That is to say a maximum of 26,000 francs and a minimum of 10,000. Out of 100 shareholders, 75 owned only from 1 to 10 shares. Here we have the "financial feudalism" referred to in Socialist orations.

The bonds of the railway companies were distributed as follows:

354,731 of from 1 to 24, say a capital of from

Nearly 95 per cent. of the shares are the property of investors who hold a maximum number of 100 securities. The total French Government stock is divided among more than five million subscribers. The average is hardly more than 150 francs in interest, say a capital of 5,000 francs. More than 80 per cent. belongs to investors with an income of from two to fifty francs. The number of holders is more than two millions.

:

The Banque de France is an investment patronised by rich men. In 1870 the number of shareholders was 16,062, with an average holding of 12 shares in 1900 it was 27,136 with an average of 6: at the end of 1908 it was 31,249, of whom 10,381 owned one share and 17,403 between 2 and 10.

Of 39,000 shareholders of the Crédit Foncier in 1900, 32,767 owned 10 shares or less,

The "Revue Socialiste" has stated the number of deposits in the savings banks in 1904 to be

It follows from these figures that these 11,767,772 depositors possess an average deposit of 378 francs, constituting a tolerably small property and that of these 11,767,772 proprietors or capitalists (as M. Yves Guyot or M. Paul Leroy-Beaulieu would freely call them) more than half (3,908,800 + 2,291,489) have an "average capital" varying between 49 and 11 francs, while their income varies between 2 fr. 47 and 33 centimes ("Revue socialiste").

What do these figures prove? That the savings bank does not represent a concentration of capital. It cannot, therefore, be invoked as an argument in favour of Karl Marx' thesis, but these small deposits none the less represent a sum of four milliards of francs (£160,000,000) and that is a total which is not to be despised.

Twenty-five years ago, in 1882, the savings banks had :

One knows that the savings bank does not allow of deposits above 1,500 francs. This progress points to the increase of would-be capitalists. So far from decreasing they become more and more numerous, in spite of Karl Marx' law of concentration, which involves the "pauperisation" of the great majority. But Messrs. Rockfeller, Carnegie and perhaps two or three others are multimillionaires. Be it so, but do they absorb a greater proportion of wealth than the great feudal lords and kings of the good old times? Quite the contrary. Therefore the alleged law of the concentration of capital is not in accordance with the facts.

1 For this year the average deposit was 387 francs.

CHAPTER IV

REAL AND APPARENT INCOME

Regular incomes vary.-Reduction of income by fall in securities.-French Government stock.-Railway shares.-Fall in landed property.-The increase of capital not automatic.

AMONG the promoters of various taxes upon income who have put forward various proposals, not one has asked himself the simple question, "What is income, and how is it distinguished from capital?" It is repeatedly stated, for example, that the 3 per cent. paid upon stock of the City of Paris, the Crédit Foncier or the railway companies represents a security paying a fixed rate of interest. This is the established phrase. The conclusion is suggested that on the imposition of so much per cent. upon income every taxpayer knows the precise_portion of the total levy which he has to bear. This may seem certain, but it is wrong, for French Government stock does not always bear 3 per cent., and railway bonds and other securities paying a fixed rate of interest pay irregular dividends.

Instead of exclaiming at the paradox let us look at the facts. I bought 3 per cent. French Government stock at the end of December, 1897, at 103fr. 10; I had to sell at the end of December, 1906, at 95fr. That is a difference of at least 7fr. 85, say an annual loss for nine years of ofr. 87. I must therefore deduct this 87 centimes from my 3 francs of dividend, and my regular income was not 3fr., but 2fr. 13. If the Treasury imposes a tax of 4 per cent. upon my 3 francs I am paying ofr. 12, which upon 2fr. 13, represents an actual rate of 5.68 per cent. But I may fare even worse than this. I bought 3 per cents. at 99fr. at the end of December, 1905, and sold them at the end of December, 1906, at 95fr. 25, that is at a loss of

3fr. 75. I drew a dividend of 3 francs, but this was absorbed by the loss which I sustained on my capital, to which I have to add a further ofr. 75.

Accordingly an income tax would have fallen not only upon a smaller income than the anticipated regular income, but upon a deficit as well: I sustain a loss of ofr. 75 and should have had to pay 4 per cent. on 3 francs, i.e., ofr. 12, which I have to add to my loss. Because I have had the misfortune to buy stock bearing 3 francs as interest at the end of December, 1905, the State is to force me to withdraw ofr. 12 of my capital in order to pay income tax to the State, when, instead of supplying me with a dividend, it has already inflicted a loss of ofr. 75 upon me!

In reviewing other securities with a fixed rate of interest, I find that their dividend is by no means the nominal dividend upon which the tax is placed. Those who want safe investments are recommended to buy railway bonds, and quite rightly on the ground of safety; it offers a double guarantee, that of the Government, and that of the substantial character of the Company.

A woman, a widow, a workman, or a careful clerk buys a 3 per cent. bond in the "Chemin de fer du Nord" at the end of December, 1898, at the price of 478 francs. The holder wants to re-sell at the end of December, 1906, and can only recover 456 francs. The stock has brought in 15 × 8=120 francs. Deducting 22 francs, it has brought in 98fr., i.e. 11fr. per annum or 2fr. 30 per cent.

In order to simplify my instance I have not taken actual taxes into account. The holder of a security payable to bearer has only received 13fr. 42 instead of 15 francs, i.e., 107fr. 36 in eight years, from which he must deduct 22 francs. He has therefore received 85fr. 26, i.e., 1ofr. 70 per annum or 2fr. 24 per cent.

Take another security of the same kind, a share in the issue of the Crédit Foncier of 1895 at the