the necessary expenses of production. To
an individual, with a capital of 20,000_l._, whose profits were 2000_l._
per annum, it would be a matter quite indifferent, whether his capital
would employ a hundred, or a thousand men, whether the commodity
produced sold for 10,000_l._, or for 20,000_l._, provided, in all cases,
his profits were not diminished below 2000_l._ Is not the real interest
of the nation similar? Provided its net real income, its rent and
profits be the same, it is of no importance whether the nation consists
of ten or of twelve millions of inhabitants. Its power of supporting
fleets and armies, and all species of unproductive labour, must be in
proportion to its net, and not in proportion to its gross income. If
five millions of men could produce as much food and clothing as was
necessary for ten millions, food and clothing for five millions would be
the net revenue. Would it be of any advantage to the country, that to
produce this same net revenue, seven millions of men should be required,
that is to say, that seven millions should be employed to produce food
and clothing sufficient for twelve millions? The food and clothing of
five millions would be still the net revenue. The employing a greater
number of men would enable us neither to add a man to our army and navy,
nor to contribute one guinea more in taxes.

It is not on the grounds of any supposed advantage accruing from a large
population, or of the happiness that may be enjoyed by a greater number
of human beings, that Adam Smith supports the preference of that
employment of capital, which gives motion to the greatest quantity of
industry, but expressly on the ground of its increasing the power of the
country; for he says, that "the riches, and, so far as power depends
upon riches, the power of every country must always be in proportion to
the value of its annual produce, the fund from which all taxes must
ultimately be paid." It must however be obvious, that the power of
paying taxes, is in proportion to the net, and not in proportion to the
gross revenue.

In the distribution of employments amongst all countries, the capital of
poorer nations will be naturally employed in those pursuits, wherein a
great quantity of labour is supported at home, because in such countries
the food and necessaries for an increasing population can be most easily
procured. In rich countries, on the contrary, where food is dear,
capital will naturally flow, when