UNIVERSITY OF CALIFORNIA
AT LOS ANGELES
GIFT OF CAPT. AND MRS.
PAUL MCBRIDE PERIGORD
&.i)o ol.Q. S<Ji
*_A_* - ^ w
, tiRSlTY of CALIFORNIA*
AT
LOS ANGELES
LIBRARY
THE
Coming Land Policy
WILLIAM THUM
The Antithesis of the Single Tax Policy
Supplement to
UNTAXING THE CONSUMER
1920
WILLIAM THUM
Publisher
Pasadena, California
Press of Pasadena Star-News
144352
I . ' "
. .
i
Copyright, 1920, J
By William Thum. *>
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CONTENTS
PACE
Introduction i
Foreword . . . 1
Need of An Able National Land Commission . 1
Reasonable Socialization 3
Must Stop Land Speculation 4
First Step (Rural Colonization) 6
Second Step, Part A. (Maximum Legal Selling
Price Beyond Which the Public Cannot Le-
gally Go) 6
Second Step, Part B. (Maximum Legal Selling
Price in Transactions Between Private In-
terests) 17
Five Checks to Speculation 20
Third Step (Unlimited Right to Condemn Pri-
vate Land), How to Solve the Land Problem
in Cities -27
Fourth Step (Minimum Use of Land) . . 28
Fifth Step (Introduction of Tax on Individual
Incomes Derived from Settlement Lands) . 29
Sixth Step (Fixing Maximum Size of Tax-
free Parcels of Land and Amount of Taxes
on Excess Holdings) 32
Seventh Step (Price Regulation of Essential
Agricultural Products) 34
Eighth Step (Eliminating the Items of Raw
Land and General Public Improvements from
the Maximum Legal Selling Price) ... 35
Ninth Step (Placing All Agricultural Land Un-
der the Farm Settlement Plan) .... 37
CONTENTS Cont.
PAGE
The Most Important Step (A Land Problem
Commission) 38
Contemporary Steps (Obtaining Public Control
Over Our Other Natural Resources) ... 39
Time Table Condensed 43
The Possibility of Carrying Out the Land Policy 48
Appendix One (The Writer's Qualification) . . 50
Appendix Two (Equalizing Economic Oppor-
tunity in Agriculture) 54
Appendix Three (The Department of Agricul-
ture's Stand on Cost Keeping for Farmers) . 59
THE COMING LAND
POLICY
SUPPLEMENT TO
UNTAXING THE CONSUMER
INTRODUCTION
This summer I intended to revise my book "Un-
taxing the Consumer", and so informed my corre-
spondents, as it needs improvement in many places.
For the present reader who did not see the book
I quote from its introductory pages with slight
modifications, and suggest that the book be read in
full in connection with this discussion.
"Although this book deals largely with the
untaxing of the consumer, in addition to that
its first two chapters treat the land question
in its relation to prices of commodities. The
purpose is really to ask questions and not, as
might seem, to offer convictions or facts; also
to show advocates of various tax systems the
nature of the numerous thoughts and questions
that are likely to arise when citizens are pon-
dering how to vote on Single Tax and other tax
laws. Some of these questions are old and
have been discussed many times, while others
are new and have as yet received little atten-
tion, though they bear on the old and make it
necessary to seek new answers. The remaining
chapters show how we can eliminate the al-
ways troublesome tax problem from the last
great natural resource still remaining in pos-
session of the public. * * * * The tax
question, coupled with inseparable economic
questions, creates a problem so deep and com-
plicated that the best amateurs soon become
lost in a quest for its solution. To solve the
problem by nation-wide experimentation form-
ii INTRODUCTION
ulated by men of insufficient experience would
take hundreds of years, and would do avoid-
able harm in the meantime to the American
public. Some way ought to be found to ap-
point a commission of life-time experts on
taxation and economics, composed of people
who possess the broadest possible social train-
ing and experience and who can be influenced
by nothing except facts as they see them after
due study. It should include men who, in the
field of research, measure up to the reputation
of Professors Richard T. Ely and Edward Als-
worth Ross of Wisconsin, Thomas S. Adams of
Yale, R. A. Seligman of Columbia, 0. M. W.
Sprague of Harvard; also men who are ac-
knowledged leaders in business management
and labor. Their task should be to formulate
in detail a tax plan and work out a revision of
such part of the social system as may be im-
perative in making fair taxation possible, and,
what is of equal importance, the commission
should devise a thorough scheme for fully in-
forming the public regarding this plan and
for putting it into practice.
"Why do Congress and our State Law-mak-
ers leave this vital problem to be bungled over
by self-appointed amateurs, like the writer
of the present book, and others? A develop-
ment of the answer to this question would re-
veal why, as a general thing, our better
planned progressive economic and social moves,
usually only of the most limited extent, how-
ever, are inaugurated after amateurish efforts
of self-appointed economists and sociologists
INTRODUCTION iii
become a serious menace to what little orderly
development there is in problems of this kind."
Instead of rewriting "Untaxing the Consumer"
this summer, I decided to spend the time in pre-
paring this supplement, giving a somewhat specific
outline of what I believe may be the coming land
policy. The dates that I have arbitrarily given for
the inauguration of the various steps of the coming
land policy are premature, unless Business itself
takes hold of the land problem with a clear under-
standing of the same and a high public spirit. My
intention is to write a second supplement next
year as a justification of the land policy de-
scribed in the present supplement. I plan still later
to rewrite both supplements and the original book,
adding new material, all to be bound in one cover.
(See Appendix One, page 50.)
In spite of the work required to develop and
administer the land policy here described and the
new tax policy that must eventually become a part
of it, the adoption of this scheme, which is the an-
tithesis of the Single Tax policy of Henry George,
will present far less difficulty than the development
and application of Single Tax. What is of com-
manding importance in this connection is that the
coming, or free, land policy is in harmony with the
most logical and inevitable line of development in
all other branches of social growth and will, there-
fore, be a co-operative rather than a disturbing ele-
ment in social advancement. The elimination of
any important disturbing element by using a little
more reason and a little less trying, costly experi-
ment is a matter of the greatest importance to pub-
lic welfare. WILLIAM THUM.
Pasadena, California, October 1, 1919.
THE COMING LAND POLICY
Foreword. The coming Land Policy is not a
matter of fancy. It is here in its incipient stages
and is bound to reach its maturity in the course of
lime, regardless of the intervention of disturbing
interests and experiments. However complicated or
difficult the plan described in what follows, as
practical knowledge in regard to it accumulates, it
will appear simpler and finally be regarded as an
ordinary feature of a complex social scheme. We
doubtless have men who can frame a plan that will
be highly serviceable at once, although it will take
years to perfect it. And not only will the applica-
tion of the policy become easier with experience;
but, as soon as it takes on an orderly, fairly ad-
vanced form, it will so react ori the other features
and policies of the great social scheme as to im-
prove general social relations and conditions al-
most beyond imagination. To bear with a few
years of increased difficulty or complexity in the
public administration of our greatest resource, land,
in order to gain hundreds of years of a higher so-
cial life is a profitable undertaking.
Need of an Able National Land Commission.
To carry out the suggested plan would do less
violence to our social organism than if we followed
our usual method of meeting questions of this
sort, yet it would result in an earlier and greater
good to society at large. Our present method, as
is well known, consists of treating isolated symp-
1
2 THE COMING LAND POLICY
toms, after conditions have become dangerous or
unbearable* with limited palliative measures. It is
true, we often start boldly to correct some general,
deep-seated social ill by sweeping, superficial ex-
periments; but the net result corresponds with the
means employed. Although it is not possible that
any general land policy will ever be suggested in
which errors will not appear that must be soon
corrected, if prepared with honest intent by the
most highly qualified of our students and workers
in economic fields, the scheme devised by them
would be invaluable in fact, indispensable in
profitably carrying out the desired reform. This
raises the question, why do they not do it? The
expenditure of both time and money to accomplish
this properly is too great for trained economists
to bear alone. It is, therefore, necessary that the
public be awakened to the necessity for a correct
land policy, that the required funds may be made
available and that a commission or commissions,
made up of capable men, shall be demanded by
public opinion.
A Serious Obstacle to Agricultural Business.
Hardly anything could demonstrate more forc-
ibly than an experience of Dr. William J. Spillman,
in the United States Department of Agriculture, the
almost insurmountable opposition that our pro-
fessional men must meet in endeavors on their part
to introduce a reform of real significance. As
chief of the Office of Farm Management in this
Department he endeavored to devise a thorough,
practical system of cost-keeping for the American
farmer. Now, farming done in the interest of the
agriculturist and the consumer, and not largely in
the interest of intermediaries urgently demands
THE COMING LAND POLICY 3
the application of an accurate and practical system
of accounting and cost-keeping. The Agricultural
Department , in contrast with its exceptional effi-
ciency in most directions, has been and still is an
obstacle in the matter of cost-keeping of farm pro-
duction. But, accounting and cost-keeping are
the very foundation of management in every kind
of business as much so in farming as in the larg-
est industrial enterprises. In fact, cost-keeping is
one of the most important features in the first
step of the new land policy, especially as it ap-
plies to farms. It is significant that, after Dr.
Spillman's removal from the Department, this De-
partment deliberately abandoned the development
of a system of cost-keeping for farmers. The
Doctor's own statement in Appendix Three, on page
59, reveals the blind, antagonistic attitude of
certain large financial and industrial interests to-
wards enlightening the farmer concerning methods
for determining the cost of production. Farmers'
organizations might well consider employing Dr.
Spillman, or some other qualified man, to carry
out the work that he was prevented from complet-
ing.
Reasonable Socialization.
The land policy outlined in this chapter, al-
though not based on an intensive study of the sub-
ject, but on practical experience, sets forth some of
the principal points that must be considered in
framing any land policy. It also is offered to pre-
sent the idea of establishing social plans with time
limits conservatively fixed for their successive
stages, thus furnishing a clear goal to work for
and a better basis for sustaining hope than is now
in vogue.
4 THE COMING LAND POLICY
To enter upon all the calculations and to keep
all the records required to carry out what follows
will seem a very large task to those unfamiliar
with such business methods. But, after this public
work is once standardized, it will prove relatively
simple. The business experience accruing to the
general public through working and carrying out
the plan will be a great, if not vital, aid in properly
socializing our country in its more common eco-
nomic phases or activities, leaving the higher hu-
man activities for individual undertaking and thus
permitting the development of a superior type of
individuality.
MUST STOP SPECULATION IN LAND
State Land Settlement Scheme.
The State Land Settlement plan of California,
together with affiliated State activities, if given a
fair trial, will doubtless accomplish most of the
objects defined on pages 62, 63 and 64, in the first
edition of "Untaxing the Consumer", and will
finally settle our perplexing land question as far
as it relates to agriculture; provided speculation
in the land coming under this plan is brought to
an end relatively soon and methods are adopted
to relieve the consumer from paying indirectly or
otherwise any and all land taxes. (See Appendix
Two, page 54).
By the terms of the California State Land Set-
tlement law of 1917 the State purchases and sub-
divides land suitable for farm communities and
develops the tract with roads, an irrigating system,
model homes, etc. It then sells farms to settlers at
cost for a reasonably moderate cash payment down
and small annual installments, charging five per
THE COMING LAND POLICY 5
cent interest on deferred payments. It also pro-
vides these settlers with such Farm Advisers as may
he necessary.
Possibility of Failure.
But, until the taxes on farm lands (as well as on
improvements) are eliminated, the consumer will
always have to pay them, however indirectly, and,
unless a minimum use of the land be exacted by
the State as a condition for continued ownership,
and proper rules be established for determining its
maximum allowable selling price, as well as the
maximum allowable rent based on such price, spec-
ulation cannot be reduced to the minimum and the
work of the State Land Settlement Board will never
result in the good it seeks to inaugurate. A similar
statement applies equally to urban land.
Working Out the Problem.
What follows constitutes a tentative plan for
working out the major part of our land problem
within twenty years or thereabouts, and for its prac-
tically complete solution in the next sixty years.
Some scheme similar to this will probably have to
be followed before our land question can be settled
finally and satisfactorily.
6 THE COMING LAND POLICY
1919 and Later.
THE FIRST STEP.
(Rural Colonization).
The State of California through its Land Settle-
ment Board is buying, platting and improving ag-
ricultural land and selling it to actual settlers.
The Board and other governmental agencies are
disseminating agricultural knowledge and are in
many other ways improving rural conditions, to
insure the success of colonization. This will prob-
ably be continued indefinitely.
As soon as the Board has demonstrated in actual
practice that it has developed a thoroughly suc-
cessful method as far as colonization goes, the
"second step" will be in order.
Present indications are that unqualified success
for the first step will be proved by the end of the
year 1919, and will be universally recognized
within a year.
1921
THE SECOND STEP.
PART A.
(Maximum Legal Selling Price beyond Which the
Public Cannot Legally Go.)
Part A: This step should be taken not later
than 1921 and should consist of devising in detail
a method for determining and putting into effect
the maximum legal selling price of any State Set-
tlement Farm, in cases of purchase or condemna-
tion by the Public. Unless the owner be willing to
sell at a lower figure, this price will equal the com-
bined money values of:
THE COMING LAND POLICY 7
a. Raw or bare land, including appurtenant
general and special public improvements
paid for prior to purchase of the land by
the State.
b. Appurtenant general public improvements
paid for through taxes after the original
purchase of the raw land by the State.
c. Appurtenant special public improvements
paid for through assessments or other-
wise, subsequent to the original purchase
of the raw land by the State.
d. Private improvements, including growing
crops.
e. Initial overhead cost.
It must not cover the value of:
a. Special features.
b. Site value (economic advantage resulting
from location).
EXPLANATION OF EACH COMPONENT PART,
OR SUBDIVISION, OF MAXIMUM LEGAL
SELLING PRICE OF SETTLEMENT
FARMS IN CASES OF ACQUISI-
TION OF SUCH FARMS
BY THE PUBLIC
Raw Land.
For the purposes of this discussion, when Set-
tlement Farms are sold by private owners the value
of land in its raw or nearly raw condition is based
on the original purchase price paid by the State
when procuring the tract for subdivision, it being
understood that the State will first have sold the
Settlement Farm to the farmer for an amount which
includes the raw land practically at the said pur-
chase price, plus expenses of handling.
8 THE COMING LAND POLICY
Haphazard determination of prices. Under our
present social system the selling prices of a vast
majority of things, including land, that are objects
of sale on the market are determined by a crude,
unscientific and haphazard method.
Especially in cases of sales between private in-
terests the commercial selling value of a farm,
whether it be a highlv improved five-acre lot or a
slightly improved hundred-thousand-acre ranch, is
based on, or rather influenced by, many conditions,
such as (a) directly appurtenant public improve-
ments; (b) a certain portion of indirectly appur-
tenant public improvements; (c) present worth of
private improvements belonging to the farm; (d)
net benefits accruing to the farm from public and
private-owned public utilities; (e) value of other
benefits accruing to the farm from its being an in-
tegral part of a community, or social organization,
to the development of which it may or may not
have contributed a reasonable share through taxa-
tion or otherwise; (f) estimated prospective net
income, whether this be expected from the business
or rent or increase in selling price of the farm, or
all three; (g) special features; (h) a biased state
of mind both of purchaser and seller at the time
of sale (the latter often endeavors to influence a
buyer in believing the property worth much more
than its real value, and the buyer, purposely or un-
intentionally, just as often underestimates its value) ;
(i) financial needs of the seller; (j) financial re-
sources of the buyer: (k) the method and rate of
taxation; (1) demand.
The result (expressed in terms of money) of the
above mentioned influences acting in combination,
except the value of private improvements, is super-
ficially regarded by many Single Taxers as the site
THE COMING LAND POLICY 9
value. In a manner most people still regard the
selling price thus evolved as the equitable price of
land. Fortunately all of these enumerated influ-
ences affecting the commercial price of farm land
have had up to the time the State buys it a rela-
tively weak effect on the price of the class of land
the State Land Settlement Board must acquire for
colonization purposes, and these influences are
bound to remain of slight effect and even to become
weaker as our new land policy develops. But it is
to be remembered that the price of item "Raw or
Bare Land", up to the date of purchase by the
State, is reached or developed under such influences
as those enumerated. In fact, the combined effect
of these influences practically establishes the price
that the State must pay and, as already explained,
what the State thus pays is essentially the amount
regarded as the value of raw land in the present dis-
cussion. This statement is made on the assumption
that the State will not. acquire other than undevel-
oped or lightly developed land for subdivision
purposes. In this connection the thing of vital im-
portance is that, after purchase by the State, no
addition shall be made to the price of the raw land
item of any Settlement Farm, except for the cost to
the State of handling it.
Scientific price of farm land. Truly there can
be no clearly defined relationship between the
price and the intrinsic value of farm land at the
present time. But, before many years, it will be
generally apparent that in a society having highly
specialized production prices of all necessities and
fundamentals especially of land must be based
on the most scientific principles. As a matter of
fact prices should be a thing of first concern and
consideration.
10 THE COMING LAND POLICY
As explained under the eighth step of this article,
the item Raw Land should in the course of time
be altogether eliminated from figuring as an item
of value in the maximum legal price of Settlement
Farms.
General Public Improvements.
General Public Improvements, for present pur-
poses, are improvements paid for out of general
taxes; that is to say, out of taxes levied in com-
mon against all the individual private properties
in any political subdivision, in amounts irrespec-
tive of the particular benefits that may accrue to
such properties individually from these improve-
ments. It would not matter whether these general
improvements belonged to the State, as, for in-
stance, the State capitol building, the State uni-
versity, or State harbors; or to the county, as the
County Court House, County Hospital, or county
bridges; or to the district, as public schools, roads
or storm drains, etc.
The amount included for general public improve-
ments in the maximum legal selling price of a
Settlement Farm should be the value of the pro-
portional part of this kind of public improvements
that apply to the piece of land under appraisement,
meaning such proportion of the improvements as was
paid for out of general taxes (as distinguished from
special assessments) levied on the farm subsequent
to the original purchase of the raw land by the
State Board. Proper amounts for depreciation and
obsolescence of these improvements, up to the time
of determining their value (being the date of con-
demnation or repurchase of the farm by the State) ,
would have to be deducted. However, at some fu-
ture date call it 1930 when the method of taxa-
THE COMING LAND POLICY 11
tion will have become appreciably better, the cost
of any further improvements met through general
taxation should cease entering into the maximum
legal selling price of any Settlement Farm, and
that part of the price at the time covering general
public improvements should, as it were, be gradu-
ally liquidated by the State in the manner provided
for in Step Eight.
Special Public Improvements.
For present purposes we will consider as special
public improvements those paid through special
assessments levied only against properties particu-
larly benefited, each property being assessed rela-
tively for any definite improvement according to
the benefit it is believed to derive from that im-
provement. The amount included for special pub-
lic improvements in the maximum legal selling
price of any Settlement Farm should be the present
value of the proportion of such public improve-
ments as has been paid for through special assess-
ments levied against the farm in question. To this
should be added the present value of public im-
provements which are beneficial to the farm and
which have been constructed through private initia-
tive and paid for by voluntary contribution in be-
half of the farm. As in the case of general public
improvements, depreciation and obsolescence would
have to be deducted.
More Technical Divisions. To be very technical,
the original price per acre that the State Land Set-
tlement Board pays for large subdivision tracts
might logically be divided into three parts: one to
cover the raw land proper, one to cover the acre's
share of special public improvements paid for out
of special assessments on the land up to the time
12 THE COMING LAND POLICY
of its purchase by the State Board, and the third
to cover the acre ? s proportion or share of the gen-
eral public improvements paid through general
taxes up to that time. If this original purchase
price were thus divided, the amounts respectively
covering special and general public improvements
would naturally be added to and incorporated with
the corresponding amount accruing after purchase
of the land by the State. If this course were pur-
sued, the value of raw land would be somewhat less
than the amount arrived at above under the caption
"Raw Land", and the value of both special and gen-