ON GROSS AND NET REVENUE
ADAM SMITH constantly magnifies the advantageswhich a country derives from a large gross, rather than a large net income. " In proportion as a greater share of the capital of a country is employed in agriculture," he says, " the greater will be the quantity of productive labour which it puts into motion within the country; as will likewise be the value which its employment adds to the annual produce of the land and labour of the society. After agriculture, the capital employed in manufactures puts into motion the greatest quantity of productive labour, and adds the greatest value to the annual produce. That which is employed in the trade of exportation has the least effect of any of the three." 1
Granting, for a moment, that this were true, what would be the advantage resulting to a country from the employment of a great quantity of productive labour, if, whether it employed that quantity or a smaller, its net rent and profits together would be the same. The whole produce of the land and labour of every country is divided into three portions: of these, one portion is devoted to wages, another to profits, and the other to rent. It is from the two last portions only that any deductions can be made for taxes or for savings; the former, if moderate, constituting always the necessary expenses of production. 2 To an individual with a capital of £20,000, whose profits were £2000 per annum, it would be a matter quite indifferent whether____________________
" The employment of capital the least favourable to a nation is that of carrying the produce of one foreign country to another."—Say, vol. ii. p. 120.