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scorn and satire on all such manifestations of fiscal wisdom. And so in 1783 he supported Pitt's plan of permitting trade to go on as it did when America was part of the Empire. The West Indies, he argued in a letter 1 to his friend Eden, needed American goods more than America needed theirs.

This friend negotiated the French Treaty of 1786. Pitt's interest in the preliminaries seems to have been lukewarm (perhaps he was disheartened by his failures with America and Ireland), and the result to France was certainly injurious, but it paved the way for success in the less bellicose age of Cobden. Adam Smith in his first edition had stated the case for a freer trade with France, and in the edition of 1784 he added a strengthening paragraph in support of the treaty which was then being advocated from the side of France. Remarking on the obstruction which national animosity was putting in its way, he said, 'The traders of both countries have announced, with all the passionate confidence of interested falsehood, the certain ruin of each in consequence of that unfavorable balance of trade which, they pretend, would be the infallible effect of an unrestrained commerce with the other' (I. 460).

When a nation is at serious war, the statesman asks of the economist only that he shall show him how to borrow money and find new taxes. Lord North, the predecessor of Pitt, faced with the financing of the American war, pounced on the suggestions in the Wealth of Nations, and adopted the taxes on men-servants, property sold by auction, and inhabited houses. On the same authority he increased the tax on malt rather than that on beer. But these were trifles, and for a big war Adam Smith had nothing to offer. Pitt had to feel his way to the income tax alone. Adam Smith disliked the inquisitional nature of such a tax, and, remembering that the merchants by the clamour which they had raised- so violent, though so unjust' (II. 370)—had defeated Walpole's much milder scheme of excise, he had good ground for believing that private self-assessment to an income tax would fail, and that public assessment would not be tolerated. 'Merchants engaged in the hazardous projects of trade all tremble at the thoughts of being obliged at all times to expose the real state of their circumstances' (II. 335). The war drove Pitt to it at long last, eight years after Adam Smith's death. Adam Smith had urged the desirability of paying for the costs of war by taxation during the war, but he did not foresee the only weapon by which this could be done.

The public debt was the legacy of England's victories over Louis XIV of France, and the national conscience was sound

1 Adam Smith to William Eden, Dec. 15, 1783 (Journal and Correspondence of William, Lord Auckland I. 64-6).

enough to admit that public debts, like private debts, ought to be discharged. Incidental surpluses, as Adam Smith pointed out, will not do it, because having occurred once they will be anticipated next time by the needy minister of finance, and a new war may break out. It would be altogether chimerical, therefore, to expect that the public debt should ever be completely discharged by any savings which are likely to be made from ordinary revenue as it stands at present' (II. 409). But debt is a cancer which, if not excised, will rot the body politic, for it spreads continuously and at an increasing rate. It must therefore be combated by a plan which itself possesses increasing momentum. This was the psychological basis of Pitt's solemn sinking fund, and indeed it was what Adam Smith expected from a sinking fund supported by increased taxation extending to the whole empire. 'This great sinking fund too might be augmented every year by the interest of the debt which had been discharged the year before, and might in this manner increase so very rapidly, as to be sufficient in a few years to discharge the whole debt, and thus to restore completely the at present debilitated and languishing vigour of the empire' (II. 423). If Pitt ever believed that a sinking fund had any efficacy apart from increased taxation, he assuredly found no countenance for the delusion in Adam Smith. Pitt, however, proved to the hilt the national habit which Adam Smith had observed with misgiving, 'the ability in the subjects of a commercial state to lend' (II. 395). For from the proceeds of the industrial revolution and an expanding foreign trade he financed the Napoleonic war. To his honour he also proved that in the crisis of war a commercial nation will submit to heavy taxation.

The return of peace permitted the resumption of the liberal policy begun by Pitt. By three mighty wieldings of the fiscal hammer, Huskisson, Peel and Gladstone gave to Great Britain that freedom of trade which to Adam Smith seemed as absurd as to expect that an Oceana or Utopia should ever be established in it' (I. 435). Between him and Huskisson there was a peculiar affinity of mind. For as a statesman Huskisson was compelled to proceed by degrees; and at a time when the majority of the commercial community had little familiarity with the arguments for free trade and no faith in its application to themselves, it was a relief to fall back on the trump card of the smuggler, who would have as many citations in an index of Huskisson's Speeches as in that of the Wealth of Nations. Moreover, Huskisson had the same large vision of empire; and when fiscal reform threatened imperial trade or the supremacy of our ocean shipping, that 'nursery of British seamen,' he stayed the fiscal hammer. Peel

was the economic child of Ricardo rather than of Adam Smith; and for Peel's greatest stroke, the repeal of the corn laws, the Wealth of Nations was a blunted weapon. At bottom the struggle for repeal was a bourgeois assault on the citadel of the landed aristocracy, and Adam Smith's sympathies were the other way. True, the Anti-Corn Law League answered Ricardo out of Adam Smith, 'wages do not fluctuate with the price of provisions' (I. 76). True, they shared in his hatred of monopoly, 'the gains of monopolists, whenever they can be come at, being certainly of all subjects the most proper' (II. 377); but their monopoly was landlord's monopoly, and his monopolists were the merchants and manufacturers, for whose supposedly declining profits the Ricardian school had a very tender regard.

On the ground thus cleared by Huskisson and Peel was erected the scheme of Gladstonian finance. With Gladstone the affinity is again clear. Both loved economy, both boggled at the income tax. Adam Smith's conclusion, it seems not improbable that a revenue, at least equal to the present neat revenue of the Customs, might be drawn from duties upon the importation of only a few sorts of goods of the most general use and consumption' (II. 369), stands as a fitting introduction to the principles observed by Gladstone in the selection of articles for indirect taxation. But the age of Gladstone has gone. Between Victorian Liberalism and that which at the outbreak of the Great War was supposed to be the voice of the Liberal party a great gulf is fixed, and across it are written among other warnings progressive taxation' and 'capital levy.' On one bank stand the disciples of Gladstone and John Stuart Mill-You disapprove, with Mr. Mill, of taxation upon any principle of graduation ? 'Entirely and emphatically . . . because it is confiscation.' 1 On the other bank stand the new Liberals-Liberals who court Labour, and Labour men who dislike the courtship.

Can Labour find support in Adam Smith? Assuredly, for it was to Adam Smith that their predecessors-the early English socialists—also turned. In this state of things (namely, that early and rude state of society which precedes both the accumulation of stock and the appropriation of land ') the whole produce of labour belongs to the labourer' (I. 49). Furthermore, 'It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion' (II. 327). The Wealth of Nations is cold to 'Taxes on Capital Value,' but the section thereon

1 Evidence of William Newmarch, statistician and joint author of the last 2 vols. of Tooke's History of Prices, before Commons Committee on Income and Property Tax,' 1861, Q.'s 328 and 748.

contains the encouraging remark, There is no art which one Government sooner learns of another, than that of draining money from the pockets of the people' (II. 346).

The problem of Adam Smith's influence on social policy is elusive. For the scope of the term is indefinite. There are obviously departments of domestic policy which fall outside the range of finance; but on the other hand it was chiefly through the avenue of fiscal reform that social improvement was expected by Adam Smith and his successors. His direct influence on social policy is therefore only incidental. Adam Smith denounced the forcible removal of the poor, and the restrictions of the Elizabethan Statute of Apprenticeship. The Settlement Act of 1795 forbade removal until a man became actually chargeable; and the Elizabethan Statute was repealed, the Wages clause in 1813 and the Apprenticeship clause the year following. It is said that Adam Smith's strictures deterred Pitt from supporting Samuel Whitbread's proposal for the regulation of wages in husbandry in 1795; but when Pitt withdrew his Poor Law Bill1 of November 1796 it was in deference, not to the Wealth of Nations, but to the strictures of Jeremy Bentham, which Malthus reinforced two years later in the essay on The Principle of Population. The Combination Act of 1800 was passed amid the stress of war and the terror of sedition; and the blame for it must be divided between the abnormal psychology of war and the general distrust of association, which was as evident in revolutionary France as in reactionary England. During the half century after 1815 the attitude of the country was dominated by individualism, but it derived its inspiration less from the natural rights of Adam Smith than from the utilitarian principles of Bentham. Indeed, during the aftermath of war, Adam Smith was reckoned by the elect to be something of a back-number. 'It was one of my father's main objects,' says the much enduring John Stuart Mill, ' to make me apply to Smith's more superficial view of political economy the superior lights of Ricardo.' But with the turn of the century the mood of pessimism disappeared, and in the seventies the national complacency was at its height. Statisticians gloated over the growth of imports and exports, and worshipped once more at the shrine of the man who had held up the electrical illuminations of free trade as applied to the food of the people and to commerce in general.' 3

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The Bill contemplated a parochial pension fund, Schools of Industry, and cow-money' and was criticised by Bentham in a private pamphlet. Cf. Holland Rose, Pitt and Napoleon, pp. 84-92.

J. S. Mill, Autobiography, p. 28.

3 C. Walford, Famines of the World, p. 123, read before the Statistical Society, 1878-1879. Cornelius Walford, who died in 1885, was the learned author of an incomplete Insurance Cyclopaedia.



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