being too
low. In the one case by a fall, and in the other by a rise in money
wages, the natural equilibrium between profits and wages would be
restored. A tax on wages then does not fall on the landlord, but it
falls on the profits of stock: it does not "entitle and oblige the
master manufacturer to charge it with a profit on the prices of his
goods," for he will be unable to increase their price, and therefore he
must himself wholly and without compensation pay such a tax.[16]

If the effect of taxes on wages be such as I have described, they do not
merit the censure cast upon them by Dr. Smith. He observes of such
taxes, "These, and some other taxes of the same kind, by raising the
price of labour, are said to have ruined the greater part of the
manufactures of Holland. Similar taxes, though not quite so heavy, take
place in the Milanese, in the states of Genoa, in the duchy of Modena,
in the duchies of Parma, Placentia, and Guastalla, and in the
ecclesiastical states. A French author of some note, has proposed to
reform the finances of his country, by substituting in the room of other
taxes, this most ruinous of all taxes. 'There is nothing so absurd,'
says Cicero, 'which has not sometimes been asserted by some
philosophers.'" And in another place he says: "taxes upon necessaries,
by raising the wages of labour, necessarily tend to raise the price of
all manufactures, and consequently to diminish the extent of their sale
and consumption." They would not merit this censure; even if Dr. Smith's
principle were correct that such taxes would enhance the prices of
manufactured commodities; for such an effect could be only temporary,
and would subject us to no disadvantage in our foreign trade. If any
cause should raise the price of a few manufactured commodities, it would
prevent or check their exportation; but if the same cause operated
generally on all, the effect would be merely nominal, and would neither
interfere with their relative value, nor in any degree diminish the
stimulus to a trade of barter; which all commerce, both foreign and
domestic, really is.

I have already attempted to shew, that when any cause raises the prices
of all commodities in general, the effects are nearly similar to a fall
in the value of money. If money falls in value, all commodities rise in
price; and if the effect is confined to one country, it will affect its
foreign commerce in the same way as a high price of commodities caused
by