England and Wales, between seventeen and eighteen millions are raised directly by rates, and of this amount about eight millions are applied, directly or indirectly, to the relief of the poor. But that the relief of the poor cheapens labour, and is to a considerable extent taken out of wages, as Mr. Purdy and Mr. Thorold Rogers have argued, appears incontrovertible. I by no means go the length of saying that its operation in that respect can be nicely calculated, or that the whole of the fund raised for the relief of the poor-who must not in that sense be confounded with the working classes, many of whom never get any relief, and who are not the only classes relieved-is practically a deduction from wages. But it is certain that, were it not for the poor-rate, there would be a smaller supply of labour, and a higher rate of wages. Both the preventive and the positive checks to population would act in increased force. There would be fewer improvident marriages and more emigration, on the one hand; and more deaths from sickness and want, more vagrancy and mendicancy, on the other hand. If the poor-rate were abolished, the difference would not all go into the pockets either of landlords or farmers in the country, or of owners or occupiers in towns; for wages would certainly rise in both country and town. And it follows that many members of the working classes contribute in poor-rates to a fund from which they not only derive no advantage, but which is so applied that it diminishes their own earnings. They are taxed, therefore, twice to the poor-rate; and they are taxed further for local improvements, from which a wealthier class derives the chief benefit. It is not, indeed, possible to measure exactly the amount of benefit derived by different classes from the objects of either imperial or local taxation. And few falser maxims of finance have ever been propounded than that of the great French economist, M. Say, which Sir William Harcourt appears to follow, that 'the best system of finance is to spend little, and the best taxation is that which is least in amount.' On the contrary, as Mr. Wells observes in a Report on the local taxation of New York, 'probably there is no act which can be performed by a community, which brings in so large a return to the credit of civilization and general happiness, as the

judicious expenditure, for public purposes, of a percentage of the general wealth raised by an equitable system of taxation It will be found to be a general rule that no high degree of civilization can be maintained in a community, and indeed no highly civilized community can exist, without comparatively large taxation.' Mr. Wells cites, in the same Report, the wise remark of Mr. Jevons:- There is sure to be a continuous increase of local taxation. We may hope for a reduction of the general expenditure, and we shall expect rather to reduce than raise the weight of duties; but all the more immediate needs of society-boards of health, medical officers, public schools, reformatories, free libraries, highway boards, maindrainage schemes, water supplies, purgation of rivers, improved police, better poor laws-these, and a score of other costly reforms, must be supported mainly out of local rates.' The working classes undoubtedly share the benefits of such institutions, but a much larger share often accrues to a wealthier class, whose contribution, in proportion to their ability, is immeasurably smaller. Local improvements in towns, for example, whether made by municipal authority or by great companies, often raise prodigiously the value of the property of the rich, while causing only loss and distress to working people, whom they disturb from their dwellings, whose rents they raise, and who do not remain long enough to participate in the ultimate advantages.

As in the case of imperial, so in the case of local taxation, I make no pretence to offer an exact estimate of the relative burdens imposed on the working and other classes. But the candid reader who has followed the investigation which my limits have narrowly circumscribed, must, I think, be convinced that, on the one hand, imperial taxation falls with enormously disproportionate weight on the working classes; and, on the other hand, local taxation, in place of redressing, greatly aggravates the inequality. I will venture only to add that, under these circumstances, to abolish the income-tax on Schedule D (which includes many of the wealthiest and least taxed men in the world), instead of repealing the duties on sugar and tea, would be a monstrous injustice. In a debate in the House of Commons

on local taxation, in 1872, Mr. Rathbone, M.P. for Liverpool, said: Local taxation, as at present levied, pressed heavily on labour as compared with capital, and the wealthiest classes were allowed to escape from paying anything like their fair share of the rates. In the case of London, or any other seaport where merchants were the wealthy class, and their visible personal estate consisted mainly of ships and stock in trade of great value, the anomaly became apparent. It was this class who directly or indirectly derived benefit from the labouring classes, so long as they were earning wages, and escaped almost entirely when they became chargeable. From inquiry into a number of cases he had ascertained that many large merchants and brokers were only paying one-half to two per cent. (in rates), while the labouring men in their employ were paying twice to seven times as much in proportion to their income. In a word, a merchant or shipowner, deriving an income of £15,000 a year from a capital of £150,000, paid £62 in rates on his country-house and warehouses, and £65 on his suburban residence assessed at £450 a year. The young doctor or solicitor paid £14 out of his income of £600 a year on his £60 house; and the labourer £2 8s. 9d. out of his £1 4s. a week on his 4s. cottage. Thus an income of £15,000 a year paid less than 1 per cent.; an income of £600 a year paid 23 per cent.; and an income of £1 4s. a week paid 4 per cent.'

Take also the evidence of a witness before the Select Committee on Local Taxation :

'2,792. You are a Justice of the Peace at Liverpool ?—I am. '2,793. Have you been a member of the Town Council at Liverpool ?-Yes, for many years.

'2,938. . . . A gentleman comes and hires an office in Liverpool, and he makes his £50,000 a year in it; but he goes and lives in Cheshire, and pays nothing to the rates of Liverpool beyond the rates that are levied on his office.'

The Chairman of the Middlesex Quarter Sessions, again, stated with respect to the metropolitan county in which so many millionaires live:

'Unfortunately the rates do not keep pace with a man's wealth; there is many an individual that has £10,000 a year,

whose rates are perhaps no more than upon a house of £500 a year, and there is the injustice, I think, of the poor rate.'

The levy of a large portion of the revenue by indirect taxation gives, however, the smaller incomes included in Schedule D a claim to exemption, and the argument for it is fortified by the fact that otherwise the income-tax must, for reasons given above, fall indirectly on the working classes. Those classes are, moreover, virtually subjected to a heavy income-tax (though one which brings nothing into the treasury of the State) in the diminution of wages resulting from customs and excise duties and regulations. A remodelled succession duty, equalizing the duties on real and personal property, and raising both in the case of remote successions, but reducing both in case of successions to property of small value, seems the best remedy for the inequalities of the income-tax as regards permanent and temporary incomes-inequalities which are not peculiar to the income-tax, being incident also to all duties on articles of common consumption. To substitute a naked property-tax for the income-tax is to tax the houses and savings of poor working people in order to exempt the income of the Rothschilds from taxation.

XIV.

ON THE PHILOSOPHICAL METHOD OF POLITICAL

ECONOMY.

(Hermathena, iv., 1876.)

ADAM SMITH called his famous treatise an inquiry into the nature and causes of the wealth of nations. Mr. Senior defines political economy as the science which treats of the nature, the production, and the distribution of wealth. The definition in Mr. Mill's Principles of Political Economy is similar, though broader: Writers on political economy profess to teach or to investigate the nature of wealth, and the laws of its production and distribution; including, directly or remotely, the operation of all the causes by which the condition of mankind, or of any society of human beings in respect to this universal object of desire, is made prosperous or the reverse.'

These definitions sufficiently indicate the character of the problem of political economy-namely, to investigate the nature, the amount, and the distribution of wealth in human society, and the laws of coexistence and sequence discoverable in this class of social phenomena. The solution offered by the method hitherto chiefly followed by English economists-known as the abstract, à priori, and deductive method—may be briefly stated as follows. The nature of wealth is explained by defining it as comprising all things which are objects of human desire, limited in supply, and valuable in exchange. Of the causes governing its amount and distribution the chief exposition is, that the desire of wealth naturally leads, where security and liberty exist, to labour, accumulation of capital, appropriation of land,