188 FINANCE Continental powers and expended in the purchase of British manufactures. But the condition of the working classes became deplorable. Mr Porter has proved with minute exactness that the real burden of the long and exhausting Continental war was, as far as England is concerned, mainly sustained by labour. In 1803 the income tax, under the name of a property tax, was reimposed. The sources of income were dis tinguished and put into five schedules named A, B, C, D, E, being respectively lands, tenements, mines, &c. ; occupancies or tenancies ; shares, annuities, and dividends ; profits and gains in professions and callings ; and public offices of profit and pensions. On all but the second a tax of a shilling in the pound was levied, but on the second ninepence only in England and sixpence in Scotland. Incomes below 60 a year were exempt from the tax, and, following the analogy in some degree of the first income tax, a reduction of the rate was made in incames increas ing by 10 a year up to 150, beginning at three pence in the pound tax up to elevenpence, the largest remission being made on the largest income. But it will be observed that, as in the first income tax, the quantity payable increased with the income, so in this system the deduction increased with the receipts of the taxpayer, though it ceased at a low amount of income. Furthermore, some consideration was shown to those who had families. Those householders who had more than two children were allowed, on incomes between 60 and 400, a reduction in the rate of 4 per cent, for each child ; those between 400 and 1000, 3 per cent; those between 1000 and 5000, 2 per cent; those who had 5000 and upwards, 1 per cent, for each child. In 1805 25 per cent, was added to the income tax, and in 1807 it was raised to two shillings in the pound on incomes in schedules A, C, D, and E, and to eighteen- pence in England and a shilling in Scotland on the annual rental of tenancies under schedule B. The limit of exemp tion was lowered to 50, and an abatement of a shilling in the pound was allowed on all incomes between 50 and 150 a year. Labourers and artisans whose earnings were less than thirty shillings a week were exempted from the tax, but it does not appear that the deductions in the case of children were allowed, as in the Act of 1803. The war income tax was levied up to April 5, 1816, when it expired, and despite the efforts of Castlereagh and others who urged its continuance, parliament refused to sanction the impost any longer. The rejection of the income tax as a means of revenue in 1816 necessitated, at the winding up of the costly Con tinental war, the imposition of indirect taxes upon most processes of production and all of consumption, for the corn laws and customs duties on foreign imports of food exalted indirectly the value of home produce. Industry was checked at its source. Food, the raw material of labour, was rendered scarce, while the farmer, who conceived that the maintenance of the corn laws was his only hope of profit, and the sole power by which he could pay his rent, was mocked by violent fluctuations of prices, and was equally ruined by plenty and by scarcity. The first hint given that the progress of the nation was impossible until its fiscal system was revised, was the formation and presentation of the Merchants Petition. This remarkable document was drawn up by Mr Tooke, who has narrated, in the latst volume of his History of Prices, the circumstances under which it was composed, signed, and presented to the House of Commons. It was not presented in the House of Lords, for Tooke had resolved on committing the document to the hands of Lord Lansdowne. But those who had signed tho petition objected to this nobleman, on the ground of his Whig principles, and the framer of the petition would not give way. Tlae petition was presented to the House of Commons by Mr Baring, afterwards Lord Ashburton, and was debated. The Government, that of Lord Liverpool, expressed its agreement in the principles which the petition avowed, those, in short, of free trade, and admitted that these principles were not only abstractedly correct, but ought to be adopted at once if one were making a beginning, but declined to agree to the inference that they could be adopted in a country where trade and commerce were and had been for so long a time based on artificial restrictions. The protected interests, however, signified pretty clearly that they would not allow themselves to be molested. But the Government granted a committee of inquiry on foreign trade, and with this committee commences the movement which six-and-twenty years later culminated in the practical adoption of free trade principles and in the abolition of the corn laws. Such a result was only a question of time, when Lord Liverpool could say in May 1820 : " We have risen to our present greatness under a different system than that of free and unrestricted trade. Some suppose that we have risen in consequence of that system. Others, of whom I am one, believe that we have risen in spite of that system. It is utterly impossible, with our debt and taxation, even if they were but half their amount, that we can suddenly adopt the system of free trade." Lord Liverpool probably knew that, as Swift had said, " in the arithmetic of the custom-house, two and two do not always make four;" but he was not alive to the enormous fertility of thatsystem of finance which, substituting low for high duties, with some exceptions, and invariably avoiding such fiscal changes as hinder the progress of industry, leaves the widest opportunities for production, exchange, and consumption. Lord Liverpool added that though he supported the corn law of 1815 as a measure of justice to the agricultural interest, he was of opinion that had the bill not passed at that time, it should not have been passed at all. It may be observed, so much was trade hampered at this time by legislation the primary object of which was to extract a revenue at all costs and hazards, that there were more than 1500 custom-house acts relating to the entry, export, and custody of goods. The committee of the Commons continued its sittings through three sessions, and presented four reports on the subject of foreign trade, accompanied by abundant evidence. The committee of the Lords sat for two sessions, and presented two reports. The necessity for admitting the principles of free trade was felt and expressed by the com mittee ; but so much alarm was excited among protected interests, even by the recognition of the abstract propriety of free exchange, that the committee felt it necessary to strongly disclaim any sympathy with sudden change, and to calm frightened imaginations by declaring that the greatest prudence and circumspection must precede any project, and accompany any measure of reform. The first thing, however, which people recognized was that great additional taxation did not add but a very small degree to the income of the exchequer. This was the effect of the financial statement of 1819, which Tooke justly characterizes as the last thoroughly vicious project accepted by the House. In 1823 Mr Vansittart retired from office, and during the next five years, when Mr Iluskisson was at the Board of Trade, great and notable modifications were made in the customs and excise, for taxes amounting in the aggregate to 8,340,000 were remitted, the experiment being attended by a manifest elasticity in the revenue. The enormous aggregate of custom-house statutes was con solidated into eleven, by the labours of Mr Deacon Hume. Between 1827 and 1841 further reforms, though not on so considerable a scale, were made, the most important of
