When a manufacturer is compelled, by the general augmentation of prices, arising from taxation, to pay his workmen and materials ten per cent. I suppose, dearer than usual, and he exports 1000 hats, upon each of which a draw-back of 6 shillings, I will suppose, is allowed him on exportation, he does not reflect on the difference of 10 per cent. diffused through the general run of prices, by the mechanical reaction of the total of the taxes on all that is not taxed; he remembers well the effect of this reaction in the account which he makes out for himself, to know at what rate he must in future sell his hats in foreign markets; he only considers the draw-back, the remittance of the 6 shillings duty, and concludes that it puts him in a situation to deal with foreigners on the same terms as he did previous to the taxes, which have increased every thing to the amount of 10 per cent. Nevertheless, the thousand hats, with which, previous to the taxes, he furnished his foreign friends for 1000l. I will suppose, are now raised to 1200l.—Point out this circumstance to him, he will tell you he cannot sell his hats cheaper, and that foreigners must pay 1200l. instead of 1000l. since the foreigner wants them. “Besides, (says he) what is the sum of two hundred pounds more, divided among a thousand persons, who will purchase the hats from the merchant abroad, to whom he sells them?” The manufacturer does not want to look further; and the writer who from the nature of his subject, or his manner of considering it, wants only to reflect a little more, will only add, Thus it is that foreigners pay our taxes, and never suspect that they do so. This is the truth, but not the whole truth. I shall endeavour to find it out.

The general trade of England with the rest of Europe is not confined to some thousands of pounds sterling, to be settled once for all; it is an immense sum, which must be renewed every year. Let us begin by being thoroughly convinced of this necessity, in order to submit to its consequences: we shall find moreover that these consequences are not destructive.

The annual exports of England amount to about a fifth of the products of her industry, and consequently represent about a fifth of the labour of her artificers.

If the taxes, after the war of 1755, had raised the price of every thing at the rate of 10 per cent. (I can err but by a little more or less) the total of her exports, which, before that war, amounted, on a medium of ten years, (see Sir Charles Whitworth) only to a sum of 12,776,614 pounds sterling, let us say 13 millions, amounted, after the peace, to 14 millions 300 thousand.

Let us now suppose the trade of England exhibiting to its foreign correspondents, in the year 1762, this total in exports of 13 millions (at the old prices) under the name of 14 millions 300 thousand pounds, (a price rendered unavoidable by the advance in the prices of all commodities, on account of the taxes); and let us suppose these correspondents to have, really and annually, no more to pay them than 13 millions of their own manufactures, indicated by this modest number, because they had not the honour to support, during seven years, a war the most brilliant and successful in the memory of man, in Germany, America, and India. I think one of the three following consequences must be the result:

Either

That the total of English exports must have been reduced from 14 millions 300 thousand pounds to 13 millions, for want of means in our foreign buyers to pay the whole amount of English exports at their advanced price:

Or,

That England must have been complaisant enough to call 13 millions, in a foreign market, the amount of her exports, which the effects of her new taxes obliged her to call 14 millions 300 thousand pounds at home:

Or,

That England must have allowed her foreign connexions to call 14 millions 300 thousand pounds the same quantity and quality of their manufactures, which, before the effect of English taxation, they called only 13 millions, and which, till then, had made the balance of what they imported from England.

In the first case, the English manufactories, which furnish the exports, would have been necessarily reduced one tenth; upon which it is necessary to observe, that the tenth of the English exportation makes a fiftieth of the total value of the product of her industry, and that the inutility of the fiftieth of those products, occasioned by the impossibility of their being purchased by foreigners at the price occasioned by the English new taxes, must have deprived of subsistence, as well as of employment, a fiftieth of the English artisans, and rendered useless a fiftieth of the capitals appropriated to exportation.

In the second case, the prices of commodities would not be perceptibly increased any where else but in England; the prices of her correspondents would have been, ten years after the peace, almost as they were in 1754.

In the third case, the prices would have increased, among the foreign correspondents of the English, nearly in the same proportion as in England.

The first case is evidently false, since Sir Charles Whitworth’s Statements prove that the exports of England, which amounted, as we have before observed, upon a medium of 10 years before the war, only to 12 millions 776,614 pounds sterling, amounted, upon a medium of 10 years after the peace, to 14 millions 921,067 pounds sterling, and even to 15 millions 11,211 pounds sterling, if we take a medium of 12 years from the peace to 1773, at which period Sir Charles Whitworth’s Statements conclude; (which exhibits, independently of the nominal augmentation supposed to have been occasioned by the taxes, a real augmentation of about a 17th, notwithstanding the real vacuum owing to the loss of those men who would have increased this exportation, if they had not perished in Germany, India, America, and at sea.)

The second case is more universally acknowledged to be false, since there is not a single country in Europe where the price of every thing has not, upon a medium, increased at least 10 per cent. from 1754 to 1770;—which proves the truth of the third case:—thus it happens that foreigners have paid the old taxes of England, without suspecting it; as England does not, in the least, suspect that those taxes are no longer paid either in England or elsewhere, although their produce returns nevertheless to the public creditor.

Let us consider, however, whether this general increase of prices could finally prove prejudicial to England, or to her connexions abroad.

It could not prove so to England, because she was obliged to submit to this increase, or else to give up the manufacturing of a tenth of the commodities she exported to foreign countries (where she exports nothing of what she can sell at home), and because a deficiency of a 10th of her exports would have inevitably deprived a 50th of her artisans of sustenance, and rendered useless a 50th of the capitals devoted to exportation. Besides, considering this object in another light, what loss would England sustain by receiving, under the denomination of 14, I suppose, the same commodities which before were furnished for 13, while she gave for the purchase, only 13 (old prices) which the effect of taxation made her call 14?

It could not prejudice her foreign connexions, because this increase of prices, which abroad was not owing to taxation, was only an encouragement to labour, which must in general have increased its products, always entitled to a profit over and above the price paid for that labour.

A circumstance which was necessary for England, without doing her the least harm, has, then, proved useful to the rest of Europe.—

But let up remark two very essential points:

The first is, that it is impossible in the nature of things, to keep up foreign consumption, upon which depends the continuation of our exports, without giving foreigners leave to increase the price of theirs, by so much as the commodities carried to them must be increased by our taxes;—in the same manner as it is impossible in the nature of things, to keep up interior consumption, national consumption, upon which depends the payment of taxes, without a general interior increase in the price of labour, as well as in the price of its products, when the wants of the State require new contributions.

The second observation which I deem equally essential, is, that such a work, (a work of an utility which may be called universal) has been brought about, consummated, without the Ministers of any State whatsoever being entitled to any glory from the event, except that of having facilitated the operation, if they have favoured the general liberty of communication in all articles of trade; and without their having deserved any other blame but that of retarding it, if their zeal, their greediness for the favourable balance, has suggested to them any device to attract and overthrow it in the only country entrusted to their management. We must universally ruin Credit, Trade, Commerce, and the Banking business, if we pretend to prevent Wealth from extending itself universally, a little sooner or later. The owner of any kind of riches whatever, has it not in his power to do any thing else, but to choose the place, the object, and the time, of giving the first motion; all the rest is merely the effect of a stone cast into the water: observe how the undulations succeed one another, how they are renewed and extended;—can you fix the point where they shall stop?—We pretend to direct them!—Scilicet is superûm labor est? ... Istæne animia cœlestibus curæ?—Indeed, indeed, too many cares occupy the minds of our Gods!

I return to the grand points.

Methinks upon viewing the picture I have drawn, it is easy now to conceive, why, as I have observed in page 62, a person, however strongly convinced of the cruel effect which ought naturally to arise from a debt of 64 millions sterling, contracted from 1754 to 1762, could not nevertheless cite in England, from 1763 to 1775, a single indication of a decay in agriculture or commerce, nor any falling-off in the enjoyment of luxury, public or private, nor less insolence in the bulk of the people. The reason is this: the two capitalists, who failed not to increase the price of every thing they were concerned in, according to the exigency of the taxes, determined also (after a few little formalities, always necessary with regard to the people, when nothing but luxury has been taxed) to augment the price of labour in proportion to that of its products; foreigners, on the other hand, raised the price of their goods in proportion as taxes had increased the goods of England exported to them; and the old equilibrium was restored every where, as soon as the general increase of prices had made the general power of consumption, equal to the need the State was in of an exterior as well as an interior, i. e. of a foreign as well as a national consumption, in order that all the taxes might be productive.

But if the debt of 64 millions, contracted from 1754 to 1762, had increased, by 10 per cent. the nominal value of all merchandise exported from England since that period, how shall we prevent the 60 millions of the last debt, from increasing, from 8 to 10 per cent. the nominal value of all commodities to be exported after this later period?

And if the general augmentation of prices, which has clearly followed the debt contracted in England from 1754 to 1762, has proved advantageous to all Europe, without hurting England, why should not the general increase of prices, which results, and will inevitably result from the last English debt, prove unprejudicial to England, although it will prove advantageous to all Europe?

But if this increase of 10 per cent. generally acknowledged, in the price of all merchandise in Europe, had extended only to the products of industry; if the price of the total of the produce of agriculture had not increased in the same proportion;—had not Nature always silently and successfully opposed all the dreams of speculation on this head, to what a degree of misery and wretchedness would not agriculture have been reduced in all parts of our so much enlightened Europe!—It was not so.[10]

The quantity of wheat sold at Berne at 69 batz, on a medium of five years taken from 1751 to 1755, was sold for 92⅗ batz from 1766 to 1770.

The quantity of wheat sold at Dijon at the lowest, 2l. 11s. 5d. on a medium of 5 years from 1753 to 1757, was sold at the lowest, 4l. 5s. 9d. on a medium of 5 years from 1766 to 1770.

The quantity of wheat sold at Bâle for 9l. 9s. on a medium of 5 years from 1754 to 1758, was sold for 13l. 14s. 2d. on a medium of 5 years from 1766 to 1770.

The quantity of wheat sold at Geneva for 27 florins, on a medium of 5 years from 1751 to 1755, was sold for 37 florins, on a medium of 5 years from 1766 to 1770, (see Arthur Young’s Political Arithmetic.)

We find upon the total, from 1755 to 1770, as I observed in my Reflexions on a singular revolution in France, about 40 per cent. increase in the price of wheat.—Ten per cent. was enough to discharge, without expence to any body, and without any attention being paid to it, the interest of the debt contracted in England, from 1755 to 1762; but 30 per cent. more was necessary, in order to come (without injuring England) nearly to an equality with the English price, a price advantageous to the agriculture of all Europe; an advantageous price, which the barriers and barricadoes set up in France, had till then prevented from extending to Switzerland.

The barriers having been removed, Switzerland and France must necessarily have been enriched, or England ruined:—France and Switzerland were better pleased to be enriched; and so it will necessarily happen after the removal of the barriers subsisting between England and Ireland, that the agriculture of the latter must be enriched;—unless she should choose to do herself a real prejudice by keeping to all her former low prices, in order to procure an imaginary advantage to Irish industry, in hopes of prejudicing the British manufacturer;—which would indeed be very strange.

But if this proportionate augmentation in the price of every thing,—as evident as it is necessary,—as general as it is useful,—as natural as it is little suspected,—in consequence of a national debt contracted by a country trading with all Europe,—getting rich by trading with all Europe,—and who cannot get rich without sharing her wealth with all Europe,—be also a complete demonstration of the burden being null, so soon as the little private interests have rendered it general, and no longer permit the supposition of its being productive of any other bad effects, but such as necessarily result from a bad system of taxation; does the point lie in rectifying the system, or in effecting a reimbursement?—At least, is a tax to be levied for the purpose of reimbursing, before we have searched deep into the question the most interesting to society that ever was propounded?

And in the supposition, that it should result from the examination, as it does from my ideas, that there neither is, nor can be any real and lasting harm in the taxes, but that which is the consequence of a bad system of taxation; as there is however so much more harm done, at least of a transient nature, as there are more taxes imposed, even in the best manner,—would it not be necessary to conclude, that loans bearing annuities, esteemed the most advantageous to the State, (although they always require an heavier, and sometimes a double taxation), might have proved the most pernicious and worst devised, in any other circumstance but that of a total discredit, if they did not now furnish the Sovereign with the means of redressing what is most oppressive in the old taxes, without imposing new ones?