The Philoeconopolist Test (c) 1998 Robert M. Barber Philoeconopolist All Rights Reserved First Edition March 18, 1998 "A paper money consisting in bank notes, issued by people of undoubted credit, payable upon demand without any condition, and in fact always readily paid as soon as presented, is, in every respect, equal in value to gold and silver money" Adam Smith Wealth of Nations page 263 "The sole use of money is to circulate consumable goods" Adam Smith Wealth of Nations page 280 "The man who borrows in order to spend will soon be ruined, and he who lends to him will generally have occasion to repent of his folly" Adam Smith Wealth of Nations page 291 "The merchant or monied man makes money by lending money to government" Adam Smith Wealth of Nations page 578 Public debts 574 ------------ Revenue ------- Government Duties 1. Military Defense 2. Legal system (Judicial) 3. Public Works & Public Institutions a. Commerce b. Instruction 1) Youth 2) All ages Taxes 498 ----- Maxims 1. Contribute 2. Certain 3. Convenient 4. Little Tax upon the rent of land Taxes on produce Taxes on profits Taxes on capital value Taxes on wages Capitation taxes Taxes upon consumable commodities Wages of Labour 78 --------------- 1. Summer and Winter wages 2. Do not fluctuate with price of provisions 3. Wages of Labour vary 4. Opposite from price Political Inequalities 126 ---------------------- Policy of Europe 1. Restraining competition 2. Increasing 3. Obstructing Political Inequalities 133 ---------------------- Materials from the Country 1. Price is augmented 2. Sending with rude Division of Stock 224 ----------------- Capital as revenue or profit 1. Circulating capital 2. Fixed capitals Fixed capital 227 ------------- 1. Articles which facilitate labour 2. Profitable buildings 3. Improvements of land 4. Aquired and useful abilities Division of stock 228 ----------------- General stock divides itself 1. Reserved for immediate consumption 2. Fixed capital 227 1. Articles which facilitate labour 2. Profitable buildings 3. Improvements of land 4. Aquired and useful abilities 3. Circulating capital 1. Circulating and distributed 2. Stock of provisions 3. Of the materials 4. Work completed Money 236 ----- Fixed capital and stock of money 1. Deductions from the neat revenue 2. No part of the gross or neat revenue 3. Savings in expence of machines Money 255 ----- Frequent and regular repayments 1. Thriving or declining circumstances 2. Secured from issuing paper money Restraints of particular imports 349 -------------------------------- Most advantageous employment of capital he commands 1. Near hone 2. Greatest value Restraints of particular imports 359 -------------------------------- Necessary for defense 1. Ships prohibited from trading 2. Bulky articles of importation 3. Loading in Holland 4. Fish not caught by British ship Tax imposed 1. Price enhanced 2. Necessaries of life Disorder 1. Without a bounty 2. Thrown out of employment On imports from particular countries 371 ------------------------------------ National prejudice and animosity 1. Favour 2. Re-exported 3. Criterion Pay less 1. Value of currency 2. Expence of coinage 3. Foreign bills of exchange Conclusion of mercantile system 426 ------------------------------- Bounties 1. Naval stores from America 2. Materials of manufacture 3. Hemp and flax 4. Wood from America 5. Raw silk 6. Pipe 7. Hemp from heland Agricultural Systems 459 -------------------- Error of this system 1. Reproduces 2. Servants 3. Increase 4. Parsimony 5. Trade and manufactures Division of Labour 13 What he is worth 527 Representation 459 Hints own interest 456 1, 2 and 3 371 Philosopher 16 Money makes money 98 Handiman 14 Wages high 85 Money Profit Interest 55 Value 34, 35 Quantity of work 13 482 Mortgage of gov't 467 Company owns Country 510 462 461 460 459 IV 499 536 Taxes on wages 536 544 line 306: The wages of the inferior classes of workmen, I have endeavoured to show in the first book, are everywhere necessarily regulated by two different circumstances; the demand for labour, and the ordinary or average price of provisions. The demand for labour, according as it happens to be either increasing, stationary, or declining, or to require an increasing, stationary, or declining population, regulates the subsistence of the labourer, and determines in what degree it shall be, either liberal, moderate, or scanty. The ordinary or average price of provisions determines the quantity of money which must be paid to the workman in order to enable him, one year with another, to purchase this liberal, moderate, or scanty subsistence. While the demand for labour and the price of provisions, therefore, remain the same, a direct tax upon the wages of labour can have no other effect than to raise them somewhat higher than the tax. Let us suppose, for example, that in a particular place the demand for labour and the price of provisions were such as to render ten shillings a week the ordinary wages of labour, and that a tax of one-fifth, or four shillings in the pound, was imposed upon wages. If the demand for labour and the price of provisions remained the same, it would still be necessary that the labourer should in that place earn such a subsistence as could be bought only for ten shillings a week free wages. But in order to leave him such free wages after paying such a tax, the price of labour must in that place soon rise, not to twelve shillings a week only, but to twelve and sixpence; that is, in order to enable him to pay a tax of one-fifth, his wages must necessarily soon rise, not one-fifth part only, but one-fourth. Whatever was the proportion of the tax, the wages of labour must in all cases rise, not only in that proportion, but in a higher proportion. If the tax, for example, was one-tenth, the wages of labour must necessarily soon rise, not one-tenth part only, but one-eighth. line 308: A direct tax upon the wages of labour, therefore, though the labourer might perhaps pay it out of his hand, could not properly be said to be even advanced by him; at least if tile demand for labour and the average price of provisions remained the same after the tax as before it. In all such cases, not only the tax but something more than the tax would in reality be advanced by the person who immediately employed him. The final payment would in different cases fall upon different persons. The rise which such a tax might occasion in the wages of manufacturing labour would be advanced by the master manufacturer, who would both be entitled and obliged to charge it, with a profit, upon the price of his goods. The final payment of this rise of wages, therefore, together with the additional profit of the master manufacturer, would fall upon the consumer. The rise which such a tax might occasion in the wages of country labour would be advanced by the farmer, who, in order to maintain the same number of labourers as before, would be obliged to employ a greater capital. In order to get back this greater capital, together with the ordinary profits of stock, it would be necessary that he should retain a larger portion, or what comes to the same thing, the price of a larger portion, of the produce of the land, and consequently that he should pay less rent to the landlord. The final payment of this rise of wages, therefore, would in this case fall upon the landlord, together with the additional profit of the farmer who had advanced it. In all cases a direct tax upon the wages of labour must, in the long-run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from the proper assessment of a sum equal to the produce of the tax partly upon the rent of land, and partly upon consumable commodities. line 354: It is thus that a tax upon the necessaries of life operates exactly in the same manner as a direct tax upon the wages of labour. The labourer, though he may pay it out of his hand, cannot, for any considerable time at least, be properly said even to advance it. It must always in the long-run be advanced to him by his immediate employer in the advanced rate of his wages. His employer, if he is a manufacturer, will charge upon the price of his goods this rise of wages, together with a profit; so that the final payment of the tax, together with this overcharge, will fall upon the consumer. If his employer is a farmer, the final payment, together with a like overcharge, will fall upon the rent of the landlord.