The equality which the presbyterian form of church government establishes

among the clergy, consists, first, in the equality of authority or

ecclesiastical jurisdiction; and, secondly, in the equality of benefice.

In all presbyterian churches, the equality of authority is perfect; that

of benefice is not so. The difference, however, between one benefice and

another, is seldom so considerable, as commonly to tempt the possessor

even of the small one to pay court to his patron, by the vile arts of

flattery and assentation, in order to get a better. In all the

presbyterian churches, where the rights of patronage are thoroughly

established, it is by nobler and better arts, that the established clergy

in general endeavour to gain the favour of their superiors; by their

learning, by the irreproachable regularity of their life, and by the

faithful and diligent discharge of their duty. Their patrons even

frequently complain of the independency of their spirit, which they are

apt to construe into ingratitude for past favours, but which, at worse,

perhaps, is seldom anymore than that indifference which naturally arises

from the consciousness that no further favours of the kind are ever to be

expected. There is scarce, perhaps, to be found anywhere in Europe, a more

learned, decent, independent, and respectable set of men, than the greater

part of the presbyterian clergy of Holland, Geneva, Switzerland, and

Scotland.

Where the church benefices are all nearly equal, none of them can be very

great; and this mediocrity of benefice, though it may be, no doubt,

carried too far, has, however, some very agreeable effects. Nothing but

exemplary morals can give dignity to a man of small fortune. The vices of

levity and vanity necessarily render him ridiculous, and are, besides,

almost as ruinous to him as they are to the common people. In his own

conduct, therefore, he is obliged to follow that system of morals which

the common people respect the most. He gains their esteem and affection,

by that plan of life which his own interest and situation would lead him

to follow. The common people look upon him with that kindness with which

we naturally regard one who approaches somewhat to our own condition, but

who, we think, ought to be in a higher. Their kindness naturally provokes

his kindness. He becomes careful to instruct them, and attentive to assist

and relieve them. He does not even despise the prejudices of people who

are disposed to be so favourable to him, and never treats them with those

contemptuous and arrogant airs, which we so often meet with in the proud

dignitaries of opulent and well endowed churches. The presbyterian clergy,

accordingly, have more influence over the minds of the common people, than

perhaps the clergy of any other established church. It is, accordingly, in

presbyterian countries only, that we ever find the common people

converted, without persecution completely, and almost to a man, to the

established church.

In countries where church benefices are, the greater part of them, very

moderate, a chair in a university is generally a better establishment than

a church benefice. The universities have, in this case, the picking and

chusing of their members from all the churchmen of the country, who, in

every country, constitute by far the most numerous class of men of

letters. Where church benefices, on the contrary, are many of them very

considerable, the church naturally draws from the universities the greater

part of their eminent men of letters; who generally find some patron, who

does himself honour by procuring them church preferment. In the former

situation, we are likely to find the universities filled with the most

eminent men of letters that are to be found in the country. In the latter,

we are likely to find few eminent men among them, and those few among the

youngest members of the society, who are likely, too, to be drained away

from it, before they can have acquired experience and knowledge enough to

be of much use to it. It is observed by Mr de Voltaire, that father

Porée, a jesuit of no great eminence in the republic of letters, was the

only professor they had ever had in France, whose works were worth the

reading. In a country which has produced so many eminent men of letters,

it must appear somewhat singular, that scarce one of them should have been

a professor in a university. The famous Cassendi was, in the beginning of

his life, a professor in the university of Aix. Upon the first dawning of

his genius, it was represented to him, that by going into the church he

could easily find a much more quiet and comfortable subsistence, as well

as a better situation for pursuing his studies; and he immediately

followed the advice. The observation of Mr de Voltaire may be applied, I

believe, not only to France, but to all other Roman Catholic countries. We

very rarely find in any of them an eminent man of letters, who is a

professor in a university, except, perhaps, in the professions of law and

physic; professions from which the church is not so likely to draw them.

After the church of Rome, that of England is by far the richest and best

endowed church in Christendom. In England, accordingly, the church is

continually draining the universities of all their best and ablest

members; and an old college tutor who is known and distinguished in Europe

as an eminent man of letters, is as rarely to be found there as in any

Roman catholic country. In Geneva, on the contrary, in the protestant

cantons of Switzerland, in the protestant countries of Germany, in

Holland, in Scotland, in Sweden, and Denmark, the most eminent men of

letters whom those countries have produced, have, not all indeed, but the

far greater part of them, been professors in universities. In those

countries, the universities are continually draining the church of all its

most eminent men of letters.

It may, perhaps, be worth while to remark, that, if we except the poets, a

few orators, and a few historians, the far greater part of the other

eminent men of letters, both of Greece and Rome, appear to have been

either public or private teachers; generally either of philosophy or of

rhetoric. This remark will be found to hold true, from the days of Lysias

and Isocrates, of Plato and Aristotle, down to those of Plutarch and

Epictetus, Suetonius, and Quintilian. To impose upon any man the necessity

of teaching, year after year, in any particular branch of science seems in

reality to be the most effectual method for rendering him completely

master of it himself. By being obliged to go every year over the same

ground, if he is good for any thing, he necessarily becomes, in a few

years, well acquainted with every part of it, and if, upon any particular

point, he should form too hasty an opinion one year, when he comes, in the

course of his lectures to reconsider the same subject the year thereafter,

he is very likely to correct it. As to be a teacher of science is

certainly the natural employment of a mere man of letters; so is it

likewise, perhaps, the education which is most likely to render him a man

of solid learning and knowledge. The mediocrity of church benefices

naturally tends to draw the greater part of men of letters in the country

where it takes place, to the employment in which they can be the most

useful to the public, and at the same time to give them the best

education, perhaps, they are capable of receiving. It tends to render

their learning both as solid as possible, and as useful as possible.

The revenue of every established church, such parts of it excepted as may

arise from particular lands or manors, is a branch, it ought to be

observed, of the general revenue of the state, which is thus diverted to a

purpose very different from the defence of the state. The tithe, for

example, is a real land tax, which puts it out of the power of the

proprietors of land to contribute so largely towards the defence of the

state as they otherwise might be able to do. The rent of land, however,

is, according to some, the sole fund; and, according to others, the

principal fund, from which, in all great monarchies, the exigencies of the

state must be ultimately supplied. The more of this fund that is given to

the church, the less, it is evident, can be spared to the state. It may be

laid down as a certain maxim, that all other things being supposed equal,

the richer the church, the poorer must necessarily be, either the

sovereign on the one hand, or the people on the other; and, in all cases,

the less able must the state be to defend itself. In several protestant

countries, particularly in all the protestant cantons of Switzerland, the

revenue which anciently belonged to the Roman catholic church, the tithes

and church lands, has been found a fund sufficient, not only to afford

competent salaries to the established clergy, but to defray, with little

or no addition, all the other expenses of the state. The magistrates of

the powerful canton of Berne, in particular, have accumulated, out of the

savings from this fund, a very large sum, supposed to amount to several

millions; part of which is deposited in a public treasure, and part is

placed at interest in what are called the public funds of the different

indebted nations of Europe; chiefly in those of France and Great Britain.

What may be the amount of the whole expense which the church, either of

Berne, or of any other protestant canton, costs the state, I do not

pretend to know. By a very exact account it appears, that, in 1755, the

whole revenue of the clergy of the church of Scotland, including their

glebe or church lands, and the rent of their manses or dwelling-houses,

estimated according to a reasonable valuation, amounted only to

£68,514:1:5 ¹⁄₁₂d. This very moderate revenue affords a decent subsistence

to nine hundred and forty-four ministers. The whole expense of the church,

including what is occasionally laid out for the building and reparation of

churches, and of the manses of ministers, cannot well be supposed to

exceed eighty or eighty-five thousand pounds a-year. The most opulent

church in Christendom does not maintain better the uniformity of faith,

the fervour of devotion, the spirit of order, regularity, and austere

morals, in the great body of the people, than this very poorly endowed

church of Scotland. All the good effects, both civil and religious, which

an established church can be supposed to produce, are produced by it as

completely as by any other. The greater part of the protestant churches of

Switzerland, which, in general, are not better endowed than the church of

Scotland, produce those effects in a still higher degree. In the greater

part of the protestant cantons, there is not a single person to be found,

who does not profess himself to be of the established church. If he

professes himself to be of any other, indeed, the law obliges him to leave

the canton. But so severe, or, rather, indeed, so oppressive a law, could

never have been executed in such free countries, had not the diligence of

the clergy beforehand converted to the established church the whole body

of the people, with the exception of, perhaps, a few individuals only. In

some parts of Switzerland, accordingly, where, from the accidental union

of a protestant and Roman catholic country, the conversion has not been so

complete, both religions are not only tolerated, but established by law.

The proper performance of every service seems to require, that its pay or

recompence should be, as exactly as possible, proportioned to the nature

of the service. If any service is very much underpaid, it is very apt to

suffer by the meanness and incapacity of the greater part of those who are

employed in it. If it is very much overpaid, it is apt to suffer, perhaps

still more, by their negligence and idleness. A man of a large revenue,

whatever may be his profession, thinks he ought to live like other men of

large revenues; and to spend a great part of his time in festivity, in

vanity, and in dissipation. But in a clergyman, this train of life not

only consumes the time which ought to be employed in the duties of his

function, but in the eyes of the common people, destroys almost entirely

that sanctity of character, which can alone enable him to perform those

duties with proper weight and authority.

PART IV. Of the Expense of supporting the Dignity of the Sovereign.

Over and above the expenses necessary for enabling the sovereign to

perform his several duties, a certain expense is requisite for the support

of his dignity. This expense varies, both with the different periods of

improvement, and with the different forms of government.

In an opulent and improved society, where all the different orders of

people are growing every day more expensive in their houses, in their

furniture, in their tables, in their dress, and in their equipage; it

cannot well be expected that the sovereign should alone hold out against

the fashion. He naturally, therefore, or rather necessarily, becomes more

expensive in all those different articles too. His dignity even seems to

require that he should become so.

As, in point of dignity, a monarch is more raised above his subjects than

the chief magistrate of any republic is ever supposed to be above his

fellow-citizens; so a greater expense is necessary for supporting that

higher dignity. We naturally expect more splendour in the court of a king,

than in the mansion-house of a doge or burgo-master.

CONCLUSION.

The expense of defending the society, and that of supporting the dignity

of the chief magistrate, are both laid out for the general benefit of the

whole society. It is reasonable, therefore, that they should be defrayed

by the general contribution of the whole society; all the different

members contributing, as nearly as possible, in proportion to their

respective abilities.

The expense of the administration of justice, too, may no doubt be

considered as laid out for the benefit of the whole society. There is no

impropriety, therefore, in its being defrayed by the general contribution

of the whole society. The persons, however, who give occasion to this

expense, are those who, by their injustice in one way or another, make it

necessary to seek redress or protection from the courts of justice. The

persons, again, most immediately benefited by this expense, are those whom

the courts of justice either restore to their rights, or maintain in their

rights. The expense of the administration of justice, therefore, may very

properly be defrayed by the particular contribution of one or other, or

both, of those two different sets of persons, according as different

occasions may require, that is, by the fees of court. It cannot be

necessary to have recourse to the general contribution of the whole

society, except for the conviction of those criminals who have not

themselves any estate or fund sufficient for paying those fees.

Those local or provincial expenses, of which the benefit is local or

provincial (what is laid out, for example, upon the police of a particular

town or district), ought to be defrayed by a local or provincial revenue,

and ought to be no burden upon the general revenue of the society. It is

unjust that the whole society should contribute towards an expense, of

which the benefit is confined to a part of the society.

The expense of maintaining good roads and communications is, no doubt,

beneficial to the whole society, and may, therefore, without any

injustice, be defrayed by the general contributions of the whole society.

This expense, however, is most immediately and directly beneficial to

those who travel or carry goods from one place to another, and to those

who consume such goods. The turnpike tolls in England, and the duties

called peages in other countries, lay it altogether upon those two

different sets of people, and thereby discharge the general revenue of the

society from a very considerable burden.

The expense of the institutions for education and religious instruction,

is likewise, no doubt, beneficial to the whole society, and may,

therefore, without injustice, be defrayed by the general contribution of

the whole society. This expense, however, might, perhaps, with equal

propriety, and even with some advantage, be defrayed altogether by those

who receive the immediate benefit of such education and instruction, or by

the voluntary contribution of those who think they have occasion for

either the one or the other.

When the institutions, or public works, which are beneficial to the whole

society, either cannot be maintained altogether, or are not maintained

altogether, by the contribution of such particular members of the society

as are most immediately benefited by them; the deficiency must, in most

cases, be made up by the general contribution of the whole society. The

general revenue of the society, over and above defraying the expense of

defending the society, and of supporting the dignity of the chief

magistrate, must make up for the deficiency of many particular branches of

revenue. The sources of this general or public revenue, I shall endeavour

to explain in the following chapter.

CHAPTER II.

OF THE SOURCES OF THE GENERAL OR PUBLIC

REVENUE OF THE SOCIETY.

The revenue which must defray, not only the expense of defending the

society and of supporting the dignity of the chief magistrate, but all the

other necessary expenses of government, for which the constitution of the

state has not provided any particular revenue may be drawn, either, first,

from some fund which peculiarly belongs to the sovereign or commonwealth,

and which is independent of the revenue of the people; or, secondly, from

the revenue of the people.

PART I. Of the Funds, or Sources, of Revenue, which may peculiarly belong

to the Sovereign or Commonwealth.

The funds, or sources, of revenue, which may peculiarly belong to the

sovereign or commonwealth, must consist, either in stock, or in land.

The sovereign, like, any other owner of stock, may derive a revenue from

it, either by employing it himself, or by lending it. His revenue is, in

the one case, profit, in the other interest.

The revenue of a Tartar or Arabian chief consists in profit. It arises

principally from the milk and increase of his own herds and flocks, of

which he himself superintends the management, and is the principal

shepherd or herdsman of his own horde or tribe. It is, however, in this

earliest and rudest state of civil government only, that profit has ever

made the principal part of the public revenue of a monarchical state.

Small republics have sometimes derived a considerable revenue from the

profit of mercantile projects. The republic of Hamburgh is said to do so

from the profits of a public wine-cellar and apothecary’s shop. {See

Memoires concernant les Droits et Impositions en Europe, tome i. page 73.

This work was compiled by the order of the court, for the use of a

commission employed for some years past in considering the proper means

for reforming the finances of France. The account of the French taxes,

which takes up three volumes in quarto, may be regarded as perfectly

authentic. That of those of other European nations was compiled from such

information as the French ministers at the different courts could procure.

It is much shorter, and probably not quite so exact as that of the French

taxes.} That state cannot be very great, of which the sovereign has

leisure to carry on the trade of a wine-merchant or an apothecary. The

profit of a public bank has been a source of revenue to more considerable

states. It has been so, not only to Hamburgh, but to Venice and Amsterdam.

A revenue of this kind has even by some people been thought not below the

attention of so great an empire as that of Great Britain. Reckoning the

ordinary dividend of the bank of England at five and a-half per cent., and

its capital at ten millions seven hundred and eighty thousand pounds, the

neat annual profit, after paying the expense of management, must amount,

it is said, to five hundred and ninety-two thousand nine hundred pounds.

Government, it is pretended, could borrow this capital at three per cent.

interest, and, by taking the management of the bank into its own hands,

might make a clear profit of two hundred and sixty-nine thousand five

hundred pounds a-year. The orderly, vigilant, and parsimonious

administration of such aristocracies as those of Venice and Amsterdam, is

extremely proper, it appears from experience, for the management of a

mercantile project of this kind. But whether such a government as that of

England, which, whatever may be its virtues, has never been famous for

good economy; which, in time of peace, has generally conducted itself with

the slothful and negligent profusion that is, perhaps, natural to

monarchies; and, in time of war, has constantly acted with all the

thoughtless extravagance that democracies are apt to fall into, could be

safely trusted with the management of such a project, must at least be a

good deal more doubtful.

The post-office is properly a mercantile project. The government advances

the expense of establishing the different offices, and of buying or hiring

the necessary horses or carriages, and is repaid, with a large profit, by

the duties upon what is carried. It is, perhaps, the only mercantile

project which has been successfully managed by, I believe, every sort of

government. The capital to be advanced is not very considerable. There is

no mystery in the business. The returns are not only certain but

immediate.

Princes, however, have frequently engaged in many other mercantile

projects, and have been willing, like private persons, to mend their

fortunes, by becoming adventurers in the common branches of trade. They

have scarce ever succeeded. The profusion with which the affairs of

princes are always managed, renders it almost impossible that they should.

The agents of a prince regard the wealth of their master as inexhaustible;

are careless at what price they buy, are careless at what price they sell,

are careless at what expense they transport his goods from one place to

another. Those agents frequently live with the profusion of princes; and

sometimes, too, in spite of that profusion, and by a proper method of

making up their accounts, acquire the fortunes of princes. It was thus, as

we are told by Machiavel, that the agents of Lorenzo of Medicis, not a

prince of mean abilities, carried on his trade. The republic of Florence

was several times obliged to pay the debt into which their extravagance

had involved him. He found it convenient, accordingly to give up the

business of merchant, the business to which his family had originally owed

their fortune, and, in the latter part of his life, to employ both what

remained of that fortune, and the revenue of the state, of which he had

the disposal, in projects and expenses more suitable to his station.

No two characters seem more inconsistent than those of trader and

sovereign. If the trading spirit of the English East India company renders

them very bad sovereigns, the spirit of sovereignty seems to have rendered

them equally bad traders. While they were traders only, they managed their

trade successfully, and were able to pay from their profits a moderate

dividend to the proprietors of their stock. Since they became sovereigns,

with a revenue which, it is said, was originally more than three millions

sterling, they have been obliged to beg the ordinary assistance of

government, in order to avoid immediate bankruptcy. In their former

situation, their servants in India considered themselves as the clerks of

merchants; in their present situation, those servants consider themselves

as the ministers of sovereigns.

A state may sometimes derive some part of its public revenue from the

interest of money, as well as from the profits of stock. If it has amassed

a treasure, it may lend a part of that treasure, either to foreign states,

or to its own subjects.

The canton of Berne derives a considerable revenue by lending a part of

its treasure to foreign states, that is, by placing it in the public funds

of the different indebted nations of Europe, chiefly in those of France

and England. The security of this revenue must depend, first, upon the

security of the funds in which it is placed, or upon the good faith of the

government which has the management of them; and, secondly, upon the

certainty or probability of the continuance of peace with the debtor

nation. In the case of a war, the very first act of hostility on the part

of the debtor nation might be the forfeiture of the funds of its credit.

This policy of lending money to foreign states is, so far as I know

peculiar to the canton of Berne.

The city of Hamburgh {See Memoire concernant les Droites et Impositions en

Europe tome i p. 73.}has established a sort of public pawn-shop, which

lends money to the subjects of the state, upon pledges, at six per cent.

interest. This pawn-shop, or lombard, as it is called, affords a revenue,

it is pretended, to the state, of a hundred and fifty thousand crowns,

which, at four and sixpence the crown, amounts to £33,750 sterling.

The government of Pennsylvania, without amassing any treasure, invented a

method of lending, not money, indeed, but what is equivalent to money, to

its subjects. By advancing to private people, at interest, and upon land

security to double the value, paper bills of credit, to be redeemed

fifteen years after their date; and, in the mean time, made transferable

from hand to hand, like banknotes, and declared by act of assembly to be a

legal tender in all payments from one inhabitant of the province to

another, it raised a moderate revenue, which went a considerable way

towards defraying an annual expense of about £4,500, the whole ordinary

expense of that frugal and orderly government. The success of an expedient

of this kind must have depended upon three different circumstances: first,

upon the demand for some other instrument of commerce, besides gold and

silver money, or upon the demand for such a quantity of consumable stock

as could not be had without sending abroad the greater part of their gold

and silver money, in order to purchase it; secondly, upon the good credit

of the government which made use of this expedient; and, thirdly, upon the

moderation with which it was used, the whole value of the paper bills of

credit never exceeding that of the gold and silver money which would have

been necessary for carrying on their circulation, had there been no paper

bills of credit. The same expedient was, upon different occasions, adopted

by several other American colonies; but, from want of this moderation, it

produced, in the greater part of them, much more disorder than

conveniency.

The unstable and perishable nature of stock and credit, however, renders

them unfit to be trusted to as the principal funds of that sure, steady,

and permanent revenue, which can alone give security and dignity to

government. The government of no great nation, that was advanced beyond

the shepherd state, seems ever to have derived the greater part of its

public revenue from such sources.

Land is a fund of more stable and permanent nature; and the rent of public

lands, accordingly, has been the principal source of the public revenue of

many a great nation that was much advanced beyond the shepherd state. From

the produce or rent of the public lands, the ancient republics of Greece

and Italy derived for a long time the greater part of that revenue which

defrayed the necessary expenses of the commonwealth. The rent of the crown

lands constituted for a long time the greater part of the revenue of the

ancient sovereigns of Europe.

War, and the preparation for war, are the two circumstances which, in

modern times, occasion the greater part of the necessary expense or all

great states. But in the ancient republics of Greece and Italy, every

citizen was a soldier, and both served, and prepared himself for service,

at his own expense. Neither of those two circumstances, therefore, could

occasion any very considerable expense to the state. The rent of a very

moderate landed estate might be fully sufficient for defraying all the

other necessary expenses of government.

In the ancient monarchies of Europe, the manners and customs of the time

sufficiently prepared the great body of the people for war; and when they

took the field, they were, by the condition of their feudal tenures, to be

maintained either at their own expense, or at that of their immediate

lords, without bringing any new charge upon the sovereign. The other

expenses of government were, the greater part of them, very moderate. The

administration of justice, it has been shewn, instead of being a cause of

expense was a source of revenue. The labour of the country people, for

three days before, and for three days after, harvest, was thought a fund

sufficient for making and maintaining all the bridges, highways, and other

public works, which the commerce of the country was supposed to require.

In those days the principal expense of the sovereign seems to have

consisted in the maintenance of his own family and household. The officers

of his household, accordingly, were then the great officers of state. The

lord treasurer received his rents. The lord steward and lord chamberlain

looked after the expense of his family. The care of his stables was

committed to the lord constable and the lord marshal. His houses were all

built in the form of castles, and seem to have been the principal

fortresses which he possessed. The keepers of those houses or castles

might be considered as a sort of military governors. They seem to have

been the only military officers whom it was necessary to maintain in time

of peace. In these circumstances, the rent of a great landed estate might,

upon ordinary occasions, very well defray all the necessary expenses of

government.

In the present state of the greater part of the civilized monarchies of

Europe, the rent of all the lands in the country, managed as they probably

would be, if they all belonged to one proprietor, would scarce, perhaps,

amount to the ordinary revenue which they levy upon the people even in

peaceable times. The ordinary revenue of Great Britain, for example,

including not only what is necessary for defraying the current expense of

the year, but for paying the interest of the public debts, and for sinking

a part of the capital of those debts, amounts to upwards of ten millions

a-year. But the land tax, at four shillings in the pound, falls short of

two millions a-year. This land tax, as it is called however, is supposed

to be one-fifth, not only of the rent of all the land, but of that of all

the houses, and of the interest of all the capital stock of Great Britain,

that part of it only excepted which is either lent to the public, or

employed as farming stock in the cultivation of land. A very considerable

part of the produce of this tax arises from the rent of houses and the

interest of capital stock. The land tax of the city of London, for

example, at four shillings in the pound, amounts to £123,399: 6: 7; that

of the city of Westminster to £63,092: 1: 5; that of the palaces of

Whitehall and St. James’s, to £30,754: 6: 3. A certain proportion of the

land tax is, in the same manner, assessed upon all the other cities and

towns corporate in the kingdom; and arises almost altogether, either from

the rent of houses, or from what is supposed to be the interest of trading

and capital stock. According to the estimation, therefore, by which Great

Britain is rated to the land tax, the whole mass of revenue arising from

the rent of all the lands, from that of all the houses, and from the

interest of all the capital stock, that part of it only excepted which is

either lent to the public, or employed in the cultivation of land, does

not exceed ten millions sterling a-year, the ordinary revenue which

government levies upon the people, even in peaceable times. The estimation

by which Great Britain is rated to the land tax is, no doubt, taking the

whole kingdom at an average, very much below the real value; though in

several particular counties and districts it is said to be nearly equal to

that value. The rent of the lands alone, exclusive of that of houses and

of the interest of stock, has by many people been estimated at twenty

millions; an estimation made in a great measure at random, and which, I

apprehend, is as likely to be above as below the truth. But if the lands

of Great Britain, in the present state of their cultivation, do not afford

a rent of more than twenty millions a-year, they could not well afford the

half, most probably not the fourth part of that rent, if they all belonged

to a single proprietor, and were put under the negligent, expensive, and

oppressive management of his factors and agents. The crown lands of Great

Britain do not at present afford the fourth part of the rent which could

probably be drawn from them if they were the property of private persons.

If the crown lands were more extensive, it is probable, they would be

still worse managed.

The revenue which the great body of the people derives from land is, in

proportion, not to the rent, but to the produce of the land. The whole

annual produce of the land of every country, if we except what is reserved

for seed, is either annually consumed by the great body of the people, or

exchanged for something else that is consumed by them. Whatever keeps down

the produce of the land below what it would otherwise rise to, keeps down

the revenue of the great body of the people, still more than it does that

of the proprietors of land. The rent of land, that portion of the produce

which belongs to the proprietors, is scarce anywhere in Great Britain

supposed to be more than a third part of the whole produce. If the land

which, in one state of cultivation, affords a revenue of ten millions

sterling a-year, would in another afford a rent of twenty millions; the

rent being, in both cases, supposed a third part of the produce, the

revenue of the proprietors would be less than it otherwise might be, by

ten millions a-year only; but the revenue of the great body of the people

would be less than it otherwise might be, by thirty millions a-year,

deducting only what would be necessary for seed. The population of the

country would be less by the number of people which thirty millions

a-year, deducting always the seed, could maintain, according to the

particular mode of living, and expense which might take place in the

different ranks of men, among whom the remainder was distributed.

Though there is not at present in Europe, any civilized state of any kind

which derives the greater part of its public revenue from the rent of

lands which are the property of the state; yet, in all the great

monarchies of Europe, there are still many large tracts of land which

belong to the crown. They are generally forest, and sometimes forests

where, after travelling several miles, you will scarce find a single tree;

a mere waste and loss of country, in respect both of produce and

population. In every great monarchy of Europe, the sale of the crown lands

would produce a very large sum of money, which, if applied to the payment

of the public debts, would deliver from mortgage a much greater revenue

than any which those lands have ever afforded to the crown. In countries

where lands, improved and cultivated very highly, and yielding, at the

time of sale, as great a rent as can easily be got from them, commonly

sell at thirty years purchase; the unimproved, uncultivated, and

low-rented crown lands, might well be expected to sell at forty, fifty, or

sixty years purchase. The crown might immediately enjoy the revenue which

this great price would redeem from mortgage. In the course of a few years,

it would probably enjoy another revenue. When the crown lands had become

private property, they would, in the course of a few years, become well

improved and well cultivated. The increase of their produce would increase

the population of the country, by augmenting the revenue and consumption

of the people. But the revenue which the crown derives from the duties or

custom and excise, would necessarily increase with the revenue and

consumption of the people.

The revenue which, in any civilized monarchy, the crown derives from the

crown lands, though it appears to cost nothing to individuals, in reality

costs more to the society than perhaps any other equal revenue which the

crown enjoys. It would, in all cases, be for the interest of the society,

to replace this revenue to the crown by some other equal revenue, and to

divide the lands among the people, which could not well be done better,

perhaps, than by exposing them to public sale.

Lands, for the purposes of pleasure and magnificence, parks, gardens,

public walks, etc. possessions which are everywhere considered as causes

of expense, not as sources of revenue, seem to be the only lands which, in

a great and civilized monarchy, ought to belong to the crown.

Public stock and public lands, therefore, the two sources of revenue which

may peculiarly belong to the sovereign or commonwealth, being both

improper and insufficient funds for defraying the necessary expense of any

great and civilized state; it remains that this expense must, the greater

part of it, be defrayed by taxes of one kind or another; the people

contributing a part of their own private revenue, in order to make up a

public revenue to the sovereign or commonwealth.

PART II. Of Taxes.

The private revenue of individuals, it has been shown in the first book of

this Inquiry, arises, ultimately from three different sources; rent,

profit, and wages. Every tax must finally be paid from some one or other

of those three different sources of revenue, or from all of them

indifferently. I shall endeavour to give the best account I can, first, of

those taxes which, it is intended should fall upon rent; secondly, of

those which, it is intended should fall upon profit; thirdly, of those

which, it is intended should fall upon wages; and fourthly, of those

which, it is intended should fall indifferently upon all those three

different sources of private revenue. The particular consideration of each

of these four different sorts of taxes will divide the second part of the

present chapter into four articles, three of which will require several

other subdivisions. Many of these taxes, it will appear from the following

review, are not finally paid from the fund, or source of revenue, upon

which it is intended they should fall.

Before I enter upon the examination of particular taxes, it is necessary

to premise the four following maxims with regard to taxes in general.

1. The subjects of every state ought to contribute towards the support of

the government, as nearly as possible, in proportion to their respective

abilities; that is, in proportion to the revenue which they respectively

enjoy under the protection of the state. The expense of government to the

individuals of a great nation, is like the expense of management to the

joint tenants of a great estate, who are all obliged to contribute in

proportion to their respective interests in the estate. In the observation

or neglect of this maxim, consists what is called the equality or

inequality of taxation. Every tax, it must be observed once for all, which

falls finally upon one only of the three sorts of revenue above mentioned,

is necessarily unequal, in so far as it does not affect the other two. In

the following examination of different taxes, I shall seldom take much

farther notice of this sort of inequality; but shall, in most cases,

confine my observations to that inequality which is occasioned by a

particular tax falling unequally upon that particular sort of private

revenue which is affected by it.

2. The tax which each individual is bound to pay, ought to be certain and

not arbitrary. The time of payment, the manner of payment, the quantity to

be paid, ought all to be clear and plain to the contributor, and to every

other person. Where it is otherwise, every person subject to the tax is

put more or less in the power of the tax-gatherer, who can either

aggravate the tax upon any obnoxious contributor, or extort, by the terror

of such aggravation, some present or perquisite to himself. The

uncertainty of taxation encourages the insolence, and favours the

corruption, of an order of men who are naturally unpopular, even where

they are neither insolent nor corrupt. The certainty of what each

individual ought to pay is, in taxation, a matter of so great importance,

that a very considerable degree of inequality, it appears, I believe, from

the experience of all nations, is not near so great an evil as a very

small degree of uncertainty.

3. Every tax ought to be levied at the time, or in the manner, in which it

is most likely to be convenient for the contributor to pay it. A tax upon

the rent of land or of houses, payable at the same term at which such

rents are usually paid, is levied at the time when it is most likely to be

convenient for the contributor to pay; or when he is most likely to have

wherewithall to pay. Taxes upon such consumable goods as are articles of

luxury, are all finally paid by the consumer, and generally in a manner

that is very convenient for him. He pays them by little and little, as he

has occasion to buy the goods. As he is at liberty too, either to buy or

not to buy, as he pleases, it must be his own fault if he ever suffers any

considerable inconveniency from such taxes.

4. Every tax ought to be so contrived, as both to take out and to keep out

of the pockets of the people as little as possible, over and above what it

brings into the public treasury of the state. A tax may either take out or

keep out of the pockets of the people a great deal more than it brings

into the public treasury, in the four following ways. First, the levying

of it may require a great number of officers, whose salaries may eat up

the greater part of the produce of the tax, and whose perquisites may

impose another additional tax upon the people. Secondly, it may obstruct

the industry of the people, and discourage them from applying to certain

branches of business which might give maintenance and employment to great

multitudes. While it obliges the people to pay, it may thus diminish, or

perhaps destroy, some of the funds which might enable them more easily to

do so. Thirdly, by the forfeitures and other penalties which those

unfortunate individuals incur, who attempt unsuccessfully to evade the

tax, it may frequently ruin them, and thereby put an end to the benefit

which the community might have received from the employment of their

capitals. An injudicious tax offers a great temptation to smuggling. But

the penalties of smuggling must arise in proportion to the temptation. The

law, contrary to all the ordinary principles of justice, first creates the

temptation, and then punishes those who yield to it; and it commonly

enhances the punishment, too, in proportion to the very circumstance which

ought certainly to alleviate it, the temptation to commit the crime. {See

Sketches of the History of Man page 474, and Seq.} Fourthly, by subjecting

the people to the frequent visits and the odious examination of the

tax-gatherers, it may expose them to much unnecessary trouble, vexation,

and oppression; and though vexation is not, strictly speaking, expense, it

is certainly equivalent to the expense at which every man would be willing

to redeem himself from it. It is in some one or other of these four

different ways, that taxes are frequently so much more burdensome to the

people than they are beneficial to the sovereign.

The evident justice and utility of the foregoing maxims have recommended

them, more or less, to the attention of all nations. All nations have

endeavoured, to the best of their judgment, to render their taxes as equal

as they could contrive; as certain, as convenient to the contributor, both

the time and the mode of payment, and in proportion to the revenue which

they brought to the prince, as little burdensome to the people. The

following short review of some of the principal taxes which have taken

place in different ages and countries, will show, that the endeavours of

all nations have not in this respect been equally successful.

ARTICLE I.—Taxes upon Rent—Taxes upon the Rent of Land.

A tax upon the rent of land may either be imposed according to a certain

canon, every district being valued at a curtain rent, which valuation is

not afterwards to be altered; or it may be imposed in such a manner, as to

vary with every variation in the real rent of the land, and to rise or

fall with the improvement or declension of its cultivation.

A land tax which, like that of Great Britain, is assessed upon each

district according to a certain invariable canon, though it should be

equal at the time of its first establishment, necessarily becomes unequal

in process of time, according to the unequal degrees of improvement or

neglect in the cultivation of the different parts of the country. In

England, the valuation, according to which the different counties and

parishes were assessed to the land tax by the 4th of William and Mary, was

very unequal even at its first establishment. This tax, therefore, so far

offends against the first of the four maxims above mentioned. It is

perfectly agreeable to the other three. It is perfectly certain. The time

of payment for the tax, being the same as that for the rent, is as

convenient as it can be to the contributor. Though the landlord is, in all

cases, the real contributor, the tax is commonly advanced by the tenant,

to whom the landlord is obliged to allow it in the payment of the rent.

This tax is levied by a much smaller number of officers than any other

which affords nearly the same revenue. As the tax upon each district does

not rise with the rise of the rent, the sovereign does not share in the

profits of the landlord’s improvements. Those improvements sometimes

contribute, indeed, to the discharge of the other landlords of the

district. But the aggravation of the tax, which this may sometimes

occasion upon a particular estate, is always so very small, that it never

can discourage those improvements, nor keep down the produce of the land

below what it would otherwise rise to. As it has no tendency to diminish

the quantity, it can have none to raise the price of that produce. It does

not obstruct the industry of the people; it subjects the landlord to no

other inconveniency besides the unavoidable one of paying the tax. The

advantage, however, which the land-lord has derived from the invariable

constancy of the valuation, by which all the lands of Great Britain are

rated to the land-tax, has been principally owing to some circumstances

altogether extraneous to the nature of the tax.

It has been owing in part, to the great prosperity of almost every part of

the country, the rents of almost all the estates of Great Britain having,

since the time when this valuation was first established, been continually

rising, and scarce any of them having fallen. The landlords, therefore,

have almost all gained the difference between the tax which they would

have paid, according to the present rent of their estates, and that which

they actually pay according to the ancient valuation. Had the state of the

country been different, had rents been gradually falling in consequence of

the declension of cultivation, the landlords would almost all have lost

this difference. In the state of things which has happened to take place

since the revolution, the constancy of the valuation has been advantageous

to the landlord and hurtful to the sovereign. In a different state of

things it might have been advantageous to the sovereign and hurtful to the

landlord.

As the tax is made payable in money, so the valuation of the land is

expressed in money. Since the establishment of this valuation, the value

of silver has been pretty uniform, and there has been no alteration in the

standard of the coin, either as to weight or fineness. Had silver risen

considerably in its value, as it seems to have done in the course of the

two centuries which preceded the discovery of the mines of America, the

constancy of the valuation might have proved very oppressive to the

landlord. Had silver fallen considerably in its value, as it certainly did

for about a century at least after the discovery of those mines, the same

constancy of valuation would have reduced very much this branch of the

revenue of the sovereign. Had any considerable alteration been made in the

standard of the money, either by sinking the same quantity of silver to a

lower denomination, or by raising it to a higher; had an ounce of silver,

for example, instead of being coined into five shillings and two pence,

been coined either into pieces which bore so low a denomination as two

shillings and seven pence, or into pieces which bore so high a one as ten

shillings and four pence, it would, in the one case, have hurt the revenue

of the proprietor, in the other that of the sovereign.

In circumstances, therefore, somewhat different from those which have

actually taken place, this constancy of valuation might have been a very

great inconveniency, either to the contributors or to the commonwealth. In

the course of ages, such circumstances, however, must at some time or

other happen. But though empires, like all the other works of men, have

all hitherto proved mortal, yet every empire aims at immortality. Every

constitution, therefore, which it is meant should be as permanent as the

empire itself, ought to be convenient, not in certain circumstances only,

but in all circumstances; or ought to be suited, not to those

circumstances which are transitory, occasional, or accidental, but to

those which are necessary, and therefore always the same.

A tax upon the rent of land, which varies with every variation of the

rent, or which rises and falls according to the improvement or neglect of

cultivation, is recommended by that sect of men of letters in France, who

call themselves the economists, as the most equitable of all taxes. All

taxes, they pretend, fall ultimately upon the rent of land, and ought,

therefore, to be imposed equally upon the fund which must finally pay

them. That all taxes ought to fall as equally as possible upon the fund

which must finally pay them, is certainly true. But without entering into

the disagreeable discussion of the metaphysical arguments by which they

support their very ingenious theory, it will sufficiently appear, from the

following review, what are the taxes which fall finally upon the rent of

the land, and what are those which fall finally upon some other fund.

In the Venetian territory, all the arable lands which are given in lease

to farmers are taxed at a tenth of the rent. {Memoires concernant les

Droits, p. 240, 241.} The leases are recorded in a public register, which

is kept by the officers of revenue in each province or district. When the

proprietor cultivates his own lands, they are valued according to an

equitable estimation, and he is allowed a deduction of one-fifth of the

tax; so that for such land he pays only eight instead of ten per cent. of

the supposed rent.

A land-tax of this kind is certainly more equal than the land-tax of

England. It might not, perhaps, be altogether so certain, and the

assessment of the tax might frequently occasion a good deal more trouble

to the landlord. It might, too, be a good deal more expensive in the

levying.

Such a system of administration, however, might, perhaps, be contrived, as

would in a great measure both prevent this uncertainty, and moderate this

expense.

The landlord and tenant, for example, might jointly be obliged to record

their lease in a public register. Proper penalties might be enacted

against concealing or misrepresenting any of the conditions; and if part

of those penalties were to be paid to either of the two parties who

informed against and convicted the other of such concealment or

misrepresentation, it would effectually deter them from combining together

in order to defraud the public revenue. All the conditions of the lease

might be sufficiently known from such a record.

Some landlords, instead of raising the rent, take a fine for the renewal

of the lease. This practice is, in most cases, the expedient of a

spendthrift, who, for a sum of ready money sells a future revenue of much

greater value. It is, in most cases, therefore, hurtful to the landlord;

it is frequently hurtful to the tenant; and it is always hurtful to the

community. It frequently takes from the tenant so great a part of his

capital, and thereby diminishes so much his ability to cultivate the land,

that he finds it more difficult to pay a small rent than it would

otherwise have been to pay a great one. Whatever diminishes his ability to

cultivate, necessarily keeps down, below what it would otherwise have

been, the most important part of the revenue of the community. By

rendering the tax upon such fines a good deal heavier than upon the

ordinary rent, this hurtful practice might be discouraged, to the no small

advantage of all the different parties concerned, of the landlord, of the

tenant, of the sovereign, and of the whole community.

Some leases prescribe to the tenant a certain mode of cultivation, and a

certain succession of crops, during the whole continuance of the lease.

This condition, which is generally the effect of the landlord’s conceit of

his own superior knowledge (a conceit in most cases very ill-founded),

ought always to be considered as an additional rent, as a rent in service,

instead of a rent in money. In order to discourage the practice, which is

generally a foolish one, this species of rent might be valued rather high,

and consequently taxed somewhat higher than common money-rents.

Some landlords, instead of a rent in money, require a rent in kind, in

corn, cattle, poultry, wine, oil, etc.; others, again, require a rent in

service. Such rents are always more hurtful to the tenant than beneficial

to the landlord. They either take more, or keep more out of the pocket of

the former, than they put into that of the latter. In every country where

they take place, the tenants are poor and beggarly, pretty much according

to the degree in which they take place. By valuing, in the same manner,

such rents rather high, and consequently taxing them somewhat higher than

common money-rents, a practice which is hurtful to the whole community,

might, perhaps, be sufficiently discouraged.

When the landlord chose to occupy himself a part of his own lands, the

rent might be valued according to an equitable arbitration of the farmers

and landlords in the neighbourhood, and a moderate abatement of the tax

might be granted to him, in the same manner as in the Venetian territory,

provided the rent of the lands which he occupied did not exceed a certain

sum. It is of importance that the landlord should be encouraged to

cultivate a part of his own land. His capital is generally greater than

that of the tenant, and, with less skill, he can frequently raise a

greater produce. The landlord can afford to try experiments, and is

generally disposed to do so. His unsuccessful experiments occasion only a

moderate loss to himself. His successful ones contribute to the

improvement and better cultivation of the whole country. It might be of

importance, however, that the abatement of the tax should encourage him to

cultivate to a certain extent only. If the landlords should, the greater

part of them, be tempted to farm the whole of their own lands, the country

(instead of sober and industrious tenants, who are bound by their own

interest to cultivate as well as their capital and skill will allow them)

would be filled with idle and profligate bailiffs, whose abusive

management would soon degrade the cultivation, and reduce the annual

produce of the land, to the diminution, not only of the revenue of their

masters, but of the most important part of that of the whole society.

Such a system of administration might, perhaps, free a tax of this kind

from any degree of uncertainty, which could occasion either oppression or

inconveniency to the contributor; and might, at the same time, serve to

introduce into the common management of land such a plan of policy as

might contribute a good deal to the general improvement and good

cultivation of the country.

The expense of levying a land-tax, which varied with every variation of

the rent, would, no doubt, be somewhat greater than that of levying one

which was always rated according to a fixed valuation. Some additional

expense would necessarily be incurred, both by the different

register-offices which it would be proper to establish in the different

districts of the country, and by the different valuations which might

occasionally be made of the lands which the proprietor chose to occupy

himself. The expense of all this, however, might be very moderate, and

much below what is incurred in the levying of many other taxes, which

afford a very inconsiderable revenue in comparison of what might easily be

drawn from a tax of this kind.

The discouragement which a variable land-tax of this kind might give to

the improvement of land, seems to be the most important objection which

can be made to it. The landlord would certainly be less disposed to

improve, when the sovereign, who contributed nothing to the expense, was

to share in the profit of the improvement. Even this objection might,

perhaps, be obviated, by allowing the landlord, before he began his

improvement, to ascertain, in conjunction with the officers of revenue,

the actual value of his lands, according to the equitable arbitration of a

certain number of landlords and farmers in the neighbourhood, equally

chosen by both parties: and by rating him, according to this valuation,

for such a number of years as might be fully sufficient for his complete

indemnification. To draw the attention of the sovereign towards the

improvement of the land, from a regard to the increase of his own revenue,

is one or the principal advantages proposed by this species of land-tax.

The term, therefore, allowed, for the indemnification of the landlord,

ought not to be a great deal longer than what was necessary for that

purpose, lest the remoteness of the interest should discourage too much

this attention. It had better, however, be somewhat too long, than in any

respect too short. No incitement to the attention of the sovereign can

ever counterbalance the smallest discouragement to that of the landlord.

The attention of the sovereign can be, at best, but a very general and

vague consideration of what is likely to contribute to the better

cultivation of the greater part of his dominions. The attention of the

landlord is a particular and minute consideration of what is likely to be

the most advantageous application of every inch of ground upon his estate.

The principal attention of the sovereign ought to be, to encourage, by

every means in his power, the attention both of the landlord and of the

farmer, by allowing both to pursue their own interest in their own way,

and according to their own judgment; by giving to both the most perfect

security that they shall enjoy the full recompence of their own industry;

and by procuring to both the most extensive market for every part of their

produce, in consequence of establishing the easiest and safest

communications, both by land and by water, through every part of his own

dominions, as well as the most unbounded freedom of exportation to the

dominions of all other princes.

If, by such a system of administration, a tax of this kind could be so

managed as to give, not only no discouragement, but, on the contrary, some

encouragement to the improvement or land, it does not appear likely to

occasion any other inconveniency to the landlord, except always the

unavoidable one of being obliged to pay the tax. In all the variations of

the state of the society, in the improvement and in the declension of

agriculture; in all the variations in the value of silver, and in all

those in the standard of the coin, a tax of this kind would, of its own

accord, and without any attention of government, readily suit itself to

the actual situation of things, and would be equally just and equitable in

all those different changes. It would, therefore, be much more proper to

be established as a perpetual and unalterable regulation, or as what is

called a fundamental law of the commonwealth, than any tax which was

always to be levied according to a certain valuation.

Some states, instead of the simple and obvious expedient of a register of

leases, have had recourse to the laborious and expensive one of an actual

survey and valuation of all the lands in the country. They have suspected,

probably, that the lessor and lessee, in order to defraud the public

revenue, might combine to conceal the real terms of the lease.

Doomsday-book seems to have been the result of a very accurate survey of

this kind.

In the ancient dominions of the king of Prussia, the land-tax is assessed

according to an actual survey and valuation, which is reviewed and altered

from time to time. {Memoires concernant les Droits, etc. tom, i. p. 114,

115, 116, etc.} According to that valuation, the lay proprietors pay from

twenty to twenty-five per cent. of their revenue; ecclesiastics from forty

to forty-five per cent. The survey and valuation of Silesia was made by

order of the present king, it is said, with great accuracy. According to

that valuation, the lands belonging to the bishop of Breslaw are taxed at

twenty-five per cent. of their rent. The other revenues of the

ecclesiastics of both religions at fifty per cent. The commanderies of the

Teutonic order, and of that of Malta, at forty per cent. Lands held by a

noble tenure, at thirty-eight and one-third per cent. Lands held by a base

tenure, at thirty-five and one-third per cent.

The survey and valuation of Bohemia is said to have been the work of more

than a hundred years. It was not perfected till after the peace of 1748,

by the orders of the present empress queen. {Id. tom i. p.85, 84.} The

survey of the duchy of Milan, which was begun in the time of Charles VI.,

was not perfected till after 1760. It is esteemed one of the most

accurate that has ever been made. The survey of Savoy and Piedmont was

executed under the orders of the late king of Sardinia. {Id. p. 280,

etc.; also p, 287. etc. to 316.}

In the dominions of the king of Prussia, the revenue of the church is

taxed much higher than that of lay proprietors. The revenue of the church

is, the greater part of it, a burden upon the rent of land. It seldom

happens that any part of it is applied towards the improvement of land; or

is so employed as to contribute, in any respect, towards increasing the

revenue of the great body of the people. His Prussian majesty had

probably, upon that account, thought it reasonable that it should

contribute a good deal more towards relieving the exigencies of the state.

In some countries, the lands of the church are exempted from all taxes. In

others, they are taxed more lightly than other lands. In the duchy of

Milan, the lands which the church possessed before 1575, are rated to the

tax at a third only or their value.

In Silesia, lands held by a noble tenure are taxed three per cent. higher

than those held by a base tenure. The honours and privileges of different

kinds annexed to the former, his Prussian majesty had probably imagined,

would sufficiently compensate to the proprietor a small aggravation of the

tax; while, at the same time, the humiliating inferiority of the latter

would be in some measure alleviated, by being taxed somewhat more lightly.

In other countries, the system of taxation, instead of alleviating,

aggravates this inequality. In the dominions of the king of Sardinia, and

in those provinces of France which are subject to what is called the real

or predial taille, the tax falls altogether upon the lands held by a base

tenure. Those held by a noble one are exempted.

A land tax assessed according to a general survey and valuation, how equal

soever it may be at first, must, in the course of a very moderate period

of time, become unequal. To prevent its becoming so would require the

continual and painful attention of government to all the variations in the

state and produce of every different farm in the country. The governments

of Prussia, of Bohemia, of Sardinia, and of the duchy of Milan, actually

exert an attention of this kind; an attention so unsuitable to the nature

of government, that it is not likely to be of long continuance, and which,

if it is continued, will probably, in the long-run, occasion much more

trouble and vexation than it can possibly bring relief to the

contributors.

In 1666, the generality of Montauban was assessed to the real or predial

taille, according, it is said, to a very exact survey and valuation.

{Memoires concernant les Droits, etc. tom. ii p. 139, etc.} By 1727, this

assessment had become altogether unequal. In order to remedy this

inconveniency, government has found no better expedient, than to impose

upon the whole generality an additional tax of a hundred and twenty

thousand livres. This additional tax is rated upon all the different

districts subject to the taille according to the old assessment. But it is

levied only upon those which, in the actual state of things, are by that

assessment under-taxed; and it is applied to the relief of those which, by

the same assessment, are over-taxed. Two districts, for example, one of

which ought, in the actual state of things, to be taxed at nine hundred,

the other at eleven hundred livres, are, by the old assessment, both taxed

at a thousand livres. Both these districts are, by the additional tax,

rated at eleven hundred livres each. But this additional tax is levied

only upon the district under-charged, and it is applied altogether to the

relief of that overcharged, which consequently pays only nine hundred

livres. The government neither gains nor loses by the additional tax,

which is applied altogether to remedy the inequalities arising from the

old assessment. The application is pretty much regulated according to the

discretion of the intendant of the generality, and must, therefore, be in

a great measure arbitrary.

Taxes which are proportioned, not in the Rent, but to the Produce of Land.

Taxes upon the produce of land are, in reality, taxes upon the rent; and

though they may be originally advanced by the farmer, are finally paid by

the landlord. When a certain portion of the produce is to be paid away for

a tax, the farmer computes as well as he can, what the value of this

portion is, one year with another, likely to amount to, and he makes a

proportionable abatement in the rent which he agrees to pay to the

landlord. There is no farmer who does not compute beforehand what the

church tythe, which is a land tax of this kind, is, one year with another,

likely to amount to.

The tythe, and every other land tax of this kind, under the appearance of

perfect equality, are very unequal taxes; a certain portion of the produce

being in different situations, equivalent to a very different portion of

the rent. In some very rich lands, the produce is so great, that the one

half of it is fully sufficient to replace to the farmer his capital

employed in cultivation, together with the ordinary profits of farming

stock in the neighbourhood. The other half, or, what comes to the same

thing, the value of the other half, he could afford to pay as rent to the

landlord, if there was no tythe. But if a tenth of the produce is taken

from him in the way of tythe, he must require an abatement of the fifth

part of his rent, otherwise he cannot get back his capital with the

ordinary profit. In this case, the rent of the landlord, instead of

amounting to a half, or five-tenths of the whole produce, will amount only

to four-tenths of it. In poorer lands, on the contrary, the produce is

sometimes so small, and the expense of cultivation so great, that it

requires four-fifths of the whole produce, to replace to the farmer his

capital with the ordinary profit. In this case, though there was no tythe,

the rent of the landlord could amount to no more than one-fifth or

two-tenths of the whole produce. But if the farmer pays one-tenth of the

produce in the way of tythe, he must require an equal abatement of the

rent of the landlord, which will thus be reduced to one-tenth only of the

whole produce. Upon the rent of rich lands the tythe may sometimes be a

tax of no more than one-fifth part, or four shillings in the pound;

whereas upon that of poorer lands, it may sometimes be a tax of one half,

or of ten shillings in the pound.

The tythe, as it is frequently a very unequal tax upon the rent, so it is

always a great discouragement, both to the improvements of the landlord,

and to the cultivation of the farmer. The one cannot venture to make the

most important, which are generally the most expensive improvements; nor

the other to raise the most valuable, which are generally, too, the most

expensive crops; when the church, which lays out no part of the expense,

is to share so very largely in the profit. The cultivation of madder was,

for a long time, confined by the tythe to the United Provinces, which,

being presbyterian countries, and upon that account exempted from this

destructive tax, enjoyed a sort of monopoly of that useful dyeing drug

against the rest of Europe. The late attempts to introduce the culture of

this plant into England, have been made only in consequence of the

statute, which enacted that five shillings an acre should be received in

lieu of all manner of tythe upon madder.

As through the greater part of Europe, the church, so in many different

countries of Asia, the state, is principally supported by a land tax,

proportioned not to the rent, but to the produce of the land. In China,

the principal revenue of the sovereign consists in a tenth part of the

produce of all the lands of the empire. This tenth part, however, is

estimated so very moderately, that, in many provinces, it is said not to

exceed a thirtieth part of the ordinary produce. The land tax or land rent

which used to be paid to the Mahometan government of Bengal, before that

country fell into the hands of the English East India company, is said to

have amounted to about a fifth part of the produce. The land tax of

ancient Egypt is said likewise to have amounted to a fifth part.

In Asia, this sort of land tax is said to interest the sovereign in the

improvement and cultivation of land. The sovereigns of China, those of

Bengal while under the Mahometan govermnent, and those of ancient Egypt,

are said, accordingly, to have been extremely attentive to the making and

maintaining of good roads and navigable canals, in order to increase, as

much as possible, both the quantity and value of every part of the produce

of the land, by procuring to every part of it the most extensive market

which their own dominions could afford. The tythe of the church is divided

into such small portions that no one of its proprietors can have any

interest of this kind. The parson of a parish could never find his

account, in making a road or canal to a distant part of the country, in

order to extend the market for the produce of his own particular parish.

Such taxes, when destined for the maintenance of the state, have some

advantages, which may serve in some measure to balance their

inconveniency. When destined for the maintenance of the church, they are

attended with nothing but inconveniency.

Taxes upon the produce of land may be levied, either in kind, or,

according to a certain valuation in money.

The parson of a parish, or a gentleman of small fortune who lives upon his

estate, may sometimes, perhaps find some advantage in receiving, the one

his tythe, and the other his rent, in kind. The quantity to be collected,

and the district within which it is to be collected, are so small, that

they both can oversee, with their own eyes, the collection and disposal of

every part of what is due to them. A gentleman of great fortune, who lived

in the capital, would be in danger of suffering much by the neglect, and

more by the fraud, of his factors and agents, if the rents of an estate in

a distant province were to be paid to him in this manner. The loss of the

sovereign, from the abuse and depredation of his tax-gatherers, would

necessarily be much greater. The servants of the most careless private

person are, perhaps, more under the eye of their master than those of the

most careful prince; and a public revenue, which was paid in kind, would

suffer so much from the mismanagement of the collectors, that a very small

part of what was levied upon the people would ever arrive at the treasury

of the prince. Some part of the public revenue of China, however, is said

to be paid in this manner. The mandarins and other tax-gatherers will, no

doubt, find their advantage in continuing the practice of a payment, which

is so much more liable to abuse than any payment in money.

A tax upon the produce of land, which is levied in money, may be levied,

either according to a valuation, which varies with all the variations of

the market price; or according to a fixed valuation, a bushel of wheat,

for example, being always valued at one and the same money price, whatever

may be the state of the market. The produce of a tax levied in the former

way will vary only according to the variations in the real produce of the

land, according to the improvement or neglect of cultivation. The produce

of a tax levied in the latter way will vary, not only according to the

variations in the produce of the land, but according both to those in the

value of the precious metals, and those in the quantity of those metals

which is at different times contained in coin of the same denomination.

The produce of the former will always bear the same proportion to the

value of the real produce of the land. The produce of the latter may, at

different times, bear very different proportions to that value.

When, instead either of a certain portion of the produce of land, or of

the price of a certain portion, a certain sum of money is to be paid in

full compensation for all tax or tythe; the tax becomes, in this case,

exactly of the same nature with the land tax of England. It neither rises

nor falls with the rent of the land. It neither encourages nor discourages

improvement. The tythe in the greater part of those parishes which pay

what is called a modus, in lieu of all other tythe is a tax of this kind.

During the Mahometan government of Bengal, instead of the payment in kind

of the fifth part of the produce, a modus, and, it is said, a very

moderate one, was established in the greater part of the districts or

zemindaries of the country. Some of the servants of the East India

company, under pretence of restoring the public revenue to its proper

value, have, in some provinces, exchanged this modus for a payment in

kind. Under their management, this change is likely both to discourage

cultivation, and to give new opportunities for abuse in the collection of

the public revenue, which has fallen very much below what it was said to

have been when it first fell under the management of the company. The

servants of the company may, perhaps, have profited by the change, but at

the expense, it is probable, both of their masters and of the country.

Taxes upon the Rent of Houses.

The rent of a house may be distinguished into two parts, of which the one

may very properly be called the building-rent; the other is commonly

called the ground-rent.

The building-rent is the interest or profit of the capital expended in

building the house. In order to put the trade of a builder upon a level

with other trades, it is necessary that this rent should be sufficient,

first, to pay him the same interest which he would have got for his

capital, if he had lent it upon good security; and, secondly, to keep the

house in constant repair, or, what comes to the same thing, to replace,

within a certain term of years, the capital which had been employed in

building it. The building-rent, or the ordinary profit of building, is,

therefore, everywhere regulated by the ordinary interest of money. Where

the market rate of interest is four per cent. the rent of a house, which,

over and above paying the ground-rent, affords six or six and a-half per

cent. upon the whole expense of building, may, perhaps, afford a

sufficient profit to the builder. Where the market rate of interest is

five per cent. it may perhaps require seven or seven and a half per cent.

If, in proportion to the interest of money, the trade of the builders

affords at any time much greater profit than this, it will soon draw so

much capital from other trades as will reduce the profit to its proper

level. If it affords at any time much less than this, other trades will

soon draw so much capital from it as will again raise that profit.

Whatever part of the whole rent of a house is over and above what is

sufficient for affording this reasonable profit, naturally goes to the

ground-rent; and, where the owner of the ground and the owner of the

building are two different persons, is, in most cases, completely paid to

the former. This surplus rent is the price which the inhabitant of the

house pays for some real or supposed advantage of the situation. In

country houses, at a distance from any great town, where there is plenty

of ground to chuse upon, the ground-rent is scarce anything, or no more

than what the ground which the house stands upon would pay, if employed in

agriculture. In country villas, in the neighbourhood of some great town,

it is sometimes a good deal higher; and the peculiar conveniency or beauty

of situation is there frequently very well paid for. Ground-rents are

generally highest in the capital, and in those particular parts of it

where there happens to be the greatest demand for houses, whatever be the

reason of that demand, whether for trade and business, for pleasure and

society, or for mere vanity and fashion.

A tax upon house-rent, payable by the tenant, and proportioned to the

whole rent of each house, could not, for any considerable time at least,

affect the building-rent. If the builder did not get his reasonable

profit, he would be obliged to quit the trade; which, by raising the

demand for building, would, in a short time, bring back his profit to its

proper level with that of other trades. Neither would such a tax fall

altogether upon the ground-rent; but it would divide itself in such a

manner, as to fall partly upon the inhabitant of the house, and partly

upon the owner of the ground.

Let us suppose, for example, that a particular person judges that he can

afford for house-rent all expense of sixty pounds a-year; and let us

suppose, too, that a tax of four shillings in the pound, or of one-fifth,

payable by the inhabitant, is laid upon house-rent. A house of sixty

pounds rent will, in that case, cost him seventy-two pounds a-year, which

is twelve pounds more than he thinks he can afford. He will, therefore,

content himself with a worse house, or a house of fifty pounds rent,

which, with the additional ten pounds that he must pay for the tax, will

make up the sum of sixty pounds a-year, the expense which he judges he can

afford, and, in order to pay the tax, he will give up a part of the

additional conveniency which he might have had from a house of ten pounds

a-year more rent. He will give up, I say, a part of this additional

conveniency; for he will seldom be obliged to give up the whole, but will,

in consequence of the tax, get a better house for fifty pounds a-year,

than he could have got if there had been no tax for as a tax of this kind,

by taking away this particular competitor, must diminish the competition

for houses of sixty pounds rent, so it must likewise diminish it for those

of fifty pounds rent, and in the same manner for those of all other rents,

except the lowest rent, for which it would for some time increase the

competition. But the rents of every class of houses for which the

competition was diminished, would necessarily be more or less reduced. As

no part of this reduction, however, could for any considerable time at

least, affect the building-rent, the whole of it must, in the long-run,

necessarily fall upon the ground-rent. The final payment of this tax,

therefore, would fall partly upon the inhabitant of the house, who, in

order to pay his share, would be obliged to give up a part of his

conveniency; and partly upon the owner of the ground, who, in order to pay

his share, would be obliged to give up a part of his revenue. In what

proportion this final payment would be divided between them, it is not,

perhaps, very easy to ascertain. The division would probably be very

different in different circumstances, and a tax of this kind might,

according to those different circumstances, affect very unequally, both

the inhabitant of the house and the owner of the ground.

The inequality with which a tax of this kind might fall upon the owners of

different ground-rents, would arise altogether from the accidental

inequality of this division. But the inequality with which it might fall

upon the inhabitants of different houses, would arise, not only from this,

but from another cause. The proportion of the expense of house-rent to the

whole expense of living, is different in the different degrees of fortune.

It is, perhaps, highest in the highest degree, and it diminishes gradually

through the inferior degrees, so as in general to be lowest in the lowest

degree. The necessaries of life occasion the great expense of the poor.

They find it difficult to get food, and the greater part of their little

revenue is spent in getting it. The luxuries and vanities of life occasion

the principal expense of the rich; and a magnificent house embellishes and

sets off to the best advantage all the other luxuries and vanities which

they possess. A tax upon house-rents, therefore, would in general fall

heaviest upon the rich; and in this sort of inequality there would not,

perhaps, be any thing very unreasonable. It is not very unreasonable that

the rich should contribute to the public expense, not only in proportion

to their revenue, but something more than in that proportion.

The rent of houses, though it in some respects resembles the rent of land,

is in one respect essentially different from it. The rent of land is paid

for the use of a productive subject. The land which pays it produces it.

The rent of houses is paid for the use of an unproductive subject. Neither

the house, nor the ground which it stands upon, produce anything. The

person who pays the rent, therefore, must draw it from some other source

of revenue, distinct from and independent of this subject. A tax upon the

rent of houses, so far as it falls upon the inhabitants, must be drawn

from the same source as the rent itself, and must be paid from their

revenue, whether derived from the wages of labour, the profits of stock,

or the rent of land. So far as it falls upon the inhabitants, it is one of

those taxes which fall, not upon one only, but indifferently upon all the

three different sources of revenue; and is, in every respect, of the same

nature as a tax upon any other sort of consumable commodities. In general,

there is not perhaps, any one article of expense or consumption by which

the liberality or narrowness of a man’s whole expense can be better judged

of than by his house-rent. A proportional tax upon this particular article

of expense might, perhaps, produce a more considerable revenue than any

which has hitherto been drawn from it in any part of Europe. If the tax,

indeed, was very high, the greater part of people would endeavour to evade

it as much as they could, by contenting themselves with smaller houses,

and by turning the greater part of their expense into some other channel.

The rent of houses might easily be ascertained with sufficient accuracy,

by a policy of the same kind with that which would be necessary for

ascertaining the ordinary rent of land. Houses not inhabited ought to pay

no tax. A tax upon them would fall altogether upon the proprietor, who

would thus be taxed for a subject which afforded him neither conveniency

nor revenue. Houses inhabited by the proprietor ought to be rated, not

according to the expense which they might have cost in building, but

according to the rent which an equitable arbitration might judge them

likely to bring if leased to a tenant. If rated according to the expense

which they might have cost in building, a tax of three or four shillings

in the pound, joined with other taxes, would ruin almost all the rich and

great families of this, and, I believe, of every other civilized country.

Whoever will examine with attention the different town and country houses

of some of the richest and greatest families in this country, will find

that, at the rate of only six and a-half, or seven per cent. upon the

original expense of building, their house-rent is nearly equal to the

whole neat rent of their estates. It is the accumulated expense of several

successive generations, laid out upon objects of great beauty and

magnificence, indeed, but, in proportion to what they cost, of very small

exchangeable value. {Since the first publication of this book, a tax

nearly upon the above-mentioned principles has been imposed.}

Ground-rents are a still more proper subject of taxation than the rent of

houses. A tax upon ground-rents would not raise the rent of houses; it

would fall altogether upon the owner of the ground-rent, who acts always

as a monopolist, and exacts the greatest rent which can be got for the use

of his ground. More or less can be got for it, according as the

competitors happen to be richer or poorer, or can afford to gratify their

fancy for a particular spot of ground at a greater or smaller expense. In

every country, the greatest number of rich competitors is in the capital,

and it is there accordingly that the highest ground-rents are always to be

found. As the wealth of those competitors would in no respect be increased

by a tax upon ground-rents, they would not probably be disposed to pay

more for the use of the ground. Whether the tax was to be advanced by the

inhabitant or by the owner of the ground, would be of little importance.

The more the inhabitant was obliged to pay for the tax, the less he would

incline to pay for the ground; so that the final payment of the tax would

fall altogether upon the owner of the ground-rent. The ground-rents of

uninhabited houses ought to pay no tax. Both ground-rents, and the

ordinary rent of land, are a species of revenue which the owner, in many

cases, enjoys without any care or attention of his own. Though a part of

this revenue should be taken from him in order to defray the expenses of

the state, no discouragement will thereby be given to any sort of

industry. The annual produce of the land and labour of the society, the

real wealth and revenue of the great body of the people, might be the same

after such a tax as before. Ground-rents, and the ordinary rent of land,

are therefore, perhaps, the species of revenue which can best bear to have

a peculiar tax imposed upon them.

Ground-rents seem, in this respect, a more proper subject of peculiar

taxation, than even the ordinary rent of land. The ordinary rent of land

is, in many cases, owing partly, at least, to the attention and good

management of the landlord. A very heavy tax might discourage, too much,

this attention and good management. Ground-rents, so far as they exceed

the ordinary rent of land, are altogether owing to the good government of

the sovereign, which, by protecting the industry either of the whole

people or of the inhabitants of some particular place, enables them to pay

so much more than its real value for the ground which they build their

houses upon; or to make to its owner so much more than compensation for

the loss which he might sustain by this use of it. Nothing can be more

reasonable, than that a fund, which owes its existence to the good

government of the state, should be taxed peculiarly, or should contribute

something more than the greater part of other funds, towards the support

of that government.

Though, in many different countries of Europe, taxes have been imposed

upon the rent of houses, I do not know of any in which ground-rents have

been considered as a separate subject of taxation. The contrivers of taxes

have, probably, found some difficulty in ascertaining what part of the

rent ought to be considered as ground-rent, and what part ought to be

considered as building-rent. It should not, however, seem very difficult

to distinguish those two parts of the rent from one another.

In Great Britain the rent of houses is supposed to be taxed in the same

proportion as the rent of land, by what is called the annual land tax. The

valuation, according to which each different parish and district is

assessed to this tax, is always the same. It was originally extremely

unequal, and it still continues to be so. Through the greater part of the

kingdom this tax falls still more lightly upon the rent of houses than

upon that of land. In some few districts only, which were originally rated

high, and in which the rents of houses have fallen considerably, the land

tax of three or four shillings in the pound is said to amount to an equal

proportion of the real rent of houses. Untenanted houses, though by law

subject to the tax, are, in most districts, exempted from it by the favour

of the assessors; and this exemption sometimes occasions some little

variation in the rate of particular houses, though that of the district is

always the same. Improvements of rent, by new buildings, repairs, etc. go

to the discharge of the district, which occasions still further variations

in the rate of particular houses.

In the province of Holland, {Memoires concernant les Droits, etc. p. 223.}

every house is taxed at two and a-half per cent. of its value, without any

regard, either to the rent which it actually pays, or to the circumstance

of its being tenanted or untenanted. There seems to be a hardship in

obliging the proprietor to pay a tax for an untenanted house, from which

he can derive no revenue, especially so very heavy a tax. In Holland,

where the market rate of interest does not exceed three per cent., two and

a-half per cent. upon the whole value of the house must, in most cases,

amount to more than a third of the building-rent, perhaps of the whole

rent. The valuation, indeed, according to which the houses are rated,

though very unequal, is said to be always below the real value. When a

house is rebuilt, improved, or enlarged, there is a new valuation, and the

tax is rated accordingly.

The contrivers of the several taxes which in England have, at different

times, been imposed upon houses, seem to have imagined that there was some

great difficulty in ascertaining, with tolerable exactness, what was the

real rent of every house. They have regulated their taxes, therefore,

according to some more obvious circumstance, such as they had probably

imagined would, in most cases, bear some proportion to the rent.

The first tax of this kind was hearth-money; or a tax of two shillings

upon every hearth. In order to ascertain how many hearths were in the

house, it was necessary that the tax-gatherer should enter every room in

it. This odious visit rendered the tax odious. Soon after the Revolution,

therefore, it was abolished as a badge of slavery.

The next tax of this kind was a tax of two shillings upon every

dwelling-house inhabited. A house with ten windows to pay four shillings

more. A house with twenty windows and upwards to pay eight shillings. This

tax was afterwards so far altered, that houses with twenty windows, and

with less than thirty, were ordered to pay ten shillings, and those with

thirty windows and upwards to pay twenty shillings. The number of windows

can, in most cases, be counted from the outside, and, in all cases,

without entering every room in the house. The visit of the tax-gatherer,

therefore, was less offensive in this tax than in the hearth-money.

This tax was afterwards repealed, and in the room of it was established

the window-tax, which has undergone two several alterations and

augmentations. The window tax, as it stands at present (January 1775),

over and above the duty of three shillings upon every house in England,

and of one shilling upon every house in Scotland, lays a duty upon every

window, which in England augments gradually from twopence, the lowest rate

upon houses with not more than seven windows, to two shillings, the

highest rate upon houses with twenty-five windows and upwards.

The principal objection to all such taxes is their inequality; an

inequality of the worst kind, as they must frequently fall much heavier

upon the poor than upon the rich. A house of ten pounds rent in a country

town, may sometimes have more windows than a house of five hundred pounds

rent in London; and though the inhabitant of the former is likely to be a

much poorer man than that of the latter, yet, so far as his contribution

is regulated by the window tax, he must contribute more to the support of

the state. Such taxes are, therefore, directly contrary to the first of

the four maxims above mentioned. They do not seem to offend much against

any of the other three.

The natural tendency of the window tax, and of all other taxes upon

houses, is to lower rents. The more a man pays for the tax, the less, it

is evident, he can afford to pay for the rent. Since the imposition of the

window tax, however, the rents of houses have, upon the whole, risen more

or less, in almost every town and village of Great Britain, with which I

am acquainted. Such has been, almost everywhere, the increase of the

demand for houses, that it has raised the rents more than the window tax

could sink them; one of the many proofs of the great prosperity of the

country, and of the increasing revenue of its inhabitants. Had it not been

for the tax, rents would probably have risen still higher.

ARTICLE II.—Taxes upon Profit, or upon the Revenue arising from

Stock.

The revenue or profit arising from stock naturally divides itself into two

parts; that which pays the interest, and which belongs to the owner of the

stock; and that surplus part which is over and above what is necessary for

paying the interest.

This latter part of profit is evidently a subject not taxable directly. It

is the compensation, and, in most cases, it is no more than a very

moderate compensation for the risk and trouble of employing the stock. The

employer must have this compensation, otherwise he cannot, consistently

with his own interest, continue the employment. If he was taxed directly,

therefore, in proportion to the whole profit, he would be obliged either

to raise the rate of his profit, or to charge the tax upon the interest of

money; that is, to pay less interest. If he raised the rate of his profit

in proportion to the tax, the whole tax, though it might be advanced by

him, would be finally paid by one or other of two different sets of

people, according to the different ways in which he might employ the stock

of which he had the management. If he employed it as a farming stock, in

the cultivation of land, he could raise the rate of his profit only by

retaining a greater portion, or, what comes to the same thing, the price

of a greater portion, of the produce of the land; and as this could be

done only by a reduction of rent, the final payment of the tax would fall

upon the landlord. If he employed it as a mercantile or manufacturing

stock, he could raise the rate of his profit only by raising the price of

his goods; in which case, the final payment of the tax would fall

altogether upon the consumers of those goods. If he did not raise the rate

of his profit, he would be obliged to charge the whole tax upon that part

of it which was allotted for the interest of money. He could afford less

interest for whatever stock he borrowed, and the whole weight of the tax

would, in this case, fall ultimately upon the interest of money. So far as

he could not relieve himself from the tax in the one way, he would be

obliged to relieve himself in the other.

The interest of money seems, at first sight, a subject equally capable of

being taxed directly as the rent of land. Like the rent of land, it is a

neat produce, which remains, after completely compensating the whole risk

and trouble of employing the stock. As a tax upon the rent of land cannot

raise rents, because the neat produce which remains, after replacing the

stock of the farmer, together with his reasonable profit, cannot be

greater after the tax than before it, so, for the same reason, a tax upon

the interest of money could not raise the rate of interest; the quantity

of stock or money in the country, like the quantity of land, being

supposed to remain the same after the tax as before it. The ordinary rate

of profit, it has been shewn, in the first book, is everywhere regulated

by the quantity of stock to be employed, in proportion to the quantity of

the employment, or of the business which must be done by it. But the

quantity of the employment, or of the business to be done by stock, could

neither be increased nor diminished by any tax upon the interest of money.

If the quantity of the stock to be employed, therefore, was neither

increased nor diminished by it, the ordinary rate of profit would

necessarily remain the same. But the portion of this profit, necessary for

compensating the risk and trouble of the employer, would likewise remain

the same; that risk and trouble being in no respect altered. The residue,

therefore, that portion which belongs to the owner of the stock, and which

pays the interest of money, would necessarily remain the same too. At

first sight, therefore, the interest of money seems to be a subject as fit

to be taxed directly as the rent of land.

There are, however, two different circumstances, which render the interest

of money a much less proper subject of direct taxation than the rent of

land.

First, the quantity and value of the land which any man possesses, can

never be a secret, and can always be ascertained with great exactness. But

the whole amount of the capital stock which he possesses is almost always

a secret, and can scarce ever be ascertained with tolerable exactness. It

is liable, besides, to almost continual variations. A year seldom passes

away, frequently not a month, sometimes scarce a single day, in which it

does not rise or fall more or less. An inquisition into every man’s

private circumstances, and an inquisition which, in order to accommodate

the tax to them, watched over all the fluctuations of his fortune, would

be a source of such continual and endless vexation as no person could

support.

Secondly, land is a subject which cannot be removed; whereas stock easily

may. The proprietor of land is necessarily a citizen of the particular

country in which his estate lies. The proprietor of stock is properly a

citizen of the world, and is not necessarily attached to any particular

country. He would be apt to abandon the country in which he was exposed to

a vexatious inquisition, in order to be assessed to a burdensome tax; and

would remove his stock to some other country, where he could either carry

on his business, or enjoy his fortune more at his ease. By removing his

stock, he would put an end to all the industry which it had maintained in

the country which he left. Stock cultivates land; stock employs labour. A

tax which tended to drive away stock from any particular country, would so

far tend to dry up every source of revenue, both to the sovereign and to

the society. Not only the profits of stock, but the rent of land, and the

wages of labour, would necessarily be more or less diminished by its

removal.

The nations, accordingly, who have attempted to tax the revenue arising

from stock, instead of any severe inquisition of this kind, have been

obliged to content themselves with some very loose, and, therefore, more

or less arbitrary estimation. The extreme inequality and uncertainty of a

tax assessed in this manner, can be compensated only by its extreme

moderation; in consequence of which, every man finds himself rated so very

much below his real revenue, that he gives himself little disturbance

though his neighbour should be rated somewhat lower.

By what is called the land tax in England, it was intended that the stock

should be taxed in the same proportion as land. When the tax upon land was

at four shillings in the pound, or at one-fifth of the supposed rent, it

was intended that stock should be taxed at one-fifth of the supposed

interest. When the present annual land tax was first imposed, the legal

rate of interest was six per cent. Every hundred pounds stock,

accordingly, was supposed to be taxed at twenty-four shillings, the fifth

part of six pounds. Since the legal rate of interest has been reduced to

five per cent. every hundred pounds stock is supposed to be taxed at

twenty shillings only. The sum to be raised, by what is called the land

tax, was divided between the country and the principal towns. The greater

part of it was laid upon the country; and of what was laid upon the towns,

the greater part was assessed upon the houses. What remained to be

assessed upon the stock or trade of the towns (for the stock upon the land

was not meant to be taxed) was very much below the real value of that

stock or trade. Whatever inequalities, therefore, there might be in the

original assessment, gave little disturbance. Every parish and district

still continues to be rated for its land, its houses, and its stock,

according to the original assessment; and the almost universal prosperity

of the country, which, in most places, has raised very much the value of

all these, has rendered those inequalities of still less importance now.

The rate, too, upon each district, continuing always the same, the

uncertainty of this tax, so far as it might he assessed upon the stock of

any individual, has been very much diminished, as well as rendered of much

less consequence. If the greater part of the lands of England are not

rated to the land tax at half their actual value, the greater part of the

stock of England is, perhaps, scarce rated at the fiftieth part of its

actual value. In some towns, the whole land tax is assessed upon houses;

as in Westminster, where stock and trade are free. It is otherwise in

London.

In all countries, a severe inquisition into the circumstances of private

persons has been carefully avoided.

At Hamburg, {Memoires concernant les Droits, tom. i, p.74} every

inhabitant is obliged to pay to the state one fourth per cent. of all that

he possesses; and as the wealth of the people of Hamburg consists

principally in stock, this tax maybe considered as a tax upon stock. Every

man assesses himself, and, in the presence of the magistrate, puts

annually into the public coffer a certain sum of money, which he declares

upon oath, to be one fourth per cent. of all that he possesses, but

without declaring what it amounts to, or being liable to any examination

upon that subject. This tax is generally supposed to be paid with great

fidelity. In a small republic, where the people have entire confidence in

their magistrates, are convinced of the necessity of the tax for the

support of the state, and believe that it will be faithfully applied to

that purpose, such conscientious and voluntary payment may sometimes be

expected. It is not peculiar to the people of Hamburg.

The canton of Underwald, in Switzerland, is frequently ravaged by storms

and inundations, and it is thereby exposed to extraordinary expenses. Upon

such occasions the people assemble, and every one is said to declare with

the greatest frankness what he is worth, in order to be taxed accordingly.

At Zurich, the law orders, that in cases of necessity, every one should be

taxed in proportion to his revenue; the amount of which he is obliged to

declare upon oath. They have no suspicion, it is said, that any of their

fellow citizens will deceive them. At Basil, the principal revenue of the

state arises from a small custom upon goods exported. All the citizens

make oath, that they will pay every three months all the taxes imposed by

law. All merchants, and even all inn-keepers, are trusted with keeping

themselves the account of the goods which they sell, either within or

without the territory. At the end of every three months, they send this

account to the treasurer, with the amount of the tax computed at the

bottom of it. It is not suspected that the revenue suffers by this

confidence. {Memoires concernant les Droits, tom. i p. 163, 167,171.}

To oblige every citizen to declare publicly upon oath, the amount of his

fortune, must not, it seems, in those Swiss cantons, be reckoned a

hardship. At Hamburg it would be reckoned the greatest. Merchants engaged

in the hazardous projects of trade, all tremble at the thoughts of being

obliged, at all times, to expose the real state of their circumstances.

The ruin of their credit, and the miscarriage of their projects, they

foresee, would too often be the consequence. A sober and parsimonious

people, who are strangers to all such projects, do not feel that they have

occasion for any such concealment.

In Holland, soon after the exaltation of the late prince of Orange to the

stadtholdership, a tax of two per cent. or the fiftieth penny, as it was

called, was imposed upon the whole substance of every citizen. Every

citizen assesed himself, and paid his tax, in the same manner as at

Hamburg, and it was in general supposed to have been paid with great

fidelity. The people had at that time the greatest affection for their new

government, which they had just established by a general insurrection. The

tax was to be paid but once, in order to relieve the state in a particular

exigency. It was, indeed, too heavy to be permanent. In a country where

the market rate of interest seldom exceeds three per cent., a tax of two

per cent. amounts to thirteen shillings and four pence in the pound, upon

the highest neat revenue which is commonly drawn from stock. It is a tax

which very few people could pay, without encroaching more or less upon

their capitals. In a particular exigency, the people may, from great

public zeal, make a great effort, and give up even a part of their

capital, in order to relieve the state. But it is impossible that they

should continue to do so for any considerable time; and if they did, the

tax would soon ruin them so completely, as to render them altogether

incapable of supporting the state.

The tax upon stock, imposed by the land tax bill in England, though it is

proportioned to the capital, is not intended to diminish or, take away any

part of that capital. It is meant only to be a tax upon the interest of

money, proportioned to that upon the rent of land; so that when the latter

is at four shillings in the pound, the former may be at four shillings in

the pound too. The tax at Hamburg, and the still more moderate taxes of

Underwald and Zurich, are meant, in the same manner, to be taxes, not upon

the capital, but upon the interest or neat revenue of stock. That of

Holland was meant to be a tax upon the capital.

Taxes upon the Profit of particular Employments.

In some countries, extraordinary taxes are imposed upon the profits of

stock; sometimes when employed in particular branches of trade, and

sometimes when employed in agriculture.

Of the former kind, are in England, the tax upon hawkers and pedlars, that

upon hackney-coaches and chairs, and that which the keepers of ale-houses

pay for a licence to retail ale and spiritous liquors. During the late

war, another tax of the same kind was proposed upon shops. The war having

been undertaken, it was said, in defence of the trade of the country, the

merchants, who were to profit by it, ought to contribute towards the

support of it.

A tax, however, upon the profits of stock employed in any particular

branch of trade, can never fall finally upon the dealers (who must in all

ordinary cases have their reasonable profit, and, where the competition is

free, can seldom have more than that profit), but always upon the

consumers, who must be obliged to pay in the price of the goods the tax

which the dealer advances; and generally with some overcharge.

A tax of this kind, when it is proportioned to the trade of the dealer, is

finally paid by the consumer, and occasions no oppression to the dealer.

When it is not so proportioned, but is the same upon all dealers, though

in this case, too, it is finally paid by the consumer, yet it favours the

great, and occasions some oppression to the small dealer. The tax of five

shillings a-week upon every hackney coach, and that of ten shillings

a-year upon every hackney chair, so far as it is advanced by the different

keepers of such coaches and chairs, is exactly enough proportioned to the

extent of their respective dealings. It neither favours the great, nor

oppresses the smaller dealer. The tax of twenty shillings a-year for a

licence to sell ale; of forty shillings for a licence to sell spiritous

liquors; and of forty shillings more for a licence to sell wine, being the

same upon all retailers, must necessarily give some advantage to the

great, and occasion some oppression to the small dealers. The former must

find it more easy to get back the tax in the price of their goods than the

latter. The moderation of the tax, however, renders this inequality of

less importance; and it may to many people appear not improper to give

some discouragement to the multiplication of little ale-houses. The tax

upon shops, it was intended, should be the same upon all shops. It could

not well have been otherwise. It would have been impossible to proportion,

with tolerable exactness, the tax upon a shop to the extent of the trade

carried on in it, without such an inquisition as would have been

altogether insupportable in a free country. If the tax had been

considerable, it would have oppressed the small, and forced almost the

whole retail trade into the hands of the great dealers. The competition of

the former being taken away, the latter would have enjoyed a monopoly of

the trade; and, like all other monopolists, would soon have combined to

raise their profits much beyond what was necessary for the payment of the

tax. The final payment, instead of falling upon the shop-keeper, would

have fallen upon the consumer, with a considerable overcharge to the

profit of the shop-keeper. For these reasons, the project of a tax upon

shops was laid aside, and in the room of it was substituted the subsidy,

1759.

What in France is called the personal taille, is perhaps, the most

important tax upon the profits of stock employed in agriculture, that is

levied in any part of Europe.

In the disorderly state of Europe, during the prevalence of the feudal

government, the sovereign was obliged to content himself with taxing those

who were too weak to refuse to pay taxes. The great lords, though willing

to assist him upon particular emergencies, refused to subject themselves

to any constant tax, and he was not strong enough to force them. The

occupiers of land all over Europe were, the greater part of them,

originally bond-men. Through the greater part of Europe, they were

gradually emancipated. Some of them acquired the property of landed

estates, which they held by some base or ignoble tenure, sometimes under

the king, and sometimes under some other great lord, like the ancient

copy-holders of England. Others, without acquiring the property, obtained

leases for terms of years, of the lands which they occupied under their

lord, and thus became less dependent upon him. The great lords seem to

have beheld the degree of prosperity and independency, which this inferior

order of men had thus come to enjoy, with a malignant and contemptuous

indignation, and willingly consented that the sovereign should tax them.

In some countries, this tax was confined to the lands which were held in

property by an ignoble tenure; and, in this case, the taille was said to

be real. The land tax established by the late king of Sardinia, and the

taille in the provinces of Languedoc, Provence, Dauphine, and Britanny; in

the generality of Montauban, and in the elections of Agen and Condom, as

well as in some other districts of France; are taxes upon lands held in

property by an ignoble tenure. In other countries, the tax was laid upon

the supposed profits of all those who held, in farm or lease, lands

belonging to other people, whatever might be the tenure by which the

proprietor held them; and in this case, the taille was said to be

personal. In the greater part of those provinces of France, which are

called the countries of elections, the taille is of this kind. The real

taille, as it is imposed only upon a part of the lands of the country, is

necessarily an unequal, but it is not always an arbitrary tax, though it

is so upon some occasions. The personal taille, as it is intended to be

proportioned to the profits of a certain class of people, which can only

be guessed at, is necessarily both arbitrary and unequal.

In France, the personal taille at present (1775) annually imposed upon the

twenty generalities, called the countries of elections, amounts to

40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom. ii,

p.17.} the proportion in which this sum is assessed upon those different

provinces, varies from year to year, according to the reports which are

made to the king’s council concerning the goodness or badness of the

crops, as well as other circumstances, which may either increase or

diminish their respective abilities to pay. Each generality is divided

into a certain number of elections; and the proportion in which the sum

imposed upon the whole generality is divided among those different

elections, varies likewise from year to year, according to the reports

made to the council concerning their respective abilities. It seems

impossible, that the council, with the best intentions, can ever

proportion, with tolerable exactness, either of these two assessments to

the real abilities of the province or district upon which they are

respectively laid. Ignorance and misinformation must always, more or less,

mislead the most upright council. The proportion which each parish ought

to support of what is assessed upon the whole election, and that which

each individual ought to support of what is assessed upon his particular

parish, are both in the same manner varied from year to year, according as

circumstances are supposed to require. These circumstances are judged of,

in the one case, by the officers of the election, in the other, by those

of the parish; and both the one and the other are, more or less, under the

direction and influence of the intendant. Not only ignorance and

misinformation, but friendship, party animosity, and private resentment,

are said frequently to mislead such assessors. No man subject to such a

tax, it is evident, can ever be certain, before he is assessed, of what he

is to pay. He cannot even be certain after he is assessed. If any person

has been taxed who ought to have been exempted, or if any person has been

taxed beyond his proportion, though both must pay in the mean time, yet if

they complain, and make good their complaints, the whole parish is

reimposed next year, in order to reimburse them. If any of the

contributors become bankrupt or insolvent, the collector is obliged to

advance his tax; and the whole parish is reimposed next year, in order to

reimburse the collector. If the collector himself should become bankrupt,

the parish which elects him must answer for his conduct to the

receiver-general of the election. But, as it might be troublesome for the

receiver to prosecute the whole parish, he takes at his choice five or six

of the richest contributors, and obliges them to make good what had been

lost by the insolvency of the collector. The parish is afterwards

reimposed, in order to reimburse those five or six. Such reimpositions are

always over and above the taille of the particular year in which they are

laid on.