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

and never

to be opened but in his presence. If the merchant carried them to

his own private warehouse, the duties to be immediately paid, and

never afterwards to be drawn back ; and that warehouse to be at

all times subject to the visit and examination of the

custom-house officer, in order to ascertain how far the quantity

contained in it corresponded with that for which the duty had

been paid. If he carried them to the public warehouse, no duty to

be paid till they were taken out for home comsumption. If taken

out for exportation, to be duty-free; proper security being

always given that they should be so exported. The dealers in

those particular commodities, either by wholesale or retail, to

be at all times subject to the visit and examination of the

custom-house officer; and to be obliged to justify, by proper

certificates, the payment of the duty upon the whole quantity

contained in their shops or warehouses. What are called the

excise duties upon rum imported, are at present levied in this

manner ; and the same system of administration might, perhaps, be

extended to all duties upon goods imported ; provided always that

those duties were, like the duties of excise, confined to a few

sorts of goods of the most general use and consumption. If they

were extended to almost all sorts of goods, as at present, public

warehouses of sufficient extent could not easily be provided; and

goods of a very delicate nature, or of which the preservation

required much care and attention, could not safely be trusted by

the merchant in any warehouse but his own.

 

If, by such a system of administration, smuggling to any

considerable extent could be prevented, even under pretty high

duties ; and if every duty was occasionally either heightened or

lowered according as it was most likely, either the one way or

the other, to afford the greatest revenue to the state; taxation

being always employed as an instrument of revenue, and never of

monopoly ; it seems not improbable that a revenue, at least equal

to the present neat revenue of the customs, might be drawn from

duties upon the importation of only a few sorts of goods of the

most general use and consumption ; and that the duties of customs

might thus be brought to the same degree of simplicity,

certainty, and precision, as those of excise. What the revenue at

present loses by drawbacks upon the re-exportation of foreign

goods, which are afterwards relanded and consumed at home,

would, under this system, be saved altogether. If to this saving,

which would alone be very considerable, were added the abolition

of all bounties upon the exportation of home produce ; in all

cases in which those bounties were not in reality drawbacks of

some duties of excise which had before been advanced ; it cannot

well be doubted, but that the neat revenue of customs might,

after an alteration of this kind, be fully equal to what it had

ever been before.

 

If, by such a change of system, the public revenue suffered no

loss, the trade and manufactures of the country would certainly

gain a very considerable advantage. The trade in the commodities

not taxed, by far the greatest number would be perfectly free,

and might be carried on to and from all parts of the world with

every possible advantage. Among those commodities would be

comprehended all the necessaries of life, and all the materials

of manufacture. So far as the free importation of the necessaries

of life reduced their average money price in the home market, it

would reduce the money price of labour, but without reducing in

any respect its real recompence. The value of money is in

proportion to the quantity of the necessaries of life which it

will purchase. That of the necessaries of life is altogether

independent of the quantity of money which can be had for them.

The reduction in the money price of labour would necessarily be

attended with a proportionable one in that of all home

manufactures, which would thereby gain some advantage in all

foreign markets. The price of some manufactures would be reduced,

in a still greater proportion, by the free importation of the raw

materials. If raw silk could be imported from China and Indostan,

duty-free, the silk manufacturers in England could greatly

undersell those of both France and Italy. There would be no

occasion to prohibit the importation of foreign silks and

velvets. The cheapness of their goods would secure to our own

workmen, not only the possession of a home, but a very great

command of the foreign market. Even the trade in the commodities

taxed, would be carried on with much more advantage than at

present. If those commodities were delivered out of the public

warehouse for foreign exportation, being in this case exempted

from all taxes, the trade in them would be perfectly free. The

carrying trade, in all sorts of goods, would, under this system,

enjoy every possible advantage. If these commodities were

delivered out for home consumption, the importer not being

obliged to advance the tax till he had an opportunity of selling

his goods, either to some dealer, or to some consumer, he could

always afford to sell them cheaper than if he had been obliged to

advance it at the moment of importation. Under the same taxes,

the foreign trade of consumption, even in the taxed commodities,

might in this manner be carried on with much more advantage than

it is at present.

 

It was the object of the famous excise scheme of Sir Robert

Walpole, to establish, with regard to wine and tobacco, a system

not very unlike that which is here proposed. But though the bill

which was then brought into Parliament, comprehended those two

commodities only, it was generally supposed to be meant as an

introduction to a more extensive scheme of the same kind.

Faction, combined with the interest of smuggling merchants,

raised so violent, though so unjust a clamour, against that bill,

that the minister thought proper to drop it ; and, from a dread

of exciting a clamour of the same kind, none of his successors

have dared to resume the project.

 

The duties upon foreign luxuries, imported for home consumption,

though they sometimes fall upon the poor, fall principally upon

people of middling or more than middling fortune. Such are, for

example, the duties upon foreign wines, upon coffee, chocolate,

tea, sugar, etc.

 

The duties upon the cheaper luxuries of home produce, destined

for home consumption, fall pretty equally upon people of all

ranks, in proportion to their respective expense. The poor pay

the duties upon malt, hops, beer, and ale, upon their own

consumption ; the rich, upon both their own consumption and that

of their servants.

 

The whole consumption of the inferior ranks of people, or of

those below the middling rank, it must be observed, is, in every

country, much greater, not only in quantity, but in value, than

that of the middling, and of those above the middling rank. The

whole expense of the inferior is much greater titan that of the

superior ranks. In the first place, almost the whole capital of

every country is annually distributed among the inferior ranks of

people, as the wages of productive labour. Secondly, a great

part of the revenue, arising from both the rent of land and the

profits of stock, is annually distributed among the same rank, in

the wages and maintenance of menial servants, and other

unproductive labourers. Thirdly, some part of the profits of

stock belongs to the same rank, as a revenue arising from the

employment of their small capitals. The amount of the profits

annually made by small shopkeepers, tradesmen, and retailers of

all kinds, is everywhere very considerable, and makes a very

considerable portion of the annual produce. Fourthly and lastly,

some part even of the rent of land belongs to the same rank ; a

considerable part to those who are somewhat below the middling

rank, and a small part even to the lowest rank ; common labourers

sometimes possessing in property an acre or two of land. Though

the expense of those inferior ranks of people, therefore, taking

them individually, is very small, yet the whole mass of it,

taking them collectively, amounts always to by much the largest

portion of the whole expense of the society ; what remains of the

annual produce of the land and labour of the country, for the

consumption of the superior ranks, being always much less, not

only in quantity, but in value. The taxes upon expense,

therefore, which fall chiefly upon that of the superior ranks of

people, upon the smaller portion of the annual produce, are

likely to be much less productive than either those which fall

indifferently upon the expense of all ranks, or even those which

fall chiefly upon that of the inferior ranks, than either those

which fall indifferently upon the whole annual produce, or those

which fall chiefly upon the larger portion of it. The excise upon

the materials and manufacture of homemade fermented and

spirituous liquors, is, accordingly, of all the different taxes

upon expense, by far the most productive ; and this branch of the

excise falls very much, perhaps principally, upon the expense of

the common people. In the year which ended on the 5th of July

1775, the gross produce of this branch of the excise amounted to

�3,341,837:9:9.

 

It must always be remembered, however, that it is the luxuries,

and not the necssary expense of the inferior ranks of people,

that ought ever to be taxed. The final payment of any tax upon

their necessary expense, would fall altogether upon the superior

ranks of people; upon the smaller portion of the annual produce,

and not upon the greater. Such a tax must, in all cases, either

raise the wages of labour, or lessen the demand for it. It could

not raise the wages of labour, without throwing the final payment

of the tax upon the superior ranks of people. It could not lessen

the demand for labour, without lessening the annual produce of

the land and labour of the country, the fund upon which all taxes

must be finally paid. Whatever might be the state to which a tax

of this kind reduced the demand for labour, it must always raise

wages higher than they otherwise would be in that state ; and the

final payment of this enhancement of wages must, in all cases,

fall upon the superior ranks of people.

 

Fermented liquors brewed, and spiritous liquors distilled, not

for sale, but for private use, are not in Great Britain liable to

any duties of excise. This exemption, of which the object is to

save private families from the odious visit and examination of

the tax-gatherer, occasions the burden of those duties to fall

frequently much lighter upon the rich than upon the poor. It is

not, indeed, very common to distil for private use, though it is

done sometimes. But in the country, many middling and almost all

rich and great families, brew their own beer. Their strong beer,

therefore, costs them eight shillings a-barrel less than it costs

the common brewer, who must have his profit upon the tax, as well

as upon all the other expense which he advances. Such families,

therefore, must drink their beer at least nine or ten shillings

a-barrel cheaper than any liquor of the same quality can be drank

by the common people, to whom it is everywhere more convenient to

buy their beer, by little and little, from the brewery or the

alehouse. Malt, in the same manner, that is made for the use of

a private family, is not liable to the visit or examination of

the tax-gatherer but, in this case the family must compound