CHAPTER XIV.

RESTRAINTS ON MANUFACTURES.

Taxes on raw materials.-Excise duties.-Factory-bill.

THE legal restrictions which interfere with manufacturing industry in this country are chiefly of a fiscal character.

Direct taxation has always been an unpalatable and unpopular mode of raising the public revenue. And governments have, in consequence, generally resorted to the imposition of customs and excise duties upon imported or home-made commodities. The tax being levied upon the producer or importer is charged by him, of course, upon the purchaser, who in reality pays it, but in so indirect a manner, as to be unconscious of the nature of the payment without a process of reflection that does not readily present itself to ordinary minds. Through this contrivance the Government of Great Britain has raised and spent enormous revenues which the nation would cer tainly never have consented to pay in direct contributions from their purses.

Whatever injury results from the people being thus blinded to the excessive expenditure of their government may, perhaps, be counterbalanced by the facility afforded to the collection of the

necessary revenue.

The system, therefore, would be harmless on the whole, if the articles taxed were solely luxuries, consumed by the wealthier classes; in which case the effect of these duties would be nearly the same as of a direct tax on wealth. They would have little or no influence on wages or profits, and consequently on national industry. A very considerable proportion of our customs and excise duties, exceeding, according to Sir H. Parnell*, £27,000,000, are of this comparatively innoxious character.

But there are some duties which, by their interference with the manufacture either of articles of the first necessity, or of such as are fabricated in this country for exportation, exercise an injurious influence on these important branches of industry.. Such are

1. The taxes on the raw materials of our principal manufactures. Sir H. Parnell estimates the amount of taxes annually levied on the materials employed in manufactures, buildings, ship-building, &c., at upwards of £6,000,000.

The levying of so large a sum on articles that require capital and labour to give them utility and value, must strike every one as being a most serious obstacle in the way of remedying the difficulties which press at this moment the heaviest on the country, namely, the want of employment for capital and labour. The repealing, therefore, of the whole of these taxes is a measure particularly called for under the present state of our manufactures, and of the labouring class.'t

* Financial Reform. Chap. IV. † Parnell, p. 19. Ed.

1832.

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Since the first publication of Sir H. Parnell's valuable work, steps have been taken, in conformity with his recommendations, for the abolition or lightening of some of these injurious imposts. The duties on hemp, which is extensively used in the manufacture of linen, sails, and cordage-on barilla and ashes, on a large number of drugs and dyes used in various branches of manufacture, on coals and culm carried coastwise, on tiles, on leather, and on soap, have been either completely abolished or greatly reduced. The duty on thrown silk still remains. And the heavy duty on timber, but especially the arrangement of that duty, whereby North American timber, very deficient in strength and durability, is forced into general use in place of that from the north of Europe, which is not only procurable at a less expense, but is likewise of infinitely better quality -continues to disgrace the statute-book, and condemn our public and private buildings to premature decay.

2. Of taxes imposed directly on the manufacture of articles of prime necessity, or exportation, Sir H. Parnell justly stigmatises the heavy duties on paper, glass, and printed calicoes. The latter has lately been materially reduced.

The duty on paper has an injurious effect on many other trades besides that of the paper-maker. The limited consumption which it occasions injures the makers of machinery, type-founders, inkmakers, printers, engravers, booksellers, bookbinders, stationers, paper-stainers, and several other trades. But the greatest evil of all is the high price of books which it gives rise to.

This

places a great obstacle in the way of the progress of knowledge, of useful and necessary arts, and of sober and industrious habits. Books carry the productions of the human mind over the whole world, and may be truly called the materials of every kind of science and art, and of all social improvement.'*

In addition to the increased cost of these manufactures occasioned by the amount of the tax collected from them, the necessarily severe and vexatious regulations under which the duties are collected, have most injurious consequences.

By the Excise laws prescribing the processes of fabrication, the manufacturer cannot manage his trade in the way his skill and experience point out as the best; but is compelled to conform to such methods of pursuing his art as he finds taught in Acts of Parliament. Thus the unseen injury arising from Excise taxation, by its interference with the free course of manufacture, is much greater than is suspected by the public. The consequence of the activity and invention of the manufacturers being repressed, is, that the consumers of their goods pay increased prices, not only for the duties imposed on them, but for the additional expense incurred by absurd and vexatious regulations; and, in addition to this, the goods are generally very inferior in quality to what they would be if no duties existed.'t

In the same way the mode of levying the duty on malt inflicts a greater injury on the agricul+ Ibid. p. 26.

* Parnell, p. 28.

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of

tural interest and the manufacturers of malt, as well as on its consumers, than can be measured by the amount of the tax collected. "The severe and vexatious excise regulations, at one and the same time, have the effect of unnecessarily fettering the operations of the maltster-of deteriorating the quality, and adding to the price of his malt-and of putting him wholly in the power of the pettiest officer of excise."* In consequence this system, and perhaps of the too heavy duty levied on an article which can scarcely be called a luxury, the consumption of malt had been stationary for the last forty years, until the late Beer Act gave a temporary stimulus to the consumption of brewers' beer, at the expense, we fear, of much of the morality and happiness of the working classes, who have been induced to consume it in tippling-houses rather than at home in the midst of their families. The malt-duty should be taken off; and if no other means could be devised for making up the deficit in the revenue, it were better that a beer-duty be reimposed in its place.

It is to be hoped that the further repeal of the taxes on manufactures, and the materials of manufactures, will be proceeded in, until the whole are removed, and that artificial obstacles of this nature will no longer be allowed to impede the employment of British capital and labour, in working up the produce of British industry into articles for sale in the home or foreign markets.

Direct interference of government with manu

* Edinburgh Review, vol. xliv., p. 373.