The American Farmer
[Reprinted from Land and Freedom, July-August
Recent generations of American farmers have seen their farms getting
away from themselves and their children, into the hands of money
lenders, banks, insurance and trust companies, to such an extent that
in the middle West, at present, nearly one-half the farms are operated
by tenants. Year by year the percentage of tenancy is growing. Over a
single generation the change comes almost unnoticed; but it may
involve ten to twenty percent of the farms in a county. The census now
under way should shed important light on the subject.
The prevailing conditions are important to those farmers and others
who would like to look forward to future generations, not as a
serflike tenantry of the European pattern, but as a nation of
independent, upstanding American farmers, each owning and operating
his farm home, and asking no favors nor charity from government,
national, state or local such farmers as were common when land was
relatively free not many generations past.
Can our present farmers assure their children and grandchildren of
such a future? Is it not more likely that three-fourths of middle
western farms will be operated by tenants in less than three
generations? Or can our farmers learn how to hold their farms away
from money lenders, investors, banks, trusts and insurance companies?
My answer is that it can be done. Not only can, but must be done; and
that there is only one way; and the brief answer is to take "Investment
for Income" value out of the farm, and keep it out.
All incomes are derived from three sources from the three-factors of
production: Land, Labor and Capital. The respective incomes are Rent,
Wages and Interest. Any other incomes are negligible. Of these, wages
and interest are earned incomes; rent, more accurately, ground rent,
is an unearned income. Because it is un- earned it is ruining the
business of farming. It is the bait held out to all those seeking "something
for nothing." Every investor, every banker, trust company,
insurance company, land speculator, landlord, is combing the
countryside for a good piece of land to produce him an "income
without effort" on his part an unearned income, or as he would
call it, an "investment."
The operating farmer is also loaded down with taxes. The only tax he
does not earn before paying is his land tax, payable out of ground
rent. Taxes on his buildings, livestock, machinery and equipment are
paid out of his earnings, wages, or interest on capital. Out of his
earnings he must also pay numerous auto, gas, income, sales and other
taxes taxes on everything he purchases, and on most things he sells
direct and indirect taxes, import taxes and transport taxes.
Let the farmer wake up and abolish some taxes he now pays, and add
the amount to his land value tax. Let him exempt from taxation his
livestock, farm machinery and equipment, improvements and buildings,
and make it up by an increased tax on land value. Let him repeal his
income, sales, transportation taxes and add to his land value taxes.
Thus he will in time have shifted all his taxes to his land value that
is, to ground rent the unearned income until all ground rent is taken.
Being unearned, it has cost him nothing. His land will have paid taxes
less in most cases than his present taxes.
But his land tax will have done more ; it will have paid his public
expenses his schools, highways, courts, public offices, parks,
playgrounds, libraries, hospitals. And it will not have paid incomes
to money lenders, banks, and investment companies. His earnings from
his labor, and from his buildings and other capital equipment will be
secured to himself from the tax gatherer as well as from the investor.
When ground rent is reserved for his taxes and public expenses his
land is safe from the "investor for income." Land has no
purchase price when it will produce no ground rent for an investor.
But it has retained all its fine value for a home and for the
production of crops and stock.
A note should be added here to forestall the question of assessment
as commercial value disappears: At an early stage, land must be valued
in terms of annual ground rent production instead of sales value.
Farmers have not had time to analyze the different forms of their
income. It might seem to make little difference out of which pocket
their taxes are paid. But it actually makes the difference between
ownership and tenancy. If the farmer pays out of wages, ground rent is
left for the landlord. If the farmer will stop and think awhile he can
easily separate ground rent from wages. Rent is the part which a
landlord will take when there is a landlord. Any farmer can apply it
to his own land if he knows its value. If the law compels him to set
ground rent aside for taxes, he saves his earnings, and more
important, he saves his farm from investors.
Consider the expense to be saved. Tens of thousands of men and women
are now engaged in administering and collecting all the different
varieties of taxes with which we are oppressed. A few men in the towns
and villages assess, collect and disburse the land taxes: and in the
cities the number is still smaller in proportion to population.
Increasing the tax on land value will increase not much the number of
officials required for its administration.
Our statesmen, our politicians and our "scholars" waste
their time on the mock battle of "capital and labor". There
is no conflict of interests between labor and capital except as caused
by shutting men out from land. There are only two fundamental factors
in production, Man and Land. Capital, the third factor, is only the
tool of production the factory and the machine, from the axe and
sickle of our ancestors to the laboratory with a hundred smoke-stacks
The "capital-labor" problem must be settled by the farmer
who knows and loves the land. He must make it free to himself, his
children and grandchildren down through the generations, and to all
who want to live on and from the land. It is not that we need more
farmers to support the population; but that we need more farmers to
support themselves and their families; to make homes that cannot be
mortgaged and which cannot be sold against their will; that hold out
no inducement to the landlord, speculator or investor. When the farmer
begins by exempting his buildings and improvements from taxation, and
replacing that tax by a two or three percent surtax or land value, or
as much more as may be needed to absorb all ground rent, he will never
turn back. He will never again leave land as an open bait for the
investor, who wants an unearned income. There will be no land owners
except land users. But this work must be done, not by farmers who want
to make money from farm work done by tenants, but by farmers who want
to see tenancy an institution of the past, or at worst, of lands
beyond the sea.