An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗

are either necessaries or luxuries.

 

By necessaries I understand, not only the commodities which are

indispensibly necessary for the support of life, but whatever the

custom of the country renders it indecent for creditable people,

even of the lowest order, to be without. A linen shirt, for

example, is, strictly speaking, not a necessary of life. The

Greeks and Romans lived, I suppose, very comfortably, though they

had no linen. But in the present times, through the greater part

of Europe, a creditable daylabourer would be ashamed to appear

in public without a linen shirt, the want of which would be

supposed to denote that disgraceful degree of poverty, which, it

is presumed, nobody can well fall into without extreme bad

conduct. Custom. in the same manner, has rendered leather shoes a

necessary of life in England. The poorest creditable person, of

either sex, would be ashamed to appear in public without them. In

Scotland, custom has rendered them a necessary of life to the

lowest order of men ; but not to the same order of women, who

may, without any discredit, walk about barefooted. In France,

they are necessaries neither to men nor to women; the lowest rank

of both sexes appearing there publicly, without any discredit,

sometimes in wooden shoes, and sometimes barefooted. Under

necessaries, therefore, I comprehend, not only those things which

nature, but those things which the established rules of decency

have rendered necessary to the lowest rank of people. All other

things I call luxuries, without meaning, by this appellation, to

throw the smallest degree of reproach upon the temperate use of

them. Beer and ale, for example, in Great Britain, and wine, even

in the wine countries, I call luxuries. A man of any rank may,

without any reproach, abstain totally from tasting such liquors.

Nature does not render them necessary for the support of life ;

and custom nowhere renders it indecent to live without them.

 

As the wages of labour are everywhere regulated, partly by the

demand for it, and partly by the average price of the necessary

articles of subsistence; whatever raises this average price must

necessarily raise those wages; so that the labourer may still be

able to purchase that quantity of those necessary articles which

the state of the demand for labour, whether increasing,

stationary, or declining, requires that he should have.{See book

i.chap. 8} A tax upon those articles necessarily raises their

price somewhat higher than the amount of the tax, because the

dealer, who advances the tax, must generally get it back, with a

profit. Such a tax must, therefore, occasion a rise in the wages

of labour, proportionable to this rise of price.

 

It is thus that a tax upon the necessaries of life operates

exactly in the same manner as a direct tax upon the wages of

labour. The labourer, though he may pay it out of his hand,

cannot, for any considerable time at least, be properly said even

to advance it. It must always, in the long-run, be advanced to

him by his immediate employer, in the advanced state of wages.

His employer, if he is a manufacturer, will charge upon the price

of his goods the rise of wages, together with a profit, so that

the final payment of the tax, together with this overcharge, will

fall upon the consumer. If his employer is a farmer, the final

payment, together with a like overcharge, will fall upon the rent

of the landlord.

 

It is otherwise with taxes upon what I call luxuries, even upon

those of the poor. The rise in the price of the taxed

commodities, will not necessarily occasion any rise in the wages

of labour. A tax upon tobacco, for example, though a luxury of

the poor, as well as of the rich, will not raise wages. Though it

is taxed in England at three times, and in France at fifteen

times its original price, those high duties seem to have no

effect upon the wages of labour. The same thing maybe said of the

taxes upon tea and sugar, which, in England and Holland, have

become luxuries of the lowest ranks of people; and of those upon

chocolate, which, in Spain, is said to have become so.

 

The different taxes which, in Great Britain, have, in the course

of the present century, been imposed upon spiritous liquors, are

not supposed to have had any effect upon the wages of labour. The

rise in the price of porter, occasioned by an additional tax of

three shillings upon the barrel of strong beer, has not raised

the wages of common labour in London. These were about eighteen

pence or twenty pence a-day before the tax, and they are not more

now.

 

The high price of such commodities does not necessarily diminish

the ability of the inferior ranks of people to bring up families.

Upon the sober and industrious poor, taxes upon such commodities

act as sumptuary laws, and dispose them either to moderate, or to

refrain altogether from the use of superfluities which they can

no longer easily afford. Their ability to bring up families, in

consequence of this forced frugality, instead of being

diminished, is frequently, perhaps, increased by the tax. It is

the sober and industrious poor who generally bring up the most

numerous families, and who principally supply the demand for

useful labour. All the poor, indeed, are not sober and

industrious ; and the dissolute and disorderly might continue to

indulge themselves in the use of such commodities, after this

rise of price, in the same manner as before, without regarding

the distress which this indulgence might bring upon their

families. Such disorderly persons, however, seldom rear up

numerous families, their children generally perishing from

neglect, mismanagement, and the scantiness or unwholesomeness of

their food. If by the strength of their constitution, they

survive the hardships to which the bad conduct of their parents

exposes them, yet the example of that bad conduct commonly

corrupts their morals ; so that, instead of being useful to

society by their industry, they become public nuisances by their

vices and disorders. Through the advanced price of the luxuries

of the poor, therefore, might increase somewhat the distress of

such disorderly families, and thereby diminish somewhat their

ability to bring up children, it would not probably diminish much

the useful population of the country.

 

Any rise in the average price of necessaries, unless it be

compensated by a proportionable rise in the wages of labour, must

necessarily diminish, more or less, the ability of the poor to

bring up numerous families, and, consequently, to supply the

demand for useful labour; whatever may be the state of that

demand, whether increasing, stationary, or declining; or such as

requires an increasing, stationary, or declining population.

 

Taxes upon luxuries have no tendency to raise the price of any

other commodities, except that of the commodities taxed. Taxes

upon necessaries, by raising the wages of labour, necessarily

tend to raise the price of all manufactures, and consequently to

diminish the extent of their sale and consumption. Taxes upon

luxuries are finally paid by the consumers of the commodities

taxed, without any retribution. They fall indifferently upon

every species of revenue, the wages of labour, the profits of

stock, and the rent of land. Taxes upon necessaries, so far as

they affect the labouring poor, are finally paid, partly by

landlords, in the diminished rent of their lands, and partly by

rich consumers, whether landlords or others, in the advanced

price of manufactured goods; and always with a considerable

overcharge. The advanced price of such manufactures as are real

necessaries of life, and are destined for the consumption of the

poor, of coarse woollens, for example, must be compensated to the

poor by a farther advancement of their wages. The middling and

superior ranks of people, if they understood their own interest,

ought always to oppose all taxes upon the necessaries of life, as

well as all taxes upon the wages of labour. The final payment of

both the one and the other falls altogether upon themselves, and

always with a considerable overcharge. They fall heaviest

upon the landlords, who always pay in a double capacity ; in that

of landlords, by the reduction, of their rent ; and in that of

rich consumers, by the increase of their expense. The observation

of Sir Matthew Decker, that certain taxes are, in the price of

certain goods, sometimes repeated and accumulated four or five

times, is perfectly just with regard to taxes upon the

necessaries of life. In the price of leather, for example,

you must pay not only for the tax upon the leather of your own

shoes, but for a part of that upon those of the shoemaker and the

tanner. You must pay, too, for the tax upon the salt, upon the

soap, and upon the candles which those workmen consume while

employed in your service ; and for the tax upon the leather,

which the saltmaker, the soap-maker, and the candle-maker

consume, while employed in their service.

 

In Great Britain, the principal taxes upon the necessaries of

life, are those upon the four commodities just now mentioned,

salt, leather, soap, and candles.

 

Salt is a very ancient and a very universal subject of taxation.

It was taxed among the Romans, and it is so at present in, I

believe, every part of Europe. The quantity annually consumed by

any individual is so small, and may be purchased so gradually,

that nobody, it seems to have been thought, could feel very

sensibly even a pretty heavy tax upon it. It is in England taxed

at three shillings and fourpence a bushel; about three times the

original price of the commodity. In some other countries, the tax

is still higher. Leather is a real necessary of life. The use of

linen renders soap such. In countries where the winter nights

are long, candles are a necessary instrument of trade.

Leather and soap are in Great Britain taxed at three halfpence

a-pound; candles at a penny; taxes which, upon the original price

of leather, may amount to about eight or ten per cent. ; upon

that of soap, to about twenty or five-and-twenty per cent. ; and

upon that of candles to about fourteen or fifteen per cent.;

taxes which, though lighter than that upon salt, are still very

heavy. As all those four commodities are real necessaries of

life, such heavy taxes upon them must increase somewhat the

expense of the sober and industrious poor, and must consequently

raise more or less the wages of their labour.

 

In a country where the winters are so cold as in Great Britain,

fuel is, during that season, in the strictest sense of the word,

a necessary of life, not only for the purpose of dressing

victuals, but for the comfortable subsistence of many different

sorts of workmen who work within doors ; and coals are the

cheapest of all fuel. The price of fuel has so important an

influence upon that of labour, that all over Great Britain,

manufactures have confined themselves principally to the coal

contries; other parts of the country, on account of the high

price of this necessary article, not being able to work so cheap.

In some manufactures, besides, coal is a necessary instrument of

trade ; as in those of glass, iron, and all other metals. If a

bounty could in any case be reasonable, it might perhaps be so

upon the transportation of coals from those parts of the country

in which they abound, to those in which they are wanted.

But the legislature, instead of a bounty, has imposed a tax of

three shillings and threepence a-ton upon coals carried

coastways; which, upon most sorts of coal, is more than sixty per

cent. of the original price at the coal pit. Coals carried,

either by land or