scheme for dividing rates, defined but not discussed in an earlier page,1 of which the essence is to lay an impost on each party pro-portionate to the net income which he derives from the premises. This scheme presents two aspects according as (1) it does, or (2) does not respect vested interests. To the former (1) class belongs the recommendation of the Select Committee on Town. Holdings, 1892-2 "that under all future contracts half of the rates should be borne by owners. in proportion to the several rents they receive. . . . and that the liability to deduction should attach not only to the receivers of the rack rent, but to th owners of all superior interests." 3 The objections above stated under the head II. 2 a do not apply to this case, but the objections stated under the head II. 2 b apply almost equally to this case. It may be thought that, as no distinction is made between income issuing from buildings and from land, this system will discourage building more than the so-called rate upon site-value. But it is very possible that a fixed impost proportional to net profits will discourage industry less than the abstraction of an unpredictable quantity which is called indeed a rate on site value, but might as well be called a rate on an unknown quantity, σ. "The result would be to make every rent received in respect of every interest in houses a variable one, and so to drive cheap or trust capital out of houses as an investment, and to necessarily raise rents." (Sargant, Mem., p. 215.) "If, where there are several interests in houses, a proportion of the rates in the £ is to be deducted on each payment between successive interests, the effect will be to rate mere annuitants or rent chargers, and to relieve to this extent the real owners " [that is, the parties in this article denominated the rack-rent owners]. (Ibid.) When (2) present as well as future rents and quasi-rents are struck, the check to production is aggravated by the shock to equity. Almost all that has been said as to the productional and distributional imperfections of the site-rate may be transferred to this case. Here, too, appearances are apt to deceive the very elect. The brilliant writer who has been referred to as advocating this scheme is confident that "if you define the term owner so as to cover those persons whom you want to rate, and then proceed to send to each of these owners' a demand note, the relief so given to the occupier will be a real relief." A patient analysis discloses the contrary view. The relief so given to the occupier will not be a real relief, for his rent is likely to be raised 1 I. B, referred to on p. 491. 1892, No. 214. at least as much as his rates are lowered, probably more owing to the discouragement of producers. Nor will you render contributory all "those persons whom you want to rate," for the rackrent owner will not only not be amerced, but will even gain, by your substituting the proposed system for the present one.1 It will be understood that the statements in the preceding paragraphs relate primarily to the typical case of the English leasehold system; 2 with which, for much of the reasoning, the system of Scotch feus, Manchester chief rents, and so forth, may be identified. It has been all along supposed that the owner and the occupier are different persons, as commonly in our towns.3 When this is not the case the schemes in question can no longer be regarded as inept as well as inequitable. The object being to relieve, as the phrase is, the ratepaying occupier, this object would be realised as far as the present occupier-owners are concerned, even though the whole class of occupiers, including the species that are owners, might, in the future, be damnified by the check now given to production. As to the equity of the scheme, if, as seems to be a frequent case in our large towns, the property increases without much trouble on the part of the owner and beyond what he reckoned on when acquiring the property, what is the claim of the owner-occupier to relief? Unforeseen rates, it is said, are imposed. But they are mostly "beneficial." Where they are really onerous, may not this onus be set against that increase in value? Where not, in neighbourhoods that are declining, no doubt a hardship, or at least a misfortune, is made out. But is the remedy sought equitable? Is it reasonable that the superiors, who would not have shared a gain, should have to share a loss with the owner? And once more it is to be recalled that more often than appears there is a productional, as well as a distributional, reason against confiscating the interest of superiors. Upon the whole the schemes which are now in vogue for rating all kinds of "owners" appear to effect nothing which could not better be effected by a scheme like Mill's, perhaps coupled with a division of rates between occupier and "rack-rent owner" as recommended by many of the experts whom the present Royal Commission has consulted. If a scheme em bodying Mill's principle had been adopted a generation ago with respect to urban sites, an annual income of some two or three 1 Above, p. 511. Ante, p. 183, par. 2. 3 Reports of the Select Committee on Town Holdings, 1889, No. 251, pp. 9, 10; and Report, 1892, No. 214, p. xvi. Ante, p. 342. 5 Above, pp. 496, 503. million sterling1 would probably now have been flowing into the municipal treasury from ground rents in London; while the division of rates between the occupier and his immediate landlord, not too suddenly introduced,2 might possibly have conferred some advantages of minor importance on the occupiers. Nothing better would have been accomplished by the more pretentious schemes which are now in vogue. The apparent gain to the occupier from the diminution of rates would have been compensated by a rise of rent. It would probably have been more than compensated the check to production would have resulted in a higher price, as measured by rent plus rates, being paid by the occupier for house-accommodation. Nothing more would have been effected-nothing but confusion and bitterness, the temporary gains of rapacity, and the useless transference of windfalls from one investor to another.3 These conclusions have been reached without bias. The writer holds no brief for urban landlords. He has impartially pronounced against them upon several counts. He has disputed the favourite argument that they have been already rated in that their rents are by so much less than they would have been if the rates had not existed. He would go so far as to allow that, even if it were true that the landlords had paid the rates out of unearned increase in the past, it might nevertheless be reasonable to rate unearned increase in the future. He has met the recherché objection that a special rate on ground rent would be nugatory, since the landlord would be compensated by the increased demand on the part of occupiers.5 He has fully accepted Mill's doctrine on the taxation of "future unearned increment of rent. He has admitted that the industry of which house-accommodation is the product presents something peculiar and exceptional in the long incorporation of land with labour, in virtue of which an impost on the profits of the producers might have less than its usual effect on the interests of the consumers. He regards it as conceivable that a greater than Mill might succeed in demarcating some portion of the gains of middlemen in this industry as par excellence "unearned," 196 so different in kind from the ordinary 1 On the basis of the figures given above, p. 499. 3 See pp. 511-12. Ante, p. 341. 2 Cp. above, p. 490. 5 Above, p. 502. 6 See note to p. 501, above. A tentative in this direction-the only direction, as it appears to the present writer, in which there is any hope of advancing beyond Mill's position is made by Mr. Henry, the City Assessor of Glasgow, when he proposes (Minutes of Evidence, Royal Commission on Local Taxation, vol. III. [C. 9319] Appendix XXV., p. 25, &c., Cp. Mr. R. McKenna, M.P. Ibid., vol. IV. App. xix.) that owners of land and buildings should be specially taxed " on all increase of rent of annual value beyond that at the passing of the Act, but providing always that blends of work and luck as to become the object of a specially heavy impost without detriment to the quantity of production or the equality of distribution.1 But this problem which Mill did not attempt has not been solved by his successors. In a matter so complex and momentous it may reasonably be demanded that action should not be taken until a scheme is. forthcoming which shall stand the test of abstract general reasoning as well as Mill's scheme. And even then there still should give us pause the possibility that, though the principles are sound, some error in a datum, such as Mill committed," might result in a disastrous failure. F. Y. EDGEWORTH where an increase of rental is obtained from money spent on improvements, &c., on. the property an annual deduction of 7 per cent. [on the money spent," presum ably; but for how many years? for ever, into whatever hands the premises may pass?] from such increase of rental be allowed before imposing such tax." This impost on future unearned increment would not much offend against the distributioual canon of taxation if not too suddenly introduced, (cp. above, p. 489.) It would offend against the productional canon, so far as the regulations necessary to the working of the scheme might deter the investment of capital, and the restriction of profit might discourage the application of effort and sacrifice, which in many inobtrusive ways are apt to act productively (above, p. 496); so far also as the working of the system proved costly in comparison with the yield (as to the amount of which in the case of London, see above, p. 499), a great part of the "unearned increment" becoming earned by assessors, accountants, inspectors and lawyers, who would be required in order to ascertain the increase of rental "obtained from money spent. on improvements." 1 1 Ante, p. 173, et seq.; regard to "quantity of production" including the condition that the tax should be worth the cost of collection (ibid., p. 174). 2 Above, p. 500. REVIEWS The Early History of English Poor Relief. By E. M. LEONARD. (Cambridge: at the University Press. 1900.) THERE is no class of writers to whom we owe a greater debt than those who set forth the continuity of some branch of national life. To do this is the aim of Miss Leonard, and she has done it with logical imagination, a wealth of illustration, and, so far as we can judge, with historical accuracy. And such a book was greatly needed. We have been accustomed to regard Poor Law history far too much as a record of individual Acts of Parliament, each bringing important consequences in its train, but standing in little or no connection with the life of the nation or the Acts which preceded it. Certain dates are commonly selected and "movements" are grouped around them, but of the steady, continuous growth of principle in legislation and administration we have heard far too little. No one can complain on this score now. The points in Miss Leonard's work may be summarised thus: (1) the early growth of local administration; (2) the pressure brought to bear by the central authority, viz., the Privy Council or Parliament on local bodies and exercised through the Judges and the Justices; (3) the close connexion between Poor Relief and the maintenance of order, not merely in the face of vagrancy, but of a rooted dissatisfaction with the existing state of things. All through the 16th century we find various local bodies gradually taking over from the ecclesiastical authorities the duty of relieving the poor. London was conspicuous-there the aldermen set themselves to secure a constant supply of low-priced corn, they repressed vagrancy to the best of their ability, they developed hospitals on various lines, notably Bridewell as a house of correction for the wilfully idle. Nor did London stand alone. Lincoln and Cambridge and Ipswich and York were busy with experiments of one kind or another. No doubt their experiments were often crude, but they served a good purpose, and the lesson which failure taught was salutary, if severe. Miss Leonard points out some of the evil consequences, the shiftng of population, the encouragement of idlers, the manufacture of paupers. |