As has previously been discussed, the figure of the consumer as an active promoter of national economic interests was manipulated by both state and law through political and economic influences on trade.99 This was primarily achieved through taxation and
duties. Some duties, and indeed many of those implemented by Walpole’s 1712 policy
reforms, were levied at importers and exporters. However, as the century progressed, it was the public, and in particular the consumer, who was increasingly targeted. The discussions surrounding taxation firmly brought the figure of the consumer to the forefront of political economy. I will divide my discussion of this matter into two subsections. First, I will consider how politicians and political economists have philosophised over the details of who should be taxed and by how much. Secondly, I will interrogate observations regarding how consumers reacted to these taxes.
98Berg, ‘New Commodities, Luxuries, and Their Consumers’, p. 77. 99 Trentmann, The Making of the Consumer, p. 12.
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David Hume, in his Political Discourses, argued that the most desirable form of taxation was the moderate taxation of consumer goods through a sales tax, as these tended to stimulate industry.100 This countered the views of earlier writers, such as
John Locke, who had argued for property taxes as the most effective form of revenue generation. Furthermore, Hume argued that it was luxury goods, rather than
necessities, that should be taxed as the purchase of luxury items was ‘in some measure,
voluntary; since a man may chuse how far he will use the commodity which is taxed: They are paid gradually and insensibly: And being confounded with the natural price
of the commodity, they are scarcely perceived by the consumers’.101 Hume directly referenced the consumer as a distinct player in the strategizing of taxation. Hume’s
consumer was in many ways controlled through taxation, simultaneously deceived into not noticing the tax due to the already high price of the luxury commodity, and
also encouraged into ‘sobriety and frugality’.102 Hume’s vision of taxation was not
only a means of generating revenue, but also a means of controlling what consumers spent their money on, and how much they spent.103
Adam Smith’s views, in principle, held a number of similarities. He argued
that a tax on necessities was, in effect, the same as a tax on wages – a point on which many eighteenth-century political economists differed from their predecessors.104 He
also believed, as Hume did, that a tax on luxury goods, such as tobacco, meant that the consumer was in control of the amount of their income that they decided to spend on
100 David Hume, Political Discourses (Edinburgh: A. Kincaid and A. Donaldson, 1752). See in
particular p. 116.
101 Ibid., p. 119. 102 Ibid., p. 119.
103 Claudia M. Schmidt, David Hume: Reason in History (Pennsylvania: Pennsylvania State University
Press, 2003), p. 308.
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that products, and consequently laid out in tax. This was as opposed to the taxation of necessary items, such as food, shirts, and leather shoes, which Smith saw as essential to survival, and therefore comparable to a tax on wages.105 Smith also argued that taxes
on luxuries had no negative influences on the market as a whole. While the taxation of a necessity might in turn raise labour costs, and consequently manufacture costs, Smith stated that a taxation on a luxury would only raise the price of the commodity itself. In other words, it would only impact the consumers of those luxuries.
Smith and Hume both placed a significant amount of trust in the consumer to moderate their spending in accordance with what they could financially afford. Their theories on taxation ignored a trend that was widely noticed and commented upon elsewhere – that many consumers who could not afford to purchase luxury goods were nonetheless compelled to buy them. As John Bidlake wrote in his sermons of 1799,
‘the luxury of dress is then only improper in those who cannot afford it; and who by
indulgence may be reduced to distress’.106 Duties and taxes were key in influencing
consumer behaviour. However, how reactions to the implementation of these government decisions were manifested was often not as was predicted or desired. Certainly, changes in government policy in regards to revenues and the taxation of luxury goods can be seen to have influenced the mercantile and industrial development
of Britain. Patrick O’Brien formulated that tax on luxury goods such as wine, sugar,
and tea contributed sixty percent of the total British public revenue between 1788 and 1792, collected primarily in order to fund war with France.107 The decision to tax these
luxury commodities, and the amount of public wealth which was acquired through this
105 Ibid., p. 871.
106 John Bidlake, Sermons, on Various Subjects (2 vols, London: J. Murray, 1799), 1, p. 64.
107Patrick K. O’Brien, ‘The Political Economy of British Taxation, 1660-1815’, Economic History Review 41 (1988): pp. 1–32.
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scheme, was as much a result of developing consumer behaviour as it was government manipulation of consumer spending.
The implementation of certain taxes influenced consumer behaviour on an individual level, in terms of consumer choices, and in terms of how relationships were managed between consumers and retailers. To some degree, luxury taxation acted as a new form of, or replacement of, sumptuary law.108 Susan Vincent has demonstrated
that dress was regulated through these laws, as well as through social and moral means, throughout the early modern period.109 Sumptuary laws often levied fines upon those
who broke them, meaning both forms of regulation were incentivised financially.
Vincent’s work emphasises the importance of appearances, primarily expressed
through dress, in communicating social status. As was earlier discussed in relation to acquiring credit, maintaining, or simulating, the appearance of being worthy of credit was essential in order to establish the individual as a viable consumer.
The influence of taxation on the appearance of the consumer can be most readily demonstrated through the tax on wig powder. The Duty on Hair Powder Act was put in place in 1795, and was not repealed until 1869.110 The act declared that
anyone wishing to wear hair powder had to visit a stamp officer and pay one guinea annually. There were various exceptions to this tax, such as the Royal family and their servants, clergyman earning below a certain salary, and any additional unmarried daughters beyond two in one family. Although hair powder had already declined as a fashionable item, consumer reactions to this taxation are nonetheless compelling. John Donaldson wrote, in an open letter to William Pitt responding to the act, that the tax
108 McKendrick, Brewer, and Plumb, Birth of a Consumer Society, p. 37.
109 Susan Vincent, Dressing the Elite: Clothes in Early Modern England (Oxford: Berg, 2003), pp. 117-
152.
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actually proved of additional use to the retailer wishing to discern customers who
would be able to afford to pay: ‘What tradesman will refuse credit to a powdered
person, who proves by his appearance, that he gives a guinea a-year to the revenue,
for a licence to use a luxury in dress?’.111 In other words, the tax acted as a pseudo-
sumptuary law, enabling visual distinction based on financial ability to pay the tax. In both cases, if the financial penalty could not be paid, the luxury item of dress could not be worn.
For every tax that is enacted, there are of course those who evade it. John Bowles, in 1797, reflected upon this fact, stating that:
This disposition to injure the Revenue has been carried into private life, where we have been accustomed to see men, even of rank, who have renounced the garb of gentlemen in order to evade a tax, imposed upon a mere luxury of dress, and the unproductiveness of which must have an obvious tendency to make public burdens fall more heavily upon the inferior classes of the Community.112
Bowles here made the argument that individuals would prefer to not wear the garments which would distinguish them as socially superior, rather than pay the tax levied upon them. Furthermore, he argued that as a consequence of their avoidance of tax, poorer people were being induced to pay more tax to make up the deficit. As Bowles made clear, the introduction of taxation had the potential to significantly shift the way in which the public consumed.113 While Bowles’ argument is primarily concerned with
the economic impact of government taxation on the merchant class, we can also
111 John Donaldson, A Letter to the Right Hon. William Pitt, on the Use of Hair-Powder (London: Cadell
and Davies, 1795), p. 7.
112 John Bowles, A Third Letter to a British Merchant (London: T. N. Longman and Richard White,
1797), p. 83.
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deduce interesting observations about the nature of consumer behaviour towards the end of the eighteenth century. Specifically, that social commentators were increasingly identifying the consumer, whether specifically termed as such or not, as a distinct and important player in the economic structure of the country.