kind, as well as according to the size, of income.1 Referring to the claim that the income tax is inquisitorial, he stated that “this objection would be entitled to some weight if the present system of taxation for which that on income is proposed as a substitute were entirely free from any inquisitorial examinations into men's property operations and affairs;" but this he vigorously denied.

In opposition to all these writers, the prevalent feeling of the political leaders is well reflected in a leading article, which, after reviewing in some detail the various schemes, concluded that "taxes on income, though theoretically equal, are, in their actual operations, the most unequal and vexatious of any that it is possible to imagine."2 The very idea was indignantly repelled by Wells, a barrister-at-law, who declared it as his belief that "a tax which will convert every collector into a spy, which will compel the gentleman of estate and the merchant of capital, and the professional man, even of limited practice, to disclose the actual net amount of income to the state, will never again be tolerated in England." 3

The discussion of the early thirties proved to be only a flash in the pan. The old system continued with but slight changes until an entirely different situation was brought about by the growing movement to repeal the corn laws. This movement, as is well known, before long became a formidable one, and led to a reconsideration of the whole fiscal problem. The agitation, in fact, began shortly before 1840.

The advantages of a direct tax over the excise and the customs were set forth in a well-written pamphlet, in which the author suggested "an assessment on all property, including the public debt itself, in substitution for the present

1" The Superiority of an Income and Property Tax to every Other Source of Revenue," The Parliamentary Review, vol. v (1834), p. 363. Cf. Thirty Years Observations on the Effects of taxing Provisions instead of Income, with a just Scale to tax Income. By a Farmer. London, 1836.

2" The Proposed Tax on Property and Income," Edinburgh Review, vol. Ivii (1833), pp. 143-168.

3 The Revenue and the Expenditure of the United Kingdom. By Samuel Wells London, 1834, p. 187.

1

system of taxation." Another writer made an earnest plea for a property tax, by which, he explained, is meant "a tax upon income derived from real and realized property; but not upon the profits of professions and business."2 He thought that "a graduated scale according to the amount of income would probably be the most just principle." 3 The production, however, which perhaps carried the most weight, because of the reputation of its author, was that of Wilson, who advocated an income tax not only because of its "honesty and fairness," but also because of "the probability of receiving it without materially pressing on the ability of those interests from which it is derived."4 Wilson confessed that if the Chancellor of the Exchequer, instead of suggesting more taxes on consumption, had proposed a tax on property and income, "there can be little doubt but the proposal would have been in the first instance received with great surprise and alarm. But," he adds, "very little consideration will show that it could have been justified by every consideration of justice, policy, and necessity." 5

over.

By the beginning of 1842 Sir Robert Peel was finally won Peel had never been a friend of the income tax. In 1830, in discussing Huskisson's motion, he manifested his disbelief in it. In 1833, when in opposition, he praised Lord Althorp for not proposing an income tax, and declared that in his opinion nothing but a case of extreme necessity could justify parliament in imposing an income tax in time of

1 Argument for the General Relief of the Country from Taxation, and eventually from the Corn Laws, by an Assessment on Property. London, 1839, p. 4.

2 A Property Tax. The Justice and Utility of a Property Tax as a Means of Restoring the Revenue, placing it upon a permanent Basis, and affording Facilities for the Development of the Commercial and Manufacturing Resources of the Country. By a True Conservative. London, n. d. [1839], p. 5.

The Revenue: or, What should the Chancellor do? By James Wilson. London, 1841, p. 19. 5 Op. cit., p. 18.

peace.

In 1835, when in office, and opposing the reduction of the malt tax, he warned the landed interest to beware how they exchange "the light pressure of a malt duty for the scourge of a property tax.” In 1839 he opposed the government's proposal to introduce penny postage, and stated that this would virtually commit the House to a property tax, although he now added that possibly it might be wise to resort to it. But even in 1840 he approved of Baring's plan to meet the deficiency in the revenue by additional indirect taxes. As Buckingham correctly states, Peel and Althorp "manifested the most cordial unanimity on this subject, and to judge from the speeches of both, one could hardly have thought it possible that either would ever have consented to be a party to such a tax, by whomsoever it should be proposed." 1

In 1842, however, matters had come to a crisis. The panic of 1837 had left behind it a wake of long-continued distress; the new poor law was unpopular; the Chartist agitation was acquiring momentum; and the Corn Laws were becoming increasingly unpopular. For the last five years there had been a repeated deficit in the budget. In 1840 the Chancellor of the Exchequer, Baring, had attempted to make both ends meet by a general increase of duties; in 1841 he endeavored to produce the same result by reducing the duties in order to augment the revenues. All these experiments failed. As a consequence, Peel finally decided, as the most likely method of escaping from the difficult situation, to propose a revival of the income tax.

In his great budget speech of March 11, 1842,2 Peel pointed out that the deficit for the coming year would again be over two and one-quarter millions sterling, bringing the deficit for the six years from 1837 to over ten millions. He declared that a reduction of expenditure was out of the question, and

1 Plan of an Improved Income Tax. By J. S. Buckingham. London, 1845, p. ix.

2 Hansard, vol. lxi, pp. 431 et seq. A good summary of this is found in North

cote's Twenty Years of Financial Policy, pp. 12-32.

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thus addressed himself to a consideration of the best methods of increasing the revenue. To augment the indirect taxes he dismissed as impracticable; for, quite apart from his reluctance to add to the burdens of the laboring classes, he stated that Baring's experience was decisive on this point. "I cannot consent to any proposal for increasing taxation on the great articles of consumption by the labouring classes of society. Moreover, I can give you conclusive proof that you have arrived at the limits of taxation on articles of consumption." One by one he took up the other possible alternatives, only to reject each in turn. Finally, after adverting to the dangers of a continued deficit, he made "an earnest appeal to the possessors of property, for the purpose of repairing this mighty evil." "I propose," he said, "for a time at least — (and I never had occasion to make a proposition with a more thorough conviction of its being one which the public interest of the country required)-I propose that, for a time to be limited, the income of this country should be called upon to contribute a certain sum for the purpose of remedying this mighty and growing evil. I propose that the income of this country should bear a charge not exceeding 7d. in the pound, which will not amount to £3 per cent, but speaking accurately £2 18s. 4d. per cent, for the purpose of not only supplying the deficiency in the revenue, but of enabling me with confidence and satisfaction to propose great commercial reforms, which will afford a hope of reviving commerce and such an improvement in the manufacturing interests as will react on every other interest in the country; and, by diminishing the prices of the articles of consumption, and the cost of living, will, in a pecuniary point of view, compensate you for your present sacrifices; whilst you will be relieved from the contemplation of a great public evil."

Peel had hoped that parliament might be willing to vote the tax for five years, but he finally decided to content himself with asking for its imposition for only three years. He did not demand that it should be applied to Ireland, but as a partial compensation he proposed the raising of the duty on

Irish spirits to the Scotch level, as well as the raising of most of the Irish stamp duties to the English level. With these new sources of revenue, Peel counted on a surplus of almost two millions, which he proposed to devote to a reduction of the most burdensome import duties.

The introduction of Peel's income tax bill precipitated a long and exciting debate. The opposition objected to the whole fiscal scheme in general, and to the income tax in particular. Baring declared that there was no real necessity for "a recurrence to that odious impost." In the House of Lords Brougham introduced a whole series of resolutions in opposition, calling forth a reply from Lord Ripon, which, in the light of future events, is exceedingly interesting. "Entirely concurring," said Ripon, "in the noble and learned Lord's declaration that the proposed tax was a resource to which Parliament ought not to have recourse except under the pressure of dire necessity, still, unless the noble and learned Lord thought he had reason to believe. . . that there existed a design on the part of the government to entrap Parliament into the passing of this act on the plea of absolute necessity, and for a limited period only . . . unless the noble and learned Lord thought them mean and shabby enough to direct Parliament in order to get the measure passed, and then afterwards to continue it as a permanent tax . . . he did not see why, as a preliminary step, their lordships should be called upon to declare by resolution their opposition to it." 1

During the discussion Peel reverted to the subject from many different points of view. In his speech of March 18 he referred to "the great objection to the income tax, that which arose from its necessarily inquisitorial character," and he called attention to the measures suggested by him for reducing the evil to a minimum.2 Alluding again to the

1 Speech of March 17, 1842.

2 This was reprinted in a large penny edition as The Income Tax. Sir R. Peel's Speech, in the House of Commons, on Friday Evening, March 18, 1842. See esp. p. 8.