be habituated to a new tax ; and, next, that any unfairness in the imposition of taxation is sure to suggest evasion. A financier must be just, if he wishes the taxpayer to bo honest. There are three offences against the revenue, looked on as very differently culpable, but all stimulated by financial error or injustice. The first is that just alluded to, a gift of property during the life of the donor with a view to evade the legacy duties. This fraud is thought scarcely culpable, though it will be obvious that it is much more easy for the wealthy to practise it than for those who are in narrow or moderate circumstances. The second is the evasion of the charges imposed on earnings by the so-called property tax, but which is of course no property tax at all, since large masses of property are exempted from its operation, and incomes which are in no sense pro perty are taxed at the same rate as those which issue from property. The third, now considered as merely vulgar larceny, is smuggling. A generation ago public sympathy was strongly with the smuggler. The change in this opinion is intelligible and instructive. The greater part of English taxation of an indirect kind was imposed for political purposes, or to serve private interests, up to the time when Sir Robert Peel, nearly forty years ago, began seriously to reform the tariff. In course of time, he and those who succeeded to his policy have adopted and carried out the principles that protection must be abandoned, that finance must not be manipulated in order to suit poli tical antipathies, and that taxation must be imposed for revenue purposes only. The progress of these principles has extinguished the trade of the smuggler. For a long time even economists argued that the smuggler was the practical critic of a vicious system of finance. It may be predicted with some confidence that, when a just property tax is im posed instead of an unfair income tax, public opinion will enforce a morality which it does not require at present, and will assist the Government in enforcing that morality by penalties and by compulsory publicity ; and that similarly when real estate is made liable to the same duties as are imposed on personalty, the disposition to evade the duties will be checked, and that machinery of Government which detects and chastises fraud will be strengthened and enforced. The disasters which followed on the outbreak of the great Continental war, the enormous cost at which the war was carried on, and the demand for money in order to meet current charges, produced serious effects on the currency. A considerable exaltation took place in the value of gold, and as gold had become the chief currency of England, its exportation was under the circumstances inevitable. In 1794 the Bank of England possessed in cash and bullion over 8 millions. In February 1797 the stock of treasure had sunk to 1J millions. The Government had overdrawn its account with the Bank on February 25, 1797, to the amount of nearly 10 millions, and was demanding further advances. It is true that no real alarm was felt for the ultimate solvency of the Bank, but considerable and just alarm was entertained as to the convertibility of the notes. Hence the Government, on February 27, 1797, ordered the Bank of England to suspend cash payments, and shortly afterwards authorized the issue of notes below five pounds. In November 1797 Mr Pitt introduced what he called a new and solid system of finance. The scheme was after wards explained to consist in a triple assessment, i.e., a trebling of all the assessed taxes imposed on individuals, with a limitation, however, that such a tax should not exceed the tenth of the taxpayer s income. It was estimated that this tax would yield 7 millions, but the result was disappointing. From the first it was exceedingly unpopular. It was felt to be unequal, and to press with peculiar severity on those whose avocations constrained them 187 to contribute to those assessments which the Government im posed, and perhaps necessarily, without much consideration for those who had to pay them. At the same time the poor escaped the tax, for according to Pitt s budget speech, the assessed taxes were leviable on between 700,000 and 800,000 householders, and yielded 2,700,000, though the contributions of 400,000 of these householders did not amount to more than 150,000. The triple assessment lasted only a year. It was pro bably intended only to be preparatory for the income tax, which was imposed in 1798. Indeed, if the expenditure of the war was to be met by any other resource than loans, it was necessary to discover some tax which should reach all classes who could be made to contribute to the necessities of the exchequer. Now it was plain that, had the assessed taxes been ever so productive, the amount actually received from them was only two-thirds of their estimated yield, they are more or less optional in character, and could therefore be evaded. The income tax, according to Lord Stanhope, had often been urged on Pitt, and especially by Bishop Watson. It began as a graduated percentage. If the incoins of the taxpayer was between GO and G5 a year it was not imposed on those rated below that sum the tax was to be a 120th part of the income, and the proportion gradually rose to a 10 per cent, tax on incomes of 200 and upwards. Pitt estimated the produce of the tax at 10 millions ; it actually yielded only 7. It was imposed as a war tax, to cease at a declaration of peace. But Pitt immediately pledged it to a loan, and in 1801 3 millions of its annual produce was thus appropriated to irredeemable debt. The remission of the tax then rendered it necessary that new taxes should be imposed, and such was the course actually adopted after the short-lived peace of Amiens. The income tax was criticized by Lord Holland on grounds very familiar to us in the later times, namely, that it visited incomes " derived from permanent and disposable capital, those arising from precarious and temporary pos sessions, and those from labour, talents, and industry at the same rate, and was therefore unjust, unequal, and impolitic." It was also argued that the term property tax was a misnomer, that property was often not visited by the tax at all, and that what was not property was mulcted. It was alleged that to require the disclosure of one s circum stances was contrary to the prejudices and customs of Englishmen, was unconstitutional, and a serious injury to commerce and trade, since merchants, it was alleged, would often find it convenient to sacrifice more than a tenth of their income rather than permit the publication of their affairs, and, lastly, that it was a violation of public faith with the stockholder, whose dividends were mulcted, by the intervention of that very Government which was pledged to pay him an irredeemable annuity, of one tenth of his just due. But no objection seems to have been alleged, on the one hand, against the graduated character of the tax, nor, on the other, against the low limit on which the full amount was exacted. At the remission of the income tax imposts to the amount of 38| millions a year were paid, this sum being double the amount raised in 1793. With the exception of the perpetual land tax, a little over 2 millions, and every year becoming more disproportionate to the rising value of land, almost the whole of this amount was raised on consump tion, i.e., from indirect sources. Rents rose rapidly, under the joint operation of high prices and deficient crops. Profits increased, owing partly to the legitimate growth of manufacturing industry, for the inventions of Hargreaves, Arkwright, and Watt were beginning to produce their effects, partly to the enormous expenditure of Government, and to the subsidies and loans which were lavished on the
