PRINCIPLES OF TAXATION. 515 



" Now a ' credit,' be it promissory note, mortgage, certificate of deposit, 

 or what you will, is not only not property, but is proof that the holder has 

 parted with property that he once had. His paper credits, which merely 

 certify that in consideration of certain advantages (interest, freedom from 

 cares of management, etc.) he has surrendered his property to another, 

 have no function but that of enabling him at some future time not to re- 

 sume his own, for it is no longer his, but to acquire its equivalent from the 

 present owner. The more a man has of these things, which it is proposed 

 to tax as property, the poorer he is not necessarily poorer than a man with 

 none, but poorer than himself was before he got them. It is only by sur- 

 rendering them that he can become again as wealthy as he was. 



" Is he then to escape taxation, living at his ease on his interest, while the 

 man who pays it bears the expense of government for both ? Let us see if 

 under the present system the latter does anything of the kind. X wants a 

 thousand dollars of Z, for which he can afford to pay, say, sixty dollars a 

 year. But if the State government is going to exact from him ten dollars, 

 he can afford to give Z but fifty, with which that person must be content, 

 or X will either get the money from another or not take it at all. It is 

 clear, therefore, that the lender really pays the tax, the borrower being un- 

 affected directly ; what he pays to the State he would otherwise have to pay 

 to the lender. Indirectly he is affected thus : Taxation of the principal, by 

 reducing the interest, reduces also the volume of borrowable money by 

 driving a part of it into more profitable investment, and the scarcity so 

 created tends to restore the rate of interest, the cause thus counteracting its 

 own effect, as the slackening in the speed of a steam engine is the agent 

 that increases its velocity. 



u Reverting to the matter of the horse, we find that quadruped in the 

 possession of B and a note for one hundred dollars in the hands of A. Re- 

 lying on B's payment of the note, A purchases a hundred dollars' worth of 

 flour from C, giving his note. C knows that A is good for the amount, and 

 gives his own note for a hundred dollars for a barrel of whisky to D, who 

 then feels rich enough to purchase a thousand cigars, at ten dollars a hun- 

 dred, from E, satisfying him with a note. At the end of a month D's hos- 

 pitable friends have burned all that gentleman's cigars ; C, in one pro- 

 tracted, solitary revel, has gone through his barrel of whisky like a rat 

 through a water pipe ; A's family and retainers have consumed his flour 

 like a flame in flax ; and B's charger, broken by the weight of the financial 

 superstructure reared upon his patient person, lies dead wise on the plain, 

 with daisies at his head and at his feet. But he has left a legacy of taxable 

 ' solvent credits ' that does honor to his memory better than a monument 

 of brass, and 



" ' Nothing beside remains round that colossal wreck ! ' 



"Working for a dead horse is, however, proverbially disheartening, and 

 it is some years before B has put by enough money to discharge his debt to 

 A, and has thereby rendered him unable to pay C, whose habit of being 

 supinely drunk has made the expensively befriended D whistle in vain for 

 the wherewithal to pay E. But finally B hands a hundred dollars to A, 

 who hands it to C, who hands it to D, who hands it to E ; and four hun- 

 dred dollars' worth of taxable property, on which the government of this 

 State had been living, like St. Simon Stylites on his capital, vanishes into 



