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
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.