LSE Library Archives 2002-11-21

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Arrived around noon, as usual on these trips, and requested a number of files under Series 14.

Files provided included 14/19 through 14/24 (14/19-14/23 in a single archive box). Those examined include the entire set except 14/19, which came bound up in a linen tape and so has not been examined yet. These papers are all connected with the Departmental Committee on Taxation and Regulation of Road Vehicles, of which Sir Henry Maybury was chairman and Rees Jeffreys was vice-chairman. In general the file contents are disaggregated into so many items that there is little value in making contents lists as an aid in developing future photocopying orders. Instead, type summaries will be made, and an attempt will be made to summarize the general issues involved, especially with regard to the controversy between use and unit taxation for private passenger cars. However, Maybury's departmental committee had a broader remit than to make recommendations with respect to the taxation of road vehicles. It was also meant to suggest legislation with respect to driver licensing, traffic signing, goods and passenger transport regulation, etc.

With regard to taxation, the main points of the controversy seem to have been this. As World War I ended, Britain had a vehicle excise duty which was calibrated to piston crown surface area (the RAC formula, also referred to as "Treasury rating") and which was significantly smaller than the £1 per horsepower formula which was adopted in 1920. There was also a petrol tax of around 4 1/2 d. per gallon which applied only to imported petrol (about 80% of the total petrol or fuel available, and the 20% that was "home-produced" was not likely to rise high enough to compete effectively with the imported petrol, which was monopolized by American and Dutch producers--early Texaco, probably still Standard Oil of Texas at that point, as well as Royal Dutch Shell working oil wells in Indonesia--who had control not only over extraction but also over freighting to the UK). [Note added 2012-03-25: Texaco was actually never part of the Standard Oil monolith; it was an independent company, Texas Oil Company.] The roads were also in appalling shape because maintenance and construction had been deferred during the war while heavy military vehicles had been trundling over the roads under Crown exemption, so there was a great hunger for revenue to make up for the war damage.

It was almost universally considered desirable to base road taxation on a flat rate according to usage. Even those who eventually came out in favor of systems which would not tax according to use, such as Sir Eric Geddes (the Minister of Transport) and eventually Rees Jeffreys himself, paid lip service (in RJ's case, much more than lip service) to the concept of taxing according to use. Even true-blue advocates, however, were frustrated by the fact that the Shell/Texaco monopoly made it politically difficult to insist on adding tax on top of an already-inflated petrol price. 'Ad valorem' taxation fell by the wayside for the same reason.

HOwever, the engine technologies at the time permitted fuels taxed at different rates to be used for road traction. For example, taxed petrol could be used to start charabanc engines, which could then be run on untaxed kerosene. It was not thought practical to devise an effective system of distinguishing between fuels meant for motor vehicle use, which would be taxed, and chemically similar or identical fuels meant for domestic or industrial use, which could not be taxed. In addition, under the taxation system existing before the 1920 reforms, people in essential-worker categories such as doctors, county road surveyors, etc. could obtain rebates on the petrol tax. The petrol tax cost £10,000 to collect but administering the rebates cost £65,000. Merely providing a system of rebates was to create additional avenues for tax evasion.

A version of terminal or off-the-rack taxation for petrol was proposed, which would have confined the system of rebates to heavy industrial use, but by this time the advocates of pure user taxation had lost political momentum. Eliminating VED altogether was a nonstarter because it was apparent that there were fixed costs involved in providing roads suitable for rubber-tired vehicles (not to mention vehicles with steel lugs, which were already fairly common though at one point proposed for a complete ban except for agricultural tractors), and there was by this point considerable distaste for a complex system of "composite" taxation. In the end Rees Jeffreys helped broker a compromise which resulted in the £1 horsepower tax and encouragement from the Committee for the government (1) to crack down on petrol profiteers (which probably never did happen?) and (2) to incentivize the production of two popular petrol substitutes, benzole (which was refined from coal gas) and "power alcohol" (probably methanol, since destructive distillation of wood seems to have been involved in its production).

With respect to (1) the Government concluded that it was unlikely that it would be able to break the Shell/Texaco monopoly on its own, these cos being multinational, and that it should get together with other European countries such as France, Italy, Holland, etc. to agree a controlled price. It is not clear what came of this.

With respect to (2) it was discovered that a combination of benzole and power alcohol would run in car engines designed for petrol, with minimum adaptation, although they would produce only 5/6 the horsepower of petrol. Advocates of home-produced petrol substitutes in fact tried to insert a clause into a Bill to do with the (nationally owned?) London metropolitan gasworks to force it to produce benzole out of coal gas--during the war benzole was produced in massive quantities because it was needed for TNT manufacture, but after the war benzole production tapered off. The advocates even presented a petition before the HOL committee hearing the bill, which failed, apparently because the "unscrubbed" coal gas (the "scrubbing" process being what produces the benzole) made it impossible to provide a gas through the mains which was suitable for lighting houses in low-income areas. This was apparently because "flat base burners" could not operate on scrubbed gas. It is not clear what the technical reasons involved were, but obviously the benzole idea did not go much further because it was felt to have deleterious equity implications.

Aside from this, there were problems of principle. In order to tax fairly according to use, it would be necessary to tax home-produced benzole as well as imported petrol, and the tax on the home product would create an additional disincentive to produce at home.

With respect to power alcohol as a separate motor fuel, the people connected with the committee noted just that its provision had been liberalized in Germany, the US, and a number of other countries, and argued that Britain should similarly liberalize. Did this ever happen?


This is perhaps the best file for getting a bird's-eye view of the Committee's work. It contains a rather long document with (1) a summary of C'ttee membership, (2) the C'ttee's terms of reference, and (3) an "Index to minutes" giving summaries of every minuted item discussed at all of the C'ttee's business meetings--404 in all, continuously numbered from first item at first meeting to last item at last meeting--held from 21/11/1919 to 10/2/1922. (These do not, however, cover the whole life of the C'ttee because there are minutes with items numbered higher than this, and item 404--the last item in the minutes summary--indicates that although it represented the last item at the last meeting, an additional meeting might be called by the Chairman prior to signature of the Final Report, and later minutes suggest that an additional meeting was in fact called and that discussion ranged over a fair number of items.) In addition, there is a (partial) set of minutes covering items 342-426 (perhaps not all-inclusive). It is sort of obvious that this committee met weekly for much of the time it was meeting.

The report was published in 1922 and is probably a departmental and non-parliamentary publication.


This contains documentation dealing with the petrol taxation issue. It is about evenly divided between the dept c'ttee materials dealing with the issue (mainly memoranda and drafts thereof, with no meeting minutes) and materials produced by a "Motor Legislation Committee" which was probably a body within the SMMT (whose interests RJ was representing in the departmental c'ttee) and which drafted position papers as part of the process of bargaining for a not-too-bad VED.


This is mainly, though not exclusively, MOT material dealing with the road safety and accident reporting/investigation aspects of the dept c'ttee's work.


This is more petrol taxation material. Much of it has been prepared by RJ or people he was in contact with, attempting to determine the tax impact of various pricing and usage scenarios.


This is exclusively hackney taxicab material. Nothing P in here.

It is obviously going to be necessary to return especially to mark up files 14/23, 14/24, and 14/21 for photocopying. But in the meantime I should do research and determine what petrol, benzole, and power alcohol are all chemically, what their performance characteristics were in typical engines of the period, how these were affected by engine design parameters, and what secondary sources have had to say about this issue. The fascinating thing, however, is that it is obvious various scenarios and the unintended consequences arising from them were at least examined--for instance, people considered what would happen if the RAC formula were abandoned in favor of actual horsepower, or nominal horsepower calculated on the basis of displacement plus compression. (Look in Tech & Culture, and also Journal of Transport History.)