frontier provinces; and, thirdly, those provinces
which are said to be treated as foreign, or which, because they are
allowed a free commerce with foreign countries, are, in their commerce
with the other provinces of France, subjected to the same duties as
other foreign countries. These are Alsace, the three bishoprics of
Mentz, Toul, and Verdun, and the three cities of Dunkirk, Bayonne, and
Marseilles. Both in the provinces of the five great farms (called so on
account of an ancient division of the duties of customs into five great
branches, each of which was originally the subject of a particular farm,
though they are now all united into one), and in those which are said
to be reckoned foreign, there are many local duties which do not extend
beyond a particular town or district. There are some such even in the
provinces which are said to be treated as foreign, particularly in
the city of Marseilles. It is unnecessary to observe how much both the
restraints upon the interior commerce of the country, and the number
of the revenue officers, must be multiplied, in order to guard the
frontiers of those different provinces and districts which are subject
to such different systems of taxation.

Over and above the general restraints arising from this complicated
system of revenue laws, the commerce of wine (after corn, perhaps, the
most important production of France) is, in the greater part of the
provinces, subject to particular restraints arising from the favour
which has been shown to the vineyards of particular provinces and
districts above those of others. The provinces most famous for their
wines, it will be found, I believe, are those in which the trade in that
article is subject to the fewest restraints of this kind. The extensive
market which such provinces enjoy, encourages good management both in
the cultivation of their vineyards, and in the subsequent preparation of
their wines.

Such various and complicated revenue laws are not peculiar to France.
The little duchy of Milan is divided into six provinces, in each of
which there is a different system of taxation, with regard to several
different sorts of consumable goods. The still smaller territories of
the duke of Parma are divided into three or four, each of which has,
in the same manner, a system of its own. Under such absurd management,
nothing but the great fertility of the soil, and happiness of the
climate, could preserve such countries from soon relapsing into the
lowest state of poverty and barbarism.

Taxes upon consumable commodities may either he levied by an
administration, of which the officers are appointed by govermnent, and
are immediately accountable to government, of which the revenue must,
in this case, vary from year to year, according to the occasional
variations in the produce of the tax; or they may be let in farm for a
rent certain, the farmer being allowed to appoint his own officers, who,
though obliged to levy the tax in the manner directed by the law, are
under his immediate inspection, and are immediately accountable to him.
The best and most frugal way of levying a tax can never be by farm. Over
and above what is necessary for paying the stipulated rent, the salaries
of the officers, and the whole expense of administration, the farmer
must always draw from the produce of the tax a certain profit,
proportioned at least to the advance which he makes, to the risk which
he runs, to the trouble which he is at, and to the knowledge and skill
which it requires to manage so very complicated a concern. Government,
by establishing an administration under their own immediate inspection,
of the same kind with that which the farmer establishes, might at
least save this profit, which is almost always exorbitant. To farm
any considerable branch of the public revenue requires either a great
capital, or a great credit; circumstances which would alone restrain the
competition for such an undertaking to a very small number of people. Of
the few who have this capital or credit, a still smaller number have the
necessary knowledge or experience; another circumstance which restrains
the competition still further. The very few who are in condition to
become competitors, find it more for their interest to combine together;
to become copartners, instead of competitors; and, when the farm is set
up to auction, to offer no rent but what is much below the real value.
In countries where the public revenues are in farm, the farmers are
generally the most opulent people. Their wealth would alone excite the
public indignation; and the vanity which almost always accompanies
such upstart fortunes, the foolish ostentation with which they commonly
display that wealth, excite that indignation still more.

The farmers of the public revenue never find the laws too severe, which
punish any attempt to evade the payment of a tax. They have no bowels
for the contributors, who are not their subjects, and whose universal
bankruptcy, if it should happen the day after the farm is expired, would
not much affect their interest. In the greatest exigencies of the state,
when the anxiety of the sovereign for the exact payment of his revenue
is necessarily the greatest, they seldom fail to complain, that without
laws more rigorous than those which actually took place, it will be
impossible for them to pay even the usual rent. In those moments of
public distress, their commands cannot be disputed. The revenue laws,
therefore, become gradually more and more severe. The most sanguinary
are always to be found in countries where the greater part of the public
revenue is in farm; the mildest, in countries where it is levied under
the immediate inspection of the sovereign. Even a bad sovereign feels
more compassion for his people than can ever be expected from the
farmers of his revenue. He knows that the permanent grandeur of his
family depends upon the prosperity of his people, and he will never
knowingly ruin that prosperity for the sake of any momentary interest of
his own. It is otherwise with the farmers of his revenue, whose grandeur
may frequently be the effect of the ruin, and not of the prosperity, of
his people.

A tax is sometimes not only farmed for a certain rent, but the farmer
has, besides, the monopoly of the commodity taxed. In France, the duties
upon tobacco and salt are levied in this manner. In such cases, the
farmer, instead of one, levies two exorbitant profits upon the people;
the profit of the farmer, and the still more exorbitant one of the
monopolist. Tobacco being a luxury, every man is allowed to buy or not
to buy as he chuses; but salt being a necessary, every man is obliged to
buy of the farmer a certain quantity of it; because, if he did not buy
this quantity of the farmer, he would, it is presumed, buy it of some
smuggler. The taxes upon both commodities are exorbitant. The temptation
to smuggle, consequently, is to many people irresistible; while, at
the same time, the rigour of the law, and the vigilance of the farmer's
officers, render the yielding to the temptation almost certainly
ruinous. The smuggling of salt and tobacco sends every year several
hundred people to the galleys, besides a very considerable number whom
it sends to the gibbet. Those taxes, levied in this manner, yield a very
considerable revenue to government. In 1767, the farm of tobacco was let
for twenty-two millions five hundred and forty-one thousand two hundred
and seventy-eight livres a-year; that of salt for thirty-six millions
four hundred and ninety-two thousand four hundred and four livres. The
farm, in both cases, was to commence in 1768, and to last for six years.
Those who consider the blood of the people as nothing, in comparison
with the revenue of the prince, may, perhaps, approve of this method
of levying taxes. Similar taxes and monopolies of salt and tobacco have
been established in many other countries, particularly in the Austrian
and Prussian dominions, and in the greater part of the states of Italy.

In France, the greater part of the actual revenue of the crown is
derived from eight different sources; the taille, the capitation, the
two vingtiemes, the gabelles, the aides, the traites, the domaine,
and the farm of tobacco. The live last are, in the greater part of
the provinces, under farm. The three first are everywhere levied by
an administration, under the immediate inspection and direction of
government; and it is universally acknowledged, that in proportion to
what they take out of the pockets of the people, they bring more
into the treasury of the prince than the other five, of which the
administration is much more wasteful and expensive.

The finances of France seem, in their present state, to admit of three
very obvious reformations. First, by abolishing the taille and the
capitation, and by increasing the number of the vingtiemes, so as to
produce an additional revenue equal to the amount of those other taxes,
the revenue of the crown might be preserved; the expense of collection
might be much diminished; the vexation of the inferior ranks of people,
which the taille and capitation occasion, might be entirely prevented;
and the superior ranks might not be more burdened than the greater part
of them are at present. The vingtieme, I have already observed, is a
tax very nearly of the same kind with what is called the land tax of
England. The burden of the taille, it is acknowledged, falls finally
upon the proprietors of land; and as the greater part of the capitation
is assessed upon those who are subject to the taille, at so much a-pound
of that other tax, the final payment of the greater part of it must
likewise fall upon the same order of people. Though the number of the
vingtiemes, therefore, was increased, so as to produce an additional
revenue equal to the amount of both those taxes, the superior ranks
of people might not be more burdened than they are at present; many
individuals, no doubt, would, on account of the great inequalities with
which the taille is commonly assessed upon the estates and tenants of
different individuals. The interest and opposition of such favoured
subjects, are the obstacles most likely to prevent this, or any other
reformation of the same kind. Secondly, by rendering the gabelle, the
aides, the traites, the taxes upon tobacco, all the different customs
and excises, uniform in all the different parts of the kingdom, those
taxes might be levied at much less expense, and the interior commerce of
the kingdom might be rendered as free as that of England. Thirdly, and
lastly, by subjecting all those taxes to an administration under the
immediate inspection and direction or government, the exorbitant profits
of the farmers-general might be added to the revenue of the state. The
opposition arising from the private interest of individuals, is likely
to be as effectual for preventing the two last as the first-mentioned
scheme of reformation.

The French system of taxation seems, in every respect, inferior to the
British. In Great Britain, ten millions sterling are annually levied
upon less than eight millions of people, without its being possible to
say that any particular order is oppressed. From the Collections of the
Abbé Expilly, and the observations of the author of the Essay upon
the Legislation and Commerce of Corn, it appears probable that France,
including the provinces of Lorraine and Bar, contains about twenty-three
or twenty-four millions of people; three times the number, perhaps,
contained in Great Britain. The soil and climate of France are better
than those of Great Britain. The country has been much longer in a
state of improvement and cultivation, and is, upon that account, better
stocked with all those things which it requires a long time to raise
up and accumulate; such as great towns, and convenient and well-built
houses, both in town and country. With these advantages, it might be
expected, that in France a revenue of thirty millions might be levied
for the support of the state, with as little inconvenience as a revenue
of ten millions is in Great Britain. In 1765 and 1766, the whole revenue
paid into the treasury of France, according to the best, though, I
acknowledge, very imperfect accounts which I could get of it, usually
run between 308 and 325 millions of livres; that is, it did not amount
to fifteen millions sterling; not the half of what might have been
expected, had the people contributed in the same proportion to their
numbers as the people of Great Britain. The people of France, however,
it is generally acknowledged, are much more oppressed by taxes than the
people of Great Britain. France, however, is certainly the great empire
in Europe, which, after that of Great Britain, enjoys the mildest and
most indulgent government.

In Holland, the heavy taxes upon the necessaries of life have ruined,
it is said, their principal manufacturers, and are likely to discourage,
gradually, even their fisheries and their trade in ship-building. The
taxes upon the necessaries of life are inconsiderable in Great Britain,
and no manufacture has hitherto been ruined by them. The British taxes
which bear hardest on manufactures, are some duties upon the importation
of raw materials, particularly upon that of raw silk. The revenue of the
States-General and of the different cities, however, is said to amount
to more than five millions two hundred and fifty thousand pounds
sterling; and as the inhabitants of the United Provinces cannot well be
supposed to amount to more than a third part of those of Great Britain,
they must, in proportion to their number, be much more heavily taxed.

After all the proper subjects of taxation have been exhausted, if the
exigencies of the state still continue to require new taxes, they must
be imposed upon improper ones. The taxes upon the necessaries of life,
therefore, may be no impeachment of the wisdom of that republic, which,
in order to acquire and to maintain its independency, has, in spite of
its meat frugality, been involved in such expensive wars as have obliged
it to contract great debts. The singular countries of Holland and
Zealand, besides, require a considerable expense even to preserve their
existence, or to prevent their being swallowed up by the sea, which must
have contributed to increase considerably the load of taxes in those two
provinces. The republican form of government seems to be the principal
support of the present grandeur of Holland. The owners of great
capitals, the great mercantile families, have generally either some
direct share, or some indirect influence, in the administration of that
government. For the sake of the respect and authority which they derive
from this situation, they are willing to live in a country where their
capital, if they employ it themselves, will bring them less profit, and
if they lend it to another, less interest; and where the very
moderate revenue which they can draw from it will purchase less of the
necessaries and conveniencies of life than in any other part of Europe.
The residence of such wealthy people necessarily keeps alive, in spite
of all disadvantages, a certain degree of industry in the country. Any
public calamity which should destroy the republican form of government,
which should throw the whole administration into the hands of nobles and
of soldiers, which should annihilate altogether the importance of those
wealthy merchants, would soon render it disagreeable to them to live in
a country where they were no longer likely to be much respected. They
would remove both their residence and their capital to some other
country, and the industry and commerce of Holland would soon follow the
capitals which supported them.

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