control or management of a local authority. Some of these expenses are incurred for purposes in which the particular locality is solely or chiefly interested; as the paving, cleansing, and lighting of the streets; or the making and repairing of roads and bridges, which may be important to people from any part of the country, but only in so far as they, or goods belonging to them, pass along the roads or over the bridges. In other cases again, the expenses are of a kind as nationally important as any others, but are defrayed locally, because supposed more likely to be well administered by local bodies: as, in England, the relief of the poor and the support of gaols, and in some other countries, of schools. To decide for what public objects local superintendence is best suited, and what are those which should be kept immediately under the central government, or under a mixed system of local management and central superintendence, is a question not of political economy but of administration. It is an important principle, however, that taxes imposed by a local authority, being less amenable to publicity and discussion than the acts of the government, should always be special— laid on for some definite service, and not exceeding the expense actually incurred in rendering the service. Thus limited, it is desirable, whenever practicable, that the burthen should fall on those to whom the service is rendered; that the expense, for instance, of roads and bridges, should be defrayed by a toll on passengers and goods conveyed by them, thus dividing the cost between those who use them for pleasure or convenience, and the consumers of the goods which they enable to be brought to and from the market at a diminished expense. When, however, the tolls have repaid with interest the whole of the expenditure, the road or bridge should be thrown open free of toll, that it may be used also by those to whom, unless open gratuitously, it would be valueless; provision being made for repairs either from the funds of the state, or by a rate levied on the localities which reap the principal benefit.

In England, almost all local taxes are direct, (the coal duty of the City of London, and a few similar imposts, being the chief exceptions,) although the greatest part of the taxation for general purposes is indirect. On the contrary, in France, Austria, and other countries where direct taxation is much more largely employed by the state, the local expenses of towns are principally defrayed by taxes levied on commodities when entering them. These indirect taxes are much more objectionable in towns than on the frontier, because the things which the country supplies to the towns are chiefly the necessaries of life and the materials of manufacture, while, of what a country imports from foreign countries, the greater part usually consists of luxuries. An octroi cannot produce a large revenue, without pressing severely upon the labouring classes of the towns; unless their wages rise proportionally, in which case the tax falls in a great measure on the consumers of town produce, whether residing in town or country, since capital will not remain in the towns if its profits fall beyond their ordinary proportion as compared with the rural districts.

CHAPTER VI.

COMPARISON BETWEEN DIRECT AND INDIRECT

TAXATION.

§ 1. ARE direct or indirect taxes the most eligible? This question, at all times interesting, has of late excited a considerable amount of discussion. In England there is a popular feeling, of old standing, in favour of indirect, or it should rather be said in opposition to direct, taxation. The feeling is not grounded on the merits of the case, and is of a rather puerile kind. An Englishman detests, not so much the payment as the act of paying. He dislikes seeing the face of the tax collector, and being subjected to his peremptory demand. Perhaps, too, the money which he is required to pay directly out of his pocket is the only taxation which he is quite sure that he pays at all. That a tax of two shillings per pound on tea, or of three shillings per bottle on wine, raises the price of each pound of tea and bottle of wine which he consumes, by that and more than that amount, cannot indeed be denied; it is the fact, and is intended to be so, and he himself, at times, is perfectly aware of it; but it makes hardly any impression on his practical feelings and associations, serving to illustrate the distinction between what is merely known to be true and what is felt to be so. The "ignorant impatience" of direct taxation, contrasted with the easy manner in which the public consent to let themselves be fleeced in the prices of commodities, has generated in many friends of improvement a directly opposite mode of thinking to the foregoing. They contend that the very reason which makes direct taxation disagreeable, makes it preferable. Under it, every one knows how much he really pays; and if he votes for a war, or any other expensive

national luxury, he does so with his eyes open to what it costs him. If all taxes were direct, taxation would be much more odious than at present; and there would be a security which now there is not, for economy in the public expenditure.

Although this argument is not without force, too much. stress, I cannot but think, is laid on it: for, in the first place, its weight is likely to be constantly diminishing. The real incidence of indirect taxation is every day more generally understood and more familiarly recognized: and whatever else may be said of the progressive changes which are taking place in the tendencies of the human mind, it can scarcely, I think, be denied, that things are more and more estimated according to their calculated value, and less according to their non-essential accompaniments. The mere distinction, therefore, between paying money directly to the tax-collector, and contributing the same sum through the intervention of the tea-dealer or the wine-merchant, will not continue to make the whole difference between dislike or opposition, and passive acquiescence. But further, while this infirmity of the popular mind subsists, the argument grounded on it tells partly on the other side of the question. If our present revenue of above fifty millions were all raised by direct taxes, an intense dissatisfaction would certainly arise at having to pay so much; but while men's minds are so little guided by reason, as such a change of feeling from so irrelevant a cause would imply, it may be doubted if so great an aversion to taxation would not produce more evil than good. Of the fifty millions in question, nearly thirty are pledged, under the most binding obligations, to those whose capital has been borrowed and spent by the state: and while this debt remains unredeemed, a greatly increased impatience of taxation would involve no little danger of a breach of faith, similar to that which, in the defaulting states of America, has been produced, and in some of them still continues, from the same cause. That part, indeed, of the public expenditure which is devoted

to the maintenance of civil and military establishments, is still, in many cases, unnecessarily profuse, but though the total amount will bear great reduction, many items certainly require increase. There is hardly any public reform or improvement of the first rank, proposed of late years, and still remaining to be effected, which would not probably require, at least for a time, an increased instead of a diminished appropriation of public money. Whether the object be popular education; emigration and colonization; a more efficient and accessible administration of justice; a more judicious treatment of criminals; improvement in the condition of soldiers and sailors; a more effective police; reforms of any kind which, like the Slave Emancipation, require compensation to individual interests; or, finally, what is as important as any of these, the entertainment of a sufficient staff of able and highly-educated public servants, to conduct in a better than the present awkward manner the business of legislation and administration; every one of these things implies considerable expense, and many of them have again and again been prevented by the reluctance which existed to apply to Parliament for an increased grant of public money, though the cost would be repaid, often a hundred-fold, in mere pecuniary advantage to the community generally. I fear that we should have to wait long for most of these things, if taxation were as odious as it probably would be if it were exclusively direct.

There is, however, a frequent plea in support of indirect taxation, which must be altogether rejected, as grounded on a fallacy. We are often told that taxes on commodities are less burdensome than other taxes, because the contributor can escape from them by ceasing to use the taxed commodity. He certainly can, if that be his object, deprive the government of the money; but he does so by a sacrifice of his own indulgences, which (if he chose to undergo it) would equally make up to him for the same amount taken from him by direct taxation. Suppose a tax laid on wine, sufficient to