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the most desirable relative scope of private and of public property, this question has been deliberately excluded, on the ground of its magnitude, from discussion in this book. It seems clear, however, without any lengthy argument, that in old countries newly discovered natural resources of high value should not be allowed to become private property, and that in new countries many natural resources, especially those that are practically certain to increase in value, should not be allowed to become private property except for a limited and predetermined period, at the end of which they should revert to public ownership without any right to compensation.1

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As regards land, so comparatively conservative an economist as Marshall is of opinion that, "if from the first the State had retained true rents in its own hands, the vigour of industry and accumulation need not have been impaired, though in a very few cases the settlement of new countries might have been delayed a little." a new country, from the point of view of checking the growth of inequalities, the chief duty of the Government would seem to be to play squatter, and to sit tight on property rights in the land. In many new countries, however, large inequalities are being prepared with deadly certainty by an inheritance law of the normal type operating, in an atmosphere of rapid development, on private property in land and other natural resources. The excuses of feudal origin, or of the sentimental halo which, in the minds of the owners at any rate, surrounds an" ancestral home" in an old country, are lacking here.

1 There is much to be said for the view that all minerals should be public property. All gold discovered beneath the surface of the United Kingdom belongs to the Crown. If the same rule had applied to coal, inequality would certainly have been smaller and productive power would almost certainly have been no less. It is not the owners of mineral rights, who have shown enterprise in the development of the coal industry.

* Principles, pp. 802-803.

The tendency to inequality is stronger in new countries than at first sight might be supposed, owing to this handing over to first comers of rights, heritable in perpetuity, in natural resources.

It only remains to notice that the inequality of incomes from property, even more readily than the inequality of incomes from work, can be reduced by means of taxation.1 The most important limit to the employment of such a policy is to be found in the reactions on production which are liable to result from heavy taxes.

1 Compare Part III., Ch. VI., § 6 above.

CHAPTER V

INEQUALITY AND INHERITED Wealth.

§1. The phenomenon of inherited wealth is at once very curious, very important and very much neglected. "For half a century and more, the rights and responsibilities of living men may be determined by an instrument which was of no effect, until the author of it was in his grave and had no longer any concern with the world or its affairs. The power of the dead hand is so familiar a feature in our law, that we accept it as a matter of course, and have some difficulty in realising what a very singular phenomenon it really is." Under almost all systems of law, where the ownership of private property is concerned, the living are allowed to step into the shoes of the dead, either under wills or under various legal rules of succession. This is a very curious fact.

It is also a very important fact. We have seen that, within the framework of the capitalist system, the chief cause of the inequality of incomes from property is the fact that some persons receive much larger amounts of property through inheritance and gift than others, and that the effects of inherited property in maintaining the inequality of incomes from work are also very great, since the children of those who inherit property inherit better economic opportunities, in the form of better chances than they might otherwise have had, and than others have, of health, education and comfort. Thus "the institution of inheritance promotes social stratifica

1 Salmond, Jurisprudence, p. 422.

tion through its indirect effects not less than through its direct." Each year about one-thirtieth part of the total accumulated private wealth in existence changes hands owing to death, and in a period somewhat over thirty years practically the whole will have changed hands. The mere deaths of individuals hardly affect the wealth of the world, and in no way directly affect the mass of material wealth. So, too, the great and growing fund of knowledge and skill is hardly affected by individual deaths and, subject to trivial limitations, this fund is at the free disposal of all. But with the bulk of the material wealth of the world it is otherwise. Its disposal is limited and its proprietorship is determined by the laws of inheritance, in such a way that great wealth is handed down from one generation to another, and poverty likewise is handed down.

We have seen that under modern conditions there is no tendency, apart from the effects of taxation, for great fortunes to break up in the course of a few generations. The statement of Leroy Beaulieu that it is as hard to maintain as to create a fortune is ridiculous, and is akin to the argument that it is undesirable to pay off the National Debt, because by so doing we should deprive widows and elderly spinsters of a safe investment. In spite of taxation, it is generally quite easy for any reasonably prudent person, not only to maintain a large fortune intact, but by saving and judicious investment steadily to increase it. As Dr. Watkins truly says,

"

1 Taussig, Principles of Economics, II., p. 248. Moreover, mere continuance of prosperity is likely to increase the inequality of incomes resulting from inequality of inheritance." (Cannan, Wealth, p. 184).

"It is a law of our nature," said a speaker at a political meeting some years ago, "that just as we cannot bring anything into this world, so none of us, not even the richest, can carry anything out." "And if you could, it would melt!" commented a member of the audience. For an alternative view, compare Mr. Hilaire Belloc's Poem, Dives and Lazarus, (Verses, pp. 1–2),

• Répartition des Richessés, pp. 261–262.

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keeping riches once gained is easier than ever before. The rich by inheritance have a position which they can lose only by a destructive tendency amounting almost to madness."

"

Though very curious and very important, the phenomenon of inherited wealth has been very much neglected, especially by professional economists. "Few economists," says Professor Graham Wallas, think with satisfaction of the degree to which the less urgent desires of the minority who have inherited wealth are now satisfied before the more urgent desires of the majority who have not inherited it." It would be more true to say that few professional economists appear to think of this aspect of the distribution of wealth at all. Their thoughts on this subject at any rate are usually confined to stray comments or obiter dicta, which are often neither particularly illuminating nor particularly profound. The importance of the question has been most vividly present to the minds of many, who can make small claim to the title of economist. "I am astonished," said de Tocqueville," that ancient and modern writers have not attributed to the laws relating to succession a greater influence in the march of human affairs. They should be

placed at the head of all political institutions, for they exercise an incredible influence upon the social conditions of peoples." The grounds of de Tocqueville's astonishment are no less valid to-day, in spite of the fact that he imagined that America would continue to be a land of moderate fortunes evenly distributed."

§2. It is important to avoid false analogies between

1 Growth of Large Fortunes, p. 159. Compare Taussig, Principles, II., p. 168.

Compare Part II., passim, and especially Chapter VII. §§ 8-11

above.

The Great Society, p. 312.

• La Démocratie en Amerique, Vol. I., Ch. III., PP. 74-5.

Ibid, Vol. II., Part III., Ch. I., and Vol. IV., Part IV., Ch. VIII.

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