the tax was imposed.

As taxes on raw produce, tithes, taxes on wages, and on the necessaries
of the labourer, will, by raising wages, lower profits, they will all,
though not in an equal degree, be attended with the same effects.

The discovery of machinery, which materially improves home manufactures,
always tends to raise the relative value of money, and therefore to
encourage its importation. All taxation, all increased impediments,
either to the manufacturer, or the grower of commodities, tend on the
contrary to lower the relative value of money, and therefore to
encourage its exportation.

CHAPTER XIV.

TAXES ON WAGES.

Taxes on wages will raise wages, and therefore will diminish the rate of
the profits of stock. We have already seen that a tax on necessaries
will raise their prices, and will be followed by a rise of wages. The
only difference between a tax on necessaries, and a tax on wages is,
that the former will necessarily be accompanied by a rise in the price
of necessaries, but the latter will not; towards a tax on wages,
consequently, neither the stockholder, the landlord, nor any other
class but the employers of labour will contribute. A tax on wages is
wholly a tax on profits, a tax on necessaries is partly a tax on
profits, and partly a tax on rich consumers. The ultimate effects which
will result from such taxes then are precisely the same as those which
result from a direct tax on profits.

"The wages of the inferior classes of workmen," says Adam Smith, "I have
endeavoured to shew in the first book, are every where 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."

To the proposition, as it is here advanced by Dr. Smith,