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which constituted his additional rent; and further, he would be a loser by the depreciation in the real or exchangeable value of the raw produce, in which, or in the value of which, his remaining rent would be paid.

But the rise in the price of raw produce, which is advantageous to the landlord, is prejudicial to farmers, capitalists, labourers, and every other class of society. High rents are invariably accompanied by a high price of raw produce, and consequently by high wages, and a low rate of profit. Every increase of rent is, therefore, a proof that society is becoming clogged in its progress. It shows, that the power to accumulate capital and population, or to increase that fund, by whose extent the extent of the productive industry of the country must ever be regulated, is diminished. It is not possible, however, that in any society, rent and wages can ever absorb the whole value of a commodity; for, long ere this could happen, there would be no motive to accumulate; capitalists would live, not on profit but on capital; a want of employment would be universally experienced ; population would

rapidly diminish ; and inferior lands being thrown out of cultivation, the price of raw produce would be reduced ; rent and wages would fall, and capital would again yield a profit on its employment.

High rent and low profits, for they are inséparably connected, ought never to be made the subject of complaint, if they occur in the natural progress of society, and under a system of perfectly free intercourse with other nations. But if they are caused by an exclusive commercial system, or by restrictions which pre vent the importation of cheap foreign corn, and which, therefore, force the cultivation of inferior soils at home, they are highly to be deprecated. A nation placed in such circumstances, must not only advance slowly, when compared with other nations which are enabled to raise their supplies of raw produce from superior soils, and at a less expense,--the power to accumulate capital must not only be diminished, but a strong inducement will be held out to transfer it to other countries. The love of country,--the thousand ties of society and friendship, -the ignorance of foreign languages, and the desire of having one's funds employed under their own inspection,—will, na doubt, in very many cases, induce capitalists to put up with a less rate of profit in their own, than they might realize by investing their funds in other countries. But this love of country has its limits. The love of gain is a no less powerful and constantly operating principle; and if capitalists are once assured that their stock can be laid out with equal security, and with considerably greater advantage, in foreign states, a transference to a greater or less extent will undoubtedly take place.

A manufacturing country which has wisely adopted a liberal commercial system, has no reason to be alarmed at the effects of competition in any department of industry. The manufactare of one commodity opens up a market for the exchange that is, for the sale of some other commodity. What a manufacturing nation has really to fear is, that the average profits of its capital do not fall lower than the average rate of profit in the surrounding countries. If this is the case, its progress must be retarded; and it will ultimately languish and decline. Neither the skill, industry, and perseverance of artisans, nor the most improved machinery, can permanently bear up against a constantly diminishing rate of profit. And such a comparative diminution is always produced by acting on a fictitious and exclusive system, which, by preventing the importation of foreign corn, forces the cultivation of poor soils, and raises the real price of raw produce.

The length to which the foregoing remarks have extended, and our anxiety to lay before our readers a faithful abstract of the fundamental principles which have been developed and illustrated by Mr Ricardo, and to point out some of their more important consequences, preclude our giving any detailed account of the subsidiary parts of his great work. We shall, perhaps, on some future occasion, endeavour to supply this deficiency; but, in the mean time, such of our readers as wish to be made acquainted with the laws by which the commercial transactions between different countries are always regulated, will do well to study Mr Ricardo's chapter on · Foreign Trade. This is one of the most valuable and original parts of the work before us; and affords a striking example of Mr Ricardo's uncommon sagacity in investigating and tracing the operation of fixed and general principles, and in disentangling and separating them from those of a secondary and accidental nature.

That part of Mr Ricardo's work which treats of the THEORY OF Taxation, is entirely bottomed on the principles we have been endeavouring to elucidate; and a few remarks will be sufficient to give our readers an idea of its general scope and bearing.

It is observed by Mr Dugald Stewart, * and the observation seems perfectly just, that Dr Smith is more loose and unsatisfactory in his chapter on the Principles of Taxation, than in almost any other part of his work. But the fact is, that it was

Sketch of the Life and Writings of Dr Smith.

impossible to engraft a sound theory of taxation on the principles which pervade the greater part of the Wealth of Nations. Had Dr Smith been acquainted with the real nature of rent, and with the circumstances which, in every stage of society, regulate the exchangeable value of commodities, he would doubtless have come to very different conclusions respecting the ultimate incidence and effects of various taxes.

That a direct tax on the wages of labour would raise wages, is universally admitted; and Dr Smith, in perfect conformity with his opinion, that every rise in the rate of wages caused a proportionable rise in the price of commodities, contended, that the final payment of such a tax would fall, not on the labourer or the capitalist, but on the consumer. If it be true, however, that a rise in the wages of labour does not, and cannot, raise the price of commodities, a tax on wages, it is obvious, could not be paid by the consumer. Such a tax would fall entirely on the employers of labourers, and, by raising wages, would loveer the profits of stock to a corresponding extent.

The only difference between a direct tax on the wages of labour, and a tax on those commodities which, to use the words of Dr Smith, are not only indispensably necessary for the support of life, but which the custom of the country renders it indecent for creditable people even of the lowest order to be without, consists in this, that the former is altogether a tax on profits, and is entirely paid by the employers of labourers, whereas the latter is partly, because it must raise wages, a tax on profits, and partly, because every person is a consumer of necessaries, a tax on consumers generally.

The low rate of profit in Holland has often been appealed to as a practical proof of the truth of the theory which teaches that the increase of capital, and the consequent competition in the different departments of industry, is always attended by a diminution of the profits of stock. But the imposition of heavy taxes on the necessaries of life, and not the abundance of capital, was the real cause of the low rate of profits in Holland. The principle of population, if it does not outrun, will at least keep pace with, the increase of capital; and when this is the case, when the demand for commodities must be constantly increasing with every increase of the means whereby they are produced, it is impossible, as we have already remarked, to conceive how any multiplication of commodities, or any increase of capital, should be attended with a diminution of profits. This can only be effected by an increase of wages; and wages will always be increased by every increase of those taxes which affect the necessaries of life.

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Higher duties were imposed on those necessaries in Holland than have ever been imposed in any other country. Dr Smith informs us that the price of bread consumed in the Dutch towns was supposed to be at least doubled by these means;* and it was a common saying at Amsterdam, that every dish of fish was paid once to the fisherman, and six times to the State. But this oppressive system of taxation had not the least effect in raising the price of those commodities which were not. strictly taxed. They continued to sell at the same price as before. The taxed commodities were raised in price; for if they had not been so raised, the producers could not have obtained the general profits of stock, and would no longer have brought them to market. But that rise could not communicate itself to any other commodity which was not taxed, and whose producers were already in possession of the ordinary rate of profit. These taxes, however, by being imposed chiefly on the necessaries of life, not only raised their price to every consumer, but they further raised the

general or average rate of wages, and consequently reduced the common and average rate of profit. • Although a tax on a necessary-on corn for example-would raise its price to the extent of the tax, it must not therefore be imagined, that the profits of the stock employed in producing the corn would not be diminished. Prices would only be raised to the extent of the tax; but the tax, besides raising the price of corn, would also raise wages. For this additional sum, which the farmer would be obliged to pay his workmen, he could obtain no compensation. Prices would rise in proportion to the tax, but they would rise no higher; and the increased amount of wages would fall entirely on the profits of stock.

It has, we know, been contended, that a tax on raw produce would fall on the landlord, and that, instead of raising its price, it would only lower rent. But this could not possibly be the case. In a country where the growth of corn is just adequate to supply the wants of the inhabitants, if a tax of 5s. or 10s. were imposed on every bushel or quarter brought to the market, its price would necessarily be increased to that extent. The exchangeable value of raw produce, it must be remembered, is regulated entirely by that portion which is raised on land paying no rent, or by that capital which is employed on land without yielding any thing, except the common and or, dinary rate of profits. When, therefore, a tax is imposed on raw produce, the cultivator, if he did not obtain an equivalent increase of price, would be obliged to quit a trade where he

* Wealth of Nations, vol. üi, p. 340.

could not obtain the general rate of profit; and the diminution of the aggregate supplies would speedily raise prices to their proper level. The raiser of that portion of raw produce which regulates the price of the whole, either pays no rent whatever, or he only gets, at the average existing prices, the common and ordinary rate of profit for a certain portion of his capital employed in producing. If he pays no rent, it is impossible he should be able to deduct the tax from a landlord; and assuredly he would not deduct it from his own profits; for there can be no reason why a farmer should continue in an employment which yields only small profits, when all other employments are yielding greater.

Such taxes, therefore, as raise the price of the necessaries of life, are attended by exactly the same effects as result from being compelled to have recourse to poorer soils for subsistence. They raise the price of the commodity on which they are imposed, in the same way as an increase in the quantity of labour necessary for its production would raise its price, and, enhancing the rate of wages, proportionably lower the profits of stock.

A tax on luxuries would not be productive of those effects. A duty on velvets, on claret, and on coaches, would fall entirely on the consumer. Such commodities are not consumed by the labourer, and a tax on them would not therefore raise wages, and would not have any effect on the profits of stock.

It is, perhaps, unnecessary to state, that these remarks apply entirely to the general and ultimate effects of taxation. But, when in a stationary state of society, or in a state where capital and population are increasing with nearly the same rapidity, a tax is imposed on any of the necessaries of life, labourers cannot at once raise their wages to a corresponding level. Their number would continue the same immediately after the imposition of the tax as before. This is a given quantity which cannot be increased or diminished in an instant. The supply of labourers is not like the supply of boots and shoes : it cannot be made to vary with every variation in the demand; and a considerable time must elapse before any great effect can be brought about, either in the way of its increase or diminution. During the whole of the period from the imposition of the tax, until the slackened operation of the principle of population had, by lessening the accustomed supply of labourers, raised their real wages to their former level, the tax would not fall altogether upon the profits of the capitalist. It would then fall partly on the labourers themselves, and would cause a greater or less diminution of their comforts and enjoyments:

Were a tax imposed on a necessary of life, in a country such

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