An inquiry into the nature and causes of the wealth of

768

The Wealth of Nations

tal stock, to another set of persons (the creditors of the public,

who have no such particular interest ), the greater part of the rev-

enue arising from either, must, in the long-run, occasion both the

neglect of land, and the waste or removal of capital stock. A credi-

tor of the public has, no doubt, a general interest in the prosperity

of the agriculture, manufactures, and commerce of the country;

and consequently in the good condition of its land, and in the

good management of its capital stock. Should there be any gen-

eral failure or declension in any of these things, the produce of the

different taxes might no longer be sufficient to pay him the annu-

ity or interest which is due to him. But a creditor of the public,

considered merely as such, has no interest in the good condition

of any particular portion of land, or in the good management of

any particular portion of capital stock. As a creditor of the public,

he has no knowledge of any such particular portion. He has no

inspection of it. He can have no care about it. Its ruin may in

some cases be unknown to him, and cannot directly affect him.

The practice of funding has gradually enfeebled every state which

has adopted it. The Italian republics seem to have begun it. Genoa

and Venice, the only two remaining which can pretend to an in-

dependent existence, have both been enfeebled by it. Spain seems

to have learned the practice from the Italian republics, and (its

taxes being probably less judicious than theirs) it has, in propor-

tion to its natural strength, been-still more enfeebled. The debts

of Spain are of very old standing. It was deeply in debt before the

end of the sixteenth century, about a hundred years before En-

gland owed a shilling. France, notwithstanding all its natural re-

sources, languishes under an oppressive load of the same kind.

The republic of the United Provinces is as much enfeebled by its

debts as either Genoa or Venice. Is it likely that, in Great Britain

alone, a practice, which has brought either weakness or dissolu-

tion into every other country, should prove altogether innocent?

The system of taxation established in those different countries,

it may be said, is inferior to that of England. I believe it is so. But

it ought to be remembered, that when the wisest government has

exhausted all the proper subjects of taxation, it must, in cases of

urgent necessity, have recourse to improper ones. The wise repub-

lic of Holland has, upon some occasions, been obliged to have

recourse to taxes as inconvenient as the greater part of those of

Spain. Another war, begun before any considerable liberation of

the public revenue had been brought about, and growing in its

progress as expensive as the last war, may, from irresistible neces-

sity, render the British system of taxation as oppressive as that of

Holland, or even as that of Spain. To the honour of our present

system of taxation, indeed, it has hitherto given so little embar-

rassment to industry, that, during the course even of the most

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769

Adam Smith

expensive wars, the frugality and good conduct of individuals seem

to have been able, by saving and accumulation, to repair all the

breaches which the waste and extravagance of government had

made in the general capital of the society. At the conclusion of the

late war, the most expensive that Great Britain ever waged, her

agriculture was as flourishing, her manufacturers as numerous and

as fully employed, and her commerce as extensive, as they had

ever been before. The capital, therefore, which supported all those

different branches of industry, must have been equal to what it

had ever been before. Since the peace, agriculture has been still

further improved; the rents of houses have risen in every town and

village of the country, a proof of the increasing wealth and rev-

enue of the people; and the annual amount of the greater part of

the old taxes, of the principal branches of the excise and customs,

in particular, has been continually increasing, an equally clear proof

of an increasing consumption, and consequently of an increasing

produce, which could alone support that consumption. Great

Britain seems to support with ease, a burden which, half a century

ago, nobody believed her capable of supporting, Let us not, how-

ever, upon this account, rashly conclude that she is capable of

supporting any burden; nor even be too confident that she could

support, without great distress, a burden a little greater than what

has already been laid upon her.

When national debts have once been accumulated to a certain

degree, there is scarce, I believe, a single instance of their having

been fairly and completely paid. The liberation of the public rev-

enue, if it has ever been brought about at all, has always been

brought about by a bankruptcy; sometimes by an avowed one,

though frequently by a pretended payment.

The raising of the denomination of the coin has been the most

usual expedient by which a real public bankruptcy has been dis-

guised under the appearance of a pretended payment. If a six-

pence, for example, should, either by act of parliament or royal

proclamation, be raised to the denomination of a shilling, and

twenty sixpences to that of a pound sterling; the person who, un-

der the old denomination, had borrowed twenty shillings, or near

four ounces of silver, would, under the new, pay with twenty six-

pences, or with something less than two ounces. A national debt

of about a hundred and twenty-eight millions, near the capital of

the funded and unfunded debt of Great Britain, might, in this

manner, be paid with about sixty-four millions of our present

money. It would, indeed, be a pretended payment only, and the

creditors of the public would really be defrauded of ten shillings

in the pound of what was due to them. The calamity, too, would

extend much further than to the creditors of the public, and those

of every private person would suffer a proportionable loss; and

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