and efficiency. The same economy must be applied to public affairs if they are to be well administered.1 All the corruption is not, as a rule, caused by bad legislation; the laws creating the various offices and making provisions for their emoluments were legitimate and proper at the time when they were enacted. But most of them were enacted very early in the history of the country, and few, if any, radical changes have been made in them. But they have simply outlived their period of usefulness. Economic conditions have changed, while the laws have not been changed to fit them. The fee bill, which would yield barely enough revenue to support the sheriff of New York in 1840, would, if in force in 1890, produce a fortune in a single year. Why? Simply because the business of the office has increased enormously on account of the growth of population. Furthermore, the work can be done at a much lower cost. It is like production on a large scale, in that economies of various kinds can be practiced.

The question immediately arises: Why have the legislatures so often failed to adjust law to economic conditions in this particular more than in others? The answer is evident. Whichever political party happens to be in power is directly interested in having as many lucrative offices to bestow as possible. A party is not likely to diminish the emoluments of an office when, by so doing, it diminishes to just that extent the patronage

1 Elsewhere. (p. 189) Professor Urdahl says: "Scarcely any of the states employing the fee system have as yet required the officers to give any strict account of the total amount received as fees. Even if the new system is introduced, it becomes next to impossible to obtain any figures which will show in dollars and cents the total gain or loss due to the one system or the other. It is quite different with the federal officials, and more especially those connected with the federal courts. These were required comparatively early to give a complete account of every fee received. We have thus full and reliable statistics of the amounts collected as fees in the various courts for a long series of years. These figures show that the cost of maintaining the United States courts has for a number of years been increasing at the rate of over a million dollars a year. On May 28, 1896, Congress passed an act which changed most of the officials connected with the federal courts from the fee to the salary system of compensation. The result is, that the total expenses under the new system for the current year 1897, according to the estimates made by the attorney-general, based on the returns for the first six months, will be $4,861,465, as compared with $6,675,239 for 1896, which was the cost under the fee system. This shows a total saving of $1,813,774 in spite of the fact that the volume of business is on the increase."

which it has to confer. Especially is this the case where no pressure in that direction is brought to bear upon the legislative body. There is likely to be no pressure of this kind for the diminution of the fees of an office or a change in the system, because no body of individuals, as a class, is likely to be especially affected or feel the burden of the system. The fees are paid intermittently, now by one person and now by another; while the great majority of people rarely have any fees to pay at all. There has thus never arisen any popular demand for the publication of the amount of fees collected or for their reduction. As a result, we find that it is only at this late day that the same requirements are beginning to be made in regard to fees as were introduced in regard to taxes one hundred years ago; namely, that their amount should be made public, and that all fees collected should be accounted for. This lack of knowledge of the number of fees collected has tended still further to discourage any agitation for their reduction. But whenever a movement of this kind is started, then all the fee-collecting officers, with all the political influence which they can command, stand ready to work against it. It is not strange, therefore, when everything is taken into consideration, that primitive laws have so long remained in force, and that they are even now with difficulty being displaced with more modern and suitable enactments. The movement seems to be in progress which appears destined to place every fee-paid public officer on a salary or what is equivalent to the same. This, together with civil service reform, will ultimately remove the greater part of the political corruption connected with purely administrative offices. But from the very nature of American conditions, the movement must be slow and gradual.

1 A bill to abolish some minor sheriffs' fees in the Wisconsin legislature in 1896 was defeated through the lobbying of the sheriffs and their friends. Numerous similar bills have met the same fate. It is a notorious fact, well known to all who are familiar with New York politics, that the recent amendment to the New York fee code failed to pass because of the opposition of sheriffs and other fee-paid officials, whose salaries would have been affected thereby.

CHAPTER VIII

GENERAL PROPOSITIONS CONCERNING TAXATION

26. Smith's Canons of Taxation.

Few passages in the

literature of finance are more celebrated than those with which Adam Smith introduces his discussion of taxation. Smith said: 1

The private revenue of individuals, it has been shown in the first book of this inquiry, arises ultimately from three different sources rent, profit, and wages. Every tax must finally be paid from some one or other of those three different sorts of revenue, or from all of them indifferently. I shall endeavor to give the best account I can, first, of those taxes which it is intended should fall upon rent; secondly, of those which it is intended should fall upon profit; thirdly, of those which it is intended should fall upon wages; and fourthly, of those which it is intended should fall indifferently upon all those three different sources of private revenue. The particular consideration of each of these four different sorts of taxes will divide the second part of the present chapter into four articles, three of which will require several other subdivisions. Many of those taxes, it will appear from the following review, are not finally paid from the fund or source of revenue, upon which it was intended they should fall.

Before I enter upon the examination of particular taxes, it is necessary to premise the four following maxims with regard to taxes in general.

1. The subjects of every state ought to contribute toward the support of the government, as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of 1 Wealth of Nations, Bk. V, ch. 2,

the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. Every tax, it must be observed, once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal, in so far as it does not affect the other two. In the following examination of different taxes I shall seldom take much further notice of this sort of inequality, but shall, in most cases, confine my observations to that inequality, which is occasioned by a particular tax falling unequally even upon that particular sort of private revenue which is affected by it.

2. The tax which each individual is bound to pay, ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the taxgatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favors the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.

3. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it. A tax upon the rent of land or of houses, payable at the same term at which such rents are usually paid, is levied at the time when it is most likely to be convenient for the contributor to pay, or when he is most likely to have wherewithal to pay. Taxes upon such consumable goods as are articles of luxury, are all finally paid by the consumer, and generally in a manner that is very convenient for him. He pays them by

little and little, as he has occasion to buy the goods. As he is at liberty, too, either to buy or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconveniency from such taxes.

4. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state. A tax may either take out or keep out of the pockets of the people a great deal more than it brings into the public treasury, in the four following ways. First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may impose another additional tax upon the people. Secondly, it may obstruct the industry of the people, and discourage them from applying to certain branches of business which might give maintenance and employment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so. Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals. An injudicious tax offers a great temptation to smuggling. But the penalties of smuggling must rise in proportion to the temptation. The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime. Fourthly, by subjecting the people to the frequent visits and the odious examination of the taxgatherers it may expose them to much unnecessary trouble, vexation, and oppression; and though vexation is not, strictly speaking, expense, it is certainly equivalent to the expense at which every man would be willing to redeem himself from it. It is in some one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign.

The evident justice and utility of the foregoing maxims have