situation in which one is always begging of the other, especially when the incidence of burden is taken into the account, is becoming intolerable. Recent applications to the Treasury by the L.C.C. and other local authorities show us very clearly how undesirable are arrangements which invite such local authorities to cover up a growing expenditure by seeking aid from the central authority. This declaration does not, of course, touch the merits of the demands now made by these authorities on the Treasury, but is directed to the necessity of a change in the law, which should aim at a healthier state of things, a state in which those who incur an obligation should be responsible for the money to discharge it.

In addition to the separation of national and local taxation and finance it is very desirable that such grants as are made should be reviewed in correlation with expenditure for similar objects. Cross-spending should be eliminated. This is only secondary in importance to the separation of national and local finance. A capital instance of this is found in regard to education. When Government grants to education are referred to the grants made by the Board of Education are usually thought of— a series of grants much in need of review as a part of the cost of public education-but it is often overlooked how that a very large sum is applied by local authorities under the "whiskey money (Local Taxation, Customs and Excise Act, 1890) for what the Local Government Board deems "higher education." Such a method of applying public money cannot be defended. The same public local authority gets sums of money for educational purposes from two departments of State, just as at present a central body dispensing Government funds and the county councils are spending money on public roads, and in this case of education the local authority has but to spend this grant money. That is an objection which applies to such a grant as that of 1896 to agricultural rates also. The grant itself is part of the question as between national and local burdens, but that local authorities should, say in England and Wales, receive about £1,350,000 a year from Government towards their expense is, per se, a premium on extravagance, while the grant may be objected to on other grounds.

We may revert to the education grants to consider the problem of a settlement of the relation to be established between national and local finance. As was said, already the basis of these grants to education needs a thorough review, but in this place their position as aids to local taxation is the chief point of view. We

may assume that the cost of education, publicly provided, in the United Kingdom is about £27,000,000 to £30,000,000, a vast sum, the vastness of which has not been considered by the taxand rate-payers. Some one-half of that is derived from national sources; perhaps the sum may be under that. In any case, the quota of the cost borne by the taxes has grown very considerably since 1870. But those who speak for certain interests, and it is significant of much, also, that local authorities without an exception join in their representations, demand that the education charges should be borne by the Exchequer. It may be that some of our local authorities do not insist upon the transfer of the whole charge to the Exchequer; but that there is a demand for aid to the rates from all points of the kingdom is well known. In the case of some individuals, and of some local authorities, it is probable such a demand is simply the desire for relief to the ratepayers, whose complaints trouble the members of the authority, rather than a conviction gained as the result of a study of the incidence of taxes and rates, and of the relation of taxing power to the power to spend. Leaving that for a moment, it is becoming more common to find opinion in harmony regarding the national rather than local character of the educational services, and consequently a readiness to consider once more the State's obligation toward education. When the whole cost is said to be due from the State, an evident difficulty appears. No experience is better read than that administration and financial responsibility should be yoked together. Our local authorities spending £27,000,000 to £30,000,000 of national funds, without any fear of a rate- or tax-payer, is not a vision to please any cautious man. Our experience of present grants-in-aid forbids such an extension. The most that could be entertained with safety as an extension of the aid to education would be some portion of the cost short of the whole, an arrangement by which local bodies would be left with an incentive to good and careful administration. The form of grant will be important; that form should be such as will leave the whip in the central authority's hand, for, of course, authorities will differ as to the sums they may desire to spend on buildings and other matters. On the whole, however, in the case of education there is a disposition to regard the charge for it as national, and to require the national authority to assume it.

1 One-half of the cost to local authorities, but in addition the central authority bears the cost of central administration, and of grants to educational institutions of various kinds.

The readjustment required between national and local finance cannot be regarded, however, as a pure matter of transferring local charges in larger measure to the Exchequer. It is true that a regard for the age of various local charges is necessary, and a reconsideration of modern charges; but it is necessary to consider also the effect of the grants now made, and the effect of the most recent legislation. The last available report of the Local Government Board for England and Wales shows the proportion of public rates and imperial taxation, as the sources of the expenditure paid for by local authorities. It is only necessary to cull the effect of this table, which shows that in 1879-80 88.9 was raised by local rates, and 11'1 per cent. paid for from national sources. In 1906-7 these figures became 73.9 and 261 per cent. respectively. So that while thirty years ago local authorities in England and Wales found all they spent locally save 11 per cent., in recent years they have not been at any pains with regard to no less than 26 per cent. of their expenditure. That is an outstanding fact not to be forgotten in any readjustment. Another is that a revision will reconsider the aid given severally to town and country authorities, which are not treated at present quite according to the facts of the case.

This aspect of the matter is by no means completed without a glance or two at very recent legislation. The Treasury's expectafion from the Land Duties of the Finance Act, 1909-10, is as yet somewhat undefined, but in a few years may be expected to reach a sum of about £5,500,000, the half of which will be devoted to the relief of local burdens. In any readjustment of Treasury grants, however, it may be assumed that this grant will be brought into the account. Much more important in every way is the effect of the Old Age Pension Act, by which, and the extension to paupers of its benefits, a sum of from £11,000,000 to £12,000,000 a year will be spent from the Treasury. Very little, much too little, has been said of this large departure in its relation to the Poor Law and the Poor Rate. That it may, and probably will, have a very important effect ultimately upon the burden from the poor is seen clearly by all who have given any attention to the matter. Now the charge for the poor is one of the old local charges which Mr. Goschen regarded, not as a rate, but a rent-charge upon all lands, all real property. That the cost of maintaining pensioners should be borne wholly by national funds means that owners of real property have been relieved of an actual and, probably more important still, of a very substantial contingent liability. When the readjustment of grants

from the Exchequer is made, it will be impossible to overlook the per contra account to be taken of the pension fund, not to speak of the half of the Land Duties.

Such paper as this cannot be made exhaustive without enlarging its scope, in excess of the reader's patience. Sufficient has been given of the outlines of the question to establish the need of inquisition and action upon the relation of national to local taxation. That a term should be assigned to grants from the Exchequer, that a delimitation should be made. of present grants, and that the whole should be settled with a due regard to economy and care by local authorities, are put forward as the chief objects to be aimed at. Our present practice and position, it is submitted with general consent, are such that people of every opinion (and of no opinion) are agreed that something should be done," and that something, it is to be hoped, will be done at an early day, before the roots of the mischief cause us greater harm.

W. M. J. WILLIAMS

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No. 81.-VOL. XX

LAND VALUATION AND RATING REFORM.

"It is no wonder that in England the movement for the tax on ground values assessed on the owner should now be making such rapid headway. For the English system . . . is of all systems of direct local taxation perhaps the most inequitable."-Professor Seligman, Shifting and Incidence of Taxation.

NATIONAL valuation of land has been so long a matter entirely in the region of academic theory and political speculation that its imminent realisation as an achieved fact finds most students of economics but half-prepared for a consideration of its possibilities. Attention has been so closely riveted upon its immediate purposes that little has been given to the way in which it may stand related to our other institutions. Even those who are keenly interested in a reform of our system of local rating-that curious jumble of "historical accidents," so indefinite in its mixture of fundamental principles, so ineffective in carrying out any principle consistently in practice, and so unsatisfactory and fortuitous in incidence-are divided in opinion as to the consequences of the new Domesday Book. To many who found in the difficulty of reliable and systematic site valuation the chief obstacle to rating reform the prospect of a system at once national, uniform, and undertaken with all the technical and financial advantages of skilled central control, offers an easy road to the complete realisation of their schemes. But others consider that these advantages will be fully overborne by the aims of the new departure, which have "skimmed the cream" off the case for rating reform. Certain it is that those anomalies in our system which are most striking and capable of popular exposition, requiring no close reasoning on questions of incidence, are met by the new taxes and are now comprehended by the man in the street. We have no concern here with the political aspect or right of the case, but from an economic standpoint, the "public" value of land, rising in direct ratio to the increasing stress of modern life, the reversion of leaseholds, mineral wayleaves, and the valuable untaxed land around our towns, are all