tised by the author of the People's Budget as ' undeveloped,' and under the operation of that Budget is penally taxed.

The third fundamental defect of the Lloyd Georgian land taxes is the attempt to base taxation, not upon general ability to pay, but upon the profit made on a particular transaction. In practical business one transaction is set off against another, for no man can be uniformly successful in his ventures. This has hitherto been recognised by English administrators. For example, in dealing with the builder's industry the Inland Revenue Department requires each builder to furnish for income-tax purposes an annual statement showing the net result of his transactions after deducting losses from gains. The balance is his taxable income, and this balance is taxed 9d. in the £as earned income. Under the Lloyd Georgian system, the profits alone are reckoned and they are taxed 4s. in the £, 'as a chance gain incident to land monopoly.' It ought not to need much acumen to see that if a business man is taxed 20 per cent. on all the profits he makes, without allowance for losses, his net income may easily be wiped out altogether.

The increment value duty has the further grave defect that it involves two valuations, one at the date from which increment is supposed to be reckoned and the other on the occasion of levying the tax. Thus double expense is incurred.

The only sound system of taxation is to tax a man on the basis of what he actually possesses, for that is the measure of his ability to pay. If he has honestly come by his possessions he is entitled to the enjoyment of his good fortune; if he has come by them dishonestly it is the police magistrate, not the tax collector, who ought to deal with him. If, finally, through some defect of the law he has been able to make gains which though legal are unfair to the rest of the community, then the evil should not be tinkered at by a tax but remedied by an alteration of the law.

These considerations apply to local as well as to national taxation, and therefore inferentially condemn any scheme for extending Lloyd Georgian or Henry Georgian theories to the realm of local finance. It is perhaps, however, worth while to point out the peculiar absurdities that would result from any attempt to levy local rates upon site values. The present system of rating upon the whole value of the property is based on the sound general principle that the value of a

man's house or office or factory gives an approximate measure of his ability to pay. Admittedly there are defects in the system-defects which ought to be remedied and could be remedied without any revolutionary changes-but they are as nothing to the injustice that would follow the transference of local rates to the value of the bare site. In the suburbs of every town are suburban houses with gardens attached where the more prosperous inhabitants live. These properties are at present rated upon their composite value. Under the proposed system the occupants of these comfortable houses would only have to pay upon the value of the bare site covered by the house and garden. As such sites would be cheap in comparison with sites in the centre of a town, it follows that well-to-do residents in the suburbs would have their rates reduced, while the business people and the poorer residents in the centre would have to pay more.

It may be added that the Henry Georgite idea that all the revenue of the State should be raised by a land values tax is a financial impossibility. In an ordinary provincial town the value of the site of a house is estimated on the average to be about one-fifth of the total rateable value of the premises. It follows that an existing rate of, say, 7s. in the £ on the composite property would have to be replaced by an average rate of 35s. in the £on the site value. How 35s. is to be extracted out of 20s. the land taxers have not yet explained.

But even if local rating on site values were a feasible proposition, the idea of using the Lloyd Georgian valuation as a step to establishing such a rating system will not bear examination. The reason is that Mr. Lloyd George-excusably enough-never fully understood the wild theories advocated by the land values group in the House of Commons, and his Budget was only a half-hearted concession to their views. In their franker moods they condemn its follies as scornfully as a mere Duke might do, but seeing that the Chancellor of the Exchequer has got himself into such a desperate quagmire they hope to tempt him to try to escape by following the ignis faluus which emanates from their brains. That is why the proposal to use the Lloyd Georgian valuation for the purposes of local taxation is now being so persistently urged. Mr. Lloyd George, if he accepted this scheme, would then be able to proclaim that the realised failures of his taxes

was of no consequence in comparison with the vast boons that his valuation would yield to local authorities.

This ingenious scheme is however doomed to failure; for the Lloyd Georgian valuation is based neither upon old-fashioned English common sense nor upon the pure wisdom of the prophet of San Francisco. It is a jumble of conflicting ideas expressed in language which no one can with certainty construe. For example, after four years it is still uncertain whether growing grass, which may have cost £10 an acre to establish, is a deductible improvement or is to be treated as part of the prairie value of the land. In the passage quoted above Mr. Lloyd George took the view that his system of valuation makes no allowance for improvements which enhance the value of land for agricultural purposes. Yet to ignore these improvements is to fly in the face of the theories taught by the land tax group. A similar difficulty arises with regard to urban land, for here many owners-especially poor owners -have through negligence omitted to claim allowances which the Act permits. Consequently some properties have been valued at one figure and adjoining properties, similar in every respect, at another figure. These divergent values are now recorded in the Lloyd Georgian Domesday Book, but any attempt to levy local rates upon them would arouse that passionate sense of indignation which a particular injustice excites even among people who are sluggish to observe general wrongs. Nor has anyone yet explained how to deal with the minus values which have already formed the subject of much litigation. The mind reels at the idea of a minus value as a basis for local rating. Finally, any system of local rating must be based upon contemporary values, even if they be hypothetical site values. The community would not tolerate the levying of rates, say, in 1920 upon the values recorded for 1909.

The truth is that the Lloyd Georgian valuation is absolutely useless except for the exclusive purposes of the Lloyd Georgian land taxes; and they are useless for any purpose whatsoever. EDITOR.

No. CCCCXLVI. will be published in October.

The

Edinburgh Review

OCTOBER, 1913

No. 446

THE PROBLEM OF DEMOCRACY AND THE SWISS SOLUTION

1. The Swiss Democracy. By H. D. LLOYD and J. H. HOBSON. T. Fisher Unwin. 1908.

2. The Rise of the Swiss Republic. By W. D. MCCRACKAN. New York Henry Holt & Co. 1908.

3. The Swiss Republic. By BOYD WINCHESTER. Philadelphia : J. B. Lippincott Co. 1891.

4. The Referendum in Switzerland. By SIMON DEPLOIGE. Longmans, Green. 1898.

5. Blue Book No. 3, 1911, respecting the Referendum.

6. Blue Book respecting the Initiative.

IT

T may be accepted as an axiom that a truly democratic government should first and foremost express as far as is humanly possible the will of the people of the country. An ideal democratic Constitution should make it impossible for parliamentary representatives to impose on the country laws which the people do not want. Further, it should be very difficult, if not impossible, for a small majority to impose constitutional changes to which nearly one-half of the electors are opposed. Yet these obvious requirements of democratic government are conspicuously absent in most so-called democratic countries to-day, and there consequently exists All rights reserved.

VOL. CCXVIII. NO. CCCCXLVI.

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a very widespread discontent with parliamentary government both in Europe and America.

It is often uncertain on both sides of the Atlantic how far laws, which are easily carried through parliament, are really wanted by the people, and whether, if put to the popular vote, they would have even a bare majority in their favour. This doubt necessarily provokes bitterness among minorities in legislative assemblies, and from that state of mind it is but a step to obstruction, followed by the closure, and in turn followed by increased discontent, and finally by indifference to parliamentary proceedings. A further consequence of the present methods of legislating is that attempts are made to defeat governments by trickery, by snap votes, by plots and counterplots and all the mean and meaningless paraphernalia of party intrigue. The expression of the will of the people as an aim of government is altogether lost sight of, and party opportunity and party necessities become the sole motives of political action.

The first requirement of democratic government being the expression of the real will of the people, the second requirement is that the political machine should work as smoothly as possible. For this end care should be taken so to constitute the legislative and executive bodies as to avoid as far as possible the political crises consequent upon sudden changes of government and to minimise the turmoil and excitement caused by general elections.

The object of this article will be to show that these two fundamental requirements of democracy-the frank and sure expression of the people's will and the smooth working and stability of government-are obtained to a far greater extent by Swiss political institutions than by those of England.

The Swiss Confederation is made up of twenty-two sovereign States or Cantons which have united and delegated to a Central or Federal Government the right to deal with certain matters of common interest to all. Any matters not specially declared by the Constitution to be within the jurisdiction of the Federal Government remain within that of the Cantonal Governments.

For present purposes we are not concerned with the Cantonal Governments or with their relations to the Federal Govern