The kind of policy described is sometimes possible where, as in the case of railways, the only competition possible is between two or three great companies, the operations being on too vast a scale to be within the reach of individual capitalists; and this is one of the reasons why businesses which require to be carried on by great joint-stock enterprises cannot be trusted to competition, but, when not reserved by the State to itself, ought to be carried on under conditions prescribed, and, from time to time, varied by the State, for the purpose of insuring to the public a cheaper supply of its wants than would be afforded by private interest in the absence of sufficient competition. But in the ordinary branches of industry no one rich competitor has it in his power to drive out all the smaller ones. Some businesses show a tendency to pass out of the hands of many small producers or dealers into a smaller number of larger ones; but the cases in which this happens are those in which the possession of a larger capital permits the adoption of more powerful machinery, more efficient by more expensive processes, or a better organized and more economical mode of carrying on business, and thus enables the large dealer legitimately and permanently to supply the commodity cheaper than can be done on the small scale; to the great advantage of the consumers, and therefore of the labouring classes, and diminishing, that waste of the resources of the community so much complained of by Socialists, the unnecessary multiplication of mere distributors, and of the various other classes whom Fourier calls the parasites of industry. When this change is effected, the larger capitalists, either individual or joint-stock, among which the business is divided, are seldom, if ever, in any considerable branch of commerce, so few as that competition shall not continue to act between them; so that the saving in cost, which enabled them to undersell the small dealers, continues afterwards, as at first, to be passed on, in lower prices, to their customers. The operation, therefore, of competition in keeping down the prices of commodities, including those on which wages are expended, is not illusive but real, and, we may add, is a growing, not a declining, fact.
This disastrous result is to be brought about partly by the mere progress of competition, as sketched in our previous extract by M. Louis Blanc; assisted by the progress of national debts, which M. Considérant regards as mortgages of the whole land and capital of the country, of which “les capitalistes prêteurs” become, in a greater and greater measure, co-proprietors, receiving without labour or risk an increasing portion of the revenues.
Imagine a continent like America to be gradually covered by tenant freeholders, each of whom is recognized, for the present, as absolute owner of the soil which he cultivates. You will yet see that an increase of human population might hereafter take place, so great that the law must refuse any longer to admit the right of the freeholders to be absolute. For to allow anything to become a complete private property it must either be needless to human life, as jewels; or practically unlimited in quantity, as water; or brought into existence by human labour, as the most important kinds of food; and it is rather as a result of experience and wisdom than by direct moral perception that we forbid all invasion of private property in food, even to alleviate public famine. Now, as water, which is ordinarily allowed to be private, becomes public property in time of siege, so soon as its quantity is painfully limited; and as the possessors of wells would then be indemnified for the expense of their well only and not for water, so if at any time land becomes needed the right of private possessors to withhold it comes to an end, and the State has merely to secure that they be liberally indemnified for their actual expenses, and for any fixed capital which they are made to yield up.
The concluding sentence is ambiguous, and if the writer means that landowners have no claim to indemnity for the market value of their land, but only for the capital which has been laid out on it, we cannot admit that he awards full justice to them. It is true the original claim to hold land as private property, was only valid in so far as it was grounded on past, or conceded with a view to future, expenditure of labour and capital. But when the law has given more than this—has allowed the original powers of the soil to be permanently appropriated, and to pass by purchase and sale to those who have paid full value for it in things produced by labour—this property is no more a fit subject of confiscation than any other. Society has no right to seize upon one particular kind of property, and on the ground of a moral defect in the first title, a thousand years ago, turn out the possessors with no compensation except for actual expenses. For the sake of great public reforms, sacrifices may have to be imposed on the possessors of property, but not on one class or description of property peculiarly, no more than on one individual; and the most proper time for demanding such sacrifices is on the occasion of succession by death, that being the mode which least interferes with the habits and expectations which have grown up under the sanction of law.
The concluding chapters contain some useful observations in favour of small landed properties, of partnerships, of giving the labourers a joint interest in the profits of the capitalist, and other matters of considerable, though secondary importance, of which the limits already attained by this article, forbid any more particular notice.
It was exceedingly well put by one of the witnesses before the Committee, Mr. Ansell, that the injustice depends upon the combined circumstances, that it professes to be an income tax and does tax capital, and, that taxing capital, it does not tax it equally. It only taxes some capitals, and not others; and is therefore unjust as a tax upon capital.
I do not feel that I understand that subject. The difficult question is to know how far deductions should be allowed for exhaustibility, on the same principle on which the replacement of capital is deducted in the Chairman’s plan in the case of terminable annuities; and on that question I do not feel that I can give any opinion worth hearing.
Because the reasons for exemption are stronger in the other two cases than they are in that. The only reason that could be urged for exemption in the case of the shareholder, is the slight shade of precariousness that there is about his income, which is not usually great in those cases. Where the shareholder is poor, the property is usually in the funds, or in some comparatively secure and steady investment, and where he is not poor, it will generally be so divided that the risks will be an insurance against one another; therefore I think the claim is at its lowest point in the case of the shareholder in a company; it is at the lowest point that can be, where there is any precariousness at all. But in the other two cases, not merely the interest or profit on capital, but also the reward of industry and talent forms part of the income; and this element of the income, besides being more precarious, terminates with the life of the person.
But, on the other hand, if that capital belonged to him, and if it was spent by himself, you may say, on that principle, that the interest on it becomes subject to the full taxation, and justly so.
It would very often happen in the case of a small trader, for instance, that the capital would be so small a proportion as not to be worth considering, and if so, I would give him the full benefit in the same manner as professional persons; but in the cases in which the capital was anything considerable, anything that would be much worth taxing, I should think it just, if it were practicable, to tax the interest on capital at one rate, and the profits above the interest at another and a less rate.
I find it difficult to make up my mind upon that subject, because it depends very much upon practical considerations. I have no doubt whatever as to their being entitled to the exemption of one-third, or whatever it is that is given to life incomes generally, because there is no class of persons on whom the obligations to save are more imperative than on a large proportion of life annuitants. But, on the other hand, the Chairman proposes that they should be allowed a deduction, not of this one-third, but the much larger deduction which is implied in exempting from taxation what is required to replace the capital. This I quite agree is a proper principle in the case of terminable annuities, that is, in the case of all annuities in which the capital is really intended to be replaced; and there is a class of life annuities, as the Honourable Chairman has had the goodness privately to point out to me, to which it applies. For instance, if a person receives money from an insurance office, paying for it by an annuity on his own life, that is a similar case to an annuity for a term of years; and there are just the same reasons for leaving untaxed the portion which is repayment of capital.
The present work, though popular and attractive in style, is strictly scientific in its principles and reasonings; and is therefore, as might be expected, strictly impartial in its judgments. A considerable part of the volume is employed in refuting the principles on which it is usual to rest those claims and aspirations of the labouring classes, which nevertheless the author, on better grounds, supports. No blind partisan on either side of the feud of labour against capital, will relish the book; but few persons of intelligence and impartiality who read it through, will lay it down without having reason to feel that they understand better than before some of the bearings of the questions involved in that conflict.