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The Consequences of Land Speculation
are Tenantry and Debt on the Farms,
and Slums
and Luxury in the Cities
by Upton Sinclair
I know of a woman — I have never had the pleasure of
making her acquaintance, because she lives in a lunatic asylum, which does
not
happen to be on my visiting list. This woman has been mentally
incompetent from birth. She is well taken care of, because her father
left her when he died the income of a large farm on the outskirts of a
city. The city has since grown and the land is now worth, at
conservative estimate, about twenty million dollars. It is covered with
office buildings, and the greater part of the income, which cannot be
spent by the woman, is piling up at compound interest. The woman enjoys
good health, so she may be worth a hundred million dollars before she
dies.
I choose this case because it is one about which there can be no
disputing; this woman has never been able to do anything to earn that
twenty million dollars. And if a visitor from Mars should come down to
study the situation, which would he think was most insane, the
unfortunate woman, or the society which compels thousands of people to
wear themselves to death in order to pay her the income of twenty
million dollars?
The fact that this woman is insane makes it easy to see that she is not
entitled to the "unearned increment" of the land she owns. But how
about all the other people who have bought up and are holding for
speculation the most desirable land? The value of this land increases,
not because of anything these owners do — not because of any useful
service they render to the community — but purely because the community
as a whole is crowding into that neighborhood and must have use of the
land.
The speculator who bought this land thinks that he deserves the
increase, because he guessed the fact that the city was going to grow
that way. But it seems clear enough that his skill in guessing which
way the community was going to grow, however useful that skill may be
to himself, is not in any way useful to the community. The man may have
planted trees, or built roads, and put in sidewalks and sewers; all
that is useful work, and for that he should be paid. But should he be
paid for guessing what the rest of us were going to need?
Before you answer, consider the consequences of this guessing game. The
consequences of land speculation are tenantry and debt on the farms,
and slums and luxury in the cities. A great part of the necessary land
is held out of use, and so the value of all land continually increases,
until the poor man can no longer own a home. The value of farm land
also increases; so year by year more independent farmers are
dispossessed, because they cannot pay interest on their mortgages. So
the land becomes a place of serfdom, that land described by the poet, "where wealth accumulates and men decay." The
great cities fill up with festering slums, and a small class of idle parasites
are provided with
enormous fortunes, which they do not have to earn, and which they
cannot intelligently spend.
This condition wrecked every empire in the history of mankind, and it
is wrecking modern civilization. One of the first to perceive this was
Henry George, and he worked out the program known as the Single Tax.
Let society as a whole take the full rental value of land, so that no
one would any longer be able to hold land out of use. So the value of
land would decrease, and everyone could have land, and the community
would have a great income to be spent for social ends.
wealthandwant note: more precisely, the value of land would not be
reduced; rather its selling price would decrease, making it affordable
to those
who would
use
it.
(Further, because the user would not be paying other taxes, he would
likely have more to invest in improving the property.) |
A few years ago, out here in Southern California, a fine enthusiast by
the name of Luke North started what he called the "Great
Adventure"
movement, to carry California for the Single Tax. I did what I could to
help, and in the course of the campaign discovered what I believe is
the weakness of the Single Tax movement. Our opponents, the great rich
bankers and land speculators of California, persuaded the poor man that
we were going to put all taxes on this poor man's lot, and to let the
rich man's stocks and bonds, his inheritance, his wife's jewels, and
all his income, escape taxation. The poor man swallowed this argument,
and the "Great Adventure" did not carry California.
So, I no longer advocate the Single Tax. I advocate many taxes. I want
to tax the rich man's stocks and bonds, also his income, and his
inheritances, and his wife's jewels. In addition, I advocate a land
tax, but one graduated like the income tax. If a man or a corporation
owns a great deal of land, I want to tax him on the full rental value.
If he owns only one little lot, I don't want to tax him at all. Some
day that measure will come before the voters of California, and then I
should like to see the bankers and land speculators of the state
persuade the poor man that the measure would not be to the poor man's
advantage!
...I have before me a little book entitled "Enclaves of Economic Rent,"
by C. W. Huntington....This book is published by Mr. Fiske Warren, a
millionaire paper manufacturer who lives at Harvard, Massachusetts, and
believes in the Single Tax by way of enclaves....I sought to persuade
Mr. Warren that a great crisis was impending; that the inequality of
wealth in our society a thing continually growing worse, was bound to
bring a smash-up long before mankind had been persuaded to live in
enclaves. To this Mr. Warren answered, in substance: "You may be right;
but if this civilization collapses, something else will have to be put
in its place, and it may be useful to men to have a model of a better
community."
"Enclaves of Economic Rent" was issued annually for
a number of years. This article appeared in the 1924 edition. |
...How are these enclaves run? The principle is very simple. The
community owns the land, and fixes the site value year by year, and
those who occupy the land pay the full rental value of the land they
occupy. Improvements of any kind are not taxed; you pay only for the
use of what nature and the community have created. The community takes
all this wealth and uses it, first to pay all the taxes on the land
[and buildings -ds] the remaining money being expended for community
purposes, by the democratic vote of all.
What this means in practice you can see from the town of Fairhope,
Alabama. Fairhope began nearly thirty years ago, with three hundred and
fifty acres, and now has nearly four thousand acres. Its land is
estimated to be worth a million dollars. But instead of this wealth
being distributed among private owners, in accordance with the guessing
power or each individual, the whole rental value is the property of the
community, and the whole community prospers by the labors of each one.
What this means in the way of moral values you may judge from one
sentence in the little book: and I will follow the example of the book
and quote this sentence in the same cold and unemotional fashion: "No
resident of Fairhope has been defendant in a criminal case in county
court." Perhaps I should add that there is no place except the county
court where anyone could be a defendant; there has never been a court
or jail or anything of that sort in Fairhope.
Or take the colony of Arden, Delaware, which is just south of
Philadelphia. I could not say that no resident of Arden has ever been a
defendant in a court — I myself having been one of eleven men who were
arrested by a constable from the city of Wilmington, and sent to prison
for the crime of playing baseball and tennis on Sunday! It is that kind
of humorous story which you read about Arden, and not the
serious efforts which are there being made to solve a great and pressing
social problem.
In Philadelphia, as in all our great cities, are enormously wealthy
families, living on hereditary incomes derived from crowded slums. Here
and there among these rich men is one who realizes that he has not
earned what he is consuming, and that it has not brought him happiness,
and is bringing still less to his children. Such men are casting about
for ways to invest their money without breeding idleness and
parasitism. Some of them might be grateful to learn about this enclave
plan, and to visit the lovely village of Arden, and see what its people
are doing to make possible a peaceful and joyous life, even in this
land of bootleggers and jazz orchestras.
The above essay by Upton Sinclair is from Enclaves of Economic Rent, C. W. Huntington
(ed), Fiske Warren, Harvard Massachusetts, 1924
DAN SULLIVAN OBSERVES:
What I find particularly interesting is a passage that, to me, shows
how class envy was used to shift us from the highly principled Georgist
message to the "us-them" Marxist message. Here is the passage to which
I refer:
"A few years ago, out here in Southern
California, a fine enthusiast by the name of Luke North started what he
called the "Great Adventure" movement, to carry California for the
Single Tax. I did what I could to help, and in the course of the
campaign discovered what I believe is the weakness of the Single Tax
movement. Our opponents, the great rich bankers and land speculators of
California, persuaded the poor man that we were going to put all taxes
on this poor man's lot, and to let the rich man's stocks and bonds, his
inheritance, his wife's jewels, and all his income, escape taxation.
The poor man swallowed this argument, and the "Great Adventure" did not
carry California.
"So, I no longer advocate the Single Tax. I advocate many taxes. I want
to tax the rich man's stocks and bonds, also his income, and his
inheritances, and his wife's jewels. In addition, I advocate a land
tax, but one graduated like the income tax. If a man or a corporation
owns a great deal of land, I want to tax him on the full rental value.
If he owns only one little lot, I don't want to tax him at all. Some
day that measure will come before the voters of California, and then I
should like to see the bankers and land speculators of the state
persuade the poor man that the measure would not be to the poor man's
advantage!"
Of course, what happened when lefties like Upton Sinclair sold out to
the expedient of class envy, was that the privileged classes
strategically caved on these other taxes, so that now we do tax the
rich man's stocks and bonds (and also the poor man's retirement funds)
and his inheritances (if he is not rich enough to hold them overseas)
and his wife's jewels (which merely causes unemployment among
jewelers). And since these various unprincipled measures have been
disastrous, people are now suspicious of any tax that falls on the
rich, including the one proper tax, for which Mr. Sinclair, had he not
been impatient for cheap victories, would have held out.
It is often asserted that Henry George paved the way for the
Progressive Movement, which in turn paved the way for the Socialist
Movement. This passage, to me, is the *essential* description of how
our own "allies" derailed us.
Thus I regard as critically important, the following passage from
paragraph 18 of Tom Paine's "Agrarian Justice":
"While, therefore, I advocate the
right, and interest myself in the hard case of all those who have been
thrown out of their natural inheritance by the introduction of the
system of landed property, I equally defend the right of the possessor
to the part which is his."
We must oppose those who would make public property private, but we
must equally oppose those who would make private property public. In my
opinion, Georgism was undone, not by its enemies, but by its shallower
allies who were more enamored of victory than of principle.
The rest of the Upton Sinclair article is wonderful, but this passage
is especially wonderful in its own perverse way, because it is a window
into exactly where the movement went astray.
Dan Sullivan
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