twenty-one and three-quarter million florins. By 1874 it had grown to forty-eight million florins, and has continued to increase.1

Like the salt monopoly that of tobacco was in Italy derived from the states out of which the present kingdom has been formed. For the period 1863-7 the state retained the monopoly of sale in its own hands. From 1868 to 1882 inclusive, it was farmed to a company whose payments for 1868 were sixty-eight and a half million lire, for 1876 eighty-seven million lire, and for 1880 one hundred and four million lire. After 1882 the monopoly reverted to the Government, who received in 1886 a net return of 182 million lire.2

The results of the Spanish monopoly are also satisfactory, the yield for 1884-5 being estimated at £5,480,000. There is no necessity for fuller notice of the Prussian monopoly of the last century, but it is significant that a vigorous attempt was lately made to introduce the system in the German Empire in place of the present duties. The net receipts of the proposed system were estimated at 165 million marks after allowing for cost of production and interest on capital. The hostility of the smaller German States, supported by the Catholic vote, caused the defeat of the project in the Reichstag. England also, though she has not adopted the monopoly, has found it necessary to infringe just as seriously on industrial liberty by prohibiting altogether the cultivation of native tobacco. On the whole, the conclusion is strongly suggested that, when it is necessary to tax this particular commodity at a high rate, a state monopoly is the most efficient and economical mode of so doing. It is, however, apparent that no more suitable object of taxation is in existence; since it is at once a luxury, and one which, if not injurious, is certainly not beneficial. It is at the same time an object of general consumption, and yet its taxation does not trench on the minimum of subsistence. The combination of all these conditions. seems to mark it out as being designed for a leading financial resource, such as it has in most countries become, and the superiority of monopoly to other modes of taxation is admitted by the majority of competent inquirers.

Another side of the question remains to be considered. What

1 Wagner, vol. iii. p. 104; Leroy-Beaulieu, vol. i. p. 706; Stein, Finanzwissenschaft (5th ed.), vol. iii. pp. 366–7.

See Alessio, vol. ii. pp. 299-307; Fournier de Flaix, Traité des Institutions Financières, pp. 530—31.

3 For this reason Garnier, Traité des Finances, p. 140, and Hock, Abgaben, p. 133, speak of England as having a monopoly. In the last few years experimental cultivation has been allowed by a license from the Inland Revenue.

is the effect of monopoly on the production of the article? The superiority of private enterprise is generally taken for granted; but, judging from the evidence, the French state manufacture keeps up its position most creditably, its products being free from adulteration and preferred to those of foreign manufacture. Invention does not seem to be very active in the industry; all that is required, according to Leroy-Beaulieu,1 is attention and honesty. Public industry is therefore in this case freed from its greatest drawback, the want of vigorous initiative and of spirit to take up new methods. Nevertheless there is unquestionably a difficulty in the introduction of the monopoly form of tax. Where a flourishing private industry exists, its members have acquired an amount of connection, and immaterial as well as material capital, for which they will naturally seek compensation, e.g. the placing of the English tobacco industry in the hands of the state, if for other reasons it were desirable, which it is not, would be likely to be as bad a bargain as the purchase of the telegraphs. This consideration had great influence on the German Commission that reported against the introduction of the monopoly into that country. The effect on the different districts of a country may also vary, and some may gain at the loss of others. Wurtemburg, for instance, was the only state that favoured the policy of monopoly, inasmuch as it expected peculiar advantages, and the same conflicts of interest would inevitably arise elsewhere, as they actually did between Austria and Hungary.2

OPIUM. The tobacco monopoly has at present little practical interest for any part of the British Empire; but in India, which is so rich a storehouse of financial illustration, the treatment of opium shows very remarkable resemblances. What is commonly described as the opium monopoly is, in fact-like the salt taxapplied in different ways. In Bengal the method is very similar to that adopted in France for tobacco. The area under cultivation is regulated; the product is taken at a definite price by the state; it is manufactured at two places (Patna and Ghazipore), and then sold by auction for export solely. The Bombay part of the duty is really a transit charge levied on opium from the native states of Malwa and Gujerat. This employment of different systems, according to the particular circumstances, brings out more clearly than perhaps anything else the fact that monopoly is simply a special form of taxation (erhebungsform) that has to be compared with other forms in regard to each commodity. The

1 P. 701.

For Germany, cf. Roscher, Finanzwissenschaft, pp. 130, 136.

productiveness of opium to the Indian Government has not varied so much as might have been anticipated. Examination of the yield for a series of years seems to show that the maximum return has been passed.

GROSS AND NET REVENUE FROM OPIUM FOR EACH OF THE YEARS 1869-70-1888-89.1

Omitting the difficult question of the morality of the opium. revenue, on which such opposite opinions are held, we may notice that it is in reality derived from an export duty applied under the specially favourable conditions of intense demand and monopoly of supply; but for this very reason it is less safe to draw any general conclusion from its operation.

3

ALCOHOL.—It would have been strange if reformers under the impulse of temperance ideas had not suggested a state monopoly of the production and sale of spirits as at least a partial remedy against excessive drinking. Quite apart from such influences the

1 The £ is taken as equal to ten rupees.

2 For a vigorous defence of the opium tax, see Strachey, pp. 253-264.

3 There are opium monopolies also at Hong Kong and Singapore, but the former is farmed out.

Russian Government had from an early time used a monopoly as the best mode of collecting a revenue, and only abandoned it in 1863 in favour of an excise. M. Alglave's proposal for the establishment of a spirit monopoly in France, extending to the refining process and partially to sale, excited attention; and a somewhat similar scheme was submitted in 1886 to the German Reichstag, with the encouraging estimate that it would give a net return of 300 million marks (or £15,000,000). This proposal met with the same fate as the earlier plan for tobacco monopoly, and it was reserved for Switzerland to take the lead in the adoption of a monopoly for the sale of alcohol. A law for that object was passed in 1886, and on being submitted to the popular vote (or referendum) it was approved by 259,000 votes against 136,000. The motives that dictated the measure seem to have been twofold, viz., (1) to reduce the consumption of spirits, (2) to provide financial resources; and, owing to the unexpected fall in the price of imported raw spirit, both these objects were attained. During the first year of working (1888 and 1889) the consumption fell from the previous amount of 150,000 hectolitres to 80,700 and 85,000 respectively. The net yield for the seventeen months, July 20, 1887, to end of 1888, was in round figures 5 million francs, while for the year 1889 it was 5 million francs. For the latter period the gross receipts were 113 million francs, but the expenditure came to 61 million francs, leaving the balance just stated. In the case of alcohol monopoly the fiscal element is not so prominent as in those of tobacco or opium, but it is put forward as an additional reason in favour of it; and in the taxation of all three commodities there is a moral ground, real or alleged. In other respects the spirit monopoly has a weaker case. The great extent of the industry, the many technical processes employed, and the changes that invention brings about, are all hindrances to effective working by a state department; and it is shown by Russian experience that the transfer from state to private industry is beneficial even for the increase in revenue. In 1862, the last year of the monopoly in that country, the net yield was 123 million roubles, in 1864 it had fallen to 1183 million roubles, but rose to 244 million roubles in 1884, and to 265 million roubles in 1888. The evidence when weighed seems as much against the monopoly in spirits as it is for that in tobacco.1

What is known as the Gothenburg system is simply a municipal monopoly of the sale of alcohol, which is farmed out to a company.

1 For the Russian alcohol monopoly, see De Parieu, vol. ii. pp. 433-6; F. de Flaix, p. 311; M. Alglave's views in Journal des Economistes, March 1886; De Flaix, pp. 363-6; for the Swiss monopoly, Wolf in Finanzarchiv, vol. vii. pp. 189–200.

Adopted originally in 1865 in the Swedish town, from which it derives its name, as a likely check to intemperance, it was warmly advocated in England, but seems to have now passed out of notice. The revenue derived from the method by the town of Gothenburg in 1875-6 was about £40,000; but the combination of financial and non-financial ends is very hard to realize, the financial success being in this case a failure for the temperance party, who are apprehensive of the direct interest that the municipal authorities have in the increased consumption of intoxicating liquors.

MATCHES.-The match tax, the mere proposition of which in England was so fatal to Mr. Lowe's popularity as a financier, has in France taken the form of a monopoly farmed out to a company. A stamp duty on the model of the English proposition was first tried after the war of 1870-71, but its yield proving insignificant it was replaced by the monopoly in 1872. The results have not, so far, been satisfactory. The state receipts have been from 16 to 17 million francs per annum, but 32,500,000 francs had to be expended in compensation to the expropriated manufacturers. The company has not made profits; there are loud complaints as to the inferior quality of their product; and finally, the prosecutions for infringement of the privilege are numerous. The fact that matches are a part of necessary consumption in modern society, and the desirability of encouraging technical progress in their manufacture, both tell against the monopoly. It is even doubtful-Jevons' view to the contrary notwithstanding—whether they are fit objects of taxation in any form, and it is clear that there are many better taxes.

GUNPOWDER.-The ancient French gunpowder monopoly, dating from the sixteenth century, has, as Hock remarks,1' no financial significance.' Though abandoned at the Revolution, it was instituted afresh in 1797, and has survived to the present time. Its net yield is small, amounting to 10,500,000 francs in 1885. The manufacture of dynamite, which was at first included under this monopoly, has, since 1875, been surrendered to private industry with an excise duty of two francs per kilo.2

LOTTERIES. The tendency of the state to seek gain from the errors or weaknesses of its subjects is very strongly marked in the earlier periods of financial history, and prominent among illustrations of this proposition is the treatment of lotteries. For raising loans or procuring revenue appeal was often made to men's 'absurd presumption in their own good fortune' in its crudest

1 Abgaben und Schulden, p. 157.

2 Say, Dictionnaire des Finances, s.v, Dynamite.