Popular Science Monthly/Volume 48/February 1896/Principles of Taxation: In Literature and History IV

by David Ames Wells

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APPLETONS’

POPULAR SCIENCE

MONTHLY.

 

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FEBRUARY, 1896.

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PRINCIPLES OF TAXATION.

By DAVID A. WELLS, LL.D., D. C. L.,

CORRESPONDANT DE L'INSTITUT DE FRANCE, ETC.

II.—THE PLACE OF TAXATION IN LITERATURE AND HISTORY.

ONE of the great historians of the present century has expressed disappointment at what he terms the "emptiness" of historical study, and accordingly inclines to the opinion that guidance in respect to human affairs in the future is to be sought for in present rather than in past experiences. Nevertheless, it would seem to stand to reason, that when any department of knowledge, especially one characterized by controverted questions, is to be comprehensively examined, with the prime object of determining the best methods for human action, it would not be expedient to attempt to discover or discuss any abstract principles which ought to govern such action, until at least a summary of facts derived from experience and essential to correct conclusions had been presented and made familiar, and, acting on this assumption, it is proposed next to ask attention—first, to the place of taxation, considered as a department of knowledge, in general literature; and, second, to some points of historical interest, growing out of the appropriation of states or rulers of the property of their citizens or subjects for real or assumed public purposes. It is believed that in this way the discussion at a later period of the principles growing out of the exercise by governments of this great prerogative may be facilitated and rendered more attractive.^[1]

Position of Taxation in General Literature.—All general treatises on political economy devote more or less space to the consideration of taxation; and there have been many publications in the nature of official reports, compendiums of tax laws, and their interpretation by legal tribunals, and special essays on particular forms of taxes. But, at the same time, notwithstanding the vastness and importance of the subject, its symbolism and exemplification of sovereignty, its influence for weal or woe on every citizen and on every industry, according as the power involved is properly or improperly exercised, and the part it has played in history, its position in economic literature is so comparatively insignificant that there is not a single publication at present in the English language which is entitled to be considered as a full and complete treatise; certainly none such as are readily at the command of every person desirous of becoming reasonably proficient in any of the other leading branches of learning. Prof. Cossa, of the University of Pavia, Italy, in a bibliography of taxation incorporated in a brief treatise on the Science of Finance, published in 1882, and brought up to the times by an American translation in 1888,^[2] does not mention even one title of this character. And, although there are works on taxation more or less general in their scope in other languages—especially in French and German—and to some of which high merit is accorded, there are none which any considerable number of economists are willing to accept as standard or authoritative in all departments; the chapter on taxation in Adam Smith's Wealth of Nations constituting the only treatise which can possibly be regarded as an exception.^[3] For such a result it is not easy to account. Possibly, owing to the want of accord among writers on economic and financial subjects, an opinion has come to prevail that no consistent treatment of the subject, as a whole, is possible; that the financial and industrial condition of nations or states differs so widely that no uniform rules of practice for the raising of revenue can be established; and, finally, if such a code of rules were universally accepted, the varying necessities of nations would

compel its violation, or complete abandonment, in periods of great emergency.

In the case of the United States the condition of the country previous to the civil war, as already pointed out, was very curiously such as to create great indifference to this, in common with almost every other economic or financial topic. The nation and the several States composing it were at the period referred to comparatively free from debt. All taxation was light. Direct taxation by the Federal Government had become a matter of history, no taxes of this character having been imposed for nearly half a century. Pauperism was mainly restricted to persons of foreign nativity, while to all who were willing to practice industry and economy, the ability to command a good subsistence, if not an ultimate competence, seemed comparatively easy. Why should a nation under such circumstances trouble itself about difficult and intricate problems in finance or political economy? And taking counsel of the proverb, "Sufficient unto the day is the evil thereof," the nation did not. But, with the advent of war in 1861, the creation of an enormous national debt, and a gigantic, unsystematic, and complex system of taxation, a resort to irredeemable paper money and the suspension of specie payments, the condition of things as above stated rapidly changed; and the questions and problems which in popular estimation were before insignificant have rapidly become so important, as to constitute not only the theme of never-ending popular discussion, but also the issues which mainly divide the national political parties of the country. And as illustrating in some degree the nature and strength of what may be termed the motor or impelling influences which have forced these changes in public opinion, what can be more pertinent than the fact that the State of New York alone now annually raises by taxation to meet the expenditures of State and local governments a sum ($91,232,012 in 1890) more than one half in excess of the net ordinary expenditures of the Federal Government in 1860 ($60,086,754). In this latter year the cost to the people of the United States for the maintenance of their national, State, and local governments was probably less than three dollars per capita. For the year 1890, an approximately correct estimate for like expenditures was $13.65 per capita.

These questions and problems have not, however, come up simultaneously for consideration, but have been gradually evolved, as it were, from the changing condition of affairs, and somewhat in the following order: First, the national debt and its transition from a miscellaneous to a consolidated character; second, the readjustment of the war system of internal taxation; third, the question of currency, specie redemption, and legal tender—on which topics alone more than three hundred separate publications, books and pamphlets, exclusive of congressional speeches and newspaper articles, have been issued from the American press; fourth, the "Free Trade" and "Protection" question; fifth, the monetary metallic standard question; sixth, the relations of the State to common carriers, and the methods of internal intercommunication; seventh, the subject of local or State as contradistinguished from national or Federal taxation; on which latter topic, although it relates to methods by which the people of the United States at present annually contribute to local or State governments a sum nearly equal to the present total annual revenue of Great Britain from all imperial taxes, there had not been up to 1870, a single publication in the United States apart from official reports that pretended intelligently to discuss it. Since this date, however, a much greater interest has been manifested on this subject. Several publications of great merit, exhibiting the situation in its legal aspects, and the theories, controversies, and experiences of the past, have appeared;^[4] and this interest has been especially intensified and popularized by the scheme of the so-called "single tax," which, if not originated by Mr. George, has been so ably advocated by him as to have attracted, previous to the development of the silver problem, more of popular attention on both sides of the Atlantic than any other economic topic brought forward during the present century.

Some better acquaintance with the literature of taxation than has hitherto been acquired by most educated men would seem to be essential to a full understanding of many of the great events in the world's history, inasmuch as nearly all great political revolutions have been primarily occasioned by the exercise of arbitrary power in compelling contributions of property from the masses by those in authority. Thus, going back to ancient history, the disruption of the Jewish monarchy and the secession of the ten tribes were due to the refusal of the successor of Solomon to accede to the demands of their representatives that he should abate the (tax) exactions of the preceding reign; and to his threat in response that he would make his yoke even heavier in this particular than his father's. And the first significant act recorded of the revolt that followed was the stoning to death of the man Adoram, who "was over the tribute," or the chief of the tax collectors.

After the Persian war, the states of Greece, united under what was termed the confederation of Delos, agreed to make contributions—i. e., pay taxes—to Athens, to be used by her for the common defense; and these contributions, assessed in the first instance by Aristides, whose reputation for justice commanded the confidence of all, occasioned no complaint. But finally Athens, having assumed the direction of the confederacy, not only increased the contributions beyond the assessments of Aristides, but also assumed the right to use them arbitrarily, notably for fortifying and beautifying the city. The result was a revolt, followed by the Peloponnesian war, and from that date and occurrence the decline of Athens, and indeed of all the states of Greece, is traceable.

Oppressive taxation prompted the so-called massacre of the "Sicilian Vespers" in 1282, resulting in the slaughter or expulsion of all the French from the island of Sicily.

The assumption and exercise of authority on the part of Pope Leo X in 1517, to enforce contributions for the rebuilding of the cathedral of St. Peter's at Rome was, as is well known, the primary cause of the disruption of the Roman Catholic Church, the Protestant secession led by Luther, and the almost innumerable wars and social disturbances that followed in consequence.

The history of the struggle of the people of England against arbitrary taxation is the history of the English Constitution. Thus, the attempt to arbitrarily collect an unjust poll tax was the primary cause of the rebellion of Wat Tyler in England in 1378, in the reign of Richard II; as was the "misuse of taxes" the occasion of the rising of the commons of England in the next century (1450) against the government of Henry VI, and under the leadership of Jack Cade.^[5]

Shakespeare, who apparently analyzed and comprehended the subtle philosophy of all human motives and tendencies, seems also in the play of Henry VIII to ascribe the fall of his great minister, Wolsey, to abuse of the power of taxation; and whether in this he was historically correct or not, his utterances respecting the effect of such abuse are as pertinent to-day as ever, and in some respects remarkably applicable to the depression that in recent years has come to one great department of the domestic industries of the United States through injudicious taxation of the crude material—wool—that constitutes its foundation:

⁠"The subject's grief
Comes through commissions, which compel from each
The sixth part of his substance, to be levied
Without delay; . . . this makes bold mouths:
Tongues spit their duties out; and it's come to pass,
This tractable obedience is a slave
To each incensed will."
"For, upon these taxations,
The clothiers all, not able to maintain
The many to them 'longing, have put off
The spinsters, carders, fullers, weavers, who,
Unfit for other life, compelled by hunger.
And lack of other means, in desperate manner
Daring the event to the teeth, are all in an uproar.
And Danger serves among them."

The great revolution in England (1642-1659), by which the constitutional rights of her people were finally established, wherein Charles I lost both his crown and his head, was caused by a question of taxation. And subsequently the attempt of Great Britain to tax her American colonies without their consent was also the primary cause of the American Revolution;^[6] while later the demonstrated inability of maintaining a harmonious and efficient government under the Articles of Confederation, which permitted the several States that were parties thereto to interfere with their mutual trade and commerce by multiple and conflicting systems of taxation, was one of the principal factors that led to the formation and adoption of the Federal Constitution.

It is also now generally admitted that to the cruel and extraordinary abuse of the power of taxation, more than to any other one agency, is attributable not only the French Revolution, but the extraordinary ferocity with which it was conducted.

No text in the New Testament has been so little understood for want of any recognition of its connection with the subject of taxation, as that one which declares that "it is easier for a camel to go through the eye of a needle than for a rich man to enter into the kingdom of God." By many theologians and secular advocates of social reform—the Russian Tolstoi being a recent notable example of the latter it has been regarded as a disapproval of the attainment or accumulation of wealth, and has doubtless served as the basis for innumerable sermons on the "sin of riches;" when a little reflection and acquaintance with social economy would have led to the conclusion, as Buckle has clearly expressed it, "that of all the results which are produced among a people by their climate, food, and soil the accumulation of wealth is the most important. For, although the progress of knowledge eventually accelerates the increase of wealth, it is nevertheless certain that in the first formation of society, wealth must accumulate before knowledge can begin, because without wealth there can be no taste or leisure for that acquisition of knowledge on which the progress of civilization depends." And surely a disapproval of this almost self-evident truth could not have been the intent of an inspired teacher. To understand the true meaning of this text it is necessary to go back and consider the time and circumstances under which the declaration it embodies was made. Judea at this period was a subjugated Roman province, and what the wisest and best men of Rome thought of the people of such provinces and of the right of Rome to grind down the nations that it had subjugated, is clearly shown by the following extract from the oration of Cicero against Verres, who was prosecuted for extortion when governor of the province of Sicily: "If," he said, "we have esteemed the revenues of the provinces as the nerves of the republic, we shall not hesitate to say that the order which raises them is the mainstay of the other orders. The provinces and countries subject to tribute are the lands of the Roman people. If Verres is guilty, it is not because of his rapacious exactions, but because he diverted them to his own use rather than to that of the republic." And as for the sufferings of the tributary people, he alludes to them for the necessities of his cause, but he regards them of so little importance that in his oration for Fonteius he exclaims: "Who are his accusers? Barbarians! Men who wear breeches and smocks! Can the most reputable of the Gauls be placed on a par with the least and most wretched of Roman citizens?" The Romans, in fact, regarded their provinces as valuable only to the extent that they could make them available for extorting tribute (taxes), and the most effective instrumentalities they could employ for this purpose were unpatriotic or renegade citizens of the provinces who understood the habits, pursuits, and amount and distribution of the property of their fellow-countrymen. These in the case of Judea were Romanized or apostate Jews, who, in accordance with the Roman custom, were invested with a power, which they undoubtedly exercised, to administer torture in case it was found necessary to enforce payments from unwilling or impoverished subjects.

Again, as there was little industry at the time save agriculture, and markets were limited, there was little opportunity for a Jew to become rich, except by favor of the Romans and plunder of his people; and with these latter the publican or tax-gatherer and the rich man, who must have been often one and the same, became so abhorrent, that they naturally classified and placed them upon the same plane with notorious sinners and the most despised and degraded members of society—the harlots^[7]—for whom an entrance into the kingdom of heaven was regarded as an impossibility.

And in this connection it is pertinent to recall that Jesus visited the house of "a man named Zaccheus, which was the chief among the publicans, and he was rich.". . . "And when they" (the people)" saw it they all murmured, saying that he was gone to be guest with a man that is a sinner. And Zaccheus stood and said unto the Lord: Behold, Lord, the half of my goods I give to the poor; and if I have taken anything from any man by false accusation, I restore him fourfold." And evidently in consequence of this declaration, "Jesus said unto him. This day is salvation come to this house, forasmuch as he also is a son of Abraham" (and not a foreigner). "For the Son of man is come to seek and to save that which was lost" (i, e., the publicans).

In ancient Greece also there was a familiar proverb that used the term "publican" as synonymous with that of "robber"; and Tacitus, the Roman historian, in his description of the German people, regards them as fortunate in having no publicans to impoverish (atterit) them.

On the other hand, in the case of the Romans, who had little sensitiveness as to the manner in which public revenue or private wealth was attained, the publicans who collected the customs were held in high honor, and were characterized as the flower of the nobility ("flos equitum Romanorum").

Another point of interest in connection with this immediate subject, and one which has been generally overlooked, is that the answer which Jesus gave to the Jews, who put to him the question, "Is it lawful to give tribute to Cæsar?" namely, "Render unto Cæsar the things that are Cæsar's"—expresses a fundamental principle in political economy, in that it enjoins payment on the part of citizens or subjects of such tribute (taxes) as the government (typified by Cæsar) under which they live, may lawfully be entitled to demand for its support; and at the same time withholds sanction from, and so by implication denies, the right of a government to take that to which it is not entitled (or which is not Cæsar's), which it does when it exacts tribute or taxes for any other purpose than its legitimate support, or, what is the same thing, for the benefit of individual or private interests. In other words, the answer recognizes a broad line of distinction between the rights of Cæsar, or the government, and other rights in respect to property; and indicates that Cæsar, or a government, can find no justification, in virtue of power to compel the payment of tribute or taxes, to appropriate property (of the people) under circumstances in which similar action on the part of a private citizen would be considered robbery.

The casual observer would hardly imagine that there was any relation between anthropology (the science of man) and taxation; and yet writers on the laws of nations from an early period, and economists of a later day,^[8] have called attention to the circumstance that different races seem to possess different moral aptitudes for different forms of taxation. Thus it is claimed that in countries inhabited by the pure Germanic race, or its leading branches in Germany, Scandinavia, Great Britain, and the United States the desire and ability for self-government, and' the disposition to place authority near to the individual or in his town or locality, favors voluntary taxation and a great endurance of burden in view of the attainment of a right result; whereas among the Latin races the tendency is to concentrate all authority, and generally in a military form, in the state, and require passive submission to the exercise of it on the part of the people. Hence, general taxes on property and income, which require for their successful application a certain degree of loyalty, of patience, and even of voluntary co-operation on the part of taxpayers, and which find favor among the former races, hardly exist among the latter. It is interesting also to note, in connection with this subject, that the restitution to the government of what is termed "conscience money," which is of constant occurrence in Germany, Great Britain, and the United States, is said to be very inconsiderable or wholly lacking in the States of the Latin races.

The comparatively insignificant position which the subject of taxation holds in economic literature has already been pointed out. Its relation to general literature is similar, and perhaps even more remarkable. Since sin came into the world, there has probably been no one purely human agency more prolific of crime and human suffering and of temptation to do wrong than the multitude of arbitrary, impolitic, and absurd laws which have been enacted to unjustly exact from the people contributions of their labor and property under the name of taxation, and yet the utilization of these experiences by novelists and dramatic authors has been almost entirely restricted to the comparatively petty transactions of smugglers and the illicit producers of distilled spirits. Even the terrible tax incidents which preceded and in fact occasioned the great French Revolution, have not entered largely as an element into more than one or two works of fiction of acknowledged merit in the English language.^[9] As a field of morals also, this subject has been almost entirely ignored, and rarely entered upon by theologians; and yet under the tax laws of the United States, to say nothing of other countries, the practice of perjury is encouraged and tolerated to a degree that is utterly inconsistent with the existence of any high standard of public morality, or any rational religious belief.^[10] And so also in the department of history. How few of those who consider themselves well read and well informed, recognize that the terrible decadence of Spain up to 1808 is attributable more to the influence of a tax on sales than to any other one cause; and that, on the other hand, the great wealth and prosperity of Holland in the sixteenth, seventeenth, and eighteenth centuries, and the control of a commerce that made its ships the chief carriers and their ports the chief depots of the products of the world, were due mainly to a system of taxation that imposed the minimum of restriction on exchanges, domestic or foreign, and entailed the least friction upon its own people; while in all other and competitive countries the direct reverse of such a fiscal policy found favor and existed.

The Place of Taxation in History.—A clear and exhaustive statement of the world's experience in respect to what is called taxation would be almost equivalent to a universal history; and in default of this, a review of the most prominent features of such experience is the only alternative, and is capable of being made in the highest degree interesting and instructive.

While the farthest reach of history touches no period when government or the state has not appropriated for its maintenance or pleasure the property or services of its subjects or citizens, the present ideas respecting taxation are so essentially modern that little or no recognition of them can be found in either ancient or mediæval history. In fact, no taxes, in the present ordinary sense of the term, were needed in ancient times to carry on government or public institutions. The monarch, king, chief, lord, or other sovereign of any particular district or country was generally the owner of all the landed property within his empire or domain; and the people who cultivated it were his villeins, serfs, or tenants. "The theory of English (and also of Chinese) land tenures to-day is, that the original title is in the king or emperor, and that everybody who has an interest in land is a tenant. There is no such thing known to this day in England as an allodial title that is, one which is absolute as to the ownership of the soil, and which is mainly the one recognized in the United States. As a consequence, all land in England is held mediately or immediately of the king, and there is no allodial tenure."^[11]

A sovereign who owned all the land of a country, and could at his will take any portion of the labor products of the people who cultivated or occupied it, obviously was exempt from the necessity of resorting to any other form of levy upon persons or property for the support of the state or for his pleasure; and this mode of appropriating property by the governing power has prevailed in almost every country of the Old World of which we have any fiscal record, at some period of its history. At the same time all history teaches that the actual administration of such governments has been very generally, and perhaps as a rule unnecessarily, oppressive by reason of the manner of collecting or exacting the tribute or contributions from the people, or by the spoliations of the officials to whom the business was intrusted. Throughout the Eastern world the general practice under its native princes has been, and even still is, for the tribute or tax collectors to pay themselves by peculations, and to extort from the cultivator the utmost farthing that could be taken without compelling him to abandon his fields. Thus under the Sikh dynasty of India, which was founded by a petty chieftain on the ruins of the Mogul Empire at the close of the last century and continued until 1846, the custom was to take from the peasant the equivalent of six shillings out of every twelve shillings' value of his produce in the name of rent; but under the present British rule the government takes from the descendants of these same peasants only one or two shillings in the form of taxes. It is not necessary, however, to go to Eastern experiences for illustrations of how the burden of taxation can be made terribly oppressive by the method of taking, inasmuch as in 1598 (according to Sully^[12]), out of one hundred and fifty millions extorted from the taxpayers of France in that year, only thirty millions found their way into the public treasury. It is stated as a not infrequent occurrence that prior to the great Revolution of 1789, a duty was levied twenty-seven times on a barrel of wine in the course of its transportation from the place where it was grown to that where it was sold; so that it was said to be cheaper to send wine from China to France than from one of the departments of France to Paris.

It is also to be noted that in ancient times war, both in Eastern countries and in Europe, was almost the normal state of mankind, and victorious nations supported and enriched themselves from the plunder and tribute of the vanquished. The land especially of subjected people became the property of the conquerors, and payments in the nature of rents rather than taxes were exacted from its occupants and cultivators.

Taxation in China.—A curious perpetuation in many respects of these ancient methods is yet to be found in the present system of raising funds for defraying the expenses of the Government in China, and concerning which little has been definitely known until within a very recent period. With the exception of certain limited grants held by Manchu princes in consideration of remote military services, all the land of the empire is regarded as the property of the emperor, and all original titles to land are held directly from him subject to three conditions:^[13]First, the payment of a land tax; second, the payment of fees when the crown title-holder or his successors sell mortgages, or leases; third, the supplying of certain labor service when demanded by the authorities. The land tax, which is exacted from all arable land, varies in amount according to the productiveness of the land, and does not ordinarily exceed one twentieth of the gross product. There is no tax on waste and uncultivated land, and rights in common exist in respect to waste land adjoining villages. The fees incident to the alienation of land are nominally about three per cent of the purchase money, but usually, by extortion, range from five to six per cent. The supplying of labor, when demanded by the authorities, is not well defined, and is apparently limited to furnishing the Government with transportation and labor on the public works, especially the repairing of dikes and canals. If these conditions are complied with, the state rarely interferes with the possession, alienation, or rental of land by its subjects. When land is rented the Government tax is paid by the landlord, and not by the tenant. The district magistrate is tax assessor, tax collector, judge, and administrator. A board of revenue fixes the amount that each district shall return to the state, and the district magistrate is liable for this sum whether he collects it or not. Any surplus collected, on the other hand, in excess of what is due the state is his private perquisite. Remission of land taxes is made when any great calamities occur, as floods, famines, and fires, and in such cases the tenant has the benefit of three tenths of the remission.

The other chief sources of imperial revenue in China are from a monopoly of salt; from taxes on goods brought through the gates of towns and cities, which appear to be analogous to the European octroi taxes; from taxes known as likin on the transit of goods through the provinces; from export and import duties, which are of modern origin; and from the sale of honors or titles.^[14] There appear to be no taxes on personal property in China; but in Pekin, and probably in other cities, small license fees are required from certain occupations and manufactures, ostensibly for defraying municipal expenditures.

The imperial revenue of China is believed to be about 85,000,000 taels, or $118,750,000, per annum, although the sum actually collected is probably much greater, the part that is unaccounted for being absorbed in the taking by the prominent officials. Under any circumstances, however, the great mass of the people of China are not heavily taxed; and their system of administration has few inquisitorial and annoying features; and to the absence of these the permanency of the Chinese Government for so long a period, and the tranquillity and contentment of the Chinese people may, in a great degree, be attributed. As the chief source of revenue to the state or Imperial Government, furthermore, is the direct and indirect land tax, the existing system of China may be regarded as a living, practical example of the single-tax system.

Taxation in Japan.—Another example of an ancient system of taxation, which until a recent period has been subjected to very little change, is to be found in the case of Japan. In this country, as in China, the system of taxation is now, as it always has been, essentially a land tax, but greatly modified in recent years to conform to modern conditions. During the feudal period in Japan, taxes were for the most part paid in kind by the cultivators of the soil, and were in fact a form of rent due to the lord of the soil. Under the oldest régime, when the emperor was the real as well as the nominal head of the government, the land was divided into nine squares, the central one of which was cultivated by the holders of the other eight, for the use of the emperor, who thus received one ninth part of the total product of the soil. During the fifteenth century, when the military chieftains—the Daimios or Shoguns—had gradually usurped the real power of the emperor, a much larger proportion of the produce of the land was exacted; seldom less than four tenths of the total crop, and sometimes as much as two thirds. The staple food of the country being rice, the taxes were almost invariably collected in that commodity. The amount paid, however, was not fixed by any national measure, but varied from province to province, depending on local customs, the humor of the Daimio, or other circumstances. Moreover, as the established policy of the ancient feudal government was to preserve and fix the status of all classes and conditions of men, it laid down a multitude of vexatious and arbitrary rules regulating every kind of production, which in turn prevented everything in the way of independent action and progress on the part of the producers. Thus, the Japanese farmer without government permission could neither increase nor decrease. the amount of his cultivated land; nor could he change from the cultivation of rice requiring a wet or marshy soil to some other agricultural product requiring a drier soil. In short. all the conditions of land cultivation were so carefully prescribed that the farmer had nothing to do but follow a routine that deviated little from generation to generation. Under such a condition of things, especially under such a system of land tenure and taxation, population obviously could not, and in fact did not, increase either in wealth or numbers; and taken in connection with the circumstance that each of the many daimios or feudal lords maintained great retinues of wholly unproductive retainers, we find an explanation of the fact that Japan continued a poor country with a very slowly increasing population even in times of profound peace. During the century and a quarter from 1721 to 1846, the increase is reported by Japanese authorities to have not been in excess of five per cent.^[15]

After the restoration in 1873 of the authority of the emperor, and the abrogation of the daimio system or lordship, a radical change was made in Japan, not only in the general status of the farmer, but in the conditions, under which he cultivated the soil and paid his taxes. All the previous iron rules imposed upon him were abolished; he was given perfect liberty to buy and sell land or adopt new modes of cultivation. The system of payment in kind to each provincial lord was replaced by a national land tax paid in money. The value of every piece of cultivated land was appraised according to a complex and somewhat arbitrary method of valuation, and on this capitalized value three per cent was imposed, in addition to a Government tax of one per cent for local purposes. In 1876 a decree was issued reducing the general tax to two and a half per cent, and the local tax to one half of one per cent. At the same time, with a view to supplement this reduction of local taxation and increase the national revenues, taxes were imposed on spirits and tobacco, on sales (at varying rates), on contracts, receipts, land transfers, petitions (through the agency of stamps), on some professions and mechanical pursuits, and on the ownership and use of ships, boats, and vehicles. The land taxes, however, contribute the largest amount of revenue to the national treasury, furnishing about seventy per cent of its receipts, exclusive of the local land taxes; and in many districts of Japan the total amount yielded by the farmer to the Government, national and local, was estimated in 1891 at even more than fifty per cent of his crop.^[16]

Very curiously, the responsibility for the existence and continuance of this extraordinary system of land taxation in Japan, which finds no parallel in any other country, and the incidence of which constitutes such a burden on the mass of its population, has until a very recent period rested with foreign nations rather than the Japanese Government, and in this wise: When treaties were first made by foreign nations with Japan, after the opening of its ports and the abandonment of its old-time system of non-intercourse with the rest of the world, it was assumed on the part of the former that the Government and people of Japan were in a semi-barbarous condition, and ought to be treated as such in all political and commercial negotiations; and that in respect to trade and commerce the greatest advantage should be taken of the weaker nation that circumstances would permit. The leading nations of Europe and the United States accordingly stipulated, in their treaties with Japan, that it should not impose any duties on exports or imports in excess of five per cent; and the receipts from customs being thus arbitrarily made insignificant, and those from such other sources as spirits, tobacco, licenses, and the like being normally inadequate, the Government of Japan has been compelled to resort to the old feudal system of taxation as the only practical way of obtaining revenue to defray its necessary expenditures.^[17]

But, notwithstanding this, the results that have followed the fall of feudalism in Japan in 1868 are in the highest degree interesting, and constitute an important contribution to the history of civilization. Between 1871 and 1893 the population increased eight millions, railways and steamers have annihilated famine, old epidemics have become rare, the severity of old criminal law has been greatly mitigated, while liberty has encouraged the people to a wonderful activity and progress.

 

1. "No man can learn what he has not preparation for learning, however near to his eyes is the object. Our eyes are holden that we can not see things that stare us in the face, until the hour arrives when the mind is ripened; then we behold them."—Emerson Spiritual Laws, First Series of Essays, p. 139.
2. Taxation, its Principles and Methods. Translated from the Scienza delle Finanze of Dr. Luigi Cossa, Professor of the University of Pavia, Italy; with an Introduction and Notes by Horace White. New York: G. P. Putnam's Sons, 1888.
3. "It is well known that during the period from Adam Smith to the close of John Stuart Mill's activity—that is, for fully one hundred years—English political economy treated the science of finance" (embracing the raising of revenue) "as nothing better than a scanty appendage. It is a significant fact that no work worth mentioning on the science of finance has yet (1889) been published in the English language, though some considerable contributions have been made to financial history."—Cohn's Science of Finance.
4. Of such publications the following are specially worthy of notice: A Treatise on the Law of Taxation, including the Law of Local Assessment, by Thomas M. Cooley, one of the justices of the Supreme Court of Michigan, 1876; A Treatise on the Law of Taxation, as exercised by the Government of the United States, by W. M. Burroughs, 1877; The Law of Taxation, by Francis Hillard, 1875 (three publications in which questions of political economy, as not necessarily involved in discussion of legal points, have received little consideration); The Shifting and Incidence of Taxation, 1892, Progressive Taxation in Theory and Practice, 1894, Essays on Taxation, 1895, by Prof. Edwin R. A. Seligman, of Columbia College, N. Y., three publications characterized by great historical research, and a repertory of information not otherwise readily accessible. Cohn, Science of Finance, a recent work of sufficient merit to warrant its translation from the German under the auspices of the University of Chicago, is nevertheless of such a character that it will never be generally read, or have the slightest influence on the mass of the people of a country like the United States, who select the legislators who determine what shall be the policy of their Government in respect not only of taxation but of all other fiscal or economic subjects.
5. Recent historical investigations favor the idea that the leader of this rebellion was not an illiterate rascal and buffoon one of "the filth and scum of Kent," as portrayed by Shakespeare in Henry VI but rather a gentleman of gentle and possibly of noble birth.
6. Recent historical investigations (by Prof. Tyler) have shown that the demand "no taxation without representation," which has been popularly regarded as one of the prime causes that contributed to the revolt of the British American colonies in 1775 and their subsequent independence, "did not mean that the colonies could not be lawfully taxed by Parliament when they had no representatives in Parliament. It was a demand applicable to the three orders of the English body politic king, lords, and commons and meant that the commons could not be taxed when they were not represented. But the commons represented the cities of Leeds, Halifax, Manchester, Birmingham, and Liverpool in Parliament, although none of them had any vote or personal representation in it at the time of the American revolt or for a long time afterward. Indeed, only one tenth of the people of the United Kingdom had then any vote. The commons represented Massachusetts in the same way that they represented Manchester. That this was an unsatisfactory kind of representation will be admitted without argument, but it was not in contravention of the maxim quoted, which has come down to us as a legal justification for the war. It would have been strange indeed if the English Constitution had contained within itself a justification for breaking up the British Empire." The separation of the colonies from the mother country was therefore not a legal step, but an act of revolution, and suggests a remark attributed to Mr. Lincoln at the outbreak of our civil war, that "it was a constitutional procedure for overthrowing the Constitution."
7. "Verily, I say unto you, that the publicans and the harlots go into the kingdom of God before you."—S. Mathew, xxi, 31.
   "For John came unto you and ye believed him not; but the publicans and the harlots believed him."—S. Matthew, xxi, 32.
8. Macchiavelli and other Italian publicists in the seventeenth century, and M. de Parieu, a French economist, in 1855.
9. The only work of fiction of this character known to the writer is Gabrielle André, by S. Baring-Gould (D. Appleton & Co., New York, 1871), in which the conditions of taxation existing in France, prior to the Revolution of 1788-89 are instructively used as the basis of a historical story.
10. On this topic a leading American clergyman writes as follows: "It is probably a good thing that clergymen have not preached numerous sermons on taxation, even on its moral and religious aspects. That they have hitherto been ignorant on the subject is not so much their fault as their misfortune, and being ignorant on the details of this matter they have not taken it as the theme of set discourses. But, judging by my own experience, they have preached on the application of moral principles to every department of life, and on the obligation of a man to be honest in his dealings with government no less than with individuals. That taxation has moral relations and qualities they have perceived and stated, and that probably was as far as their qualifications authorized them to proceed. Whether the present encyclopedic education will give us the more serviceable clergymen remains to be seen."
11. Miller, on the Constitution of the United States. "Out of this fact come many of the difficulties American students find in regard to the doctrines pertaining to estates and tenancies. Our laws have been freed from a large part of these intricacies and traditional requirements, which were the outgrowth of centuries of development among our English ancestors regarding the holding of land, but their influence still embarrasses our judicial system" (ibid., pp. 231, 232).
12. Memoirs of Sully; quoted by McCulloch in Treatise on Taxation, p. 30.
13. It is even asserted that there is at the present time but one person in all China who holds an absolute freehold title to any real estate, and he in virtue of being a lineal descendant of the Ming dynasty which the Manchus supplanted.
14. The customs revenue of China for the year 1893 was reported as £3,646,350 (or $18,331,750), of which fully one third was derived from the duties on opium. The average rate of duties on other importations was about six per centum of their entered valuation.
15. According to a paper read by Prof. Droppers before the Asiatic Society in Tokio, June, 1894, this period was a time of only measurably suppressed anarchy and lawlessness. It was two hundred and fifty years of armed truce. It was one large dance to death. Famines were frequent and dreadful. Having no railroads or steamships, and having, in their eagerness to shut out foreigners and keep in their own people, destroyed all sea-going ships, they had no means of water transportation except by means of wretched junks. Millions upon millions died of hunger. To this day, around the cremation houses of certain inland cities there are acres of heaps of human bones mixed with ashes, the awful witnesses to the might of famine, when hundreds of bodies were burned daily to prevent pestilence. Child murder and exposure were in some provinces so common that the question which neighbors would ask of a father, whether he intended to raise the newborn baby or not, was as proper as it was common. It is estimated by medical men that fifty per cent of the people died of smallpox. Syphilis was almost a national disease. Disease, immorality only partly suppressed, anarchy, famine, social and economical antagonisms, cramped Japan as in bands of iron.
16. "This statement, however, gives no indication of the true condition of the Japanese farmer. In this country, where the Government performs so many functions which in America are left to the individual, a high rate of taxation is not necessarily an indication of poverty or of a low standard of living. With a sufficiency of land and a variety of crops, even the Japanese farmer can live comfortably, especially if a good fraction of his land ia dry field (hata), on which he generally raises two crops a year. Very few of the farmers of Japan, however, are in this condition of tolerable comfort. The amount of the cultivated land of the empire is so small (less than twelve per cent of the whole area) and the population so large (over forty millions) that the land belonging to each family is absurdly insufficient. The average holding is less than two acres, subdivided into smaller parcels, which vary in size in different provinces, but average nearly one eighth of an acre each. Thus, to picture a typical Japanese farm, one must imagine a piece of land less than two acres, cut up into about fourteen pieces, or bits, each separated from the other by a raised path of earth. Even then the picture is incomplete, since the bits belonging to one farmer are not necessarily adjacent to each other, but frequently many a rood apart. Such a beggarly amount of land, even under the most perfect system of cultivation, can not of course yield sufficient to bring up a family according to Western standards of comfort. The idea of wages, or remuneration for labor, scarcely enters the Japanese farmer's mind; he is content if, after paying his taxes, he can in some rough fashion merely make both ends meet. At any fair rate of wages, farming is carried on at a loss in Japan. The farmer seldom eats the rice he grows, generally using barley or millet as a cheaper means of subsistence. His expenditures are on an infinitesimal scale; the clothes of the family are often heirlooms handed down from generation to generation; and as for saving anything from year to year, the practice is so little known in this country as hardly to be considered a virtue."—Correspondence New York Nation, 1891.
17. Recent treaties (1894) have in a degree abrogated the disabilities which foreign nations imposed on Japan at the time of the abandonment of its policy of non-intercourse with the rest of the world, but a denial of the right of Japan exclusively to regulate its taxes (duties) on imports is still maintained.