Progress and Poverty (George)/Chapter XXI

by Henry George

Chapter XXI Claim of landowners to compensation

It is impossible for anyone to study Political Economy, or to think at all upon the production and distribution of wealth, without seeing that property in land differs from property in things of human production.

This is admitted, either expressly or tacitly, in every standard work on Political Economy, but in general only by vague admission or omission. Attention is in general called away from the truth, as a lecturer on moral philosophy in a slave-holding community might call away attention from too close a consideration of the natural rights of men; and private property in land is accepted without comment, as an existing fact, or is assumed to be necessary to the proper use of land and the existence of the civilized state.

The consideration that seems to cause hesitation is the idea that having permitted land to be treated as private property for so long, we should in abolishing it be doing a wrong to those who have been suffered to base their calculations upon its permanence; that having permitted land to be held as rightful property we should by the resumption of common rights be doing injustice to those who have purchased it with what was unquestionably their rightful property.

Thus it is held that if we abolish private property in land, justice requires that we should fully compensate those who now possess it, as the British government, in abolishing the purchase and sale of military commissions, felt itself bound to compensate those who held commissions which they had purchased in the belief that they could sell them again; or as, in abolishing slavery in the British West Indies, the sum of 20,000,000 pounds was paid to the slaveholders.

Land purchase and nationalization condemned

It is this idea that suggests the proposition that the government shall purchase at its market price the individual proprietorship of the land of the country; the idea also which led John Stuart Mill, although clearly perceiving the essential injustice of private property in land, to advocate, not a full resumption of the land, but only a resumption of accruing advantages in the future. His plan was that a fair and even liberal estimate should be made of the market value of all the land in the kingdom, and that future additions to that value, not due to the improvements of the proprietor, should be taken by the state.

To say nothing of the practical difficulties that such cumbrous plans involve, the extension of the functions of government they would require and the corruption they would beget, their inherent and essential defect lies in the impossibility of bridging over by any compromise the radical difference between wrong and right. Just in proportion as the interests of the landholders are conserved, just in that proportion must general interests and general rights be disregarded, and if landholders are to lose nothing of their special privileges, the people at large can gain nothing.

To buy up individual property rights would merely be to give the landholders in another form a claim of the same kind and amount that their possession of land now gives them. It would be to raise for them by taxation the same proportion of the earnings of labour and capital that they are now enabled to appropriate in rent. Their unjust advantage would be preserved and the unjust disadvantage of the non-landholders would be continued. To be sure there would be a gain to the people at large when the advance of rents had made the amount that the landholders would take under the present system greater than the interest upon the purchase price of the land at present rates; but this would be only a future gain, and in the meanwhile there would not only be no relief, but the burden imposed upon labour and capital for the benefit of the present landholders would be much increased. For one of the elements in the present market value of land is the expectation of future increase of value.

Thus to buy up the land at market rates and pay interest upon the purchase money would be to saddle producers not only with the payment of actual rent, but with the payment in full of speculative rent. Or to put it in another way: The land would be purchased at prices calculated upon a lower than the ordinary rate of interest (for the prospective increase in land values always makes the market price of land much greater than would be the price of anything else yielding the same present return), and interest upon the purchase money would be paid at the ordinary rate. Thus not only all that the land yields them now would have to be paid the landowners, but a considerably larger amount. It would be, virtually, the state taking a perpetual lease from the present landholders at a considerable advance in rent over what they now receive. For the present the state would merely become the agent of the landholders in the collection of their rents, and would have to pay over to them not only what they received, but considerably more.

The case against mere increment taxation

Mill's plan for nationalizing the future "unearned increase in the value of land," by fixing the present market value of all lands and appropriating to the state the future increase in value, would not add to the injustice of the present distribution of wealth, but it would not remedy it. Further speculative advance of rent would cease, and in the future the people at large would gain the difference between the increase of rent and the amount at which that increase was estimated in fixing the present value of land, in which, of course, prospective as well as present value is an element. But it would leave, for all the future, one class in possession of the enormous advantage that they now have over others.

Nor is it right that there should be any concern about the proprietors of land. That such a man as John Stuart Mill should have attached so much importance to the compensation of landowners as to have urged the confiscation merely of the future increase in rent, is only explainable by his acquiescence in the doctrines that wages are drawn from capital and that population constantly tends to press upon subsistence. These blinded him as to the full effects of the private appropriation of the rent of land. Great as he was and pure as he was - warm heart and noble mind - he yet never saw the true harmony of economic laws, nor realized how from this one great fundamental wrong flow want and misery, and vice and shame. Else he could never have written this sentence: "The land of Ireland, the land of every country, belongs to the people of that country. The individuals called landowners have no right in morality and justice to anything but the rent, or compensation for its saleable value." (Principles of Political Economy, Book 2, chap. 2) In the name of the Prophet - figs! If the land of any country belong to the people of that country, what right, in morality and justice, have the individuals called landowners to the rent ? If the land belong to the people, why in the name of morality and justice should the people pay its saleable value for their own?

Injustice of the private appropriation of rent

It has been said: "Had we to deal with the parties who originally robbed the human race of its heritage, we might make short work of the matter." (Herbert Spencer in Social Statics, first published in 1864).

Why not make short work of the matter anyhow? This robbery is not like theft of a horse or a sum of money that ceases with the act. It is a fresh and continuous robbery that goes on every day and every hour. It is not from the produce of the past that rent is drawn; it is from the produce of the present. It is a toll levied upon labour constantly and continuously. Every blow of the hammer, every stroke of the pick, every thrust of the shuttle, every throb of the steam engine, pays its tribute. It levies upon the earnings of those men who, deep underground, risk their lives, and of those who over white surges hang to reeling masts. It robs the shivering, of warmth; the hungry, of food; the sick, of medicine; the anxious, of peace. It debases, and embrutes, and embitters. It crowds families of eight and ten into a single squalid room. It makes lads who might be useful men candidates for prisons and penitentiaries. It sends greed and all evil passions prowling through society as a hard winter drives the wolves to the abodes of men. It darkens faith in the human soul, and across the reflection of a just and merciful Creator draws the veil of a hard, and blind, and cruel fate.

It is not merely a robbery in the past; it is a robbery in the present - a robbery that deprives of their birthright the infants that are now coming into the world. Why should we hesitate about making short work of such a system? Because you were robbed yesterday and the day before, and the day before that, is that any reason why you should suffer yourself to be robbed today and tomorrow? Any reason why you should conclude that the robber has acquired a vested right to rob you?

If the land belong to the people, why continue to permit landowners to take the rent, or compensate them in any manner for the loss of rent? Consider what rent is. It does not arise spontaneously from land; it is due to nothing that the landowners have done. It represents a value created by the whole community. Let the landholders have, if you please, all that the possession of the land would give them in the absence of the rest of the community. But rent, the creation of the whole community, necessarily belongs to the whole community.

Try the case of the landholders by the maxims of the common law by which the rights of man and man are determined. The common law we are told is the perfection of reason, and certainly the landowners cannot complain of its decision, for it has been built up by and for landowners. Now what does the law allow to the innocent possessor when the land for which he paid his money is adjudged to belong rightfully to another? Nothing at all. That he purchased in good faith gives him no right or claim whatever. The law does not concern itself with the "intricate question of compensation" to the innocent purchaser. The law does not say, as John Stuart Mill says: "The land belongs to A, therefore B who has thought himself the owner has no right to anything but the rent, or compensation for its saleable value." For that would be indeed like a famous fugitive slave case decision, in which the court was said to have given "the law to the North and the Black to the South." The law simply says: "The land belongs to A, let the Sheriff put him in possession!" It gives the innocent purchaser of a wrongful title no claim, it allows him no compensation. And not only this, it takes from him all the improvements that he has in good faith made upon the land.

You may have paid a high price for land, making every exertion to see that the title is good; you may have held it in undisturbed possession for years without thought or hint of an adverse claimant; made it fruitful by your toil or erected upon it a costly building of greater value than the land itself, or a modest home in which you hope, surrounded by the fig trees you have planted and the vines you have dressed, to pass your declining days. Yet if Quirk, Gammon and Snap can mouse out a technical flaw in your parchments or hunt up some forgotten heir who never dreamed of his rights, not merely the land, but all your improvements, may be taken away from you. And not merely that. According to the common law, when you have surrendered the land and given up your improvements, you may be called upon to account for the profits you derived from the land during the time you had it.

Now if we were to apply to this case of The People v. The Landowners the same maxims of justice that have been formulated by landowners into law, and are applied every day in English and American courts to disputes between man and man, we should not only not think of giving the landholders any compensation for the land, but should take all the improvements and whatever else they might have as well.

But I do not propose, and I do not suppose that anyone else will propose, to go so far. It is sufficient if the people resume ownership of the rent of land. Let the landowners retain their improvements and personal property in secure possession. And in this measure of justice would be no oppression, no injury to any class. The great cause of the present unequal distribution of wealth, with the suffering, degradation and waste that it entails, would be swept away. Even landholders would share in the general gain. The gain of even the large landholders would be a real one. The gain of the small landholders would be enormous. For in welcoming justice, men welcome the handmaid of Love. Peace and Plenty follow in her train, bringing their good gifts, not to some, but to all.

If in this chapter I have spoken of justice and expediency as if justice were one thing and expediency another, it has been merely to meet the objections of those who so talk. In justice is the highest and truest expediency.