97

THE CAPITAL L

An interesting summary of the effects which a
Levy of the Labour Party is here presented by

A large cause of the present unemployment is the high taxation and the reluctance of capital to be employed in reproductive work, partly owing to the Commission which was appointed by Mr. Chamberlain discussing the possibility of a capital levy, the mere suspicion of which caused a restriction of new capital being employed.

The Labour party have as one of the items of their manifesto a capital levy. Such a capital levy would be disastrous to the country, and would cause a vast increase of unemployment, and might even possibly destroy that personal initiative that has done so much to bring the British nation to its present position as a reproductive and manufacturing Power.

The expenditure of capital on reproductive works is, to use a simile, like throwing a stone into a pond. Immediately ripples of water arise, going in larger and larger circles. So the expenditure of capital on reproductive works increases the employment, the fund from which wages are earned, and again, when these wages are paid to labour they are again spent by labour among the various shopkeepers and in other ways, so that the expenditure of this capital leads to an ever-increasing number of people or circles which enjoy the fruit of its expenditure.

EVY : By Sir John R. Ellerman,
Bart., C.H.

He thinks would acrue from the proposed Capital
by Sir John Ellerman, the distinguished shipowner

This capital is provided by thrift, savings, self-denial, and hard work by the bulk of the people, the incentive of which is inherent to each to leave a competency for his widow and family after his death or a competency for his own old age. Most large fortunes of to-day have been so made in the lifetime of the individual.

A capital levy would destroy all confidence as to the future, and would tend to make each individual spend all they had without accumulating or providing in any way for the capital requirements for the future. There would be no certainty, if such levy was possible, that a later Government might not impose another levy. It would tend to increase taxation, not decrease it, as much capital would be destroyed in the process, and the State cannot have the capital and still receive the tax on the income of such capital, while a horde of professional valuers would be employed. It would incidentally depreciate the value of securities, raise the rate of interest, as everybody would be sellers at the same time, and tend to be disastrous in its effects on all forms of capital invested in this country and on foreign exchanges. There is a form of capital levy practically in existence to-day, which is the levy which arises on the death of an individual by death duties, and this in large estates already amounts to 40 per cent. of the capital.