By some curious mental process the idea of a levy on capital has come into rapidly increasing prominence in the last few months, and seems to be gaining popularity in quarters where one would least expect it.  On the other hand, it is naturally arousing intense opposition, both among those who would be most closely affected by its imposition, and also among those who view with grave concern the possible and probable economic effects of such a system of dealing with the national debt.  I say “dealing with the national debt” because, as will be clear, as a system of raising money for the war the suggestion of the levy on capital has little or nothing to recommend it.  But, as will also be made clear, the proposal has been put forward as a thing to be done immediately in order to increase the funds in the hands of the Chancellor of the Exchequer to be spent on war purposes.

A levy on capital is, of course, merely a variation of the tax on property, which has long existed in the United States, and had been resorted to before now by Governments, of which the German Government is a leading example, in order to provide funds for a special emergency.  This it can very easily do as long as the levy is not too high.  If, for example, you tax a man to the extent of 1-1/2 per cent. to 2 per cent. of the value of his property, on which he may be earning an average of 5 to 6 per cent. in interest, then the levy on capital becomes merely a form of income tax, assessed not according to the income of the taxpayer but according to the alleged value of his property.  It is thus, again, a variation of the system long adopted in this country of a special rate of income tax on what is called “unearned” income, i.e. income from invested property.  But it is only when one begins to adopt the broadminded views lately fashionable of the possibilities of a levy on capital and to talk of taking, say, 20 per cent. of the value of a man’s property from him in the course of a year, that it becomes evident that he cannot be expected to pay anything like this sum, in cash, unless either a market is somehow provided—­which seems difficult if all property owners at once are to be mulcted of a larger amount than their incomes—­or unless the Government is prepared to accept part at least of the levy in the shape of property handed over at a valuation.

Before, however, we come to deal in detail with the difficulties and drawbacks of the suggestion, it may be interesting to trace the history of the movement in its favour, and to see some of the forms in which it has been put forward.  It may be said that the ball was opened early last September when, in the Daily News of the 8th of that month, its able and always interesting editor dealt in one of his illuminating Saturday articles with the question of “How to Pay for the War.”  He began with the assumption that the capital of the individuals of the nation has increased during the war from 16,000