property is levied to-day. The tax on the income from mortgages might have been levied by treating the income of the mortgage as a part of real estate, and assessing it primarily on the mortgageor, with provisions for withholding the interest by the mortgageor, and prohibiting contracts to the contrary by the mortgagee, as is the practice in some of the states to-day. The tax on all salaries might have been reported and withheld by the employer. The interest on all corporate bonds might have been withheld by the corporation. And in many other ways the principle of stoppage at source might have been introduced.

Instead of this, the American legislators chose to follow the more primitive and discredited methods. The result must inevitably be an immense increase of evasion and undervaluation. With no machinery for checking the returns, and with no reliable estimates for gauging the value of the selfassessments, it is unfortunately only too probable that many of the doleful predictions made by the opponents of the measure will be verified. It may not indeed be true of the new tax on individual incomes, as it has been said of the state tax on personal property, that it is looked on even by honorable citizens very much in the light of a Sunday-school donation; but it can safely be predicted that the tax on individual incomes will yield exceedingly little as compared with those two features of the law in which the stoppage-atsource idea has been introduced, namely, the tax on public salaries and that on corporate dividends. It is very much to be regretted that Congress should have deliberately refrained from adopting those measures which alone would have made the tax both lucrative and comparatively efficient. The difficulties have been needlessly multiplied; the lessons of experience have gone unheeded; and the income tax itself will be held responsible for what is really not the use but the abuse of the principle.

VII.

From the above review it is evident that the law falls considerably short of being a perfect measure. The enthusiastic hopes of its admirers will fail of realization. The fraud which is inseparable from any income tax will have fuller opportunities because of the defective provisions of the present measure. But it cannot be too often repeated that the act must be regarded not by itself, but simply as a part of the entire American revenue system. Even were it to be a permanent measure, it would not by any means suffice as a complete reform of the system of taxation; for the state and local revenues exceed in amount those of the federal government. Even conceding that the income tax is to be regarded as a kind of compensation for the national indirect taxes, the injustice in the actual working of the state and local system would not yet be remedied. No direct income tax can be so administered under present American conditions as to strike the wealthy and unscrupulous in the same proportion as the honest and less well-to-do. And experience has sadly shown that the attempts at tax dodging increase in a given ratio to the amount of wealth. A direct state income tax has frequently been proposed as a remedy for the present abuses. But a local income tax would have all the disadvantages of a national income tax and none of its advantages. This is, indeed, not the place to outline a practical plan for the reform of our local taxation. But it may confidently be affirmed that the general line of development will lie in the abolition of the tax on personal property and the substitution in its stead of indirect income taxes, such as those on rentals and on business. In no other way can the opposition of the farmer be overcome. With a state tax on corporations and inheritances, and a local tax on real estate, business licenses and rentals, a comparatively good system will have been found.

Upon the rapidity with which this program is realized depends entirely the answer to the query whether or not the

present income tax is to be permanent. As yet every one is at sea as to its probable yield. The very loose estimates vary from twelve to forty millions of dollars, and it may, probably will, yield even more. Of course it will take several years before the tax is in full working order. But it must be conceded that the revenue will be a substantial one. Since therefore the new tariff, together with the indirect taxes, will about cover expenses, a considerable surplus is to be looked for. Whether the income tax will then be dropped at the expiration of the five years, or whether some change will be made in the tariff, depends so much upon purely political conditions that it is plainly impossible to forecast the future. But if the tax should be dropped, the prediction may be hazarded that it will reappear before long. The democratic trend towards justice in taxation cannot be prevented here, as it has been impossible to prevent it in other countries. And while many

of us would prefer to see the ideal approached rather by a reform of state and local taxation than by any change in the principles that govern the federal revenue, the difficulties in the path and the growing interstate jealousies will perhaps make it easier to alter the national than the local systems. In proportion as this is true, the ultimate permanence of the federal income tax, although not perhaps in its actual form, seems to be assured. This is the real importance of the present measure; and this, notwithstanding its inevitable shortcomings, constitutes its undoubted strength. The mass of the people are becoming restless and dissatisfied with the tax system. The chief reform must be either local or national. In proportion as the former is delayed the latter will be accelerated. But national reform is well nigh impossible without a permanent income tax.

EDWIN R. A. SELIGMAN.

ASSIMILATION OF NATIONALITIES IN THE

HE

UNITED STATES. II.

Influence of Social Environment.

ERBERT SPENCER has made the remark that the earlier stages of social evolution are much more dependent upon local conditions than the later. Primitive man was at the mercy, so to speak, of the physical environment. With his feeble appliances and weak intelligence he was unable successfully to combat the adverse influences of climate, of habitat, of the savage beasts and noxious plants which threatened existence itself. Civilized man has reduced nature to subjection, at least to a certain extent. He can withstand the extremes of heat and cold; he has domesticated the useful and exterminated the dangerous beasts; he brings the soil under cultivation; in the bosom of the earth he seeks treasures which were unknown to his ancestors; and he devises means of communication over land and sea. He can, consequently, choose his place of dwelling and adapt himself to apparently unfriendly surroundings. The effect of physical environment is obscured and in many cases doubtless neutralized by these artificial contrivances for the promotion of living.

As societies progress a new set of factors come in to modify them. Among these Spencer notes the influence of the superorganic environment — the action and reaction of neighboring societies on one another and the accumulation of super-organic products. Among these latter are material appliances, tools, machinery and buildings; language, the development of knowledge, science; and finally, customs and opinions developing into creeds, mythologies, theologies, cosmogonies, systems of law, ethical codes, institutions and social sentiments. These

form together an immensely-voluminous, immensely-complicated and immensely-powerful set of influences. . . They gradually form

what we may consider either as a non-vital part of society itself, or else as an additional environment, which eventually becomes even more important than the original environments so much more important that there arises the possibility of carrying on a high type of social life under inorganic and organic conditions which originally would have prevented it.1

The circumstances under which mixture of nationalities has occurred in the United States leaves no room for doubt that the influence of the social environment is one that must be reckoned with. The original colonists were men armed with the appliances and resources of civilization, trained by centuries of organized social life, with tradition, history, language, literature, religion and settled customs, and with strongly marked social ideals and aspirations. Many of the first settlers came in order that they might carry out peculiar religious and political modes of thought and living, or at least that they might be freed from creeds and systems that were distasteful to them. In this country they found an unexampled opportunity to establish and to cultivate their own system, which in turn left a deep impress upon the customs and character of their descendants. It is impossible that the institutions thus developed should not have had a powerful influence during the further expansion of the country westward after the formation of the Union. It is equally impossible that they should not have influenced the immigrants who assisted in that expansion. These immigrants, it is true, brought their own customs and habits of life and may have influenced in turn the institutions of the native Americans. The result has been a modification of character and institutions due to the mixture of nationalities under the influence of social environment. How are we to conceive of the influence of this social environment and how are we to trace and define its effect?

In the first place the remarks which were made in the previous article in regard to the peculiar circumstances connected with the mixture of nationalities in this country are

1 Principles of Sociology, I, pp. 14 and 15.

2 See this QUARTERLY for September, pp. 432 et seq.