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, who 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 estate 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 labour 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 seem 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 1 In the middle ages, the ordinary expenses of the Crown were defrayed from the rents and profits of the Crown estates, and from those incidental sources of revenue which were contained in the incidents of feudal times. The king, like other feudal proprietors, journeyed from castle to castle, from manor to manor (we can trace his journeys in the records contained in the Fœdera, and in other writs), consuming the produce which had been stored up by his bailiffs against his coming, or had been purchased by his purveyors. After the great plague, when, owing to the increased cost of labour, bailiff cultivation ceased to be so profitable, the Crown let its estates, and received its rents in money. Under these circumstances, the habit of migration became much less frequent. estate might, upon ordinary occasions, very well defray all the necessary expenses of government. In the present state of the greater part of the civilised 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 excepted which is either lent to the public, or employed as farming stock in the cultivation of land.1 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 68. 7d.; that of the city of Westminster, to £63,092 18. 5d.; that of the palaces of Whitehall and St. James's, to £30,754 68. 3d. A certain proportion of the land-tax is in the same manner assessed upon all the other cities and towns corporate in the kingdom, and 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 excepted which is either lent to the public or employed in the cultivation of land, does not exceed ten millions sterling a year, the 1 The assessment to the land-tax was made at the conclusion of the 17th cen tury, and no fresh assessment has been made since. It therefore did not represent in Smith's time any such proportion to the annual rent of land as he assumes, and its present proportion is immeasurably less real. The facts that the populalation of England and Wales doubled between 1700 and 1750, or nearly so; that corn was extraordinarily cheap; that rents rose enormously; and that, nevertheless, considerable quantities of corn grown in England and Wales were exported, are proofs, if any are needed, of how utterly unfounded was the statement that in any particular county or district' the rate at which the land-tax was assessed was 'nearly equal to the value' of the land. 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 at twenty 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 twenty millions a year, they could not well afford the half, most probably not the fourth part of that rent, if they all belonged 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 the land of every country, if we except what is reserved for seed, is either annually consumed by the great body of the people, or 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 rent of ten millions sterling a year, would in another afford a rent of twenty 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 ten millions a year only, but the revenue of the great body of the people would be less than it otherwise might be by thirty 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 thirty 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 civilised state of any kind which derives the greater part of its public revenue from the rent of lands 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 forest where, after travelling 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 of money, which, if applied to the payment of the public debts, would deliver from mortgage a much greater revenue than any which those lands have ever 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 thirty years' purchase; the unimproved, uncultivated, and low-rented Crown lands might well be expected to sell at forty, fifty, or sixty 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 wellimproved and well-cultivated. The increase of their produce would increase the population of the country, by augmenting the revenue and consumption of the people. But the revenue which the Crown derives from the duties of customs and excise would necessarily increase with the revenue and consumption of the people. The revenue which, in any civilised monarchy, the Crown derives from the Crown lands, though it appears to cost nothing to individuals, in reality costs 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 to replace 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.1 1 The income which the Crown derived from the estates vested in that dignity has been commuted for a fixed annual sum paid to the monarch, and the man Lands for the purposes of pleasure and magnificence, parks, gardens, public walks, &c., 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 civilised monarchy, ought to belong to 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 civilised 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. PART II. 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 sorts of revenue, or from all of them indifferently. I shall endeavour 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 indifferently agement of the estates is transferred to the Woods and Forests office. It is to be regretted that those lands, except such as are ornamental, are not sold, since the waste incurred in the management of the estates is enormous and scandalous. A similar course of policy would be advantageous in the case of the Duchy of Cornwall, the income of which is vested in the eldest son of the monarch, and which might be beneficially commuted for an annual allowance. The principle on which taxation is justified altogether is that which Smith dwelt on as fundamental in economical inquiries, the division, namely, of labour or employments. If everybody could protect himself, and interpret his own rights justly, there would be no need for |