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under those heads, so that substantially the contrivance would be a variation of the method of direct grant by the State, with the advantage of securing a more complete separation.

The "estate duty” at first sight appears fitted for similar treatment, but closer examination shows that there are very strong reasons against using it in such a way. It is uncertain in yield-notoriously so in any particular locality-and, when applied to immovable property, inconvenient, while by the method of insurance it may be reduced, so far as the payer is concerned, to an income or rather“ produce” tax. Hence it would be in all respects better to rely on the income tax as the mode of obtaining the sum required.

In any of the above ways it would be possible to start with a due and equitable division that would neither hamper the national finances nor leave local revenue worse off than before.

A graver question, however, remains behind. Assuming that the division of revenue can be settled in a satisfactory manner for the present, how is adequate provision to be made for the growth of expenditure in the future? Is it not likely that the same difficulties will reappear, and be met by the same expedients leading back to the present condition ? To this one reply available is that much depends on the firmness and prudence shown in dealing with new claims, but it may also be added that the development of the licence system, and the more economical direction of municipal industries, would increase the resources of the bodies most likely to feel fresh pressure. Moreover, some reforms in the system of assessment and valuation with a removal of all, or nearly all, the existing exemptions would be a further benefit. The simpler and broader the method the better on the whole will be the results obtained.

Another source of revenue, specially applicable in cases where costly improvements are being carried out by a public authority, may be found in special taxation of the owners who profit by the improvements. These “special assessments," as they are called in the United States, are generally in accordance with the principles of equity, and their use, under due safeguards, would meet a particular and keenly felt grievance. Of somewhat similar character are the charges that may be levied on companies for special privileges. Here, again, American experience suggests that the various industries that tend towards monopoly, inasmuch as they depend on a particular concession, should pay an adequate price for what they have obtained. Where local bodies do not engage in industrial work themselves, this method has the largest scope and may well be employed.

1 In answer to the natural objection that the effect of this measure would be to deprive the owners of agricultural land of the relief given to them by the Act of 1896, it may be urged that this relief was only temporary, and was the cause of angry controversy at the time, while the Irish grant, though nominally the logical application of the English measure to Ireland, was really an attempt to turn ofi the agitation that followed the Report of the “Financial Relations" Commission, and at the same time to compensate and conciliate the landlords affected by the change in local government. The only defence for the maintenance of the grants is the need in present circumstances of keeping up the receipts of local authorities to their present level. Special relief for agriculturists and other classes should be secured through a revaluation which would recognise the fall in land values where it has taken place.

Even with these normal and reasonable developments of local revenue it is evident that there can be no great and sudden growth comparable to that which at times takes place in state finance. A wave of prosperity passing over the country does not gladden the hearts of chairmen of finance committees. The national revenue advances by “ leaps and bounds"; the “rates” are comparatively inelastic, though their progress may be regular. But this contrast is only in strict accordance with the fundamental difference between the two systems. The imperial revenue must be elastic, because it has to meet the indefinite and often imperfectly foreseen needs of the state as a whole. Local finance is concerned with the steady or only slowly changing conditions of ordinary life. It is, in fact, set apart for that very reason. Prudence in administration is in its case a quality of the first order.

Magnum vectigal est parsimonia has been often suggested as a maxim to be laid to heart by statesmen; it is even more particularly appropriate in respect to local finance. The “parsimony need not take the form of stinginess in small matters; it should rather be that alluded to by Adam Smith as looking to the future, and sparing from present enjoyment. It is quite consistent with a policy of judicious outlay always carried on under close supervision.

Dividing the great mass of local bodies into the two broad divisions of “rural” and “ urban,” there can be little doubt that the former need not show any increase in their expenditure. The duties to be performed are simple and definite; the fund out of which revenue must come is equally plain. A little determination would suffice to remove all difficulties from this quarter.

1 For this system of franchise taxes, see H. C. Adams's Science of Finance, pr. 379-82.

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The problem of urban districts is much more complex, owing to the very different classes into which they fall. This very complexity and activity is, fortunately, an aid; as it is in such cases that municipal industries, franchise taxes, licences, and special assessments are most likely to be effective contributories of income. Large expenditure is only justifiable when there is adequate revenue to meet the charge, or strong grounds for expecting it in the immediate future. By observing this very obvious prudential rule, British urban finance could be kept in a perfectly solvent condition without any aid from the State revenue.

To briefly sum up results, it may be said (1) that the present conditions of both Imperial and local finance make a definite settlement of their relations highly desirable. (2) That the best adjustment is an essentially conservative treatment of the distribution of the great classes of revenue. There need not be any violent shifting of receipts from either central or local authorities. (3) That the most important object is to secure a real and effective separation between the revenue of the State and that of the localities. (4) That the means for this reform are present in the land tax and inhabited house duty, aided, perhaps, by a temporary grant of a part of Schedules A and B of the Income Tax, and supplemented by the development of local licences. (5) That for rapidly growing districts the betterment tax would be advisable. (6) That the growth of a sentiment in favour of prudent and economical administration is the essential condition for a sound and effective system of local finance.

C. F. BASTABLE

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Die Voraussetzungen des Sozialismus und die Aufgaben der

Sozialdemocratie. EDUARD BERNSTEIN. (Stuttgart: Dietz

Nachfolger. 1899.)

TAE Social Democrats even more truly than other social reformers live in an atmosphere of controversy, and controversy that tends to personalities. Mr. Bernstein's book is an illustration of this statement; and the English reader will not find it easy to enter into all the family quarrels of the party. But after all they are quarrels about matters of general interest; and the Social Democratic party has always contained men willing to do good economical work and place it before the world to be tested on its merits. There is much in the writings of Marx and Engels that the world will not willingly let die ; and we are not unduly magnifying the work of Mr. Bernstein when we say that it has something in it of the quality of the elder men's, together with a moral or intellectual courage even greater than theirs.

Mr. Bernstein tries to throw off the cant and the illusions and the exaggerations of his sect while he still remains a professed adherent of it. He has endured the reproof of its friends, and perhaps winced at the praise of its enemies. He will need all his courage, for the Congress of the party, held a few weeks ago, has declared his views to be heresy.

He takes the well-known distinction between the permanent and the changeable or ephemeral element in economic doctines; and he points to a changeable element in the received doctrines of Marx and Engels, generally considered to be the accepted Articles of Social Democracy. He shows that, especially in later life, Engels and Marx allowed, for example, a modification of their “ Materialistic" view of bistory. An outside critic might indeed say that Mr. Bernstein explains away inconsistent concessions unadvisedly made by these writers (e.g. 11,18). There is, at least, no doubt about Mr. Bernstein's own position. The explanation of history, he says, cannot be materialistic, though it may in a sense be economical (13); the plurality of causes in history is unmistakable (9). The followers of Marx should not hesitate to confess such facts. “ The further development and improvement of the doctrine of Marx must begin by the criticism of it—a criticism of its own making” (19).

What then are the unessential articles of the creed, for it must be these that are open to criticism from within the party? First, that the salvation of society demands a catastrophic change, an instantaneous and complete political revolution. This idea, says Mr. Bernstein, is obsolete (33) Its presence in Marx is partly due to the influence on him of revolutionaries of the type of Blanqui; but it betrays a dualism in the theory of Marx. The theory is in its essential economic basis constructive, but in its unessential excrescences it is revolutionary and destructive (30). How comes this? It was because Marx was led by Hegel to adopt the principle that progress takes place not by peaceful evolution but by revolutions (35). As Mr. Bernstein points out, the economic disturbance caused by a revolution had become immensely more serious in the France of 1848 than it would have been (under Baboeuf) in 1789 (32). Marx did not regard this; and he set down as the token of the coming revolution, indeed as the cause of it, the concentration of capital in fewer and fewer hands. Mr. Bernstein has discovered that the opposite is taking place. There may be fewer and fewer concerns, but there are far more sharers; a single company, like Lipton's, may have 74,000 shareholders (48). Again, the extended production of articles of general consumption points to a greater diffusion of wealth, for the millionnaires have no greater powers of consumption than other men, and the articles go somewhere else than to them (52). The very notion, too, of surplus value, as construed by Marx, is built on an abstraction, the notion of “abstract labour,” and is no measure of the degree of “exploitation.” It is better to abide by the fact, ascertained a posteriori, that there is exploitation than to use the abstract method (42). Yet it is not possible to found Socialism even on the fact so obtained (45). On Marx's own principles the constant capital outruns the variable, which means that the proletariat grows more slowly than the capital, though its presumed faster growth was to cause the revolution (54). A posteriori too the large production has not entirely driven out the small, nor is it even tending thereunto in Europe generally (55 seq.). The cataclysmal “crises” in trade and industry are not more but less acute than they once were ; there is a smaller margin of the unknown; the telegraph enables Credit to lessen the danger it was accused of causing, and trade combinations and trusts with all their faults often prevent overproduction (74, 77, 79). Such crises as we have are usually in particular trades, and one at a time (80). Finally, the immense progress of cooperation since the days of the communistic manifesto has shown new possibilities in self-help; the proletariat are not ready for a sweeping change, but co-operation shows us what their training for better things may be (96, &c.).

After this, we are prepared to find that Mr. Bernstein's Socialism is not irreconcilable with ordinary Radicalism. He might join hands

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