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Monopolies Royalties

MONOPOLIES (ROYALTIES).

§ 284. Although the system of royalties, as a fiscal resource, properly belongs to an early stage of the development of the public exchequer, and is intelligible only as conditioned by the circumstances of the epoch to which it belongs, while in connec tion with the modern public economy it is to be treated of only for the purpose of destructive criticism (cf. secs. 71-77 above), still there is one element of that system which has maintained itself as part of the modern system of taxation at the same time that it dates far back into the past. This is the state monopoly.

Aristotle' tells us that the buying up and exclusive sale of a given article was known to the commercial world of antiquity as a favorite method of acquiring wealth ; that Thales of Miletus had employed this means to silence those who ridiculed his poverty, by showing that the wise man is poor by choice because he despises wealth although his knowledge gives him the power to acquire wealth. He was able to foresee by observation of the stars that the olive crop would be unusually large ; accordingly he bought up all the oil-presses in Miletus and Chios and let them for hire during the harvest at a great profit. Many states have profited by this class of traffic, adds Aristotle (p.ovoraAtav yap r(liv 0114COV wog/Arty) . From other sources we have accounts of a variety of monopolies in Greece and Egypt. It was an obvious expedi ent for the Greek statesmen, since the state looked upon the con trol of trade as its proper function.

In Rome the salt monopoly was introduced during the early years of the Republic, because the price of salt had been greatly increased by speculation on the part of the traders. A reg ulation in the laws of Justinian also points to the existence of a salt monopoly during the later times of the Empire.' During the Republic this monopoly appears to have afforded no consid erable profit, but to have been maintained chiefly for the public benefit, to keep the price of salt down (as is the case with the salt monopoly in the canton of Zurich today). Under the Empire however it seems to have been used for fiscal purposes, and to have been farmed out.' § 285. The medieval city is to be mentioned in connection with these accounts handed down from antiquity, inasmuch as it shows a predilection for the salt monopoly as a factor in its rev enue system, employing it along with a variety of other monop olies, such as that of the retailing of wine (sec. 57). The rela tive importance of salt during earlier stages of the extreme localization of its production; the public obligation to provide a sufficient supply, readily suggest to the public author ities the expedient of taking over the business of its sale. The salt monopoly was introduced into Zurich by the burgomaster Hans Waldmann (1483). It was chiefly by this means that he improved the finances of the city all who paid taxes or ren dered military service to the town were obliged "to provide themselves with salt from the town." Until that time the trade in salt had been in the possession of one of the thirteen guilds in Zurich which had, even during the thirteenth and fourteenth centuries, had the exclusive sale of salt, selling it in their own salt warehouse in the salt-market.

From the middle of the seventeenth century the salt monopoly was exercised by the governments of Berne and Lucerne within their cantonal district, and was gradually extended also to the city's manorial estates. It came to be the custom that each of the ruling classes, during the years for which it had the right to appoint the district governor, was also entitled to farm the salt trade [Die Besalzung] of the district.' - In the year 1399 the city council of Zurich enacted' that the city exclusively was to retail all imported wines ; the office of wine master was erected into a civil office, but it was afterward farmed out.

§ 286. The fuller development of the system of monopolies belongs to the centuries following the close of the Middle Ages and during the rise of the monarchical state.

The monarchical power of England, France and certain of the German principalities turned to the monopoly as a means of remedying their financial embarrassments, and at the same time as a means of furthering the public welfare by encouraging industrial activity in various directions. It is instructive to note that such a statesman and financier as Colbert in France, and that the Tudors, especially Queen Elizabeth, in England, fur thered the development of the monopolies.

In Germany the Electorate of Saxony led the way. Its exam ple was followed by the Great Elector and his successors. They figure as undertakers of industrial enterprises and bring crafts men into the country by means of monopolies and The fiscal glass industry was extended and expanded into a man ufacture of mirrors ; copper and brass forges, iron and steel works were erected at public expense, and the import of competing goods prohibited or discouraged. The Elector came to a settle ment with Luneburg in 1651 with respect to the debts of his house, and at the same time also with respect to new supplies of salt ; the edict of February 15, 1652, announced an exclusive royal privilege of the salt trade. The nobility alone retained their right to fetch their salt on a free pass. In 1664 the villages were assigned to certain cities, where they were obliged to get their salt. The income from the salt monopoly was seventy to seventy-five thousand thalers yearly. In the reign of Frederick I. it was developed further and was made to yield a larger rev enue by raising the prices. The newly acquired territory, includ ing the salt springs of Halle, superseded Luneburg as the chief source of supply of salt.

Just as the salt monopoly (by means of which the Great Elector had at least intended to cheapen the price of salt) occu pied a middle ground between public utility and fiscality, so did also the Brandenburg letter-post' which he organized. It very shortly came to be looked up to as a model through out Germany, and at the same time yielded a considerable net revenue (1685, 39,00o thalers, 1712, 137,000 thalers, 1740, 220,000 thalers). For many decades it was carried on simply under the virtual monopoly afforded by its centralized and efficient administration ; it was only after 1712 that the postal regulations reserved an exclusive privilege for the public post.

§ 287. As we approach the nineteenth century, interest centres in those monopolies which have retained a prominent place in the present. The objects included under these monopolies are salt, tobacco, the lottery and the post.

During the eighteenth century the salt monopoly in Prussia was developed into the form of the "salt conscription" (after the French model) by Frederick the Great, in order to meet the grow ing demands on the treasury.' The number of the people and of heads of milch cattle (each person being counted at five pecks and each head of milch cattle at two pecks of salt) was taken yearly, in order to prevent the use of foreign salt ; an account was kept with each taxpayer as to the amount of salt which he must legally procure from the royal factory, and at the close of the year a fine was collected for the amount of salt shown by this account not to have been purchased. Not until the early years of the nineteenth century (1816) was the salt conscription abol ished, after a uniform price of salt had been established for the whole kingdom (1806).

The government procured the salt' partly from its own exten sive salt works, partly from private salt works within the country, from which it bought the requisite portion of their product at a price contracted for, partly from abroad (for such portions of the country as, by their remoteness from the places of produc tion of the domestic salt, would be obliged to pay a higher price for the domestic than for the foreign article). The salt was sold to the consumers from the royal storehouses scattered all over the kingdom, in barrels of 405 pounds, and at a uniform price of 5 thalers (decree of January 17, 1820). Anyone procuring this salt for retail trade was obliged to obtain a special permit, and was bound to sell at a certain official price. The net revenue from the salt monopoly amounted, in 1821, for 437,120 barrels, to 3,779,500 thalers ; 1836, for 549,580 barrels, to 5,590,257 thalers, or 61-69 per cent. of the gross income (1821, 6.5o million thalers ; 1836, 8 millions).

The rate was slightly lowered by a decree of June 16, 1838 (on salt used for cattle and the like), and by a decree of Novem ber 22, 1842 (on kitchen salt to 12 thalers).

The liberal economic movement, and especially the Radicals, had long looked upon the salt monopoly as a relic of ancient abuses. Economic liberalism was more particularly concerned with opposing the monopoly as while the radical popular element condemned the salt tax in any form. In point of fact this tax was one of the chief causes of the hatred with which indirect taxes had been regarded in France for centuries past. Even Colbert had planned to reduce the price of salt as being taxation of a necessity. But during the eighteenth century the government increased the price of salt to such a figure that in 1788 the French people were deprived of from one-tenth to one-eighth of their entire income under this form of taxation alone.' The Revolution put an end (1790) to this feature of the old regime, and abolished the form of a monopoly finally. On the other hand, as was the case with so much else which the Revolution had discarded, the salt tax came to life again under the free trade administration of Napoleon (the rate since 1806 varying from ten centimes to thirty centimes per kilogram, and fixed at ten centimes after 1848). The great demands on the public treasury since the war of 1870-1871 have advanced the rate only to twelve and one-half centimes.

In Great Britain the reform was of a more radical character. Although the salt tax was enormously increased in the early years of the century during the war (in 1805, to 15 shillings per bushel, equal to fifteen times the market price of the goods), it was entirely abolished by George Canning in 1825.

In Prussia the form of monopoly was done away ; but the tax remained. Under the influence of the individualistic drift of the times, a law of the North German Federation of October 12, 1867, repealed the legislation on the subject of the salt royalty and imposed (dating from January'', 1868) a tax of two thalers per hundredweight.' Many expert authorities were more favor ably inclined to the abolition of the salt tax than to the abolition of the monopoly, the effect of this latter, apart from its financial results, being to furnish the inhabitants of the country with good salt at a uniform In point of fact, the latter view has been put in practice in the legislation of Switzerland since 1870, at least in the canton of Zurich. The salt monopoly (which exists in all the cantons) is deprived of its fiscal character in Zurich ; it continues to serve only the purpose of supplying the people with the necessary salt. In this connection it is not to be ignored that not only does the salt monopoly continue to exist in all the other cantons, but also that the demand for a lowering of the price of salt, inspired by the example of Zurich, has been voted down by an adverse majority of the popular vote (the country district of Glarus, 1880) .

§ 288. The tobacco monopoly deserves special attention at this point, as being the tax monopoly which has a peculiar sig nificance, not only for the past, but for the present, and in all probability also for the future.' The tobacco tax, says Necker in his work on the French finance administration,' is of all taxes the gentlest . and least obtrusive. Introduced in 1629 into France as an import duty, it was made the subject of a monopoly by Colbert (1674), and rose from a net income of one-half million at the outset to thirty million francs 3 in Necker's time, inside of a hundred years. By 178o the monopoly extended over the greater part of the country, with a population of 22 millions, certain provinces (Flanders, Artois, Hainault, Alsace, Franche-Comte) being exempt. The monopoly was farmed out ; over 15,000,0o0 pounds of tobacco were sold. The ready sale was to some extent due to the perfection of the royal tobacco manufacture. In answer to the aversion of the new era to state manufactories, Necker warningly urges that this perfection was the fruit of a long course of experience, and that it would be a useless experiment to discontinue the national factories and allow a number of private undertakings to take their place, as the competition between them might easily lead to deterioration of the product.

But the Revolution made this experiment also, along with so many other experiments. In 1791 the monopoly was abolished, and tobacco culture was freed of restraint after having been con fined, in 1781, to certain provinces for the purposes of the monopoly ; only a duty was adopted, taxing the tobacco imported from abroad, while the home-grown tobacco was exempt from taxation. Not until 1798 (and again in 1799, i800 and 1804) was a tax laid on the domestic manufacture and sale of tobacco and the import duty increased. Still the income from the tobacco tax in all forms did not rise above twenty to twenty-one million francs' during the years 1805 181o, and it declined in 1809 to fourteen millions.

The decree of December 29, reinstated the tobacco monopoly. It recites that tobacco is the most suitable subject of taxation, but that under the existing system the manufacturers have appropriated the better part of the profits, inasmuch as the price of manufactured tobacco had remained the same as it was under the old monopoly ; the smallest portion of the income had come into the public treasury ; the tobacco growers were at the mercy of the manufacturers. It was for the interest of all, including the tobacco growers of the country, that the tobacco manufacture should be carried on under a royalty for the bene fit of the national treasury.' A net income of about 8o million francs was intended to be raised. After the Restoration the tobacco monopoly was continued in existence by a law of April 28, 1816, and new regulations were established as to the admin istration, prices, etc. This law was limited to five years ; but it was renewed at the end of each five year period, and later on, for the most part, for periods of ten years, being dealt with in this way by the laws of 1872 and 1882.

The net receipts have been The consumption of tobacco increased from II million kilo grams in 1830 to 32.5o million kilograms in 1869, and in spite of the pronounced increase of the tobacco tax and the diminution of the French territory after the war, it rose again to 32.5o million kilograms by .1833. The net per capita payment is the largest yielded by the tobacco tax in any country (1883, 8.58 francs, as compared with .81 mark in the German Empire); while the consumption in the German Empire is 1.90 kilograms per capita, it is only .85 kilogram in France.' The French tobacco monopoly has kept its footing through all constitutional changes, under the Empire as well as under the Restoration and Louis Philippe, under the Second Empire as under the Republics of 1848 and 1871. The form of taxation of the ancien regime was not only reinstated after the great Revolution, but it has also come off victorious in all the changes and periodically recurring debates and inquiries, and at each renewal of the law it has shown itself to be an indispensable con stituent of the finances.

Even so faithful an adherent of the old school as Leroy Beaulieu recognizes the tobacco monopoly as an incomparable financial means, in point of productiveness and inoffensiveness.' § 284. It may not be out of place to glance at the tobacco monopoly which once existed in Prussia, although the reorgani zation of the Prussian finances did not follow the French exam ple. 3 After the Seven Years' War Frederick the Great tried to increase the public revenues, especially by adopting the fiscal methods of the French. He wished, without oppressing the lower classes of the population, to take over the trade in articles of general but still not indispensable consumption, as an income yielding monopoly.' Among the foremost of the reforms, it was intended to introduce the traditional French system of Farmers General, whose private interests would, in com parison with the abuses of the then existing public administra tion of the taxes, lessen the cost of collection and increase the revenue. His French friends, who praised this system to the king, were equally able to tell him of the tobacco monopoly which at that time brought 14-15 millions into the French treasury. In May 1765 the tobacco monopoly was offered to a company of French adventurers at an annual rental of one million thalers. But in July it was awarded to a syndicate of manufacturers in Berlin, who offered to pay one hundred-thousand thalers more. The undertaking failed, how ever, and by the end of twelve months the king established an independent royal commission for the general management of the tobacco .business.

This fiscal contrivance not only yielded a considerable net income (1785-86, 1,286,289 thalers), it also became a means of fostering the production of tobacco, for the king spent a remark able amount of thought and care on the furtherance of the tobacco culture and of the domestic tobacco manufacture.

But immediately after the death of Frederick the Great the new ideas of industrial freedom asserted themselves in the fiscal and industrial policy of his successor, and in 1787 brought about in Prussia the results which the Revolution achieved in France a few years later. The tobacco monopoly together with the coffee monopoly and the French regie were abolished. But by the end of another decade Frederick William II. found it expe dient (1797) to establish a new General Tobacco Administration. Of all the monopolistic contrivances of Frederick the Great, the tobacco monopoly had best approved itself. It was now hoped that the revenue would amount to three times what this monop oly had yielded in 1786. The territory had increased and the consumption of tobacco had increased. In order to lighten the burden the king professed the intention "of satisfying the poorer classes of humanity in this their necessary consumption at a moderate price, but to make the wealthy pay an adequate price for their tobacco as an article of luxury."' A few months after the reintroduction of the tobacco monopoly the king died, and his successor, by a patent of December 25, 1797, made his subjects a Christmas present of the freedom to cultivate, manu facture and trade in tobacco.

The liberal ideas of the time had triumphed in Prussia ;' the strong hand of Napoleon I., which established the French tobacco monopoly in 181o, the sober sense of expediency which urged to its retention under the later governments in France, were wanting in the tax reform of Prussia, then and afterward.

§ 290. Prussian statesmen and the Prussian people have for a long time past been on a friendly footing with the lottery monopoly.

The lottery made its appearance as a fiscal expedient in Florence, in the year 1530, when the Republic, being in great financial straits, set up a lottery with chances selling at one ducat.' It is also mentioned in France about the same time. Francis I. gave permission to establish a lottery in 1539, under official supervision, on payment of a bonus to the king.

About the middle of the seventeenth century lotteries came to be widely adopted. The Neapolitan, Tonti, succeeded in gaining the favor of Louis XIV. for the lottery ; in 1661 the lottery was made a royal prerbgative. In Holland' and England it was made use of just as in France and Italy. At the beginning of the eighteenth century Savary speaks with commendation of its widespread employment and of the blessed work it was doing in furthering many good and pious objects. The great commercial companies made use of it as well as states and The earlier form is the less hurtful one, the one which we know as the class lottery ; the later form, which is more dis tinctly calculated to appeal to the gambling propensity, is the lottery of numbers, formerly known as the Genoese lottery (still practiced in with the employment of the numbers 2, 3, etc.).

The older form was, according to Justi (1755), "very much in use throughout Germany" during the first half of the eighteenth It rarely happened that the prince carried on the lottery himself, but the privilege was granted to a corporation in the town or to some private person, in consideration of the pay ment of a stipulated annual sum. Since these lotteries are, in Justi's opinion, extremely profitable for the undertaker and very tempting for the people, they are, in point of fact, a form of taxa tion which properly belongs to no one else than the sovereign.

In Prussia' it was the number lottery [Zahlenlotterie] which was first reserved as a royal prerogative. The class lottery [Klassenlotteriel has been in existence since the beginning of the eighteenth century, but was not monopolized by the state until 1767. On the other hand the number lottery was taken over by the government at its first establishment, by letters patent on February 8, 1763. It was in this case also an Italian (Calzabigi) who organized it for the king. It belongs in the system of new financial expedients which the kings resorted to after the great war. The preference shown for this most dubious form of the lottery at the outset may be taken as evidence of the unflinching realism of the king in his choice of means to carry out his pur pose, but in this particular case the end attained is by no means proportioned to the means employed. As happens elsewhere so frequently, so also here, it was sought to justify the lottery to the public conscience by appropriating a portion of the revenue to benevolent objects. The total receipts, to begin with, were quite insignificant ; experiments in administration had to be made before a satisfactory method was found; the method of farming out the monopoly proved itself relatively the best, and remained in force until 1794. Beginning with scarcely 20,000 thalers, the annual rental advanced to 30,00o (177o), and at the king's death it had reached 55,00o, and finally reached 6o,000 Since 1794, when the administration took the lottery into its own hands, the income from it has been greater ; from the rrum ber lottery and the class lottery together, the latter being now organized in a more effective way, there was obtained in 1797-98 a net income of 515,475 thalers. And similarly for the succeed ing decade.

The Lottery Edict of May 28, 181o, abolished the number lottery and pronounced in the preamble a condemnatory judg ment on its tendencies and effects. It had diffused and fos tered the propensity for gambling among the lower classes of the population to a disastrous extent. In particular cases (e. g., in Luckenwald) it had resulted in a scandalous state of affairs.' After short-lived experiments with the quinine lottery, the real estate lottery' (raffling for landed estates), and later with the small money lottery, the class lottery became the permanent form in which the Prussian lottery monopoly has continued through the nineteenth century.

§ 291. The method by which the Prussian class lottery is managed is as follows : There are every year two lotteries, in which four drawings (classes) take place. The number of prizes and the amount increases from the first to the fourth class ; the latter class contains the majority of prizes and the largest prizes. The price of a chance is 13 thalers for each class, and therefore 52 thalers for the four classes together. Only whole, half and quarter tickets are sold, in order to confine participation in the lottery to the wealthier classes of the population. In point of fact, however, many poor people will club together to buy a quarter ticket, and so set at naught the purpose of this The number of tickets, and consequently the profits obtained by the state, have increased as the years have gone by. In 1852 it amounted to 971,200 thalers, in 1861 to 1,315,900 thalers, at which figure it remained until 1886. Since 1886-87, after the views on the subject had been unsettled for several years the number of tickets, and consequently the amount of the profits, has been doubled, in accordance with a resolution of the Chamber of Deputies (191-131). In the for 1889-90 a sum of 8,287,500 marks is set down as income from the lottry. The revenue accruing to the state is due to the fact that a deduction of 13.75 per cent. is made from all prizes, together with a deduction of two per cent. for the lot tery collectors, while the purchasers of the tickets pay five per cent. as a stamp duty (by an imperial law of July I, 1881) in addition to this, and one mark as a clerk's fee for each class.

By doubling the number of tickets and the revenue this insti tution has by so much been placed on a firmer footing in Prussia, while in England it was abolished in 1826, in France in 1836, in the Grand Duchy of Hesse in 1832, in Bavaria in 186i. There has also been no want of discussion looking to the abolition of the lottery in Prussia. Since the United Diet of 1847, and until a few years ago, the question has continually come up for con sideration.' The opponents of a state lottery are wont to assert that it is reprehensible on moral and religious grounds, to draw the revenues necessary to the preservation of the state from lot teries ; more particularly for the reason that it is the needier classes of the population who are most easily tempted to patron ize it, and that to such an extent as to trench upon the means necessary to their sustenance, and at the same time the effect of the resulting gambling propensity is to paralyze their industry and economy. In favor of the retention of the lottery it was claimed (especially on the part of the government) that the fiscal income derived from the lottery could not be spared,—that in point of fact the detrimental effect on the economic and moral characteristics of the people does not supervene,—that the gam bling propensity innate in the population had best be guided into the channels which the state in this way assigns it,— that the abolition of the Prussian lottery would simply foster. gambling in private or in foreign state lotteries,—that the joint measures necessary to be taken in order to its abolition in the states in cluded in the German Empire have been broached, but that for the present there is no prospect of their realization.

These idealistic and realistic arguments have constantly re curred. The growing fiscal needs of the government have inclined it to keep its hold on the income ; but in the course of years this Marcinowski gives an account of the various debates in the Prussian parliament and in the Reichstag during a period of forty years.—Loc. cii.

realism has itself received a shock, so that the national government shifted its standpoint more and more in the direction of placing the responsibility on the representatives of the people. Realism carried the day in the Committee on the Budget and in the full Chamber of Deputies, when the estimates for 1886-87 were under consideration. The motive force was a survival of the old misery of special interest on the part of the small states. It appeared that certain of the smallest of the German states main tain lotteries which for the most part find a sale for their tickets in Prussia, not being effectively restrained by the prohibition against gambling in foreign lotteries (Ordinances of July 5, 1847, and June 25, 1867). Hamburg= derives a revenue of 3.36 marks per capita of its population from the state lottery, Brunswick 3 marks, Saxony 1.5o marks, Prussia only about mark (since 1886-87 less than X mark).

An attempt was made in 1881 in the Reichstag to abolish the state lotteries, which, in view of the provisions of the imperial constitution, had but very slight chances of success. The com mittee appointed to report a bill for levying imperial stamp taxes included in their report of May 20, 1881, a resolution to ask the imperial chancellor to use his influence towards the abolition of all existing state lotteries in the states of the empire, and in the meantime to hinder any extension of the lotteries. The commissioner of the Federal Council [Bundesrath] replied that the maintenance or abolition of state lotteries was a question entirely within the competency of the governments of the several states, and that the resolution consequently exceeded the limits of imperial jurisdiction.

The situation is not made any the less surprising by the fact that the states which turn the lotteries to account under cover of their competency are precisely those particular ones of the smaller states which are distinguished above all others by their accumulated wealth or the flourishing state of their finances.

§ 292. Among financially important monopolies we have finally to mention the Post.

Its character and its place in the discussions of the science of finance have already been explained in the course of some earlier observations (cf. above, secs. 76-77, 81, 93-94, o8), because its peculiar intermediate position affords occasion for discussion of it from different standpoints. The material on which these the oretical discussions are based is the precipitate of the experiences of the Post in history. Its purpose has for centuries past varied from fiscality to public utility and back again ; now one and now the other being the dominant purpose ; both being frequently inextricably blended. But there have also been times when the Post was devoted exclusively to the service of the government and had nothing to do with the carriage of letters for private parties, either with a view to revenue or from any other financial motive.

Such was the case in the Roman Empire.' Just as the Roman system of highways was of an entirely administrative-strategic nature, so also the administration of the Post was calculated exclusively for the conveyance of officials and of state dispatches. It was only by exception, requiring the consent of the Emperor, that a private person was able to make use of the Post. Augustus was the first one who established a definite system ; the expenses of the postal stations were defrayed by the adjacent country ; it was only gradually that a certain centralization was developed in this matter, and that the expenses of the local stations came to be defrayed by the treasury.

The medieval antecedents of our modern postal system are partly survivals of the Roman establishment (under Charlemagne and his successors), partly establishments created to serve cer tain particular interests which were brought into prominence by the advance of civilization and increase of intercourse,'—corpo rate messenger service of the Universities, of cities, of the Teu tonic Order, which extended over hundreds of miles of territory as early as the thirteenth century. In the second half of the fifteenth century, when the monarchical state was beginning to increase in power, state postal establishments began to develop in France, England and Germany. These, too, served only offi cial purposes at the outset. But very shortly they were made accessible to private intercourse as well, and that to the extent that the Post undertook the conveyance of persons as well as of letters.

In the second half of the sevebteenth century the Post was already yielding a considerable income in France. In that con nection it is to be mentioned that in 1681 it was declared a monopoly of the state, and then like the other fiscal establish ments of the government utilized by the method of farming. In England the postal monopoly was introduced as early as 1637. Here, too, it was farmed out, and in 1685 it yielded an income of 465,000. State management of the Post began in England in 17 ; in France not until 1792. The conveyance of persons, which was especially profitable during the early cen turies of the governmental postal business, gradually fell into the background as compared with letter-carriage. The monopoly of the conveyance of persons was relinquished in England in 1779 ; in France this branch of the postal service was entirely discontinued by the administration after the Revolution (1805).

§ 293. In Germany' the evolution of the Post is a reflex of the general development 'of the state. The Taxis, contractors of Italian descent, gradually secured, at the hands of the German Emperors (1545, 1563, 1595, 1597, 1615, 1621), an hereditary concession of the Imperial Post, which came into conflict with the old messenger service of the towns and with the incipient state postal establishments of the more powerful territorial princes, but for the many small and scattered fragments of the Empire it afforded a very desirable centralization of the postal service. Austria, Brandenburg, Saxony, Brunswick, Hesse, created postal establishments of their own. In the conflict with the smaller states the power, and consequently the somewhat questionable right, of the Taxis was successful. Still, even as late as February 13, 168o, an ordinance of Emperor Leopold was issued directed against the old messenger establishments and casual conveyance. By the middle of the seventeenth century the postal business is said to have afforded the Taxis a yearly income of 1 oo,000 ducats. Even after the fall of the old Empire the relative expe diency of the institution was recognized in the German Articles of Confederation, and led to the re-establishment of the postal privilege of the Taxis in spite of the distracted state of a portion of Germany. This lasted until the reorganization of Germany in 1866, which resulted in the abolition of the old establishment.

In Prussia' it was the Great Elector who established a main post route through his extended territory,' from Memel to Cleve, in 1646, and he placed it under direct state management in 1649. Contrary to what happened in Austria, the immediate state management of the postal service was not abandoned. It pres ently came to be looked upon all over Germany as a model, and although it was not managed with a view exclusively to a fiscal return until 174o, still it yielded a considerable surplus-1685, 39,213 thalers ; 1712, 137,45o thalers ; 1740, 220,000 thalers. It was Frederick the Great who first was constrained by his great need of revenue to turn this branch of the administration also to fiscal account. At about the same time with the royalty of the excise and tariff revenues, and under similar conditions, the administration of the postal system was, in 1766, placed in the hands of a French Intendant-General,' but after some discourag ing experience, it was again taken in hand by the government management in 1769. It had been Justi's teaching, even as early as that the postal monopoly as well as all other monopolies should neither be farmed out nor be granted as a feudal right, for the reason that its administration is intimately related to the welfare of the state ; that its purpose is the convenience of travelers and the furtherance of commerce and industry ; the revenue derived from the postal service, as from all other royal ties, is of only secondary importance. He holds that it is quite 'contrary to the essential nature of this monopoly to charge an extremely high postage,' whereas if the rate of postage is mod erate a correspondence will often be kept up on very slight occa sion and merely for friendship's sake ; the post office should afford all convenience to the subjects, and without imposing burdensome conditions and restrictions, such as prohibiting travelers from conveying letters and the like. If only the rate of postage were lowered, people would be willing to spend a couple of groschen rather than inconvenience a friend with the carriage of letters.

§ 294. For a hundred years after that time the postal admin istration changed back and forth from one guiding principle to another. Now the aim was that of a one-sided fiscality (to some extent under the pressure of necessity), now it was public utility, and again an attempt would be made to harmonize and combine these two interests, as being the simplest solution of the problem. After the unsuccessful experiment with the French method of managing the Prussian postal service the confession was made in an edict that the postal revenues had suffered seriously by this immoderate and ill-proportioned increase of the rates. But there was also a similar epoch of fiscality in the management of postal rates in other countries at the same time.

salt, monopoly, tobacco, lottery and thalers