was generally acquiesced in. The doctrine that money was the only form of wealth was held by nearly all statesmen and traders, and had resulted in the establishment of the so-called mercantile system. The physiocrats taught the contrary of both these conceptions. They held that governmental interference with the gainful occupations of the people was bad for both government and people, since it hindered the increase of wealth and the productiveness of taxes. They maintained that money was not wealth except in a secondary sense, as a tool and instrument of exchange, since all persons who acquire money find it for their advantage immediately to lay it out for other things. These two contentions of the physiocrats constitute their claim to the admiration of mankind.
They had another doctrine by which, as it has turned out, they are now more generally distinguished. They held that land was the only source of wealth, and that all occupations except agriculture were unproductive.
Agriculture, they said, yielded a “net product” over and above the wages of the cultivator during the time he was engaged in producing the crop. This net product went to the landlord, and might rightfully be taken by the Government to the extent necessary to defray the public expenses. They accordingly proposed and advocated the impót unique, or single tax, on the income derived from landed property. The residue of the net product remaining in the landlord's hands after the payment of taxes was, in their judgment, the annual and sole increment of the world's capital and stock in trade for the upbuilding of civilization.
All other trades, such as manufacturing and commerce, were sterile. These served as the clerks, the agents, the porters of agriculture. If any of these saved anything from their earnings as the handmaids of agriculture, competition would cut down their gains, so that eventually they would have nothing left over at the end of the year.
Adam Smith agreed with the physiocrats in their views respecting governmental interference with private business, and as to the true character and functions of money. He differed from them as to the “net product.” He held that land was not the sole source of wealth, but that all useful labor was to be reckoned, equally with agriculture, among the sources. His answer to the physiocrats is embraced in Chapter IX, Book IV, of the “Wealth of Nations.” Notwithstanding an occasional subsequent flicker, it may be said, speaking broadly, that if there ever was any economic conclusion upon which the world had agreed it was that the physiocratic doctrine of net product and single tax was erroneous.
