 Chapter 1 Part H of the Wealth of Nations, Book 5 This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith. Book 5 Chapter 1 Part H of the Expenses of the Sovereign or Commonwealth. The privileges of the clergy in those ancient times, which to us who live in the present times appear the most absurd, their total exemption from the secular jurisdiction, for example, or what in England was called the benefit of clergy, were the natural or rather the necessary consequences of this state of things. How dangerous must it have been for the sovereign to attempt to punish a clergyman for any crime whatever, if his order were disposed to protect him, and to represent either the proof as insufficient for convicting so wholly a man, or the punishment as too severe to be inflicted upon one whose person had been rendered sacred by religion. The sovereign could, in such circumstances, do no better than leave him to be tried by the ecclesiastical courts, who, for the honor of their own order, were interested to restrain as much as possible every member of it from committing enormous crimes, or even from giving occasion to such gross scandal as might discuss the minds of the people. In the state in which things were, through the greater part of Europe, during the 10th, 11th, 12th, and 13th centuries, and for some time both before and after that period, the Constitution of the Church of Rome may be considered as the most formidable combination that ever was formed against the authority and security of civil government, as well as against the liberty, reason, and happiness of mankind, which can flourish only where civil government is able to protect them. In that Constitution, the grossest delusions of superstition were supported in such a manner by the private interests of so great a number of people, as put them out of all danger from any assault of human reason, because, though human reason might, perhaps, have been able to unveil, even to the eyes of the common people, some of the delusions of superstition, it could never have dissolved the ties of private interest. Had this Constitution been attacked by no other enemies but the feeble efforts of human reason, it must have endured forever. But that immense and well-built fabric, which all the wisdom and virtue of man could never have shaken, much less have overturned, was, by the natural course of things, first weakened and afterwards in part destroyed, and is now likely, in the course of a few centuries more, perhaps, to crumble into ruins altogether. The gradual improvements of arts, manufacturers, and commerce, the same causes which destroyed the power of the great barons, destroyed, in the same manner, through the greater part of Europe, the whole temporal manufacturers and commerce, the clergy, like the great barons, found something for which they could exchange their rude produce, and thereby discovered the means of spending their whole revenues upon their own persons, without giving any considerable share of them to other people. Their charity became gradually less extensive, their hospitality less liberal or less profuse, their retainers became consequently less numerous, and by degrees dwindled away altogether. The clergy, too, like the great barons, wished to get a better rent from their landed estates in order to spend it, in the same manner, upon the gratification of their own private vanity and folly. But this increase of rent could be got only by granting leases to their tenants, who thereby became, in a great measure, independent of them. The ties of interest, which bound the inferior ranks of people to the clergy, were, in this manner, gradually broken and dissolved. They were even broken and dissolved sooner than those which bound the same ranks of people to the great barons, because the benefices of the church being the greater part of them, much smaller than the estates of the great barons, the possessor of each benefice was much sooner able to spend the whole of its revenue upon his own person. During the greater part of the 14th and 15th centuries, the power of the great barons was, through the greater part of Europe, in full vigor. But the temporal power of the clergy, the absolute command which they had once had over the great body of the people, was very much decayed. The power of the church was, by that time, very nearly reduced, through the greater part of Europe, to what arose from their spiritual authority. And even that spiritual authority was much weakened when it ceased to be supported by the charity and hospitality of the clergy. The inferior ranks of people no longer looked upon that order as they had done before, as the comforters of their distress and the relievers of their indigence. On the contrary, they were provoked and disgusted by the vanity, luxury, and expense of the richer clergy, who appeared to spend upon their own pleasures what had always before been regarded as the patrimony of the poor. In this situation of things, the sovereigns in the different states of Europe endeavored to recover the influence which they had once had in the disposal of the great benefices of the church, by procuring to the deans and chapters of each diocese the restoration of their ancient right of electing the bishop, and to the monks of each abyssey that of electing the abbot. The re-establishing this ancient order was the object of several statutes enacted in England during the course of the 14th century, particularly of what is called the Statute of Provisors, and of the pragmatic sanction established in France in the 15th century. In order to render the election valid, it was necessary that the sovereigns should both consent to it beforehand and, afterwards, approve of the person elected. And though the election was still supposed to be free, he had, however, all the indirect means which his situation necessarily afforded him, of influencing the clergy in his own dominions. Other regulations of a similar tendency were established in other parts of Europe. But the power of the Pope in the collation of the great benefices of the church seems, before the Reformation, to have been nowhere so effectually and so universally restrained as in France and England. The Concordate, afterwards, in the 16th century, gave to the kings of France the absolute right of presenting to all the great, or what are called the consistorial, benefices of the Gallican church. Since the establishment of the pragmatic sanction and of the Concordate, the clergy of France have, in general, shown less respect to the decrees of the papal court than the clergy of any other Catholic country. In all the disputes which their sovereign has had with the Pope, they have almost constantly taken part with the former. This independency of the clergy of France upon the court of Rome seems to be principally founded upon the pragmatic sanction and the Concordate. In the earlier periods of the monarchy, the clergy of France appeared to have been as much devoted to the Pope as those of any other country. When Robert, the second prince of the Capetian race, was most unjustly excommunicated by the court of Rome, his own servants, it is said, threw the victuals which came from his table to the dogs and refused to taste anything themselves which had been polluted by the contact of a person in his situation. They were taught to do so, it may very safely be presumed, by the clergy of his own dominions. The claim of collating to the great benefices of the church, a claim in defense of which the court of Rome had frequently shaken and sometimes overturned the thrones of some of the greatest sovereigns in Christendom, was in this manner either restrained or modified or given up altogether in many different parts of Europe, even before the time of the Reformation. As the clergy had now less influence over the people, so the state had more influence over the clergy. The clergy therefore had both less power and less inclination to disturb the state. The authority of the Church of Rome was in this state of declension when the disputes which gave birth to the Reformation began in Germany and soon spread themselves through every part of Europe. The new doctrines were everywhere received with the high degree of popular favor. They were propagated with all that enthusiastic zeal which commonly animates the spirit of party when it attacks established authority. The teachers of those doctrines, though perhaps in other respects not more learned than many of the divines who defended the established church, seem in general to have been better acquainted with ecclesiastical history, and with the origin and progress of that system of opinions upon which the authority of the church was established, and they had thereby the advantage in almost every dispute. The austerity of their manners gave them authority with the common people, who contrasted the strict regularity of their conduct with the disorderly lives of the greater part of their own clergy. They possessed, too, in a much higher degree than their adversaries, all the arts of popularity and of gaining proselytes. Arts which the lofty and dignified sons of the church had long neglected, as being to them in a great measure useless. The reason of the new doctrines recommended them to some, their novelty to many, the hatred and contempt of the established clergy to a still greater number. But the zealous, passionate, and fanatical, though frequently coarse and rustic eloquence with which they were almost everywhere inculcated, recommended them to by far the greatest number. The success of the new doctrines was almost everywhere so great that the princes, who at that time happened to be on bad terms with the court of Rome, were, by means of them, easily enabled in their own dominions to overturn the church, which, having lost the respect and veneration of the inferior ranks of people, could make scarce any resistance. The court of Rome had disablied some of the smaller princes in the northern parts of Germany, whom it had probably considered as too insignificant to be worth the managing. They universally, therefore, established the Reformation in their own dominions. The tyranny of Christ during the Second, and of Troll Archbishop of Upsall, enabled Gustavus Vassa to expel them both from Sweden. The Pope favored the tyrant and the archbishop, and Gustavus Vassa found no difficulty in establishing the Reformation in Sweden. Christ during the Second was afterwards deposed from the throne of Denmark, where his conduct had rendered him as odious as in Sweden. The Pope, however, was still disposed to favor him, and Frederick of Holstein, who had mounted the throne in his stead, revenged himself by following the example of Gustavus Vassa. The magistrates of Bern and Zurich, who had no particular quarrel with the Pope, established with great ease the Reformation in their respective cantons, where just before some of the clergy had, by an impostor somewhat grosser than ordinary, rendered the whole order both odious and contemptible. In this critical situation of its affairs, the papal court was at sufficient pains to cultivate the friendship of the powerful sovereigns of France and Spain, of whom the latter was at that time Emperor of Germany. With their assistance it was enabled, though not without great difficulty and much bloodshed, either to suppress altogether or to obstruct very much the progress of the Reformation in their dominions. It was well enough inclined, too, to be complacent to the King of England. But from the circumstances of the times it could not be so without giving offense to a still greater sovereign, Charles V, King of Spain, and Emperor of Germany. Henry VIII, accordingly, though he did not embrace himself the greater part of the doctrines of the Reformation, was yet enabled by their general prevalence to suppress all the monasteries and to abolish the authority of the Church of Rome in his dominions. That he should go so far, though he went no further, gave some satisfaction to the patrons of the Reformation, who, having got possession of the government and the reign of his son and successor completed without any difficulty, the work which Henry VIII had begun. In some countries, as in Scotland, where the government was weak, unpopular, and not very firmly established, the Reformation was strong enough to overturn not only the Church, but the state likewise, for attempting to support the Church. Among the followers of the Reformation, dispersed in all the different countries of Europe, there was no general tribunal, which, like that of the Court of Rome or an ecumenical council, could settle all disputes among them, and, with irresistible authority, prescribed to all of them the precise limits of orthodoxy. When the followers of the Reformation in one country, therefore, happened to differ from their brethren in another, as they had no common judge to appeal to, the dispute could never be decided, and many such disputes arose among them. Those concerning the government of the Church, and the right of conferring ecclesiastical benefits, were perhaps the most interesting to the peace and welfare of civil society. They gave birth, accordingly, to the two principal parties, or sects, among the followers of the Reformation, the Lutheran and Calvinistic sects, the only sect among them of which the doctrine and discipline have ever yet been established by law in any part of Europe. The followers of Luther, together with what is called the Church of England, preserved, more or less, the Episcopal government, established subordination among the clergy, gave the sovereign the disposal of all the bishoprics and other consistorial benefices within his dominions, and thereby rendered him the real head of the Church. And without depriving the bishop of the right of collating to the smaller benefices within his diocese, they, even to those benefices, not only admitted, but favored the right of presentation, both in the sovereign and in all other lay patrons. This system of Church government was, from the beginning, favorable to peace and good order, and to submission to the civil sovereign. It has never, accordingly, been the occasion of any tumult or civil commotion in any country in which it has once been established. The Church of England, in particular, has always valued herself, with great reason, upon the unexceptionable loyalty of her principles. Under such a government, the clergy naturally endeavored to recommend themselves to the sovereign, to the court, and to the nobility and gentry of the country, by whose influence they chiefly expect to obtain preferment. They pay court to those patrons, sometimes, no doubt, by the vilest flattery and ascension, but frequently, too, by cultivating all those arts which best deserve, and which are, therefore, most likely to gain them, the esteem of people of rank and fortune. By their knowledge in all the different branches of useful and ornamental learning, by the decent liberality of their manners, by the social good humor of their conversation, and by their avowed contempt of those absurd and hypocritical austerities which fanatics inculcate and pretend to practice, in order to draw upon themselves the veneration and upon the greater part of men of rank and fortune, who avow that they do not practice them, the abhorrence of the common people. Such a clergy, however, while they pay their court in this manner to the higher ranks of life, are very apt to neglect altogether the means of maintaining their influence and authority with the lower. They are listened to, esteemed and respected by their superiors, but before their inferiors they are frequently incapable of defending, effectually, and to the conviction of such heirs, their own sober and moderate doctrines, against the most ignorant enthusiast who chooses to attack them. The followers of Zwinglius, or more properly those of Calvin on the contrary, bestowed upon the people of each parish, whenever the church became vacant, the right of electing their own pastor, and established at the same time the most perfect equality among the clergy. The former part of this institution, as long as it remained in vigor, seems to have been productive of nothing but disorder and confusion, and to have tended equally to corrupt the morals both of the clergy and of the people. The latter part seems never to have had any effects, but what were perfectly agreeable. As long as the people of each parish preserved the right of electing their own pastors, they acted almost always under the influence of the clergy, and generally of the most factious and fanatical of the order. The clergy, in order to preserve their influence in those popular elections, became, or affected to become many of them, fanatics themselves, encouraged fanaticism among the people, and gave the preference almost always to the most fanatical candidate. So small a matter as the appointment of a parish priest, occasioned almost always a violent contest, not only in one parish, but in all the neighboring parishes who seldom failed to take part in the quarrel. When the parish happened to be situated in a great city, it divided all the inhabitants into two parties, and when that city happened, either to constitute itself a little republic or to be the head and capital of a little republic, as in the case with many of the considerable cities in Switzerland and Holland, every paltry dispute of this kind, over and above exasperating the animosity of all their other factions, threatened to leave behind it both a new schism in the church and a new faction in the state. In those small republics, therefore, the magistrate very soon found it necessary, for the sake of preserving the public peace, to assume to himself the right of presenting to all vacant benefices. In Scotland, the most extensive country in which this Presbyterian form of church government has ever been established, the rights of patronage were in effect abolished by the act which established Presbytery in the beginning of the reign of William III. That act, at least, put in the power of certain classes of people in each parish to purchase, for a very small price, the right of electing their own pastor. The constitution which this act established was allowed to subsist for about two and twenty years, but was abolished by the Tenth of Queen Anne C-12 on account of the confusions and disorders which this more popular mode of election had almost everywhere occasioned. In so extensive a country as Scotland, however, a tumult in a remote parish was not so likely to give disturbance to government as in a smaller state. The Tenth of Queen Anne restored the rights of patronage. But though in Scotland the law gives the benefits, without any exception, to the person presented by the patron, yet the church requires sometimes, for she has not in this respect been very uniform in her decisions, a certain concurrence of the people, before she will confer upon the presentee what is called the cure of souls, or the ecclesiastical jurisdiction in the parish. She sometimes, at least from an affected concern for the peace of the parish, delays the settlement till this concurrence can be procured. The private tampering of some of the neighbouring clergy, sometimes to procure, but more frequently to prevent this concurrence, and the popular arts which they cultivate in order to enable them upon such occasions to tamper more affectionately, are perhaps the causes which principally keep up whatever remains of the old fanatical spirit, either in the clergy or in the people of Scotland. 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 benefits. In all Presbyterian churches the equality of authority is perfect, that of benefits is not so. The difference, however, between one benefits 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 ascension in order to get a better. In all the Presbyterian churches, where the rites 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 worst perhaps is seldom any more than that in difference 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 benefits, 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 favorable to him and never treats them with those contemptuous and arrogant heirs which we so often meet with in the proud dignitaries of opulent and well-undowed 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 choosing 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 imminent men of letters, who generally find some patron who does himself honor by procuring them church preferment. In the former situation we are likely to find the universities filled with the most imminent men of letters that are to be found in the country. In the latter we are likely to find few imminent 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 Poirier, 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 imminent 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 Ikes. 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 imminent man of letters, who is a professor in a university, except perhaps in the professions of law and physics, 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 imminent 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 imminent 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 imminent men of letters. It may perhaps be worthwhile to remark that if we accept the poets, a few orators, and a few historians, the far greater part of the other imminent 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 Lyceus 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 anything, 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 after, 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 accepted as may arise from particular lands or manners, 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 defense 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 defense 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 Bern, 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 Bern 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 glee, or church lands, and the rent of their manses or dwelling-houses, estimated according to a reasonable valuation, amounted only to 68,514 pounds, one shilling five-and-a-half-pence. This very moderate revenue affords a decent subsistence to 944 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 80 or 85,000 pounds a year. The most opulent church in Christendom does not maintain better the uniformity of faith, the fervor of devotion, the spirit of order, regularity, and austere morals, and 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, produced 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 recompense 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, and 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 4 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 equiptage, it cannot well be expected that the sovereign should alone hold out against the fashion. He naturally therefore, or rather necessarily, becomes more expensive than 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 splendor in the court of a king than in the mansion house of a doge or burglar 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 pages 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 endeavor to explain in the following chapter. End of Book 5, Chapter 1, Part H. Chapter 2, Part A of the Wealth of Nations, Book 5. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith. Book 5, Chapter 2, Part A 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 such 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 1. 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 and 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 super intends 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 Hamburg is said to do so from the profits of a public wine cellar and apothecary shop. 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 Hamburg 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 percent and its capital at ten millions, seven hundred and eighty thousand pounds, the neat annual profit after paying the expensive 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 percent 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 Machiavelle, that the agents of Lorenzo of Medici, 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 million 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 is amassed a treasure, it may lend a part of that treasure, either to foreign states or to its own subjects. The canton of Bern 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, and, 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 deader nation. In the case of a war, the first act of hostility on the part of the deader nation might be the forfeiture of the funds of its creditor. This policy of lending money to foreign states is, so far as I know, peculiar to the canton of Bern. The city of Hamburg has established a sort of public pawn shop, which lends money to the subjects of the state upon pledges at 6% interest. This pawn shop, or Lombard, as it is called, affords a revenue it has pretended to the state of 150,000 crowns, which, at 4 and 6 pence the crown, amounts to 33,750 pounds 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 15 years after their date, and, in the meantime, made transferable from hand to hand, like banknotes, and declared by active 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 defraining an annual expense of about 4,500 pounds, 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 that 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 convenience. The unstable and perishable nature of stock and credit, however, renders them unfit to be trusted to as the principal funds of that sure, 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 of 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 state 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 times 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 shown, instead of being a cause of expense, was a source of revenue. The labor 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 seemed 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 accepted 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 pounds six shillings seven pence that of the City of Westminster to 63,092 pounds one shilling five pence that of the palaces of Whitehall and St. James to 30,754 pounds six shillings three pence. A certain proportion of the land tax is in the same manner assessed upon all the other cities and towns corporate in the kingdom 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 accepted which is either lent to the public or employed in the cultivation of land does not exceed 10 million 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 20 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 20 millions a year they could not well afford the half most probably not the fourth part of that rent if they all belong 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 every country if we accept what is reserved for seed is either annually consumed by the great body of the people were 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 10 million sterling a year would in another afford a rent of 20 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 10 millions a year only but the revenue of the great body of the people would be less than it otherwise might be 30 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 30 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 compared to the amount of land 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 traveling 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 which if applied to the payment of the public debts would deliver from mortgage a much greater revenue than any which those lands have even 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 30 years purchase the unimproved, uncultivated and low rented crown lands might well be expected to sell at 40, 50 or 60 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 the revenue which the crown derives from the duties of 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 cost 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 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 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 end of book 5 chapter 2 part a chapter 2 part b of the wealth of nations book 5 this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Stephen Escalera the wealth of nations by Adam Smith book 5 chapter 2 part b of the sources of the general or public revenue of the society part 2 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 and differently I shall endeavor 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 in differently 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 one 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 interest in the estate in the observation that they 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 of that inequality which is occasioned by a particular tax falling unequally upon that particular sort of private revenue which is affected by it to 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 adnoxious contributor or extort by the terror of such aggravation some present or perquisite to himself the uncertainty of taxation encourages the insolence and favors 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 three 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 attacks upon the rent of land or of houses payable at the same term at which such 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 wherewithal to pay taxes upon such consumable goods as our 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 to either to buy or not to buy as he pleases it must be his own fault if he ever suffers any considerable inconvenience from such taxes four 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 that 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 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 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 endeavored 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 endeavors of all nations have not in this respect been equally successful one, 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 certain 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 fourth of William and Mary 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 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 can never 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 inconvenience besides the unavoidable one of paying the tax the advantage however which the landlord 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 have 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 pins been coined either into pieces which bore so low a denomination as two shillings and seven pins or into pieces which bore so high one as ten shillings and four pins it would in the one case would have been a much greater 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 inconvenience 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 it comes 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 attacks 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 land and what are those which fall finally upon some other fund in the Venetian territory all the arable lands which are given and leased to farmers are taxed at a tenth of the rent 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 percent 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 leveeing 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 the practice is, in most cases the expedient of a spend-thrift 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 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 then 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 neighborhood 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 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 landlord should attempt it 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 inconvenience 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 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 improvements 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 neighborhood 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 from a regard to the increase of his own revenue is one of 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 to encourage by every means in his power the attention both of the landlord and of the former 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 recompense of their own industry and by procuring to both the most extensive market for every part of their produce and 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 of land it does not appear likely to occasion any other inconvenience 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 and 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 lesser and lessy 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 according to that valuation the labor priors pay from 20% to 25% of their revenue ecclesiastics from 40% to 45% the survey and valuation of salicia 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 brezla are taxed at 25% of their rent the other revenues of the ecclesiastics of both religions at 50% the commandaries of the teutonic order and of that of malta at 40% lands held by a noble tenure at 38 and one third percent lands held by a base tenure at 35 and one third percent 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 piece of 1748 by the orders of the present empress queen the survey of the duchy of melan 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 and 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 slightly than other lands in the duchy of malan the lands which the church possessed before 1575 are rated to the tax at a third only of their value in salicia lands held by a noble tenure are taxed 3% higher than those held by a base tenure the honors 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 predile tale 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 so ever 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 melan 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 in 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 montébon was assessed to the real or predile tail according it is said to a very exact survey and valuation by 1727 this assessment had become altogether unequal in order to remedy this inconvenience the government has found no better expedient than to impose upon the whole generality an additional tax of 120,000 leavers this additional tax is rated upon all the different districts subject to the tail 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 900 the other at 1100 leavers are by the old assessment both taxed at 1000 leavers both these districts are by the additional tax rated at 1100 leavers each but this additional tax is levied only upon the district undercharged and is applied altogether to the relief of that overcharged which consequently pays only 900 leavers 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 government of the generality and must therefore be in a great measure arbitrary end of book 5 chapter 2 part B chapter 2 part C of the wealth of nations book 5 this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Stephen Escalera the wealth of nations by Adam Smith book 5 chapter 2 part C of the sources of the general or public revenue of the society taxes which are proportioned not on 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 tithe which is a land tax of this kind is one year with another likely to amount to the tithe 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 and the neighborhood the other half or what comes to the same thing the value of the other half or to pay as rent to the landlord if there was no tithe but if a tenth of the produce is taken from him in the way of tithe 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 expensive 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 tithe 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 tithe 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 tithe 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 tithe 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 to make the most important which are generally the most expensive improvements nor the other to raise the most valuable which are generally to 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 matter was for a long time confined by the tithe to the united provinces which being presbyterian countries and upon that account exempted from this destructed tax issued a sort of monopoly of that useful dying 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 tithe upon matter 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 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 Mohammedan 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 Mohammedan government 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 tithe of the church is divided into such small portions that no one of its proprietors can have any interest of this kind the person 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 such taxes when destined for the maintenance of the state have some advantages which may serve in some measure to balance their inconvenience when destined for the maintenance of the church they are attended with nothing but inconvenience taxes upon the produce of land may be levied either in kind or according to a certain valuation in money the person 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 tithe 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 the 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 the 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 to the markets 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 later 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 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 for a tax or tithe 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 tithe in the greater part of those parishes which pay what is called a modus in lieu of all other tithe is a tax of this kind during the Mohammedan government of Bengal instead of the payment in kind 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 round 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 4% the rent of a house which over and above paying the ground rent affords 6 or 6.5% upon the whole expensive building may perhaps afford a sufficient profit to the builder where the market rate of interest is 5% it may perhaps require 7 or 7.5% 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 choose upon the ground rent is scarce anything no more than what the ground which the house stands upon would pay if employed in agriculture in country villas in the neighborhood of some great town it is sometimes a good deal higher and the peculiar convenience or beauty of situation is there frequently 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 or business society or for mere vanity and fashion attacks upon house rent payable by the tenant and proportion 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 attacks 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 an 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 convenience which he might have had from a house of ten pounds a year or more rent he will give up I say a part of this additional convenience for he will sell to me 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 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 convenience 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 the 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 and the highest degree and it diminishes gradually through the inferior degrees so as in general to be lowest and 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 anything 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 an independent of the subject attacks 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 labor 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 attacks upon such 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 endeavor to evade it as much as they could by consenting 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 convenience 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 least to attend it 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 percent 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 ground rents are a still more proper subject of taxation than the rent of houses attacks 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 attacks 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 inclined 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 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 labor of the society the real wealth and revenue of the great body of the people might be the same after such attacks 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 all together 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 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 ground 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 and 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 favor of the assessors in this exemption sometimes occasion 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 occasion still further variations in the rate of particular houses in the province of Holland every house is taxed at two and a half percent of its value without any regard either to the rent which it actually pays after 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 attacks in Holland where the market rate of interest does not exceed three percent two and a half percent 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 the 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 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 to 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 two pence 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 the 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 end of book 5 chapter 2 part c