An Inquiry into the Nature and Causes of the Wealth of Nations - Adam Smith (ebooks children's books free .TXT) 📗
- Author: Adam Smith
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American and West Indian colonies, 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 revenue,
supposing that this system could produce it, must be deducted 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 ayear. By a very
exact account 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 necessary for supporting the civil government of
Ireland and the plantations may amount to a million. There would
remain, consequently, a revenue of fifteen millions two hundred
and fifty thousand 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 been discharged the year before ; and
might, in this manner, increase so very rapidly, as to be
sufficient in a few years to discharge the whole debt, and thus
to restore completely the at-present debilitated 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
proportioned to the numbers of the people. In a poor country, the
consumption of the principal commodities subject to the duties of
customs and excise, is very small; and in a thinly inhabited
country, the opportunities of smuggling are very great. The
consumption of malt liquors among the inferior ranks of people in
Scotland is very small ; and the excise upon malt, beer, and ale,
produces 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 smuggling in the one country than in the
other. The duties upon the distillery, and the greater part of
the duties of customs, in proportion 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 smuggling 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 probably
much greater. The blacks, indeed, who make the greater part of
the inhabitants, both of the southern colonies upon the continent
and of the West India islands, as they are in a state of slavery,
are, no doubt, in a worse condition than the poorest people
either in Scotland or Ireland. We must not, however, upon that
account, imagine that they are worse fed, or that their
consumption of articles which might be subjected to moderate
duties, is less than that even of the lower ranks of people in
England. In order that they may work well, it is the interest of
their master that they should be fed well, and kept in good
heart, in the same manner as it is his interest that his working
cattle should be so. The blacks, accordingly, have almost
everywhere their allowance of rum, and of molasses or
spruce-beer, in the same manner as the white servants ; and this
allowance would not probably be withdrawn, though those articles
should be subjected to moderate duties. The consumption of the
taxed commodities, therefore, in proportion to the number of
inhabitants, would probably be as great in America and the West
Indies as in any part of the British empire. The opportunities of
smuggling, indeed, would be much greater ; America, in proportion
to the extent of the country, being much more thinly inhabited
than either Scotland or Ireland. If the revenue, however, which
is at present raised by the different duties upon malt and malt
liquors, were to be levied by a single duty upon malt, the
opportunity of smuggling in the most important branch of the
excise would be almost entirely taken away ; and if the duties of
customs, instead of being imposed upon almost all the different
articles of importation, were confined to a few of the most
general use and consumption, and if the levying of those duties
were subjected to the excise laws, the opportunity of smuggling,
though not so entirely taken away, would be very much diminished.
In consequence of those two apparently very simple and easy
alterations, the duties of customs and excise might probably
produce a revenue as great, in proportion to the consumption of
the most thinly inhabited province, as they do at present, in
proportion to that of the most populous.
The Americans, it has been said, indeed, have no gold or silver
money, the interior commerce of the country being carried on by a
paper currency; and the gold and silver, which occasionally come
among them, being all sent to Great Britain, in return for the
commodities which they receive from us. But without gold and
silver, it is added, there is no possibility of paying taxes. We
already get all the gold and silver which they have. How is it
possible to draw from them what they have not ?
The present scarcity of gold and silver money in America, is not
the effect of the poverty of that country, or of the inability of
the people there to purchase those metals. In a country where the
wages of labour are so much higher, and the price of provisions
so much lower than in England, the greater part of the people
must surely have wherewithal to purchase a greater quantity, if
it were either necessary or convenient for them to do so. The
scarcity of those metals, therefore, must be the effect of
choice, and not of necessity.
It is for transacting either domestic or foreign business, that
gold or silver money is either necessary or convenient.
The domestic business of every country, it has been shewn in the
second book of this Inquiry, may, at least in peaceable times, be
transacted by means of a paper currency, with nearly the same
degree of conveniency as by gold and silver money. It is
convenient for the Americans, who could always employ with
profit, in the improvement of their lands, a greater stock than
they can easily get, to save as much as possible the expense of
so costly an instrument of commerce as gold and silver; and
rather to employ that part of their surplus produce which would
be necessary for purchasing those metals, in purchasing the
instruments of trade, the materials of clothing, several parts of
household furniture, and the iron work necessary for building and
extending their settlements and plantations ; in purchasing not
dead stock, but active and productive stock. The colony
governments find it for their interest to supply the people with
such a quantity of paper money as is fully sufficient, and
generally more than sufficient, for transacting their domestic
business. Some of those governments, that of Pennsylvania,
particularly, derive a revenue from lending this paper money to
their subjects, at an interest of so much per cent. Others, like
that of Massachusetts Bay, advance, upon extraordinary
emergencies, a paper money of this kind for defraying the public
expense; and afterwards, when it suits the conveniency of the
colony, redeem it at the depreciated value to which it gradually
falls. In 1747, {See Hutchinson’s History of Massachusetts Bay
vol. ii. page 436 et seq.} that colony paid in this manner the
greater part of its public debts, with the tenth part of the
money for which its bills had been granted. It suits the
conveniency of the planters, to save the expense of employing
gold and silver money in their domestic transactions; and it
suits the conveniency of the colony governments, to supply them
with a medium, which, though attended with some very considerable
disadvantages, enables them to save that expense. The redundancy
of paper money necessarily banishes gold and silver from the
domestic transactions of the colonies, for the same reason that
it has banished those metals from the greater part of the
domestic transactions in Scotland ; and in both countries, it is
not the poverty, but the enterprizing and projecting spirit of
the people, their desire of employing all the stock which they
can get, as active and productive stock, which has occasioned
this redundancy of paper money.
In the exterior commerce which the different colonies carry on
with Great Britain, gold and silver are more or less employed,
exactly in proportion as they are more or less necessary. Where
those metals are not necessary, they seldom appear. Where they
are necessary, they are generally found.
In the commerce between Great Britain and the tobacco colonies,
the British goods are generally advanced to the colonists at a
pretty long credit, and are afterwards paid for in tobacco, rated
at a certain price. It is more convenient for the colonists to
pay in tobacco than in gold and silver. It would be more
convenient for any merchant to pay for the goods which his
correspondents had sold to him, in some other
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