Front Page Titles (by Subject) TAX WITH MONOPOLY; OR HINTS OF CERTAIN CASES IN WHICH, IN ALLEVIATION OF THE BURDEN OF TAXATION, EXCLUSIVE PRIVILEGES MAY BE GIVEN AS AGAINST FUTURE COMPETITORS, WITHOUT PRODUCING ANY OF THE ILL EFFECTS, WHICH IN MOST CASES ARE INSEPARABLE FROM EVERYTH - The Works of Jeremy Bentham, vol. 2
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TAX WITH MONOPOLY; OR HINTS OF CERTAIN CASES IN WHICH, IN ALLEVIATION OF THE BURDEN OF TAXATION, EXCLUSIVE PRIVILEGES MAY BE GIVEN AS AGAINST FUTURE COMPETITORS, WITHOUT PRODUCING ANY OF THE ILL EFFECTS, WHICH IN MOST CASES ARE INSEPARABLE FROM EVERYTH - Jeremy Bentham, The Works of Jeremy Bentham, vol. 2 
The Works of Jeremy Bentham, published under the Superintendence of his Executor, John Bowring (Edinburgh: William Tait, 1838-1843). 11 vols. Vol. 2.
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TAX WITH MONOPOLY; OR HINTS OF CERTAIN CASES IN WHICH,
Taxes on the profits of traders would, generally speaking, be impracticable:—
1. The difficulty of ascertaining the profit and loss upon each article would be an endless source of evasion.
2. The measures necessary to be taken against evasion, would be an equally endless source of real or supposed oppression.
3. The disclosure of the secrets of the trade would operate as a prohibition of ingenuity and improvement.
In the business of a stock-broker, none of these objections have place:—
1. & 2. No difficulty about ascertaining profit and loss: loss, none in any case: rate of profit perfectly fixed: the transactions which gave birth to it are always upon record.
3. No secret, no inventions, no improvement in the case.
1. 2. & 3. No more difficulty about ascertaining profit and loss, nor anything more of invention than in the case of stock-brokers.
The profit of the banker results from the placing out at interest, in large sums, what he finds to spare, out of the money he receives in large and small sums, on condition of returning it as it is wanted.
If in this case there be any such thing as a secret, the disclosure of which might be attended with prejudice to anybody, it lies in the money transactions of the customers, who deposit the money and draw for it, and of those who, by getting bills discounted or otherwise, deal with this shop in the character of borrowers. Were the knowledge of these transactions generally spread, or were it easily attainable, it might in some instances be attended with prejudice to the parties, by the information given to rivals in business, or other adversaries. But, for the purpose in question, the knowledge in question might be confined in each instance to a single accountant appointed by the crown, whose attention would be confined to the mere figures having neither time to inquire, nor interest in inquiring, into the history of any transaction, in the occasion of which this or that sum was drawn for or deposited.
So much for the tax—the burthen. Now as to the exclusive privilege—the compensation. The effects to which this sort of institution, in as far as it is mischievous, stands indebted for its mischievousness, are—
1. Enhancement of the price of the article dealt in.
2. Impairing the quality.
3. Lessening consumption, in the case of consumable goods:—or more generally, diminishing the general mass of benefit depending upon this use of the sort of article, whatever it may be.
4. Enhancement of trouble to the customer, by his having farther to go than if dealers were more numerous.
5. [The exclusion of persons already embarked in the business, a still greater grievance, if it existed, is out of the question here.]
None of these ill effects would take place in any degree, in the instance of either of the above professions. Thus, in the case of
The Stock Broker.
1. The price of the service rendered is a fixed per centage; it is amply sufficient: enhancement might be prevented by law.
2. The quality of the service cannot, from the nature of it, either be improved or impaired: neither skill nor invention, nor so much as any extraordinary degree of exertion, have anything to do with it.
3. The demand for this sort of service cannot in the nature of things, be lessened, or anyways affected, by the limitation of the number of the persons whose profession it is to render it, or by the fixation of the price at which they are to render it.
4. The distance between the agent and his employer cannot receive any enhancement from the exclusive privilege, or from anything else. The agents, how numerous soever, are confined to a spot by the very nature of their business.
1. The service of receiving and keeping—the service rendered to the depositor of money, is rendered gratis, and though the number of bankers should ever be lessened, there can be no apprehension of their requiring payment for this service.
The price at which the other sort of customer, the borrower, is supplied, is equally incapable of being raised by the operation; the rate of interest will depend upon the quantity of capital accumulated in the whole country, not upon the quantity that happens to be in the hands of bankers. A confederacy, and that a successful one, among all the bankers, town and country, to raise the rate of interest, is in itself scarce possible; besides that the rate is actually limited by law.
2. The quality of the service is as little susceptible of being impaired by such a cause: it is more likely to be improved: each bank being rendered richer, and thereby safer, in proportion as the number is kept down.
3. As little is the demand for this sort of service capable of being lessened by the restriction of the number of hands allowed to render it: the demand for the service, consisting in the keeping of money, will depend upon the quantity of money to be kept: the demand for the service consisting in the loan of money, will depend upon the quantity of money wanted for a time by those who have value to give for it when the time is over. In neither of these instances has the demand anything to do with the number of the persons whose business it is to render this sort of service.
4. The distance between the professional man and his customer and employer need not receive any enhancement in that case, any more than in the other. Distance has never been a matter much regarded in this branch of business. As to the London bankers, instead of spreading themselves equally within the circle of the metropolis, their object seems rather to have been to crowd into, or as near as possible to, Lombard Street.
In the country, whatever distance the depositor and borrower have been used to go, they might contrive to go, were it necessary, without much inconvenience. The inconvenience might be done away entirely by proper reservation, adapted to future demands in places where as yet there is none.
A calculation might easily be made of the progressive value of the indemnity, from retrospective view of the gradual increase in the number of bankers on the one hand and in the quantity of circulating cash and paper deposited on the other.
The advantages of monopoly find their way without much difficulty to the eyes of dealers.*
Monopoly would be no innovation in this branch of business; an illustrious example is afforded by the bank of England.
Should the principle be approved of, it might be worth while to look over the list of trades, professions, and other lucrative occupations, for the purpose of ascertaining the instances in which this species of compensation might be given, without any such inconvenience as would outweigh the benefit.
The exclusive privilege being a benefit, ought of course to be coupled with the tax in every instance where it is not attended by a proponderant mass of inconvenience to the public at large.
The stock of these cases being exhausted, then, and not till then, may be the time to look out for the instances, if any, in which the tax might stand alone without the indemnity to lighten it.
end of volume ii.
[* ]Not long ago a great banking-house opened upon the plan of giving 3 per cent. for money on condition of its not being drawn out till after a short notice. This was too much, and so it proved: but an indication seems to be afforded that, even without the benefit of the monopoly, the profits of trade are capable of bearing a deduction in this instance.