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aspect. Some crystalline rocks and minerals of simple composition (and of the cubic system of crystallization) were selected, and, like quartz, they proved to have heat-conducting properties in a high degree. The thermal conductivity of iron-pyrites, resembling apparently that of the metals, could not, from its high value, be accurately determined by the method of experiment pursued; and it is accordingly omitted (as undetermined) from the list. The diathermancy of rock-salt for the heat radiated and absorbed by the oiled surfaces between which the trial plate of it was placed will not account for more than a part of the heat which the plate actually transmitted ; and the high position of this substance in the list is consequently due to a really high conductivity which rock-salt possesses (about 113), greater than that of quartz (85-88), and even of fluorspar (921), the substance found to rank next to it in high conducting-power. A specimen of galena nearly pure, but enclosing a few fragments of quartz, presented the highest thermal conluctivity (701) next to that of quartz. A plate of soft, white, opaque calcite, perfectly but irregularly crystallized (forming vein-stuff in Clifton sandstone), agrees exactly in its thermal conductivity (46.7) with various kinds of marble (46-49) which were tried last year. On the other hand, a similar specimen of heavy spar (barium sulphate) from a mine of that substance near Exeter presents, in spite of its great density, a remarkably low thermal conductivity (17-18 in two experiments), not very far removed from that of English alabaster (gypsum, or calcium sulphate, 23:4). English plate-glass (20•4), it may also be remarked, has a low thermal conductivity, differing not very greatly from those of the two substances last named. Finally, the lightest species of rocks examined in the course of these experiments, pumicestone and Newcastle house-coal, have also the lowest conductivities (5.5 and 5:7). hitherto presenting themselves in these investigations.
As, with the exception of rock-salt, clay-slate and elvan, house-coal and pumicestone, no new thermal resistances of great importance, in a gcological point of view, are added in the present list to those already exhibited in the diagram of these Reports (vol. for 1875, p. 59), a new graphic representation of the resistances now found is here deemed unnecessary—the values of the absolute resistances furnished in this Table enabling them to be added without difficulty in that diagram, where they may thus be exhibited in the same normal scale with the earlier determinations.
The applications to questions of underground temperatures which these obscrvations suggest have not yet engaged the Committee's attention sufficiently to enable them to arrive at definite conclusions certain enough to entitle them to be noticed in this Report. Examples of very reliable measurements of underground temperatures, such as have recently been obtained in the tunnels of Mont Cenis and of St. Gothard, and in the deep vertical boring at Sperenberg, near Berlin (the last of which, although extremely deep, passes almost entirely through rock-salt), are ill-adapted to test distinctly the relative values of the thermal conductivities of different species of rocks--the former two from the irregular surface-configurations, and the last from the absence of any change of the strata through which these borings pass. In view also of the many disturbing conditions that affect both the local rate of change and the actual observations and measurements of underground temperatures in other borings more suitably adapted to exbibit clearly the differences of thermal resistance in geological formations, which the Committee is endeavouring to distinguish and to recognize in actual cases, it would be premature, in the present stage of the investigation, to deal more particularly with results derived immediately from these and from similar comparisons, the degree of dependence to be placed on which cannot very
casily be defined. The agreement which they trust eventually to trace between the observed temperatures and the experimentally determined thermal properties of the locally predominating rocks is liable to be masked and concealed by causes of disturbance of so many unknown and unsuspected kinds, that plain and obvious corroborations are not frequently to be expected ; and the nature of those causes which principally tend to disturb the results will probably become better known by the progress of further comparisons such as the Committee is now endeavouring to pursue. While it was thus anticipated by Prof. Everett*, from the slow rate of temperature-variation from the surface observed in the rocky excavations of the Mont-Cenis tunnel, that quartz (which is a principal ingredient of the rock) would prove to have a high thermal conductivity, this property is now also found to belong to rock-salt, through which the Sperenberg boring passes with an average rate of temperature-variation (1° F. in 51 English feet) scarcely differing sensibly from the mean rate obtained from a mass of similar observations taken in other places and recorded by the Underground Temperature Committee. The apparent cortradiction presented by these two cases may possibly proceed from a more rapid local rate of variation of temperature in the neighbourhood of Sperenberg than around Mont Cenis; and the fact that in the first 60 fathoms of ordinary strata overlying the rock-salt the observed rate of variation was slower than below (contrary to what would be expected from · the relative conductivities of the superincumbent strata and the underlying masses of rock-salt), is said, in Herr Dunker's description of the observations, to be probably accounted for by the intrusion into the boring near its mouth of the waste warm water of the engines on the surface. The effect, it may be observed, of a highly conducting mass, like that of the deep bed of rock-salt here penetrated, by diminishing the local resistance and increasing the flow of internal heat outwards through the Sperenberg strata, would be to cause the local rate of variation of temperature in this locality to be abnormally rapid ; and perhaps this may explain why a slow rate of variation is not observed in this instance, from the great depth of the excellently conducting rock-salt formation, which considerably exceeds 3000 feet. The Sperenberg boring thus presents examples of secondary conditions which will perhaps prove to be in good agreement (instead of, as they at first appear to be, somewhat at variance) with the results of the Committee's observations.
Report of a Committee, consisting of the Right Hon. J. G. HUBBARD,
M.P., Mr. CHADWICK, M.P., Mr. MORLEY, M.P., Dr. Farr, Mr. HALLETT, Professor JEVONS, Mr. NEWMARCH, Professor LEONE LEVI, Mr. HeYWOOD, and Mr. SHAEN (with power to add to their number), appointed for the purpose of considering and reporting on the practicability of adopting a Common Measure of Value in the Assessment of Direct Taxation, local and imperial. By Mr.
HALLETT, Secretary. Your Committee, appointed to inquire into the subject of a Common Measure of Value in Direct Taxation, have proceeded in this inquiry, have considered the matters to them referred, and have agreed to the following Report :
* See these Reports, vol. for 1875, p. 16, note at bottom of the page.
1. Measure of value wanted.—The question of a common measure of value is one of a class that may be literally called standard questions, and its solution is at the basis of equality in taxation both general and particular. Values are the object matters of taxation, their measurement and comparison are the necessary condition of its equal incidence; and measurements with unequal measures are like weighings with unjust balances. Taxation, however pure its intention, without a common measure of value, is what navigation would be without sextant and chronometer, or architecture without compass and level. And this perhaps is not an unfair description of what it actually is, though not, it may be hoped, of what it must be. One of the chief marks of advancing science has been a progress towards better measures and better measurements, a substitution of the uniformities of rules of reason for the unrestricted vagaries of rules of thumb; and such is the aim of the present inquiry. This question of a common measure of value is the question of the common measure of taxation; or if there be several such measures, what is their common ratio ? what are they in terms of one another?
2. Two Methods of General Valuation : Capital-Value and Usable Value.Measurements of the value of things (employing this word “ things ” as inclusive of land, labour, stock, &c.) may have reference to their absolute worth or to their temporary uses. They may have reference to their property, capital, or absolute values, or to their products, profits, or annual values. The one measure is exemplified in contracts of sale and purchase, the other in contracts of letting and hiring. Each has its special advantages and special applications. Capital or absolute value is applied in the assessment of probate and legacy duty; usable value in the assessment of local taxation and in those of the imperial income-tax. Moreover, as the capitalvalue of the thing must be equivalent to the present value of the sum of its future uses, the two measures, if consistently defined, though differing it may be year by year, must be in the long run equivalent. But such consistency of definition is an essential. The idea of capital-value is tolerably well fixed, but that of usable or lettable value is indefinite. Usable value is, or is equivalent to, the consideration paid for, the income received from, the use of things. This consideration, however, may be paid under such totally different conditions of contract that, unless these conditions are first assimilated, the payments regarded as measures, either of the values of the things or of the abilities of their owners, are worse than useless : they are misleading.
3. Usable Value unrestricted and indeterminate and hence un fit as a common measure.-To illustrate this : things having a use, and hence capable of becoming sources of income, are all, by the very nature of the process, liable to outgoings ; some more, some less. Production involves productive consumption. Efficiency implies cost-cost, for the most part of insurance against natural risk; of repairs ; of necessary depreciation. But the user of a thing, be it land, labour, or stock, may engage for its use with or without liability to these outgoings; their costs may be borne by the user or by the owner, or they may be divided between the two in any proportion that convenience may direct. The user may bear repairs and the owner natural risk and depreciation, or the user may bear natural risk and repairs and the owner natural depreciation, or the user may bear all and the owner none, or the user none and the owner all, the consideration given (the income received) of course varying accordingly. Were the things valued by absolute sale or capitalization, all the incidents, whether of efficiency or cost, plus or minus, would be wholly and uniformly included, and the test would fix the things' relative positions. In valuation by uses, however, it is evident that these incidents are not as a matter of practice uniformly included, and the valuation, founded upon unfised conditions, can fix nothing; its possibilities of variation are coextensive with those of free contract itself, and hence, being absolutely unrestricted, as a measure it must be inherently unfit.
4. Exemplified in incomes of Income-tax.-Such valuations, some tempering effect of deductions notwithstanding, have been those of local taxation; and hence the local chaos which Mr. Sclater-Booth's bill was the last attempt to reduce to order. Such also, without any tempering influence, are the valuations of income under the present income-tax. In this latter the returnable and taxable incomes of interest, land-rent, house-rent, royalties, wages, including professional fees and salaries, are the considerations that are paid for the uses of principal monies, land, houses, mines, and labour respectively. Interest, however, is the consideration paid for the use of the principal, neither user nor owner being subject to any outgoings. Land-rent is the consideration paid for the use of land, the user bearing almost all outgoings. House-rent is the consideration paid for the use of houses, the owner and user sharing the outgoings in various proportions. The owner also largely bears outgoings in the contract of mines and royalties; he wholly bears them, as a rule, in that of labour and wages. Moreover these outgoings vary according to the nature of the thing; they may vary from zero up to 40 or 50 per cent., or even more, of the gross production. It is these differences that give rise to the various characteristics of incomes, as gross, net, certain, precarious, terminable, permanent, nominal, real. All, indeed, are in the catalogue of considerations paid; all are so-called incomes received, but only
“As hounds and greyhounds, mongrels, spaniels, curs,
Shoughs, water-rugs, and demi-wolves are cleped
The true account“ distinguishes” we are told, and gives to each “particular addition :" the measure of incomes, too, that lays claim to scientific truth must do the same, and to the “ bill that writes them all alike” and taxes them all alike, must add natural differences and just discrimination.
5. Usable value specialized and determined as Interest-value. By consistent deduction of outgoings. Interest-value as the common measure required.And if the cause of these inequalities of valuation be rightly stated, the discovery of such measure ought not to be difficult. As the inequalities arise from the different conditions in respect to outgoings under which the various incomes are calculated, the remedy must be the assimilation of these conditions; and the case of principal and interest, which in one aspect may be regarded as a common expression of sources and uses generally, may be employed as a precedent. Interest, as before said, is the income received from a thing free of outgoings. It leaves the thing or its capital value unimpaired. The extension of this idea to revenues or incomes in general is simply the universal deduction from them of their productive outgoingsequivalent to the general restoration of the capital-values of their respective sources. Under such a regime, returnable and taxable income would not be land-rent, house-rent, mine-royalties, labour-wages ; but land-rent minus land-outgoings, house-rent minus house-outgoings, mine-royalties minus mine-outgoings, labour-wages minus labour-outgoings; and similarly with terminable annuities and the profits of business, the outgoings, however, being in all cases only the necessary ones of the production. The result thus obtained would be what by analogy we may call the interest-value of the various sources; and such interest-value of land, of labour, of houses, of economic agencies generally, would be the common measure required. And the measure is a perfectly scientific one, and, indeed, admits of mathematical expression. As the exact difference, comprehensively considered, between the total receipts and total outgoings of a source, it is the pure annual increment of its capital-value, and henco is identical with absolute profit. It would represent the pure annual growth of national wealth taken in its widest sense, and the returnable income of national taxation.
6. Precedents for its practicability.—But are such deductions of outgoings on the sources of income and the determination of the interest-value practicable? In many cases this question has been already solved by actual legislation. That such deductions are practicable for lands, houses, and mines may be proved by reference to the Metropolis Valuation Act of 1869, and to the Local Valuation Bill before referred to, both of which are grounded on them, and have schedules of deduction for different cases attached. That they are practicable for machines, ships, trade fixtures, horses, and stock generally, the Income-tax Act, with its special clauses for repairs and resupply, itself recognizes ; and though no schedules or deductions are attached for these cases, the deductions are well known in the estimates of business and recognized in the Surveyor's office. But if such deductions of outgoings are practicable for the labour of horses, are they not practicable for the labour of men ? Economically considered, the two labours are analogous; both are productive agents, both have productive powers subject to consumption. Natural risk, maintenance, and terminability belong to the labour of men just as they belong to the labour of horses, just as risk, repairs, and terminability belong to machines, ships, or implements. All these outgoings are facts equally ascertained by experience, and it is difficult to see why their valuations are not equally practicable. They are as much an item in a source's general account as the receipts themselves, forming its debit as these form its credit column. Nor can any account, be it individual or national, be said to be complete unless both sides are considered.
7. Effect on Income-tax Act.—The application of this interest-value measure to the Income-tax Act would give these results :-Incomes from lands, houses, and mines would be charged much the same as under the proposed new local valuation system. Dividends and profits of capital, purely considered, would be charged as at present. Government and other terminable annuities would not be taxed on the amount representing the restoration of capital. On the same principle the incomes from labour, whether pure, as in the case of salaried officers and some professors, or mixed with the proceeds of capital, as in other professions and as in businesses, would be entitled to material deductions varying with the relative proportions of skill and capital engaged. In all cases the tax would be collected at the source and levied on the net value of the produce; and the deductions would be made without reference, as such, either to the position or fortune of the owner.
8. Practicability exemplified in composite incomes.—Questions may be raised on the practicability of applying an outgoings deduction to incomes from businesses and professions which are the mixed results of labour and capital, It may be objected either, first, that as labour and capital enter into these mixed incomes in varying proportions, and as the percentage of labouroutgoings is very different from that of capital-outgoings, a deduction common to these mixed incomes and to unmixed labour-incomes would be unjust; or, eccondly, that if the labour-income and capital-income be assessed separately a separate return of capital will be necessary, and that this must entail an objectionable exposure of affairs. To meet the first objection, a classification