An inquiry into the nature and causes of the wealth of

739

Adam Smith

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 every-

where 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 customs.

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 com-

modity 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 commodi-

ties of the same kind which are made at home may thereby, in-

deed, gain some advantage in the home market, and a greater quan-

tity 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 neces-

sarily 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

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740

The Wealth of Nations

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 fre-

quent occasion to forfeitures and other penalties, which entirely

ruin the smuggler; a person who, though no doubt highly blame-

able 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 cor-

rupted governments, where there is at least a general suspicion of

much unnecessary expense, and great misapplication of the pub-

lic 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 mani-

fest encouragement to the violation of the revenue laws, and to

the perjury which almost always attends it, would, in most coun-

tries, 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 ab-

sorbed either in the revenue of the state, or in that of the revenue

officer; and is employed in maintaining unproductive, to the dimi-

nution of the general capital of the society, and of the useful in-

dustry which it might otherwise have maintained.

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