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rate of taxation at the same time is uniform everywhere the government will have taken one-fifth part of the whole capital wealth of the country. Now there are several contingencies in which this may be supposed to have actually occurred. For example, it may have been concluded that communism is the true political gospel, that the State as everybody's trustee and agent is rightful proprietor of all property, and the people may have resolved by a constitutional majority to begin the exper. iment by conveying to its agent a fifth part of its wealth to be administered in its behalf. Or again, it may bave been concluded and resolved that the best provision for the expenses of the State is a permanent endowment to that amount, the annual revenue from which will release the people from all future burdens of taxation as the police relieves it from service on the posse comitalus, a standing army from military service, or the constitution of certain courts from service on the jury. Or again, to meet some exceptional emergency, the State may have contracted a loan which has now matured and payment on which is demanded, so that caught, if one may say so, between the devil of default and the deep sea of liquidation it meets its engagements by appropriating to that purpose the requisite portion of the national wealth. In all these cases the confiscation once effected the account is closed; its force is exhausted when the money is taken and the necessity provided for. The State put in possession of a fifth part of the national wealth, whether as administrator in behalf of the people, or as permanently endowed for transacting its business and protecting its rights, or as furnished with the means of paying off its debt capital, has no further claim until a new necessity of the same kind arises and another portion of the national wealth is appropriated to meet it. But as it happens there are no traces of any of these necessities in the fiscal position of the United States. The doctrine of communism is a mere speculation of certain peculiar theorists, the magnificent national endowment in the shape of public lands has been nearly dispersed under the homestead law and in land-grants, and as to its capital debt the anxiety of the creditors is not that it will not be paid at maturity but that it will. In a word it is under no pressure of instant and final liquidation whatsoever, but is tranquilly providing for its current expenses, in which all claims upon it bave been merged, by continuous taxation. So when Brown & Co. pay a fifth part of their capital in import duties they are not only paying an exceptional and disproportionate tax, but a tax which does not close the account and release them from further taxation ; on the contrary, every time their capital comes back in the shape of a new importation they pay the fifth part of it over again. How can they possibly continue business under burdens like these?

The answer is that the duty paid to the government is as much a part of the cost of the watches as the price paid to the manufacturers, and is at once charged along with all the other elements of the cost upon sale to the customers. If Brown & Co. are provided with the requisite capital to advance to the government and are sure of a sale at remunerative prices, the amount of the duty is a matter of perfect indifference to them; all they have to fear is that the increased cost of their goods may increase the difficulty of finding purchasers and so diminish the volume of their business; otherwise they wholly escape the effects of what looks like exorbitant and ruinous taxation. They are in fact what is called middle men, mere transfer agents whose business is to put goods on the market, and the capital they advance to the manufacturer, the carrier, the underwriter, the government, to all in short whose charges have added to the cost, is immediately reimbursed to them upon sale, that is, is circulating capital which distributes the burdens put upon it to the capital in which circulation ends, the fixed capital of final investments. He who last buys the watch not for sale but to keep and use, foots the whole bill, pays all the successive charges upon it from the manufacturers to the merchants, and among the rest the duty charged by the government. Brown & Co. are in effect unaccredited agents who collect for the government the duty distributed among and ultimately paid by the consumers. *

* Capital, according to the standard definition, is distinguished from Land or Labor as wealth accumulated to assist in the further production of wealth ; which to the uninitiated sounds much like a distinction without a difference, since land and labor are not only wealth in that they may be exchanged for their equivalents but are two of the three factors which assist in producing more wealth. Capital, so defined, is

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Now this function might be exercised by all other middle men whether dealing in foreign or domestic products; they could all as easily collect the duty for the government as first cost for the manufacturer, freight for the carrier, insurance for the underwriter, or interest and profit for themselves. « If it were in the power of the government to surprise and detain the goods in the hands of any middle men anywhere on the way from the producer to the consumer, and to ascertain their cost at the moment of detention it would have no difficulty in levy. ing a duty upon them as in the case of the imported watches. In this way the entire expenses of the State for the current year might be charged upon the circulating capital employed in putting the year's product on the market and so distributed among the consumers, who are the whole population. But this is not all.

When one buys a watch he does not usually draw on any part of his capital to pay for it. The living wealth he holds invested in real estate or securities or in his business is continually reproducing itself in rent, interest, or profits, and he is no more likely to stop the reproduction and turn it into dead wealth by buying watches with it than the laborer is to impair his productive capital by maiming himself or ruining his health. Either will do it in an emergency or under strong either circulating capital consisting of the food and other things required to support the laborer and which are quickly consumed, or fixed capital consisting of machines, factories and other things which assist labor and are consumed slowly. It seems to be therefore a part of labor, which is the discovery Mr. Henry George makes after defining it as that form of productive wealth which is not land or labor.

I venture to use the word according to its etymology and popular acceptation as any source or fountain-head of revenue, whether land, labor or accumulated savings; and revenue as any return or income of capital, whether rent, wages or profits. The generic term is wealth, whose two species are capital and revenue in their several varieties. By circulating capital I mean simply capital in circulation, wealth of any kind held for exchange with other kinds ; and by fixed capital, as I have said, the wealth in which the circulation ends. Real'estate, slaves, machines, railways, to the dealers in those articles are as much circulating capital as food or clothes ; they all become fixed capital when taken out of the circulation for occupancy, use or consumption. Of course the same wealth gets back into circulation again sooner or later, but in a different form and other relations. Practically the solution of continuity is complete and this I take to be the basis of the real distinction between the two things.

temptation, but in ordinary circumstances he will pay for his watch out of his wages or his income. The daily wants, co veniencies and luxuries of life, in general the whole conamp. tion of the country, are ultimately provided for out of tile earnings of capital and not out of capital itself. We may therefore define the direct taxation of the circulating capital of any country as an indirect income-tax; and admitting for the moment that the State is justified in renouncing, as all States do, the direct appropriation of what rightfully belongs to it, namely a uniform proportion of every man's income, there is probably no more satisfactory source of public revenue than a tax on circulating capital.

But it is to be observed that of the whole volume of this capital a large portion is practically inaccessible to taxation; it is not in the power of the government to stop the goods and ascertain their value anywhere on the way from the producer to the consumer. For example, the most of the hay grown in the United States is consumed on the farms where it grows, in which case producer and consumer are one; there is no middle man, no advance or re-imbursement of capital, no measurement and valuation of the product. Of the surplus if any, nearly the whole is sold in the immediate neighborhood, in which case if there is no middle man there is measurement and valuation of the thing sold; but it would be clearly indefinitely easier to tax the whole income of every farmer en bloc than the several products sold separately from bis farm. Produce of this sort requiring no process of manufacture to fit it for the market is absorbed so promptly and in such endless detail that it escapes all possibility of assessment. This is true too of manufactured commodities produced in small quantities for neighborhood consumption. The capital advanced all over the land to the village artisan, the joiner, the tailor, the miller, like that advanced to the farmers around the village, flows in quantities too minute, through circuits too short and complicated to admit of computation. It is only the surplus products natural or manufactured left over by local consumption, and gathered from a broad territory in great quantities at a central point for wide re-distribution thence, that are accessible to the government.

r This Now concentration of this sort takes place on the largest and na most conspicuous scale when the varied surplus of one country

is brought together to supply the wants of another. Thus the entire exportation from the United States to Europe must be collected at a few sea-ports and subjected there to exact measurement and valuation before being shipped. So far as accessibility is concerned there is no part of the circulating capital of any country more clearly indicated for taxation than the capital advanced by the exporter, and in the United States none probably would better bear the burden. Our position today is so peculiar and commanding that the ordinary expenses of the State might be entirely charged to the capital employed in exporting our surplus cotton and food products. But a tax on circulating capital, at whatever point in the circulation levied, is paid by the consumer, who in this case is an alien, so that it is in our power to shift the whole cost of government to the subjects of other States. The objection is that it is not they who make government with us necessary or for whose benefit it exists; a tax paid by them, unless a war-measure, is spoliation, the appropriation by the State of property not its own. But this very consideration which excludes from taxation the capital advanced by the exporter of domestic produce, selects for taxation the capital advanced by the importer of foreign produce, for imports into the United States are for consumption in the Unite i States and the duties upon them are paid by residents of the United States. Nothing can be more artless than the notion which actually survives in some quarters that duties on foreign goods are a means for shifting our burdens to foreign shoulders, paying our State expenses out of foreign pockets. It is the consumer who pays, whoever he is. If we want the foreigner to pay the costs of our government we should levy duty on our exports; if like honest men we want to pay them ourselves we may levy duty on our imports.

Here then are clear and intelligible motives for taxation; first, property in a form eminently accessible to the government, seeing that it is concentrated at the points where the great channels of commerce intersect the national frontier, and is delivered there under exact measurement and valuation in accompanying invoices and bills of lading; second, prop

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