Wealth, in George's precise thinking, does not include land.  Wealth consists of those things that can be produced, and land (not just acreage, but all of the natural creation) is not something any of us can produce, individually or as a community or as a corporation. On this website, you'll see wealth used both in George's precise definition and in the more common usage, in which it refers to all of one's assets without regard to their nature. Keep in mind the distinction between common usage and George's more precise usage; it is a distinction critical to achieving justice!

Henry George: The Common Sense of Taxation (1881 article)

... These are truisms. Yet so widespread and persistent is the notion that all property should be taxed, that they are generally ignored. Nothing is clearer than that when a farmer who wants more capital puts a mortgage on his farm, no new value is thereby created. Yet, in most of our States, both the farm and the mortgage are taxed; though so obvious is the double taxation that in some of them the clumsy expedient of making an exemption to the debtor is resorted to.

But it is manifest that property of this kind is not a fit subject for taxation, and ought not to be considered in making up the assessment rolls. It has, in itself, no value. It is merely the representative, or token, of value — the certificate of ownership, or the obligation to pay value. It either represents other property, or property yet to be brought into existence. And, as nothing real can be drawn from that which is not real, taxation upon property of this kind must ultimately fall, either upon the property represented, in which case there is double taxation, or upon those whose obligations it expresses, in which case men are taxed, not upon what they own, but upon what they owe; and all cumbrous devices to prevent the unjust effects of such taxation, like other complications of the revenue system, simply give to the stronger and more unscrupulous opportunities of throwing the burden upon the weaker and more conscientious. Property of this kind ought not to be taxed at all. Property in itself valuable is clearly that with which any wise scheme of taxation should alone deal.

To consider the nature of property of this kind is again to see a clear distinction. That distinction is not, as the lawyers have it, between movables and immovables, between personal property and real estate. The true distinction is between property which is, and property which is not, the result of human labor; or, to use the terms of political economy, between land and wealth. For, in any precise use of the term, land is not wealth, any more than labor is wealth. Land and labor are the factors of production. Wealth is such result of their union as retains the capacity of ministering to human desire. A lot and the house which stands upon it are alike property, alike have a tangible value, and are alike classed as real estate. But there are between them the most essential differences.

• The one is the free gift of Nature, the other the result of human exertion;
• the one exists from generation to generation, while men come and go; the other is constantly tending to decay, and can only be preserved by continual exertion.
• To the one, the right of exclusive possession, which makes it individual property, can, like the right of property in slaves, be traced to nothing but municipal law; to the other, the right of exclusive property springs clearly from those natural relations which are among the primary perceptions of the human mind.

Nor are these mere abstract distinctions. They are distinctions of the first importance in determining what should and what should not be taxed.

For, keeping in mind the fact that all wealth is the result of human exertion, it is clearly seen that, having in view the promotion of the general prosperity, it is the height of absurdity to tax wealth for purposes of revenue while there remains, unexhausted by taxation, any value attaching to land. We may tax land values as much as we please, without in the slightest degree lessening the amount of land, or the capabilities of land, or the inducement to use land. But we cannot tax wealth without lessening the inducement to the production of wealth, and decreasing the amount of wealth. We might take the whole value of land in taxation, so as to make the ownership of land worth nothing, and the land would still remain, and be as useful as before. The effect would be to throw land open to users free of price, and thus to increase its capabilities, which are brought out by increased population. But impose anything like such taxation upon wealth, and the inducement to the production of wealth would be gone. Movable wealth would be hidden or carried off, immovable wealth would be suffered to go to decay, and where was prosperity would soon be the silence of desolation. ... read the whole article

Henry George: Progress & Poverty: Wages & Capital: The Meaning of the Terms (Book I, Chapter 2)

Land, labor, and capital are the three factors of production. If we remember that capital is thus a term used in contradistinction to land and labor, we at once see that nothing properly included under either one of these terms can be properly classed as capital. The term land necessarily includes, not merely the surface of the earth as distinguished from the water and the air, but the whole material universe outside of man himself, for it is only by having access to land, from which his very body is drawn, that man can come in contact with or use nature. The term land embraces, in short, all natural materials, forces, and opportunities, and, therefore, nothing that is freely supplied by nature can be properly classed as capital. A fertile field, a rich vein of ore, a falling stream which supplies power, may give to the possessor advantages equivalent to the possession of capital, but to class such things as capital would be to put an end to the distinction between land and capital, and, so far as they relate to each other, to make the two terms meaningless. The term labor, in like manner, includes all human exertion, and hence human powers whether natural or acquired can never properly be classed as capital. In common parlance we often speak of a man's knowledge, skill, or industry as constituting his capital; but this is evidently a metaphorical use of language that must be eschewed in reasoning that aims at exactness. Superiority in such qualities may augment the income of an individual just as capital would, and an increase in the knowledge, skill, or industry of a community may have the same effect in increasing its production as would an increase of capital; but this effect is due to the increased power of labor and not to capital. Increased velocity may give to the impact of a cannon ball the same effect as increased weight, yet, nevertheless, weight is one thing and velocity another.

Thus we must exclude from the category of capital everything that may be included either as land or labor. Doing so, there remain only things which are neither land nor labor, but which have resulted from the union of these two original factors of production. Nothing can be properly capital that does not consist of these that is to say, nothing can be capital that is not wealth.

But it is from ambiguities in the use of this inclusive term wealth that many of the ambiguities which beset the term capital are derived.

As commonly used the word "wealth" is applied to anything having an exchange value. But when used as a term of political economy it must be limited to a much more definite meaning, because many things are commonly spoken of as wealth which in taking account of collective or general wealth cannot be considered as wealth at all. Such things have an exchange value, and are commonly spoken of as wealth, insomuch as they represent as between individuals, or between sets of individuals, the power of obtaining wealth; but they are not truly wealth, inasmuch as their increase or decrease does not affect the sum of wealth. Such are bonds, mortgages, promissory notes, bank bills, or other stipulations for the transfer of wealth. Such are slaves, whose value represents merely the power of one class to appropriate the earnings of another class. Such are lands, or other natural opportunities, the value of which is but the result of the acknowledgment in favor of certain persons of an exclusive right to their use, and which represents merely the power thus given to the owners to demand a share of the wealth produced by those who use them. Increase in the amount of bonds, mortgages, notes, or bank bills cannot increase the wealth of the community that includes as well those who promise to pay as those who are entitled to receive. The enslavement of a part of their number could not increase the wealth of a people, for what the enslavers gained the enslaved would lose. Increase in land values does not represent increase in the common wealth, for what landowners gain by higher prices, the tenants or purchasers who must pay them will lose. And all this relative wealth, which, in common thought and speech, in legislation and law, is undistinguished from actual wealth, could, without the destruction or consumption of anything more than a few drops of ink and a piece of paper, be utterly annihilated. By enactment of the sovereign political power debts might be canceled, slaves emancipated, and land resumed as the common property of the whole people, without the aggregate wealth being diminished by the value of a pinch of snuff, for what some would lose others would gain. There would be no more destruction of wealth than there was creation of wealth when Elizabeth Tudor enriched her favorite courtiers by the grant of monopolies, or when Boris Godoonof made Russian peasants merchantable property.

All things which have an exchange value are, therefore, not wealth, in the only sense in which the term can be used in political economy. Only such things can be wealth the production of which increases and the destruction of which decreases the aggregate of wealth. If we consider what these things are, and what their nature is, we shall have no difficulty in defining wealth.

When we speak of a community increasing in wealth -- as when we say that England has increased in wealth since the accession of Victoria, or that California is a wealthier country than when it was a Mexican territory -- we do not mean to say that there is more land, or that the natural powers of the land are greater, or that there are more people, for when we wish to express that idea we speak of increase of population; or that the debts or dues owing by some of these people to others of their number have increased; but we mean that there is an increase of certain tangible things, having an actual and not merely a relative value -- such as buildings, cattle, tools, machinery, agricultural and mineral products, manufactured goods, ships, wagons, furniture, and the like. The increase of such things constitutes an increase of wealth; their decrease is a lessening of wealth; and the community that, in proportion to its numbers, has most of such things is the wealthiest community. The common character of these things is that they consist of natural substances or products which have been adapted by human labor to human use or gratification, their value depending on the amount of labor which upon the average would be required to produce things of like kind.

Thus wealth, as alone the term can be used in political economy, consists of natural products that have been secured, moved, combined, separated, or in other ways modified by human exertion, so as to fit them for the gratification of human desires. It is, in other words, labor impressed upon matter in such a way as to store up, as the beat of the sun is stored up in coal, the power of human labor to minister to human desires. Wealth is not the sole object of labor, for labor is also expended in ministering directly to desire; but it is the object and result of what we call productive labor -- that is, labor which gives value to material things. Nothing which nature supplies to man without his labor is wealth, nor yet does the expenditure of labor result in wealth unless there is a tangible product which has and retains the power of ministering to desire.

Now, as capital is wealth devoted to a certain purpose, nothing can be capital which does not fall within this definition of wealth. By recognizing and keeping this in mind, we get rid of misconceptions which vitiate all reasoning in which they are permitted, which befog popular thought, and have led into mazes of contradiction even acute thinkers.

But though all capital is wealth, all wealth is not capital. Capital is only a part of wealth -- that part, namely, which is devoted to the aid of production. It is in drawing this line between the wealth that is and the wealth that is not capital that a second class of misconceptions are likely to occur. ...

Increase in the amount of bonds, mortgages, notes, or bank bills cannot increase the wealth of the community that includes as well those who promise to pay as those who are entitled to receive. The enslavement of a part of their number could not increase the wealth of a people, for what the enslavers gained the enslaved would lose. Increase in land values does not represent increase in the common wealth, for what landowners gain by higher prices, the tenants or purchasers who must pay them will lose. And all this relative wealth, which, in common thought and speech, in legislation and law, is undistinguished from actual wealth, could, without the destruction or consumption of anything more than a few drops of ink and a piece of paper, be utterly annihilated. By enactment of the sovereign political power debts might be canceled, slaves emancipated, and land resumed as the common property of the whole people, without the aggregate wealth being diminished by the value of a pinch of snuff, for what some would lose others would gain. There would be no more destruction of wealth than there was creation of wealth when Elizabeth Tudor enriched her favorite courtiers by the grant of monopolies, or when Boris Godonof made Russian peasants merchantable property. ...

When we speak of a community increasing in wealth -- as when we say that England has increased in wealth since the accession of Victoria, or that California is a wealthier country than when it was a Mexican territory -- we do not mean to say that there is more land, or that the natural powers of the land are greater, or that there are more people, for when we wish to express that idea we speak of increase of population; or that the debts or dues owing by some of these people to others of their number have increased; but we mean that there is an increase of certain tangible things, having an actual and not merely a relative value -- such as buildings, cattle, tools, machinery, agricultural and mineral products, manufactured goods, ships, wagons, furniture, and the like. The increase of such things constitutes an increase of wealth; their decrease is a lessening of wealth; and the community that, in proportion to its numbers, has most of such things is the wealthiest community. The common character of these things is that they consist of natural substances or products which have been adapted by human labor to human use or gratification, their value depending on the amount of labor which upon the average would be required to produce things of like kind.

[31] Thus wealth, as alone the term can be used in political economy, consists of natural products that have been secured, moved, combined, separated, or in other ways modified by human exertion, so as to fit them for the gratification of human desires. It is, in other words, labor impressed upon matter in such a way as to store up, as the beat of the sun is stored up in coal, the power of human labor to minister to human desires. Wealth is not the sole object of labor, for labor is also expended in ministering directly to desire; but it is the object and result of what we call productive labor -- that is, labor which gives value to material things. Nothing which nature supplies to man without his labor is wealth, nor yet does the expenditure of labor result in wealth unless there is a tangible product which has and retains the power of ministering to desire. ... read the entire chapter

This right of ownership that springs from labor excludes the possibility of any other right of ownership. If a man be rightfully entitled to the produce of his labor, then no one can be rightfully entitled to the ownership of anything which is not the produce of his labor, or the labor of some one else from whom the right has passed to him. For the right to the produce of labor cannot be enjoyed without the right to the free use of the opportunities offered by nature, and to admit the right of property in these is to deny the right of property in the produce of labor. When nonproducers can claim as rent a portion of the wealth created by producers, the right of the producers to the fruits of their labor is to that extent denied.

A house and the lot on which it stands are alike property, as being the subject of ownership, and are alike classed by the lawyers as real estate. Yet in nature and relations they differ widely.

• The one is produced by human labor, and belongs to the class in political economy styled wealth.
• The other is a part of nature, and belongs to the class in political economy styled land.

The essential character of the one class of things is that they embody labor, are brought into being by human exertion, their existence or nonexistence, their increase or diminution, depending on man. The essential character of the other class of things is that they do not embody labor, and exist irrespective of human exertion and irrespective of man; they are the field or environment in which man finds himself; the storehouse from which his needs must be supplied, the raw material upon which and the forces with which alone his labor can act.

The moment this distinction is realized, that moment is it seen that the sanction which natural justice gives to one species of property is denied to the other. ... read the whole chapter

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 12. Effect of Remedy Upon Various Economic Classes (in the unabridged P&P: Part IX: Effects of the Remedy — Chapter 3. Of the effect upon individuals and classes)

When it is first proposed to put all taxes upon the value of land, all landholders are likely to take the alarm, and there will not be wanting appeals to the fears of small farm and homestead owners, who will be told that this is a proposition to rob them of their hard-earned property. But a moment's reflection will show that this proposition should commend itself to all whose interests as landholders do not largely exceed their interests as laborers or capitalists, or both. And further consideration will show that though the large landholders may lose relatively, yet even in their case there will be an absolute gain. For, the increase in production will be so great that labor and capital will gain very much more than will be lost to private landownership, while in these gains, and in the greater ones involved in a more healthy social condition, the whole community, including the landowners themselves, will share.

• It is manifest, of course, that the change I propose will greatly benefit all those who live by wages, whether of hand or of head -- laborers, operatives, mechanics, clerks, professional men of all sorts.
• It is manifest, also, that it will benefit all those who live partly by wages and partly by the earnings of their capital -- storekeepers, merchants, manufacturers, employing or undertaking producers and exchangers of all sorts from the peddler or drayman to the railroad or steamship owner -- and
• it is likewise manifest that it will increase the incomes of those whose incomes are drawn from the earnings of capital. ...

... In short, the working farmer is both a laborer and a capitalist, as well as a landowner, and it is by his labor and capital that his living is made. His loss would be nominal; his gain would be real and great. In varying degrees is this true of all landholders. Many landholders are laborers of one sort or another. This measure would make no one poorer but such as could be made a great deal poorer without being really hurt. It would cut down great fortunes, but it would impoverish no one.

Wealth would not only be enormously increased; it would be equally distributed. I do not mean that each individual would get the same amount of wealth. That would not be equal distribution, so long as different individuals have different powers and different desires. But I mean that wealth would be distributed in accordance with the degree in which the industry, skill, knowledge, or prudence of each contributed to the common stock. The great cause which concentrates wealth in the hands of those who do not produce, and takes it from the hands of those who do, would be gone. The inequalities that continued to exist would be those of nature, not the artificial inequalities produced by the denial of natural law. The nonproducer would no longer roll in luxury while the producer got but the barest necessities of animal existence. ... read the whole chapter

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 13 Effect of Remedy Upon Social Ideals (in the unabridged P&P: Part IX: Effects of the Remedy — 4. Of the changes that would be wrought in social organization and social life)

From whence springs this lust for gain, to gratify which men tread everything pure and noble under their feet; to which they sacrifice all the higher possibilities of life; which converts civility into a hollow pretense, patriotism into a sham, and religion into hypocrisy; which makes so much of civilized existence an Ishmaelitish warfare, of which the weapons are cunning and fraud?

Does it not spring from the existence of want? Carlyle somewhere says that poverty is the hell of which the modern Englishman is most afraid. And he is right. Poverty is the openmouthed, relentless hell which yawns beneath civilized society. And it is hell enough. ...

To remove want and the fear of want, to give to all classes leisure, and comfort, and independence, the decencies and refinements of life, the opportunities of mental and moral development, would be like turning water into a desert. The sterile waste would clothe itself with verdure, and the barren places where life seemed banned would ere long be dappled with the shade of trees and musical with the song of birds. Talents now hidden, virtues unsuspected, would come forth to make human life richer, fuller, happier, nobler. For

• in these round men who are stuck into three-cornered holes, and three-cornered men who are jammed into round holes;
• in these men who are wasting their energies in the scramble to be rich;
• in these who in factories are turned into machines, or are chained by necessity to bench or plow;
• in these children who are growing up in squalor, and vice, and ignorance, are powers of the highest order, talents the most splendid.

They need but the opportunity to bring them forth.

Consider the possibilities of a state of society that gave that opportunity to all. Let imagination fill out the picture; its colors grow too bright for words to paint.

• Consider the moral elevation, the intellectual activity, the social life.
• Consider how by a thousand actions and interactions the members of every community are linked together, and how in the present condition of things even the fortunate few who stand upon the apex of the social pyramid must suffer, though they know it not, from the want, ignorance, and degradation that are underneath.
• Consider these things and then say whether the change I propose would not be for the benefit of every one — even the greatest landholder? ... read the whole chapter

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

CAPITAL, which is not in itself a distinguishable element, but which it must always be kept in mind consists of wealth applied to the aid of labor in further production, is not a primary factor. There can be production without it, and there must have been production without it, or it could not in the first place have appeared. It is a secondary and compound factor, coming after and resulting from the union of labor and land in the production of wealth. It is in essence labor raised by a second union with land to a third or higher power. But it is to civilized life so necessary and important as to be rightfully accorded in political economy the place of a third factor in production. — The Science of Political Economy unabridged: Book III, Chapter 17, The Production of Wealth: The Third Factor of Production — Capital • abridged: Part III, Chapter 10: Order of the Three Factors of Production

IT is to be observed that capital of itself can do nothing. It is always a subsidiary, never an initiatory, factor. The initiatory factor is always labor. That is to say, in the production of wealth labor always uses capital, is never used by capital. This is not merely literally true, when by the term capital we mean the thing capital. It is also true when we personify the term and mean by it not the thing capital, but the men who are possessed of capital. The capitalist pure and simple, the man who merely controls capital, has in his hands the power of assisting labor to produce. But purely as capitalist he cannot exercise that power. It can be exercised only by labor. To utilize it he must himself exercise at least some of the functions of labor, or he must put his capital, on some terms, at the use of those who do. — The Science of Political Economy unabridged: Book III, Chapter 17, The Production of Wealth: The Third Factor of Production — Capital • abridged: Part III, Chapter 10: Order of the Three Factors of Production

THUS we must exclude from the category of capital everything that may be included either as land or labor. Doing so, there remain only things which are neither land nor labor, but which have resulted from the union of these two original factors of production. Nothing can be properly capital that does not consist of these — that is to say, nothing can be capital that is not wealth. — Progress & Poverty — Book I, Chapter 2: Wages and Capital: The Meaning of the Terms

THUS, a government bond is not capital, nor yet is it the representative of capital. The capital that was once received for it by the government has been consumed unproductively — blown away from the mouths of cannon, used up in war ships, expended in keeping men marching and drilling, killing and destroying. The bond cannot represent capital that has been destroyed. It does not represent capital at all. It is simply a solemn declaration that the government will, some time or other, take by taxation from the then existing stock of the people, so much wealth, which it will turn over to the holder of the bond; and that, in the meanwhile, it will, from time to time, take, in the same way, enough to make up to the holder the increase which so much capital as it some day promises to give him would yield him were it actually in his possession. The immense sums which are thus taken from the produce of every modern country to pay interest on public debts are not the earnings or increase of capital — are not really interest in the strict sense of the term, but are taxes levied on the produce of labor and capital, leaving so much less for wages and so much less for real interest. — Progress & Poverty — Book III, Chapter 4: The Laws of Distribution: Of Spurious Capital and of Profits Often Mistaken For Interest

CAPITAL, as we have seen, consists of wealth used for the procurement of more wealth, as distinguished from wealth used for the direct satisfaction of desire; or, as I think it may be defined, of wealth in the course of exchange.

Capital, therefore, increases the power of labor to produce wealth: (1) By enabling labor to apply itself in more effective ways, as by digging up clams with a spade instead of the hand, or moving a vessel by shoveling coal into a furnace, instead of tugging at an oar. (2) By enabling labor to avail itself of the reproductive forces of nature, as to obtain corn by sowing it, or animals by breeding them. (3) By permitting the division of labor, and thus, on the one hand, increasing the efficiency of the human factor of wealth, by the utilization of special capabilities, the acquisition of skill, and the reduction of waste; and, on the other, calling in the powers of the natural factor at their highest, by taking advantage of the diversities of soil, climate and situation, so as to obtain each particular species of wealth where nature is most favorable to its production.

Capital does not supply the materials which labor works up into wealth, as is erroneously taught; the materials of wealth are supplied by nature. But such materials partially worked up and in the course of exchange are capital. — Progress & Poverty — Book I, Chapter 5: Wages and Capital: The Real Functions of Capital

WHEN we speak of a community increasing in wealth we do not mean to say that there is more land, or that the natural powers of the land are greater, or that there are more people (for when we wish to express that idea we speak of increase of population) or that the debts or dues owing by some of these people to others of their number have increased; but we mean that there is an increase of certain tangible things, having an actual and not merely a relative value — such as buildings, cattle, tools, machinery, agricultural and mineral products, manufactured goods, ships, wagons, furniture and the like. . . . The common character of these things is that they consist of natural substances or products which have been adapted by human labor to human use or gratification, their value depending on the amount of labor which upon the average would be required to produce things of like kind.— Progress & Poverty — Book I, Chapter 2: Wages and Capital: The Meaning of the Terms

WEALTH is not the sole object of labor, for labor is also expended in ministering directly to desire; but it is the object and result of what we call productive labor — that is, labor which gives value to material things. Nothing which nature supplies to man without his labor is wealth, nor yet does the expenditure of labor result in wealth unless there is a tangible product which has and retains the power of ministering to desire. — Progress & Poverty — Book I, Chapter 2: Wages and Capital: The Meaning of the Terms

IT will be well for a moment to consider this idea of accumulated wealth. The truth is, that wealth can be accumulated but to a slight degree, and that communities really live, as the vast majority of individuals live, from hand to mouth. Wealth will not bear much accumulation; except in a few unimportant forms it will not keep. The matter of the universe, which, when worked up by labor into desirable forms, constitutes wealth, is constantly tending back to its original state. Some forms of wealth will last for a few hours, some for a few days, some for a few months, some for a few years; and there are very few forms of wealth that can be passed from one generation to another. Take wealth in some of its most useful and permanent forms — ships, houses, railways, machinery. Unless labor is constantly exerted in preserving and renewing them, they will almost immediately become useless. Stop labor in any community, and wealth would vanish almost as the jet of a fountain vanishes when the flow of water is shut off. Let labor again exert itself, and wealth will almost as immediately reappear. Accumulated wealth seems to play just about such a part in relation to the social organism as accumulated nutriment does to the physical organism. Some accumulated wealth is necessary, and to a certain extent it may be drawn upon in exigencies; but the wealth produced by past generations can no more account for the consumption of the present than the dinners he ate last year can supply a man with present strength. — Progress & Poverty — Book II, Chapter 4: Population and Subsistence: Disproof of the Malthusian Theory

IN the economic meaning of the term production, the transporter or exchanger, or anyone engaged in any subdivision of those functions, is as truly engaged in production as is the primary extractor or maker. A newspaper-carrier or the keeper of a news-stand would, for instance, in common speech be styled a distributor. But in economic terminology he is not a distributor of wealth, but a producer of wealth. Although his part in the process of producing the newspaper to the final receiver comes last, not first, he is as much a producer as the paper-maker or type-founder, the editor, or compositor, or press-man. For the object of production is the satisfaction of human desires, that is to say, it is consumption; and this object is not made capable of attainment, that is to say, production is not really complete, until wealth is brought to the place where it is to be consumed and put at the disposal of him whose desire it is to satisfy.  — The Science of Political Economy unabridged: Book III, Chapter 1, The Production of Wealth: The Meaning of Production • abridged: Part III, Chapter 1, The Production of Wealth: The Meaning of Production

PRODUCTION and distribution are not separate things, but two mentally distinguishable parts of one thing — the exertion of human labor in the satisfaction of human desire. Though materially distinguishable, they are as closely related as the two arms of the syphon. And as it is the outflow of water at the longer end of the syphon that is the cause of the inflow of water at the shorter end, so it is that distribution is really the cause of production, not production the cause of distribution. In the ordinary course, things are not distributed because they have been produced, but are produced in order that they may be distributed. Thus interference with the distribution of wealth is interference with the production of wealth, and shows its effect in lessened production. — The Science of Political Economy — unabridged Book IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution • abridged Part IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution

OUR inquiry into the laws of the distribution of wealth is not an inquiry into the municipal laws or human enactments which either here and now, or in any other time and place, prescribe or have prescribed how wealth shall be divided among men. With them we have no concern, unless it may be for purposes of illustration. What we have to seek are those laws of the distribution of wealth which belong to the natural order — laws which are a part of that system or arrangement which constitutes the social organism or body economic, as distinguished from the body politic or state, the Greater Leviathan which makes its appearance with civilization and develops with its advance. These natural laws are in all times and places the same, and though they may be crossed by human enactment, can never be annulled or swerved by it. It is more needful to call this to mind, because, in what have passed for systematic treatises on political economy, the fact that it is with natural laws, not human laws, that the science of political economy is concerned, has, in treating of the distribution of wealth, been utterly ignored, and even flatly denied. — The Science of Political Economy — unabridged: Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution • abridged: Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution

THE distinction between the laws of production and the laws of distribution is not, as is erroneously taught in the scholastic political economy, that the one set of laws are natural laws and the other human laws. Both sets of laws are laws of nature. The real distinction is that the natural laws of production are physical laws and the natural laws of distribution are moral laws. . . . The moment we turn from a consideration of the laws of the production of wealth to a consideration of the laws of the distribution of wealth, the idea of ought or duty becomes primary. All consideration of distribution involves the ethical principle, is necessarily a consideration of ought or duty — a consideration in which the idea of right or justice is from the very first involved. — The Science of Political Economy — unabridged: Book IV, Chapter 4, The Distribution of Wealth: The Real Difference Between Laws of Production and of Distribution • abridged: Part IV, Chapter 3: The Distribution of Wealth: Physical and Moral Laws

THE mere abolition of protection — the mere substitution of a revenue tariff for a protective tariff — is such a lame and timorous application of the free-trade principle that it is a misnomer to speak of it as free trade. A revenue tariff is only a somewhat milder restriction on trade than a protective tariff.
 
Free trade, in its true meaning, requires not merely the abolition of protection but the sweeping away of all tariffs — the abolition of all restrictions (save those imposed in the interests of public health or morals) on the bringing of things into a country or the carrying of things out of a country.

But free trade cannot logically stop with the abolition of custom-houses. It applies as well to domestic as to foreign trade, and in its true sense requires the abolition of all internal taxes that fall on buying, selling, transporting or exchanging, on the making of any transaction or the carrying on of any business, save of course where the motive of the tax is public safety, health or morals. Thus the adoption of true free trade involves the abolition of all indirect taxation of whatever kind, and the resort to direct taxation for all public revenues.

But this is not all. Trade, as we have seen, is a mode of production, and the freeing of trade is beneficial because it is a freeing of production. For the same reason, therefore, that we ought not to tax anyone for adding to the wealth of a country by bringing valuable things into it, we ought not to tax anyone for adding to the wealth of a country by producing within that country valuable things. Thus the principle of free trade requires that we should not merely abolish all indirect taxes, but that we should abolish as well all direct taxes on things that are the produce of labor; that we should, in short, give full play to the natural stimulus to production — the possession and enjoyment of the things produced — by imposing no tax whatever upon the production, accumulation or possession of wealth (the things produced by labor), leaving everyone free to make exchange, give, spend or bequeath. — Protection or Free Trade — Chapter 26: True Free Trade - econlib -|- abridged 

... go to "Gems from George"

Weld Carter: An Introduction to Henry George

In addition, George differentiated sharply between land itself and the products — or wealth, as he termed them — which labor made from the land. "In producing wealth, labor, with the aid of natural forces, but works up, into the forms desired, pre-existing matter, and, to produce wealth, must, therefore, have access to this matter and to these forces — that is to say, to land. The land is the source of all wealth. It is the mine from which must be drawn the ore that labor fashions. It is the substance to which labor gives the form."

George saw, as between land and products, certain elementary differences. "In every essential, land differs from those things which... [are] the product of human labor. ...It is the creation of God; they are produced by man. It is fixed in quantity; they may be increased illimitably. It exists, though generations come and go; they in a little while decay and pass again into the elements."... read the whole article

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894)

1. THE SOURCE OF WEALTH

The first demand upon us is to make sure that we know the source of the things that satisfy want.43 But it is quite unnecessary to tediously specify these and trace them to their origin in detail. In searching for the source of one we shall discover the source of all.

43. For it is ability or inability to satisfy his wants that determines whether or not a man is poor. He who has the power to procure what he wants, as he wants it, and in satisfactory quality and quantity, is not poor. No matter how he gets the power, provided he keeps out of the penitentiary, he is accounted rich.

As a common object of this kind, the production of which is a familiar process, bread is probably the best example for our purpose. Let us, then, carefully trace bread to its source. To make the results of our work clear to the eye as well as to the ear we will construct a chart as we proceed. The chart should begin with a classification of Bread with reference to Man, for it is as an object for satisfying the wants of man that we consider bread at all. Is Bread a part of the personality of Man? or is it an object external to him? That is our first question. The answer is so obvious that a child could make no mistake. Bread is external to Man. It should, therefore, be classified with what for brevity we will call "External Objects." It is also a product having certain constituents.

Let us so arrange the chart as to indicate these facts and also to provide a place for particularizing the constituents of bread as we ascertain them. Thus: [chart]

Now let the necessary constituents of bread be inserted. Any housewife, any kitchen girl, knows what they are as well as does the most expert baker or learned chemist. They are named in the place reserved for them in the chart: [chart]

In respect of Man the constituents of Bread all fall into two general classes: Man, and objects that are external to him — or, briefly, External Objects. Thus: [chart]

While all these External Objects are alike in the one particular that they are external to Man, some of them may differ from others in respects which, for clear thinking, must be distinguished. Compare the first two External Objects — the lot of land and the oven — and a radical difference at once appears. The lot of land is a natural object. The oven is an artificial object. The lot exists independently of man's art; the oven can have no existence whatever as an oven but for man's art. 44 And when the remaining External Objects are considered the same difference appears. Objects are considered the same difference appears. All of them, Bread included, differ from the lot of land precisely as the oven does; they are artificial.45 Let us note this difference upon our chart:

44. This difference is frequently ignored, even by political economists; but it is plain to any intelligent mind that no reasoning can be trusted which does not distinguish a difference so radical.

...

Wealth is produced solely by the application of Labor to Land.51

50. It may at first seem like a great waste of time and space to have gone through this long analysis for no other purpose at last than to demonstrate the self-evident fact that land and labor are the sole original factors in the production of Wealth. But it will have been no waste if it enables the reader to firmly grasp the fact. Nothing is more obvious, to be sure. Nothing is more readily assented to. Yet by layman and college professor and economic author alike, this simple truth is cast adrift at the very threshold of argument or investigation, with results akin to what might be expected in physics if after recognizing the law of gravitation its effects should be completely ignored.

51. There is ample authority among economic writers for this conclusion.

Professor Ely enumerates Nature, Labor, and Capital as the factors of production, but he describes Capital as a combination of Nature and Labor — Ely's Introduction, part ii, ch. iii.

Say describes industry as " nothing more or less than human employment of natural agents." — Say's Trea., book i, ch. ii.

And though John Stuart Mill and numerous others speak of Land, Labor, and Capital as the three factors of production, as does Professor Jevons, most of them, like Jevons, recognize the fact, though in their reasoning they often fail to profit by it, that Capital is not a primary but a secondary requisite. See Jevons's Pol. Ec., secs. 16, 19.

Henry George says: "Land, labor, and capital are the factors of production. The term land includes all natural opportunities or forces; the term labor, all human exertion; and the term capital, all wealth used to produce more wealth. . . Capital is not a necessary factor in production. Labor exerted upon land can produce wealth without the aid of capital, and in the necessary genesis of things must so produce wealth before capital can exist." — Progress and Poverty, book iii, ch. i.

Also : "The complexities of production in the civilized state, in which so great a part is borne by exchange, and so much labor is bestowed upon materials after they have been separated from the land, though they may to the unthinking disguise, do not alter the fact that all production is still the union of the two factors, land and labor."— Id., ch. viii.

This is the final analysis. In the union of Labor, which includes all human effort,52 with Land, which includes the whole material universe outside of man,53 we discover the ultimate source of Wealth, which includes all the material things that satisfy want.54 And that is the first great truth upon which the single tax philosophy is built.

52. The term labor includes all human exertion in the production of wealth." — Progress and Poverty, book i, ch. ii.

53. "The term land necessarily includes, not merely the surface of the earth as distinguished from the water and the air, but the whole material universe outside of man himself, for it is only by having access to land, from which his very body is drawn, that man can come in contact with or use nature." — Progress and Poverty, book i, ch. ii.

54. "As commonly used the word 'wealth ' is applied to anything having exchange value. But ... wealth, as alone the term can be used in political economy, consists of natural products that have been secured, moved, combined, separated, or in other ways modified by human exertion, so as to fit them for the gratification of human desires." — Progress and Poverty, book i, ch ii. ...

69. Demand for consumption is satisfied not from hoards of accumulated wealth, but from the stream of current production. Broadly speaking there can be no accumulation of wealth in the sense of saving up wealth from generation to generation. Imagine a man's satisfying his demand for eggs from the accumulated stores of his ancestors! Yet eggs do not differ in this respect from other forms of wealth, except that some other forms will keep a little longer, and some not so long.

The notion that a saving instinct must be aroused before the great and more lasting forms of wealth can be brought forth is a mistake. Houses and locomotives, for example, are built not because of any desire to accumulate wealth, but because we need houses to live in and locomotives to transport us and our goods. It is not the saving, but the serving,, instinct that induces the production of these things; the same instinct that induces the production of a loaf of bread.

Artificial things do not save. No sooner are the processes of production from land complete than the products are on their way back to the land. If man does not return them by means of consumption, then through decay they return themselves. Mankind as a whole lives literally from hand to mouth. What is demanded for consumption in the present must be produced by the labor of the present. From current production, and from that alone, can current consumption be satisfied.

"Accumulated wealth" is, in fact, not wealth at all in any great degree. It is merely titles to wealth yet to be produced. A share in a mining company, for example, is but a certificate that the owner is legally entitled to a proportion of the wealth to be produced in the future from a certain mine.

Titles to future wealth may be both morally and legally valid. This is so when they represent past labor or its products loaned in free contract for future labor or its products; for example, a contract for the delivery of goods of any kind today to be paid for next week. or next month, or next year, or in ten years, or later.

They may be legally but not morally valid. This is so when they represent the product of a franchise (whether paid for in labor or not) to exact tribute from future labor; for example, a franchise to confiscate a man's labor through ownership of his body, as in slavery, or a franchise to confiscate the products of labor in general through ownership of land.

Or they may be both legally and morally invalid, as when they are obtained by illegal force or fraud from the rightful owner.... read the book

Alanna Hartzok: In the History of Thought: Henry George's "Single Tax"

We say that that is stupid; that we ought not by our taxes to repress the production of wealth; that when a farmer reclaims a strip of the desert and turns it into an orchard and a vineyard, or on the prairie produces crops and feeds fine cattle, that, so far from being taxed and fined for having done these things, we ought to be glad that he has done it; that we ought to welcome all energy; that no man can produce wealth for himself without augmenting the general stock, without making the whole country richer. We impose some taxes for the purpose of getting rid of things, for the purpose of having fewer of the things that we tax. In most of our counties and States when dogs become too numerous, there is imposed a dog tax to get rid of dogs. Well, we impose a dog tax to get rid of dogs, and why should we impose a house tax unless we want to get rid of houses? Why should we impose a farm tax unless we want fewer farms? Why should we tax any man for having exerted industry or energy in the production of wealth? ...

What do we do when we tax a building? When a man puts up a building by his own exertion, or it comes to him through the transfer of the right that others have to their exertion, down comes the community and says, virtually, you must give us a portion of that building. For where a man honestly earns and accumulates wealth, down come the tax-gatherers and demand every year a portion of those earnings. Now, is it not as much an impairment of the right of property to take a lamb as to take a sheep? To take 5% or 20%, as to take 100%? We should leave the whole of the value produced by individual exertion to the individual. We should respect the rights of property not to any limited extent, but fully. We should leave to him who produces wealth, to him to whom the title of the producer passed, all that wealth. No matter what be its form, it belongs to the individual. We should take for the uses of the community the value of land for the same reason. It belongs to the community because the growth of the community produces it.  Read the entire article

Marjorie Carter: My Introduction to Henry George

Henry George:  The Land Question (1881)

The galleys that carried Caesar to Britain, the accoutrements of his legionaries, the baggage that they carried, the arms that they bore, the buildings that they erected; the scythed chariots of the ancient Britons, the horses that drew them, their wicker boats and wattled houses–where are they now? But the land for which Roman and Briton fought, there it is still. That British soil is yet as fresh and as new as it was in the days of the Romans. Generation after generation has lived on it since, and generation after generation will live on it yet. Now, here is a very great difference. The right to possess and to pass on the ownership of things that in their nature decay and soon cease to be is a very different thing from the right to possess and to pass on the ownership of that which does not decay, but from which each successive generation must live.

To show how this difference between land and such other species of property as are properly styled wealth bears upon the argument for the vested rights of landholders, let me illustrate again.

Captain Kidd was a pirate. He made a business of sailing the seas, capturing merchantmen, making their crews walk the plank, and appropriating their cargoes. In this way he accumulated much wealth, which he is thought to have buried. But let us suppose, for the sake of the illustration, that he did not bury his wealth, but left it to his legal heirs, and they to their heirs and so on, until at the present day this wealth or a part of it has come to a great-great-grandson of Captain Kidd. Now, let us suppose that some one – say a great-great-grandson of one of the shipmasters whom Captain Kidd plundered, makes complaint, and says: "This man's great-great-grandfather plundered my great-great-grandfather of certain things or certain sums, which have been transmitted to him, whereas but for this wrongful act they would have been transmitted to me; therefore, I demand that he be made to restore them." What would society answer?

Society, speaking by its proper tribunals, and in accordance with principles recognized among all civilized nations, would say: "We cannot entertain such a demand. It may be true that Mr. Kidd's great-great-grandfather robbed your great-great-grandfather, and that as the result of this wrong he has got things that otherwise might have come to you. But we cannot inquire into occurrences that happened so long ago. Each generation has enough to do to attend to its own affairs. If we go to righting the wrongs and reopening the controversies of our great-great-grandfathers, there will be endless disputes and pretexts for dispute. What you say may be true, but somewhere we must draw the line, and have an end to strife. Though this man's great-great-grandfather may have robbed your great-great-grandfather, he has not robbed you. He came into possession of these things peacefully, and has held them peacefully, and we must take this peaceful possession, when it has been continued for a certain time, as absolute evidence of just title; for, were we not to do that, there would be no end to dispute and no secure possession of anything."

Now, it is this common-sense principle that is expressed in the statute of limitations – in the doctrine of vested rights. This is the reason why it is held – and as to most things held justly   – that peaceable possession for a certain time cures all defects of title.

But let us pursue the illustration a little further:

Let us suppose that Captain Kidd, having established a large and profitable piratical business, left it to his son, and he to his son, and so on, until the great-great-grandson, who now pursues it, has come to consider it the most natural thing in the world that his ships should roam the sea, capturing peaceful merchantmen, making their crews walk the plank, and bringing home to him much plunder, whereby he is enabled, though he does no work at all, to live in very great luxury, and look down with contempt upon people who have to work. But at last, let us suppose, the merchants get tired of having their ships sunk and their goods taken, and sailors get tired of trembling for their lives every time a sail lifts above the horizon, and they demand of society that piracy be stopped.

Now, what should society say if Mr. Kidd got indignant, appealed to the doctrine of vested rights, and asserted that society was bound to prevent any interference with the business that he had inherited, and that, if it wanted him to stop, it must buy him out, paying him all that his business was worth–that is to say, at least as much as he could make in twenty years' successful pirating, so that if he stopped pirating he could still continue to live in luxury off of the profits of the merchants and the earnings of the sailors?

What ought society to say to such a claim as this? There will be but one answer. We will all say that society should tell Mr. Kidd that his was a business to which the statute of limitations and the doctrine of vested rights did not apply; that because his father, and his grandfather, and his great- and great-great-grandfather pursued the business of capturing ships and making their crews walk the plank, was no reason why lie should be permitted to pursue it. Society, we will all agree, ought to say he would have to stop piracy and stop it at once, and that without getting a cent for stopping.

Or supposing it had happened that Mr. Kidd had sold out his piratical business to Smith, Jones, or Robinson, we will all agree that society ought to say that their purchase of the business gave them no greater right than Mr. Kidd had.

We will all agree that that is what society ought to say. Observe, I do not ask what society would say.

For, ridiculous and preposterous as it may appear, I am satisfied that, under the circumstances I have supposed, society would not for a long time say what we have agreed it ought to say. Not only would all the Kidds loudly claim that to make them give up their business without full recompense would be a wicked interference with vested rights, but the justice of this claim would at first be assumed as a matter of course by all or nearly all the influential classes–the great lawyers, the able journalists, the writers for the magazines, the eloquent clergymen, and the principal professors in the principal universities. Nay, even the merchants and sailors, when they first began to complain, would be so tyrannized and browbeaten by this public opinion that they would hardly think of more than of buying out the Kidds, and, wherever here and there any one dared to raise his voice in favor of stopping piracy at once and without compensation, he would only do so under penalty of being stigmatized as a reckless disturber and wicked foe of social order.

If any one denies this, if any one says mankind are not such fools, then I appeal to universal history to bear me witness. I appeal to the facts of to-day.

Show me a wrong, no matter how monstrous, that ever yet, among any people, became ingrafted in the social system, and I will prove to you the truth of what I say. ...

What is the slave-trade but piracy of the worst kind? Yet it is not long since the slave-trade was looked upon as a perfectly respectable business, affording as legitimate an opening for the investment of capital and the display of enterprise as any other. The proposition to prohibit it was first looked upon as ridiculous, then as fanatical, then as wicked. It was only slowly and by hard fighting that the truth in regard to it gained ground. Does not our very Constitution bear witness to what I say? Does not the fundamental law of the nation, adopted twelve years after the enunciation of the Declaration of Independence, declare that for twenty years the slave-trade shall not be prohibited nor restricted? Such dominion had the idea of vested interests over the minds of those who had already proclaimed the inalienable right of man to life, liberty, and the pursuit of happiness! ... read the whole article