took what I shall call a work of hygienic cleansing; dusting energetically the moth-eaten economic furniture, opening wide the doors and windows to freshen the musty atmosphere, and introducing a flood of sunshine and pure air from the four corners of the world.

Nothing can describe the consternation of the liberal school on finding itself thus betrayed by the very men whom it intended to use as tools. It asked, in amazement, whence came all these mutineers ? But, after a little storming it changed its tactics, and resolved to remain silent in future in regard to this unfortunate episode. By a tacit agreement among the leaders of the liberal school, it was decided that the professors of economics in the law faculties were simply presumptuous young men, utterly ignorant of what they were employed to teach, and that their dissent was of small importance and not to be mentioned in good society1-"Much ado about nothing."

same success.

But this policy of indifference, which had heretofore been so successful in stifling all dissent, could no longer meet with the The professors of economics in the faculties of law found in the numerous students who attended their lectures (there are not less than five to six thousand law students in France) an audience - a public- that could not be taken from them. They found their support in their colleagues at home and abroad, and in the publishers. In vain had their books been put on the index expurgatorius of the liberal school. Their publications came from the press none the less rapidly. And if we remember that all the men in France who are to fill the positions of judges, of lawyers, of administrative officials, and the still greater number of those who are preparing for public life, if we remember that all these must sit on the benches of the schools of law, we shall readily perceive that the movement begun in these schools is by no means one to be disregarded. Unfortunately, the law-schools have rather too professional a

1 Evidence of this tendency can be found in the article of M. de Foville on The Economic Movement in France, in the Quarterly Journal of Economics, January, 1890. Cf. especially (p. 224) the way in which he speaks of the faculties

of law.

character. They serve to form officials or statesmen, but seldom erudite scholars. For this reason, the instruction in economics will perhaps not result in so great an intellectual emancipation as might be hoped for. It will not readily adopt so purely scientific a character nor so liberal a method as that of the German universities, where it is placed not in the faculty of law but in the faculty of philosophy or, in some of the newer universities, in a special faculty of political science. To be impartial, I must add, moreover, that although the faculties of law include some distinguished professors of political economy, up to this time they have not produced an economist of sufficient talent or prominence to counterbalance the authority of the leaders of the orthodox school; and the same may be said, in fact, of all the other dissenting schools. Of course we must

allow them a little time.

To sum up, it may be said that for some years past a very active economic movement has been going on in France which, taking all things into consideration, is full of promise. We may say that there is now as much economic activity in France as in any other country. There are no less than seven general economic journals - Germany, we believe, has but six-which represent, although unequally, all the principal schools, and which may be classed in their chronological order as follows : the Journal des Économistes (1842), the Économiste Français (1873), the Association Catholique (1876), the Réforme Sociale (1882), the Science Sociale (1886), the Revue Socialiste (1886), the Revue d'Économie Politique (1887). There is also a large number of special reviews, such as the Annales de l'École des Sciences Politiques, the Annales Économiques, the Revue des Institutions de Prévoyance, the Devoir (organ of the "Familistère" of M. Godin, now deceased), the Christianisme Pratique (founded by an association of Protestant divines), the Revue Économique de Bordeaux, the Bulletin de la Société de Statistique, the Idée Nouvelle (organ of the Marxist school), five or six co-operative or mutualist journals, etc. Moreover, there is no important literary review or political paper without several

editors in charge of economic questions. There are three or four societies of political economy in Paris, one in Lyons, one in Bordeaux. The public, in all social classes, in all political parties, in all religious sects, takes a burning interest in economic and social questions. All this augurs well. In the light of these facts, I am unable to endorse the melancholy assertion made recently by M. de Foville: "We must admit that political economy in France has lost, during the past ten years, much of the ground which it had gained in earlier years.' Not at all! It is not political economy which has lost during the past ten years; it is only the orthodox school, which is by no means the same thing. On the contrary, all the ground which it has lost has been a distinct gain for the science.

"1

Now, what is to be the outcome of this confused medley? Shall we witness the birth of some great economist or of some great school like that of the Physiocrats? And will the science of economics in France, after the lapse of a hundred years, blossom forth anew, like the plant which, if tradition is to be trusted, flowers but once a century? A not distant future will tell us.

CHARLES GIDE.

1 The Economic Movement in France, Quarterly Journal of Economics, January, 1890.

THE TAXATION OF CORPORATIONS. III.

HE discussion of corporation taxation would be incomplete without an examination of the various phases of duplicate taxation. This is all the more necessary for the reason that no attempt at a thorough analysis has ever yet been made. And yet the problems that hinge about this particular subject are so especially important in the United States as to demand the most serious attention.

What is meant by double taxation? Double taxation in the wider sense exists when the same or different persons are taxed twice upon the same source, whether this be property, income or any other element. Thus if two different persons like mortgagor and mortgagee are assessed on the same piece of land, it is double taxation. Or if the same person is taxed by two different states or localities on his income and on the property from which the income is derived, this again is double taxation. It is a mistake, however, to think that all duplicate taxation is necessarily unjust. Much confusion has arisen on precisely this point. Double taxation is unjust only when the principle of equality is violated. This is usually, but not neces sarily the case. We can ascertain the limits of the principle only by analyzing separately each of the various kinds of duplicate taxation.

There are in reality no less than five different forms of double taxation in the case of corporations. These are :

1. Double taxation of property and debts or of income and

interest on debts.

2. Double taxation of property and income.

3. Double taxation of property and stock.

4. Double taxation arising from interstate, intermunicipal or foreign complications.

5. Double taxation of the corporation and the holders of

stock or bonds.

Three of these forms, it will be perceived, are applicable also to individuals, as well as to corporations. Let us discuss them in order.

VII. Double Taxation of Property and Debts.

This first point need not detain us long. It applies in this country only to the general property tax, which we have discarded as the basis of corporation taxation. Moreover, in the case of individuals this means practically the question of taxation of mortgages and book debts, which has been discussed in a previous article.1 Finally, in so far as corporations are concerned it has been pointed out that there is really no injustice at all in not exempting corporate indebtedness. The issue of mortgage bonds by a corporation is simply another mode of increasing the working capital. Correct policy demands the taxation of corporate bonds as well as of stock, of loans as well as of share-capital. To tax corporate debts may indeed be called double taxation in so far as the tax on both property and debt is paid out of the same income; but if so, it is double taxation of a perfectly legitimate kind. It is here that the principles of individual and corporation taxation diverge.

Some of the Swiss cantons, like many of the American commonwealths, recognize this distinction between the taxation of individuals and that of corporations, by permitting the deduction of indebtedness from the property of individuals but refusing a like deduction in the case of corporate property. Such e.g. is the system in St. Gallen, Zürich, Ticino, etc. 3

Perhaps more interesting and probably of greater future importance in the United States is the other phase of this question of the taxation of indebtedness-double taxation of income and interest on debt. While the true theory of income taxation in the case of individuals necessarily demands the deduction of interest on debts, it has already been shown that in the case of corporations the interest paid on mortgage bonds

1 The General Property Tax, POLITICAL SCIENCE QUARTERLY, V, 1 (March, 1890), p. 32.

2 Ibid. V, 3 (Sept., 1890), p. 452.

8 Schanz, Die Steuern der Schweiz, II, 338; II, 435; IV, 281.