An inquiry into the nature and causes of the wealth of

747

Adam Smith

first-mentioned scheme of reformation.

The French system of taxation seems, in every respect, inferior

to the British. In Great Britain, ten millions sterling are annually

levied upon less than eight millions of people, without its being

possible to say that any particular order is oppressed. From the

Collections of the Abbé Expilly, and the observations of the au-

thor of the Essay upon the Legislation and Commerce of Corn, it

appears probable that France, including the provinces of Lorraine

and Bar, contains about twenty-three or twenty-four millions of

people; three times the number, perhaps, contained in Great Brit-

ain. The soil and climate of France are better than those of Great

Britain. The country has been much longer in a state of improve-

ment and cultivation, and is, upon that account, better stocked

with all those things which it requires a long time to raise up and

accumulate; such as great towns, and convenient and well-built

houses, both in town and country. With these advantages, it might

be expected, that in France a revenue of thirty millions might be

levied for the support of the state, with as little inconvenience as a

revenue of ten millions is in Great Britain. In 1765 and 1766, the

whole revenue paid into the treasury of France, according to the

best, though, I acknowledge, very imperfect accounts which I could

get of it, usually run between 308 and 325 millions of livres; that

is, it did not amount to fifteen millions sterling; not the half of

what might have been expected, had the people contributed in

the same proportion to their numbers as the people of Great Brit-

ain. The people of France, however, it is generally acknowledged,

are much more oppressed by taxes than the people of Great Brit-

ain. France, however, is certainly the great empire in Europe, which,

after that of Great Britain, enjoys the mildest and most indulgent

government.

In Holland, the heavy taxes upon the necessaries of life have ru-

ined, it is said, their principal manufacturers, and are likely to dis-

courage, gradually, even their fisheries and their trade in ship-build-

ing. The taxes upon the necessaries of life are inconsiderable in Great

Britain, and no manufacture has hitherto been ruined by them. The

British taxes which bear hardest on manufactures, are some duties

upon the importation of raw materials, particularly upon that of

raw silk. The revenue of the States-General and of the different cit-

ies, however, is said to amount to more than five millions two hun-

dred 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 neces-

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748

The Wealth of Nations

saries of life, therefore, may be no impeachment of the wisdom of

that republic, which, in order to acquire and to maintain its inde-

pendency, has, in spite of its meat frugality, been involved in such

expensive wars as have obliged it to contract great debts. The sin-

gular countries of Holland and Zealand, besides, require a consid-

erable 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 pur-

chase less of the necessaries and conveniencies of life than in any

other part of Europe. The residence of such wealthy people neces-

sarily keeps alive, in spite of all disadvantages, a certain degree of

industry in the country. Any public calamity which should de-

stroy 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.

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749

Adam Smith

CHAPTER III

CHAPTER III

CHAPTER III

CHAPTER III

CHAPTER III

OF PUBLIC DEB

OF PUBLIC DEB

OF PUBLIC DEB

OF PUBLIC DEB

OF PUBLIC DEBT

T

T

T

TS

SS

SS

I

N

 

THAT

 

RUDE

 

STATE

 

OF

 

SOCIETY

 which precedes the extension of

commerce and the improvement of manufactures; when those ex-

pensive 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 con-

sumption, 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 ex-

penses of the rich and the great. But these I have likewise endeav-

oured 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 ru-

ined 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, suffi-

ciently 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 insepa-

rably 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 gentle-

man; and to lend money at interest, which at that time was con-

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