A Response to Richard Ely
On the Question of Compensation to Owners of Land
Henry George
[Reprinted from The Standard, Vol.2, 24
December, 1887]
In another column will be found the third of a series of articles
entitled "Land, Labor and Taxation, which Professor Richard T.
Ely of Johns Hopkins university is writing for the Independent. His
two previous articles have been mainly devoted to an admirable
statement of the nature and causes of rent and to tracing "the
development of the land tax theory," beginning with "the
first school of real political economists, the Physiocrats,"
through Adam Smith and John Stuart Mill, to the present day. In these
articles Professor Ely shows that economic rent "is an income
derived from current industry without toil on the part of those who
enjoy it," and "if all rent should be appropriated by the
community it would not stop productive processes" or increase the
amount that the user of land has to pay to the owner. In the third
article, which we reprint , he goes on to discuss the appropriation of
rent to public purposes by means of taxation, as proposed by the
united labor party and advocated by THE STANDARD.
Professor Ely effectually disposes of all the economic objections
that are usually made to the single tax and concedes in terms or by
implication all the enormous advantages that are claimed for it. But ,
as if from an unconscious aversion to going too far, Professor Ely
brings up a moral objection. It would not be just to existing land
holders, he contends, to take for the public use what society has
permitted them to consider as theirs. This he puts in its strongest
form when he says, "If we have all made a mistake, should one
party to the transaction alone bear the cost of the common blunder?"
If a people, who up to that time had acceded unquestioningly to the
treatment of land as the absolute property of individuals, were
suddenly called upon to decide as to the immediate resumption of
common rights to the "unearned increment," Professor Ely's
argument would unquestionably be a plausible one. But such a case,
though supposable, is practically impossible. It is certainly not the
case as it is presented to us to-day. For not only is it impossible to
educate public opinion up to the point of any legislative action
looking to the appropriation of land values for public purposes
without a prolonged agitation, during which those owning land and
those thinking of buying land may have ample notice of what is coming,
but such legislative action, when it takes place, must necessarily
require time, and will consist in a series of steps. The objection
which to Professor Ely appears so grave in the realm of the abstract
loses all its force in the realm of the practical.
It is true, as Professor Ely says, that we "propose to take all
of a certain species of property without a cent of compensation,"
but it is also true that this taking can only be gradual , and would
consist in successive changes in our system of taxation, which
reducing the taxes now levied on industry and the products of industry
would increase the taxes now levied on land values. Surely, Professor
Ely would not say that there could be anything in any one of these
changes to shock the moral sentiment? Surely he would not say that the
state is stopped in justice from imposing or increasing a tax on land
values unless it at the same time makes compensation to land owners?
Is property in land values more sacred than property in thing produced
by labor? Has the land owner any better right to compensation when he
is taxed than other people have when they are taxed? We do not
compensate smokers when we tax tobacco; nor the final purchasers of
dry goods when we tax dry goods; nor the people who use houses when we
tax houses or the materials that enter into houses. We do not
compensate saloon keepers when the keeping of saloons is interdicted
by prohibitive law, nor does anybody propose to compensate them. And
with his wide study of the effects of taxation Professor Ely will be
able to recall many instances where businesses to which no objection
on the score of morals could be made, have been crushed out of
existence by the imposition of taxation. He will not, however, recall
an instance in which the men so injured have been compensated. Should
a proposition to apply to land owners the same rule which we
habitually apply in all other cases of taxation shock the moral sense?
But there is a very great difference in effect between the change in
taxation which we propose and thee taxes by which we habitually take
the property of individuals for public uses without making them any
compensation. In the case of all these taxes the individual has simply
to "pocket his loss" and get along as best he may,
notwithstanding the fact, as Professor Ely is very clearly showing in
a series of lucid articles in the Baltimore Sun, that the greater part
of these taxes are what he terms regressive taxes , falling on the
ultimate payers with greater weight as their incomes diminish. But in
the case of the substitution of a tax on land values for the taxes now
laid on other species of property, whatever loss there might be to
land owners would be, in some degree at least , compensated for by the
improvement in general conditions. Such a change, as Professor Ely
very clearly sees, would greatly augment the production of wealth and
greatly equalize its distribution. This increase of material
prosperity would inure to the benefit of the individuals who happen to
be land owners as well as to that of other people.
Of what is at present our favorite method of taking individual
property for public purposes, Professor Ely very truly says in one of
his Baltimore Sun articles:
"Indirect taxation does not discriminate between the
last dollar of the poor widow and the dollar which is only one in an
income of a million. It raises prices, reduces the value of income
and forces some who are already near the awful line of pauperism to
cross it, and thus puts to death bigger aspirations in a class of
citizens and lowers the level of civilization. But the absurdity of
the thing is seen in this, that when the tax has destroyed the value
of a man as an industrial factor in the community, what has been
taken away is given back in alms!"
How different would be the effect of appropriating rent for public
purposes, even though we should take it to the last penny. Such would
be the opening of natural opportunities, such would be the stimulation
of industrial enterprise, such would be the demand on all sides for
labor, that we would not be forced to maintain the ex-land owners by
alms . They could go to work.
All this is upon the assumption that Professor Ely seems to make when
he comes to treat the moral question, that property in land does not
essentially differ from other property. But that he is, when treating
of the economic question, fully conscious of the essential difference,
other parts of his articles clearly show. We who propose, as fast as
we can arouse the intelligence and moral sense of the people to its
expediency and justice, to take land values for public uses "without
a cent of compensation," do not rest our case upon the
proposition that the earth is the gift of the Creator to the whole
human race, and that no one can show a title deed to it from the Al-
mighty. While this may be with many of us a favorite mode of calling
attention to the obvious distinction between property in land and
property in things produced by labor, the argument on which we would
rest the case for the appropriation of land values without
compensation, is one that will appeal as strongly to those who do not
believe in God as to those who do. Nor yet would we justify ourselves
by asserting that "property is but a means to an end-the welfare
of the race," nor reply to those who invoke against us the
command "Thou shalt not steal," as Professor Ely does for us
when he says:
"Very true, my friend. But God equally said: 'Thou
shalt not murder.' Yet we send men to battle and certain death in
war. We compel them to go and lay down life for us."
We arraign private property in land -- or, rather , to speak more
precisely, since we are dealing with an economist , private property
in rent-on the ground that it is in itself a violation, and a
continuous violation, of the rights of property; on the ground, only
not that it is based on robbery or springs from robbery, but that it
involves robbery. This robbery is not a robbery that once committed is
over and done, but a fresh and successive series of robberies that
must continue as long as the private appropriation of rent is
permitted to continue. To appropriate rent for public purposes is not
in reality to really take anything from land owners -- it is to put a
stop to their unjust taking of the fruits of other people's industry.
All this is perfectly plain to Professor Ely while he looks at the
matter with the clear eyes of the economist . He says in the article
which preceded the one we reprint:
"Men who obtain the right of private property in
land by conquest, robbery, inheritance or purchase, have it thus in
their power to exact an annual charge for its use, and this is
called rent. Now this rent must come out of the fruits of the
industry of other classes, and others must toil for it."
And, again:
"A man may fence in a square in a great city or a
rapidly growing one like Minneapolis, and, without a stroke of
labor, while even obstructing the labor of others, grow in wealth
daily until he is able to levy a tribute on the toil of all future
generations for having injured the present generation."
Professor Ely thus sees the true nature of private property in rent
as clearly as any one can. And yet seeing this he coolly declares that
, as a matter of justice and good morals, we must continue to permit
one class to appropriate the fruits of the industry of other classes,
and allow men "to lay a tribute on the toil of all future
generations for having injured the present generation" -- until,
forsooth, we compensate them for what they might in the future be able
to despoil honest industry of if permitted to keep on.
Professor Ely is a man to be spoken of in sorrow rather than in anger
. He is, as these articles show him to be, the clearest , the fairest
and the most painstaking of all our college professors of political
economy. But when a man like he gives expression to such hazy notions
of meum and tuum, how shall we wonder at some of the queer utterances
of Professor Sumner of Yale! Clearly, however, some sort of primary
instruction in moral philosophy ought to be given in our colleges. For
though Professor Ely may be relied on to work his way in time into a
clearer moral atmosphere, this cannot be hoped of all college bred
men.
Happily, we who really believe in the fundamental assertion of the
Declaration of Independence and would carry it out ; we who recognize
in the command, "Thou shalt not steal," an injunction to
stop all forms of stealing as soon as we get the power, have too clear
a conception of the rights of property to permit us to entertain any
notion of compensating landowners as a condition of taking for the use
of the community those values which attach to land by the growth and
improvement of the community. But it is instructive to observe that
were we to so far ignore the clear principles of honesty and justice,
it would be to postpone to the Greek calends the great reform we would
carry out . For not only would an admission of the rightfulness of
compensation be an admission of the rightfulness of private property
in rent, and thus make it impossible for us to appeal to the only
power by which any great reform can be carried into effect -- the
moral sense of the masses; but it would be to prevent our advance,
could advance still be possible, from lessening the difficulties in
our way and bringing about a gradual adjustment of private interests
to the new order. Compensation assured, land grabbing and land
speculation would go on unchecked, no matter how much public opinion
should be educated to the utility of the public ownership of rent.
Prospective land values would continue to increase up to the point of
final legislative action, and even with the prospect of legislative
action, just as the value of land now increases when it is needed for
public purposes; and a great reform that otherwise might be
accomplished easily and gradually, would involve such an expenditure
and such chances of fraud and corruption that practical men might well
relegate it to the care of dreamers and utopians.
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