is diminished, its productions
will be necessarily diminished; and therefore, if the same expenditure
on the part of the people and of the government continue, with a
constantly diminishing annual reproduction, the resources of the people
and the state will fall away with increasing rapidity, and distress and
ruin will follow.

Notwithstanding the immense expenditure of the English government during
the last twenty years, there can be little doubt but that the increased
production on the part of the people has more than compensated for it.
The national capital has not merely been unimpaired, it has been greatly
increased, and the annual revenue of the people, even after the payment
of their taxes, is probably greater at the present time than at any
former period of our history.

For the proof of this we might refer to the increase of population--to
the extension of agriculture--to the increase of shipping and
manufactures--to the building of docks--to the opening of numerous
canals, as well as to many other expensive undertakings; all denoting an
increase both of capital and of annual production.

There are no taxes which have not a tendency to impede accumulation,
because there are none which may not be considered as checking
production, and as causing the same effects as a bad soil or climate, a
diminution of skill or industry, a worse distribution of labour, or the
loss of some useful machinery; and although some taxes will produce
these effects in a much greater degree than others, it must be confessed
that the great evil of taxation is to be found, not so much in any
selection of its objects, as in the general amount of its effects taken
collectively.

Taxes are not necessarily taxes on capital, because they are laid on
capital; nor on income, because they are laid on income. If from my
income of 1000_l._ per annum, I am required to pay 100_l._, it will
really be a tax on my income, should I be content with the expenditure
of the remaining 900_l._; but it will be a tax on capital, if I continue
to spend 1000_l._

The capital from which my income of 1000_l._ is derived may be of the
value of 10,000_l._; a tax of one per cent. on such capital would be
100_l._; but my capital would be unaffected, if after paying this tax, I
in like manner contented myself with the expenditure of 900_l._

The desire which every man has to keep his station in life, and to
maintain his wealth at the height which it has once attai