A Single Taxer Answers Charles N. Edge
in the Wall Street Journal

Oscar H. Geiger

[Reprinted from Land and Freedom, May-June, 1932]

In the 1930's, Charles N. Edge was a prominent member of the New York Stock Exchange. His views periodically appeared in financial and other journals. For example, the November, 1933 issue of The Living Edge included his article, "The Price of Recovery." In another instance he is paraphrased: " A Communistic state has been defined by Charles N. Edge as one where the only taxes are income taxes, since there can be no capital taxes where there is no private capital to tax. When taxation consists of 100% income taxes, you have perfect Communism, because what you get is the pooling of the results of the work of all individuals for the benefit of the entire community. It is plain that the moment we tax incomes we take the first step toward Communism." The following essay by Oscar Geiger was written in response to commentary appearing in the Wall Street Journal. A brief search of online material failed to locate the commentary.

In a report of a speech by Charles N. Edge, Mr. Edge is quoted as saying that the problem that confronts society at present is "the displacement of man by machine," and the solution that he suggests for this problem, according to the report, is "a shift in taxation from land to machine."

As justification for this solution the report quotes Mr. Edge as offering:

• "The true value of a worker depends upon the value of the land;"
• "as far back as records go, the basic value and obtainable wage of a man has been half of the produce from the land he rents and can work, " and
• "the transfer of taxation from land to the machine would have the immediate effect of increasing the value of land throughout the country."

In [the first] statement Mr. Edge places himself at variance with all correct economic reasoning from Adam Smith, John Stuart Mill and David Ricardo down. It is an axiom in economics that the value of land arises out of, and depends upon, the community's presence, its activities, its needs and effective demand for land, and on its productivity, thrift and law-abiding qualities. Thus, if we were to more correctly state the case, we would have to reverse Mr. Edge's form to read: "the true value of land depends on labor itself" labor, of course, including all who come by their wealth or earnings by rendering value or services in return for it.

If [the second] statement is analyzed, it merely tells us that land, without itself producing anything, is able to exact half of all that labor produces; for in production, land is a passive factor, merely permitting production, while labor and capital are the active factors, producing everything.

[His third] statement is correct, and that is why Mr. Edge's proposed remedy is wrong. The value of land represents the amount of the product land is able to exact from the producer for the mere privilege it grants him to produce. The higher land value is, the more it absorbs of the product; therefore, the higher land value is the less is left to the producer.

We have already reversed Mr. Edge's findings; let us now reverse his proposed remedy and perhaps we may find the solution of the problem that really is confronting society. Abolish the taxation that is now burdening industry. Remove all taxes from machinery, tools, farm implements, houses, business structures, and all improvements; from food products, materials and merchandise of all descriptions; from incomes, thrift and production, and put it all on the value of land.

It is an axiom in economics that taxation on labor products is added to the price of commodities, makes them dearer, weakens the effective demand for them and thus tends to unemployment. It is equally axiomatic that a tax on land values (especially if the entire economic rent is taken) discourages only the holding of land out of use, and therefore makes for the employment of labor.

Labor employed will make effective the consumers potential demand, will translate underconsumption into underproduction, and will put an end to all that now is troubling our industrial and economic structure. And as for "the displacement of man by machine" (the problem visioned by Mr. Edge), we will have to invent more and better machines to keep pace with the demand.