BOOKS.

TOREENS ON TILE TAXATION OF LAND AND TRADE..

THE evident intention of the Derby Ministry to use "compensa- tion" or "revision" as a means of getting quietly rid of Protec- tion, gives to the tract of Colonel Torrens on the special burdens of land, "especially submitted to electors," a temporary. interest, and a claim for exhaustive inquiry, which its intrinsic importance might not have excited at another time. If the lord and the litte- rateur have betrayed the cause, the Protectionists have found an advocate in the old soldier—an advocate who will go through his work. They may address the world as Curran's blubbering client

j in the Irish assault case addressed the jury : " By Sams, ontle- men, everyovord the counsellor's been telling ye is thrue, but I did'nt know before how ill-traited I'd been." Disraeli's five mil- lions is nothing "at all at all." " The counsellor" maintains that the landed people are unfairly burdened to the extent of some twenty millions per annum. Of this sum, eight millions, he says, is saddled upon them by local taxation • nearly seven millions (6,869,925k) by general imposts—the taxes on land, malt, and hops ; and five millions by tithes. In what proportions these bur- dens press upon the landlord or cultivator, the learned gentleman does not stop to expound : so far as regards general taxation and tithes, he makes his affirmation do the work of proof. The pres- sure of local taxes he illustrates by an hypothesis regarding rates, which is anything but " truth severe," though there is plenty of "fairy fiction." After applying to local rates what Adam Smith says of general taxation, and asserting that the poor-rate is a type of all other local imposts, he proceeds thus.

"While that portion of the local taxes which is levied on the occupiers of inhabited houses is justifiable on the ground of equality, that other portion i

of these taxes which is levied on the occupiers of land is unjustifiable on the ground of inequality. The irregularity and the consequent injustice of this portion of the local taxation will be made palpable by a familiar example. "Two cousins, Mr. Clay and Mr. Coal, hved in the same parish, possessed equal incomes, and occupied two houses of the annual rated value of 1001. each. The local rates of the parish were 2s. in the pound upon the rental, and Clay and Coal were assessed at 101. each. In the first instance the two cousins followed no business ; but in process of time Clay advanced WOO/. in cultivating a farm, the rent of which was 2001. per annumt while Coal advanced a hke sum in conducting a manufacture, the raw material of which cost him 2001. per annum. Their equal capitals yield equal returns ; but as Clay is now rated for his farm, as well as for his house, his contribution to the local taxation is increased from 10/. to 301. per annum, while that of Coal remains fixed at 10/.

"The two cousins continue to prosper in their respective undertakings. Clay advances another 2000/. in cultivating another farm, for which he pays another rent of 200/., and which is rated at 20/. ; while Coal advances a second 20001. in working up additional raw material, costing him an addi- tional 2004 per annum. They obtain double returns to the expenditure of their doubled capitals. But while the equality in their incomes is main- tained, the inequality in the amount of their local taxation is increased. Clay's rates upon his house and farms have swelled to 501., while Coal's rate, limited to the buildings which he occupies, remains at 101. per annum.

"Clay advances 20001. in drainage, and thereby increases his income and the rateable value of his holdings by 50 per cent, while Coal advances the same sum in improved machinery, and also increases his income by 50 per cent, but without adding to the rateable value of his buildings. The contri- bution of Clay to the local taxation is increased from 501. to 751., while that of Coal still remains at the original amount of 10/. per annum.

"A period of stagnation and depression occurs ; pauperism advances, and the local taxation is increased by 10 per cent. Clay's rates are raised from 751. to 821. 10s. ; while Coal, although employing an equal capital, and real- izing an equal income, has his rate increased only from 101. to ill."

There are various errors here; but one is conclusive as to the fair- ness of the hypothesis. Colonel Torrens rates Mr. Clay upon the rent- al of his farm, but leaves out altogether the rental of Mr. Coal's fac- tory ; which is quite a distinct thing from his dwellinghouse. Had the Colonel allowed himself time for reconnaissance before trying to carry matters by a coup-de-main, he would have learned that ma- nufactures are not earned on in the open air, but often in very ex- pensive buildings, especially adapted to the purpose; and that rent is an important element in manufactures, and indeed in all other trading occupations. The fallacy of the first paragraph runs through the second and third paragraphs. When Mr. Coal or any other manufacturer doubles his manufacturing capital, he extends if he does not double his buildings, upon which he pays both rent and rates; and if he lays out 2000/. in improved machinery, he most probably pays for a place to put it in.

The conclusion of this " familiar example " is more startling than even the fictitious premises, and should have induced our tract- arian to reconsider his hypothesis. So far from the " Clay" por- tion of the community paying to the poor at the rate of 82/. 10s. to 11/, the difference between the landed and other interests is very little, probably now nothing. In 1841, the annual value of property assessed to the poor-rate was as under ; and since 1841 houses and "other kinds of property" rateable has increased much more than cultivated land. We prefix to the sum total a few of the greater counties.

Other kinds of Total of Houses and other pro- perty except Land. land.

6,988,716 304,653 3,864,398 1,402,208 1,550,849 376,644 1,876,796 1,449,007 £29,236,421 £30,448,991

• Tracts on Finance and Trade, submitted to the Consideration of the Electors of the United Kingdom. By E. Torrens, Esq., F.E.S. No. I. On the Equalisation of Taxation between Land and Trade. Published by Chapman and Hall.

Dwelling- houses. property ex- cept land.

Middlesex 6,680,202 308,514 Lancaster 2,449,196 1,415,202 Surrey . 1,409,180 141,669 West Riding.. 1,414,800 460,995 Total England £22,991,472

£6,244,949

So much for the hypothesis. In reality, however, thrassumed case is quite beside the question, so far as regards any unfair charge upon the agriculturists. By omitting to inquire into the nature of the rates, and by not distinctly separating the agri.. cultural interest into the two classes of land-owners and land-culti- vators' Colonel Torrens has thrown a haze round the matter which smacks more of the zealous advocate than of the rigid inquirer.

Local rates are a charge upon rent, from whatever source the rent may arise, and they finally &Enkcn the landlord. The tenant, whether of house, farm, quarry, mine, or what not, adds the amount of the poor-rates and the other outgoings to the rent de- manded ; and if he finds the whole more than the property is worth, he either beats down the 'rent, or he declines the property. If, therefore, landed people did pay eighty-two parts of the poor-rate out of ninety-three parts, there would be nothing unfair. It would only prove that the lords of the soil were eight times richer than the house-owners. It is easy to conceive a case where the rent from land might have all but entirely to support the poor, or the very opposite. In a new state of America, or rather in a purely agricultural county forming an independent federal state, nearly the whole burden might fall upon landlords. On the other hand, in Tyre or Venice, the house-owners might have had to pay the whole, had the state supported its paupers by a charge on rent.

In saying that the rates are a charge upon rent, we speak of the general and final pressure, or, as it is termed in economical language, the "incidence," apart from accidents and what Adam Smith calls the higgling of the market. Should, for instance, the poor-rate fall, a man with a lease gains by the amount of the reduc- tion, during the continuance of the term; as he loses in case of a rise. He may continue this gain or loss on the renewal of his agreement; the gain, because the landlord is easy, or does not wish to lose a tenant—the loss, because the tenant finds that the loss and cost of moving is greater than the increased rate. Mathe- matical accuracy cannot be attained in the practice of life, any more than the perfect ideal beauty of the artist can be found in a living form. Extreme cases, it is said, illustrate principles; provided, of course, the principle is contained in the case. This is not the fact with Clay and Coal, so far as regards any unfair pressure upon land- lords or cultivators ; but it " looms ' through the illustration that the agriculturists really. enjoy advantages in practically evading the full payment of what is due from them, which no other class pos- sesses. It also suggests ideas touching what some late economists have considered the " monopoly " of land, that are worth evolv- ing. When Clay and Coal start with their 2000/. a piece, they start fairly; each is rated on his actual rent—or most proba- bly on two-thirds or three-fourths. But when cousin Clay ex- pends another 2000/. on his farm, it is done silently and covertly, if not secretly. His neighbours suspect it, probably know it ; but they are hardly in condition to prove the fact of in- creased outlay, still less of increased value ; and if they could, Clay would not be brought to book for some time. But when Coal extends his buildings to extend his business, there would be no escape. His factory is a " great fact," staring the parish in the face; and he would be rated instanter without the possibility of evasion. So it would be with the second additional advance of 20001. by the two cousins. Clay could not perhaps so well escape some increased rating for such a permanent improvement as drain- ing, but Coal must pay for all that he improves. The most important suggestion in the " familiar example " is, however, the landlord's gain from his monopoly, or at least from his advantageous position as owner of the soil. When Clay lays out 2000/. in generally improved cultivation, his rent would not be in- creased so instantly as Colonel Torrens assumes. If Clay held a lease, it could not be altered till the lease was out. If he was a tenant at will, it might legally be done, no doubt; but even a landlord has some sort of conscience—he has a character to main- tain in the neighbourhood, and he cannot run counter to the cus- tom of the country. Still, we readily concede that the rent will be raised upon the tenant at the first opportunity, and that the oppor- tunity will come quite as soon as the farmer wishes it. Bo it would be with the permanent improvement of draining ; and the account of poor Clay in reference to his landlord would soon stand thus— Outlay of my capital on the general improvement of your farm.. £2000

Ditto ditto in permanent drainage 2000 Total investment of tenant's capital on landlord's property £4000 For which outlay the landlord will condescend in future to charge cousin Clay, or some other tenant, in the form of Rent per annum L400

Rate If 65

Annual increased value of landlord's farm, by the skill and capi- tal of the tenant £465

Compared with Clay's original rental of 200/., this assumed outlay is perhaps excessive ; but there is no doubt about the broad fact that the landlord's rent largely consists of improvements by the farmer's skill and capital. Cousin Coal cannot be done in this man- ner, or rather not so rapidly. This is owing to his skull not being so thick as Clay's ; to the rent of building-land being so high com- pared witli that for agricultural purposes, that even a greedy land- lord is satisfied; and to the fact that the demand for houses is not so urgent as it is for food. Still, whether Coal or any other per- son is compelled by his circumstances to build on a short lease, or is able to bargain for a long lease, there comes a time when the whole of the tenant's improvements revert to the landlord, not only without the latter having contributed one penny towards them, but after having received during the whole period the value of his land. Mr. Disraeli, in his official economical exposition, de- clares that "in this country rent has become a return for the capital invested in the improvement of the land." This is not strictly accurate. Inherent fertility is one element; site, the increase of population, and the advance of material civilization, are very important elements. Yet there is no doubt that a very large portion of rent in England is a return to " capital invested. in improvements." Whose capital this has been, is a curious matter for inquiry. We fancy, a large portion of it has been the tenant- farmer's; often invested at the loss of the farmer's capital, not unfrecluently to his ruin.

It is needless to follow the other subjects of Colonel Torrens in detail. If the law of settlement were abolished, something might be said for making the poor-rate a general tax instead of a local rate. The objections are, the enormous jobbery and corruption that would follow such an attempt; the fact that a local manage- ment not only can best control the poor and their growth, but that the poor bear some general proportion to the artificial enhance- ment of rent. Owing to the influx of Irish paupers the rates of Liverpool are enormous; but the position which brings the poor Irish brings also the commerce of the world: if the landlords of Liverpool had a choice, they would not silt up the Mersey to get rid of the paupers. Other rates are justly local. Who are the proper persons to pay for roads and bridges, but those who use them ? for prisons, but those who build them ? for police, but those who profit by it? for criminals, but those who breed or attract them ? On these last points the manufacturing counties have much the worst of it. There is no doubt that London is a point of reunion for thieves from the country and the Continent in addition to her own town-bred; but the high rents of a capital and of land in its vicinity can bear the additional charge, and it is properly imposed.

Colonel Torrens asserts flatly that " the land-tax, the tithes, and the excise-duties upon malt and hops, all fall exclusively upon the land and its produce." As regards the land-tax this statement is incorrect in fact, without any reference to economical "incidence." Had the Colonel inquired, he would have learned that a land-tax disproportionately heavy is paid by the City of London, by such suburbs as were built at the time of its assessment, as well as by all other towns then erected and whose boundaries were " covered in," or nearly so. There are obstacles in the way of a readjust- ment of the land-tax, however desirable that adjustment may be. When it does take place, the landed interest may be sure of this, they will not generally benefit by the change. As regards tithes, there is no doubt but that the " incidence " is upon the landlord : if they were abolished, the five millions, or what- ever it may be, would find its way into his pocket. But tithes are a condition upon which the land is held. Tithes are long antecedent to the present times; the landlords have no more just claim to them than the tenants have to the rentals, if so much. The State has the power to confiscate tithes; it has the right to re- gulate them ; in case of a secession or separation of Church from State, they would lapse to the State; but failing the Church, they belong to the State, that is, to the public at large. Although general opinion may be against us, we incline to think that the economical working of tithes has been overrated in favour of the landlords. Let it be assumed that tithes retard the cultiva- tion of new land, or the improvement of old land, by ten per cent. The landlord and the cultivator are prevented from reclaiming or improving, till the price of agricultural produce has risen ten per cent higher than if there were no tithes. This is a loss to the public at large, who have to pay ten per cent more than they would do. It is no loss to the cultivator, who pockets the in- creased ten per cent in price, and no loss to the landlords at large, who get an increased rental from the land already in cultivation. The effect of existing tithes is past and done with; the public have already paid for this economical evil. What the annual burden of the operation of tithe may now amount to, it is impossible to ascertain and consequently impossible to com- pensate : if the Protectionist assertion is true that land is being thrown out of cultivation, the future operation of tithe will of course be nil. Neither is this operation special : wherever you impose a tax you produce a similar effect. The house-tax, for ex- ample, will retard the increase of houses, in the same way as tithes retard the increase of cultivation.

It is also said that tithes are charged upon the capital invested in reclaiming or improving : but all taxes imposed upon invest- ments operate in the same way. If you build a house, the in- come-tax is charged upon the produce of your capital; if you make a new railway and it yields an income, the tax is as much charged upon the promoter's capital as tithe upon the landlord's or most probably the tenant's. Tithe is a heavy impost; but, as we have already remarked, "it is the condition upon which the land is held."

The only argument in the tract before us, as regards the incidence of the malt and hop duties, is a quotation from " Mr. M'Culloch, the most learned of all the disciples of Adam Smith" • though the argument is really against the Colonel. Mr. M'Culloch says truly, "that the malt-tax, like all other taxes on commodities, falls di- rec on the consumers." He then proceeds with some remarks equally true in principle, but exaggerated in effect, as to their indi- rect effects upon the agriculturists. These effects really. come to this. The tendency of the malt-tax is, by raising the price of beer, to diminish the consumption of barley for malting. The injury to the agriculturists is the profit on the additional barley they might

grow, supposing they grew any, (on which something could be said,) and the landlords' rent for new land taken into cultivation, or old land improved. The amount of this addition it is obviously

im- possible to calculate ; and the claim is untenable. Every tax on commodities operates like the malt-tax. The dealers in groceries might as well claim compensation for the duties on tea, sugar, &c.; for there is no doubt that these duties diminish the demand, and pro tanto their profits. It is the same with the soap-dealers, the paper-dealers, and so forth. As long as we must have duties upon commodities of any kind, the malt-tax is as good an excise- duty as can be levied.

The hop-duty was only justifiable under the direst fiscal neces- sity ; it should have been repealed a generation ago. Almost every principle of taxation is violated in this duty. It is partial, only a small portion of cultivators paying it ; the amount is small, and very uncertain ; it is not only levied on tb,e, raw pro- duce in its first stage, but actually whilst it is growing, by estimate or conjecture; this conjecture a" skyey influence " may defeat after the assessment has been made, but the grower must still pay. But we hear little about the hop-duties. The cultivators are few in number, scattered in a few districts and counties, and not important enough to supply " political capital " to political ad- venturers. In fact, they are clients whose cause is not worth pleading. The tract concludes with a solemn warning against taxing land- lords. Ireland as she is, or as she was a year or two ago, is the theme. The facts and arguments, like the rest of his essay, rather cut against the writer's views. The present or late condition of Ireland directly originated in a national affliction—famine, operating upon a most strange and corrupt state of society. This corruption of society, however, originated in not taxing landlords, and not compelling them to discharge their duties. If ever a class was petted and privileged it was the Irish landlords. They were exempt from poor-rates, from assessed taxes, from income-tax; they were permitted to breed paupers ad libitum for political pur- poses; to extort from the miserable paupers they had created, every farthing of rent they could furnish beyond "keeping soul and body together," and not always that ; and we have seen the result, in a state of the body corporate which can neither resist disease nor bear the remedy.