taxation which have obtained popular credence may be here appropriately noticed.
Thus, it is not infrequently assumed that any injurious influences of excessive or unnecessary taxation are largely or wholly imaginary, inasmuch as they are really returned to the contributors (taxpayers) through the expenditures of Government; which, by increasing demand for commodities and services, create or extend markets, maintain prices, and enlarge the sphere or opportunity for industrial employment, and favor an increase in the supply and circulation of money. This assumption is obviously but a reproduction in another form of the fallacy (before noticed) that industry can be stimulated by taxation; and which in turn finds its antetype in a favorite idea of the middle ages that the destruction or waste of commodities "made good for trade"; and which maxim, it is said, a guild of glaziers in Paris practically carried out by encouraging their apprentices to break windows, who may have attempted to justify their conduct by asking themselves the question, "What would become of the glazing business if nobody ever broke windows?"
A general answer to this fallacy is, that to break, spoil, or waste by fire, pestilence, war, famine, shipwreck, or injudicious and unnecessary taxation and public expenditure, always entails a loss to society; and if these results give to certain class interests an opportunity to perform unnecessary work, or sell products at an advance over their current prices in the world's market, and thereby inflict unnecessary and additional taxes on other individuals, it can not be regarded as other than an evil, and prejudicial to public interests.
To those who live on the produce of unnecessary taxation and correlative governmental expenditure, any consequent encouragement of industry by increasing demand and extension of markets, will very naturally seem to be in the highest degree beneficial. But, in order that industry may be truly benefited, the market must be real and not artificial, or one created by unnecessary taxation and expenditure. "It is absurd to suppose that either individuals or states should receive the smallest benefit from the demand of those whom they have been previously and unnecessarily obliged to furnish with the means of buying. To keep up useless regiments and overgrown establishments on the pretense of encouraging industry is quite as irrational as if a shopkeeper were to attempt to increase his business and get rich by furnishing his customers with money to buy his goods."—McCulloch.
Hamilton (a Scotch economist) puts the case even more forcibly. "To argue," he says, "that the money raised in taxes, being spent among those who pay it, is therefore no loss to them, is no less