In direct opposition to the English customs tariff, the customs tariff of the Swiss confederation levies light duties on all articles,

duties which descend to the minimum rate of 30 centimes per 100 kilograms for articles of prime necessity, such as wheat ; which tax raw materials like cotton at 60 centimes, half-manufactured and entirely manufactured goods correspondingly higher, machines at four francs, wine at three francs, coffee three francs, sugar seven francs, etc. From the standpoint of commercial policy, this means the application of a moderate protective duty to all possible articles; from the standpoint of financial policy, it means the raising of revenue by taxing consumption as generally as possible. Up to 1879, no one article of consumption was singled out for heavier taxation, as is usual in other customs tariffs. Even the increase of the tobacco duty, which was finally brought about in 1879, was only an isolated and modest exception. (Until 1879, the duty on tobacco was seven francs, on cigars 30 francs; since 1879, on tobacco 25 francs, and on cigars 100 francs.) At the present time, the duty on corn produces more than the duty on tobacco a remarkable state of things in a democratic country. The articles made dutiable in the English customs tariff produce, in Switzerland, only a quarter of the total customs receipts, moderate as these receipts are.

It is clear that not only is tobacco able to bear a much greater burden, but also the wine duty, now not exceeding three francs per 100 kilograms, is susceptible of a considerable increase. The same is true of the beer duty, which amounted to one and a half francs up to 1882 and has since been raised to three francs, and of the duties on many other commodities.

This conclusion (that an increase of indirect taxation is necessary) forces itself upon us, not only in view of the unavoidable increase in the needs of the confederation, which is compelled to follow the neighboring states in their increase of military expenditures, but also and especially in view of the connection of the federal and the cantonal tax systems. From the standpoint of financial technique, the confederation is the organ best adapted to supplement the tax systems of the cantons with indirect taxes

customs duties and internal revenue. A number of years will elapse before the conviction of the utility of this measure will become sufficiently widespread to modify seriously the legislation of Switzerland. But I do not doubt that the day will come when this will occur. Indeed, a beginning has been made already, which points to a wider development in the future.

The Swiss Federal Assembly voted, June 26, 1885, to adopt the following amendment to the constitution; and the majority of the people ratified the amendment by the popular vote of October 25, 1885:

The confederation is authorized to make provision, by law, concerning the manufacture and sale of distilled liquors. . . . The net revenues derived from the taxation of the sale of distilled liquors accrue to the cantons in which the liquors are sold. The net revenues of the confederation, derived from the inland manufacture and from the corresponding duties upon the importation of distilled liquors, are distributed among all the cantons in proportion to their population. Of these revenues the cantons must devote at least ten per cent to the suppression of alcoholism.

To carry out this constitutional amendment the Federal Assembly voted, December 23, 1886, and the Swiss people ratified, May 15, 1887, the "federal law concerning distilled liquors." This law provides, in substance, as follows:

The confederation has the exclusive right to manufacture and import distilled liquors. Approximately a quarter of the necessary supply is obtained by contracts with inland producers. The distilled liquors are sold for cash by the confederation in quantities of at least 150 litres. The price is fixed from time to time by the Federal Council. It shall not amount to less than 120 francs nor more than 150 francs per hectolitre of pure alcohol. ("Denaturalized"1 spirits are sold at cost price for technical and household purposes.) The sale of distilled liquors in quantities of at least forty litres is a business free to all; but trade in smaller quantities is subject to a license on the part of the cantonal authorities, and must pay to the cantons, according

1 I.e., alcohol so treated as to prevent its use in the manufacture of beverages, e.g., by the addition of wood-spirits.

sales, fixed by The net profits

to the amount of the transactions, a tax on the cantons until the passage of a federal law. of the administration of the federal monopoly are divided among the several cantons in proportion to the population.

These are the main provisions of the new law. Its results will shortly be made public. The purposes at which it aims are those which have been examined in the preceding pages purposes that in future, unless all the indications are fallacious, will play an increasingly important part in Swiss finances.

VIII.

Let us sum up the results of the Swiss experiences.

The hostility of European democracy (or of those parties which are especially accustomed to espouse the interests of the lower classes) to indirect taxation is to a certain extent justified by history. For centuries it was the means of rolling a disproportionate burden upon the shoulders of the laboring classes, through taxation of the necessaries of life. If this was not the case everywhere and at all times, it at least occurred frequently and for long periods. If writings like that of Ferdinand Lassalle, on Indirect Taxation and the Condition of the Working Classes, contain frequent exaggerations, it is still not to be denied that they contain a kernel of justice as well. Not the abolition of all indirect taxes indeed, but a suitable correction of the component parts of the system, and the addition of a supplementary system of direct taxes - these reforms have been made necessary by the advancing recognition of social justice in taxation. The proportion of the public burdens which ought to be borne by the well-to-do and the rich can be put upon their shoulders only by a system of income and property taxes.

This system attempts to apply the old principle that with increasing income and property a relatively greater portion should be contributed to the public needs. The scale on which the rate of progression is to be carried out, depends naturally on changing circumstances, for which no absolute norm

exists. On the other hand it is a principle, recognized nearly as universally as the principle of progression, that the revenues from property should pay a higher rate than the revenues from personal effort, because funded income possesses much greater ability to pay taxes than personal income. Furthermore, the same reason renders it proper to supplement the property tax with a tax on inheritances, which seizes the property at a period of especial ability to pay, and which again is to be made progressive according to the size of the property and the remoteness of the relationship.

Democracy, under favoring circumstances, has realized these considerations of modern justice in opposition to the system of indirect taxes. The canton of Zurich in first instance, the other cantons of Switzerland in second instance, are the field. in which this new justice in taxation is being tested. But the amount and the rapid tempo of the increase of the income and property taxes in the state and communal budgets of Zurich and other cantons have led to a speedy reaction. In the radical theory this new tax system has no limits; in practice, radicalism has discovered what the limits are. There is a widespread feeling that it is impossible to go any further on the new road and that it is necessary to turn back to the deserted path of indirect taxation.

But why is this? And what is the real issue in this opposition between direct and indirect taxation? There is now no longer any contest for an altered justice, such as the radicals have hitherto been waging against the indirect taxes. There has come instead a recognition of the expediency of the form in which the indirect taxes are levied, compared with the difficulties of highly developed income and property taxes.

It is a question of civic maturity and of the widespread recognition of the necessity of paying taxes. The question has been answered by experience, in our thoroughly democratic trial-field, in a manner in no wise satisfactory. It is however just the fatality of a democracy that, in consequence of the sovereignty of the people, no other lever can be found for the enforcement of public duty than the will of the mass

itself. Just as high as is the stage of political maturity of the majority, just so high and not higher is the will of the law and its execution.

The difficulties which spring from this relation are so great, as regards the assessment of direct taxes, that even in the monarchic states of Germany the unavoidable participation of the self-governing localities in the administration of the tax laws produces analogous results. Because it is impossible to attain a knowledge of the income of the citizen, from the centre of the state and through its officials, without calling into play the local aid of the community itself, the assessment is based principally on those democratic elements which come unchecked to the front in a democratic republic. The weaknesses and consideration for each other's weaknesses in a body of neighbors, who demand for themselves and their associates an illegal privilege in the payment of taxes, make themselves felt even in monarchic states. Recent experiences in the Prussian Chamber of Deputies show that here, too, the popular will, acting through the parliamentary power, is able to defeat legislative measures intended to secure more stringent methods of

assessment.

Such experiences ought not to be regarded as reasons for condemning the whole system of income taxation. They should only lead to moderation in the extension of this system, in order not to exaggerate its hardships. They should inspire efforts to promote the gradual development of insight and sense of duty among the citizens, as well as to improve gradually the methods and the execution of the methods for the collection of taxes. These efforts will be unsuccessful in proportion as the reformer intoxicates himself and others by the large phrases of radicalism. They will begin to yield results as soon as he accustoms himself to prove by deeds the love for liberty and for country so often paraded in words.

But since the demands of locality, state and nation are everywhere increasing; and since this increase is not waiting for those gradual developments which ought some day to show themselves in the sense of duty and in the methods of direct