I30 



SCIENCE. 



[Vol. XVIII. No. 



ceniuries ago, and has undergone little change. If we except 

 the indirect taxes like customs duties, our present system is 

 based on the idea that the chief wealth of the country is in 

 its agricultural districts, in its farms, and consequently it is 

 adapted to reach the main elements in such a condition of 

 society. But nothing could be further from the truth. It 

 was so a century ago, but has long ceased to be so. 



In 1790 there was no railroad in the country, scarcely any 

 banks, few trades, little manufacturing, scarce a dozen cor- 

 porations in the whole country, no very large cities, and 

 ninety-seven per cent of the people lived in the country. 

 What wealth there was was in the country — in the farms 

 and lands and farm products. A system of taxation based on 

 this fact worked fairly well. 



How is it now ? Where is the bulk of the wealth of this 

 great country of ours ? It is no longer in the country: it is 

 in the cities, in and around which nearly half the population 

 is aggregated. It is no longer in agriculture; it is in rail- 

 roads; it is in gas companies, in street-car lines, in merchan- 

 dizing and trading, — everywhere but in farming. The earn- 

 ings of the railroads of the country during the year 1888 

 were over one thousand millions of dollars. We have no 

 reports as yet on the earnings of gas companies, electric-light 

 companies, telephone companies, street-car lines, telegraph 

 companies, express companies, sleeping car companies, man- 

 ufacturing corporations, standard oil monopoly, cottonseed 

 oil trust. They mount up into the hundreds of millions 

 every year. The profit of trade in the agricultural products 

 of the country alone amount to more than the total value of 

 those products only a few decades back. In a word, the 

 wealth has been steadily flowing away from the farms and 

 into other forms. 



This has come about in two ways: first, by the natural 

 increase of manufacturing industry and of commerce in an 

 age of steam and electricity, which would show relative in- 

 crease of capital invested in those branches; and second, by 

 the actual fall of late years in all farm values in the old and 

 settled communities incident to the opening up of new fields, 

 which are enabled to compete in the world's market by the 

 cheapening of transportation in railway and steamship ser- 

 vice. Not only Dakota and Montana compete in London 

 with the Pennsylvania wheat, but also India, Russia, and 

 even Africa. There has been a great fall of late in the value 

 of farm staples in the world's market, which has depressed the 

 value of farms in all the settled countries, — in England, 

 France, and Germany, as well as in our Eastern States. 

 There are no signs that those prices will go up again, at least 

 in your day and mine. 



Africa, South America, India, Russia, and Australia will 

 be opened up faster than the demand for bread-stuffs will in- 

 crease, and you may be sure that Europe will not pay as 

 high prices for our surplus wheat and corn when it can get 

 cheaper supplies elsewhere. We need expect then no recov- 

 ery in farm values so far as these depend on the price of 

 staple commodities. 



In examining this question of taxation, then, let us im- 

 press upon our minds several points: first, that we cannot 

 hope to get money where it is not, no matter how good our 

 system may be; second, that the wealth of the country is no 

 longer in its farms; third, that the present revenue system is 

 based on that supposition, and that consequently our whole 

 revenue system must be radically changed to bring it into 

 harmony with our modern industrial conditions. 



No mere tinkering or pottering around with existing taxes 

 is going to help. We must make up our minds to go to the 



root of the matter at once; recognize that if we wish revenue 

 we must reach the place where it is, and not try to get it 

 from where it is not. 



Before proposing our remedy it is desirable to glance at 

 our present system and its effect. We have already seen 

 that it is inadequate to meet the demands we are making and 

 shall make upon it. It is simply impossible to get adequate- 

 revenue from it. 



There is, however, another reason why our present revenue- 

 system is unsatisfactory besides the mere reason that it can 

 not meet the heavier demands upon it, i.e., than its insuffi- 

 ciency to get the necessary revenue, and that is, that, owing 

 to the great changes in our industry, it has become grossly 

 unjust. 



We may characterize the system as a whole as the general- 

 property tax system, iiC., the effort is made to ascertain the 

 valuation of the entire property belonging to every taxa- 

 ble, and then to collect a certain per cent of that valuation for 

 the use of the public. Even if it were possible to ascertain 

 such value, and collect the tax levied upon it, the system 

 would be a grossly unequal one, and undesirable from many 

 points of view. It would tax, for example, the thrifty far- 

 mer who had acciimulated from his savings a sum sufficient 

 to purchase a small farm in proportion to his thrift and sav- 

 ings; while it would let the extravagant lawyer or physiciaa 

 who makes thousands of dollars every year and lives it all 

 up, go scot-free of all taxation. All those classes who use 

 up their income as they go along would escape taxation, while 

 those who save and invest it in some form of property would 

 have to bear all the burden of taxation. It would, in a word, 

 discourage savings and encourage waste. Such a tax makes 

 no distinction between the people of small property and those 

 of large means. 



The true principle of taxation is not every one in propor- 

 tion to his property, but every one in proportion to his ability ; 

 and ability is not measured by possession of property alone, 

 since a man of large means may better afford to give a larger 

 sum than a person of small means a small sum. A general- 

 property tax, moreover, takes no account of whether the prop- 

 erty is available for purpo.ses of income or not. A person is- 

 taxed upon what he has, irrespective of the fact whether he 

 can get anything out of it or not. And so I might go on andi 

 show how unequal and wasteful such a tax is, .even if it 

 could be fully assessed and collected ; but the fundamental 

 objection to it is that it can never be assessed and collected. 

 To make it even approximately complete you must rely on 

 the declaration of the taxable that he has given a full and 

 true list of his property. A portion of this property can, of 

 course, be seen, such as houses and lands and furniture, im- 

 plements and tools, pictures, books, pianos, etc. But another 

 class cannot be seen; such are stocks and bonds, notes, mort- 

 gages where owned outside of the community, etc., and all 

 other forms of immaterial rights. It is impossible to assess 

 these things except upon the personal declaration of the 

 owner Now everybody who has looked into the matter at 

 all agrees, I believe, that this cannot be relied upon at all. 



All tax commissions which have reported upon this point 

 say that existing laws do not secure such a return. Taxables 

 commit perjury by wholesale in such matters, and think 

 nothing of it. How much of this sort of property escapes 

 taxation can be seen from examining the tax books and re- 

 ports of any of our leading American cities. We have, of 

 course, no adequate statistics of the relative value of person- 

 alty and real estate for any country or part of a country. 

 No one, however, estimates the value of the personal prop- 



