An inquiry into the nature and causes of the wealth of

776

The Wealth of Nations

the colonies might require some considerable change in the present

system of British taxation.

What might be the amount of the revenue which this system of

taxation, extended to all the different provinces of the empire,

might produce, it must, no doubt, be altogether impossible to

ascertain with tolerable exactness. By means of this system, there

is annually levied in Great Britain, upon less than eight millions

of people, more than ten millions of revenue. Ireland contains

more than two millions of people, and, according to the accounts

laid before the congress, the twelve associated provinces of America

contain more than three. Those accounts, however, may have been

exaggerated, in order, perhaps, either to encourage their own

people, or to intimidate those of this country; and we shall sup-

pose, therefore, that our North American and West Indian colo-

nies, taken together, contain no more than three millions; or that

the whole British empire, in Europe and America, contains no

more than thirteen millions of inhabitants. If, upon less than eight

millions of inhabitants, this system of taxation raises a revenue of

more than ten millions sterling; it ought, upon thirteen millions

of inhabitants, to raise a revenue of more than sixteen millions

two hundred and fifty thousand pounds sterling. From this rev-

enue, supposing that this system could produce it, must be de-

ducted the revenue usually raised in Ireland and the plantations,

for defraying the expense of the respective civil governments. The

expense of the civil and military establishment of Ireland, together

with the interest of the public debt, amounts, at a medium of the

two years which ended March 1775, to something less than seven

hundred and fifty thousand pounds a year. By a very exact ac-

count of the revenue of the principal colonies of America and the

West Indies, it amounted, before the commencement of the present

disturbances, to a hundred and forty-one thousand eight hundred

pounds. In this account, however, the revenue of Maryland, of

North Carolina, and of all our late acquisitions, both upon the

continent, and in the islands, is omitted; which may, perhaps,

make a difference of thirty or forty thousand pounds. For the sake

of even numbers, therefore, let us suppose that the revenue neces-

sary for supporting the civil government of Ireland and the plan-

tations may amount to a million. There would remain, conse-

quently, a revenue of fifteen millions two hundred and fifty thou-

sand pounds, to be applied towards defraying the general expense

of the empire, and towards paying the public debt. But if, from

the present revenue of Great Britain, a million could, in peaceable

times, be spared towards the payment of that debt, six millions

two hundred and fifty thousand pounds could very well be spared

from this improved revenue. This great sinking fund, too, might

be augmented every year by the interest of the debt which had

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Adam Smith

been discharged the year before; and might, in this manner, in-

crease so very rapidly, as to be sufficient in a few years to discharge

the whole debt, and thus to restore completely the at-present de-

bilitated and languishing vigour of the empire. In the meantime,

the people might be relieved from some of the most burdensome

taxes; from those which are imposed either upon the necessaries

of life, or upon the materials of manufacture. The labouring poor

would thus be enabled to live better, to work cheaper, and to send

their goods cheaper to market. The cheapness of their goods would

increase the demand for them, and consequently for the labour of

those who produced them. This increase in the demand for labour

would both increase the numbers, and improve the circumstances

of the labouring poor. Their consumption would increase, and,

together with it, the revenue arising from all those articles of their

consumption upon which the taxes might be allowed to remain.

The revenue arising from this system of taxation, however, might

not immediately increase in proportion to the number of people

who were subjected to it. Great indulgence would for some time

be due to those provinces of the empire which were thus subjected

to burdens to which they had not before been accustomed; and

even when the same taxes came to be levied everywhere as exactly

as possible, they would not everywhere produce a revenue propor-

tioned to the numbers of the people. In a poor country, the con-

sumption of the principal commodities subject to the duties of

customs and excise, is very small; and in a thinly inhabited coun-

try, the opportunities of smuggling are very great. The consump-

tion of malt liquors among the inferior ranks of people in Scot-

land is very small; and the excise upon malt, beer, and ale, pro-

duces less there than in England, in proportion to the numbers of

the people and the rate of the duties, which upon malt is different,

on account of a supposed difference of quality. In these particular

branches of the excise, there is not, I apprehend, much more smug-

gling in the one country than in the other. The duties upon the

distillery, and the greater part of the duties of customs, in propor-

tion to the numbers of people in the respective countries, produce

less in Scotland than in England, not only on account of the smaller

consumption of the taxed commodities, but of the much greater

facility of smuggling. In Ireland, the inferior ranks of people are

still poorer than in Scotland, and many parts of the country are

almost as thinly inhabited. In Ireland, therefore, the consumption

of the taxed commodities might, in proportion to the number of

the people, be still less than in Scotland, and the facility of smug-

gling nearly the same. In America and the West Indies, the white

people, even of the lowest rank, are in much better circumstances

than those of the same rank in England; and their consumption of

all the luxuries in which they usually indulge themselves, is prob-

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