indirect taxes, preferably on luxuries, as the "properest ob jects for taxation in time of war.”1

By the autumn of 1797 Pitt realized the gravity of the situation. The three per cent consols, which had been nearly at par in 1792 and which had fluctuated around 70 during the next three years, fell to 55 in January, 1797, and to 47% before the end of May. The Bank of England, amid universal consternation, had suspended specie payments,2 and a French invasion under Hoche seemed imminent. The time had now come to make an appeal to the country, and in his famous budget speech of November 24, 1797, Pitt introduced his scheme for the triple assessment.

The assessed taxes, as we have learned, comprised a series of direct imposts, partly on houses and partly on so-called establishments, including carriages, servants, horses, hair-powder, dogs, watches and clocks. Pitt now decided to convert the system into what he called "a general tax on persons possessed of property commensurate as far as practical with their means." On the first reading of the bill, Pitt discussed the broad outlines of the scheme and declared the objects to be attained to be as follows: "That the plan should be diffused as extensively as possible; that it should be regulated as fairly and equally as possible, without the necessity of such investigation of property as the customs, the manners, the pursuits of the people would render odious and vexatious. That it should exclude those who are least able to contribute or furnish means of relief; that it should distinguish the gradation of classes: that it should admit of those abatements, which, in particular instances, it might be prudent to make." 3

166 'Those duties are preferable which the consumer pays in the purchase of the article or connectedly with the value; and which produces obliquely, rather than immediately to government." A General Address, etc., p. 49. Cf. also the scheme of Francis Adams, A Plan for raising the Taxes impartially and almost free of expense in War and in Peace for paying off the National Debt. London, 1797.

2 "A few months before payment was stopped at the Bank, any man who had predicted that event would have been pitied as a madman, or proscribed as a traitor." The Question as it stood in March 1798. London, n. d. [1798], p. 22.

3 The Speeches of the Right Honourable William Pitt in the House of Commons. 2d ed., London, 1808, vol. ii, p. 346.

He conceded that the "Assessed Taxes are often eluded by men of large property, who, by denying themselves many of the enjoyments of life, hoard up money and exclude themselves from assessment.' "1 But Pitt contended, nevertheless, that "even though the hoards of the penurious elude our search . . . a due proportion would, at least in some cases, be forthcoming at the solicitation of self-interest and selfdefense"; and he closed by a general appeal to this particular class of the wealthy to do their share.3

On the second reading of the bill, a general discussion was precipitated, and fierce opposition developed, led by Fox. Pitt replied in a brilliant speech of December 14, 1797, of which a contemporary observer, Mallet du Pan, said: "From the time that deliberative assemblies have existed, I doubt whether any man ever heard a display of this nature, equally astonishing for its extent, its precision, and the talents of its author. It is not a speech spoken by the minister; it is a complete course of public economy; a work, and one of the finest works, upon practical and theoretical finance, that ever distinguished the pen of a philosopher and statesman." 4 Pitt began by stating that it had been called a tax on property and a tax on income. It was neither, said he. Pitt

1 The Speeches of the Right Honourable William Pitt in the House of Commons. 2d. ed., London, 1808, vol. ii, p. 353.

2 Op. cit., p. 354.

3" Then should those who, devoted to accumulation by ignorance of enjoyment, and early habits of frugality, have arisen from the lower rank and meanest employments, by rigid frugality and indefatigable industry, protected, fostered, and encouraged, by that happy system of government, and those equal laws, which enabled them and permits any man to emerge from the bottom to the top of society, then ought they, I say, for the recollection of the benefits they have received, and for the sake of those to which they look forward, to consider themselves above all men bound to come forward, in defense of that system which afforded encouragement to their labours, nurture to their industry, vigour to their pursuits, and protection to their persons, their property and their acquisitions."Op. cit., p. 355.

4 Quoted in The Financial Statements of 1853, 1860-1863. By the Right Hon. W. E. Gladstone. London, 1863, p. 15. Gladstone says, "When Pitt proposed the Income Tax to Parliament, that great man, possessed with his great idea, raised his eloquence to an unusual height and power."

declared that he did not believe in any such scheme. "If the amount of every man's property could be ascertained, it would be a most desirable thing to make the people contribute to the public exigence in proportion to their wealth. But there existed no means of ascertaining the property of individuals, except such as were of a nature that could not be resorted to. Instead, therefore, of a tax upon property, this was what he had stated it to be, a tax upon general expenditure." For the assessed taxes, he thought, were the best "visible criterion" of property.

On the third reading, Fox maintained that the bill contemplated "the most monstrous inequalities and the most gross injustice in every part,"? and called attention to the protests which had been made in various public meetings in London. "Is it not a dreadful thing," he asked, "to pass a bill like this against the unanimous opinion of the inhabitants of the metropolis? What is the language of this money bill? 'We give voluntarily.'-Who gives voluntarily, - the people of the metropolis, who must pay the fourth of it? No -- they have unanimously declared that they cannot give it at all! that if it is attempted to be levied upon them, their ruin will be the effect of it." Pitt replied in a brilliant speech. He made a crowning appeal to the patriotism of the country, and in conclusion urged his hearers to make this "great and unusual exertion," rather than to "suspend all defensive precautions and leave the country open to the ruinous projects of an insolent and overbearing enemy."4 His appeal did not fall

8

1 Pitt continued: "He had anticipated an objection which he thought would be made, viz. that this tax applied only to such income as was in expenditure. This was an inconvenience which it was impossible to avoid, without having recourse to such a scrutiny of property as must, in every point of view, be highly objectionable. That the present plan was in its nature imperfect he was ready to admit, and had stated it to be so when he first introduced the subject; but he thought it the best and most general criterion that could be found." - Speech of December 14, 1797, in his Speeches, vol. ii, p. 380.

2 The Speech (at length) of the Right Hon. C. J. Fox, on the Third Reading of the Bill for Increasing the Assessed Taxes, London, n. d. [1798], p. 119.

3 Op. cit., p. 121.

♦ Pitt's Speeches, vol. ii, p. 402.

upon deaf ears; and even though the unpopularity of the scheme was such that he was mobbed on his passage to St. Paul's,1 the bill was enacted into law on January 12, 1798.

§ 2. The Act of 1798

The Aid and Contribution Act, as it was called,2 divided the taxpayers into three categories. In the first class were comprised the presumably wealthier taxpayers, who owned establishments consisting of carriages, men-servants, or horses, and who, in Pitt's words, paid on "optional consumptions and luxuries." They had their assessment for the previous year augmented as follows: If the last year's assessment was £25, it was increased three times; if £25-30, three and one-half times; if £ 30-40, four times; if £40-50, four and one-half times; and if over £50, five times. The second class of taxpayers included those who, while not keeping any such establishments, had been assessed on their houses, windows, clocks, or watches. In these cases the assessments of the previous year were altered as follows: £ 1-2

2-3

3-5

5-71

7-10

£121-15.

21

10-12.

5

The third class comprised the presumably poorest individuals, who paid only on lodgings or shops. In this case the assessment was changed as follows:

1 Cf. the "Sketch of the History of the English Income Tax," by C. A. Roberts, printed at the end of "Letter from Goldwin Smith to John V. L. Pruyn," in Bankers' Magazine, New York, 1866, p. 872. See also William Smart, Economic Annals of the Nineteenth Century, 1801-1820. London, 1910, p. 37. 238 George, III, c. 16. 8 Pitt's Speeches, vol. ii, p. 348.

F

It is clear, therefore, that, although called a triple assessment, it was in effect a system of taxation which was graduated from a slight beginning to a sum equal in one case to double, and in the other cases to five times, the original assessment. Instead of being termed a triple assessment, it should hence have been called the double and quintuple

assessment.

The characteristic feature of the scheme, however, was to bring the assessments, calculated as they were according to expenditure, into some relation to income. The total payments were so arranged that incomes under £60 were exempt; incomes from £60 to £200 paid from one one hundred and twentieth to one-tenth of the respective amounts, i.e., five-sixths of one per cent to ten per cent; while all incomes over £200 paid ten per cent. In other words, while the normal rate of tax was supposed to be ten per cent, the rates were progressively reduced on all incomes below £200, until at £60 no tax at all was payable. In the case of incomes over £200, where the quintuple assessment fell short of reaching ten per cent of the income, the act invited the taxpayers to make additional voluntary contributions, thus realizing, in part at least, the scheme of Bowles referred to above.2 Furthermore, additional abatements were made in