sion.

Men rather abandon a calling than continue it under the condition of running the perpetual risk of violence or fraud, and of being constrained to defend themselves against these chances by extraordinary prudence or force. We have seen that the distribution of capital over the world is seriously hampered by the absence of any effectual protection to lenders, when they negotiate business with such countries as do not extend the benefits of civil process to the foreign creditor; and we must acknowledge that one of the greatest benefits which diplomacy could bestow, would be the establishment of an international commercial law.

So great are the advantages derived from the assistance which law gives to the fulfilment of contracts, that the members of civilised communities are willing, if need be, to make personal payment for the benefit by incurring the costs of civil process. They do not hesitate to sacrifice the recovery of their property, and submit to the loss of time involved in prosecuting criminals who are guilty of such offences as are indictable, and in which the wrong done to the individual is forgotten or merged in the greater wrong done to the well-being of the community. In the abstract, since private citizens contribute to the public revenue under the implied contract that the State will, as far as possible, protect them in the enjoyment of life and property, the forcible or fraudulent interruption of this enjoyment should be made good by the State. The defence of costliness in law proceedings, (sufficient precaution being taken against vexatious and frivolous prosecutions,) that were law cheap, lawsuits would be enormously multiplied, was well met by Bentham when he pointed out that the very fact of a citizen being con

strained to remedy himself in a court of law is a proof that the organisation of civil society is incomplete for the purposes of protection, and that, therefore, the aggrieved person has a right to compensation. In some cases, as, for example, loss of property during such disturbances as constitute, in legal language, riot, full compensation is awarded by law to the sufferers.

The collection of a revenue then, in other words, the legal abstraction from each individual, according to some proportion or other, of a part of that which he would otherwise enjoy at his own discretion, is justified on the principle of the division of labour. A government does a service more cheaply, more effectually, more justly than the individual could perform it for himself. It can do this only by claiming a portion of each person's resources. It perpetually defends the claim on the plea of the value which must be assigned to the service done. The policy of a government stands or falls as it substantiates its assertion that it has acted and is acting for the public good. If it fails to make this out, it may coerce criticism, but it has ceased to be a government. It is treating its subjects as an inheritance, as the property of the ruler, as the dupes of an adventurer, or as the slaves of a despot. When a people is in such a condition, it must either be content to become demoralised or it will reverse the policy of its rulers.

It is admitted on all hands that taxation should be equitable. It should be determined, says Adam Smith, according to the amount of revenue which each person enjoys under the protection of the State. If it were determined by the comparative protection accorded to individuals, it is plain that women and children should

pay a higher rate than strong and healthy adults, since they have more need of assistance; and, if the law be effectual, get more. In fact such was the theory of medieval finance. The lord protected his vassal; the vassal assisted his lord by his service or by his purse. But minors under the English military tenures, and women under some forms of the feudal assize, were in the hands of guardians, who were enabled to take the rents or profits of their estates, without account, during legal incapacity. The reason given was, that there was no reciprocity of service in these cases, and the plea might be justified because, in an age of violence, weakness taxes the energies of defence more than it excites the sentiment of pity. A more generous and less utilitarian theory has gradually prevailed. It is held that for practical purposes, and under the conditions of organised society, the strongest is too much indebted to the security which a wise and just government gives, to allow any such comparison between his condition and the condition of the weakest, as shall tend to lay a heavier impost on the latter.

Taxation then, to be equitable, should be determined according to the amount of revenue which each person enjoys, What is this revenue, and to what extent is the revenue which a person receives available for his personal enjoyment?

A man's revenue is not his capital, but the profit on his capital. His gross wages are not his revenue, for, as we have seen above, part of the total sum receivable under the circumstances of competition for the supply of services, as compensation for these services, is paid for maintaining the instrument by which the service is rendered,

i. e. the life and health of the agent; part is insurance against risk; part a payment of the nature of a sinking fund, replacing the capital which is invested in the agent, and is gradually being worn out. It is confiscation to levy a tax on that which a man cannot save. We have seen that these constituents must be satisfied in the case of those subordinate animal or mechanical forces by which man assists his own labour, and that no person would reckon the whole of the product of a steam-engine or the whole work of a horse as net profit, but would have to consider the above-named quantities as deductions from such profit. He cannot ignore them in his own case. The only profit which he can recognise in his wages, or whatever else be the name which he gives to the remuneration of his own services, is that portion of the sum receivable, which is due as interest on the capital originally invested in making him fit for his employment, or has been subsequently accumulated in his professional reputation or improved powers of labour. The profit contained in wages, in short, is interest or rent, on the outlay of capital.

Nor can we call that revenue which a man receives but cannot personally enjoy. If a man is liable to the maintenance of children, whom he brings up in such a position as to enable them to labour and take his place. after him, he does not enjoy his revenue, but invests it productively in the education or training of life for the purpose of labour. He has, it is true, no lien on the capital which he has invested in the maintenance of his children, for the usages of modern society do not recognise any such property in a parent; but he has, when the case is considered in its economical bearings, and

on the hypothesis that the labour which he has reared is in demand, as surely invested capital productively as if he had laid out a part of his earnings in a drove of cattle, in a workshop full of machinery, in draining an estate, or in any other form which implies an addition to the stock of useful objects or useful forces in existence. Of course, if it be taken for granted, that labour is already redundant, and that the adult population is excessive, the existence and the maintenance of children may be conceived to be at the best a matter of private interest, or even the calling into being of a number of persons for whom the world has neither need nor room; but as long as men can emigrate, and until the earth is occupied, the dread of over-population is a vague fear, and in any case, the maintenance and education of children is an investment of capital.

If we take revenue, therefore, in its strictest sense, and conceive that only to be a man's revenue which is devoted to his personal enjoyment, under the protection of the State; and further conclude that this revenue, when strictly limited in the sense which I have given it, is alone liable to taxation; it will be clear that the necessary maintenance of the labourer, his investments while they are being made but are as yet unproductive, and such payments as represent insurance against the risks of sickness and the certainty of death, are not legitimately liable to taxation, because they are not a productive employment of his capital or labour.

This theory of the object on which an impost may be levied, is to some extent recognised in the incometax. Incomes below a certain sum are untouched, below another limit are only partially visited, and all who are