28 REPORT— 1876. 



1. Measure of value wanted.- — The question of a common measure of value 

 is one of a class that may be literally called standard questions, and its 

 solution is at the basis of equality in taxation both general and particular. 

 Values are the object matters of taxation, their measurement and comparison 

 are the necessary condition of its equal incidence ; and measurements with 

 unequal measures are like weighings with luijust balances. Taxation, how- 

 ever pure its intention, without a common measure of value, is what navigation 

 would be without sextant and chronometer, or architecture without compass 

 and level. And this perhaps is not an unfair description of what it actually 

 is, though not, it may be hoped, of what it must be. One of the chief marks 

 of advancing science has been a progress towards better measures and better 

 measurements, a substitution of the uniformities of rules of reason for the 

 unrestricted vagaries of rules of thumb ; and such is the aim of the present 

 inquiry. This question of a common measure of value is the question of the 

 common measure of taxation ; or if there be several such measures, what is 

 their common ratio ? what are they in terms of one another ? 



2. Tivo Methods of General Valuation: Capital-Value and Usable Value. — 

 Measurements of the value of things (employing this word " things " as 

 inclusive of land, labour, stock, &c.) may have reference to their absolute 

 worth or to their temporary uses. They may have reference to their pro- 

 perty, capital, or absolute values, or to their products, profits, or annual 

 values. The one measure is exemplified in contracts of sale and purchase, 

 the other in contracts of letting and hiring. Each has its special advantages 

 and special applications. Capital or absolute value is ajjplied in the assess- 

 ment of probate and legacy duty ; usable value in the assessment of local 

 taxation and in those of the imperial income-tax. Moreover, as the capital- 

 value of the thing must be equivalent to the present value of the sum of its 

 future uses, the two measures, if consistently defined, though differing it may 

 be year by year, must be in the long run equivalent. But such consistency 

 of definition is an essential. Tlie idea of capital-value is tolerably well fixed, 

 but that of usable or lettable value is indefinite. Usable value is, or is 

 equivalent to, the consideration paid for, the income received from, the use 

 of things. This consideration, however, may be paid under such totally 

 different conditions of contract that, unless these conditions are first assimi- 

 lated, the payments regarded as measures, either of the values of the things 

 or of the abilities of their owners, are worse than useless : they are mis- 

 leading. 



3. Usable Valve unrestricted and indeterminate and lience unfit as a com- 

 mon measure. — To illustrate this : things having a use, and hence capable of 

 becoming sources of income, are all, by the very nature of the process, liable 

 to outgoings ; some more, some less. Production involves productive con- 

 sumption. Efficiency implies cost — cost, for the most part of insurance 

 against natiual risk ; of repairs ; of necessary depreciation. But the user of 

 a thing, be it land, labour, or stock, may engage for its use with or without 

 liability to these outgoings ; their costs may be borne by the user or by the 

 owner, or they may be divided between the two in any proportion that con- 

 venience may direct. The user may bear repairs and the owner natural risk 

 and depreciation, or the user may bear natural risk and repairs and the owner 

 natural depreciation, or the user may bear all and the owner none, or the user 

 none and the owner all, the consideration given (the income received) of 

 course varying accordingly. Were the things valued by absolute sale or 

 capitalization, all the incidents, whether of efficiency or cost, plus or minus, 

 would be wholly and uniformly included, and the test would fix the things' 

 relative positions. In valuation by uses, hoAvever, it is evident that these 



