Popular Science Monthly/Volume 30/February 1887/Some Points on the Land Question

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974926Popular Science Monthly Volume 30 February 1887 — Some Points on the Land Question1887Oliver Bell Bunce



IN a recent number of a religious periodical there occurred the following sentence: "There can be no question as to the abstract proposition that land is not a proper subject for private ownership; that labor alone creates wealth, and labor does not create land."

It is obvious from the appearance of a statement like this in a publication of high standing that many worthy people are half ready to accept Mr. Henry George's theory of a common ownership in land. They are not ready, perhaps, to sanction his scheme of ruthless confiscation, but they are saying to themselves that at bottom his theory is right, and they are wondering whether land can not ultimately be restored to the community, to which, it is said, it rightfully belongs. My purpose, therefore, in reply to the proposition so confidently affirmed by the writer I have quoted, is to make good the following points:

1. That land, no less than other things, is a proper subject for private ownership.
2. That labor alone does not create wealth.
3. That labor creates the conditions that make land wealth just as much as it creates the conditions that make other things wealth.

And, in continuance of the subject, I hope to show—

4. That the greater part of the land is now practically held by the community, for it enjoys in common all that the land produces.
5. That the confiscation of the rental value of land by means of taxation would in the main be a confiscation of the proceeds of labor.
6. That unearned increment in land, of which so much is said, is not more hurtful to the community than other forms of unearned increment.
7. That the accomplishment of Mr. George's purpose would be destructive to the best interests of the community.

It will be said that this is attempting a great deal in the space of one short magazine article, but let us see what can be done.

Now, it is true that labor does not create land, for land primarily comes from the hand of Nature, but then it is equally true that labor does not create gold, or silver, or coal, or timber, or grain, or wool, or any other of the primary gifts of Nature, commonly accounted in the market as wealth. Labor discovers, transports, cultivates, fashions, blends, makes useful in some way the free gifts of Nature, and they become wealth; labor also clears the land, drains it, fences it, fertilizes it, plants it, builds roads and bridges that make it accessible, and it becomes wealth. We find, therefore, at the very beginning of our quest, that land stands just where other kinds of property stand, and becomes wealth by certain processes similar to those by which movable substances become wealth.

But labor alone does not create wealth. Three things are necessary for the production or creation of material wealth: first, a natural product; second, the labor that fashions or utilizes it; third, demand.[1] Unless there is demand, unless the product that labor has brought into the market meets some want or gratifies some desire, the labor has gone for nothing. Hence it is not true that labor alone creates wealth. Nor does labor determine the measure of wealth. Whether I shall be well paid or ill paid for my labor depends upon its estimation in the market. I may labor many months in producing an article that can not be exchanged—that is, that does not sell; another man may labor no longer on something else that comes immediately into such demand that the maker thereof is enriched by it. Labor is always an indispensable factor in the production of wealth, but it is clear that it is not the sole factor.

That land is not wealth as it comes from the hands of Nature, but becomes wealth by human connection with it, is evident from the fact that wild land, v/hen remote from civilized centers, has no price whatever. You can purchase in many parts of the world land enough for a kingdom at the price of a song; you can in some places appropriate a kingdom, if a wilderness makes a kingdom, by simply calling it your own. You can purchase land in Mexico for ten cents an acre, and it would not command even this almost nominal price were it not wanted for cattle-rearing. When we buy or sell land, the price paid is not for a mere stretch of earth, but either for improvements or conditions, for something given to the land by the efforts of man, or for something that has been developed in connection with the land as a consequence of man's relation to it. Conditions make the wealth that pertains to land, and it is always conditions that we buy and sell. And we do not always pay for or obtain the price in labor and capital that the conditions absolutely cost. Many pieces of cultivated land, not near the great towns, can be purchased at a price that is probably less than it cost to clear them, fence them, drain them, break up the sod, plant orchards upon them, and construct roads that lead to them. We talk about buying land just as we talk about buying coal, lumber, fish, minerals, grain, etc., when in all cases we buy labor, conditions, or rights, the land or the substances themselves being free from the hand of Nature. What is the price of coal in the mine, of lumber in the distant forest, of fish in the sea, of metals buried a thousand feet deep in the hills, of the phosphorus and other elements that combine to make us wheat and corn? Nothing. Coal in a mine situated for working or transportation a little more favorably than coal in other mines is worth a few cents a ton, perhaps;[2] but coal in mines inaccessible by roads, in its absolute natural state, has no price whatsoever. When we buy fish we merely pay the fisherman for his labor. It is cheaper for us to do this than to go ourselves and catch the fish. When we require grain, or lumber, or wool, or cotton, we simply employ some one to do the work necessary for the production of grain, wool, or cotton, or for transporting the lumber to our door. Land, coal, the metals, etc., are therefore all alike—they are wealth by virtue of certain conditions; they are not wealth in their natural state.

A community of ownership in land is demanded, and yet under our present social arrangement every man has his share of all that land produces. Land is occupied by one class of producers, but these producers do not enjoy its bounties one whit more than other classes do.[3] Practically, the land—confining ourselves for the present to agricultural land—is now as much the property of the community as it was when private ownership was unknown. With primitive peoples the possession of land is indispensable for existence. There are but two industries, the feeding of herds and the planting of corn, and the man or the tribe without land must needs perish. Civilization has brought about a very different state of things. The development of agriculture and the multiplication of industries have released a large body of workers from the soil. But the latter are by no means thereby cut off from the benefits of the land, for the products of their labor in other directions exchange freely for the products of the land, and secure for their enjoyment as much of these products as if they themselves had delved for the ore, planted the corn, or tended the herds. The world is not poorer, but richer, as a consequence of this separation of some part of human industry from the soil. If I am in possession of land I must labor on the land if I would enjoy its yield; and if it is not in my possession I have still the privilege of enjoying its yield by paying some one else to perform the labor. As matters stand, I would rather pay Farmer Black for a bushel of potatoes than purchase and cultivate a garden in order to raise my own potatoes. If the truth were fairly told, I am afraid that the farmer who owns the land gets less for his labor in raising his potatoes than I, who own no land, get for my labor in obtaining the means whereby I am enabled to purchase the potatoes.[4]

In truth, we each of us obtain by the present social co-operative system a vast deal more of the bounties of Nature than we possibly could if in possession of land with nothing but our individual efforts to rely upon; and if we look the world over, we shall find that those communities enjoy the greatest abundance in which there is a great diversity of industry, an unrestricted accumulation of wealth, and where private ownership has been guaranteed by the authority of the state and supported by the consent of the people.

But private ownership of land is a monopoly, say Mr.George and his followers. Land belongs to the whole community; the state, therefore, should be the common landlord; and the first great step in a general act of readjustment is to appropriate the rental value of land by taxation. Improvements, it is magnanimously conceded, are not to be taxed; but land only to the full extent of its rental value. But what is the rental value of agricultural land apart from its improvements? According to Ricardo, all that land produces above the lowest point of production that will support the laborer goes, by virtue of the competition that always exists, to the landlord as rent. In this country freeholds are so general that we have little practical exemplification of the operation of the laws of rent; but, should the state become the common landlord, these laws would be sure to manifest themselves. According to this theory, if land yielding ten bushels to the acre is suflScient to subsist the worker thereon, then all land that yields more than ten bushels to the acre has a rental value equal to this excess. That is to say, the Georgeian plan of taxation, in so far as it affected agricultural lands, would, on all the farms of the country, absolutely confiscate the entire results of labor above the mere point of subsistence.

Ricardo's theory of rent may not be mathematically true, but it is unquestionably approximately true, because in the briskness of competition, in the struggle for subsistence, land must, if sought for at all, command a rental value proportionate to its yield above a certain minimum point. Mr, George will say that this is not what he means. It is no doubt true that he did not anticipate any such result, but is it not a logical consequence of a plan for seizing upon the rental value of land?

"But," say our land theorists, "land in favorable situations, and specially in or near great cities, brings enormous prices, not because of labor given to the land or of improvements built upon it, but for the reason that its situation makes it in demand and competition brings up the price. This land increased in value because of enterprises initiated often by persons not owners of the land, being an increase of value not due to the owner of the land, not because of anything he has planned or brought about, not as the result of his labor, skill, sagacity, or enterprise, but because of other people's labor, skill, and enterprise, and which becomes a tax that the community, as a whole, pays to the owner of the ground. Assuredly this is unjust. Why should men be allowed to grow enormously rich by lying still and simply retaining possession of their land?"

This is all true. I have spoken of value being due to labor or conditions, and here we have value that arises from demand, which is one form of conditions, just as the value of innumerable other things arises from demand. At first sight the position of the land theorists appears here to be very plausible; but there is nothing new in it. John Stuart Mill dwelt on the apparent injustice of what he calls unearned increment; but Mill saw that the appropriation by the state of this increment could not be accomplished without greatly disturbing the whole structure of society. He never even proposed a plan for the appropriation of this increase in the future, let alone of violently seizing upon a form of wealth that had grown up under the sanction of the laws.

But, after all, what is the difference between unearned increment in land and unearned increment in other kinds of property? All natural products are the bounty of Nature just as land is, and, like land, often yield to their possessors an unearned profit. Shall the Government compel all holders of wool, sugar, grain, iron, cotton, fish, lumber, and other products, to surrender through the machinery of a tax all profits that come from an increased demand for these articles? Unearned increment in products being often the result of conspiracies and schemes to the detriment of the public, its confiscation would be much more just than the confiscation of the increased value of land. The owner of land can not by his own personal efforts increase its value except by acts of advantage to the community—by building railroads, by erecting desirable buildings, by fostering industries; whereas the owner of products can not by his own personal efforts increase their value except by producing a "corner," by making them scarce, and thereby imposing a tax on consumers. Our theorists are really at war with a comparatively innocent form of unearned increment, but shut their eyes to a guilty form of it.

Unearned increment is commonly a direct tax upon society and undeniable is often an evil; but it is unavoidable so long as individual liberty and freedom of exchange exist, and can not be appropriated or even legislated upon without more evil arising than would be prevented. And then would not such an interference on the part of the state be an instance of a rule that should work both ways? If it is right for the Government to confiscate my profits on lands or goods when I am so fortunate as to make profits, it ought to make good my losses when my plans miscarry. If wheat or corn go up on my hands, and the tax-collector seizes upon the increase, shall I not be entitled to a bounty when corn and wheat on my hands go down? The new railroad has doubled the value of my lots in one town, but in another a diversion of trade and transportation in consequence thereof has nearly paralyzed everything, and my lots there are almost valueless. The state shall cheerfully have all the gain in one instance if it will make good the decline in the other. If unearned increment is proclaimed on one side of the reform banner, it should exhibit undeserved loss on the other.

But, assuming that there is some justice in the plan for appropriating unearned increase in the value of land, what would be the consequences if it were carried out? Mr.George does not propose compensation to owners for this arbitrary seizure of their wealth. Their property has been procured, under the sanction of the laws, by the general consent of the community and in reliance upon established usage, and hence its appropriation or confiscation under any plan would not only be grossly unjust, but it would destroy all sense of security in any kind of property, and fairly bring chaos itself upon us. Such a measure would be like a cyclone of the most destructive character through the length and breadth of the land. It would force into litigation every savings-bank, trust company, and life-insurance company in the country; it would cut off the revenue of innumerable institutions of learning and charity; it would rob millions of persons of their savings, impoverishing old age, young children, and dependent women; it would bring bankruptcy upon tens of thousands of traders, and impair credit everywhere. No class would suffer more than the poor, who hold in their savings through the savings-banks, liens amounting to thousands of millions upon landed property, much of which would be irretrievably lost.

And when all had been done, what would have been accomplished? Time would repair the damages and heal the wounds thus inflicted; but what compensation would there be? Mr.George declares that the nationalization of land would bring great blessings to struggling millions, but he does not anywhere show us how, or by what means. In his necromancy, private ownership of land and great poverty are here; community of land and general prosperity there; but we have not a word of explanation by what means a change of many landlords for one landlord is to bring about the splendid result he depicts. Taxation would fall on land, instead of, as now, on various forms of property, and this would be all. Doubtless, this would confer some benefit, but how is it to secure a juster distribution of profits, how is it to cause poverty to change its coat, and plenty come where want has hitherto existed? It is impossible to see how these results are to ensue, and the land theorists do not tell us.

The good that is pictured is a dream, whereas the evil would be immeasurable; and when we had all finally settled down to the new conditions, we should contemplate some such picture as the following: All the farm-lands in the country in a condition of shameful neglect, and their productiveness seriously decreased; state tenants going from farm to farm, cultivating the fields solely for their immediate yield, neither planting orchards, nor fertilizing, nor keeping in repair fences or drains. The ambition to improve would be paralyzed, and the desire to keep up the productiveness of the acres to a standard would no longer exist. As soon as one piece of land would be exhausted, the tenant would move to another. Every motive for careful cultivation and preservation would be replaced by motives for immediate profit. These conditions would follow any form of national ownership; but if George's tax of rental value were strictly enforced, there would be no inducement, as I have shown elsewhere in this article, to work the land at all. In towns and cities, or wherever land is used for commercial purposes, we should see rent paid just as it is now, but to the state instead of to individuals. The only difference would be, that all taxes would fall on land. Houses, bonds, mortgages, stocks, personal effects would be untaxed; that is to say, the greater part of most rich men's possessions would be unburdened, but rent would remain just as it is now, and enter into the price of commodities just as it does now. As the scheme is to tax up to the rental value, this rental value would be what competition and demand made it. Favorable situations would be bid for and go to the highest bidder, and consequently the poor would be pressed to the wall as much then as now.

Nor is this all. Under such an enormous enlargement of the powers of Government, jobbery and corruption would have a field for its operation such as the most sanguine Tweed never dreamed of. Our politicians would have all the corner lots, all the choice situations. And then, if the rents should prove to be in magnitude what Mr.George supposes, think of the funds that would lie in the state treasuries as tempting reserves for the schemes and devices of speculators and law-makers!

I have been able in the brief space allowed me to no more than roughly hint at all the possibilities involved in the startling scheme of the Georgeian economics. If it were possible to collect unearned increment, or to determine what it is and so adjust taxation that it should take just the increment and no more (which would be about as difficult as for Shylock to cut his pound of flesh and shed no blood), the gain thereby would be nothing to the tremendous injury to the whole people that would ensue? Can we increase the prosperity and well-being of a community by putting a penalty on success? Can a people advance under laws that check enterprise, that put a fine on sagacity, that repress energy, that destroy the liberty of the individual? There are possibly some evils that arise from private ownership of land, but the blessings that arise from it are simply incalculable. It is absurd to call it a monopoly; it is that only in name, in this country at least, where the land is really held by the people, and is always attainable by the people. We are peculiarly a landed democracy. Our farmers, for the most part, cultivate their own acres, and on every hill-side in the country stand innumerable cottages owned by their occupants and earned by labor and self-denial. The ownership of land is one of the greatest stimulants to right-doing that exists: it excites ambition; it promotes industry; it induces thrift and abstemious habits; it is the hope of youth and the pride of age. It is the very essence of wisdom to encourage it. Anarchy is impossible among a people wedded to the land. What if a few persons in the great cities become rich by the increase of the value of land—what is this to the welfare of the millions that have secured small footholds on the earth, and built their roof-trees? "I tell you what," says a French author, "those old fellows that invented marriage knew what they were about." So also, we may say, did those old fellows that invented private ownership of land.

  1. There area few kinds of wealth that do not proceed from a natural product, such as patent-rights, copyrights, and productions in art. Macleod makes demand or exchange-ability the sole test of wealth.
  2. I recall an instance of an owner of a coal-mine being paid for the privilege of working it six cents a ton for all that was mined.
  3. "Are there not bonanza mines, fortunes in petroleum, monopolies of metals and minerals?" will be asked. No rule can be made that docs not have its temporary exceptions. Taking the silver and gold mines of the world during long periods, we will find that they have not paid their workers more than the average of profits that other forma of labor yield. If a man has a monopoly of any special product, he is enabled to tax his fellow-men to his own great advantage; but the gratuities of Xature are so distributed over the world that monopolies are exceptional, and very rarely maintained beyond short periods. I generalize from common conditions, from the usual and ordinary operations of production. The demand for whale-oil may temporarily be so much more than the supply that those who hold the oil are enabled to command excessive profits; but we can not argue from this that the whales in the sea are not common property—are not absolutely gratuities of Nature, conditions only determining the price of their product in the market.
  4. The following statement, in a recent article by Edward Atkinson, illustrates how completely the product of the land falls to the benefit of the whole community: "One man working the equivalent of three hundred days in the year, or three men working one hundred days in the harvest-season on the far plains of Dakota in the production of wheat, aided by one man working three hundred days in milling and barreling the flour, and supplemented by two men working three hundred days in moving wheat and flour from Dakota to New York, and in keeping all the mechanism of the farm, the mill, and the railroad in good repair—four men's work for one year places one thousand barrels of flour at the mouth of the baker's oven in the city of New York—a yearly ration of bread for one thousand men and women."