First, I believe it is impossible to realise the effect on our trade of having London, Liverpool, etc., free ports. We possess at present half the ocean trade of the world: with our ports free, we should get a yet larger share of the world's trade, and secure it permanently. That is to say, we should certainly keep it until other nations adopted Universal Free Trade.
Secondly, The fall in the price of tea, beer, etc., would be more than the amount of the tax remitted: the freedom of universal manufacture without any Government interference, the liberty to land tea without delay, and put it into the market without having to advance the duty, would cause at once a great activity in the trades, and at the same time a fall in price. By diminishing the need for middle-men the quality of the beer, tea, etc., would be raised, and adulteration diminished.
Thirdly, The fall in the price of tea and beer would bring down the price of all competing drinks: it would at first diminish the consumption of competing drinks. The cheapening the price of some of the prime necessaries of life would be to some extent divided between capital and labour. As in the case of wheat, the labourer would be made better off, while the profits of capital would be raised. A general and permanent improvement in all trades would result, except possibly in those of the tea-dealer and brewer—but I do not think they would lose. I see no end to the developments from Universal Free Trade: we can only gain some idea of what they would be by tracing as far as we may what the results of Free Trade in one article—wheat—have been; and in doing this we must recollect that before 1846 the quantity of wheat imported was trifling compared with the present importation.
To this scheme of direct taxation Edward Wilson objects, "Taxation should fall on expenditure, not on income." It is true that our object must always be to encourage accumulation, and discourage destruction of capital (expenditure). Practically, it does not appear that a heavy income tax diminishes the taste for accumulation in England: it does increase the tendency of large capitalists to invest their capital out of England, so as to avoid the State charges on capital in England. But the capital in England and the quantity of English capital invested abroad are already so enormous that the "tendency" of an increased income tax may be disregarded. Lastly, it may be objected, Would the sixteen-pence income tax levied as you propose (or nearly so) raise £40,000,000? At the time of the Crimean War each penny in the pound income tax brought in a million sterling. At the present time, each penny in the pound income tax brings in nearer two millions sterling, but the productiveness of the tax is much interfered with by the large remissions now allowed, and subtractions which take effect just where the contributors to the tax are most numerous, say from £100 to £300 a year. I therefore reckon that, without remissions, the tax of sixteen-pence in the pound down to £156 a year would produce about £30,000,000, and that the tax down to £52 a year would about produce the rest. The total income that income tax is now levied on is nearly £600,000,000. We need not be surprised at the productiveness of the income tax. A man of £10,000 a year pays tax on that. But he has a steward on £300 a year, he is worth to his firm of lawyers £100 a year, and so on: these pay income tax on the £300 and the £100 over again. When the income tax is carried down to incomes on £1 a week, the tax will be levied on the same income over and over again. Even a spendthrift with £10,000 a year usually scatters more than he actually destroys.
Lastly, It has not been overlooked that there is an income tax now: and if the whole proceeds of the sixteen-pence income tax were used to fill up the deficiency in customs and excise, then we have to make up a deficiency equal to the present proceeds of the income tax. This might be done (to start with) by the National Property Rate now to be suggested. But the expectation is, that with Universal Free Trade, and the tremendous stimulus thereby given to commerce and manufacture, the National Income would rise with a bound, and that in two or three years a much lower rate than sixteen-pence income tax in the pound would supply the amount of all the indirect taxes abandoned.
4. THE RANSOM OF THE LAND.
Many people see quite clearly that, the population of England being 25,000,000, the next baby born has a right to one twenty-fifth-millionth part of the area of England in soil of average fertility. The arrangements of society by which the laud is partitioned among a limited class, and the complicated rights sanctioned by law in one plot of land, are considered of no validity as against the natural right of the new-born baby. I do not see this theory to be self-evident: on the other hand the supporters of it always give it as fundamental, axiomatic; they no doubt presume rightly that the land is limited, and that if one man holds more than his arithmetical share, he must push out somebody else from his arithmetical share: while a man who keeps a hundred pocket-knives does not perceptibly hinder other people having numerous pocket-knives. Still I do not see how this consideration weighs against Lord Derby's title to his lands, if the body politic has determined that on the whole it is best for the community that land should not be held equally by all, and sanctions by law Lord Derby's monopoly of a large area. On the theory of the natural right of every infant born to its arithmetical share, the monopolisers of land are liable to a perpetually recurring ransom: this can only practically be carried out by a special National Rate on Real Property (i.e. Land, with the houses, mines, etc., inseparably attached to it), which must be in addition to such taxes as income tax, succession duty, etc., which land already suffers equally with trades, professions, offices, and personalty. The local rates in England exceed £25,000,000 annually; and the ratepayers perhaps reckon this a large enough ransom. I should remark in passing that one man with 1000 acres of land does not dispossess any more babies of their rights than do ten men with 100 acres each. The ransom therefore must be a strictly level rate: to put a higher rate on large holders, or to despoil large holders of a portion of their landed property, will be to work the ransom unfairly. It hence will follow that any heavy ransom is now impracticable. Of late years some farms have gone out of cultivation because they will not pay the tithe, land tax, and rates already on them: to put any heavy ransom on the land would at once throw large areas in England out of cultivation.
The question of the ransom, therefore, is not so all-important as has been considered; the rates at present being £25,000,000, it might be possible to levy an additional national rate of £5,000,000 to keep down the perpetually upspringing rights of new-born infants, without throwing land out of cultivation to any sensible extent. The whole question will lie thus between a total rate of £25,000,000 and £30,000,000. I am about, however, as a corollary to this subject, to suggest a way of forming a National Rate Book which probably would not materially alter the present rating, but which would alter entirely the taking of land for public purposes, and would effectuate all that is good in the phrase the Nationalisation of Land.