vast increase of demand, that notwithstanding this reduction of price, the value of the cottons annually manufactured in Great Britain, and either disposed of at home, or sent abroad, amounts, according to the very lowest estimate, to the amazing sum of FORTY MILLIONS! It is obvious, however, that if the same reduction of the price of cottons which has been brought about by the improvement of machinery, had been brought about by an equivalent reduction of taxation, precisely the same effects would have followed.. The demand would have equally increased, and would have far more than compensated for the diminution of the duties.

But it is not necessary, in order to establish the superior productiveness of moderate taxation, to resort to arguments drawn from general principles, or from analogy. The history of taxation, both in this and other countries, furnishes numerous direct, conclusive, and well-authenticated proofs of the same principle. We shall notice a few of them. Previously to 1745, the excise duty of 4s. a pound on tea yielded, at an average, about 150,000l. a year; which, had there been no smuggling or adulteration, would have shown that the consumption was equal to about 750,000 lbs. But it was well known that smuggling was then carried to a very great height, and that the real consumption of tea was much greater than the apparent consumption. To put a stop to this clandestine importation, a bill was introduced into Parliament in 1745, in pursuance of the recommendation of a Committee of the House of Commons, and passed into a law, by which the excise duty of 4s. was reduced to 1s., and 25 per cent. ad valorem. This measure was signally successful. In 1746, the year immediately subsequent to the reduction, the sales of tea for home consumption amounted to above TWO MILLIONS of pounds weight, and the revenue was increased to 243,3097.! But to set the effects of this wise and salutary measure in a still clearer point of view, we shall subjoin an account of the nett produce of the Tea duties, from 1743 to 1748, both inclusive.

In 1743 it amounted to L. 151,959

Hamilton's Principles of Taxation, Appendix, No. 19; and Postlethwaite's History of the Revenue, p. 293.

tiveness of low duties, was unable to restrain the rapacity of the Treasury. In 1748, the duties were again increased, and fluctuated between that epoch and 1784, from 64 to 119 per cent. ad valorem. The effects which followed this inordinate extension of the duties, are equally instructive with those which followed their reduction. The revenue was not increased in any thing like a corresponding proportion; and as the use of tea had now become general, smuggling was carried to an infinitely greater extent than at any former period. In the nine years preceding 1780, above 118 millions of pounds weight of tea were exported from China to Europe, in ships belonging to the Continent, and about 50 millions of pounds in ships belonging to England. But from the best information attainable, it ap pears that the real consumption was almost exactly the reverse of the quantities imported; and that, while the consumption of the British dominions amounted to above 13 millions of pounds, the consumption of the Continent did not exceed 5 millions! If this statement be nearly correct, it follows, that an annual supply of about eight millions of pounds must have been clandestinely imported into this country, in defiance of the utmost vigilance on the part of the revenue officers. But this was not the worst effect of the high duties, for many of the retail merchants, who purchased tea at the East India Company's sales, being in a great measure beat out of the market, were, in order to put themselves in a condition to stand the competition of the smugglers, tempted to adulterate their teas, by mixing them with sloe. and ash leaves.* At length, in 1784, ministers, after having in vain tried every other resource for the suppression of smuggling, resolved to follow the precedent of 1745, and reduced the duty on tea from 119 to 12 per cent. This measure was as successful as the former. Smuggling, and the practice of adulteration were immediately put an end to. The following official statement shows, that the quantity of tea sold by the East India Company, was about tripled in the course of the two years immediately following the reduction !

In 1781, the quantity of tea sold at the East India Company's sales, amounted to

1782
83

84 (Duties reduced)

85

86

87

5,023,419 lbs.

6,283,664

5,857,883

10,148,257

16,307,433

15,093,952

Macpherson's Commerce with India, p. 208. Commerce, vol. 2, p. 540.

+ Macpherson's Commerce with India, p. 416.

16,692,426 +

Milburn's Oriental

While the quantity of tea sold at the Company's sales, was thus rapidly augmenting, in consequence of the reduction of the duty, the quantity of tea imported into the Continent from China, which had, in the year 1784, amounted 19,027,300 libs., declined with still greater rapidity, and in 1791, was reduced to only 2,291,500 libs. ! *

The duties on tea, on an average of the five or six years preceding 1784, produced about 700,000l. a year. And, at the same time that Parliament reduced them to 12 per cent., they laid an additional duty on windows, estimated to produce 600,000l. as a commutation tax, to compensate the deficiency which it was supposed would take place to that extent, in the revenue formerly derived from tea. But instead of the duties falling off in the proportion of 119 to 12, or from 700,000l. to 73,000l., owing to the increased consumption, they only fell off in the proportion of about two to one, or from 700,000l. to 340,000. The Commutation act has been always regarded, and with justice, as one of the most successful financial measures adopted in the course of Mr Pitt's administration. The plan was generally understood, at the time, to have been suggested by Mr Richardson, Accountant-General of the East India Company. But the popularity of the measure was so great as to induce several other individuals to claim this honour, and even to occasion some hot disputes on the subject in the House of Commons. In point of fact, however, the merit of having first suggested the plan, did not really belong either to Mr Richardson, or to any of those who then claimed it; and such of our readers as will take the trouble to look into a pamphlet of Sir Matthew Decker's (Serious Considerations on the present High Duties), published in 1743, will find that the measure adopted in 178+, had been strenuously recommended forty years before.

But the principle of the Commutation act, and the striking advantage that had resulted from the reduction of the duty, were soon lost sight of. In 1795, the duty was increased to 25 per cent. And after successive augmentations in 1797, 1798, 1800, and 1805, it was raised, in 1806, to 96 per cent. ad valorem, at which it continued till 1819, when it was raised to 100 per cent. Now, although it cannot be disputed that the duty on tea yields, at present, a vastly greater revenue than was derived from it in 1795, there are the strongest possible reasons for believing that the revenue would have been considerably greater, had the duty not been carried so high. The quantity of tea sold by the East India Company in 1795 and 1796, amounted to very nearly 20

• Macpherson's Commerce with India, p. 210,

millions of pounds a year, and in 1799, to very nearly 25 millions of pounds, (24,853,508.) Since then, there has been no increase! For, according to the account given in the Lord's Report on the East India Trade (p. 334.), the average quantity of tea sold at the Company's sales in 1818, 1819, and 1820, is rather under 25 millions of pounds a year. But the population of Great Britain, which is ascertained by the late census to amount to 14,379,000, amounted to only 10,817,000 in 1800; and had there been no diminution of the individual consumption of the Company's tea, in the interval between these enumerations, their sales ought plainly to have been increased in the proportion of 10,817 to 14,379, or from 25 to 33 millions of pounds. Nor is this all. The sales made by the East India Company supply the market of Ireland as well as Britain; and, if we take into account the extraordinary increase of population in that part of the empire, the diminution of consumption will appear still more striking. But, notwithstanding, the Company's sales have thus continued stationary since 1795, it is, we believe, pretty generally admitted, that the individual consumption of tea, or rather of the compound sold under its name, has not been considerably diminished in the towns, while it has increased greatly in the country since that epoch. It is plain, however, that this increased supply can have been obtained only by clandestine importation, or adulteration; and as there was no opportunity of smuggling during the latter part of the war, and as the powerful force that has been employed in the preventive service since the return of peace, must have rendered it extremely difficult to import any considerable quantity of foreign tea, we should be disposed to conclude, that the vacuum caused by the high duties, has been chiefly supplied by adulteration,—and such, we find, is really the case. There is, indeed, every reason to think that the practice of adulterating by the intermixture of ash and sloe leaves, and by drying tea that has been already infused, and mixing it with fresh tea, is carried to a greater extent at this moment, than in 1784. In proof of this, we may mention, that in London in 1818, upwards of twenty grocers were convicted of having spurious tea in their possession. And it is worthy of remark, that in the case of the King v. Owen, the counsel for the defendant (Mr Lawes) declared, that the practice was so general, that his client was not aware of the existence of any law, by which it was forbidden! Since then, several additional convictions have taken place; but it is not in the nature of things that the evil can be materially diminished by such means. If ministers be really desirous of putting a stop to the practice of adulterating, they must follow Mr Pitt's example, and take 50 or 60 per cent.

from the present duties. The experience of the effects of the reductions in 1745 and 1784, enable us confidently to pronounce, that such a reduction would not be followed by any corresponding diminution of revenue,-while, besides putting an instant stop to smuggling and adulteration, it would be a considerable boon to the lower classes, to whom tea is now become an article of prime necessity, and would powerfully contribute to extend our commerce with China.

We have been thus particular in noticing the variations in the tea duties, because the Company's sales afford the means of ascertaining the precise effect of their increase and diminution on consumption. The results are both curious and instructive; and would of themselves be sufficient to establish the truth of Dr Swift's observation that, in the arithmetic of the Customs, two and two do not always make four, but sometimes only one!

The shortsightedness of ministers, and the narrow and contracted policy on which they have almost always acted, put it out of our power to refer to many such conclusive instances as the reduction of the tea duties in 1745 and 1784, to prove the superior productiveness of diminished taxation; there are, however, one or two others which deserve to be pointed out. In 1742, the high prohibitory duties upon spirituous liquors, and upon licenses for retailing the same, were abolished, and such moderate duties imposed, to commence after Lady Day 1743, as were expected to increase the revenue by increasing the legal consumption of spirits. This measure was vehemently opposed by the Bishops; but their opposition was ineffectual; and the increase of the duties, and diminution of smuggling which followed, proved that the measure was alike advantageous to the revenue and to the morals of the people. In 1787, Mr Pitt

reduced the duty on wine and spirits 50 per cent., and the revenue was, notwithstanding, considerably augmented! Perhaps, however, the progress of the duties on coffee illustrates this principle in a still more striking manner. In 1805, they were raised a third, and that year their produce fell off an eighth instead of increasing a third; in 1806, they had increased only a sixteenth, so that the consumption had diminished above a fourth. But it was at length found that the tax had been overdone, and it was lowered from 2s. to 7d. the cwt. Mark the immediate effects of this step. The average annual produce of the high duty for the three years previous to 1808, when it was lowered, was 166,000/.; and the average annual produce of the reduced duty for the next three years was 195,000l. !—a proof

History of our Debts and Taxes, Part iv. p. 110.