An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗
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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.
CHAPTER III.
OF PUBLIC DEBTS.
In that rude state of society which precedes the extension of
commerce and the improvement of manufactures ; when those
expensive luxuries, which commerce and manufactures can alone
introduce, are altogether unknown ; the person who possesses a
large revenue, I have endeavoured to show in the third book of
this Inquiry, can spend or enjoy that revenue in no other way
than by maintaining nearly as many people as it can maintain. A
large revenue may at all times be said to consist in the command
of a large quantity of the necessaries of life. In that rude
state of things, it is commonly paid in a large quantity of those
necessaries, in the materials of plain food and coarse clothing,
in corn and cattle, in wool and raw hides. When neither commerce
nor manufactures furnish any thing for which the owner can
exchange the greater part of those materials which are over and
above his own consumption, he can do nothing with the surplus,
but feed and clothe nearly as many people as it will feed and
clothe. A hospitality in which there is no luxury, and a
liberality in which there is no ostentation, occasion, in this
situation of things, the principal expenses of the rich and the
great. But these I have likewise endeavoured to show, in the same
book, are expenses by which people are not very apt to ruin
themselves. There is not, perhaps, any selfish pleasure so
frivolous, of which the pursuit has not sometimes ruined even
sensible men. A passion for cock-fighting has ruined many. But
the instances, I believe, are not very numerous, of people who
have been ruined by a hospitality or liberality of this kind;
though the hospitality of luxury, and the liberality of
ostentation have ruined many. Among our feudal ancestors, the
long time during which estates used to continue in the same
family, sufficiently demonstrates the general disposition of
people to live within their income. Though the rustic
hospitality, constantly exercised by the great landholders, may
not, to us in the present times, seem consistent with that order
which we are apt to consider as inseparably connected with good
economy; yet we must certainly allow them to have been at least
so far frugal, as not commonly to have spent their whole income.
A part of their wool and raw hides, they had generally an
opportunity of selling for money. Some part of this money,
perhaps, they spent in purchasing the few objects of vanity and
luxury, with which the circumstances of the times could furnish
them ; but some part of it they seem commonly to have hoarded.
They could not well, indeed, do any thing else but hoard whatever
money they saved. To trade, was disgraceful to a gentleman; and
to lend money at interest, which at that time was considered as
usury, and prohibited bylaw, would have been still more so. In
those times of violence and disorder, besides, it was convenient
to have a hoard of money at hand, that in case they should be
driven from their own home, they might have something of known
value to carry with them to some place of safety. The same
violence which made it convenient to hoard, made it equally
convenient to conceal the hoard. The frequency of treasure-trove,
or of treasure found, of which no owner was known, sufficiently
demonstrates the frequency, in those times, both of hoarding and
of concealing the hoard. Treasure-trove was then considered as an
important branch of the revenue of the sovereign. All the
treasure-truve of the kingdom would scarce, perhaps, in the
present times, make an important branch of the revenue of a
private gentleman of a good estate.
The same disposition, to save and to hoard, prevailed in the
sovereign, as well as in the subjects. Among nations, to whom
commerce and manufacture are little known, the sovereign, it has
already been observed in the Fourth book, is in a situation which
naturally disposes him to the parsimony requisite for
accumulation. In that situation, the expense, even of a
sovereign, cannot be directed by that vanity which delights in
the gaudy finery of a court. The ignorance of the times affords
but few of the trinkets in which that finery consists. Standing
armies are not then necessary; so that the expense, even of a
sovereign, like that of any other great lord can be employed in
scarce any thing but bounty to his tenants, and hospitality to
his retainers. But bounty and hospitality very seldom lead to
extravagance; though vanity almost always does. All the ancient
sovereigns of Europe, accordingly, it has already been observed,
had treasures. Every Tartar chief, in the present times, is said
to have one.
In a commercial country, abounding with every sort of expensive
luxury, the sovereign, in the same manner as almost all the great
proprietors in his dominions, naturally spends a great part of
his revenue in purchasing those luxuries. His own and the
neighbouring countries supply him abundantly with all the costly
trinkets which compose the splendid, but insignificant, pageantry
of a court. For the sake of an inferior pageantry of the same
kind, his nobles dismiss their retainers, make their tenants
independent, and become gradually themselves as insignificant as
the greater part of the wealthy burghers in his dominions.
The same frivolous passions, which influence their conduct,
influence his. How can it be supposed that he should be the only
rich man in his dominions who is insensible to pleasures of this
kind ? If he does not, what he is very likely to do, spend upon
those pleasures so great a part of his revenue as to debilitate
very much the defensive power of the state, it cannot well be
expected that he should not spend upon them all that part of it
which is over and above what is necessary for supporting that
defensive power. His ordinary expense becomes equal to his
ordinary revenue, and it is well if it does not frequently exceed
it. The amassing of treasure can no longer be expected; and when
extraordinary exigencies require extraordinary expenses, he must
necessarily call upon his subjects for an extraordinary aid. The
present and the late king of Prussia are the only great princes
of Europe, who, since the death of Henry IV. of France, in 1610,
are supposed to have amassed any considerable treasure. The
parsimony which leads to accumulation has become almost as rare
in republican as in monarchical governments. The Italian
republics, the United Provinces of the Netherlands, are all in
debt. The canton of Berne is the single republic in Europe which
has amassed any considerable treasure. The other Swiss republics
have not. The taste for some sort of pageantry, for splendid
buildings, at least, and other public ornaments, frequently
prevails as much in the apparently sober senate-house of a little
republic, as in the dissipated court of the greatest king.
The want of parsimony, in time of peace, imposes the necessity of
contracting debt in time of war. When war comes, there is no
money in the treasury, but what is necessary for carrying on the
ordinary expense of the peace establishment. In war, an
establishment of three or four times that expense be. comes
necessary for the defence of the state ; and consequently, a
revenue three or four times greater than the peace revenue.
Supposing that the sovereign should have, what he scarce ever
has, the immediate means of augmenting his revenue in proportion
to the augmentation of his expense; yet still the produce of the
taxes, from which this increase of revenue must be drawn, will
not begin to come into the treasury, till perhaps ten or twelve
months after they are imposed. But the moment in which war
begins, or rather the moment in which it appears likely to begin,
the army must be augmented, the fleet must be fitted out, the
garrisoned towns must be put into a posture of defence; that
army, that fleet, those garrisoned towns, must be furnished with
arms, ammunition, and provisions. An immediate and great
expense must be incurred in that moment of immediate danger,
which will not wait for the gradual and slow returns of the new
taxes. In this exigency, government can have no other resource
but in borrowing.
The same commercial state of society which, by the operation of
moral causes, brings government in this manner into the necessity
of borrowing, produces in the subjects both an ability and an
inclination to lend. If it commonly brings along with it the
necessity of borrowing, it likewise brings with it the facility
of doing so.
A country abounding with merchants and manufacturers, necessarily
abounds with a set of people through whose hands, not only their
own capitals, but the capitals of all those who either lend them
money, or trust them with goods, pass as frequently, or more
frequently, than the revenue of a private man, who, without trade
or business, lives upon his income, passes through his hands. The
revenue of such a man can regularly pass through his hands only
once in a year. But the whole amount of the capital and credit of
a merchant, who deals in a trade of which the returns are very
quick, may sometimes pass through his hands two, three, or four
times in a year. A country abounding with merchants and
manufacturers, therefore, necessarily abounds with a set of
people, who have it at all times in their power to advance,
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