On the Economy of Machinery and Manufactures

by Charles Babbage

On the Effect of Taxes and of Legal Restrictions upon
Manufactures

414. As soon as a tax is put upon any article, the ingenuity of those who make, and of those who use it, is directed to the means of evading as large a part of the tax as they can; and this may often be accomplished in ways which are perfectly fair and legal. An excise duty exists at present of 3d.(1*) per pound upon all writing paper. The effect of this impost is, that much of the paper which is employed, is made extremely thin, in order that the weight of a given number of sheets may be as small as possible. Soon after the first imposition of the tax upon windows, which depended upon their number, and not upon their size, new-built houses began to have fewer windows and those of larger dimensions than before. Staircases were lighted by extremely long windows, illuminating three or four flights of stairs. When the tax was increased, and the size of windows charged as single was limited, then still greater care was taken to have as few windows as possible, and internal lights became frequent. These internal lights in their turn became the subject of taxation; but it was easy to evade the discovery of them, and in the last Act of Parliament reducing the assessed taxes, they ceased to be chargeable. From the changes thus successively introduced in the number the forms, and the positions of the windows, a tolerable conjecture might, in some instances, be formed of the age of a house.

415. A tax on windows is exposed to objection on the double ground of its excluding air and light, and it is on both accounts injurious to health. The importance of light to the enjoyment of health is not perhaps sufficiently appreciated: in the cold and more variable climates, it is of still greater importance than in warmer countries.

416. The effects of regulations of excise upon our home manufactures are often productive of great inconvenience; and check, materially, the natural progress of improvement. It is frequently necessary, for the purposes of revenue, to oblige manufacturers to take out a license, and to compel them to work according to certain rules, and to make certain stated quantities at each operation. When these quantities are large, as in general they are, they deter manufacturers from making experiments, and thus impede improvements both in the mode of conducting the processes and in the introduction of new materials. Difficulties of this nature have occurred in experimenting upon glass for optical purposes; but in this case, permission has been obtained by fit persons to make experiments, without the interference of the excise. It ought, however, to be remembered, that such permission, if frequently or indiscriminately granted, might be abused: the greatest protection against such an abuse will be found, in bringing the force of public opinion to bear upon scientific men and thus enabling the proper authorities, although themselves but moderately conversant with science, to judge of the propriety of the permission, from the public character of the applicant.

417. From the evidence given, in 1808, before the Committee of the House of Commons, On Distillation from Sugar and Molasses, it appeared that, by a different mode of working from that prescribed by the Excise, the spirits from a given weight of corn, which then produced eighteen gallons, might easily have been increased to twenty gallons. Nothing more is required for this purpose, than to make what is called the wash weaker, the consequence of which is, that fermentation goes on to a greater extent. It was stated, however, that such a deviation would render the collection of the duty liable to great difficulties; and that it would not benefit the distiller much, since his price was enhanced to the customer by any increase of expense in the fabrication. Here then is a case in which a quantity, amounting to one-ninth of the total produce, is actually lost to the country. A similar effect arises in the coal trade, from the effect of a duty, for, according to the evidence before the House of Commons, it appears that a considerable quantity of the very best coal is actually wasted. The extent of this waste is very various in different mines; but in some cases it amounts to one-third.

418. The effects of duties upon the import of foreign manufactures are equally curious. A singular instance occurred in the United States, where bar-iron was, on its introduction. liable to a duty of 140 per cent ad valorem, whilst hardware was charged at 25 per cent only. In consequence of this tax, large quantities of malleable iron rails for railroads were imported into America under the denomination of hardware; the difference of 115 per cent in duty more than counter balancing the expense of fashioning the iron into rails prior to its importation.

419. Duties, drawbacks, and bounties, when considerable in amount, are all liable to objections of a very serious nature, from the frauds to which they give rise. It has been stated before Committees of the House of Commons, that calicoes made up in the form, and with the appearance of linen, have frequently been exported for the purpose of obtaining the bounty, for calico made up in this way sells only at 1s. 4d. per yard, whereas linen of equal fineness is worth from 2s. 8d. to 2s. 10d. per yard. It appeared from the evidence, that one house in six months sold five hundred such pieces of calico.

In almost all cases heavy duties, or prohibitions, are ineffective as well as injurious; for unless the articles excluded are of very large dimensions, there constantly arises a price at which they will be clandestinely imported by the smuggler. The extent, therefore, to which smuggling can be carried, should always be considered in the imposition of new duties, or in the alteration of old ones. Unfortunately it has been pushed so far, and is so systematically conducted between this country and France, that the price per cent at which most contraband articles can be procured is perfectly well known. From the evidence of Mr Galloway, it appears that, from 30 to 40 per cent was the rate of insurance on exporting prohibited machinery from England, and that the larger the quantity the less was the percentage demanded. From evidence given in the Report of the Watch and Clock-makers' Committee, in 1817, it appears that persons were constantly in the habit of receiving in France watches, lace, silks, and other articles of value easily portable, and delivering them in England at ten per cent on their estimated worth, in which sum the cost of transport and the risk of smuggling were included.

420. The process employed in manufacturing often depends upon the mode in which a tax is levied on the materials, or on the article produced. W atch glasses are made in England by workmen who purchase from the glass house globes of five or six inches in diameter, out of which, by means of a piece of red-hot tobacco pipe, guided round a pattern watch glass placed on the globe, they crack five others: these are afterwards ground and smoothed on the edges. In the Tyrol the rough watch glasses are supplied at once from the glass house; the workman, applying a thick ring of cold glass to each globe as soon as it is blown, causes a piece, of the size of a watch glass, to be cracked out. The remaining portion of the globe is immediately broken, and returns to the melting pot. This process could not be adopted in England with the same economy, because the whole of the glass taken out of the pot is subject to the excise duty.

421. The objections thus stated as incidental to particular modes of taxation are not raised with a view to the removal of those particular taxes; their fitness or unfitness must be decided by a much wider enquiry, into which it is not the object of this volume to enter. Taxes are essential for the security both of liberty and property, and the evils which have been mentioned may be the least amongst those which might have been chosen. It is, however, important that the various effects of every tax should be studied, and that those should be adopted which, upon the whole, are found to give the least check to the productive industry of the country.