of which would probably within the next few decades be completely immobilised in the hands of the State Insurance Department. The coal profit is estimated at not less than 7,000,000l. a year, the railway surplus at 2,000,000l., and the increased Post Office profit at 6,000,000l. It is, however, from the Income Tax revolution' that the greatest haul is expected; chiefly by the operation of a Special War Levy of 10 per cent. on all private property over 100l., 1 per cent. being payable each year for ten years. This, and a poll tax of 10s. per head for persons who do not possess property worth 100l., are estimated to produce 100,000,000l. a year, or 1,000,000,000l. in ten years.

This proposal, taken in conjunction with the new income-tax graduation scheme, under which incomes of over 100,000l. a year would be taxed at the rate of 168. in the pound, is Mr Sidney Webb's chief contrivance for avoiding fresh imposts. In order that enemy goods may come in free and that the consumer may have to pay no more for them, capital and incomes are to be 'sweated' to an extent which threatens to be ruinous to enterprise and production. The merciful consideration shown to property-owners in the tithe-by-instalments plan deserves their humble gratitude. 'We won't kill you outright, we'll bleed you to death,' is the compassionate cry of the financial revolutionaries.' Worse still is the lot of the man or the firm with a substantial income, for the Socialist proposal is to raise the tax from 58. to 10s. and to impose a super-tax on top of that. If a manufacturing firm making a divisible profit of 100,000l. a year in peace time is to be compelled to surrender 80 per cent. of it to the State, then we may as well say good-bye to all enterprise on the large scale. Even in the case of a private individual with an income of 100,000l., to levy a tax of 16s. in the pound would be more befitting the audacity of Captain Macheath than the sober sense of the Legislature. Believing, as we do, in the principle of graduation and super-tax, we hardly need say that their application must be reasonable. There is nothing reasonable in appropriating four fifths of even a rich man's income and taking 10 per cent. of his capital as well.

A still more extraordinary proposal with regard to capital, said to have originated in 'responsible quarters,'

was recently printed in the City Article of the Times.' What it amounts to, in brief, is the raising for war purposes of a large sum of money, in lieu of another loan, by means of a tax of 6 per cent. on capital, payable in monthly instalments of per cent. It is assumed that the capital of the country available for taxation is 24,000,000,000l., which at 6 per cent. would produce 1,440,000,000l. But what is the nature of this estimated capital? At the outside only 15,000,000,000l. consist of investments in land, houses, factories, commerce, railways, municipal undertakings, limited companies, and the other more or less material assets usually classed as capital wealth. The other 9,000,000,000l. consist of the supposed capitalised value of income earned by intellectual or physical work. The doctor's fees, the barrister's earnings, the author's net receipts, the actor's salary, and the working-man's wages, all come within the category of the annual product of brains or labour; and, in that economic sense, brains and labour are forms of wealth. But they are not forms of wealth that are either constant or permanent as material assets are. No one can pretend to believe that a man's intellect or his skill as a craftsman is worth twenty years' purchase, since all earning capacity is liable to be determined by loss of health or by death.

A proposal to tax capital must either exclude the capitalised value of earned income and thus provoke the reasonable protests of those whose capital is invested, or it must include such value capitalised on a basis which may be entirely at variance not only with actualities but also with actuarial probabilities. A doctor, after years of study and patient drudgery, may have built up a practice of 600l. a year, on which he has already to pay a not inconsiderable income-tax. If he is to be taxed 6 per cent. on this income capitalised at twenty years' value, he will have to pay, in addition to existing taxes, 7201. on his so-called capital, or 1207. more than his average yearly earnings. Still more unfair would be the exaction of 6 per cent., or 180l., on the twenty years' capitalised value of the wages of a working-man earning 31. a week. The proposal, in short, so far as it applies to capital based on earned incomes, is fantastic and absurd. Nor would its incidence be any more just to

the owners of real estate. A 6 per cent. tax on the capital value of land and buildings could, in the majority of cases, only be paid by selling part of the property to raise the funds.

All kinds of businesses, too, whether private or jointstock, would be seriously hit by such a tax. To many of them it would mean ruin. The smaller their real capital, the more severe would be the consequences. Take the example of a small tradesman making a net profit of 2001. a year. This, capitalised at twenty years' purchase, would be 4000l. (6 per cent. on which would be 2407.), whereas three years' purchase would be the utmost his business would command in the market. To find 2407. in twelve months would be almost impossible in nine such cases out of ten; and, even if it were possible, it would eventually spell bankruptcy. Nor would the great jointstock companies be able to undergo the strain without grave detriment to their business prosperity. The capital invested in the railways of the United Kingdom-to take only one group-may be put roughly at 1,000,000,0007. ; and the tax they would be called upon to pay under this scheme would be 60,000,000l. To find even a quarter of this huge sum within twelve months would handicap their development for years to come. Banks, industrial companies, and shipping companies would all be crippled in greater or less degree. It is hardly too much to say that such a tax as that proposed would paralyse the industry of the country, and utterly destroy many of the springs from which its wealth is obtained. If ever there was an illustration of killing the goose that lays the golden eggs, we have it here.

None of the authorities responsible for the various schemes, methods, proposals, or whatever they may be called, seem to have given much weight to the potentialities of Science in modifying the conditions of the future. Their general note is one of despondency. The only gleams of light they can see in an otherwise impenetrable gloom are the torches they themselves have lit. No allowance whatever is made for scientific development and the expansion of trade it foreshadows. Yet we are living in an age teeming with new inventions. Airships and aeroplanes, submersible ships, wireless telegraphy, and motor-traction, have all been made

practically useful within a couple of decades. Progress, instead of being behind us, is in front of us.

'The truth is,' as the 'Daily Telegraph' has wisely remarked, ‘that by the time this war ends we shall be confronted by a new world, one of almost infinite possibilities.' In such conditions it will be only by the most inconceivable submission to supine influences that we can help being carried forward by a movement in which Science, as the handmaid of Trade, will speed on winged feet to achievements paling all the records of the past. While anything like optimism is to be guarded against, except as an incentive to resolute organised effort, even more is pessimism to be held at bay. This great overhanging fabric of debt will not crush us if we go forward with the unhasting, unresting steps of confidence and hope. Tariff Reform, unification of the Railway System, utilisation of the Canals, State ownership of Collieries, improved Postal administration, and a fair scheme of Income-tax reform may all be needed, in a greater or less degree, to enable us to overcome the dragons in the path; but the greatest force at our service is the realisation of this new after-the-war world of infinite possibilities.'

Vol. 227.-No. 450.

N

H. J. JENNINGS.

Art. 10. THE STATE AND AGRICULTURE.

AT the beginning of the present war few of those who were compelled to be onlookers had any conception of its probable duration. Rapid military victory was at first expected. When this hope was seen to be vain, it was succeeded by the confident belief that economic and financial pressure must bring the war to a favourable end within a measurable period. It was conceded, with a certain grudging and rather scornful admiration, that the German Empire had revealed a wonderful degree of military preparation; but it was not till much later that it was generally realised that the defensive measure of providing for economic self-preservation had been equally carefully thought out. The rapid rise of food-prices in Germany, and the introduction of tickets for bread and other commodities, were hailed as signs of approaching surrender to the inevitable. This phase of public opinion was followed by another brief period of reaction, during which the same grudging admiration was extended to the German power of organisation in economic and industrial matters. Then came rumours and authoritative evidences of mistakes which had been made, and of popular discontent leading to spasmodic outbursts of rioting. These facts rekindled hope and led us to believe that we were succeeding economically, and that in this respect German discipline and skill was after all not sufficient to meet us.

Meanwhile we had slowly adopted, in the military sphere, the doctrine 'fas est et ab hoste doceri.' But the lesson of economic organisation and discipline has been a far harder one; the necessities of the case do not provide so urgent a stimulus to overcome our great weight of inertia. The steady and insidious rise in prices at home and the skilfully concealed shortage of certain necessary commodities have been glossed over by pointing to the far worse state of things in Germany, and speaking soothingly of the inevitable discomforts of war-time. When the submarine menace first became sufficiently serious to drive home the lesson of our dependence on foreign foodstuffs, it was dealt with by the naval authorities and the alarm subsided. The fictitious