38. Commercial activity on the part of the ruler is

harmful to his subjects and ruinous to the

tax revenue.656

 

It should be known that a dynasty may find itself in financial straits, as we have mentioned before, on account of its luxury and the number of (its luxurious) habits and on account of its expenditures and the insufficiency of the tax revenue to pay for its needs and expenditures. It may need more money and higher revenues. Then, it sometimes im­poses customs duties on the commercial activities of (its) subjects, as we have mentioned in the previous section. Sometimes, it increases the kinds of customs duties, if (customs duties as such) had been introduced before. Sometimes, it applies torture to its officials and tax collectors and sucks their bones dry (of a part of their fortune). (This happens) when officials and tax collectors are observed to have appropriated a good deal of tax money, which their accounts do not show.657

Sometimes, the ruler himself may engage in commerce and agriculture, from desire to increase (his) revenues. He sees that merchants and farmers make (great) profits and have plenty of property. (He sees) that their gains correspond to the capital they invest. Therefore, he starts to acquire livestock and fields in order to cultivate them for profit, purchase goods, and (enter business and) expose himself to fluctuations of the market. He thinks that this will improve (his) revenues and increase (his) profits.

However, this is a great error. It causes harm to the subjects in many ways. First, farmers and merchants will find it difficult to buy livestock and merchandise and to procure cheaply the things that belong to (farming and commerce). The subjects have (all) the same or approximately the same amount of wealth. Competition between them already exhausts, or comes close to exhausting, their financial resources. Now, when the ruler, who has so much more money than they, competes with them, scarcely a single one of them will (any longer) be able-to obtain the things he wants, and everybody will become worried and unhappy.

Furthermore, the ruler can appropriate much of (the agricultural products and the available merchandise), if it occurs to him. (He can do it) by force, or by buying things up at the cheapest possible price. Further, there may be no one who would dare to bid against him. Thus, he will be able to force the seller to lower his price. Further, when agricultural products such as corn, silk, honey, sugar, and other kinds of agricultural products, or goods of any kind, become available, the ruler cannot wait for a (favorable) market and a boom, because he has to take care of government (needs). Therefore, he forces the merchants or farmers who deal in these particular products to buy from him. He will be satisfied only with the highest prices and more. (The merchants and farmers, on the other hand), will exhaust their liquid capital in such transactions. The merchandise they thus acquire will remain useless on their hands. They themselves will no longer be able to trade, which is what enables them to earn something and make their living. Often, they need money. Then, they have to sell the goods (that they were forced to buy from the ruler), at the lowest prices, during a slump in the market. Often, the merchant or farmer has to do the same thing over again. He thus exhausts his capital and has to go out of business.658

This becomes an often repeated process. The trouble and financial difficulties and the loss of profit which it causes the subjects, takes away from them all incentives to effort, thus ruining the fiscal (structure). Most of the revenue from taxes comes from farmers and merchants, especially once customs duties have been introduced and the tax revenue has been augmented by means of them. Thus, when the farmer gives up agriculture and the merchant goes out of business, the revenue from taxes vanishes altogether or becomes dangerously low.

Were the ruler to compare the revenue from taxes with the small profits (he reaps from trading himself), he would find the latter negligible in comparison with the former. Even if (his trading) were profitable, it would still deprive him of a good deal of his revenue from taxes, so far as commerce is concerned. It is unlikely that customs duties might be levied on (the ruler's commercial activities). If, however, the same deals were made by others (and not by the ruler), the customs duties (levied in connection with them) would be included in the tax total.

Furthermore, (the trading of the ruler) may cause the destruction of civilization and, through the destruction and decrease of (civilization), the disintegration of the dynasty. When the subjects can no longer make their capital larger through agriculture and commerce, it will decrease and disappear as the result of expenditures. This will ruin their situation. This should be understood.

The Persians made no one king except members of the royal house. Further, they chose him from among those (members of the royal house) who possessed virtue, religion, education, liberality, bravery, and nobility. Then, they stipulated in addition that he should be just. Also, he was not to take a farm, as this would harm his neighbors. He was not to engage in trade, as this would of necessity raise the prices of all goods. And he was not to use slaves as servants, since they would not give good and beneficial advice.

It should be known that the finances of a ruler can be increased, and his financial resources improved, only through the revenue from taxes. (The revenue from taxes) can be improved only through the equitable treatment of people with property and regard for them. This makes their hopes rise, and they have the incentive to start making their capital bear fruit and grow. This, in turn, increases the ruler's revenues in taxes. Other (measures) taken by the ruler, such as engaging in commerce or agriculture, soon turn out to be harmful to the subjects, to be ruinous to the revenues, and to decrease cultural activity.

Amirs and other men in power in a country who engage in commerce and agriculture, reach a point where they undertake to buy agricultural products and goods from their owners who come to them, at prices fixed by themselves as they see fit. Then, they resell these things to the subjects under their control, at the proper times, at prices fixed by themselves. This is even more dangerous, harmful, and ruinous for the subjects than the afore-mentioned (procedure). The ruler is often influenced to choose such a (course) by that sort of people - I mean, merchants and farmers - who bring him into contact with the profession in which they have been reared. They influence the ruler to choose this (course). They work with him, but for their own profit, to garner quickly as much money as they may wish, especially through profits reaped from doing business without having to pay taxes and customs duties. Exemption from taxes and customs duties is more likely than anything else to cause one's capital to grow, and it brings quick profits. These people do not understand how much damage is caused the ruler by each decrease in the revenue from taxes. The ruler, therefore, must guard against such persons, and not pay any attention to suggestions that are harmful to his revenues and his rule.

May God inspire us to choose the right course for ourselves, and may He make us profit from our beneficial actions. There is no Lord except Him.