in revising their ratings, however, that the difference is probably now under 4 per cent.1

TABLE A2.-Classification of Rateable Hereditaments, England and Wales.

Compiled from House of Lords Return 183 of 1906 and other Sources (Looo omitted).

Uncertain as to extent to which Crown occupation is included.

1 Early details of rateable values for England and Wales may be found in the Poor Law Reports. Appendix XXXII. of R. C. on Agriculture, 1896, gives the following (in thousands) :—1841, £62,540; 1847, £67,320; 1850, £67,700; 1856, £71,840 (£86,078 gross); 1866, £93,638 (£110,079 gross ). Also see H. C. 215 of 1874 and H. C. 461 of 1875: 1867-8, £100,669 (£118,431 gross); 1869-70, £104,405 (£123,365 gross); 1870-1, £107,398 (£126,474 gross); 1871-2, 109,447 (129,039 gross); 1872-3, £112,318 (132,453 gross).

Vide F. Purdy, S. J., 1869, "Pressure of Taxation on Real Property."

Vide also S. C. on Burdens affecting Real Property, 1846, p. 17. The rateable value is given as £64,540,030," below the true figure," Sch. A. being £85,802,735.

H. C. 332, 1860, showed that for 1856, the gross poor rate was 8.9 per cent. below the Sch. A.

Metropolis.-Parish details are given in H. C. 254 of 1854-5:Total, Sch. A, £13,462,000; county rate, £9,294,300 (rateable value); poor rate, £9,975,600 (rateable value).

Periodical Revaluation: Relative approximation to true facts in intervening years.

Except in Ireland, the income tax, Sch. A, figures undoubtedly represent most closely the real facts, but in revaluation years far more closely than at other times. Indeed, in those years they are probably slightly in excess of the true figures, because many adjustments are made during the collection of the tax (after the totals have been made up) and allowed by way of "schedule" or repayment. But in non-valuation years they are, in England and Wales more especially, below the true figure. The reason is that while effect is given in practice to all bona fide reductions in rents wherever they occur, no effect is, or can be, given to increases in rents, and the totals are only maintained by new properties and structural alterations. There is a continuous drag downwards, and the "slack" is not taken up until the next revaluation year. No analysis of the Sch. A totals which omits to recognise this fact can therefore give valid results. As the metropolitan revaluation falls generally in a different year from that for England and Wales (ex. met.), the totals for the two combined rather mask the effect, but if they are taken separately it is very clear.

1

In Table A3 the effect of revaluation is very obvious, especially in the case of messuages (see particularly 1893-4, 1898-9 and 1903-4). The peculiar history of "Lands" since 1880 serves to mask the effect of revaluation when the two are taken together, for it seems that reductions in the case of farms are most freely made on the occasion of new assessments 1 (see Table A3, 1882-3, 1885-6, 1888–9). Prior to 1876 the effect upon lands was the same as upon buildings-a marked rise in the revaluation year; and when the two are taken together it is cumulative (see especially 1857-8, 1861-2, 1864-5 and 1867-8). This " statutory result must not be taken as representing the actual facts. Probably the true rise would be represented by a line, practically straight, joining points slightly below the position reached in each re-assessment year (vide Graph I.).

1 R. C. on Agricultural Depression, 1896, Qs. 45,575, etc.

If the true increase in a year (TI) consists of the aggregate rent increases (i), minus the aggregate rent decreases (d), plus the value of new structures (s),

TI ids,
=

but the increase shown by Sch. A figures in non-valuation years is

S d,

and that shown in a revaluation year is, after four nonvaluation years,

5is-d.

Now i can always be found from the formula, and s- d also, but s and d separately are not determinable.

The bearing of the analysis will be clear from the following attempt to use the annual increases exhibited by the figures:

"The allocation of the new capital of the United Kingdom between different forms of investment cannot be made with any precision on the basis of existing information. The erection of houses on land on the borders of urban areas absorbs much new capital. The gross profits from the ownership of houses, as shown in the reports of the Inland Revenue Commissioners, were greater by £3,155,000 in 1907-8 than in 1906-7, and a further increase of £3,113,000 was shown for 1908-9. Capitalising the indicated increase in revenue at fifteen years' purchase, there is an addition of about £47,000,000 to new capital in the form of houses (including sites)" (Census of Production, Final Report, p. 32).

In this instance the endeavour was made to capitalise s, but as a matter of fact s-d was taken, and the decrease in rents has been ignored. The result obtained represents a minimum, and the true figure may be much greater.

Any comparison of the annual increases with each other will lead to fallacious results if the effect of re-assessment years is forgotten :

Examining the connection existing between the average value of building land per head and the wealth per head, Mr. Mallock seeks to show that a constant proportion has existed, and appeals to the "facts":-" If we take the annual increase in the value of houses, as given in the Statistical Abstract for the years 18931907, there are only three years out of the fifteen in which the average was very greatly exceeded. These were the years 1898, 1901, and 1903. Now for the two years following the year 1893, the gross amount assessed to income tax exhibited a continuous

decline, and had in 1896 not so much as recovered its previous level. In 1897 it exceeded this by £30,000,000. Next year the increase in the value of houses rose to nearly twice the average. Two years later, in 1900, the gross amount assessed to income tax showed an increase on the previous year of £42,000,000. The year following (1903) the increase in the value of houses exceeded the average by more than 50 per cent. . . . But not only do the figures thus show us the close connection between the increase in total income and the increase in the gross value of houses. They also show us that with each fall in the increase of gross income the increase in the gross value of houses in a similar way falls. Thus after the record increase in gross income in 1897, with record increase in the value of houses that followed it, the annual increase in the gross value of houses sank to one half of the maximum to which the record year had raised it. In 1902 the same phenomenon repeated itself. The increase in gross income was £42,000,000 in 1900, and £33,000,000 in 1901. In 1903 it was not more than £13,000,000. The increase in the gross value of houses was, in 1904, less than one half of what it had been in 1903. . . . These facts show that the amount which the population will consent to spend in house rent . . . is limited by the amount per head which the population has to spend on its wants and enjoyments."

Mr. Mallock omits (a) to look at the 1893-4 increase over 1892-3; (b) to observe that statutory as well as commercial reasons account for a stationary state in 1896 gross income (vide, p. 288); (c) to take account of 1893-4, 1898-9, and 1903-4 as re-assessment years-although warned by a footnote-and of 1901-2 as a year of revaluation in the metropolis. The whole connection falls to the ground.

Mr. Mallock proceeds in a similar manner to show that when there is a special increase in dwelling-house values, there is also one in business premises! But this is alleged to have ceased about 1903. After much manipulation of the figures in the Statistical Abstract (Table 21, Inhabited House Duty) and confusion through mixing the columns, he concludes that business premises are falling in value or stagnant, while dwelling-houses increase in value. He finds " the clue to the riddle" in the table dealing with foreign investments, Sch. D, in which, after 1903, a marked advance in the rate of increase is shown! It is unnecessary to labour his conclusion, since the premises are worthless ("Phantom Millions," Nineteenth Century, November, 1909).

An examination of Table A3 shows that, of a total increase of £39,000,000 in messuages, 1845-6 to 1870-1, England

B.I.P.

D

and Wales, £24,000,000, or 62 per cent., was registered in the eight assessment years, and only 28 per cent. in the other seventeen years. For messuages (England and Wales, extra-met.), 1871-2 to 1910-11, the increase was £93,500,000, of which £40,000,000, or 43 per cent., took place in ten valuation years, and the remainder in thirty ordinary years. So in the first period the normal rise or surplus of new structures over rent decreases was just under one million pounds per annum, while the amount of increased rents taken up on each revaluation was about two millions, or two thirds of a million per annum. For the second period, the ordinary surplus (s-d) was over one and two-third millions, the increased rents for valuation were two and a third millions, or just over half a million annually.

Just as the effect of revaluation may be to cause the assessments to lag behind the true values when ascending, so there are sometimes reasons why they should also descend less rapidly. In the case of houses, first, in a town where there has been great overbuilding, and there are many houses standing empty, such houses remain in the assessments at the old rents until, upon re-occupation at lower rents, the assessments are reduced. A re-assessment year affords a statutory opportunity for putting them all upon the correct basis, and if there has been a general fall in rents, the aggregate for all houses, occupied or void, may be suddenly much less than before the re-assessment. Secondly, with regard to lands, in time of depression reductions of rent commonly start as temporary abatements or remissions, which, made year by year, end in becoming permanent.1

This point is well dealt with by R. J. Thompson," An Enquiry into the Rent of Agricultural Land in England and Wales during the Nineteenth Century." He constructed a table and graph showing index numbers for rents of specimen estates, income tax values, and Sauerbeck's price index number for each year from 1846 to 1900.

1 Economic Journal, ibid., March, 1911. See also R. C. on Agricultural Depression, 1896, Q. 45,589, etc., as to the effect of mortgages, R. C. on Depression in Trade, 1886, Q. 743; R. C. on Land in Wales, 1893-6, Qs. 76,545, etc.

2 S. J. 19071