An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

to

amount to more than five millions two hundred 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

necessaries of life, therefore, may be no impeachment of the

wisdom of that republic, which, in order to acquire and to

maintain its independency, has, in spite of its meat frugality,

been involved in such expensive wars as have obliged it to

contract great debts. The singular countries of Holland and

Zealand, besides, require a considerable 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 purchase less of the necessaries and conveniencies of life

than in any other part of Europe. The residence of such wealthy

people necessarily keeps alive, in spite of all disadvantages, a

certain degree of industry in the country. Any public calamity

which should destroy 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.

 

CHAPTER III.

 

OF PUBLIC DEBTS.

 

In that rude state of society which precedes the extension of

commerce and the improvement of manufactures ; when those

expensive 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 consumption, 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 expenses of the rich and the

great. But these I have likewise endeavoured 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 ruined 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, sufficiently 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 inseparably 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 gentleman; and

to lend money at interest, which at that time was considered as

usury, and prohibited bylaw, would have been still more so. In

those times of violence and disorder, besides, it was convenient

to have a hoard of money at hand, that in case they should be

driven from their own home, they might have something of known

value to carry with them to some place of safety. The same

violence which made it convenient to hoard, made it equally

convenient to conceal the hoard. The frequency of treasure-trove,

or of treasure found, of which no owner was known, sufficiently

demonstrates the frequency, in those times, both of hoarding and

of concealing the hoard. Treasure-trove was then considered as an

important branch of the revenue of the sovereign. All the

treasure-truve of the kingdom would scarce, perhaps, in the

present times, make an important branch of the revenue of a

private gentleman of a good estate.

 

The same disposition, to save and to hoard, prevailed in the

sovereign, as well as in the subjects. Among nations, to whom

commerce and manufacture are little known, the sovereign, it has

already been observed in the Fourth book, is in a situation which

naturally disposes him to the parsimony requisite for

accumulation. In that situation, the expense, even of a

sovereign, cannot be directed by that vanity which delights in

the gaudy finery of a court. The ignorance of the times affords

but few of the trinkets in which that finery consists. Standing

armies are not then necessary; so that the expense, even of a

sovereign, like that of any other great lord can be employed in

scarce any thing but bounty to his tenants, and hospitality to

his retainers. But bounty and hospitality very seldom lead to

extravagance; though vanity almost always does. All the ancient

sovereigns of Europe, accordingly, it has already been observed,

had treasures. Every Tartar chief, in the present times, is said

to have one.

 

In a commercial country, abounding with every sort of expensive

luxury, the sovereign, in the same manner as almost all the great

proprietors in his dominions, naturally spends a great part of

his revenue in purchasing those luxuries. His own and the

neighbouring countries supply him abundantly with all the costly

trinkets which compose the splendid, but insignificant, pageantry

of a court. For the sake of an inferior pageantry of the same

kind, his nobles dismiss their retainers, make their tenants

independent, and become gradually themselves as insignificant as

the greater part of the wealthy burghers in his dominions.

The same frivolous passions, which influence their conduct,

influence his. How can it be supposed that he should be the only

rich man in his dominions who is insensible to pleasures of this

kind ? If he does not, what he is very likely to do, spend upon

those pleasures so great a part of his revenue as to debilitate

very much the defensive power of the state, it cannot well be

expected that he should not spend upon them all that part of it

which is over and above what is necessary for supporting that

defensive power. His ordinary expense becomes equal to his

ordinary revenue, and it is well if it does not frequently exceed

it. The amassing of treasure can no longer be expected; and when

extraordinary exigencies require extraordinary expenses, he must

necessarily call upon his subjects for an extraordinary aid. The

present and the late king of Prussia are the only great princes

of Europe, who, since the death of Henry IV. of France, in 1610,

are supposed to have amassed any considerable treasure. The

parsimony which leads to accumulation has become almost as rare

in republican as in monarchical governments. The Italian

republics, the United Provinces of the Netherlands, are all in

debt. The canton of Berne is the single republic in Europe which

has amassed any considerable treasure. The other Swiss republics

have not. The taste for some sort of pageantry, for splendid

buildings, at least, and other public ornaments, frequently

prevails as much in the apparently sober senate-house of a little

republic, as in the dissipated court of the greatest king.

 

The want of parsimony, in time of peace, imposes the necessity of

contracting debt in time of war. When war comes, there is no

money in the treasury, but what is necessary for carrying on the

ordinary expense of the peace establishment. In war, an

establishment of three or four times that expense be. comes

necessary for the defence of the state ; and consequently, a

revenue three or four times greater than the peace revenue.

Supposing that the sovereign should have, what he scarce ever

has, the immediate means of augmenting his revenue in proportion

to the augmentation of his expense; yet still the produce of the

taxes, from which this increase of revenue must be drawn, will

not begin to come into the treasury, till perhaps ten or twelve

months after they are imposed. But the moment in which war

begins, or rather the moment in which it appears likely to begin,

the army must be augmented, the fleet must be fitted out, the

garrisoned towns must be put into a posture of defence; that

army, that fleet, those garrisoned towns, must be furnished with

arms, ammunition, and provisions. An immediate and great

expense must be incurred in that moment of immediate danger,

which will not wait for the gradual and slow returns of the new

taxes. In this exigency, government can have no other resource

but in borrowing.

 

The same commercial state of society which, by the operation of

moral causes, brings government in this manner into the necessity

of borrowing, produces in the subjects both an ability and an

inclination to lend. If it commonly brings along with it the

necessity of borrowing, it likewise brings with it the facility

of doing so.

 

A country abounding with merchants and manufacturers, necessarily

abounds with a set of people through whose hands, not only their

own capitals, but the capitals of all those who either lend them

money, or trust them with goods, pass as frequently, or more

frequently, than the revenue of a private man, who, without trade

or business, lives upon his income, passes through his hands. The

revenue of such a man can regularly pass through his hands only

once in a year. But the whole amount of the capital and credit of

a merchant, who deals in a trade of which the returns are very

quick, may sometimes pass through his hands two, three, or four

times in a year. A country abounding with merchants and

manufacturers, therefore, necessarily abounds with a set of

people, who have it at all times in their power to advance,