order, and the inestimable virtue of self-respect. To some extent a training in the army brings about these results, though the material, in the great majority of cases, is the most unfavourable that could be selected. Nor is it necessary that the relations of domestic service should lead to any sacrifice of honourable independence. On the contrary, it could be constantly made the means by which the poorer classes might learn to attempt a higher standard of life and comfort, and to develope those prudential motives in which they are confessedly so deficient at present.

When a tax is levied on some employments which cannot be dispensed with in the economy of society, the tax is ultimately paid by those who employ the service, or use the commodity on whose production the service is exercised. Thus licences on special trades are paid by customers. The case would be different if all employments without distinction were liable to proportionate licence duties. No person will, under the ordinary conditions which reduce the rate of profit to an equality, enter into a calling which is weighted with a heavy licence duty, unless he makes those who use his services, pay him to the full for the service which he renders. One of the heaviest licences is that levied on the London pawnbrokers. The persons with whom these traders deal are the poorest classes in London, and we may be sure that the tax which government levies, is paid, notwithstanding the regulations which fix the rates of interest payable on pledges, over and over again by those who employ these functionaries. It would be far better for the general public, and even for the revenue, if so wasteful a tax were repealed, and the impost replaced by an ad valorem stamp

duty on the pawnbroker's ticket. In short, the existing licence-duties offend against the fourth of Adam Smith's celebrated rules. They either check employment, and deprive the public of a convenient service, or they visit the community at large with an impost, which is far in excess of the amount which the exchequer collects.

To sum up the question. If a system of indirect taxation is to be defended and maintained, it is difficult to find any process by which a larger revenue can be obtained in so legitimate, and with a few exceptions, in so little wasteful a fashion as that which prevails among ourselves. By far the largest part of this revenue is derived from articles of voluntary consumption. From one point of view this fact constitutes the chief merit of the system. From another it is its chief blemish; since persons may evade payment to the revenue by evading the use of the article. But I repeat, it does not, except slightly, affect the use of the necessaries of life, or that investment of capital on which I have several times insisted so strongly, the maintenance and education of the young. On the other hand, direct taxation is never just, unless it be limited to profits on capital, unless all productive investments of capital are visited by the tax, and therefore, unless the tax extends to all callings and occupations from which a revenue can be derived, the basis of the calculation in the case of income being taken from the capital which an industrial agent may be fairly taken to represent, and the tax levied on the ordinary rate of interest procurable from such an amount. The basis of such an assessment will be found in the income of the labourer.

CHAPTER XXIII.

On Public Debts.

It is a saying of Macaulay, that monarchs and governments have often got into debt, but that in England at least, the government of the Revolution was the first to acknowledge and pay its obligations. The statement is historically true. The debts of Edward III. were for the time enormous, his creditors being certain Italian houses. The later Plantagenet kings raised loans, under the strange name of benevolences. These were forbidden by a statute of Richard III. Henry VIII. got deeply into debt, but his complaisant parliaments gave him a formal release from his obligations. James I. was frequently involved in difficulties. Charles I. robbed the merchants of their specie, Charles II. the goldsmiths. A portion of the latter debt was acknowledged some time after the Revolution, and forms the oldest item in the public debt of Great Britain. This country, however, was not the first to contract a funded debt. The Dutch borrowed sums during their long contest with Spain. These amounted in 1650 to 153,000,000 guilders. In fact, most of the fiscal expedients, which governments have from time to time adopted, were copied from the early financial policy of Holland.

The English public debt grew with great rapidity, whenever this country was involved in foreign war. By the conclusion of William III.'s reign it was £15,730,000. By that of Anne £54,145,000. In the third year of the

reign of George III. it reached £138,385,000. February 1st, 1817, it was £840,850,000. On March 31st, 1866, it was about £805,000,000. Other nations have

debts, less in quantity, but very large, the nearest in amount to our own being those of the United States and France.

The greater part, if not the whole of the British debt has been contracted for purposes which are technically called unproductive. To use familiar language, there is nothing to shew for the expenditure. Governments have sometimes, especially in our own day, borrowed money for the purpose of accomplishing important public works, particularly railways. Such loans are productive, that is are sources of annual revenue or advantage. The outlay on such objects, provided they are remunerative, does not differ practically from any other investment of capital; the sole distinction being that between private and public enterprize.

When we say, however, that the whole, or nearly the whole, of the public debt of Great Britian has been expended on unproductive objects, the term is not used with any intention of adverse criticism. The costs incurred by the several wars, part of the expenditure of which is comprised in the several additions to the public debts, may have been necessary to the security of the national existence. It is better to consume some part of the public wealth unproductively, than to lose all. A nation cannot be indifferent to its defence, its reputation, its honour. The best sacrifice which it can make, even if we take the harshest economical estimate of such sacrifices, is that which it makes in order to secure its integrity. Just as an honourable merchant must put up with loss, in order to keep his credit unimpeached,

so must a nation be jealous of its public character. Whether or no the wars into which this nation has entered have been necessary or even expedient, is another question, which we need not discuss.

It is necessary to advert to the fact, because even if the cost of war in past generations could be shewn, not only to have been unnecessary, on the plainest grounds of public morality and justice, but to have been, to take the strongest case, unwarrantable attempts at unsuccessful aggrandisement, and if we could add that they were entered on with a full knowledge on the part of those who engaged in them, that they were capable neither of justification or apology; we should not be relieved from the obligation involved in the creation of debt, In the language of lawyers, an heir is liable to the debts of his ancestor, if the assets of the inheritance are sufficient to defray the debts. The ancestor may have created these obligations by reckless or immoral expenditure. If the debts exceed the assets, no such over-burdened inheritance would be accepted. It is true that we have accepted a great debt, a debt the liquidation of which is as yet an unattainable aim, but we should take care in calculating the liabilities which our ancestry have put upon us, to make an estimate of the estate which they have bequeathed us. Nay more, the fact that the nation or the great part of the nation did not formally enter into the obligation is no quittance. We can escape from the liability, only if we can shew that we have no share in the inheritance, and the only way in which we can prove that we have no share, is by removing ourselves from the political institutions under which these liabilities were contracted. As long as we reside in the