Part 16

Thirdly, In consequence of some prohibitions or restrictions equivalent thereto, which afford to the national manufacturer the means of selling his goods 10 per cent. dearer than he could do, if such reasonable duties were laid upon foreign industry, as would leave national industry in possession of the advantages, which she has a right to, and deprive her only of the iniquitous privilege of ransoming those by whom she is fostered:

Fourthly, By the effect of those bodies corporate, (corporations) which, if justly appreciated, are but so many private conspiracies against the public, whom they strip of the benefit of national competition, after having wrested from them the advantages of foreign competition, which would soon have been followed by the former, infinitely more important than the other.

If the result of the proposed enquiry should show, that one of these four causes, or rather all of them together, have entirely perverted the natural price of every article in the nation, it seems to me that it would be worth the attention of the legislature to examine also, whether the repeal of all premiums, prohibitions, restrictions, and other devices of the various passions of the human heart, either to clash against each other, or to balance their respective injustice, would not prove adequate to the only aim which we may reasonably wish to attain, I mean that of keeping, at the least expence, a just equilibrium between national agriculture and industry, by securing to both, at the least expence, all the advantages which they have a right to expect from the agriculture and industry of other nations.

But if indeed we were fettered by the errors of past centuries, it would then be necessary to grant, in the fullest extent, the wished-for premium on the most important article; do nothing more for the present, but refuse new ones to all the rest; watch attentively the favourable minute for the restoration of natural order, and forward it, perhaps, by convincing every one, that the most necessary of all premiums would have proved useless, had it not been preceded by prohibitions, restrictions, corporations, &c. the end of which is as manifestly unjust, as their effects are injurious to all but those who sue for them; and that, in fine, a premium granted under a circumstance the most likely to justify such a measure, is not, as several people have hitherto imagined, a necessary means of maintaining elsewhere a foreign competition, but a very inadequate compensation for that foreign competition of which we are deprived in so many respects.

On the Influence of the various Kinds of Taxation upon National Prices.

If I mistake not, I have proved that it is indifferent to agriculture and industry, whether the prices rise or fall, provided it be always in a due and reciprocal proportion. Nor is it less indifferent, whether the increase proceeds from taxes, from monopoly, or from accession of wealth, and whether the decrease be brought about by the extirpation of monopoly, or by the triumph of smuggling; so long as the prices balance each other, no one can be injured however loud people may be in their clamours; it is impossible to shut one’s eyes against the evidence of such a point. Why then should we deny the consequence which naturally follows, of the harmlessness of taxes in themselves, the impossibility of their producing in any one’s situation, any thing beyond a momentary sensation, when they are laid with discernment; and the futility of either fears or hopes entertained of their ending at last in a national bankruptcy?

Yet, “to enjoy, is to obey,” says Pope:—To make the best use we can of the creation, is the thanksgiving the most worthy of the Creator.—There is not a man therefore who ought not to repine at seeing the general rate of prices increase in vain, since this very rise compels us to lavish, in coin, a considerable quantity of those two precious metals, gold and silver, which would prove more agreeable, if turned into plate, or even into small pocket-statues, designed for the private worship of those who would blush only in public, for this kind of idolatry. I should like therefore to examine, in regard to prices, what is natural, what necessary, and what forced; in order to find out what might be saved, if people would attend only to the necessary average.

In the first period of Societies, when they knew of no other want in the State but personal service when it was necessary and possible, the common price of the articles then in circulation, was determined by the quantity of coin then existing in the nation: this is what may be justly termed the natural price. At this present time, when money is substituted to personal service, and supplies so advantageously its place; when each representation of an extra service leaves on every article, the stamp of a seal, which, without adding to the real or relative value of any thing, increases nevertheless the nominal value of every thing;—at this present time, when every nation has all the industry necessary to procure the coin wanted for this over-charge, it is the price, which this very over-charge sets upon the different objects, that regulates and attracts the quantity of silver to correspond therewith; and this price, which may be called necessary, is often evidently forced: I say, evidently, because, in the state of general correspondence, or, if you will, of that happy dependence wherein all the States of Europe stand reciprocally towards each other at this hour, when we see in one country the same objects, of the same quality, wrought with equal skill, 15 per cent. dearer than any where else, who can doubt but a part of that difference, of that extraordinary price, proceeds from taxes, and the other from monopoly? But what part belongs to this, what part to the other? This is not so easily found out; 1st, because the part which is the work of monopoly, solely depends on the moderation of the monopolist, who never fails pleading the taxes for excuse; and, 2dly, because that part, which proceeds from the taxes, depends not only on the tax itself, but also on the manner of laying it, and on the effect which it is likely to produce in the minds of the people who are to support it. Such a tax as will make a slow, and only a trifling sensation in the prices of the French markets, will occasion all at once a considerable one in those of England: I shall hereafter state my reasons for this conjecture.

I am as little qualified to investigate all these different questions, as those which I have ventured hitherto to touch upon; I shall persevere, nevertheless, with that freedom which I derive from the purity of my intentions, and with that diffidence which must follow the consciousness of a capacity so unequal to the task.—I shall first of all adapt to England, and then to France, the reflexions suggested to me by some hundreds of suppositions, which had engrossed my time before I had perused Young’s Political Arithmetic, and the work of Mr. Necker, which has but lately fallen into my hands.

I shall begin with a general observation on taxes.

On the Object of all Ministers of Finance in laying Taxes.

In this indulgent age, wherein nothing more is required on any one subject, than a little decency, it would be a ridiculous and fruitless hypocrisy to propose a tax, as the means of encouraging virtue, or of discountenancing vice; it is not, at least in a country where a man convicted of smuggling wool, is by law sentenced to have his hand cut off, nor in another where a smuggler of salt is condemned for years to serve on board the gallies, that one should preach up the heart-felt concern he must experience at framing a law which would make it felony to drink spirituous liquors if he had really a mind to prevent intoxication; it is hoped on the contrary, nay, firmly believed, that the sweetness of the poison will make palatable the very bitterness of the tax, and its absurd disproportion to the real value of the taxed article: besides, it is too evident, that it is not the difference of a few pence more that will prevent a man from drinking to excess when he is so inclined, nor a few pence less that will occasion another to inebriate himself, when his only motive for drinking is a moderate pleasure, or the necessity of allaying his thirst. The object of every Minister, in laying a tax, is always to procure the sum at which he has rated its produce; if the tax should answer any other purpose, this additional one is considered merely with regard to the prospect it affords of making good another tax less productive than was at first expected. In fact, a minister of finance is not a præfectus morum—a moral censor: the State is in want of a certain sum; that’s enough, it must be found.—Let us then examine, what kind of taxation will be the least burdensome in its operation, give its first shock with the least violence, and be attended with inconveniences of the shortest duration.

Effects of a general Poll-Tax.

Eleventh Hypothesis.

In the year 1779, the taxes in England amounted, I shall say, to 10 millions; I shall suppose too, that this was the tenth part of the general produce of the land and industry: therefore the 10th part of the nominal value of that general produce belonged to the tax, or was necessitated by the tax; the 40 shillings, which, to facilitate my operations, I shall also suppose to be the average price of the quarter of wheat, must then have been considered as the necessary price, or the price necessitated by the tax, and 36s. as the natural price, or the price acquired by the sole, natural increase of the national wealth. But in order that those 36s. might be called the natural price, the taxes should have been divided in such a manner as to load each particular article with a 9th part of its value; that is to say, that each individual, possessed of a property denominated 9, should see it charged only with one ninth more, in consequence of a general poll-tax, which we shall suppose to have been assessed with the utmost impartiality. In effect, it appears, that in this case the proprietor of a quarter of wheat, who, in consequence of the tax, would have raised the wheat from 36 to 40s. could not be said to have injured the hatter, who would sell him for 40 guineas the 40 hats which, previously to the poll-tax, he used to let him have for 36 guineas. It also appears, that the hatter could not be injured by giving 10 to the workman, instead of the 9 which he had hitherto paid; and that, in fine, if 27 millions had proved sufficient for circulation formerly, three millions more, once found, were fully adequate to the annual and perpetual payment of those 10 millions of taxes, without any one being a sufferer, but at the instant of the first payment. This system is deficient only in point of practicability; it is not established in England: 36 shillings therefore are not the natural price of wheat; the wheat certainly owes above 4 shillings to the taxes, if its current price amounts to 40s.

Let it be observed, nevertheless, that if the system of a poll-tax could be reduced to practice, if it were not of all systems the most absurd, though the easiest for government, if it were not of all systems that in which it is most evidently impossible to avoid thousands of injuries to the subject, one might establish now in England a new tax of 10 millions annually, and pay it for ever, without altering in the least the condition of anybody, provided one could find previously, and once for all, 2,600,000l. and that wheat should advance in price from 40s. to 43s. 4d. AND EVERY THING ELSE IN PROPORTION. This appears to me so glaringly evident, that it extorts from me the affirmative tone. Now as soon as this should be effected, THE BURDEN OF THE TAX WOULD CLEARLY BE NULL.

But, it will be objected, the price of wheat is not thus arbitrarily advanced:—certainly not; for were this to be the case, it might also be lowered at pleasure, and would every other day, alternately rise from 1 to 80s. and fall from 80 to 1, since for this operation (become indispensable) it would suffice that there should be in all the provinces of England as many bodies-corporate (corporations) in agriculture, as there are in industry. I am even inclined to think, that it would then be minutely examined, Whether it be in fact advantageous to agriculture, that the merchants export more goods than they import? (a due attention being paid to the five articles so often mentioned, which render necessary the importation of bullion); a question of the utmost importance, to which I do not see that any body has hitherto attended, and which might be so easily determined, if my principles are just.

Effects of a Land-Tax.

All taxes, it is said, fall on the land at last. Land is the true, the only spring of wealth; wealth should be taxed at its very source.

It is certain, that merely by knowing how the matter stands, we know how to proceed accordingly; and that, in the long-run, every thing arranges itself in the least exceptionable manner that the system of taxation will permit. The following is probably the course which things would take, in the system of a land-tax, if it were necessary now to lay on the land a new tax of 10 millions annually, supposing always the landed revenue at 60 millions, and the quarter of wheat at 40 shillings.

Twelfth Hypothesis.

(I must premise, that in all I have now to say, not only on the present hypothesis, but on all those that follow, I build on this principle; ~that, from the moment every individual pays the tax~, nobody pays it; ~that nevertheless its produce reverts to the creditors of the State, and that therefore every body is interested in carrying matters to that issue as soon as possible~.—If there never existed in the average of prices any revolution so sudden, so great, and constant in its effect, as the one which I am about to suppose; it is because it never was necessary to lay all at once 10 millions of taxes. The effect produced by one million on a revenue like that which ~England~ enjoys, is so trifling, so gradual, that it never can be felt.—But to my hypothesis).

The march of industry is always firm; she can never be bewildered by her guide. A tax of 2 shillings upon a hat will soon occasion either an alteration in the quality, or a proportionate increase in its price. Nothing more just. But agriculture has only one resource; she cannot alter the quality of her productions, and she is always timid when she wants to increase their prices. Let it be granted, however, that the first attempt of the cultivator will be to enhance boldly the price of his goods, in a proportion which may return him the amount of the tax supposed to be of 10 millions: his wheat, of course, will rise from 40 to 46s. 8d. and so with regard to other productions; then his revenue, instead of 60, will be 70 millions; but, being obliged to lay down 10 for the tax, he will have only 60 millions left.

Let us now observe, that when the operations of agriculture are talked of in consequence of taxes, the land proprietor is alluded to; and from him they suppose that the ten millions are taken, just as the fleece is shorn from the sheep; but, on the other hand, that proprietor, though not very clear in his idea of what is best for him to do, feels mechanically that he has a right to defend his fleece, that is, to increase the price of the productions of his land, because without them, neither the manufacturer nor the Minister of Finance can subsist, and to raise that price to such a level as will subject him to pay only just as much as the minister and the manufacturer: and this again appears to me extremely just.

Now this very proprietor receives of his 60 millions revenue, or rather of the revenue of his land, no more than about 20 millions; (this is nearly the result of Mr. Young’s statement: it will be seen, in the sequel, that more or less would only alter the proportion of the shares, without having the least influence either on the application of the principle, or on its consequences): the 40 millions overplus is swallowed up, viz. for the daily pay of the labourer, 20 millions, and 20 millions for the other charges with which the estates are encumbered, tythes, profits of farmers, &c. &c. It follows, of course,

Either

That the proprietor’s share must be advanced to 30 millions, if he alone be taxed; and this will leave each of the other parts interested in the landed revenue, in possession of its 20 millions, as well after as before the tax;

Or,