POLITICAL ECONOMY. 125 



readily seen that all fluctuations in the value of money are injurious 

 either to debtors or creditors. 



Banks are of three kinds ; though in our own country the three 

 are generally united. Banks of deposits, receive money for safe 

 keeping, and repay it to the order of the creditor ; receiving compen- 

 sation therefor, by the use of the money. Banks of discqunt, lend 

 money, on security ; but discount the notes which they receive ; that 

 is deduct so much from the money which they lend, as will be equi- 

 valent to interest thereon. Banks of circulation, issue notes of their 

 own, usually payable on demand ; and these bank notes circulate as 

 money, on governmental authority. But the more abundant they be- 

 come, the less is their real value ; and when a sudden demand for 

 specie arises, the banks greatly diminishing their discounts and circu- 

 lation, greatly increase the fluctuations in the quantity and value of 

 money. We think that banks are useful, under proper restrictions, 

 when their number and circulation are sufficiently limited : and that, 

 even when they are too numerous, their number should not be dimi- 

 nished too rapidly or suddenly, lest injurious fluctuations should 

 ensue. It is an important question whether stockholders, and espe- 

 cially directors, should not be placed under heavier liabilities ; to 

 guard against abuses and failure of these institutions. 



4. Consumption of Wealth, is said to be productive, or unpro- 

 ductive, according as it generates more wealth, or not. Strictly 

 speaking, the former is not a consumption of wealth, but only of 

 certain commodities, for the sake of producing others, or a greater 

 quantity of the same : and wealth in general is the surplus of pro- 

 duction over consumption. The distinction between necessary and 

 luxurious consumption, is quite indefinite and arbitrary ; as what 

 some individuals might deem necessary, to themselves, others, of 

 different habits, might deem luxurious. Though it is desirable that 

 the private consumption of wealth should be less than the production, 

 yet this is a point in which the government has no right to interfere, 

 unless public prosperity and virtue are at stake. Sumptuary laws, 

 regulating private expenditure, are not only odious, but they dis- 

 courage production. 



A portion of the national wealth is necessarily consumed by the 

 government, in accomplishing its important objects ; and this portion 

 it derives by some mode of taxation. A. poll tax, or tax on persons, 

 if it be general, exacts as much from the poor as from the rich ; though 

 the latter need protection for their property, as well as their persons, 

 and should therefore pay more in proportion to their numbers. A 

 land tax, or tax on lands, might have been just originally ; as it 

 would in time be felt alike by all men, in the general rise of prices ; 

 but its present introduction, would at first burthen the landholders 

 unjustly, unless the change were very gradual. An excise, or internal 

 tax on commodities, is difficult to collect ; and a tax on exports is felt 

 severely by merchants, who wait a long time before receiving returns 

 therefrom. A general tax on both persons and property would pro- 

 bably be the most just ; but a tax on imports, under the name of 

 duties or customs, is the most convenient to collect, and hence re- 

 sorted to by most nations. 



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