# Popular Science Monthly/Volume 49/August 1896/Principles of Taxation: In Literature and History X

(1896)
Principles of Taxation: In Literature and History X by David Ames Wells

 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.

PART VII.

THE Tax Experiences of Switzerland.—Any review of the notable experiences of the Governments of different countries in raising revenue for their maintenance and support would be incomplete if it failed to notice those of Switzerland, where the conditions involved are, to say the least, exceptional, or different in many respects from those of any other government or country. These conditions, stated briefly, are as follows:

A country of comparatively small area—15,964 square miles—and in no small part uninhabitable and practically inaccessible, with a population in 1804 of about 3,000,000 (3,086,848). These conditions may be best appreciated by the following comparisons: Of the four countries that are immediately contiguous to and bound Switzerland, France has an area of 204,003 square miles and a population of 38,343,193; Germany, 308,738 square miles and a population of 40,438,470; Austria-Hungary, 364,364 square miles and 40,810,016 population; and Italy, 114,410 square miles and 39,699,785 population. A comparison with some of the States that in the aggregate constitute the United States also affords the following results: The whole of Switzerland has about one third of the area of the State of New York and one half of its population; one sixteenth of the area of the State of Texas; less than one third of the area of the State of Georgia, etc.

Of the total area of Switzerland, only seventy-two per cent, or an area about as large as the States of Massachusetts, Connecticut, and Rhode Island combined, is classed as habitable and productive; and the soil of this portion does not yield sufficient for the support of more than two thirds of the population, a large percentage of the remaining third finding employment and support mainly in very small industries, occupying only a family. The position taken by Switzerland in the trade and commerce of the world is most remarkable, especially when the various natural obstacles are considered—such as the absence of raw material for her industries, asphalt being the only raw mineral product of which the export exceeds the import—the costly and difficult means of transport, and the restrictive customs established by neighboring and bounding countries. Thus, a comparison of the exports of different countries, in proportion to their population, of manufactured products to the world's markets, shows that Switzerland takes the lead in respect to values; namely, \$37 per capita per annum.

Of other countries, the Netherlands comes next to Switzerland, with a present annual export valuation of manufactured products of \$35.60 per capita; then England, \$24.60; Belgium, \$23.40; Germany, \$11.50; France, \$11; Sweden, \$7; Norway, \$4.60; and, finally, the United States, with \$3.40.

In respect to comparative aggregate valuations. Great Britain furnished nearly thirty per cent of such exportations; Germany nearly eighteen per cent; and France thirteen per cent, making about sixty per cent for these three countries. The proportionate valuation of the United States for 1894 was 12·16 per cent.[1]

The principal articles of Swiss exportation are cotton fabrics (printed and embroidered), silks (especially ribbons), food stuffs, cheese and condensed milk, clocks and watches, machinery and carriages, works of art, mineral waters, straw goods, etc.

The leading characteristics of the people of Switzerland are their habits of persistent industry, the practice of rigid economy (in great part by reason of necessity) in their expenditures, a degree of patriotism that is everywhere exhibited and acknowledged, and a remarkable diversity of language. "Three tongues have existed side by side in Switzerland for centuries, and their individuality is recognized in the Federal Constitution, by providing that laws shall be printed in all of them, and that in the distribution of certain offices regard shall be paid to the language of the people for whose benefit the official serves.[2] Education is compulsory; primary education is free, and the percentage of illiteracy is small—almost nothing.

Their standard of morality may be indicated by the circumstance that about five per cent of the births are reported as illegitimate.

The present political organization of Switzerland closely resembles that of the United States, but is far better entitled to the claim of being free and democratic, and in this respect is probably typically superior to any other Government that exists or ever has existed.[3] Under the present Constitution, adopted in 1874, and which practically reaffirmed previously existing conditions, Switzerland became a federated republic, whose proper and official designation is the "Helvetic Confederation," consisting of twenty-two Cantons or States; although the division of three cantons into two demi-cantons makes the total number of federative units twenty-five. The several Cantons elect a Federal Assembly (Nationalrath) and a States Council (Ständerath) in which are vested the parliamentary government of the country. The first consists of a hundred and forty-five members chosen every three years in the ratio of one for every twenty thousand of the population, the election being direct, with the right of participation by all citizens who have attained the age of twenty years. The second is composed of forty-four members, two from each Canton irrespective of its size, the mode of their election and the term of their membership being left exclusively to the respective Cantons. Clergymen are disqualified as candidates, though they are eligible for election to the Federal Assembly. The chief executive authority is deputed to a Federal Council (Bundesrath) of seven members, elected for three years by the Federal Assembly, and who during their term of service can not hold any other office in the Confederation or cantons, or engage in any calling or business. The President and the Vice-President of the Federal Council are the first magistrates of the Confederation. Both are elected by the Federal Assembly for the term of one year and are not eligible for the same office until after the expiration of another year. The salary of the President is three thousand dollars per annum. His prerogatives are very limited. He has no rank in the army, no power of veto, or independently to name any officials. He can not enforce a policy, declare war, make peace, or conclude a treaty, and the name of their President for any one year is even said not to be familiar to the mass of the Swiss people.

The Constitution of 1874 declares, that the Confederation has for its object to insure the independence of the country against foreign control, to preserve the tranquillity and the rights of the cantons, and to increase their common well-being. The Confederation has alone the right to declare war and conclude peace, as well as make alliances and treaties with foreign states, especially commercial treaties. But the cantons reserve the right of negotiating with foreign states any treaty affecting general administration, local intercourse, and police, so long as such treaties contain nothing injurious to the Confederation or to the rights of other cantons. The Confederation may not support a standing army, but every male citizen between twenty-four and forty-four years of age is bound to military service and drill. Those between the ages of twenty-four and thirty-two are designated as the regular army, and number—officers and men—about a hundred and twenty-five thousand; those between the ages of thirty-two and forty-four constitute the Landwehr (militia), and number about eighty-four thousand. Thus, while no great army seems to exist in Switzerland, the whole able-bodied male population of the country can readily be made into an army. The natural defenses of the country have been utilized to the best advantage, and great care has been expended upon numerous defensive works on the frontiers. No Canton may have more than three hundred men under arms. If disputes arise between Cantons they shall abstain from all recourse to violence or arms, and shall submit themselves to the decision taken upon these disputes in conformity with federal regulations. That is to say, in case of necessity the Federal Council summons the Assembly to act; or it may demand the aid of other Cantons, which are bound to give it, or it is authorized to raise troops and employ them on condition of immediately summoning the Cantonal Councils if the number of troops raised should exceed two thousand, or if they remain under arms more than three weeks.

Other articles of the Constitution regulate the military training and employment of citizens; the power of the Federal authorities in regard to public works; the maintenance of free, compulsory, and non sectarian education; the principles of taxation and cantonal tariffs, consistently with general free trade; the right of domicile; municipal and communal rights, and the general toleration of religious belief and worship. Nevertheless, the Order of Jesuits and the societies affiliated therewith may not be admitted into any part of Switzerland; and all intervention by their members in the church or in the schools is forbidden. "The exercises of the Salvation Army fell under the laws of the municipalities against nuisances; the final judicial decision in this case being in effect that while persons of every religious belief are free to worship in Switzerland, none in so doing are free seriously to annoy their neighbors."[4] Freedom of the press, of local trial, and trial by jury are also guaranteed. Previous to 1848 the different Cantons conducted their postal service by different methods; but since that time its control and management, together with that of the railway system of the country, have become exclusive functions of the Federal Government.

Attention is next asked to the Cantonal political organization and government. Every Canton and demi-Canton is sovereign and independent in local affairs and in all other matters that are not limited by the Federal Constitution. In respect to their forms of government, they agree in little else than the claim and possession of absolute popular sovereignty; and differ much in respect to governmental organizations and methods of administration. Twenty-two of the twenty-five Cantons (States) are divided into 2,706 communes (townships); and each commune governs itself in respect to all local affairs, so far as is consistent with cantonal and Federal rights. "The citizens of each commune regard it as their smaller state, and are jealous of any interference by the greater state; and unless the interests of the Canton or the Confederation are manifestly superior to those of the locality, the commune is unwilling to part with its administrative power and jurisdiction over its lands, forests, police, roads, schools, churches, or taxes. In the Cantons in which German is the official language (sixteen in number) it is customary for the adult male population to meet annually in an open-air assembly in a town market-place or on a mountain side, and there propose, debate, and enact their laws, and elect their officers by universal vote; thus deferring to and establishing popular will without resort to any intermediate representative machinery."

The question here naturally arises. How did such a nation or confederation, made up of twenty-two small states differing from each other in many essential features—religious, political, social, industrial, physical, and linguistic—originate? A general answer, based on a large amount of historical research and publications, is that it was due originally to a drawing to a common center of a number of small districts, from the contiguous monarchies of Germany, France, and Italy, for common defense against a common foe; and hence also it is not surprising that the political boundaries of Switzerland do not follow the natural configuration of the country.

The revenues of the Confederation or Federal Government of Switzerland in 1894 were estimated at 84,047,312 francs (\$17,000,000), and its expenditures at 83,675,000 francs. The various Cantons of Switzerland have their own budgets of revenue and expenditure. For 1895 their combined budgets indicated a revenue of about 78,880,000 francs (\$15,600,000) and an expenditure somewhat greater, making a nominal aggregate of about \$33,000,000 to be annually raised by some form of popular contribution or taxation. As a considerable part of the cantonal revenues is derived from the proceeds of taxes imposed and collected by the Federal Government, and as contributions are made in turn to the latter by the Cantons, it is not easy to estimate the present annual average per-capita burden of taxation on the people of Switzerland; but, making all allowances, it is certainly not inconsiderable. Some years since the average tax burden on every inhabitant of the Canton of Zurich, the most populous and richest of the Swiss Cantons, was reported at 4015 francs (\$8).[5]

A further question of interest and importance that now arises (and which constitutes the main subject for consideration in the present chapter of this series) is. Under what system and by what methods is this certainly large average per-capita obligation for the maintenance of the several governments of Switzerland apportioned and collected? And as a help to a proper understanding of this problem the foregoing somewhat detailed description of the nature and functions of these governments has been thought necessary.

For the Confederation or Federal Government of Switzerland, which is not allowed to levy direct taxes, the main source of revenue is the customs (duties) on imports, which are levied and collected on the frontiers of the republic. Originally the idea on which it was sought to base the Swiss customs, was to tax all articles of commerce entering from foreign countries on a single uniform plan, having regard solely to financial and not to prohibitive or protective results; and this same idea prevails at the present time. "Changes in the customs have been made in recent years to correspond to new conditions or new commercial relations, but the Government has always kept as near free trade as good financiering would allow. The system of assessment of duties on imports differs from that of England, in that instead of a few articles being selected to stand as much duty as they will bear, a large number—almost every commodity in fact—is taxed a little. The schedule of rates contains over eight hundred articles which are subject to import duty.[6]

As a rule, raw materials necessary for manufactures are admitted free of duty, and while the principle of imposing the highest duties on luxuries is fully recognized, the duties on articles of general consumption are very light; tobacco paying from two to four cents per pound, tea about four cents, coffee one cent. Export duties are levied upon a very few articles, chiefly on timber, live stock, and certain raw materials. As recently as 1848 each Canton imposed cantonal tariff duties on imported goods, but these have now been abolished with one curious exception, namely, that of salt. The sale of this article being a monopoly of the state, whether its production be domestic or foreign, but its retail price being regulated by each Canton for itself, the supervision of the imports of salt into each Canton becomes necessary.

By a statute passed in 1887 the manufacture of alcoholic liquors was made a state monopoly; The net proceeds of the business as thus conducted are considerable, but the entire net receipts are distributed among the several Cantons in proportion to their population. Smuggling and other evasions of the law under the new system are acknowledged to be extensive and irrepressible, so that the measure in question is yet generally regarded in the light of an experiment.

As this subject is one of special interest in other countries, it is thought expedient in this connection to submit a presentation and review of it as recently made by Prof. John Martin Vincent, Professor of History in Johns Hopkins University, and published in a book entitled State and Federal Government in Switzerland, 1894:

"The right to manufacture the higher grades of distilled spirits belongs exclusively to the Federal Government of Switzerland. This is effected by contract either with home or foreign distillers, but at least one fourth of the quantity required must be manufactured by domestic companies to whom the Government makes allotments from time to time. In order to encourage agriculture, the distillation of certain native fruits and roots is exempted from the monopoly and made free to any one. The Government is also the distributer of liquors in quantities not less than one hundred and fifty litres (a litre = 1·05 quart), and fixes the prices. Spirits used for technical and household purposes must be sold at cost of manufacture, and before delivery must be reduced by the addition of wood sprits or other mixtures which render them unfit for drinking. The peddling of liquor from house to house is entirely forbidden except for the kind last mentioned. Retail dealers require a license from the cantonal authorities, and pay a graduated tax according to the amount of their sales. The traffic in quantities above forty litres is considered wholesale and under no restriction. The administration of the liquor business is therefore entirely in the hands of the Federal authorities until the spirits reach the retail dealers; there the Cantons step in to regulate the number and the character of the dramshops, to make the necessary sumptuary and police laws, and exact such license fees as may seem best. The net profits of the government management are collected by the Federal authorities, but divided entirely among the Cantons in proportion to population. The Cantons on their part are obliged to expend at least ten x>er cent of this dividend in suppressing the evils of intemperance, and to report annually to the Federal Government. Distilleries, in order to continue operations, must be large enough to supply one hundred and fifty hectolitres (a hectolitre ${\displaystyle {\ce {=}}}$ 26.4 gallons) a year. The monopoly is protected from competition by foreign countries by a duty of eighty francs per hectolitre upon all high-grade liquors imported, and by a graduated scale of duties upon all containing less than seventy-two per cent of alcohol. No one except the Federal Government is permitted to import alcohol for industrial purposes, because the reducing process must undergo inspection in order to prevent fraud. In getting its supply for the home market the Government may purchase three fourths of the demand for all kinds of spirits anywhere it chooses. The other fourth, as mentioned above, must be of home manufacture, and the Government has not exceeded that limit, because spirits can be bought cheaper abroad than at home."

The financial operations of this branch of administration in 1891 amounted to about 13,660,000 francs, from which the net revenue was 5,830,000 francs (\$1,165,000). "This net gain was chiefly due to the mercantile profit on liquors for drinking purposes, since industrial spirits must be sold at cost. Hence, as a business enterprise, the monopoly is certainly a success. When we inquire into the moral and social results, there is at present less that is tangible to be observed. The expectation of the promoters of the scheme was that the evils of drunkenness would be reduced, both by decreasing consumption and providing a purer quality of drink. This latter end is obtained by Government inspection, not only of the monopoly distilleries, but also of the smaller establishments manufacturing free products."

"In the matter of consumption there would seem to have been a decrease. In 1885, before the introduction of the monopoly, the total demand of distilled liquors for drinking purposes was about 150,000 hectolitres, while in 1889 the amount sold by the Federal Government for such use was 67,342 hectolitres. But it would not be safe to say that the country had become temperate to this extent, for there is strong reason to believe that much of the reduced alcohol intended for the arts is either purified again and used for drinking, or consumed outright in its mixed state. The use of liquor will by no means be brought under control so long as the distillation of low grades of fruit spirits and the manufacture of malt drinks are under no restriction. No one can tell whether the apparent decrease in consumption is not merely a diversion of appetite to applejack and absinthe, or perhaps to an increased use of wine and beer."

Small amounts to the credit of the Federal revenue also accrue from the postal and telegraph service, from the lease of public domains, the monopoly of the manufacture and sale of gunpowder, from military exemptions, and the like; but the aggregate income from these sources is comparatively unimportant. The powder monopoly at one time yielded considerable revenue, but when new and more powerful explosives came into favor the profits were greatly impaired. The income from the Federal domains amounts to about five tenths per cent of the total revenue. The largest item of expense to the Confederation is the army, which requires nearly forty per cent of its entire revenue. "Although carrying on no wars of its own nor joining in the conquests of other countries, Switzerland is compelled to undergo this great expense in order to preserve her neutrality and the integrity of her borders."

The comparatively recent tax experience of the twenty-two Cantons of Switzerland has been very peculiar, and different in many respects from that of any other country—a result that might naturally have been expected from their respective governmental independence, jealousy of other cantons, internal antagonisms consequent on the division of each canton into subgoverning communes, and in the radical differences in respect both to language and religion.

The taxation of property in general (or the so-called general property tax) has been thoroughly tried in Switzerland and, although substantially abandoned in all other European countries, is still adhered to, and constitutes an important feature in the fiscal system of all the Swiss Cantons. In the case of realty the tax is levied on the capital, and not upon the annual value of the estate. In the case of personal property everything is taxed, whether it yields an income or not—furniture, pictures, jewelry, carriages, etc.; but furniture and trade appliances up to the value of \$1,000 are exempted.

With a view to the successful enforcement of this kind of taxation almost every conceivable method has been devised and adopted, such as self-assessment in the form of compulsory returns on the part of the individual; assessments by officials on assumed data, oaths and no oaths, publicity and secrecy; and all of these, as has been the experience of the United States in the same line of policy, have been confessedly ineffective. One institution, however, has been developed in recent years that is peculiar to Switzerland, and that is the so-called inventory method (inventarization). "As soon as a taxpayer dies his entire property is at once seized by the Government and held until an exact inventory is made of it. If this discloses fraud in the previous self-assessments, punitive taxes must be paid, ranging in some cantons over a period of ten years." That such a method of tax administration has and will prove effective in increasing tax receipts can not be doubted, but its objectionable features are no less evident. Thus it intrudes upon the privacy of families, for the purpose of fixing seals upon their property, at a most inopportune moment, and seeks evidence of the violation of law, "as it were, in the very chamber of death." It also offers a bounty for the effective transfer of property by its owner in anticipation of death.[7]

Considering that a greater equality of fortune prevails in Switzerland than in almost any other country, it is somewhat remarkable that it has taken lead of all countries in instituting a system of progressive or graduated taxation, and has made it applicable not only to property but also to income and inheritance taxes.

In some of the Cantons, as Vaud, Basel, and Zug, real property is divided into three classes: (a) under five thousand dollars, (b) five thousand to twenty thousand dollars, (c) twenty thousand dollars and upward, and a land tax which is enacted each year falls on these three classes in the proportions of 1, 112, and 2.

In some of the Cantons personal estate is divided into seven classes and taxed in the proportions of 1, 112, 2, 212, 3, 312 4; the tax being levied on the capital and not on the annual value of the estate. In most of the Swiss Cantons the progressive or graduated system of taxation in respect to property is also made applicable to incomes, inheritances, and bequests; and as a rule the progressive scale in these respects is more sharply graduated than in the case of property taxation. "Another peculiar feature of the Swiss taxes is that the progressive rate is applied separately to the income tax and the property tax. A taxpayer with twenty-five hundred francs income from property and twenty-five hundred francs from labor will be assessed separately for each, and will pay less than if he had five thousand francs income either from property alone or labor alone." (Seligman.)

There is, furthermore, no pretense of uniformity in the different Cantons in the practical application of the progressive system. In fact, it is stated that in no two Cantons are the rates of tax and the classification of the subjects of taxation identical. In the taxation of incomes the average rate does not generally exceed four or five per cent; but in some Cantons the rates rule as high as seven and even ten per cent. Where income exists without a corresponding capital, as from wages, earnings, and life annuities, an exemption is generally made of eighty dollars a head for each person dependent on the head of the family for support. Thus a bachelor earning one thousand dollars a year would pay about fifteen dollars, while a married man with the same income and twelve children would pay nothing.

Taxes on inheritances and successions in Switzerland—which are levied in most or all of the Cantons—are characterized by extreme variations on rates, ranging from a very small percentage in some cantons to twenty and even thirty per cent in others, in the cases of the remote, or non-relatives.

Apart from the federal and cantonal systems of taxation in Switzerland, there is a third system which is regarded as distinctive, and under the name of local embraces special and separate assessments for the purpose of defraying local or communal expenditures—i. e., police, preservation of forests, roads, schools, and the like. A leading characteristic of such taxes is, that they do not embrace the idea of progressive or graduated assessments; and in their chief incidence on local tangible property do not permit any material reduction of appraisements, or valuations on account of any incumbent indebtedness—mortgages and the like—as is the practice in the appraisements of like property for cantonal taxation. A household tax and a poll tax are also, to some extent, features of Swiss local taxation.

Of the varied subjects of taxation from which the Swiss Cantons mainly derive their revenue, the following classification and exhibit of those of the Canton of Vaud in 1887, the third largest canton in respect to population, though not in area, will serve as an illustration:

1. Public lands, forests, and salt monopoly.
2. Licenses to retail tobacco, wine, and spirits.
3. Taxes on dogs, saddle horses, carriages, and billiard saloons.

4. A tax on all transfers of real property (droit de mutation).
5. An annual tax on the capital value of real property (impôt foncier).
6. An annual tax on the capital of all personal property and on incomes (impôt mobilier).

The last three taxes are the most important and productive, their united product being equal to about nine tenths of the entire revenue.

Concerning the results of this novel and complicated system of taxation in Switzerland there is great diversity of opinion. That it is not uniform throughout the comparatively small territorial divisions of the country to which it has been made applicable, only a very few Cantons being reported as in agreement; that no fixed rules governing progression or gradation in assessments have been generally agreed upon and established; that the practical administration of the system is in the highest degree arbitrary; and that the ascertainment of the tax that an individual or estate shall pay often involves a series of complex and difficult computations and additions, are all points in respect to which there is no question.

The anomaly and gross inequity of double taxation on one and the same property, contingent on the circumstance that the situs of the property and the domicile of its owner are not within the same territorial and governmental jurisdictions, and which is at present a subject of much discussion and deprecation in the United States, is also a vexing problem in the system of taxation in Switzerland; two different communes, as a rule, making demands of a taxpayer by reason of his holding a landed estate in one and residing and exercising the rights of a citizen in the other, and the probability of any just and satisfactory solution of this perplexing problem is as remote in one country as in the other.

Notwithstanding the above and other objectionable features, the people of Switzerland appear to be generally satisfied with their fiscal experiment, and thus far have exhibited but little disposition to change it; and all the most important Cantons that have tested it report a steady increase in their aggregate valuation of both property and income. Even the extreme high rates of taxation assessed on large properties and incomes—amounting in some Cantons almost to confiscation—have not been generally regarded with disfavor, but probably for the reason that the number of persons in Switzerland who are liable to such assessments is comparatively limited.

On the other hand, it is contended that any fiscal gain that is reported under the new system has been more than counterbalanced by depreciation in land values and injury to local trade. In the Canton of Vaud, for example, where the new ideas are specially exemplified, wealthy families are reported as having left the Canton, and that many of its citizens regularly close their houses for nine months in the year in order to evade the law. Foreigners, too, are said to be less and less anxious to reside in the canton. In consequence of this, it is claimed that many properties in Vaud have depreciated fifty per cent, and that trade suffers greatly. Whether all these allegations are true or not, it is significant that a proposal to introduce the Vaud system into the Canton of Berne was rejected by its people by an overwhelming majority.

Addendum.—Readers of the chapter on the Tax Experiences of India, in the preceding number of the Popular Science Monthly, have written to ask if there is any explanation of the remarkable difference in opinion respecting the material condition of the people of India, recently expressed in the British House of Commons (and quoted) by two of its members, Mr. J. S. Keay and Sir Richard Temple, both ex-officials of long service in the Government of India, and having had large opportunities for becoming acquainted with the country.

The explanation is probably to be found in the old story of the two knights who differed and quarreled about the mottoes on a suspended shield, by reason of exclusively viewing it from opposite sides. India is a vast country, about half as large in land area (square miles) as the United States, exclusive of Alaska, and with a population of 287,000,000, so widely separated by caste, language, and religions, that districts and villages that have been in close contiguity for long periods practically do not know or have intercourse with each other. In those portions of the country where the inhabitants are fairly intelligent, have learned to avail themselves of modern methods of agriculture, and have irrigation and transportation facilities, the production of foods and other commodities is so far in excess of any domestic demand, as to admit of such a large and constant export of grain stuffs as to threaten disturbance to the markets of Europe and the United States, besides textiles, fibers, dyestuffs, opium, oils and oil seeds, hardware, sugar, etc. In other districts of large population where the people still plow with crooked sticks, do not even recognize the value of manures or other fertilizers, are almost entirely lacking in facilities for transportation, and are so bound down by caste that it is difficult to induce them to emigrate to districts—like the Assam tea producing sections—where labor is in good demand at comparatively high wages—in such districts the increase of population so presses on its ordinary food supplies that, in case of any deficiency in the average crops, famine always ensues, and is only mitigated by the aid. that comes through the extraordinary pension fund established and distributed by the British Colonial government. The Duke of Argyll, who has been Secretary of State for India, tells us that "those only who have had any share in the government of India can know what the anxiety is arising out of such conditions of population"; and extensive emigration is now advocated as the best remedial action that can be taken. Making allowance for different standpoints of observation, Mr. Keay and Sir Richard Temple were, therefore, both right in their conclusions.D. A. W.

To the Reader: With the publication of the chapter in this number of the Popular Science Monthly on "The Tax Experiences of Switzerland," the first part of the plan laid out by the writer for discussing the Principles of Taxation comes to a conclusion. This plan, apart from an introductory survey of the subject, and a review of the interesting and most instructive tax experiences of the United States consequent on the civil war, and with which the writer (as chairman of the United States Revenue Commission in 1865, and as United States Special Commissioner of Revenue from 1866 to 1870), was officially and closely associated (Chapters I and II), was to set forth the position of taxation in literature and history; and more especially to narrate the most notable experiences of different countries and nations in compelling contributions or exactions for the support of the state from the people governed, and the far-reaching and important results that have been contingent upon and have followed the different policies that have been adopted for such a purpose. The underlying idea that suggested this plan was as follows:

Every person of ordinary intelligence, if questioned, will probably admit that the subject of taxation is one of the most important that can concern the masses of the people; and that their well-being and the continuance of good government, and even of civilization itself, are more dependent on the involved power of its administration and discretionary incidence than upon any other agency—a power so great that its right exercise in even the smallest degree, according to the late Chief-Justice Marshall, "involves the right to destroy." And yet the same citizen will probably say that the subject, as ordinarily presented and discussed, is so dry and uninteresting as to be exceedingly unattractive, and even repellent; that the conflict of opinion on the part of those who through study claim to understand it is so diverse that any general concurrence of opinion in regard to fundamental principles is impossible; and, finally, that all experience shows that by reason of this state of things mercenary and political considerations necessarily predominate in the construction of any general system of taxation.

It is obvious that under such circumstances it must be difficult or impossible to induce the masses of the people to intelligently interest themselves in the subject of taxation, and that in countries like the United States, where under free and universal suffrage the same people elect the legislators who shall determine the policy of their Government, laws will be enacted for the collection of revenue for the support of the state that will be neither productive or effective, and do not promote, but rather impair the industrial and commercial interests of the country.

The question, then, next suggests itself, How can a different state of things be brought about? How can the people in general be induced, in the sense of persuasion and not of compulsion, to interest themselves in this subject? The idea of the writer is that such a change can best be effected by showing that the subject is not necessarily dry and uninteresting; that it really constitutes more than almost any other element the essence of history; and that the record of the results that have followed the attempts to establish almost every form of taxation that human ingenuity can devise, has even in a very high degree the attraction of romance. Its study from such a point of view constitutes a better basis for casting a horoscope of the future of nations and governments than aught else within the ken of the historical student.

In the foregoing chapters the writer has attempted to carry out this idea. That it has been in at least a degree successful is demonstrated by the great number of commendatory letters that have come to him from different countries—even China—and from people of most varied interests, situations, and occupations.

In the chapters that are to follow, where a search for the underlying principles of taxation is to be prosecuted, a resort to more or less abstract reasoning is a necessity. But even here the presentation of abstract principles, to which assent will be asked or expected, will be avoided as far as possible, with the expectation that the reader will, from a consideration of the facts and deductions presented, be able himself to frame and determine the principles that should govern a correct system of taxation by a process of self-evident induction.

An interesting illustration of the interdependence of organisms, and of the existence of close relations where no relations are suspected, is pointed out by Miss Ormerod. Water-cress farmers are greatly annoyed and often have to suffer considerable destruction of their crops by the depredations of the larvæ of caddis flies. These larvæ are delicious morsels for trout, and where trout abound they are scarce and the cresses flourish. But if heron abound, they destroy the trout, the caddis flies are not eaten up, and the cresses are.
1. Address of Theodore Search, President of the National Association of American Manufacturers.
2. State and Federal Government in Switzerland. By John Martin Vincent. Johns Hopkins Press, Baltimore, 1891.
3. "The county, State, and Federal Governments (of the United States) are not democracies. In form they are quasi-oligarchies composed of representatives and executives, but in fact they are frequently complete oligarchies, composed in part of unending rings of politicians that directly control the law and the offices, and in part of the permanent plutocracy who purchase legislation through the politicians." The Initiative and Referendum in Switzerland. By J. W. Sullivan. Nationalist Publishing Co., New York, 1893.
4. J. B. Sullivan, The Commonwealth of Switzerland.
5. The present aggregate of all forms of taxation imposed for defraying all the expenditures of the Federal Government of the United States is equivalent to an average of about \$6·538 per head of all its population.
6. Vincent on the Government of Switzerland.
7. Essays on Taxation, Prof. E. R. A. Seligman, p. 387.