COLONEL TOERENS'S ELECTION-TRACT ON THE TAXATION OF LAND AND TRADE.
Bra—Under the conviction that on questions turning upon the principles of political economy you regard the elucidation of scientific truth as para- mount to all personal and party considerations, I request the insertion of the following reply to your strictures upon my tract on the equalization of taxa- tion between land and trade.
In order to exemplify the proportions in which the local taxes affect the capitals employed in agriculture and in manufactures, I assumed that Mr. Clay and Mr. Coal, while occupying two houses of equal value, employed two capitals of 20001. each, the one in cultivating a farm which cost him 2001. per annum for rent, and the other in conducting a manufacture which cost him 2001. per annum for raw materials ; and, taking for granted that the farm-buildings of Clay were of the same rateable value as the factory- buildings of Coal, I proceeded to show, that while the two producers were -equally rated with respect to the houses they occupied, they were un- equally rated with respect to the incomes derived from the employment of their equal capitals. To this mode of dealing with the question you -urge the following objection-
" There are various errors here; but one is conclusive as to the fairness of the 'hypothesis. Colonel Torrens rates Mr. Clay upon the rental of his farm, but leaves out altogether the rental of Mr. Coal's factory, which is quite a distinct thing from his dwellinghouse. Had the Colonel allowed himself time for reconnaissance be- fore trying to carry matters by a coup-de-main, be would have learned that manufac- tures are not earned on in the open air, but often in very expensive buildings, espe- cially adapted to the purpose; and that rent is an important element in manuftc- tures, and indeed in all other trading operations." You must permit me to remark that this objection does not present a favourable specimen of the logical precision for which the Spectator is usually preeminent. It does not bear out your previous announcement that my tract "has a claim for exhaustive inquiry." It evades the fact, that there is a very numerous class of cases in which the rateable value of farm- buildings bears the same proportion to the agricultural capital employed which the rateable value of factory-buildings bears to the manufacturing capital employed. Now, you will not deny that in relation to this class of cases my hypothesis is perfectly fair, and that my deductions from it are in strict accordance with actual results. There is, however, I fully admit, another class of cases in which the value of factories bears a greater propor- tion to the capital employed in manufactures than the value of farm-build- ings beam to agricultural capital; and that in relation to such cases my hypo- thetical conclusions, instead of being "truth severe," must be received with the mitigation due to the different proportions which the rateable properties bear to the working capitals. But while making this admission, I must at the same time remind you, that there is a third and a very numerous class of cases in which the value of farm-buildings bears a greater proportion to agricultural capital than factory-buildings bear to manufacturing capital ; and that in re- lation to this numerous class of cases my illustrations of the inequality with which the local taxes fall upon the land are erroneous not on the aide of excess but on the slIelb of defect. And I am therefore entitled to contend, that on a comprehensive review of the whole of those cases—of those in which my hypothesis is in accordance with facts, of those in which it errs on the side of excess, and of thost in which it errs on the side of deficiency—it will be found that my.assumption, that the proportion between the value of business premises and working capital is the same in agriculture and in ma- nufactures is a sufficiently near approximation to truth for all practical pur- poses; and that I hive not in my illustrative examples overstated in any material, or even in any appreciable degree, the inequality of our local taxa- tion as between agriculture and manufactures. My case is so strong/fhat I can afford to make you the largest concessions which you can possibly desire. I give you all you ask. I grant that when equal capitals are employed in agriculture and manufactures, the rateable value of the manufacturer's factory-buildings is equal to the total rateable value of the farmer'siland and farm-buildings • and that, in so far as relates to agriculture and to manufactures, the local taxation falls with a perfect equality of pressure. But of what avail to you is this most ample, this most' extravagant concession ? Does it enable you to show that personal property, when employed in manufactures, is equally rated with real property ? Does it enable you to prove that the rates levied on the countinghousea of Messrs.
Baring and of Baron Rothschild bear to their millions of circulating capital which the rates levied upon a farm bear to the capital employed in its culti- vation ? You charge me with reasoning from an unfair hypothesis, when I infer that on the average of cases the double rate paid by the farmer on ac. count of his farm and farm-buildings exceeds, in relation to the capital em- ployed, the single rate paid by the manufacturer on account of his factory. I charge you with arguing from an impossible and contradictory hypothesis, when you infer that a millionaire, whose capital is invested in public se- curities or upon mortgage, and who may have no rateable property whatever, pays, on account of local rates, the same percentage on his income which is paid by the owner and occupier of land. Your charge I have answered. I invite you to answer mine.
I have the honour to be, Sir, your obedient servant, IL. Toaxiurs.
[If Colonel Torrens thinks this letter a "reply" to our strictures on his tract, we are content : let our readers judge.
It was a good deal to take for granted that the mere farm-buildings on a farm of 2001. a year (the tenant being already rated for a dwellinghouse) were equivalent to the rent of a factory in which a opital of 20001. was em- ployed. So far as the fact of relative amount was in question, it was assuming the point in dispute ; which is quite contrary to "logical precision." All that follows from Colonel Torrens's second thoughts is the same fallacious statement only less absurdly exaggerated. We did not "charge" Colonel Torrens with reasoning from an unfair hy- pothesis, but with not reasoning at all: with endeavouring to make an ex- aggerated hypothetical stateinent, by leading the reader to a false conclusion, do the work of facts and argument, and with assuming facts which, even had they been true, were quite beside the question. Our argument was, and is, that "capitals employed in agriculture or in manufactures," in com- merce or in trade, are not rated ; that local rates are a charge upon rent, and finally, fall upon the owner of the land or the house. If the phantom Clay pays 2001. a year for a farm and 101. for rates, be would pay 2101. if there were no rates. So, if the more substantial Baring or Rothschild pays 1000/. a year for the rent of his offices and 1001. for rates, he would pay 11004 if rates were abolished.
We will not at present discuss the new question of millionaires and public securities and mortgages. It would involve an inquiry into the whole subject of taxation on invested property. If Colonel Torrens likes to take it up in his next tract, he will do well to remember there are two sides to an account, and to present each of them, instead of suppressing one.—En.]
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