90 ON TAXATION 



of the national capital withdrawn from individual 

 use and set aside for national purposes. Really, 

 therefore, there is only one principle on which 

 revenue should be raised by Government, and 

 that is the withdrawal from individual use of 

 only such capital as can be withdrawn with the 

 least hindrance to national industries. 



As nothing is more common than to hear 

 certain taxes or duties condemned for the reason 

 that the nation, in raising money by such taxes 

 or duties, is living on its capital, it is necessary 

 to give some proof of the above propositions. 



A nation must live on its capital ; it has nothing 

 else to live on. The nation financially differs 

 greatly from the individual owner : it has its 

 capital, and only its capital, in one simple form ; 

 it makes no distinction between principal and 

 interest ; it has neither the one nor the other. 

 Great Britain does, it is true, possess certain 

 canal shares ; and such a possession is like that 

 of an individual : it comprises principal and in- 

 terest. But that particular possession is a mere 

 accident; it is a rare exception to a rule other- 

 wise general. It is, in spite of that exception, 

 safe and correct to say that nations have only 

 capital in one simple form, and take their revenue 

 from that, as its only possible source. 



The individual has also only his capital; but 

 he has it in two forms, principal and interest- 

 The principal yields, and keeps on yielding, 

 interest to him who spends no more than that 

 interest. He who spends more than the interest 

 gradually uses up the principal as well. To 



