change itself would have no object. "If all the individuals who compose society were equally provided with the things able to satisfy their wants, if all possessed the same values, no one would desire to possess what belonged to others, being sufficiently provided with all things necessary to his existence. There must, therefore, be a diversity of exchangeable things, and men must possess different values, in order that exchange may be practiced among them. This diversity constitutes the third condition indispensable to the existence of all exchange.The idea of appropriation, even of individual appropriation, is so natural to man that it is found in all stages of civilization, even among savage tribes. But if private property exists in the earliest society, at least in the case of a certain number of objects, it is, as a general thing, very little respected. The stronger violates the private property of the weaker, even in the same tribe; and à fortiori is it thus outside the limits of the tribe. Under such conditions it is evident that exchange can not easily extend very far. As to transmissibility, although, strictly speaking, it exists in the case of all material values, it is in fact limited, among savage nations, by the general insecurity of circulation and of transportation. War being almost the permanent condition of primitive nations, it is only within their respective limits that the transmission of products can take place. What is true of savage tribes, is also true, though in a less degree, of barbarous nations. In this state of things, there may be a virtual but there can hardly be an effective transmissibility of products, since transmission is impossible except within a very small circle. For the same reason, there is no great diversity. So far as natural products are concerned, diversity can be great only when the nation extends over a large surface, for it is only then that the fruits of the earth are varied; and in the case of the prod ucts of human industry great diversity supposes a rather extensive division of labor, which can scarcely be realized within such narrow limits. Thus is exchange limited on all sides in this first stage of civilization. The spirit of violence, hostility and war reigns everywhere, and the general insecurity that results from this hostile spirit is the chief obstacle to the progress of exchange. But as soon as security begins to be established among men, the practice of exchange spreads rapidly. It is generally understood, however, that its development may be either favored or impeded by certain advantages or inconveniences of position. The particular circumstances which favor it among certain peoples are well indicated by Adam Smith in the passage which follows. After having shown, by several examples, the advantages of transportation by water over transportation by land, he thus continues: "Since such, therefore, are the advantages of water carriage, it is natural that the first improvements of art and industry should be made where this conveniency opens the whole world for a

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market to the produce of every sort of labor, and that they should always be much later in extending themselves into the inland parts of the country. The inland parts of the country can for a long time have no other market for the greater part of their goods but the country which lies about them and separates them from the seacoast and the great navigable rivers. The extent of this market, therefore, must for a long time be in proportion to the riches and populousness of that country, and consequently their improvement must always be posterior to the improvement of that country. In our North American colonies the plantations have constantly followed either the seacoast or the banks of the navigable rivers, and have scarce anywhere extended themselves to any considerable distance from both. The nations that, according to the best authenticated history, appear to have been first civilized, were those that dwelt round the coast of the Mediterranean sea. That sea, by far the greatest inlet that is known in the world, having no tides, nor consequently any waves, except such as are caused by the wind only, was, by the smoothness of its surface, as well as by the multitude of its islands and the proximity of its neighboring shores, extremely favorable to the infant navigation of the world, when, from their ignorance of the compass, men were afraid to quit the view of the coast, and from the imperfection of the art of ship building, to abandon themselves to the boisterous waves of the ocean. │"Of all the countries on the coast of the Mediterranean sea, Egypt seems to have been the first in which either agriculture or manufactures were cultivated and improved to any considerable degree. Upper Egypt extends itself nowhere above a few miles from the Nile, and in lower Egypt that great river breaks itself into many different canals, which, with the assistance of a little art, seem to have afforded communication by water carriage not only between all the great towns, but between all the considerable villages, and even to many farm houses in the country; nearly in the same manner as the Rhine and the Meuse do in Holland at present. The extent and easiness of this inland navigation was probably one of the principal causes of the early improvement of Egypt." - These natural advantages lose, however, something of their original value, now that human industry has discovered so many means of supplying their place. However this may be, with the progress of time and civilization exchange has grown to be almost universally prac ticed among men. It has, in turn, introduced the division of labor, which is at once its consequence and complement, and which takes place more or less in all branches of industry. These two phenomena, which are intimately connected, constitute the fundamental basis of the industrial order existing in the world to-day. We shall not enlarge upon the advantages which result therefrom with regard to the relative productivity of labor, for these advantages have been sufficiently explained

already while treating of the division of labor; but it remains for us here to show some general consequences that particularly belong to this part of the subject.-Exchange, and the division of labor which flows from it, create between men relations as necessary, and ties as strong and as numerous, to say nothing more, as those which existed between them under the primitive system of the community. It is sometimes said that in society as it now is, man isolates himself—that he separates himself from his fellow-men, to withdraw himself into his own individuality. But is he not, on the contrary, because of this division of labor, and of the law of exchange which is connected with it, in a constant and very restricted dependence upon everything that surrounds him? He works for his fellow-men, and they work for him; when the work of production is terminated by each, they exchange its products among themselves. Is there any closer bond of dependence than this? The difference between this new bond and the primitive one is, that the new one is more complex, and incomparably more favorable to the increase of production. There is, however, still another difference in its favor: it is much more susceptible of extension.-In society in its primitive state production in common and the division of its fruits were necessarily confined within a very restricted circle. By its very nature, which was opposed to expansion, such a system could not extend beyond the limits of one tribe. Thus all social relations of man with his fellows ended here. Everything outside this limit was foreign to him, if not hostile. But from the moment that industry felt the influence of the division of labor and of exchange, the social bonds which it created among men were susceptible of indefinite increase. Provided peace reigns between different nations, exchange may take place from one to the other, just as it takes place within each one of them, and the division of labor may follow the same line of progress. Thus human sociability extends; it does not even stop now at the conventional limits of states; it crosses, if we may say so, mountains and seas, and aims at forming, little by little, upon the earth one immense society, varied in its forms, but always one, embracing the whole human race. Exchange could never have reached the point to which it has come, without the fulfillment of certain necessary conditions. (See CIRCULATION, DIVISION OF LABOR, and MONEY; see also COMMERCE, and FREE TRADE.) CH. COQUELIN.

EXCISE, a term employed to designate a great variety of taxes. In its more limited and more correct sense it is applied only to taxes imposed on the sale and production of commodities produced and consumed within the country levying the tax. Excise duties are distinguished from customs duties by the fact that the latter are imposed upon commodities when imported into or exported from a country. They are further distinguished from such taxes on consumption as a tax

on dogs, on horses and carriages kept for private use, etc., in that the latter are direct, while the excise duties are indirect. (See TAXATION.)- The excise has been a very important element in all modern systems of finance. It has indeed been by far the most fruitful source of revenue for many nations. It has also been employed as a means of restraining luxury or intemperance by being made so exorbitantly high as to diminish the consumption of the article taxed. The nations of antiquity do not seem to have made very extensive use of this method of taxation. Augustus, it is true, introduced a universal excise duty on whatever was sold in the markets or by public auction. But it did not amount to more than 1 per cent., and was but inefficiently collected. It was exceedingly unpopular, and even Augustus, in order to maintain it, was obliged to declare by a public edict that the support of the army depended in great measure on the produce of the excise. Tiberius reduced it one-half and promised to abolish it altogether, although he did not keep his promise. Some of the later emperors availed themselves of the excise to a greater or less extent. But it was reserved for modern times and for industrial states to discover how large a revenue could be derived from this method of taxation.-When the payments in kind, which in the old agricultural and feudal state had proved amply sufficient to defray all public expenses, were no longer adequate to the demand, the need of some standard of taxation for movable property began to be keenly felt. In the country, under the simple conditions there prevailing, it was not unfair to distribute taxation according to the amount of land held by each individual. But in the cities it was evidently impracticable to concentrate all taxation on real estate. Consumable commodities seemed the most available subjects of taxation. By shifting the burden upon them the city authorities could gain two things. They could prevent the tax collector from interfering in the internal administration of the city, and could also save themselves the trouble of fixing a definite amount for each individual citizen to pay. This last was considered a great saving, especially as these taxes were everywhere regarded as temporary on their first introduction. They became permanent when wars began to be carried on largely by money, and began to leave behind them national debts which demanded a constant source of income for their liquidation. Thus the Netherlands adopted the excise in their war for independence against Spain; Saxony, after the thirty years' war; Brandenburg, under the great elector. Spain had a similar tax in the Alcavala at the time of the Moorish wars. It is usual to assign 1643 as the date at which the excise was introduced into England. This is in so far correct as the term excise then appears for the first time, and as the imposts then levied remained a perma nent feature of the English revenue system. But excise duties had been in existence long before. There are evidences which prove the

existence of an excise on meat as early as the time of Richard I. In the time of John and of Henry III. there was a tax on bread, which was nothing but an excise, in which the price of bread was regulated according to that of grain. Later, in the time of Edward VI., a tax of eight pence in the pound was levied on all woolen goods manufactured in England for sale. But it became so unpopular that the king was obliged to give it up within a year after it was first imposed. From that time on no attempt seems to have been made to introduce an excise until the time of James I., when this monarch imposed a tax of one shilling per chaldron on all coal shipped by water. This was not a customs duty, for it was levied on English coal shipped from one English town to another. Soon after, (1626), Charles I. attempted to introduce an excise on provisions, but was thwarted in his design by the obstinate resistance of parliament.-In 1643 the revolutionary parliament at Westminster established the first excise. The tax was laid on the manufacture and sale of ale, beer, cider and perry. The king and his parliament at Oxford soon followed the Westminster example. Both parties promised that the excise should be abolished at the close of the war. But when the time came it had proved to be too fruitful a source of revenue to be given up, and it has remained ever since a part of the financial system of Great Britain. In 1647 the excise was extended to meat, bread, salt, wine, sugar, tobacco, and other less important articles. Some of these articles (as wine and sugar) were shortly afterward relieved of taxation. In 1659 the excise yielded about £500,000. At the restoration, the produce of the excise was granted to Charles II. essential change was made in the excise during the reigns of Charles II. and James II., although the amount realized from it constantly increased. When William III., however, ascended the throne and undertook the costly wars against France, not only was the excise on ale, beer, cider and perry increased, but malt, sugar and wine were added to the taxable articles. The sum realized from it now exceeded £1,000,000, and in Queen Anne's reign reached the sum of £1,600,000. The development of these indirect taxes was exactly similar to that of the customs duties. (See CUSTOMS DUTIES.) Every addition formed a special tax for a special purpose, so that at Anne's death there were twenty-seven branches. Among other objects taxed during Anne's reign, the following may be mentioned: leather, candles, parchment, hops, paper, pasteboard, soap, printed cotton, linen and silk goods, starch, gold and silver wire.-During the peaceful reign of George I. war, of course, could no longer pass as an excuse for increasing the taxes, but the government and the aristocracy had so fallen in love with these indirect taxes which fell principally upon the shoulders of the common people and were comparatively easy to collect, that they advanced still farther along the course upon which the long parliament had entered. The number of branches

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rose to twenty-nine, and the average yield to £2,600,000 per year. The increase in the yield is to be attributed mainly to the increase of population and prosperity. The people, however, hated the tax bitterly; not merely because it made the necessaries of life dearer, but also because the administration was hateful and oppressive. Aside from the restrictions upon production and commerce which can not be separated from any tax on consumption, the needless complexity of the tax, the vast number of laws, the collection by farming, and the decision of disputes by dependent officers, caused wide-spread hatred. It can easily be seen how these various influences worked hand in hand to excite public bitterness against the excise; how the obscurity, which necessarily followed from taxing the same object at several different rates and from the number of complicated and ambiguous laws, led to constant violations; how the avarice of the taxfarmers detected these; how these farmers sought to overstep the necessary restraints and to use them if possible to vex and oppress the public, and what an impression condemnations must produce that were made on account of unintentional or ignorant violations. The loud complaints made about this time produced such an effect that the system of farming the taxes was given up. The collection passed into the hands of gov ernment officials.-But the government was not persuaded to limit the sphere of the excise at all; on the contrary, it was constantly enlarged. It was even allowed to encroach upon the field of the customs; without any other effect, however, than simply to increase the labor of the collectors and the vexations to which the public were exposed. In order to diminish smuggling which the high customs had greatly encouraged, certain duties were lowered and an excise also collected upon the articles. The duties on tea were lowered four shillings, on coffee two shillings, and an excise equal in amount to these items imposed. The importation of chocolate and manufactured cacao was at the same time forbidden, and an excise laid on their domestic manufacture. This separation of the imposts, after having been extended to tobacco and spirits, was finally given up in the year 1825.—Of far greater importance than this event, so far as administration is concerned, was a plan which the famous Walpole proposed in 1733. It was no less than such an extension of the excise system as to do away with the necessity of all other taxes. The hope was expressed that by diminishing the number of taxes simplicity and economy could be obtained in the administration; that by abolishing the customs duties, particularly those on raw materials, and by introducing a régime of free trade, a new impetus could be given to commerce and industry, the necessaries of life could be cheapened, England could be converted into a vast free port, and finally, smuggling could be destroyed and the public revenues increased.-This plan was not laid before parliament in its completeness at once, but

the minister merely attempted to extend the excise to a new commodity; but the knowledge of his intention had gotten abroad, and excited a storm of opposition throughout the whole kingdom. The most exciting scenes occurred in parliament, and the house itself was fairly besieged by the people. The bitterness increased constantly. Walpole himself was in danger of violence. After an exciting contest the minister declared, that, as the law could not be executed without an army, even if parliament should pass it, he would rather give it up than insist on a tax which would endanger England's peace. The joy at the withdrawal of the bill was boundless. The victory of the people, as it was then considered, was celebrated throughout the kingdom with bonfires, illuminations and excesses of all kinds.-The authorities are not even yet agreed as to the merit of the scheme. One party praises the grandeur of the plan to accomplish free trade, alleviation of industry, and simplicity of administration; the other party condemns the idea of shifting the burden of taxation entirely to the shoulders of the poor. We can not deny that the plan had an element of grandeur in it. It could only have been devised by an able man. But it is hard to see how the excise was to yield so much, if the rates were to be kept low and were not to be imposed on the necessaries of life. Nor is it clear that anything would have been gained if the smuggling had been simply transferred to the excise, and if the cost of living had been increased by increasing the taxes on the necessaries of life.With the rejection of Walpole's plan the English people had shown its reluctance to follow out the excise system to its utmost consequences. But the system was still retained and developed in such a way that it was certainly no better in its results than Walpole's plan would have been. For the advantages which his plan would undoubtedly have offered, namely, simplicity of administration and destruction of smuggling, were given up entirely, while they allowed the disadvantages of indirect taxation to develop themselves in their most objectionable forms. The great wars during the reigns of George II. and George III. compelled them to seek new sources of income, and driven by necessity they picked out the most productive, which were indirect taxes on consumption. At the same time instead of developing the direct taxes simultaneously, they even abolished the most important of all, the general land tax.-Among the additions to the excise under George III. the most important were a tax on auctions and one on bricks. The rates were in the meantime constantly increased, so that the yield grew regularly from decade to decade, in 1792 to ten millions, in 1800 to fourteen millions, in 1810 to twenty-five millions, and even approached in subsequent years the sum of thirty millions sterling. The excise had now become the most important source of public revenue. This period, the last years of war and the first of the succeeding

peace in the early part of this century, was the time when the excise flourished most. But it was also the time when the height of the excise began to be unbearable and in which men began to recognize its defects. Now also, as formerly, it shared the lot of the customs. Both imposts are indeed, aside from the economical effects of the customs, nothing but two branches of the same tree. At the same time with the reform of the customs, Canning began to reform the excise with the aim of producing lower prices for the necessaries of life, and thereby contentment among the laboring classes, and of establishing normal wages and thus cheapening production, and causing a revival of industry and commerce.—The first commodities upon which the taxes were diminished were malt and salt (1822, 1823 and 1825), then followed glass (1825), cider and perry and brandy (1826), beer from which the tax was entirely removed (1830), printed cloths (1831), candles (1832), soap (1833), starch (1834), paper (1836). It will be seen that after 1830 their zeal in diminishing the taxes abated somewhat, and that it entirely ceased with the year 1836. In 1840, indeed, a general increase of 5 per cent. was resolved upon to cover the deficit in the budget. But the old system was no longer tenable, and with Sir Robert Peel the reform movement began again. The excise was diminished upon glass (1844 and 1845), on auctions (1845), bricks (1850), soap (1853). The war years 1854 and 1855 occasioned an increase in the malt tax, which was again reduced in 1857, and upon brandy which has never been reduced since, though the tax on brandy has been retained from other than financial considerations.-The number of articles subject to the excise decreased gradually, so that in the year 1850 only malt, hops, paper, soap, brandy and sugar remained, of which the last is hardly worth mentioning as it produced next to nothing. Of these, soap, hops and paper have been freed from the excise. It is natural that the produce of the excise should sink under these reductions, and especially on account of the administrative reforms of 1825. It sank in 1830 to less than nineteen millions, and in 1840 to thirteen millions. But the practical rule that reasonable reductions in high taxes on consumption increase the revenue, verified itself here also. The income from the excise rose in 1850 to over fifteen millions, and in 1866 to over twenty millions. Of late years a new excise has been introduced, viz., that on substitutes for coffee. It was introduced, however, to counterbalance a duty laid upon coffee, so that the latter might not act as a protective duty. The taxes now classed under the head of excise include those on chicory, coaches, licenses, malt, race horses, railroads, brandy, and sugar. Some of these, of course, ought not to be classed under that head in a scientific classification, but the income from such articles is so small that it may be practically disregarded. The taxes on brandy and malt and the licenses to persons dealing in those articles amounted in 1866 to