The only advantage to taxpayers of taxes on commodities is that they are paid in small sums at a time, whereas taxes on possessions are paid in large lump sums. But to the government there is the all-important fact that they are paid insensibly and are not so much murmured against. “When we buy a pound of tea we do not reflect that the most part of the price is a duty paid to the government, and therefore pay it contentedly, as though it were only the natural price of the commodity. In the same manner, when an additional tax is laid upon beer, the price of it must be raised, but the mob do not directly vent their malice against the government, who are the proper objects of it, but upon the brewers, as they confound the tax price with the natural one.”
In Holland the consumer first paid the price to the merchant and then (separately) the tax to the excise officer. “We in reality do the very same thing, but as we do not feel it immediately we imagine it all one price, and never reflect that we might drink port wine below sixpence a bottle were it not for the duty.” His general objection to duties on imports is that they divert capital and industry into unnatural channels, while the effects of export duties are still more pernicious in confining consumption and diminishing industry. Uztariz, a well-known Spanish writer of that day, had observed in his book on commerce:—
“I have found ministers and others, both in their conversation and writings, maintain the erroneous maxim that high duties are to be laid upon commodities exported, because foreigners pay them; and, on the contrary, very moderate ones on such as are imported, because his majesty’s subjects are at the charge of them.”[19] This policy, says Smith, is one great cause of the poverty of Spain. Yet the Spaniards were wiser than some moderns who have sought to persuade the public that both export and import duties are paid by the foreigner.
Apart from their extraordinary power and originality as contributions to a new science, we are struck in these lectures by two qualities, freedom from prejudice, with the accompanying desire for reformation, and a tolerance of things that are tolerable. Even when he is exposing the absurdities of the Mercantile System, and the evils of the scheme of taxation which it had produced in England, he readily concedes that things might have been far worse, and is glad to confess that upon the whole “the English are the best financiers in Europe, and their taxes are levied with more propriety than those of any country whatever.” Elsewhere, indeed, he shows that the fiscal system of Holland was in some important respects superior; and in the Wealth of Nations his language cooled:—“Our state is not perfect, but it is as good or better than that of most of our neighbours.”
Yet neither tolerance, nor patriotic bias, nor the improbability of reform prevented him from criticising bad institutions. He saw how evil was the system of unpaid magistracies which Bentham burned and Gneist adored. He saw how advantageous was the famous excise scheme which ruined Walpole. He objected to large farms and entailed estates, and was not afraid to declare that a thousand acres ought to be purchased as easily as a thousand yards of cloth. He laughed at the notion, still strangely prevalent, that agriculture is injured by manufactures. “It is always a sign,” he says, “that the country is improving, when men go to town. There are no parts of the country so well inhabited nor so well cultivated as those which lie in the neighbourhood of populous cities.” He described how Philip IV. went to the plough himself to set the fashion, and did everything for the farmers except bringing them a good market; how he conferred the titles of nobility upon several farmers, and very absurdly endeavoured to oppress manufacturers with heavy taxes in order to force them to the country.
Smith concluded his discourse upon Cheapness or Plenty with a few remarks on the influence of commerce on manners; and having thus laid the foundations of a new science, a true system of political economy, he went on to “Arms” (Part IV.), and treated of Militias, Discipline, and Standing Armies. His course ended with a survey (Part V.) of the Laws of Nations. The rules, he remarks, which nations ought to observe, or do observe, with one another cannot be stated with precision. It is true that the rules of property and of justice are pretty uniform in the civilised world. But with regard to international law, what Grotius had said was still true. It was hard to mention a single regulation that had been established with the common consent of all nations and was observed as such at all times. Smith, as usual, sought for the reason, and as usual found it. “This must necessarily be the case; for where there is no supreme legislative power nor judge to settle differences we may always expect uncertainty and irregularity.”
The pope, indeed, as the common father of Christendom, had introduced more humanity into warfare; but except for this hint Smith seems to have made no proposal for filling up the blank. We can only imagine how one who so loved peace and hated war would have rejoiced to see nations moving slowly but surely towards the idea of an international judge, and learning that, as the Duel is not the last word of civilisation in individual quarrels, so the Battle is not the last or the best trial of disputes between nations.
CHAPTER VI
GLASGOW AND ITS UNIVERSITY
Mr. Rae’s diligent researches have disposed of the idea that Smith was one of those profound philosophers who are helpless in the practical affairs of life. It appears from the records of the Glasgow University, that during his thirteen years’ residence he did more college business than any other professor. He audited accounts, inspected drains and hedges, examined encroachments on college land, and served as college quæstor, or treasurer, with the management of the library funds, for the last six years of his professorship. He was Dean of Faculty from 1760 to 1762, when he was appointed Vice-Rector. As such, in the frequent absence of the Rector, he had to preside over all University meetings, including the Rector’s Court, which had judicial as well as administrative powers, and could even punish students by imprisonment in the college steeple. He went frequently to Edinburgh, and at least once to London, on college business; and altogether we may discredit the remark made by one of Smith’s Edinburgh neighbours and reported by Robert Chambers: “It is strange that a man who wrote so well on exchange and barter had to get a friend to buy his horse-corn for him.”
There is one picturesque incident in the history of Smith’s connection with the college. The imposition of octroi duties on food coming into the city was still the principal means of raising municipal revenue in Glasgow as in most other towns of Scotland. But the students of the University were so far exempt from the tribute that they were allowed at the beginning of each session to bring in with them as much oatmeal as would keep them till the end of it. In 1757 this ancient privilege was contested, and the students were obliged by the “tackman” of the meal market to pay duty on their meal. Smith and another professor were sent to the Provost to protest against this infraction of University privileges, and to demand repayment. At the next meeting of the Senate, “Mr. Smith reported that he had spoken to the Provost of Glasgow about the ladles, exacted by the town from students, for meal brought into the town for their own use, and that the Provost promised to cause what had been exacted to be returned, and that accordingly the money was offered by the town’s ladler to the students.”