Notes to the Electronic Edition:

Table of Contents

Notes, Books I-III

Notes, Books IV-VI

Book IV, Chapter I

1. Dowell, i. 8, for the 'hide.' For the Jugerum, Mommsen, Hist. Rom. i. 95. St. Vincent and British Guiana have the uniform tax. Parl. Papers (1891), 181, Taxation of Land.

2. Clamageran, i. 16.

3. 'Land (in Ohio) was divided into three classes, according to quality, and there were three rates of taxation per 100 acres; one for land of the first quality, another for land of the second quality, and still another for land of the third quality,' Ely, Taxation, 134.

4. Restraints must be placed on the sale of crops until they are inspected by the tax-collector and his share settled.

5. Wagner, iii. 26; Clamageran, i. 19. Seebohm, English Village Community, 290 sq. For England, Seebohm, 40; Dowell, iii. 67.

6. Dowell, i. 5.

7. Vignes, i. 11; Dowell, i 88, 154.

8. Wealth of Nations, 349-50.

9. Wagner, iii. 25-6.

10. Said to be derived from 'capistratum.'

11. 'The survey and valuation of Bohemia is said to have been the work of more than a hundred years.' Wealth of Nations, 351. The French cadastre, begun in 1807, was not completed till 1850. In Madras we hear that 'in 1855 the work of survey and re-settlement was begun. This work will be accomplished in or about 1895, but certain districts of the Presidency will then have seen this very re-settlement expire.' Goodrich, Economic Journal, i. 451. In like manner the Irish valuation usually known as 'Griffiths's' has become by lapse of time very misleading.

12. Three valuations of Lancashire made in 1790, 1840, and 1890 respectively, would have few common, or even proportional results.

13. Leroy-Beaulieu, i. 343. For Italy, Alessio, i. 224-5; Fournier de Flaix, Traité, 498. According to the former, land was taxed in Lombardy, at 25 per cent., in Liguria at 7 per cent.; the latter gives 79 per cent. for Modena and 17 per cent. for Sicily. A new cadastre for Italy is proposed.

14. Bk. ii. ch. 4, § 5.

15. Schedule A—

	Land.	Houses.	Land.	Houses.
1899-1900	52,814,000	174,431,000	23½ per cent.	76½ per cent.

Local Rates for 1898-99—

England and Wales	£38,602,000
Scotland	3,824,000
Ireland	3,234,000

In the last country the returns from gas and waterworks are included in the rates, but are unimportant.

16. Local Taxation Report (No. 168, 1893) xxxvii-xl. Cp. Blunden, Local Taxation and Finance, 62.

17. Owing to the great fall in the value of land the assessments are now probably up to, or in some cases beyond, the true amount.

18. Local Taxation, 17, 50. Cp. Mr. Fowler's Local Taxation Report, xxxv.

19. More precise figures are—

	1820	1840	1860	1880	1900*
	Francs.	Francs.	Francs.	Francs.	Francs.
Principal amount	168,225,220	155,669,805	163,837,194	173,827,511	103,168,643
Additional centimes for general purposes	42,899,677	33,936,017	—	—	8,377,293
Ditto for departments	36,568,634	47,629,611	70,238,036	94,077,070	69,158,840
Ditto for communes	28,518,003	24,820,985	45,683,257	81,904,095	63,647,717
Ditto for relief, &c.	3,768,747	3,601,486	4,476,168	5,350,874	9,110,182
Total	279,980,281	265,657,904	284,234,655	355,159,550	253,462,675

* The figures for 1900 include only the land tax proper (Propriétés non bâties).

20. For the French land tax, Stourm, i. 124-220: Vignes, i. 25-39. Dict des Finances, s. v. 'Foncière.'

21. En 1876, 6,614 propriétés étaient expropriées par le Fisc pour le recouvrement de 936,774 francs d'impôt, et en 1877, 6,644 propriétés pour 662,722 francs. Le Fisc dévore la petite propriété trop obérée. De 1873 à 1878, 35,074 petits propriétaires ont perdu leur avoir par l'expropriation forcée. Laveleye, Lettres d Italie (1880), 161-2. For the Italian land tax, De Parieu, i. 205-218; Alessio, Sistema Tributario, i. 88-232.

22. More accurate figures for 1900 are—

23. For the German land taxes, Cohn, §§ 303-6; Wagner, vol. iv.; Fournier de Flaix, 393 sq.

24. Bk. iv. ch. 4, § 3.

25. Probably lowest in Saxony.

26. It does not follow, as has been asserted, that Ireland suffers from this system. It would on the whole tell in her favour.

27. Professor Seligman—Political Science Quarterly, vii. 719—seems to question this proposition, which nevertheless is a necessary deduction from the nature of the land tax.

28. Bk. iii. ch. 6, § 4. The recent Prussian legislation noticed in § 7 is in accordance with the doctrine here laid down.

29. The proposal was made by Léon Say in the debates on the Impôt foncier in 1890 (Finances de la France, iii. 437), and by Professor Ely, Taxation, 251-3, who would exempt land from even 'State' taxation.

30. See Ricardo, Principles, ch. 9. McCulloch, Senior, and J. S. Mill all desert him in this case. See Bk. iii. ch. 5, § 6; also J. S. Mill, Principles, Bk. v. ch. 4, § 4.

31. 'As a matter of fact it appears that a great portion of the farms in England are not rack-rented. If so, it is clear that any increase in local burdens must fall on the margin between the actual rent and the rack-rent, and so far diminish the advantage derived by the farmer from his actual rent being below a rack-rent, and till that margin were exhausted it would naturally be useless for him to apply to his landlord to readjust his rent.' Goschen, Local Taxation, 165. But as Mr. Blunden (Local Taxation and Finance, 42) points out, in times of depression this may tell in a different way. Rents continue above the economic level, and the rates paid by the occupier are an aggravation of his position.

32. See Leslie, Essays, 395-7, for an illustration.

33. See Bk. iii. ch. 5, § 6.

34. Bk. ii. ch. 4, § 5.

Book IV, Chapter II

35. On the English house and window taxes, Wealth of Nations, 355-357; Dowell, iii. 165-192.

36. Bk. iv. ch. 1, § 4. Sir H. Fowler's estimate for England and Wales in 1891 was £23,560,000, but it should be remembered that other property is included under this heading. Local Taxation Report, xl.

37. The yield of the Personnelle mobilière has been as follows—

	Francs (000's omitted).
	Principal.	Additional Centimes.
1830	27,161	14,100
1870	46,004	44,337
1880	52,161	64,382
1885	57,846	74,240
1890	64,066	84,400
1900	72,700	102,675

38. Some of which, however, are reserved for the central government. In 1890 the centimes additionnels raised for state purposes came to 18,262,000 francs.

39. The figures for the 'door and window' tax are—

	Francs (000's omitted).
	Principal.	Additional.
1830	12,812	2,711
1870	33,911	23,750
1880	36,588	33,594
1885	39,703	38,320
1890	42,609	42,186
1900	47,455	51,350

40. The Impôt foncier on propriétés bâties, now separated from the land tax proper, gives the following results—

	Francs (000's omitted).
	Principal.	Additional.	Additional for departments.	Additional for communes.	Total.
1890	63,418	8,739	32,422	33,936	138,575
1895	68,722	10,647	35,588	37,147	152,104
1900	72,911	12,579	38,362	39,623	163,475

Taking this with the preceding notes we reach the result in the text. Mr. Egerton in the year 1890, estimated that 'the total tax on land and houses in France will be found to amount this year to about £15,000,000 independently of the personal and 'mobilière' tax of £5,500,000 and of the door and window tax of over £3,000,000.' Reports as to the Taxation of Land and Buildings, (C. 6209), 16.

41. For the Italian house tax, Alessio, i. 233-266.

42. Cohn, § 306; Reports on Taxation (C. 6209), 31.

43. I.e. taking the florin at 2s. The figures are—Austria, 30,713,000 florins; Hungary, 10,000,000 florins.

44. The plan adopted in the recent valuation of buildings in France, Finanz Archiv, viii. 193-4.

45. Cp. with the discussion in the text the fuller treatment by Professor Seligman, Incidence, Part ii. ch. 3. His careful discrimination of the different effects of the tax according to its point of first imposition—on the landowner, builder, or occupier—is most valuable as a lesson in the effect of economic friction, but he seems to give too little weight to the forces that shift taxation on the ground owner. In his second edition, Professor Seligman remarks that this criticism 'seems to overlook' the statement in his text that 'as between the landowner and the tenant, the tenant is the weaker party' (Incidence, 241). The assertion so broadly made is a disputable one. It does not follow that because rent rises with increasing demand, it will rise still further in consequence of a tax. The difference of view as to the elasticity of demand for houses accounts for the difference on this point. Moreover, in the theory of incidence it happens that the holder of a differential gain is the weaker party (infra, Bk. vi. ch. 5, § 6). To avoid misapprehension, it must be added that it is not 'the tax' but a portion of it (as suggested by the word 'taxation') that has a tendency to pass on to the ground owner. Professor Edgeworth's complete agreement powerfully supports the position here taken (Economic Journal, vii. 66). See for further reference to the latest discussions Bk. iii. ch. 6, § 5.

46. If the house tax were levied directly from the building owner, the influence of economic friction would keep part of the burden on him.

47. Professor Seligman (Incidence, 242 n.) asks, 'But why should the landowner take less? The building owner is in the weaker position, for his building is on the land and under the law goes with the land.' This implies a misconception of the supposed case. It is the intending builder who is considered, and therefore, the question may be answered thus—because, otherwise, his site will remain vacant. The building owner is not in the weaker position, for his building is not yet on the land. In respect to existing leases there is no room for shifting between the building owner and ground owner, and when a lease has expired, the ground owner absorbs the building owner's interest, or, as Professor Seligman puts it, 'the building under the law goes with the land.' Cp. the statement 'this freeholder is generally spoken of as the "ground landlord," but ... is in no sense more the owner of the ground than of the house ... At the expiration of the lease both land and house revert to him together.' Report of Town Holdings Committee, vi. vii. This position is fully accepted by Lord Balfour and his co-signatories in the separate Report on urban rating and site values. Commission on Local Taxation, Final Report, 154. A slight alteration in the text meets Professor Seligman's other objection, viz. 'that there is no such thing as a strict monopoly value of a lot.

48. Fawcett, Political Economy (5th ed.), 626. His argument as to the incidence of rates on the consumer is based on too rigid an interpretation of the doctrine of equality of profits.

49. The latest scheme in this direction is that of a section of the Local Taxation Commission for a special charge on site values. This charge is to be divided between owner and occupier, the latter deducting one-half the tax from his payment. See Final Report, 153-176. More extreme plans are vigorously criticised in this Report.

50. Some small licenses on manufactures have been retained by the central government, viz. brewers, distillers, tobacco manufacturers, and medicines.

51. One-third of the rent is now taken as the profit of the farmer, who, however, if he prefers, may be assessed under Schedule D. Previous to 1894 one-half the rent was the standard in England and Wales.

52. Under the Ancien Régime industry was taxed through the personal Taille and the Vingtièmes.

53. Most important is the law of 1844, amended in 1853, 1872, 1880, and 1893.

54. For the Patente see Vignes, i. 52-53, ii. 333-380; Leroy-Beaulieu, i. 393-414; Wagner, iii. 468-489.

55. More accurate figures are—

	Francs (000's omitted).
	Principal.	Additional.	Total.
1830	23,047	5,209	28,256
1860	48,508	31,621	80,129
1880	79,009	85,597	164,606
1885	81,381	90,535	171,916
1890	83,844	95,874	179,718
1895	86,680	103,235	189,915
1900	91,937	114,182	206,110

The additional centimes include those for State purposes, which amounted to 20,200,000 francs in 1885 and to 39,000,000 francs in 1900.

56. For the Prussian Gewerbesteuer, Cohn, § 307; Wagner in Schönberg, 273; also Finanzwissenschaft, iv. 18, 20, 31, 32, 41; Taxation of Personal Property (Misc. No. 2, 1886, C. 4909), 8-10. For the recent changes see Wagner's article in Finanz Archiv, xi. 1-76, and J. A. Hill, 'The Prussian Business Tax,' Quarterly Journal of Economics, viii. 77-92.

57. See on these Stts Wagner, iv. 830-46, where the latest changes are noticed. For Bavaria see Schanz, 'Das Bayrische Ertragssteuersystem,' FInanz Archiv, xvii. 551-772.

58. See Seligman, Essays, 136-264 (chs. 6, 7, 8), for a history and discussion of this tax

59. For a full enumeration of the bases of the corporation tax see Seligman, Essays, 176-9. The most important are those given in the text; see also Adams, Finance, 449-466.

60. Cohn, §§ 461-3; Reitzenstein in Schönberg, 623; Fournier de Flaix, 401 seq. For the future in Prussia the industry tax will be altogether local.

Book IV, Chapter III

61. It is significant that Adam Smith discusses the income tax under the title 'capitation taxes,' Wealth of Nations, 367.

62. Dowell, iii. 3-7.

63. Vignes, i. 40-1.

64. De Parieu, i. 139-151.

65. Seligman, Finance Statistics of American Commonwealths, 53; cp. Ely, Taxation, 209 11. This was the case in Massachusetts until the amendment of the Constitution in 1891, Massachusetts Tax Commission Report (1897), 5.

66. Lord Avebury (Statistical Journal, lxiv. 567) regards this passage as 'an admission which amounts almost to a surrender' of the position taken with respect to the theory of equal diffusion in an earlier part of this work (see Book iii. ch. 5, § 4). It is, however, merely a criticism of the exaggerated form of the doctrine held by the Physiocrats and Ricardo. To hold that labourers do not always, or even generally, shift capitation taxes is quite consistent with believing that taxes are not equally diffused.

Book IV, Chapter IV

67. In Mr. Dowell's words 'personal property slipped out of assessment,' iii. 85; see also Cannan, History of Local Rates, for the limitation of rates to immovable property.

68. Bk. iii. ch. 3, § 13.

69. But see § 4, infra, for the partial revival of this tax; also cp. Bk. iv. ch. 9, for inheritance taxes, which are closely akin to sudden charges imposed on property.

70. The total mass of legislation and legislative proposals is quite overwhelming. It has been collected with characteristic thoroughness in the elaborate work of Schanz, Die Steuern der Schweiz (over 2,000 pages in 5 volumes).

71. The following table will show the rates of charge—

Property.	Sum chargeable.
£	£
400	200
800	400
1,200	640, i.e. ½ of 800 and 3/5; of 400
2,000	1,120, i.e. " " of 1,200
4,000	2,520, i.e. 7/10 of the extra 2,000
8,000	5,720, or 4/5; of the extra 4,000
16,000	12,920, or 9/10 for the extra 8,000
20,000	16,920, the extra 4,000 being all charged,

72. The following are the areas and populations of the cantons referred to—

Canton.	Area. Square Miles.	Population.
Bâle (town)	22	73,749
Graubünden	2,774	94,810
Uri	415	17,249
Zürich	665	337,183

73. The above account of the Ohio property tax is condensed from Ely, Taxation, Pt. ii. ch. 4, which gives full details.

74. Essays, 61. The recent Ohio Tax Commission is equally emphatic. 'The system as it is actually administered results in debauching the moral sense. It is a school of perjury. It sends large amounts of property into hiding. It drives capital in large quantities from the State,' Report, 24.

75. Report on Local Taxation, 17-18.

76. Quite as striking is the case of Cincinnati. The following figures give the amounts assessed to realty and personalty respectively at three different periods—

Year.	Realty.	Personally.
	$	$
1867	66,454,602	67,218,101
1868	68,559,040	68,412,285
1892	144,208,810	44,735,670

We thus see that while real property has more than doubled in value, the personal property returned is roughly about two-thirds of what it was twenty-five years previously. For further details as to evasion see the excellent Report of the Tax Commission of Ohio (1893), especially 24-31.

77. The Massachusetts Tax Commission, while recognising certain of the advantages of an income tax, declines to recommend its adoption. See Report, 85-7.

78. Bk. iii. ch. 6, § 3.

79. The best American authorities approve of the corporation tax as a peculiarly suitable form of revenue for the States. Thus Prof. Adams concludes that 'in view of the peculiar duties imposed upon a State, and because of the nature of corporation and natural monopolies, that all special and corporation taxes should be assigned to the State as an exclusive source of revenue.' Finance, 502.

80. On the whole subject of the property tax see the Local Taxation Report of Mr. Wells and his colleagues, made in 1871; Professor Seligman's chapter, 'The General Property Tax,' Essays, 23-61; his Finance Statistics of the American Commonwealths, 53-66; and Professor Ely's Taxation, 146-201, in which a mass of evidence is collected showing the grievances that arise from the property tax. Professor Ely, however, fails to notice that the same arguments may be urged against the state income taxes advocated by him in a later part of his valuable work (287-311).

81. See § 8, infra.

82. See Finanz Archiv, x. 370, where the reasons for the measure are given at length.

83. The precise rates are:—Property under 6,000 marks is free; between 6,000 and 24,000 marks the tax rises from 3 marks to 12 marks, at the rate of 1 mark for each complete increment of 2,000 marks. Between 24,000 and 60,000 marks the increments are 4,000 marks and the increased duty 2 marks. Between 60,000 and 200,000 marks the increments and increased duty are 10,000 marks and 5 marks respectively. From that point up to 2,000,000 marks increments and extra tax are doubled. A property of 2,000,000 marks (£100,000) therefore pays 1,000 marks (£50). Every further addition of 100,000 marks involves an increased charge of 50 marks.

84. For the new Dutch system see Boissevain's elaborate study, Finanz Archiv, xi. 419-682 (reprinted separately); also Seligman, Essays, 322-30. The measures are due to the eminent economist Pierson, and were defended by him on financial, not on social grounds.

85. 'It was in this crisis of the revolutionary war that, when Mr. Pitt found the resources of taxation were failing under him, his mind fell back upon the conception of the income tax.' Gladstone, Financial Statements, 14.

86. It has twice within this period acted as a war tax, viz. in 1854-56, during the Crimean War, and in 1900-1903 for the South African war.

87.

1799	£6,000,000
1800	6,250,000
1801	5,600,000

88. They are—

Schedule	A. Owners of land, including houses.
"	B. Farmers, including owners in occupation.
"	C. Fundholders.
"	D. Profits and professions and all other gains unenumerated.
"	E. Public Offices.

89. See B. Sayer, On the Income Tax, 1833; Parnell, Financial Reform, 1830.

90. The last time that its existence was endangered was by Mr. Gladstone's proposal of abolition in 1874.

91. Financial Statements, 20.

92. This method of stoppage at the source has been generally recognised as a characteristic and valuable feature of the English income tax. This is the judgment of Prof. Dunbar (Quarterly Journal of Economics, ix. 38-40), Prof. Seligman (Pol. Science Quarterly, ix. 644-5) and quite recently of Mr. Hill. The same view is forcibly supported by Mr. Blunden. The only dissentient of note is Prof. Adams, who objects that the principle is carried too far. 'It [the government] taxes the salaries of public officials by not paying them as much as it promised.... The result is the citizen is never sure of getting into his pocket all that he or his property earns' (Finance, 479). Further 'it may be questioned if the use made of it by the English income tax is quite honest in its purpose or fair in its results' (ib. 484). Two points are raised by this criticism, viz., (1) the honesty of the system, (2) its fairness as between different sections. The former seems to anyone actually conversant with the English system almost ludicrous. What is the advantage to the citizen of getting into his pocket what he must immediately pay out again? There would be the necessity for a double transfer of the amount of the tax. So far as public officials are concerned the contention, to give it any substance, should be for exemption from taxation of their salaries. The second point really attacks, not the method of 'stoppage at the source,' but the income tax itself, on the ground that all incomes are not equally discoverable. This is the great difficulty that any income tax must encounter; but it can hardly be held that a contrivance which makes some parts of income more easily ascertainable adds to this weakness. Were all income capable of being taken at the source the income tax would be perfect. An abandonment of the method would increase, not diminish, the inequality inherent in this as in all taxes.

93. The following figures of income assessed are instructive—

Pitt's estimate,	1798	£102	millions
Amount assessed,	1842	204	"
"	1878-9	578	"
"	1888-9	645	"
"	1899-1900	788	"

94. On the Income Tax see Dowell, iii. 90-120; Hill, The English Income Tax. Chailley, Impôt sur le Revenu, 89-218, gives a full and lucid account of the English system. The series of studies in the Economic Journal by the late G. H. Blunden (whose loss Englsh students of finance must deplore) are most instructive: see vol. ii. 637-52; v. 527-31; vii. 607-18; xi. 156-68.

95. I.e. on a small part of permanent income; the other groups pay at the lower figures mentioned in the text.

96. This view has received the support of Newmarch and J. S. Mill, as, too, of Leroy-Beaulieu and Chailley.

97. For the Italian income tax see Chailley, 220-344; Alessio, i. 318-370.

98. See the careful discussion by Piernas Hurtado, Hacienaa Publica, ii. 457-68.

99. See Bk. iv. ch. 3, § 2.

100. For the Prussian income tax see Cohn, §§ 315-20, and for the recent reform, Wagner, Finanz Archiv. 551 sq.; also J. A. Hill, 'The Prussian Income Tax' in Quarterly Journal of Economics, vi. 207-26.

101. More exact figures are—

	Marks.
1892-3	124,842,848
1893-4	123,190,131
1894-5	122,029,765
1900-1	174,385,348
1901-2	186,888,684

102. Supra, Bk. v. Ch. 2, § 10.

103. See Sieghart, 'The Reform of Direct Taxation in Austria,' Economic Journal, viii, 173-82, and the same writer's fuller account, Finanz Archiv. xiv. 1-110

104. The following are the precise grades—

		$		$	$		$
By Act of	1862	600	(exempt)	Between 600	& 10,000 (3%)	Over	10,000 (5%)
" "	1864	"	"	" "	5,000 (5%)	"	5,000 (10%)
" "	1866	1,000	"			"	1,000 (5%)
" "	1870	2,000	"			"	2,000 (2½%)

105. The amount was $69,800,000 (£14,000,000). See infra, Bk. v. ch. 4 § 6.

106. See for this abortive income tax the admirable articles of Profs. Dunbar (Quarterly Journal of Economics, ix. 26-46) and Seligman, Economic Journal, iv. 639-67.

107. Among opponents of the income tax are M. Guyot and Léon Say, chiefly on the ground of its progressive and 'personal' character. Guyot, Impôt sur le Revenu; L. Say, Les Finances de la France, ii. 163-78; iii. 255-87; iv. 576-99, 645-67. M. Chailley, in his elaborate Impôt sur le Revenu, is a strong supporter. Leroy-Beaulieu (i. 491) is neutral. Mr. Bodley explains that the income tax is always regarded as a device of radical politicians, and adds, 'My own observation' leads me to believe that an income tax is unsuited to the French temperament, and that its imposition would be a mischievous error. France, 622.

108. Bk. iii. ch. 3, § 9.

109. This is the really decisive argument against direct progression, as contrasted with the English method, which is 'degressive,' and which throws the task of claiming exemption or abatement on the person interested.

110. 'The real tendency of all these exemptions,' said Mr. Gladstone, 'is the breaking up and destruction of the tax.' Financial Statements, 45.

111. A new period of assault on the alleged inequalities of the income tax seems to be approaching. Mr. Blunden's proposal of a property tax (really a higher charge on permanent incomes) has much to commend it in the case of a high rate to meet exceptional outlay.

112. Limited to one-sixth for land and one-eighth for houses.

113. Bk. v. ch 2, § 4.

114. Fawcett, Political Economy, 538 sq.

Book IV, Chapter V

1. Bk. iii. ch. 1, § 12.

2. Wagner, ii. 233, 515; Cohn, § 332.

3. This is probably the best plan in a purely descriptive or historical treatment. It has been adopted by Mr. Dowell (who gives tobacco a class to itself), and in great measure by De Parieu.

4. Tobacco, e.g., is free in India, subject to excise in the United States and Germany, monopolised in France and Italy, and taxed by the customs in England.

5. Cp. Cato's over-valuation of articles of luxury after the repeal of the Les Oppia, and his taxation of them.

6. Bk. iii. ch. 4, §§ 8, 9.

7. Leslie, Financial Reform, 241-2. This is one of the many instances in which economic forces act and react on each other.

8. See Bk. iv. ch. 2, §§ 1-5 inclusive.

9. To be distinguished from the trade licenses noticed in Bk. iv. ch. 2, § 8.

10.

	£
Dog licenses	550,216
Carriage "	516,810
Game "	201,517
Gun "	115,942
Menservants	156,556

11. The Irish rate of 2s. (with 6d. additional for stamp) is for this reason better than the English one of 7s. 6d.

12. The respective contributions are—

Game licenses	£335,000
Dog tax	300,000
Tax on Societies	60,000
Horse and Carriage tax	190,000

The licenses on carriages should be added; they are placed with the 'drink' licenses in the financial returns.

Book IV, Chapter VI

13. Thus in England the receipt from the Excise on commodities has been for many years, speaking broadly, 30 per cent. of the total tax receipts—£26,050,000 out of £78,665,000 in the year 1894-5—but now hardly exceeds 25 per cent.—£31,600,000 out of £121,893,000 in 1901-2. The contributions indirectes and the fiscal monopolies in France show for 1901 a gross yield of £41,800,000. Allowing for the expenses of working the tobacco monopoly, the balance remaining is over 25 per cent. of the total tax revenue. The German Imperial excise is of less importance, but still gives a substantial contribution, estimated at £15,800,000 for 1900-1. In the United States the internal revenue for 1899-1900 was $233,000,000, that for 1900-1 $238,000,000 or over 40 per cent. of the receipts from every source.

14. Bolles, Financial History (1861-1885), Bk. i. chs. 9. 10; Wells in Cobden Club Essays (2nd series), 479.

15. The first excise was created by the Long Parliament in 1643, Dowell, ii. 8 sq.; Sinclair, History of the Revenue, i. 46, 278.

16. Subject of course to the complicated reactions discussed in Bk. iii. ch. 5, § 5.

17. Bk. ii. ch. 3, §§ 6, 9.

18. Bk. iii. ch. 4, § 5.

19. The hostility of the Physiocrats to indirect taxation was shared, so far as internal taxation went, by the other sections of the liberal party. It is note-worthy that this disposition is also found in the labour parties of the present day, who resent taxation on commodities consumed by the working classes as taxation of labour. Cp. Lassalle, Die indirecte Steuer und die Lage der Arbeitenden Classen.

20. Bk. iii. ch. 4, § 6.

21. In preceding editions it was stated as an illustration that, 'With an increased expenditure of £20,000,000 per annum in Great Britain, the exemption of sugar from taxation could hardly be continued.' This has been confirmed by fact.

22. Cp. Bk. i. ch. 6, § 3; and for a notice of the fiscal aspect of protection, ch. 7, § 2 of the present book.

23. The principle stated in the text is important, but is often overlooked. Thus in the controversy on the financial relations of Ireland to Great Britain it has been argued that the imposition of the same taxes must produce equality, the different character of consumption in the two countries being neglected. On the other hand, Sir R. Giffen (Financial Relations Report, ii. 161) has suggested that the possible existence of inequality is a ground for separate financial treatment, overlooking the fact that a system of taxation may be unequal as between individuals and classes within a single country in exactly the same way. From which it follows that the true remedy for injustice in either case is reform of taxation. Provided the tax objects are properly selected there is no injustice in placing two countries under a common system.

24. Bk. iii. ch. 3, §7.

25. Wealth of Nations, 375.

26. For Economics this distinction has been worked out by Menger, who grades commodities in 'orders' according to their nearness to the consumer. Cp. Marshall, Principles (3rd ed.), 133-4.

27. Some license duties and that on the railways' receipts from passengers are placed under the excise, but they really belong to another category of taxes (see ch. 8 of the present Book).

28. See for the customs infra, Book iv. ch. 7, § 3.

29. The case of the sugar duty illustrates admirably the principle of relativity in taxation. Recognition of the fact that sugar is relatively a good object for taxation is quite consistent with the belief that the removal of the sugar duty in 1874 was highly beneficial.

30. The hereditary excise had the former, the temporary excise granted for the life of the King the latter object, but the distinction was purely formal.

31. The severity of the revenue laws was greatly increased. Hallam declared that 'our fiscal code ... is to be counted as a set-off against the advantages of the Revolution.' Constitutional History, iii. 290.

32. Wealth of Nations, 369.

33. 'The revenue from inland duties had varied considerably in different years. In 1700 over a million, it was in 1702 nearly £1,400,000.' Dowell, ii. 62.

34. For the details of these taxes, Dowell, ii. 208-245, and vol. iv. under the several heads.

35. The following were the amounts yielded by the excise taxes on the above-mentioned articles at the dates of abolition—

		£
Salt (1825)		380,000
Leather (1830)		360,000
Candles (1831)		476,500
Starch (1834)		90,000
Bottles (1834)		3,600
Glass (1845)		600,000
Bricks (1850)		456,000
Soap (1853)		1,126,000
Paper (1861)		1,350,000
	Total	4,842,100

36. An increase of 6d. per gallon imposed in 1894 was removed in 1895, but re-imposed in 1900.

37. Bk. iv. ch. 2, § 8.

38. The prohibition at first applied to Ireland, but was removed in 1779 in consequence of the American war. It was re-imposed in 1832.

39. Lavoisier, the eminent chemist, was one of the sufferers. For the system of the Ancien Régime, see Stourm, chs. 11-14. For the mechanism of the Finances, cp. Bk. vi. ch. 2, also Bouchard, Système Financier de l'Ancienne Monarchie and the Dictionnaire de l'Economie Politique, s. v. 'Finances de l'Ancien Régime.' For the earlier history, Clamageran, Histoire de l'Impôt, and for the latter part of the 18th century the elaborate works of Gomel, Les Causes financières de la Révolution Française (2 vols.); Histoire Financière de l'Assemblée Constituante (2 vols.), and Histoire Financière de la Législative et de la Convention, as yet only vol. i.

40. Stourm, i. 295.

41. Introd. ch. 2, § 4.

42. For the re-establishment of the French finances see Stourm, Les Finances de l'Ancien Régime. For Bonaparte's place see the same writer's lately issued Les Finances du Consulat. Mollien, Mémoires d'un Ministre, 1780-1815, is full of instructive details.

43. Taxation and Funding, 231.

44. By the Law of December 1900 the duty on circulation is the only one retained for wine and cider.

45. See Economic Journal, i. 307-24, for a fuller account of monopoly for taxation.

46. That is, including the customs duty on imported salt, the excise proper yielded £385,000.

47. In the case of sugar also the customs and excise returns are combined, but the customs only brought in £820,000.

48. More accurate figures are—

	Francs (000's omitted).
Year.	Wine and Cider.	Beer.	Spirits.	Total.
1895	173,715	23,546	262,145	459,406
1900	177,621	26,778	307,032	511,431
1901	74,422	13,469	324,444	412,335

49. See § 14, infra.

50. In 1897-8 the following were the receipts and expenses of the salt and tobacco monopolies—

	Lire (000's omitted).
	Gross receipts.	Expenses.	Net receipts.
Salt	72,846	11,499	61,347
Tobacco	188,120	40,251	147,869

51. The wealth of Italy has been estimated at £2,120,000,000, or one-fifth that of England. Pantaleoni, Giornale degli Economisti, Aug. 1890, 139 sq. Cp. Giffen, Growth of Capital, 153.

52. Cp. Bk. iv. ch. 3, § 2, for the 'class tax.'

53. 114,000,000 marks out of 141,000,000 marks in 1886-7. Cohn, § 413.

The following figures illustrate the relation of the sugar duty and bounties—

	Marks (000's omitted).
Year (Aug. 1)	Excise valuations. Gross duty.	Bounties.	Net produce of duty.
1886-7	142.4	108.8	33.6
1887-8	102.3	105.6	14.7
1888-9	111.2	80.1	31.1
1889-90	142.5	61.9	80.6
1890-1	154.2	78.4	75.8
1891-2	146.6	74.6	72.0
1892-3	86.7	34.5	52.2
1893-4	93.6	11.4	82.2
1894-5	100.7	15.0	85.7
1895-6	122.1	18.4	103.7
1896-7	112.5	25.6	86.9
1897-8	137.6	36.7	100.9
1898-9	144.1	34.9	109.2
1899-1900	160.0	33.3	126.7

This table shows the effect of changes in the laws regulating the bounties, and the growth in recent years of the net receipts. The customs duty is so small that it may be neglected.

54. Bk. iv. ch. 2 § 7.

55. For the German taxation of commodities up to 1888, see Cohn, §§ 411-23; for the later, and indeed the complete, history, Wagner, iv. 666-724.

56. See Wickett, 'Studien über das Österreichische Fabrikmonopol,' Finanz Archiv, xiv. 198-284.

57. Wells in Cobden Club Essays (2nd Series), 479.

58. For the tobacco tax, Olmsted in Quarterly Journal of Economics, v. 193 sq.

59. The Swiss alcohol monopoly has given a small profit. The receipts from September 1887 to the end of 1900 amounted to £5,836,000, the expenses to £3,604,000, showing a surplus of £3,232,000 or about £244,000 per annum. The Russian experience since 1895 is also in favour of a monopoly.

60. See § 4, supra.

61. The recent sugar convention is an indication pointing in this direction.

62. Constitution of the United States, Art. i, § 10.

63. Supra, § 9

64. Supra, § 6.

65. Vignes, i, 205-16. A law of December 1887 allows the communes to remove, and compels them to lower their octrois on the boissons hygiéniques (wine, cider, beer, and mineral waters).

66. The distribution of the duties among the different articles is shown by the following figures for the year 1900:—

	Francs.	Percentage of total.
Drinks and liquids	155,524,100	43.8
Food	97,575,313	27.6
Fuel	46,600,138	13.1
Fodder	18,694,278	5.1
Materials	31,289,646	8.8
Miscellaneous	5,725,603	1.6
Total	355,408,980	100.0

Of the total on drinks 67,000,000 francs were levied on wine, 57,500,000 francs on spirits, and 16,500,000 francs on beer. The cost of collection in 1900 came to about £1,250,000, which should be deducted from the gross receipts of £14,200,000.

67. Only six Tuscan communes had octrois out of 246, and only one in every ten of those in the kingdom of Sardinia. 'Report on the Octroi Duties in Italy,' Parliamentary Papers (C 6206), 1891.

68. Supra, § 8.

69. See, however, for a discussion of the modifications required, Conigliani, Tributi Locali, 232-62.

70. For the German octrois, see Cohn, §§ 457 sq. Cp. 'In Deutschland sind die Octrois von geringer Bedeutung, der Bieraufschlag in Bayern und einige neuere Verbrauchsabgaben Württembergs ausgenommen; Belangreicher sind sie schon in Oesterreich; Wien zieht aus den städtischen Verzerungssteuern eine ansehnliche Summe.' Schäffle, Steuerpolitik, 452.

71. Bk. iii. ch. 6, § 7.

72. Isolated octrois may be found in all these countries, e.g. that at Copenhagen.

73. Journal des Économistes, December 1891, 449-461.

74. Bk. iii. ch. 5, § 5.

75. This argument will reappear in connexion with the incidence of import duties.

76. This has been alleged of the Belgian reform and also of the partial remission of the Parisian octrois in 1848. The absence of any traceable effect on price by the abolition of the London coal dues is another instance.

77. Report on Octroi Duties (C. 6206), 14, 15.

Book IV, Chapter VII

78. The following table shows the position of the Customs revenue in the leading European States—

		£ (000's omitted).	Per cent. of total revenue.
England	1901-2	30,993	25
France	1901	16,340	12
Germany	1900 (estimate)	25,250	47
Italy	1901-2 (estimate)	8,835	13
Russia	1900	21,750	23

A large part of the United States' revenue has generally been obtained from this source, often exceeding one-half of the total receipts. The lowest yield since 1884 was in 1893-4, when the Customs were only $131,818,000. The highest absolute amount was in 1900-1, when $238,585,000 were received, or 40 per cent. of the revenue from all sources.

79. For the great number of tolls and passage duties in mediæval times see Clamageran, i. 160-1; Pigeonneau, Histoire du Commerce de la France, i. 96-99, 182-3. The tolls on the Seine in 1315 are set forth in a document given in Fagniez, Documents de l'Industrie et du Commerce en France, ii. 30-37 for Germany, Zimmern, Hansa Towns, 102.

80. See Introd. ch. ii. § 5.

81. For this side of Mercantilism, see Wealth of Nations, Bk. iv. ch. 8.

82. India is, perhaps, the only country in which the revenue from exports exceeds that from imports.

83. Mommsen, Hist. of Rome, iii. 397-8; Merivale, Romans under the Empire, v. 45; Clamageran, i. 73.

84. Dowell, i, 75 sq.

85. For England, see Schanz, Englische Handelspolitik, and Cunningham, Growth of English Industry and Commerce, Bks. vi., vii; for France, Pigeonneau, ut supra.

86. 'Taxes proposed with a view to prevent, or even to diminish, importation are evidently as destructive of the revenue of the customs as of the freedom of trade.' Wealth of Nations, 191.

87. Bk. iv. ch. 5, § 2.

88. Report of Import Committee (1840); Leroy-Beaulieu, i. 615; Cohn, § 407; Wagner, iv. 769.

89. The English revenue from this source kept very near £20,000,000 per annum for forty years. In the period 1815-1900 it has only varied between £24,000,000 and £19,000,000, notwithstanding the extensive remission of taxation. The export duty on coal and the import one on sugar account for the great rise in 1901-2. The estimate for 1902-3 exceeds £35,000.000.

90. J. S. Mill, Principles, Bk. v. ch. 6, § 2.

91. Bk. iv. ch. 6, § 2.

92. Cp. Mill's advocacy of a tax on raw silk. Principles, Bk. v. ch. 6, § 2.

93. Cp. Bk. iii. ch. 3, § 10, for this use of a progressive tax on income.

94. The treatment of the wine duties and the export duty on coal indicate a retrograde tendency in this respect, still further shown in the re-imposition of a duty on imported corn.

95. Dowell, i. 195; ii. 34. Some of the hottest contests between the king and the people turned on questions of taxation, e.g. the currant duty (Bates' case). For the earlier history, see Hall, History of the Customs Revenue.

96. For Walpole's fiscal policy see Morley, Walpole, 166-82; for his 'excise' scheme, Leser, Ein Accise-Streit.

97. The following figures give the yield of the customs at selected periods:—

Year.	£
1702	1,500,000
1739	1,400,000
1760	1,824,000
1784	3,025,000
1802	8,815,000
1816	11,950,000

Sinclair, History of the Revenue, ii. Appendix No i. ; Dowell, ii. 62, 109; Wilson, National Budget, 55.

98. There were three stages in the movement, viz. (1) the reforms of Huskisson 1823-7, which opened the way; (2) Peel's tariffs of 1842 and 1845, by which a substantial instalment of free trade was given; and (3) the measures of Mr. Gladstone in 1853 and 1860, which completed the work. For the fiscal history of this period, see Dowell, ii. 249-361; Buxton, Finance and Politics, i. 1-217; Bastable, Commerce of Nations, ch. 6; also Northcote, Twenty Years of Financial Policy. For the general character of the legislation, Wagner, iii. 300-1.

99. It is important to maintain the distinction between 'finance' (Finanzwissenschaft) and 'economic policy' (Wirthschaftpolitik). To introduce a discussion of the merits of free trade or protection into a financial treatise would tend to confuse these separate subjects, and would thus be detrimental to both. Prof. Plehn's statement (Finance, 185 n) that in this work we 'refuse to discuss protective duties because we believe them [sic] "vicious" and "uneconomic,"' is, it need hardly be said, entirely destitute of foundation. Such a reason, as he rightly says, 'is not scientific.' Therefore to ascribe it without a shadow of evidence—the quotation marks inserted in his note are spurious—is a proceeding which may be left to the reader to characterise.

100. Thus in 1839 crystal beads yielded 1s. 7d., starch 1s. 9d., Bruges thread 1s. 3d., extract of vitriol 12s. 3d.!

101. Between 1815 and 1885 the amount of duties remitted was £35,861,000 against £8,063,000 imposed, or a balance of £27,800,000 remitted. Wagner, iii. 299. But there were no remissions in the last ten years of the period, and those in the preceding fifteen years (1861-75) amounting to £14,500,000, were on purely revenue duties—tea, sugar, &c. In the period 1885-1900 the tea, tobacco, and currant duties were reduced.

102. As predicted in the 1st edition of this work, pp. 488-9.

103. Import duties on timber and petroleum have been suggested by Sir R. Giffen as a substitute for part of the income tax (Times, January 10, 1902).

104. On the bonding system, cp. Cliffe Leslie, Financial Reform, 199, 214-6.

105. For Colbert, see Clamageran, ii. 599-697; also Sargent, Economic Policy of Colbert. For the internal customs, Stourm, i. 470 sq., and for the tariff of 1791, ib. ii. 61-75.

106. Leroy-Beaulieu, i. 614.

107. I.e. including the salt duty.

108. The following figures are more precise:—

	£ (000's omitted).
Coffee	4,784
Petroleum	1,520
Wine	1,468
Sugar	972
Salt	966
Cocoa	732
Timber	716
Coal	700
Corn	668

109. On the French customs, see Leroy-Beaulieu, i. 612-31; Wagner, iii. 784-834, and Erganzungsheft, 124-34.

110. On the history of the Italian customs, see the elaborate study by Alessio, ii. 346-452.

111. For the founding of the Zollverein, see Roscher, § 102; also his Geschichte, ch. 34, and for the present German customs, Cohn, §§ 404-10; Wagner, iv. 655-66, 767-70.

112. For the American tariffs see Taussig, Tariff History of the United States, where, however, financial considerations are not made prominent.

113. The Indian transit duties—the most important of which was that on Cashmere wool (10 per cent.)—were abolished by Mr. James Wilson; see his Financial Statement (1860), 22. But part of the opium revenue is really a transit charge on the drug from the native States.

114. The Indian opium duty—partly monopoly, partly transit—yielded 84,500,000 rupees in 1880-1, but the estimate for 1899-1900 was only 66,000,000 rupees, the Brazilian coffee duty gave £1,800,000 in 1889.

115. The English customs system was extended to Scotland in 1707, but not to Ireland till 1825, when the Union duties were repealed. At present the Channel Islands are outside it, and the Isle of Man is under special regulations.

116. Wealth of Nations, 379.

117. The abolition of the Indian transit dues was for the object of stimulating through trade. Wilson, ut sup. 22.

118. Wool in mediæval England and opium in India at present have been suggested as examples, but the latter is undoubtedly open to some competition. The newly imposed coal duty has given rise to much discussion on this point. Mine owners, lessees, colliers, shippers, foreign consumers, and the home consumers of imported commodities have each and all been put forward as the real bearers of the tax. Cp. Jevons, Coal Question, 337.

119. For further discussion of this complicated question, see Nicholson. Principles, iii. 342-9; Seligman, Incidence, 300-304; Edgeworth, Economic Journal, iv. 39-48; Bastable, International Trade, 110-24, and Britt. Assoc. Report, 1889, 440-48, also cp. Bk. iii. ch. 5.

120. For the corn duties, Wagner, ii. 359, 367; Conrad, art. 'Landwirthschaft' in Schönberg, ii. 247-260; for tea, Senior, Pol. Ec. 184.

Book IV, Chapter VIII

1. See Bk. iii. ch. 1, §§ 11, 12; ch. 4, § 10.

2. See the discussion in Memoranda on Incidence [C. 9528] as to the nature of the postal revenue, and cp. supra, Book ii. ch. 3, § 9.

3. See Foxwell and Farrer, Express Trains, 118 sq.

4. Bk. ii. ch. 3, §§ 14, 19.

5. The tax on bicycles recently imposed in France may be regarded as a tax on transport, but it is perhaps more correct to place it under the head of licences.

6. Sidgwick, Pol. Ec. 574; Fawcett, Pol. Ec. 628-9. See for discussion of some theoretical varieties Edgeworth, Economic Journal, vii. 230-2.

7. Professor Ely advocates taxation of gross receipts in order to escape evasion. Taxation, 324. But where this danger exists a more thorough reform is wanted. Taxation of railways by American States on this basis is particularly unsuitable owing to inter-state competition. See Adams, Finance, 458-62.

8. Dowell, iv. 338-47.

9. Cp. Mill's judgment, 'A tax on newspapers is objectionable, not so much where it does fall as where it does not,' Principles, Bk. v. ch. 5, § 2. But does not a tax 'fall' where it is privative?

10. See the heads of revenue in the annual Statistical Abstracts, where 'stamps' take a place beside 'customs' and 'excise.'

11. Theory of Legislation, 140; cp. Bk. i. ch. 3, § 2.

12. Cp. Bk. ii. ch. 4, § 8.

13. Both in France and Germany popular feeling is strongly in favour of an extension of 'Bourse taxation,' as shown by the French law of 1892 and the German legislation of 1894 and 1900.

14. Some of the 'penny' duties devised by Mr. Gladstone erred in this respect; e.g. that on packages, justified by its author for statistical reasons. Financial Statements. 161, 295. The French statistical duties have the same defect. Leroy-Beaulieu, i. 617.

15. The following are the figures for selected years:—

1714	£117,000
1727	160,000
1760	290,000
1778	442,000

Dowell, iii. 290-1.

16. In 1881 the postage and revenue penny stamps were combined, so that the exact receipt of the latter is now a matter of calculation.

17. These charges were known as contrôle, insinuation, and centième denier. The stamp duty was known as the formule.

18. Stourm, i. 442-3, 468-9; Leroy-Beaulieu, i. 528, 533.

19. The following figures give the result of the enregistrement and timbre for 1901.

	£ (000's omitted).
Transfers for value (movables)	2,886
" " (immovables)	5,258
Gifts	932
Successions after death	8,000
Other duties (including fees)	5,400
Stamp duties (fixed)	5,000
" (proportional)	2,000
The Bourse tax	246

From this total the succession duties have to he deducted, and allowance has to be made for the element of fees under the 'other duties.' Actes civils et administratifs amount to £3,000,000, Actes judiciaires to £960,000. Probably one-half of these sums should be regarded as 'fees,' the other half as taxation.

20. 'Taxes upon the sales of land fall altogether upon the seller.' Wealth of Nations, 364; cp. Mill, Principles, Bk. v. ch. § 1.

21. Suppose, for example, that a property, which free of duty would sell for £10,000, is subject to 10 per cent. on transfer. If the whole tax fell on the seller he would only get £9,000, if it all fell on the buyer he would pay £11,000. Is it not plain that if an exchange is to take place the probability is that there will be a division of the tax? When there are many transactions the less eager buyers and sellers will withdraw, and there will be fewer dealings at a higher price, the tax included. See Böhm-Bawerk, Positive Theory of Capital (Eng. trans.), 203-13, for the theoretical basis of this position.

Book IV, Chapter IX

22. See on the whole question of succession duties the careful monograph by Dr. Max West entitled The Inheritance Tax; A. Garelli, L'Imposta Successoria; and Schanz, 'Studien zur Geschichte und Theorie der Erbschaftssteuer,' Finanz Archiv, xvii. 1-62, xviii. 553-678.

23. Cp. Bk. ii. ch. 4, § 6. The 'relief' or 'heriot' was the commonest of the feudal dues.

24. See the material collected in Wilcken Griechische Ostraka.

25. This was the vicesima hereditatum, which underwent several changes until it was abolished in the sixth century.

26. See the long list given by West, 112, n. 2. Some of the names might have been omitted as of little weight, and others, e.g. Leroy-Beaulieu, are those of very lukewarm supporters.

27. Cp. Bk. iii. ch. 2, § 5, and Bk. v. ch. 5, § 9, for recognition of this fact. Professor Marshall declares that 'the old objection to taxes on inheritances that they are paid out of capital ... seems to me to have great force still,' Memoranda, [C. 9528], 123.

28. It is therefore impossible to accept Dr. West's statement, that 'Whether a tax is paid out of capital or income depends not on the form of the tax but upon its amount and the time allowed for payment' (Inheritance Tax, 119), unless we reduce the antithesis between the terms so opposed almost to vanishing point. The mere 'name' of a tax has of course no effect.

29. The strongest body of sentiment in favour of high succession duties is that which regards them as an agency for reducing large fortunes, and thus bringing about a better distribution of wealth. In Bentham's language such persons desire to sacrifice 'security' to 'equality.'

30. See West, 114-19, for a list of the different theories, also Seligman, Essays, 122-33, who holds that the tax is one on 'accidental income.' Schanz (Finanz Archiv, xviii. 172-6), after reviewing the earlier theories, bases this form of taxation on (a) the increase of ability in the payer, (b) the justice of beavier taxation on property, (c) the power of the State to limit inheritance.

31. It is ingeniously suggested by Sidgwick that inheritance taxes are 'quite sui generis,' and therefore outside the rules for distributing general taxation. See his Political Economy, 577-9, and Politics, 176-7. But this view overlooks the close connexion between property and income, and also that between the successors and those from whom they inherit.

32. Financial Statements, 62.

33. The system of insurance so extensively advertised by British insurance companies to meet the estate duty of 1894 indicates very plainly that this is the essential character of the tax. This view is adversely criticised by Seligman (Essays, 132), on the grounds that (a) if the existing system (i.e. without the inheritance tax) does reach the living taxpayer, there is the injustice of double taxation; (b) if it does not reach him, there is inequality between persons dying at different ages. To which it may be rejoined that (a) it is because the existing system only partially reaches the taxpayer that the inheritance tax is introduced; and (b) that there is inequality in the case of persons dying at different ages, but this, like other inequalities, is hardly avoidable without incurring greater evils. Westlake recognises 'the fact that death duties may be regarded as capitalised income tax,' (Economic Journal, ix. 372), and holds that this view is in accordance with the principle of the British system. Lord Milner also declares, 'I regard the death duty as equivalent to an extra income tax on property.' 'Commission on Agricultural Depression,' Evidence, iv. 478 a.

34. Cp. Bk. iii. ch. 3, § 17.

35. Cp. the Roman rule as to disherison of children, justified by the jurist Paulus on the ground that there was a sort of co-partnership between the father and the children. See Pliny's remarks as to the vicesima hereditatum, which was 'tributum tolerabile et facile heredibus extraneis, domesticis grave, since it was levied on goods 'quaeque nunquam ut aliena et speranda, sed ut sua semperque possessa cepissent.' Paneg. 37.

36. Bk. iii. ch. 3, §§ 6, 7, 8.

37. E.g. J. S. Mill, who declares that 'The principle of graduation ... seems to me both just and expedient as applied to legacy and inheritance duties.' Principles, Bk. v. ch. 2, § 3.

38. The only scientific bases for progressive succession duties would be (a) the establishment of the regressiveness of other taxes, so that in this case a duly calculated progression would restore proportionality, and (b) the proof of the justice of progression on an assigned scale over the whole tax system. It was on the former ground that Lord Goschen defended his estate duty of one per cent. on estates over £10,000. He declared that 'On the whole, I think it will be found that the men whose fortunes are considerable are those who pay the least in proportion to their aggregate income.' Budget Speech, April 18, 1889.

39. This limit was raised from £5,000 to £10,000, then to £100,000, next to £500,000, and lastly, in 1815, to £1,000,000. It was abandoned in 1859.

40. 'We propose to alter the law and ... to extend the legacy duty to all successions whatever.' Gladstone, Financial Statements, 62.

41. For the history of the English death duties, see Dowell, iii. 124-140.

42. See for a lucid but one-sided statement of these anomalies Lord Farrer's Mr. Goschen's Finance, 117 sq.; also A Handbook to the Death Duties, by Messrs. Buxton and Barnes.

43. Real property paid no probate duty; succession duty on it was not due for a year after death; it could be paid by eight instalments, and it was calculated on the successor's life interest only, not on the full value.

44. The scale of duties is given in the following table:—

Value of Estate.		Rate of Duty.	Value of Estate.		Rate of Duty.
£	£		£	£
100 to	500	1 %	75,000 to	100,000	5½ %
500 "	1,000	2 %	100,000 "	150,000	6 %
1,000 "	10,000	3 %	150,000 "	250,000	6½ %
10,000 "	25,000	4 %	250,000 "	500,000	7 %
25,000 "	50,000	4½ %	500,000 "	1,000,000	7½%
50,000 "	75,000	5 %	over	1,000,000	8 %

45. As seems to have been the original design. Cp. the section of the Act, 57-58 Vict. ch. 30, § 14, with clause 12 of the Bill as introduced.

46. On this point cp. Bk. iii. ch. 3, § 14.

47. One very difficult question is the relation of the death duties to local finance. Lord Goschen's allocation of half the probate duty has been continued under the present system, with the substitution of 1½ per cent. of the new estate duty. This substitution, however, altered the character of the charge, which ceased to be on personal property (to which the 'probate' duty was confined), and instead fell on all the mass of wealth passing by succession. See 'Local Taxation Commission,' Final Report, 114.

48. The growth of the total death duties is best seen by the date at which each additional million was reached—

Year.	£ (000's omitted).
1813	1,005
1828	2,117
1856-7	3,121
1865-6	4,303
1871-32	5,360
1876-7	6,024
1881-2	7,249
1887-8	8,241
1888-9	9,378
1891-2	11,093
1895-6	14,088
1897-8	15,327
1899-1900	18,473

49. The following table gives the scale of duties under the laws of 1901 and 1902; the latter introduced the progression on inheritances exceeding £40,000. It is instructive as showing the arbitrary way in which progressive taxation can be applied. Cp. Bk. iv. ch. 3, § 7, for this point.

	£40 to £80.	£80 to £400.	£400 to £2,000.	£2,000 to £4,000.	£4,000 to £10,000.	£10,000 to £20,000.	£20,000 to £40,000.	£40,000 to £80,000.	£80,000 to £200,000.	£200,000 to £400,000.	£400,000 to £2,000,000.	Above £2,000,000
	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.	p. c.
Descendants	1	1.25	1.5	1.75	2	2.5	2.5	3	3.5	4	4.5	5
Husband and Wife	3.75	4	4.5	5	5.5	6	6.5	7	7.5	8	8.5	9
Brother and Sister	8.5	9	9.5	10	10.5	11	11.5	12	12.5	13	13.5	14
Uncle, Aunt, Nephew, Niece	10	10.5	11	11.5	12	12.5	13	13.5	14	14.5	15	15.5
Grand Uncle or Aunt, Grand Nephew or Niece, First Cousins	12	12.5	13	13.5	14	14.5	15	15.5	16	16.5	17	17.5
Relatives of 5th or 6th degree	14	14.5	15	15.5	16	16.5	17	17.5	18	18.5	19	19.5
More remote relatives or strangers	15	15.5	16	16.5	17	17.5	18	18.5	19	19.5	20	20.5

50. Hamburg, Lubeck, and Alsace-Lorraine are the only exceptions; the latter possesses a modified form of the French law of 1870.

51. See the valuable tables in Finanz Archiv, xviii. 679-695.

52. See Book iv. ch. 4, §§ 2, 8.

53. Finanz Archiv, xviii. 637. For a fuller account of the facts respecting continental inheritance taxes see, besides the articles of Schanz, West, Inheritance Tax, ch. 1. It is impossible to follow the many small changes in the various States.

54. The first to draw public attention to these remarkable experiments was Sir C. Dilke. Problems of Greater Britain, 513-4.

55. The following table gives the proportional contribution of the different heads of revenue in the Australasian colonies for 1890:—

Colony.	Customs.	Other Taxation.	Economic Revenue.	Total.
New South Wales	19.88	9.05	71.07	100
New Zealand	36.50	15.16	48.34	100
Queensland	38.13	7.02	54.85	100
South Australia	23.56	7.33	69.11	100
Tasmania	43.41	16.53	40.6	100
Victoria	30.27	8.71	61.02	100
Western Australia	44.06	5.28	50.66	100

It thus appears that the yield from succession duties, which are only one part of the non-customs taxation, is very small. See The Victorian Year-Book (1892), i. 231.

56. See Seligman, Essays, 133 n. for a list of States using the inheritance tax in 1895. On American state legislation, see West, ch. 3.

57. Minnesota amended its constitution to remove this obstruction.

58. This is the judgment of Professor Adams (Finance, 504, who, however, suggests a claim of the smaller local bodies), Professor Seligman (Political Science Quarterly, xiv. 139), and Professor Taussig (ib. xiv. 123).

59. Professor Adams, in discussing the allocation of taxation, remarks, 'The Federal Government would be excluded, because under the rule imposed by the Constitution it cannot justly make use of direct taxation,' Finance, 504. From the economic point of view this is correct, but it may be questioned whether there is any justice in this interpretation of the constitutional rule. See W. H. Dunbar (Quarterly Journal of Economics, xv. 292-8) on the legal question. It is interesting to notice that under either French or German law a succession duty is certainly 'indirect.'

60. See the Massachusetts Tax Commission (1897) Report, in which a uniform inheritance tax is recommended. Report, 93-4.

61. Wealth of Nations, 364.

62. See on this question the discussions in Memoranda on Incidence [C. 9528], especially 88 (Courtney), 105 (Sidgwick), 133 (Edgeworth).

Book V, Chapter I

1. Cp. Bk. i. ch. 8, §§ 1 sq.

2. Thucydides, Bk. i. ch. 13; Grote, Hist. Greece, xi. 498-500; Roscher, § 124, n. 1.

3. Roscher, op. cit.; Merivale, Romans under the Empire, ii 169.

4. Sinclair, Hist. of Revenue, i. 76.

5. Wealth of Nations, 386.

6. Ibid.

7. Frederick, i. 290.

8. Roscher, § 124; Wagner, i. 173-7; Cohn, § 169.

9. 2 Cohn, § 169.

10. The accumulation of silver by the American Treasury, though primarily a matter of policy rather than one of finance, has in the last few years been a disturbing element, and has affected both the trade and the revenue of the country.

11. Bk. ii. ch. 4, § 1.

Book V, Chapter II

12. Introduction, ch. 2, § 1.

13. Roscher, § 130.

14. Turpe est et multum regali reverentiae derogat a suis subditis mutuare pro sumptibus regis vel regni. Thomas Aquinas (?), De Regimine Principum, ii. 8. The approval of state treasures by so many early writers was intended as a condemnation of the alternative method of borrowing.

15. 'The king was both in theory and practice the financier of the nation.... if he had to provide security for a loan he did it upon his own personal credit, by pledging his jewels, or the customs, or occasionally the persons of his friends for the payment.' Stubbs's Constitutional History, ii. 558. See the whole section for borrowing in mediæval England.

16. Middle Ages, iii. 340. Loans by the French kings can be traced back to 1287. Vührer, Histoire de la Dette Publique, i. 2 sq.

17. Vührer, i. 16-20.

18. For a good account of the character and defects of mediæval public credit, see Ehrenberg, Zeitalter der Fugger, i. 18-31, 55-63.

19. On the loans of the city States, see Ehrenberg, i. 38-41.

20. 'Einen Bürgerstaate, der Republik der Vereinigten Niederlande, ist es unter allen modernen Staaten zuerst gelungen, sich einen wirklichen Staatscredit, und mit dessen Hülfe die Unabhängigkeit als Vorbedingung glänzenden Gedeihens zu schaffen.' Ehrenberg, ii. 321.

21. Macaulay, Hist. of England, i. 141.

22. Adams, Public Debts, 9. So far as the influence of the wealthier classes is directed to securing public credit it is decidedly beneficial.

23. The Socialists and some Catholic writers are very vehement in their attacks on La Haute Finance. For more moderate criticism see C. Jannet, Le Capital, La Speculation et La Finance, ch. 12. He, however, shows (ch. 11) that at the commencement of the modern loan system the evils were greater. The student of the history of the money market feels the truth of Emerson's remark, that 'the first lesson of history is the good of evil.'

24. Cohn, §§ 535, 536. "At the present time over one hundred States that possess practical sovereignty for debt purposes offer their bonds to the choice of an English investor, and if to this number were added the obligations of quasi-sovereignties, the London Market would show over 150 sorts of public securities. There are here found the bonds of China, Japan, Persia, Siam, Egypt, Liberia, Orange Free State, Zanzibar, besides many other peoples of the Old World. The South American States are nearly all represented.' Adams, Public Debts, 5.

25. Neymarck, Les Dettes Publiques, 86.

26. Dict. of Pol. Econ. art. on 'Debts, Public,' i. 509. The estimate given in the United States Census Report for 1890 is somewhat lower.

Book V, Chapter III

27. Macaulay, Hist. of England, ii. 398.

28. Macaulay, Hist. ii. 479; Rogers, First Nine Years of the Bank of England, xiii. xiv.

29. One curious item, the oldest of all, and hence sometimes regarded as the origin of the debt, was added in 1706. The Cabal Government of Charles II. bad in 1672 seized on the Goldsmiths' loans to the Exchequer, a proceeding known as the 'shutting of the Exchequer,' and had simply paid interest on the amount of £1,328,000 detained. In 1683 even the interest was stopped. Legal proceedings were taken by the sufferers, and after a series of trials the House of Lords decided in their favour; but by an Act of 1699 it was provided that after December 25th, 1705, one-half the amount (£664,000) should be added to the existing debt, to bear interest at 6 per cent.

30. Hamilton, 64.

31. The following was the capital funded for each year between 1793-1802:—

Year.	£
1793	6,250,000
1794	15,676,526
1795	25,609,898
1796	41,303,699
1797	67,087,669
1798	30,000,000
1799	27,499,250
1800	29,045,000
1801	44,816,250
1802	41,489,438

See Hamilton, 256.

32. Financial Statements, 16.

33. Hamilton's Inquiry was published in 1813, and Ricardo's Essay on the Funding System in 1820.

34. By the budget of 1894 an aggregate sum of £2,123,000 was placed on the reduced sinking fund, thus lowering still more the amount devoted in that year to the redemption of debt.

35. See § 1, and ch. 6, § 2, of present Book.

36. The total was composed as follows:—

	£
Consols	323,000,000
Reduced Threes	69,000,000
New Threes	166,000,000

About £58,000,000 was held by government departments, leaving £500,000,000 in the hands of the public.

The amount for which payment was demanded was very small; in the case of the 'new threes,' only £761,000, or less than ½ per cent.

37. The following are the details of the different loans:—

National War Loan £30,000,000, 2¾ per cent. interest, redeemable April 5th, 1910, issued at £98 10s. 0d.

Exchequer Bonds, £10,000,000, 3 per cent. interest, redeemable August 7th, 1903, issued at £98.

Exchequer Bonds, £3,000,000, 3 per cent. interest, redeemable December 7th, 1905, issued at £98 2s. 11d.

Exchequer Bonds, £11,000,000, 3 per cent. interest, redeemable December 7th, 1905, issued at £97 5s. 4d.

Consols, £60,000,000, issued at £94 10s.

" £32,000,000, " " £93 10s.

Treasury Bills in various amounts. Total for War purposes, £13,000,000.

38. This operation consisted in the cancelling of £28,000,000 of Consols and the substitution of two annuities arranged to expire in 1923.

39. The figure of £747,876,000, given above as the debt burden in 1902, is slightly higher than that of 1884, which was £746,424,000. The inclusion of the latest loan of £32,000,000 would bring us back to 1873 with its total of £779,222,000.

Book V, Chapter IV

40. Vührer, i. 320. Cp. Ehrenberg's account of Spanish finance in the 16th century. 'Es trieb rettungslos aus einer Krisis in die andere. Staatsbankerott und Zwangsconsolidation wurden gewöhnliche Finanzmittel,' Zeitalter der Fugger, ii. 259.

41. Ib. i. 181. The estimates, however, are not in agreement. Ib. 1. 178.

42. Necker's policy of meeting deficits by borrowing, in opposition to that of Turgot's, is justly condemned by Gomel, Causes Financières de la Révolution Française, i. ch. 8.

43. Vührer, i, 336. But see for a higher estimate, Gomel, i. 487-9.

44. On the debt system of the First Empire, see Vührer, ii. 31-58.

45. Vührer, ii. 160.

46. In 1845 the highest and lowest prices of the several stocks were:

	Highest.	Lowest.
5 per cents.	122.85	116.45
4½ "	116.25	111
4 "	110.5	106
3 "	86.4	80.85

47. Leroy-Beaulieu, ii. 498.

48. Vührer, ii. 238.

49. For the finance of the Second Empire, see Vührer, ii. 258-369.

50. The loans contracted were as follows:

Date.	Amount received. Millions of francs.	Nominal capital created. Millions of francs.	Amount of interest. Millions of francs.
August, 1870	804	1,327	39.8
October, 1870	208	250	15
June, 1871	2,293	2,779	139
July, 1872	3,498	4,140	207
	Total 6,803	8,496	400.8

Cp. Vührer, ii. 538; Leroy-Beaulieu, ii. 573. For a full treatment of the finance of the early years of the Third Republic, see Léon Say, Les Finances de la France, vols. i. and ii. His account is first hand evidence.

51. The constitution of the French debt on January, 1st, 1901, was as follows:

	Interest. Million francs.	Capital. Million francs.
Perpetual Rentes 3½ per cent.	237.6	6,789
" " 3 "	456	15,211
Redeemable 3 per cents.	114.3	3,812
Floating debt	21	1,145
Annuities for life	216.8	—
Terminable annuities, &c.	199.9	3,139
Total	1,245.6	30,096

The conversion of the 3½ per cent. rentes will bring the general 3 per cents. to 22,000,000,000 frs. The capital value of the life charges cannot be put at less than 25,000,000,000 frs.

52. See Bk. ii. ch. 3, § 13.

53. These annual deficits, 'which began with £15,000,000 for 1860 and rose to nearly £29,000,000 in the war year 1866, became less than £3,000,000 in 1871, and only a little over £500,000 in 1874,' amounted in the aggregate for the fifteen years 1860-1874 to £166,000,000.

54. The principal stock is the consolidated 5 per cent.; its capital exceeds £320,000,000.

55. For the Prussian debt, see Cohn, §§ 488-94; Neymarck, 3-6.

56. See Bk. v. ch. 1, § 3.

57. Out of $70,000,000 war expenditure, $64,300,000 was met by loans, and $5,700,000 out of the tax receipts, or 92 per cent. and 8 per cent. respectively. Adams, Public Debts, 124.

58. The smallness of the debt in the period 1836-60 will be best realised from the fact that its capital amount rarely exceeded, and in several years was much under, the annual income of the Federal Government.

59. The following table shows the relations of loans to tax revenue in the years 1861-66. See Adams, 132.

Year.	Revenue. Million dollars.	Loans. Million dollars.	Total. Million dollars.	Percentage of loans to total receipts.
1861	41.5	23.7	65.2	35
1862	51.9	433.6	485.5	89.5
1863	112.6	595.6	708.2	85
1864	264.6	696	960.6	72.5
1865	333.7	864.8	1198.5	74
1866	558	92.6	650.6	14

60. Bolles, Financial History (1861-1885), 306. According to Prof. Adams, 'the inte