may have upset calculations made by Professor Jevons many years ago when he warned the country of the disastrous consequences of using up our coal supplies, but sooner or later the pinch will come. An export duty ought to be imposed on coal directly the present war restrictions can be removed. Our stores of coal cannot be indefinitely increased by increased industry. If the duty operated to reduce export of coal British manufacturers would gain, and be able to produce commodities at less cost. If the demand from abroad were so strong that export did not diminish, the country would gain to the whole extent of the duty paid by foreign purchasers. The ordinary arguments in favour of free trade do not support objection to such an export duty as this. There will be ample demand for all the coal that can be produced. Even if there were not, it would be well not to use it up so quickly. There are some kinds of coal, of which the amount available is very limited, yet until the War broke out quantities of such coal were freely sent to other countries, some of it to those who are now at war with us, and so used to help our enemies, who got the precious mineral cheap because we refused to allow the imposition of an export duty. Probably the duty when it was tried was not imposed in the best way, being charged at a fixed rate per ton instead of on an ad valorem scale, but this fault could easily be corrected. Special exceptions in favour of Colonies or Allies, or for the supply of certain places, might be made by arrangement in consideration of some equivalent favour, or to meet some particular need.
The other suggestion involves more difficulties, and is of a more far-reaching character. Would it not be possible to replace to some extent the excess profits duty, which cannot be permanent, by a duty on "excess dividends," that is, on the amounts paid out of the profits of a business for the use of capital above a certain percentage? The excess profits duty, in spite of all its anomalies and the difficulties of assessment, has saved the financial situation during the War; a
tax on excess dividends might "save the situation" afterwards. When a business is successful, paying, as many businesses have recently done, dividends of 30 to 50 per cent., and sometimes even more, the return made to those who have invested money in them is clearly excessive. From such profitable businesses those who have the responsible management no doubt may generally get better remuneration, possibly the workmen may get a small bonus or share in such profits, but those who by a mere stroke of good luck have embarked their money in these businesses, shareholders who very likely know nothing whatever about the conduct of them, benefit enormously. Such a tax would not discourage thrift or prevent a person from getting a reasonable return on his savings. Take the case, say, of two professional men. Both, by hard work and using up their lives in the effort, manage to make a fair income and bring up their families. One of them, to make provision for the future, invests £2,000 in safe securities with fixed rate of interest, and £2,000 in some company whose business is of a more or less speculative character, but by good fortune becomes able to pay a dividend of 30 per cent. The other invests a like sum in firm securities, and £2,000 in another company which turns out a failure. Neither of them has anything to do with the conduct of the business of the company in which he invests, but one has got a tip from some friend or other who thinks he knows of a good thing. The work of the two men is exactly the same; it is a mere fluke that one gets a huge return and the other puts his money into a company which, without any fault on his part, brings in nothing.
The tax suggested would be levied on the excessive profits distributed in respect of the capital embarked in businesses of every kind. It was pointed out long ago that a tax thus levied on all alike would be paid wholly by the capitalist and "would neither affect the prices of the commodities produced nor the distribution of capital." The duty might be graded according to
the percentage to be received on the capital of each investor. It might be reasonable for the first 10 per cent. to pay only the ordinary rate of income tax. Money in fixed permanent securities may now produce 5 per cent. or 6 per cent., and the additional 4 per cent. free from the excess duty would be a fair return for risk and an inducement to enterprise. The rate of excess duty might be increased according to the excess of profits above 10 per cent. until when the profits reached, say, 30 per cent. the duty on the amount in excess of 20 per cent. might be very high. The effect of the tax would not be to reduce the spending power of the community; it would only be that the State instead of the individual would to the extent of the duty obtain the power of purchasing what it required, and discharging its liabilities with the money it took from excessive profits. The amount of the tax, the method of grading and mode of levying it, would require careful consideration; but if the difficulties and inequalities introduced by the War excess profits duty could be met, there seems no reason why the difficulties of the tax thus proposed should not be also solved; at all events, an attempt should be made to see how it would work out.
Where money is rapidly acquired by some stroke of fortune and is not the result of steady industry the result is constantly unwise and often harmful expenditure either by those who have acquired it or their immediate successors. There is an old Lancashire saying as to fortunes rapidly made, that there are only three generations from clogs to clogs: "What is unreasonably gathered is also unreasonably spent by the persons into whose hands it finally falls." It may be spent "in a stupefying luxury twice harmful both in being indulged in by the rich and witnessed by the poor."
There is a great danger to the State at the present time from large amounts of money rapidly acquired being accumulated in few hands. There are many
signs that we are likely to enter a period which may be described as the reign of the "nouveaux riches." The great financiers, the persons with enormous interests in huge combines, will exercise more and more an undue and dangerous influence on fiscal policy and political life. The old nobility and the class of country gentlemen will have less power. Their resources will be seriously crippled, and their families perhaps extinguished through losses in the War. The middle class, which, in the last century, exercised the strongest influence on political life, and from which most of our men of letters and science have sprung, may now be crushed. On the more highly educated part of the middle classes whose means are limited the burden of the War has fallen most heavily. Taxation seems deliberately arranged to place as heavy a burden as possible on those of the middle classes who have children to bring up and to educate in the way they think best, and who endeavour to provide means by which their families can occupy the same position in life which their parents have done. The rate of income tax paid by a bachelor and a spinster is increased if they marry, although their necessary expenses will be enormously increased if they have a family to support. A bachelor with £500 a year may be living in ease and luxury; if he marries and has four or five children to educate he may find difficulty in meeting the needs of his family with £1,500. In the same way the death duties are absurdly small on the estate of the bachelor who leaves no family, but are a real hardship on the family of the man who dies leaving a number of children.
The tendency is towards a rapid accumulation of huge fortunes. In considering the incidence of taxation Bacon's advice might well be remembered: "Above all things, good policy is to be used that the treasure and moneys in a State be not gathered into few hands, for otherwise the State may have great stock and yet starve, for money is like muck, not good except it be spread."