them; and if it falls on wages, it must proportionally depress the condition of the great mass of the people. There are limits, however, and those not very remote, to the power of the labourer to pay taxes; and whenever these limits have been attained, they must entirely fall on profits. It has, therefore, been most justly and truly observed by Dr Smith, that a heavy taxation has exactly the same effects as an increased barrenness of the soil, and an increased inclemency of the heavens.

It was the excessive weight of taxation that was the real cause of the lowness of profits in Holland, and consequently of the decline of her manufacturing and commercial prosperity. Notwithstanding the rigid and laudable economy of her rulers, the vast expence which the republic incurred in her revolutionary struggle with Spain, and in her subsequent contests with France and England, having led to the contraction of an immense public debt, she was obliged, in order to provide funds for the payment of the interest and other necessary charges, to lay heavy taxes on the most indispensable necessaries.* Among others, high duties were laid on foreign corn

*In 1579, at the Union of Utrecht, the interest of the public debt of the province of Holland amounted to only 117,000 florins; but so rapidly did it increase, that, in 1655, during the administration of the famous John De Witt, the States were compelled to reduce the interest from 5 to 4 per cent., and yet, notwithstanding this reduction, it amounted, in 1678, to 7,107,000 florins ! See Metelerkamp, Statistique de la Hollande, p. 203.

1

when imported, on flour and meal when ground at the mill, and on bread when it came from the oven. Taxation affected all the sources of national wealth; and so oppressive did it ultimately become, that it was a common saying at Amsterdam, that every dish of fish brought to table, was paid once to the fisherman, and six times to the state! Wages being necessarily raised so as to enable the labourers to subsist and continue their race, the weight of these enormous taxes fell almost wholly on the capitalists. Profits being in consequence reduced below their level in other countries, the prosperity of Holland gradually declined; and her capitalists were tempted to employ their stocks in other countries rather than at home. “L'augmentation successive des impôts, que les payments des interéls, et les remboursements ont rendu indispensable, a détruit une grande partie de l'industrie, a diminué le commerce, a diminué ou fort alteré l'état florissant ou étoit autrefois la population, en resserrant chez le peuple les moyens de subsistence."

* Richesse de la Hollande, Tome II. p. 179. This work contains a great deal of most valuable information. The author, (M. de Luzac,) mentions, that the Hollanders had, in 1778, about 1500 millions of livres (62 millions Sterling) in the public funds of France and England !-See also, on the subject of the taxation of Holland, a Memoir on the Means of Amending and Redressing the Commerce of the Republic, drawn up from information communicated by the best informed merchants, and published by order of the Stadtholder, William IV. Prince of Orange, in 1751. This Memoir was translated into English, and published in London in the same year.

No people have any reason whatever to be alarmed at the effects of competition in any department of industry, for instead of losing, they are always sure to gain by every discovery which tends to facilitate production, or to reduce cost. It is not by improvements among their neighbours, but by a decline in the productiveness of industry at home -a decline which will always be indicated and correctly measured by the fall of profits it must in. fallibly occasion—that either their absolute or relative situation can ever be injuriously affected. But every such fall of profits will undoubtedly tend to sink them in the scale of national power and importance, and to enable their rivals to outstrip them in the career of wealth and greatness. Neither the skill and industry of the most intelligent and persevering artisans, nor the most improved and powerful machinery, can permanently withstand the paralysing and deadening influence of a relatively low rate of profit-And, let it never be forgotten, that such relative lowness must necessarily be produced by every system or regulation, which, by excluding foreign corn or otherwise, forces the premature cultivation of poor soils at home, and artificially raises prices; and can only be prevented by acting on a liberal commercial system, and enforcing the strictest economy in the public expenditure.

PRINCIPLES

OF

POLITICAL ECONOMY.

PART IV.

CONSUMPTION OF WEALTH.

HAVING, in the previous parts of this work, endeavoured to explain the means by which labour is facilitated, and wealth produced, and to investigate the laws regulating its distribution among the various classes of society, we come now to the fourth and last division of our subject, or to that which treats of the CONSUMPTION of Wealth.

Definition of Consumption-Consumption the end of Production-Test of Advantageous and Disadvantageous Consumption-Injurious operation of Sumptuary Laws-Advantage of a Taste for Luxuries-Error of Dr Smith's Opinion with respect to Unproductive Consumption-Error of those who contend, that to facilitate Production it is necessary to encourage Consumption-Consumption of Government-Con

clusion.

It was formerly shown, that, by the production of a commodity was not meant the production of mat

ter, for that is the exclusive prerogative of Omnipotence, but the giving to matter already in existence such a shape as might fit it for ministering to our wants and enjoyments. In like manner, by consumption is not meant the consumption, or annihilation of matter, for that is equally impossible as its creation, but merely the consumption or annihilation of those qualities which render commodities useful and desirable. To consume the products of art and industry is, therefore, really to deprive the matter of which they consist of the utility, and consequently of the exchangeable value communicated to it by labour. And hence we are not to measure consumption by the magnitude, the weight, or the number of the products consumed, but exclusively by their value. Large consumption is the destruction of large value, however small the bulk in which that value may hap pen to be compressed.

*

Consumption, in the sense in which theword is used by Political Economists, is synonymous with use. We produce commodities only that we may be able to use or consume them. Consumption is the great end and object of all human industry. Production is merely a means to attain an end. No one would produce were it not that he might afterwards consume. All the products of art and industry are destined to be consumed, or made use of; and when a commodity is brought into a state fit to be used, if its consumption be deferred, a loss is incurred. All All products are intended either to satisfy the immediate wants, or to add to the enjoyments of their produ