Chapter V: Part 5

Before these two nations be represented as vying with each other in the foreign markets, I shall, in the first instance, examine, whether it might not be possible to settle between them a direct trade, equally advantageous to both; for if this be practicable, why should not the competition be so likewise?—Is not the trade of each competitor a direct one with the nation, in which he vies?—And if, in this case, there be a sure and equitable principle for one of the competitors, why should it not be so for the other?

_A necessary Principle of Trade, considered both as ~direct~, and ~in Competition~._

In all imaginable suppositions, Commerce is nothing more than the exchange of one want against another want, or of one fancy against another fancy; or, in fine, of a fancy against a want. All idea of a commerce between two nations, as between man and man, carries with it two objects different in their nature, or their form; and the relative value of these objects must essentially be previously determined by some general principle, if we mean not to transact business in the dark.

Now, the nation so rich, or, in other words, so over-loaded with money, as to have raised, at home, the quarter of wheat to 40_s._ can certainly have no real interest in taking away the small portion of the other, so scantily provided, that she is obliged to sell for 24 or 27_s._ that which fetches 40_s._ to the former; for, after all, what would be the consequence of this spoliation? It would serve only to lessen, in the opulent country, the value of the precious metal already so much disparaged there. What then will be the case, if both have sense enough to prefer real enjoyments to chimerical possessions, or rather, profit to loss?

After the first years, destined, since the establishment of Societies, to be spent in endeavouring, if possible to cheat each other, it will certainly become indispensable to agree upon a fixed rule of appraisement, as unexceptionable for one country as for the other. Now, in the supposed state of the question, money cannot be that rule; for one of them demands none, and the other is not willing to part with any, not out of regard for the _favourable balance_, but because she would get less by the exportation of her money, than of her goods; it will therefore become necessary, for the respective advantage of the parties concerned, to agree, that the labour of 10, of 100, of 1000 men in one country, shall be looked upon as repaid by the labour of the same number of hands from the other, upon a tacit proviso nevertheless, that the respective merchants in both nations shall have it in their power to ransom their countrymen, according to the proportions established in both countries, _a little_ by the degree of estimation in which commerce is held, but a _great deal_ by the degree of foreign competition by which the natives are or will be kept or called to order.—And what is required to prevent any injustice, and, above all, any mistrust from the merchant of one nation towards the merchant of the other?—Nothing more than to follow the practice almost generally established all over _Europe_.—The merchant in _Rome_, I suppose, will send his son to his friend in _London_, and _vice versâ_. Now if the _Roman_ perceives that in _London_, where a quarter of wheat costs 40_s._ the article he proposes to buy is commonly sold at 80_s._ he will readily conceive, without having gone through a course of algebra, that some other article, which is bespoke of him in exchange, going for 54_s._ in _Rome_, where wheat is at 27_s._ _per_ quarter, he will exactly pay, value for value, according to the balance and weight of the commercial sanctuary, the 80 of _London_ with the 54 of _Rome_.

It appears to me that matters thus settled, might remain so for ever, without inconvenience, without any alteration of prices, in either of the two nations, had not Nature, either from mere caprice, or to make men, in spite of themselves, dependent on each other, and oblige them to look on one another as brethren, established certain unknown rules, in consequence of which, that very same wheat, which would cost only 26 or 27_s._ at _Rome_, we have supposed, and 40_s._ in _London_, this same wheat I say, the staff of life all over _Europe_, every where accounted the standard of labour, and every where cultivated in proportion to its common necessity, is at times nevertheless at one place in great plenty, and very scarce at another. Now it seems to be a matter of perfect indifference, that in regard to any other article a merchant should ransom his wealthy fellow citizen, a landed proprietor, by charging him, for instance, 30 crowns for an _English_ trinket, originally purchased for no more than 10, as an equitable measure between labour and labour: it is the younger son who robs the elder brother, to provide against the right of primogeniture; or, in other words, it is no more than the transferring of a few crowns, from a very valuable hand, that of the consumer, to another equally precious, that of an agent of the production: but it is of the utmost consequence for the Sovereign, that, in a time of scarcity, insatiable men, were they even his subjects, do not presume to ask 4000 grains of silver for a quarter of wheat, upon pretence that in _England_, from whence it was imported, they have paid for it 3440 grains, (for it is always upon such _victorious arguments_ that the national monopolist endeavours to defend his extortions, in times of distress); the difference is so great between 4000 grains of silver, and only 2200 or 2300, the common price by which that of labour is regulated in my hypothesis, that all the treasure shut up in the castle of _St. Angelo_ could not prevent half the inhabitants from starving for want of food in a time of dearth. Luckily, however, this misfortune may be obviated by one of the grandest operations in finance, that can possibly be conceived; for the object is no less than to oblige the people to pay in good earnest for their wheat in a moment of scarcity, at the rate of 4000 grains of silver _per_ quarter, a price so far above the means of that very people, to whom the intention is to shew some favour. This financiering operation is founded on the following remark, obvious to the meanest capacity, and perhaps not unworthy of being deeply searched into by a judicious observer.

Were the wheat in _England_ to cost only from 26 to 27_s._ _per_ quarter, the landed revenue, now called 63 millions, would, in fact, amount to no more than 42; this cannot be controverted: in this case every thing would be paid for in proportion, and certainly no one could gain or lose by it: therefore if we invert the proportion, _i. e._ if the quarter of wheat rise to 40_s._ at _Rome_, instead of 27_s._ and the other productions of the earth and of industry rise in price in the same proportion, as well as the labour by which they are procured, the revenue of the Ecclesiastical State, which, in the present supposition, would be only 10 millions sterling, would swell suddenly up to 15 millions, without any one being a sufferer.—When the question is, only to take a _nominal_ share in the most dreaded effects of the _English_ taxes, in order to procure such an addition of wealth, and get rid, at the same time, of all fear of scarcity, it would be very wrong to reject the expedient.—Money, it is said, is wanted to carry on the whole circulation at that rate;—but, in _England_, where, by a single nod, they attract money from every part of the globe, do they not make guineas with paper?—Why should they not, at _Rome_, make as many paper-crowns as are necessary to facilitate a general circulation of the products there? These products are so wisely raised in price from 27 to 40_s._ that the number of grains of silver necessary to purchase a pound of wheat, made into a loaf, being now nearly upon an equality in _Holland_, in _France_, and at _Rome_, the national trader, whose business it will be to guard against scarcity, _and the foreign merchants who will be invited to concur in remedying the evil_, will no longer be able to add to the price of wheat, any more than a reasonable compensation for his advance, trouble, risque, and the quality of the service rendered: a compensation besides, on the extent of which it will be much more difficult to impose upon the Sovereign, or any one else, at least beyond a certain degree: to this advantage let us add that of keeping the needy from the thoughts of destroying that wealth which has been gleaned by former services.

In regard to the confidence necessary to favour that paper money, with the same degree of value as that of _England_ has obtained, I confess that I do not hesitate to suppose, that the paper-money of a Sovereign is never deemed contemptible, but when an opinion prevails that he himself will despise it; and I dare say (were I to be charged with a want of modesty) that the public is too deeply interested in the inferences that may be drawn from my arguments, for their consistency or absurdity not to be very soon demonstrated: now, supposing them to be consistent, I think it would be, _then_, beyond all possibility, even to imagine a circumstance wherein the interest of a Prince could induce him to dishonour himself. This great truth, generally acknowledged, could not long remain ineffectual.—But this is not the matter in point.

The case in point is, to observe,

First, that, in the same manner as foreign coin is resolved into the quantity and standard of the metals that compose it, in order to know how much of the national coin may be given in exchange, just so all kinds of foreign commodities are resolved into the quantity of labour contained in them, or supposed to be so, that the quantity of national labour, corresponding thereto, may be ascertained:

Secondly, that therefore, labour alone being the standard of value, _labour_ is consequently the only _standard_ that can regulate the exchanges between one nation and another:

Thirdly, that the national prices, or, to speak more properly, money is, in fact, the most proper standard of labour between two manufacturers in the same town; and that nothing but the misconduct and unrestrained cupidity of the one, can prevent him from selling his goods at the price by which the other clears a profit that satisfies him; but in each country the common price of labour being arbitrarily determined by the common price of the materials necessary to set the labourer at work, the common price of wheat is, in fact, the measure of the common price of labour in all nations:

Fourthly, that it is impossible a nation should be willing to barter a greater quantity of its own labour, against a less quantity of the labour of another; _and yet it is to such a degree of absurdity, that we must reduce the supposed ~advantage~_ of the _dreaded_ competition:

Fifthly, that the liberty of exporting corn, even under its present restrictions, makes, as it were, of all _Europe_, at this day, _only_ one family; that, on the whole, there is constantly as much of that indispensable commodity as is necessary for all the family; but that a man whose folly would be to trace out, describe, and acknowledge, throughout every thing that concerns society in any essential point, the stamp of an universal benevolence, determined to unite all men together by their wants and interests if it is impossible to do it by more disinterested motives, would not prove too inconsistent in a fit of that folly which might induce him to suspect some marks of that stamp, even in the bad seasons, in the storms which successively visit all the parts of the world, make them all sensible of the necessity of such union, and soon bring nearly upon a level, all the different prices of that indispensable commodity, the cultivation of which requires, almost every where, the same labour, or which, by its quantity, always answers, upon an average, to the labour bestowed upon it:

Sixthly and in fine, that hence results the impossibility that there should long subsist, in the prices of any thing, a difference capable of making any competition whatever, formidable _to any man who will not be so unjust as to wish and ask beads of gold for beads of glass, or, in other words, to try in bartering, to obtain the labour of 150 in exchange for that of 100 only_.

Let us suppose, nevertheless, that there should exist at this day, a nation pretending to be formidable in her competition, and who should only be, in fact, remarkable for her folly, that is to say, a nation so very blind, as to endeavour to keep the price of her wheat under that of all other countries; I agree that the labour of her artisans would be rated in consequence, and that the produce of her industry might thus be purchased at a lower rate than that of any other nation:—but what advantage could she derive from thence in a competition abroad?⸺Though she should denominate at home the sum of her exports, only _one million_ for instance, because she would call 100, the quantity of wheat, which elsewhere would be called 150, how could she require less for her returns than the other countries, who, by the price of their wheat, would be compelled to call 1,500,000 that which she herself would call 1,000,000?—Would not this million represent, as really, the labour of 75,000 of her workmen (their families included), as if it were by her denominated 1,500,000_l._?—Besides, the place where she has carried her goods is not the end of her voyage; and it is so much more necessary for her to obtain in return the produce of 75,000 labourers (families included), adequate to what she herself has given, as being obliged to carry those returns home, where every thing sells, in the _hypothesis_, 50 _per cent._ below the price they would fetch any where else, she would lose in lowering the rates of her exports, all the fruit she might expect to reap from her voyage.—This is what escapes observation. They see nothing but money in commercial operations, instead of observing that all the nations in _Europe_, neither do nor can require, and that _England_ herself does not preserve more of it than _the sum necessary to answer those five articles_ of which I have spoken in examining her balance: I shall in the sequel bring some proofs, in addition to those I have already given; but I think I have said enough here, to justify me in _insisting_, that the competition can be dreaded by the unjust man alone, by that man who wishes to sell the labour of 100 workmen as if it were the labour of 150, and by that man, not less unreasonable, who, compelled to sell his own goods 10 _per cent._ dearer, should refuse to pay also 10 _per cent._ dearer for the foreign goods which he would ask in exchange.—If that principle—a principle of the strictest justice, is still unknown in _Europe_; as an _American_, I glory that it is not so in _America_.

_Reflexions on a Letter from ~Philadelphia~, inserted in the ~English~ News-papers._

A Merchant of _Philadelphia_ offers to his former _Jamaica_ correspondents, (see _Morning Chronicle_ and _London Advertiser_ of June 24, 1785) to serve them, with all such articles as they may require, at the current price of _Philadelphia_, only with the addition of freight and the usual commission. In order to render his proposal unequivocal, he mentions staves, and makes a calculation, by which it appears that he could not land them in _Jamaica_ for less than 12_l._ 19_s._ 1½_d._ currency per thousand; he then adds:

“By this calculation it appears, that staves would come considerably higher than they used to be in _Jamaica_ before the war: it is true they are so, but it is owing to their being risen at _Philadelphia_ nearly 100 _per cent._ Of _course_, _Jamaica_ prices must be in proportion; _for it would be unreasonable_ to expect goods of _Jamaica_ at the old prices, when those of _America_ have advanced so considerably.”

I shall venture upon some remarks on the foregoing proposition.

First, The _Philadelphian_ has sense enough to feel, that the war must advance the price of goods from the Colonies, in a due proportion to the general increase in prices of all that is carried there. In _Europe_, on the contrary, people are not only strangers to the idea of that universal chain, but they are so convinced, or rather so persuaded, that _the Colonies were created, and do actually exist, for the sole pleasure and interest of their respective metropolises_, that no imaginable means are spared to lessen the price of their products in the mother country who receives them, in order that _this tender mother_ may sell them at a cheaper rate in the foreign markets; but, ye mother countries! your colonists are also your children, foreigners are only your brethren.—It must be owned, however, that the coffee, indigo, and cottons, of _Jamaica_, _Grenada_, _Guadaloupe_, _St. Domingo_, &c. are no more the _territorial commodities_ of _England_, and of _France_, than the corn and other productions of those two kingdoms; and that the arguments adduced in regard to the colonies, are, as _Montaigne_ says, _of a piece_ with that by which they prove, that, THE CHEAPER THE CORN, THE MORE BRILLIANT IS THE COMMERCIAL COMPETITION.—_Were not Nature by her underhand work constantly fighting, with some advantage, against the dreams of speculators, to what pitch of misery would not agriculture be reduced in all parts of the world!_

Secondly, War has been productive, in the United States of _America_, of the same effects which attend it every where else, viz. an augmentation in the price of every thing.

Thirdly, The increase of nearly _cent. per cent._ assigned to the staves, does not determine the general advance of _American_ goods; the excessive, but instantaneous price of one article only, denotes an extraordinary demand for that object, and the actual impossibility of answering that demand; the level, so necessary in all prices, naturally returns as soon as the medium of the demand is known, and has determined the number of hands necessary to supply it: now it cannot be doubted, but that the goods in _America_ must have advanced in price, much more than any where else, because the expences of the Colonies have been, during the war, relatively speaking, much more considerable than any where else, considering the discredit inseparable from the precariousness of their situation. But the difference between their inland _common_ prices, and those of _Europe_, was so great (this will presently be seen), that they may increase them enough to pay off the interest of their national debt, and yet keep the _European_ prices at a distance.

Fourthly, The United States are now a foreign nation in regard to _Jamaica_, which belongs to _England_; yet this consideration does not render them so far unjust, as to shake off the burden of their taxes, and fix it on the inhabitants of _Jamaica_; they only make them nominal partners in that burden, (if the expression may be allowed), without any inconvenience arising therefrom to either of the parties.

Fifthly, They have the true notion of an equitable trade, founded on the continuation of former relations between goods and goods; a principle from which I only draw inferences relative to the national debt, and which suffices to destroy all the _hideousness_ of that phantom.

Sixthly, They do not pretend, with the _Europeans_, that the increase in the national prices, can in any thing affect their exportation; but they have found, that being obliged to sell dearer, it was their duty to offer very frankly to pay also dearer for whatever they wanted in return.

Seventhly, They do not entertain the least doubt on what _seems_ to be unknown in _Europe_, namely, that the real benefit of a voyage can be found only in the price which the returns will meet with, when arrived in the country where the voyage is to terminate.

Eighthly, In the union, and in the execution of these different points, centers the little mystery, by means of which Nature has hitherto filled up by slow degrees, and by which the _American_ proposes, without thinking so to do, to fill up with more dispatch, those little _furrows_ of taxes, the very name of which is now a bugbear, but would cease to be so, if the manner in which they are planned, imposed, and above all, collected, did not prolong and increase the real and momentary evil, which will ever be inseparable from them.

Ninthly, It is singular enough, that the _European_ cultivator should be taught by the _American_ trader, _the necessity and the justice_ of an increase of price in the _productions_ of the earth, _proportionable_, says the honest _Philadelphian_, _to that which is to be met with in the price of the productions of industry_:—_It would be unreasonable_, says he, _to expect the goods of ~Jamaica~ at the old prices, when those of ~Philadelphia~ have advanced so considerably_.—Nay, say the _European_ manufacturers, since our goods, by means of the taxes, have increased 10 _per cent._ it follows necessarily that the price of wheat, sugar, indigo, &c. should fall in the same proportion, in order _that the trade in competition may be supported abroad;—had not Nature, by her underhand work, constantly fought with some advantage against the dreams of speculators, and against the much more dreadful surreptions of cupidity, to what pitch of misery would not agriculture be reduced in all parts of the world!_

The following estimates may be of some service; their utility is independent of the absolute precision of the facts on which they are founded; one may, as occasion requires, extend or contract the compasses.

Previous to the last war the common price of wheat was, upon an average, in _America_ about 20_s._ sterling _per_ quarter, (vide Mr. _A. Young’s Political Arithmetic_).

If in _England_ a population of 9,000,000 of industrious inhabitants, yields a landed revenue of 60,000,000_l._ sterling, the wheat being there at 40_s._ _per_ quarter, a population of 3,000,000 of industrious inhabitants in _America_, where wheat sells at 20_s._ a quarter, ought to produce _at least_ a landed revenue of 10,000,000_l._ sterling; I say _at least_, first, because the land is new, and produces as much, with less culture; and secondly, because that part of the inhabitants employed in agriculture in _England_, constitute only one third of the whole population, and that in all probability, above two thirds of the _Americans_ are employed in works of husbandry. It may therefore be presumed, that their landed revenue exceeds 20,000,000, instead of the 10 which I have set down; but this surplus of 10,000,000, only serves to make good both the national and foreign industry, which is to balance it, and pay off the taxes: so that, in whatever light my _thesis_ be considered, every error turns to their advantage.

In limiting their landed revenue to 10,000,000, their wheat remaining at 20_s._ _per_ quarter; let everyone judge what load of taxes they could bear, before the price of their wheat and other territorial productions, should come up to that of the same commodities of _Europe_, even including the expences for the export of their surplusage.

Let every one judge also of the necessity of their bankruptcy, the idea of which has been so fondly cherished by some low-minded people, and the narrative of which, they feared perhaps themselves, would unavoidably stain the first pages of the history of their political existence.

The last war, it is said, has loaded them with an interest of 1,000,000 _per annum_. Would a tax of 10 _per cent._ on every article, or rather on the total of the produce of national, as well as foreign industry, _consumed within the country_, be productive of any other effect, but that of increasing the prices nearly as much? and would the cultivators of wheat and other productions of the earth, have occasion for any other expedient to pay the tax, _without being at any expence, without any one being aggrieved, (provided they should raise in the same proportion the price of labour attending cultivation)_ but that of advancing, in the mean time, the price of their wheat, and other productions of the earth, from 10 to 11 or 12, from 20 to 22 or 24?—This is the case in my first _hypothesis_, with this difference, that the 21,000,000 interest, mentioned therein, represented highways, havens, canals, public schools, &c. and that the interest of 1,000,000, in the United States, will represent the establishment of their independence. Such a monument is, in my opinion, too precious to admit a thought of destroying it by a reimbursement,—_a reimbursement palpably useless so soon as the price of every thing is restored to a level with the interest of any national loan whatever_.

They have committed some errors; more will follow: they know not what to fix upon; nor will they know for some time, perhaps for a long time.—Is there a State in _Europe_ that can reproach them with any false step, of which that very same State did not set the precedent at some period of its history?⸺But with their principle concerning exportation, a principle founded on justice and evidence, they have already perceived that the necessitated price of 22 or 24, instead of 20, must be felt in their country alone; and if their commodities exported for the purpose of procuring such articles for their home consumption, as they stand in need of, continue still to yield them the same quantity of those articles of consumption, as were obtained before the war, will they not perceive that the home prices, which the re-action of the taxes shall have set upon the whole of their productions, establish in the country an exact balance of those new prices at which the taxes will oblige them to sell the articles to be imported?

Compelled by necessity to have recourse to paper-money, will it be long before they are made sensible, that nothing more than internal credit is wanted to make this paper equal to coin, and answer all its purposes for ever, if they should be thus wisely inclined,—if this measure should be found the only means of curbing effectually the cupidity of those with whom they shall have occasion to trade?

Will it be long before they perceive, that this credit will follow close upon the solidity of public engagements,—a solidity demonstrated by the evidence of the inutility of a base and infamous robbery?

Will it be long before they feel that all the actual wealth of a State, its real wealth, is nothing more or less than the mass of its present industry; that all its _possible_ wealth can arise only from the sum of all its _possible_ labour; that the greatest riches are only the greatest sum of labour? that if this labour is a bitter pill, the gold and silver in which it is wrapped up, are only (like honours, titles, dignities, fame, esteem, &c.) different kinds of powders, which sweeten the taste of it to those who are ignorant of its value, to those who know not how necessary labour is to support every day, without being weary, and sometimes without regret, the wretched burthen of our lives; and in fine, that paper, _once got into credit_, can, in this respect, be an ample substitute for gold and silver ... but how many circumstances, where gold and silver cannot supply the want of credit?

Will it be long before they become sensible, that they are clogged in no part of their legislation, by those preposterous maxims which can be justified only by the circumstances that gave them birth, by those tyrannical regulations which owed their success wholely to the ignorance of their cotemporaries, by that chaos of contradictory regulations, all of which became perhaps necessary by degrees, after the first was extorted by cupidity?[6]

_Under what Point of View Premiums and other Encouragements of Exportation may be considered._

The principles of the _Americans_ concerning exportation, lead us to the examination of the doctrine of premiums.

If the want of objects, capable of exercising advantageously the industry of a numerous and active people, should compel government, _on account of some difficulties unconquerable by art and nature_, to apply that industry to some other object, on which it would be impossible to support abroad the competition of another nation, that is, to offer equally with the latter an even quantity of labour of one sort, for an even quantity of labour of a different one, there is no doubt but, in such a case, a certain premium, to maintain the competition with the country most partially favoured by art and nature, would prove, of all institutions, the most judicious and the most humane; it would be a kind of indirect tax in favour of laborious indigence; a tax, much more eligible than many others, which, though destined to the relief of wretchedness, often increase it, by checking the efforts of industry, by even providing a resource for idleness, and sometimes an alluring, a comfortable prospect for debauchery.

It was represented to a Prince truly worthy of the throne he fills, that a manufactory, in which 8 or 900 persons were constantly employed, stood him in 4 or 5,000 crowns more than it produced. _How!_ (replied the Sovereign) _does it cost me no more than 4 or 5,000 crowns to feed a thousand beggars, and keep them constantly at work? It is a cheap bargain indeed!_ The most subtle of all ministers of state could make no other reply to such an answer, than to propose some means, equally effectual, and calculated to attain, at a cheaper rate, the two most important ends that a prince can have in view, _destroying beggary, and_, in a manner, _creating labour_.

There are, no doubt, some other circumstances, which may also justify premiums on exportation; for instance, the wheat intended for exportation, is an indispensable article amongst the necessaries of life: it constitutes one third, sometimes the half of a nation’s riches; it is _essential_ that it be not in such quantity as to fall in price, because the disparagement of its value would discourage the cultivator; yet it is advantageous that there should be, upon a medium, a little more than is wanted, in order to keep it at the medium price it ought to fetch, that _one may have it in his power to purchase that which another wants to sell_. The first thing therefore to be examined is, whether the medium price, at which it must be kept, in order to equipoise the quantity of national industry which it must represent, be not so considerable,

First, By reason of some prohibitory act, forbidding the exportation of other productions of the earth, which, by this means, become cheaper than they were before this act took place, oblige the cultivator to advance his price in the others, that the whole may be raised to the level of industry:

Secondly, By reason of some other premiums on exportation, granted to various branches of the national industry, which, on that very account, are grown not only much dearer within the nation, but have also enhanced the price of all other corresponding commodities, by withdrawing from them, hands which would have increased their quantity:

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 36_s._ as the _natural_ price, or the price _acquired_ by the sole, _natural_ increase of the national wealth. But in order that those 36_s._ 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 40_s._ 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 40_s._

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 80_s._ 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[7]. _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 46_s._ 8_d._ 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_,

That each of the three parts taxed singly, at 3,333,333_l._ 6_s._ 8_d._ and enabled to pay the impost by an advance of price, both in the productions and in the wages of labour, be reduced to its primitive 20 millions, after the payment of the tax.

One is evidently equal to the other; but what is not so, is, that _industry_, who paid her workmen with 20 millions when the quarter of wheat was at 40_s._ cannot pay them since the wheat is increased to 46_s._ 8_d._ but by adding to the former wages, 3,333,333_l._ 6_s._ 8_d._ an advance which, when divided on the total of her products, heretofore rated at 60 millions, raises each third part of 20 to 21,111,111, and some trifling fractions.—Now, there remains in the hands of each of the parties concerned in agriculture, only 20 millions over and above the payment of the tax.—Those who are in the persuasion that the discharge of the import must lessen, by its whole amount at least, the revenue of those who pay it, think, no doubt, that agriculture is very well off, to have, by raising the price of its commodities two thirds, lightened the weight of so terrible a burden; yet if it were possible by a vigorous exertion, by an additional increase in the price of provisions, to make it null to every body, I do not see that it would be reasonable to oppose such exertion; for, after all,

_Either_

The first increase, brought on by _agriculture_, was unjust; the proprietor was doomed to sustain alone the whole weight of the tax, if we allow _the taxator_, the man who laid the tax, to have had a single thought on the subject:

_Or_,

The further advance in the prices of agriculture is of the most indispensable necessity, if the _taxator_ has only thought of getting the amount of the tax with the least trouble to himself, leaving to Nature the care of distributing _to every one_ complete justice,—to Nature, who never fails to do it, and who, in so complicated an operation, employs only the simple spring of that private cupidity, with which she has armed and shielded every individual; just as, in order to settle the most exact symmetry in that admirable edifice commonly called a hive, she employs no other agent than the reciprocal _pressure_ of that multitude of architects who work at it, each of whom thinks of nothing but to secure a little cell for himself.

_Thirteenth Hypothesis._

Let us then suppose that agriculture, judiciously determined by wisdom not to suffer the least encroachments on any part of her _cell_, or mechanically led by cupidity to justice, boldly raises the price of her wheat from 40 to 50_s._ and the rest of her products in a due proportion; her general revenues will then be increased from 60 to 75 millions; each of the three parts interested therein will therefore stand at 25 millions, but will be reduced to 21,666,666_l._ 13_s._ 4_d._ when the tax is paid off;—

Industry, compelled also by the advanced prices of the productions of the earth, to pay her workmen 25 instead of the 20 millions which they required in the first instance, will divide the additional 5 millions amongst the 60 millions of her former returns; each third share therefore, rated hitherto at 20 millions, will, by means of the addition, rise to 21,666,666_l._ 13_s._ 4_d._—_which is the exact balance of the like sum left in the hands of each of the three branches of agriculture, after having discharged the tax_.

In a system of taxation which should be imposed only on the land, an impost of 10 millions annually, on a revenue of 60 millions, whether it fall on the proprietor, or be divided between him, the farmer, the cultivator, and other parties concerned, requires of course an addition of 25 _per cent._ to the price of the productions of the earth, that agriculture may not be sacrificed to industry; but it must be observed, that immediately after the reaction of the one upon the other shall be completed, the burden of the tax will evidently be _null_, since _the price of labour will have increased equally in both, in proportion to that of their respective products_.

_Reflexions on the foregoing System._