CHAPTER IV

THE ESTATES OF RICH AND POOR

Our review of the extraordinary facts relating to what has been called with grim humour the "National" income, prepares us for an examination of the estates of rich and poor.

Legal distribution of the property of deceased persons can only be made upon payment of certain taxes, commonly called death duties, and legally known as the Estate, Legacy and Succession duties. The nature and extent of these duties I shall discuss in a later chapter. At this point I am only concerned with the facts which are brought to light in the collection of the chief death duty, the Estate duty, as since varied, of the great 1894 Budget[14] of the late Sir William Harcourt.

The principle of graduation was very properly applied to this duty, and accordingly we obtain, through the reports of the Inland Revenue Commissioners, an exceedingly valuable record, not only of the total value of the property which is "left"—it is a suggestive term—by the deceased, but of the classification of that property in large and small estates.[15]

The Estate Duty is payable upon all estates which exceed £100 net (net, that is, after the discharge of all debts due by the deceased) and the Inland Revenue authorities undoubtedly pass under review the greater part of the property which is thus legally taxable. There must be a certain leakage, of course, for such heritages as household furniture, cash in money or notes, bearer bonds, and so forth, are sometimes divided up amongst the relatives of a departed property owner without account to the State, and it is difficult properly to assess unquoted securities, goodwills, trade stocks, furniture, etc. Moreover, large sums pass _inter vivos_. How much property thus escapes official observation we do not know, but it is probably a considerable amount.

PROPERTY LEFT AT DEATH IN THE UNITED KINGDOM. NUMBERS AND VALUES OF ESTATES BROUGHT TO THE NOTICE OF THE INLAND REVENUE COMMISSIONERS IN THE FIVE YEARS 1904-5 TO 1908-9.

------------------------------------------+----------------+----------------+ | | | CLASS OF ESTATE. | 1904-5. | 1905-6. | | | | ------------------------------------------+-------+--------+-------+--------+ | | Value. | | Value. | |Number.|Mill. £.|Number.|Mill. £.| A. _Estates not Dutiable_: | | | | | Bankrupt Estates | 1,628| | 1,552| | Estates not exceeding £100 net | 15,931| 0.9 | 15,462| 0.9 | +-------+--------+-------+--------+ Total A | 17,559| 0.9 | 17,014| 0.9 | +-------+--------+-------+--------+ B. _Estates Liable to Duty_: | | | | | Small Estates:— | | | | | (1) Not exceeding £300 gross | 18,505| 3.5 | 18,262| 3.5 | (2) Between £300 and £500 gross | 8,846| 3.6 | 8,907| 3.6 | _Net Capital Values_:— | | | | | Exceeding £100 but not over £500 | 5,853| 2.5 | 5,728| 2.5 | " 500 " 1,000 | 10,098| 8.4 | 9,894| 8.1 | " 1,000 " 10,000 | 16,704| 60.4 | 16,130| 58.8 | " 10,000 " 25,000 | 2,295| 41.8 | 2,254| 40.4 | " 25,000 " 50,000 | 883| 34.6 | 931| 36.4 | " 50,000 " 75,000 | 288| 18.9 | 277| 19.5 | " 75,000 " 100,000 | 161| 15.0 | 139| 12.1 | " 100,000 " 150,000 | 128| 14.0 | 133| 18.2 | " 150,000 " 250,000 | 89| 21.6 | 91| 18.6 | " 250,000 " 500,000 | 44| 17.6 | 70| 23.9 | " 500,000 " 1,000,000 | 23| 17.2 | 21| 13.1 | " 1,000,000 " 2,000,000 |} | | | | " 2,000,000 " 3,000,000 |} 1| 5.9 | 8| 13.5 | " 3,000,000 |} | | | | +-------+--------+-------+--------+ Total B | 63,918| 265.1 | 62,845| 272.2 | +-------+--------+-------+--------+ _Total Estates_ | 81,477| 266.0 | 79,859| 273.1 | ------------------------------------------+-------+--------+-------+--------+

+----------------+----------------+----------------+---------------- | | | | Average of | 1906-7. | 1907-8. | 1908-9. | 1904-5 to | | | | 1908-9. +-------+--------+-------+--------+-------+--------+-------+-------- | | Value. | | Value. | | Value. | | Value. |Number.|Mill. £.|Number.|Mill. £.|Number.|Mill. £.|Number.|Mill. £. | | | | | | | | | 1,704| | 1,663| | 1,802| | 1,670| | 16,039| 0.9 | 16,475| 0.9 | 15,875| 0.9 | 15,956| 0.9 +-------+--------+-------+--------+-------+--------+-------+-------- | 17,743| 0.9 | 18,138| 0.9 | 17,677| 0.9 | 17,626| 0.9 +-------+--------+-------+--------+-------+--------+-------+-------- | | | | | | | | | | | | | | | | | 18,995| 3.7 | 19,340| 3.7 | 19,481| 3.7 | 18,917| 3.6 | 9,311| 3.7 | 9,736| 3.9 | 9,640| 3.8 | 9,288| 3.7 | | | | | | | | | 5,990| 2.6 | 6,374| 3.0 | 6,422| 2.9 | 6,074| 2.7 | 10,516| 8.6 | 10,782| 9.1 | 10,729| 9.1 | 10,404| 8.6 | 17,098| 61.6 | 17,356| 65.4 | 17,266| 64.5 | 16,910| 62.1 | 2,473| 42.5 | 2,341| 40.3 | 2,328| 40.4 | 2,338| 41.0 | 909| 34.9 | 908| 35.5 | 918| 34.4 | 910| 35.1 | 314| 19.6 | 278| 19.8 | 297| 19.5 | 291| 19.4 | 127| 11.3 | 144| 14.0 | 155| 13.9 | 145| 13.2 | 159| 19.2 | 109| 16.4 | 136| 16.8 | 133| 16.9 | 104| 22.4 | 90| 18.7 | 78| 17.3 | 90| 19.7 | 58| 21.3 | 51| 20.1 | 50| 20.1 | 54| 20.6 | 18| 12.9 | 17| 16.6 | 15| 8.3 | 19| 13.6 | | | { 4| 4.6 | 6| 9.2 | } | | 10| 34.1 | { 1| 2.6 | 1| 2.2 | } 7| 18.1 | | | { 2| 8.6 | 2| 5.0 | } | +-------+--------+-------+--------+-------+--------+-------+-------- | 66,082| 298.5 | 67,533| 282.3 | 67,524| 270.9 | 65,580| 278.3 +-------+--------+-------+--------+-------+--------+-------+-------- | 83,825| 299.4 | 85,671| 283.2 | 85,201| 271.8 | 83,206| 279.2 +-------+--------+-------+--------+-------+--------+-------+--------

Before setting out particulars of the numbers and values of the estates revealed through the operation of the Estate Duty, it will be well to remind the reader of the number of deaths per annum in the United Kingdom. In the years 1899 to 1903, the figures were as follows:—

DEATHS IN UNITED KINGDOM

Year. Deaths. 1904 707,000 1905 670,000 1906 681,000 1907 679,000 1908 677,000

Average Deaths per annum 1904-1908 = 683,000.

We see that the mean number of deaths in the five years 1904-8 was just over 680,000 per annum.

We now inquire, as to these 680,000 persons who die in the United Kingdom in a year, how many leave property of sufficient value to be brought under the notice of the tax-gatherers, and what is the value of the property left by them.

These questions are answered in considerable detail by the table on pages 52 and 53, which shows, for each of the last five financial years of which we have record, the numbers and values of the estates reviewed.

It will be seen that, taking the average of these five years, we get the following summary facts:—

Deaths per annum 683,000 Sworn Estates per annum, number 83,206 Estates of less value than £100 net each per annum 17,626 Estates exceeding £100 net each per annum 65,580 Net value of Dutiable Estates per annum £278,300,000

The question now arises, what is the average value of the tiny estates which are not the subject of affidavits? What is the amount of property per head left by the poor people who form the great majority of the inhabitants of our rich country? There are the few humble sticks of furniture, and the small sums invested in savings banks, friendly societies, trade unions, building societies, etc., What are these worth?

The Chief Registrar of Friendly Societies, Mr Stuart Sim, in his latest Report (No. 105 of 1909), p. 44, gives us the Summary of Registered Provident Societies and Thrift Institutions, which appears on page 56.

The total funds, £439,000,000, represent the savings of some millions of people, but the total number of "members," nearly 34,000,000, must not be taken to stand for so many individuals. There is, of course, much duplication in the membership, one individual being sometimes member of two, three, four, or more societies or clubs. A carpenter, earning 30s. a week, may be a member of his trade union, member of two friendly societies, have a few pounds in the Post Office Savings Bank, and be a depositor in a building society, thus figuring as "five members" in the list.

The list is not complete, for it does not cover the industrial insurance companies, which waste in costly management so large a part of the sums paid them, and unregistered friendly societies and slate clubs.

THRIFT INSTITUTIONS: SUMMARY OF REGISTERED PROVIDENT SOCIETIES AND CERTIFIED AND POST OFFICE SAVINGS BANKS AT DEC. 31st, 1907.

--------------------------------------+--------+-----------+----------- NATURE OF INSTITUTION. | No. of | No. of | Funds. |Returns.| Members. | --------------------------------------+--------+-----------+----------- Building Societies: | | | £ Incorporated Societies | 1,852 | 565,047| 57,300,118 Unincorporated Societies | 58 | 58,000| 15,989,111 +--------+-----------+----------- | 1,910 | 623,047| 73,289,229 +========+===========+=========== Friendly Societies, etc.: | | | Ordinary Friendly Societies | 6,563 | 3,416,869| 19,346,567 Societies having Branches | 20,640 | 2,710,437| 25,610,365 Collecting Friendly Societies | 55 | 9,010,574| 9,946,447 Benevolent Societies | 73 | 29,716| 337,393 Working Men's Clubs | 1,036 | 272,847| 381,463 Specially Authorised Societies | 162 | 70,980| 532,717 Specially Authorised Loan Societies | 618 | 141,850| 897,784 Medical Societies | 96 | 313,755| 65,513 Cattle Insurance Societies | 60 | 4,029| 8,570 Shop Clubs | 7 | 12,207| 1,349 +--------+-----------+----------- | 29,310 | 15,983,264| 57,128,168 +========+===========+=========== Co-operative Societies: | | | Industries and Trades | 2,267 | 2,461,028| 53,788,917 Businesses | 399 | 108,550| 984,680 Land Societies | 146 | 18,631| 1,619,716 +--------+-----------+----------- | 2,812 | 2,588,209| 56,393,313 +========+===========+=========== Trade Unions | 652 | 1,973,560| 6,424,176 +--------+-----------+----------- Workmen's Compensation Schemes (1) | 59 | 99,371| 164,560 +--------+-----------+----------- Friends of Labour Loan Societies | 248 | 33,576| 260,905 +--------+-----------+----------- Total Registered Provident Societies| 34,991 | 21,301,027|193,660,351 +========+===========+=========== | Banks. |Depositors.| Deposits. Railway Savings Banks | 18 | 64,126| 5,865,072 Trustee Savings Banks (including | | | Investments in Stock) | 222 | 1,780,214| 61,729,588 Post Office Savings Bank (including | | | Investments in Stock) | 15,166 | 10,692,555|178,033,974 +--------+-----------+----------- Total Certified and Post Office | | | Savings Banks | 15,406 | 12,536,895|245,628,634 +========+===========+=========== Grand Total | 50,397 | 33,837,922|439,288,985 --------------------------------------+--------+-----------+-----------

(1) The figures given include 64,700 members, and £105,475 funds undistributed, at 31st December 1907, in respect of Schemes whose Certificates had expired or were revoked at that date.

_Note._—Where Returns are made to a date other than 31st December the particulars at the nearest date available are given.

On the other hand, it would be a profound mistake to regard the sum shown—£439,000,000—as belonging entirely to manual workers. No small part of the funds of building societies, savings banks, etc., belong to the middle classes, and even professional men do not disdain to purchase houses through building societies.

Additions must be made for the tiny stocks of little shopkeepers and the "furniture" in poor houses, but on the latter account those who know what the furniture of the poor usually consists of will make modest estimates of its value. Its exchange value is almost negligible, and its value in use is that it is a factor in the sordid discomfort of the poor home, being in that respect not unworthy of the ugly walls which enclose it.

Altogether it is probable that we may estimate the total property of the poor at less than £500,000,000 in 1908, and regard this sum as belonging chiefly to a great mass of people, forming by far the greater part of the 39,000,000 persons under the line of Income Tax exemption. Probably about £15,000,000 of this sum passes at death per annum, and only a small part of it, chiefly the house property, comes under review by Somerset House.

With the facts we have reviewed we are in a position to arrive at a just idea of the respective proportions of rich and poor estates. On page 59 will be found a table which shows the nature of those proportions. I have taken the averages of the past five years arrived at in the tables on pages 52-53, and have made a rough division between rich and poor by drawing the line at the possession of property worth £1,000 net capital value.

To give a true idea of the division of deaths in the two classes, it is necessary to make allowance in the rich class for the deaths of the children of the well-to-do. It may be taken that, in addition to the 20,000 adults who die every year possessed of estates worth upwards of £1,000, 7,500 children and young persons die in well-to-do homes. I then place in the upper part of the table the number of deaths remaining after deduction from 683,000 of all the other figures in the table.

In arriving at the amount of property left by the poor I have assumed that of the £15,000,000 of savings estimated as passing at death per annum, £5,000,000 does actually come under review in the first few lines of the table on pages 52-53. The balance, £10,000,000, I have brought into the account as corresponding to the 592,294 deaths in the first line of the table on p. 59.

With these explanations the table will speak for itself, and its tale is a startling one. We see that, drawing the line between the rich and poor arbitrarily at the possession of £1,000, of the 683,000 persons who die in a year, 28,397 die rich or very rich, leaving £259,700,000, while 654,603 die poor or very poor, leaving between them only £29,500,000.

The figures over £10,000 are worth special attention:—

FORTUNES OVER £10,000 EACH (NET)

Year. Number. Value. 1904-5 3,912 £186,600,000 1905-6 3,924 195,700,000 1906-7 4,172 218,200,000 1907-8 3,945 197,200,000 1908-9 3,986 187,100,000

_Year by year, with the regularity of the seasons, about four thousand persons die leaving between them about £200,000,000 out of total estates declared to be worth about £300,000,000._

PROPERTY LEFT BY 683,000 PERSONS Average of 1904-5 to 1908-9

_POOR AND VERY POOR_ Deaths. Property Left. Died with so little property that no affidavit was sworn (Property estimated at £10,000,000, see p. 58) 592,294 £10,000,000 Died Bankrupt 1,670 Died leaving less than £100 net 15,956 900,000 Died leaving between £100 and £500 net 34,279 10,000,000 Died leaving between £500 and £1,000 net 10,404 8,600,000 ------- ----------- Total Poor and Very Poor 654,603 £29,500,000

_RICH AND VERY RICH_

Died under age without property 7,500 Died leaving between £1,000 net and £10,000 net 16,910 62,100,000 Died leaving between £10,000 net and £1,000,000 net 3,980 179,500,000 Died millionaires 7 18,100,000 ------- ------------ Total Rich and Very Rich 28,397 £259,700,000 ------- ------------ TOTAL RICH AND POOR 683,000 £292,500,000 ======= ============

170 persons per annum die worth £150,000 each; 80 die worth over £250,000 each; 26 die worth over £500,000 each; and 7 die worth about £2,500,000 each.

Thus, in an average year, 26 persons die leaving between them far more than is possessed by 654,000 poor persons who die in one year. Again, in a single average year, the wealth left by the few rich people who die approaches in amount the aggregate property possessed by the whole of the living poor.

[Footnote 14: Finance Act, 1894 (57 & 58 Vict. c. 30).]

[Footnote 15: It was in the first edition of this work that attention was first drawn to this new source of information.]