.


SCI LIBRARY

The Land: the Rent Concept --
the Property Concept

Charles B. Fillebrown



[Reprinted from the book, Natural Taxation, published 1917.
Part I / The Authorities / Chapter 10]


Mr. George, in his brief chapter on "Rent and the Law of Rent,[1] often repeats the agricultural definition of rent, mostly in confirmation but sometimes in expansion of Ricardo. Certain features of this definition, namely, "the original and indestructible properties of the soil," "the share in the wealth produced to which the exclusive right to the use both natural capabilities gives to the owner," and "the reduction to individual ownership of natural elements which human exercise can either produce nor increase," which have been assigned by Ricardo, George, and many others as the cause of rent, are now discarded as errors by most economists, if, and indeed, they were ever held by them.


THE RENT CONCEPT

The following quotation from Sir John McDonnell[2] suffuses this economic position as to the original and indestructible properties of the soil with a convincing Oriental light:

If rent be such, then in no old country of the world.... Is there much of such a thing as rent, for the natural and inherent properties of the soil have while ago been destroyed, or, if they have not been destroyed, they are not economically useful. Except in the most rudimentary form, agriculture cannot long subsist without a careful renewal of the properties of the soil..... Why has Sicily, once the granary of Rome, with its meadows producing unexampled returns, sunk into a miserable country, one-third of it barren, or exporting a little olive oil? Why is Palestine, once a land flowing with milk and honey, barren and thinly peopled, the veritable antithesis of that which it is painted by the prophets? Why, to take a still more striking instance of decadence in wealth, have the banks of the Euphrates, which once may have been as fertile as the banks of the Thames, been transformed into baked and parched plains? One agency alone did not accomplish all these changes;.... though conquest and misgovernment may have exercised a blighting influence, the present barrenness is principally attributable to the so-called original and indestructible properties of the soil being peculiarly transient, to agriculture being long possible only if the properties of the soil are perpetually renewed..... The Sicilian at last drained the fertility of his milch cow, as Michelet calls the island. When the cisterns that crowded, or the terrace walls that girdled the hills of Palestine fell into ruins, vegetation was parched by the heat of summer, and the soil swept away by the unfertilizing rains of winter. The canals that intersected and watered the banks of the Euphrates were suffered to dry up and a goodly region became "a wilderness, a dryland, and the desert." These are the consequences of trusting to the "original and indestructible powers of the soil."


Mr. Shearman's definition was:

Ground rent is the tribute which natural laws levy upon every occupant of land as the market price of all the social as well as natural advantages appertaining to that land, including, necessarily, and his just share of the cost of government.[3]


Is it not a little curious to note that a law of rent plainly stated by Anderson, West, Malthus and Ricardo nearly a century and a half ago should continue to be defined in the agricultural terms of no rent a land, rather than in the urban terms of manufacture and commerce. Perhaps not even all economists realize how modern a matter is the cumulative growth of urban rent, which increases almost in geometric ratio. It was seem as though the classical economists were more excusable then their successors in overlooking the importance of this factor. Would it not be an improvement to let the definition stand naturally and squarely like a pyramid upon the ever broadening base of urban rent, rather than try to balance it upon its toppling apex, as it were, of agricultural rent?

The general economic conception of the land tax is largely a compound one, to wit, that it is on the one hand a tax on the fertility value of agricultural land, and on the other, a tax on the site value of urban land. It would seem to need no argument to show a great simplification for both teacher and learner if "site" might here be substituted for "fertility," making a rent-tax applicable to the single attribute of site value only.

The following conclusion is presented for consideration:

On the surface of the globe are countless varieties of exhaustible fertility, i.e., chemical constituency, differing in-kind in combination from the nitrogen, hydrogen, oxygen, and carbon of the soil to the carbon of the coal and the diamond. Fertility as an attribute need not be predicated of agricultural land alone. Economic fertility belongs equally to any other land which yields to labor its product weather in food, mineral, or metal. Lender may be fertile in wheat, corn, and potatoes. It may be fertile in cotton, in tobacco, or in rice. It may be fertile in diamonds, in gold, silver, copper, lead, or iron. It may be fertile in oil, coal, or natural gas, in a water power or water front. The value of artificial fertility is an improvement value. The value of natural fertility of any kind is the site value.

Henry George said:

Rent or land value does not arise from the productiveness or utility of land. It in no wise represents any help or advantage given to production, but simply the power of securing a part of the results of production. No matter what are its capabilities, land can yield no rent and have no value until someone is willing to give labor or the results of labor for the privilege of using it; and what anyone will thus give depends not upon the capacity of the land, but upon its capacity as compared with that of land that can be had for nothing. I may have very rich land, but it will yield no rent and have no value so long as there is other land as good to be had without cost. But when this other land is appropriated, and the best land to be had for nothing is inferior, either in fertility, situation, or other quality, my land will begin to have a value and yield a rent. And though the productiveness of my land may decrease, yet if the productiveness of the land to be had without charge decreases in greater proportion, the rent I can get, and consequently the value of my land, will steadily increase. Rent, in short, is the price of monopoly, arising from the reduction to individual ownership of natural elements which human exertion can neither produce nor increase.[4]


That natural fertility is a source of rent has become almost axiomatic, so deeply is the thought embedded in the economic, as well as in the popular mind; but the latter tendency is to question the accuracy of this view and to subject it afresh to a searching and logical analysis.

In the light of such analysis it seems clear that it is only location or site that gives fertility any value it may possess. In many places, soil of any kind (fertile or barren) is of no value. It is only when soil is located in the right place, i.e., when there are people about to use it, that it becomes valuable. Fertile soil in one place is less valuable than barren soil in another. A gravel-bank situated within city limits may be much more valuable than soil suitable for market gardening. The problem, in each case, is not one of comparative or differential value. It is a problem of positive or independent value, of which proximity appears to be the sole cause. Natural fertility is the constant factor in any comparison; that is to say, whenever element of natural fertility is present in the land today has been there from creation, but the element of proximity is the differential factor that changes with the advance of civilization. Instead of fertility giving value to site, is not the truth to be found in the very reverse statement that it is site that gives value to fertility?

The following is submitted, not as a "consensus" but in perfect confidence that there is no other ground upon which the economic foot can finally rest and be at peace.

If, as economists, we postulate LAND and MAN as the two primary contributors to production, then we are compelled to assume fertility as unnecessary and presupposed quality in land, without which land would not be LAND; just as when we speak of MAN we assume intelligence, without which that unfettered biped would not be MAN. The first factor, LAND, has been the passive factor -- what Emerson called the "raw bullion of nature" -- present from the foundation of the world, not a square foot having any value until the advance of the active factor, MAN. Varying fertility is an attribute, a part of land itself; as varying intelligence is an attribute, a part of man himself. In short, in economic thought land is fertility and man is intelligence. That the fertility in the one case, and the intelligence in the other, are unequally distributed does not affect the contention that it is only when the intelligence approaches the fertility that the value of the latter comes into existence.

This issue is presented upon the reader in the conviction that it is not merely an academic one, but is charged with deep scientific consequence. It affects the very foundation of a theory of natural taxation. The claim if substantiated that ground rent is a social product leaves no room for the hypothesis that any part of land value is due to natural fertility.

Perhaps the shortest definition of economic rent yet suggested is one already quoted and that is applicable equally to agricultural and to urban land, one approved by the decision of one hundred thirty-five economist judges without a dissenting opinion. The definition is: ground rent is thought land is worth for use.

THE PROPERTY CONCEPT. One of the serious maladjustments of the situation today is the conflicting opinions as to Mr. George's views upon the question of private property in land, these having operated as a serious impediment to the progress of the single tax. Believing that this is the proper place and time, I submit the conclusion at which I have arrived.

In chapter after chapter of Progress and Poverty as well as thirteen years later in a Perplexed Philosopher, Henry George reiterates his own and Spencer's error (which both had recanted), viz., that private property in land is unjust and should be abolished.

Notwithstanding his apparent contradiction of expression, it is manifestly due to Mr. George's intellectual honesty to credit him with the same clear conception with which he in turn credited Spencer when he summarized in A Perplexed Philosopher the latter's Social Statics chapter, viz., "Private property in land, as at present existing, can show no original title valid injustice," etc.

In assuming to suggest his students of Henry George, perhaps at a critical. In his change of base from an old dispensation to a new, what seems to me are rational interpretation of his language, it is ventured to paraphrase the form of argument used by himself in A Perplexed Philosopher, chap II, entitled "An Incongruous Passage." Here he interpolates into the lines of Herbert Spencer what he believed to be their intended meaning. A few moments of careful attention may be time well spent.

In connection with his own misinterpretation of Spencer's passage regarding compensation to existing proprietors, he says:

Taken by itself, this passage seems to admit that existing landowners should be compensated for the land they hold whenever society shell resume land for the benefit off all. Though this is diametrically opposed to all that is gone before and all that follows after, it is a sense in which it has been generally understood.[5]


This recommendation of Mr. George's that Spencer's specific views on one plank of his platform should be interpreted in the light of his generally known attitude on all other planks, suggests between the treatment which he accords to Spencer and the treatment which he, by inference, would have accorded to himself.

By a similar process of interpolation Henry George, in turn, may be made to appear as his own interpreter. For instance, in Progress and Poverty, Book VII, . chap I, "The Injustice of Private Property in Land," Mr. George would have said: if private property in [the economic rent of] land the just, then it is the remedy I propose a false one; if, on the contrary, private property in [the economic rent] of land the unjust, then is this remedy the true one." Also, on page 366:"Whatever may be said for the institution of private property in land [as it exists today], it is therefore playing that it cannot be defended on the score of justice." Linking the above expository innovation to Book VIII, chap. II, we find the following illuminating lines (p. 402):

I do not propose you to purchase or to confiscate private property in land..... It is not necessary to confiscate land; it is only necessary to confiscate rent..... By leaving to landowners a percentage of rent which would probably be much less than the cost and loss involved in attempting to read lands through state agency, and by making use of this existing machinery, we made, without jar or shock, assert the common right to [the site value] land of by taking rent for public uses..... What I therefore propose, as the simple yet sovereign remedy, .... -- to appropriate rent by taxation.


Thus was to be accomplished the object of his heart's desire -- security of improvements without disturbance of land titles.

The broad basis, and keynote, and inspiration of Progress and Poverty Mr. George found in the doctrine of natural rights -- the equal right of all men to land. Taking for his main premise the right of all men to the soil in its original state, he deduced from this premise the right of all men to economic rent. The soundness of this deduction has been in these latter days seriously questioned.

In proof of the wrongfulness of private property in land, as it lies in the private appropriation of ground rent, he puts forward the doctrine of natural rights to land as the premise and basis for the joint right rent, a form of proposition which he and most of his predecessors in land reform accepted as axiomatic, viz., the equal right of all men to the soil in its original state, from which he deep used the equal right of all men to the rent of land. Since, as Mr. George himself has said, "the primary error of the advocates of land nationalization is in their confusion of equal rights with joint rights..... In truth the right to the use of land is not a joint or common right, but in equal right; the joint or common right is to rent, in the economic sense of the term, this whole line of argument from natural rights is unnecessary.

In the light of the foregoing question whether or not Mr. George men to assert that the taking of any part or all of ground rent in taxation would destroy individual ownership in severalty of the land itself does not appear to be debatable. In any event, his assertion cannot make a right out of a wrong. None of his confreres in the company assembled in this volume advanced such a proposition. Smith, Mill, Dove, gave no hint akin to it. Burgess, McDonnell, McGlynn, Shearman made it no part of their proposed system; indeed no economist can be recalled who has hazarded this view, thus leaving such a position unique by Mr. Georges sole occupancy. This fact makes us the more strenuous for an interpretation that shall harmonize with his generally accepted tenets.

In 1872, and he wrote in Our Land and Land Policy:

It by no means follows that there should be no such thing as property in land, but merely that there should be no monopolization -- no standing between the man was willing to work and the field which nature offers for his labor. For while it is true that the land of a country is the free gift of the Creator to all the people of that country, to the enjoyment of which each has an equal natural right, it is also true that the recognition of private ownership of land is necessary to its proper use -- is, in fact, a condition of civilization.


The ethical justification of the single tax can be derived much more simply. A careful study of the nature of economic rent will show that arises from the growth and efforts of the community and not from the labor of the landowner. The taking of rent by the community can therefore be put on the simple basis that property rights in any commodity should be vested in the person or persons who produced that commodity. Indeed it is somewhat curious that after devoting so much space to the argument based on natural rights to the land, Henry George himself finally rested his case on this very line of reasoning. At the end of this chapter on "Canons of Taxation" he says that --

a tax upon land values is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward and capital its natural return.[6]


What better can Henry George's followers do than to make his ultimate their own? Here is a flat contradiction to whenever error is in the "equal rights" argument and "the common property in land" argument. The above is, as it were, a repealing clause. Is it not as though he had said, whatever acts or parts of acts of mine either before or since are in conflict with this act are hereby repealed?

A score of years ago it was my privilege, under criticism, to make a public the avowal that in the long run I would prove myself Henry George's most friendly critic and vindicator. Thus I have frequently found myself standing between him and many false and harmful impressions that have operated to his prejudice and to that of his cherished reform. Among these, the insistence upon a full 100 per cent rate, and the abolition of private property in land as Henry George's standard measures for sound doctorate, have been painfully wasteful and enervating, besides being a standard upon which neither Canada nor Australia nor Germany, nor indeed any other country except the United States, has laid misleading emphasis.

Henry George himself was a persuasive writer and speaker, little given to denunciation. The followers of his teachings who have done him great honor have been those who have talked over his principles at their own hearthstones and in their own council chambers, and voted for them at their own hustings, rather than those who by militant intrusion into foreign bailiwicks have aroused and fostered a wholly gratuitous prejudice.

If those devout followers of Henry George who still insist he should go down to posterity as advocating the destruction of private property in land would exercise his care to avoid misinterpretation, they would thereby better serve him and the reform he so wonderfully expounded.


FOOTNOTES

  1. Progress and Poverty, Book III, Chap. II.
  2. A Survey of Political Economy, chap. XXIV, P. 327, Edmonston & Douglas, Edinburgh, 1871.
  3. Natural Taxation, p. 116.
  4. Progress and Poverty, p. 166.
  5. A Perplexed Philosopher, chap. XI, p. 242.
  6. The italics are the author's.



PREFACE Ch. 1 - Adam Smith
Ch. 2 - John Stuart Mill Ch. 3 - Patrick Edward Dove
Ch. 4 - Edwin Burgess Ch. 5 - John MacDonnell
Ch. 6 - Henry George Ch. 7 - Edward McGlynn
Ch. 8 - Thomas G. Shearman, Pt 1 Ch. 8 - Thomas G. Shearman, Pt 2
Ch. 9 - A Burdenless Tax to the Threefold to Support Upon Which the Single Tax Rests Ch. 10 - Land -- the Rent Concept -- the Property Concept
Ch. 11 - Taxation and Housing Ch. 12 - Thirty Years of Henry George
Ch. 13 - Henry George and the Economists Ch. 14 - The Professors and the Single Tax
Ch. 15 - A Catechism of Natural Taxation ...