nsequently withdraw his capital from the production of
gold. If still further extended, the rent of still better mines would be
absorbed, and capital would be further withdrawn; and thus the quantity
would be continually reduced, and its value raised, and the same effects
would take place as we have already pointed out; a part of the tax would
be paid by the people of the Spanish colonies, and the other part would
be a new creation of produce, by increasing the power of the instrument
used as a medium of exchange. Taxes on gold are of two kinds, one on the
actual quantity of gold in circulation, the other on the quantity that
is annually produced from the mines. Both have a tendency to reduce the
quantity, and to raise the value of gold; but by neither will its value
be raised till the quantity is reduced, and therefore such taxes will
fall for a time, until the supply is diminished, on the proprietors of
money, but ultimately they will be paid by the owner of the mine in the
reduction of rent, and by the purchasers of that portion of gold, which
is used as a commodity contributing to the enjoyments of mankind, and
not set apart exclusively for a circulating medium.

CHAPTER XII.

TAXES ON HOUSES.

There are also other commodities besides gold which cannot be speedily
reduced in quantity; any tax on which will therefore fall on the
proprietor, if the increase of price should lessen the demand.

Taxes on houses are of this description; though laid on the occupier,
they will frequently fall by a diminution of rent on the landlord. The
produce of the land is consumed and reproduced from year to year, and so
are many other commodities; as they may therefore be speedily brought to
a level with the demand, they cannot long exceed their natural price.
But as a tax on houses may be considered in the light of an additional
rent paid by the tenant, its tendency will be to diminish the demand
for houses of the same annual rent, without diminishing their supply.
Rent will therefore fall, and a part of the tax will be paid indirectly
by the landlord.

"The rent of a house," says Adam Smith, "may be distinguished into two
parts, of which the one may very properly be called the building rent,
the other is commonly called the ground rent. The building rent is the
interest or profit of the capital expended in building the house. In
order to put the trade of a builder upon a level with other trades, it
is necessary that this