of exorbitant taxation in this respect "is equally true of all unnecessary burdens (of taxation), whether great or small."
"If taxation be a stimulus," he says, "the advantage must increase with its extent, and taking 2s. per week must do more good than taking 1s. Moderation depends upon habit. We think Mr. McCulloch has fallen into the same error with the man who attributes increased vigor to two glasses of brandy, while he deprecates the drinking of a quart as likely to produce intoxication. The man in sound health who drinks two glasses will not work as well as he who drinks none, but he will do so much better than his neighbors who drink by the quart that it may be supposed that his superiority results from the glasses taken, when it really arises out of the six that he has forborne to take. If taxation be good, so is the lash: both will make people work, but neither will make them work well. The moment we admit that taxation in any case tends to promote industry, it is impossible to say where we shall stop."
Another fallacy which has obtained credence, especially in recent years in the United States and even among its legislators, is that the burden of taxation is increased by a fall in the prices of commodities which represent the work that furnishes the money with which taxes are paid. It owes its existence and tolerance to the non-recognition of a principle of taxation which has also been thus set forth by Mr. J. R. McCulloch:
"The amount of a tax is not to be estimated by the bulk or species of the produce which it transfers from individuals to government or to creditors in general, but exclusively by its value. A heavy tax consists in the abstraction of a large value, and a light taxation in the abstraction of a small value. When a fall takes place in the cost of producing any article, its price necessarily declines in an equal degree, and its producers are obliged to dispose of a proportionally larger quantity to obtain the means of obtaining the same amount of taxes. But it is an obvious error to suppose, as is very commonly done, that the burden of taxation is consequently increased. The value paid by contributors remains the same, and it is by values and not by quantities that the weight of taxation is to be measured. If through improvements in agriculture, machinery, or any other cause, two quarters of wheat or two yards of cloth were produced with the same expenditure of capital and labor that is now required to produce one quarter or one yard, it would be no hardship to give double the quantity of wheat or cloth in payment of taxes."
A failure to recognize and understand this principle has led to much erroneous reasoning on the subject of taxation, and finds a curious practical illustration in the following record of recent experience. Thus in the so-called bimetallic discussion in the
