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lumber or raw food, transport it to the great centers; en-
gage and constantly supervise labor to work up the raw
material into forms in which human beings can utilize it.
Then it is your duty as storekeepers to distribute these
goods.

Above all, whether manufacturer, transporter, or dis-
tributor, you must get orders to keep your plant con-
stantly going.

The life of a business man in the modern world, whether
manufacturer or distributor, is one of constant worry and
excitement.

Payrolls must be met, notes reduced, merchandise paid
for and the landlord satisfied.

When, after, and if you have met all these heavy burdens,
then, and only then, have you anything left for yourself.

In a rationally organized society, automobile manu-
facturers, builders, clothing manufacturers, sign painters
and all classes of workers, whether by head or hand, would
receive an attractive return for their services.

In our present state of disorder, very often you do not
only receive nothing, but you lose your capital, your hard
earnings of a lifetime. The difficulties I have just de-
scribed are not peculiar to your business alone, but are
true today of all business and, as I shall hereafter show,
they will become increasingly acute until we establish
economic order, instead of the economic disorder which
today prevails.

In 1926, the latest year for which the Income Tax Bureau
has tabulated figures, there were in the United States
500,000 business corporations, and over 200,000 lost money
that year. Two-thirds of all the profits made by the re-
maining 300,000 corporations in business were made by
one thousand corporations.

Among individuals, the situation is equally distressing.
Statistics show that over ninety per cent, of those engaged
in business with capital of $5000. or less, go into bank-
ruptcy within five years from the time they start.

Now, this lack of automobiles, buildings, clothing, food,
educated children, signs, etc. and etc. is not due to nig-
gardliness on the part of nature. On the contrary, where-
ever we look we see how generous she has been to man.

There is enough coal underground in Pennsylvania to
last for over two hundred years. Only last Saturday I
read in the New York Sun of copper deposits in Africa,
capable of supplying ten billion pounds annually. This



is more than three times the entire output of the world
today. One copper area is 52,000 square miles, in area
(more than the entire State of New York.)

In the bituminous coal industry, we are told that all
coal we now use can be mined by working three days a
week, three months a year.

In the shoe industry we make 750 million pairs of shoes
a year and consume only 358 million..

What then is the trouble?

Well, to understand the trouble, you must have a work-
ing knowledge of economics, which is the science that deals
with the production and distribution of wealth.

What is wealth?

Wealth is anything produced by labor. Wealth is
anything necessary to gratify human wants or needs. A
pair of shoes, a pound of potatoes, an automobile, a build-
ing, a sign, a book, any and all of these things are wealth.

Two things characterize wealth.

a. All wealth comes from the Earth.

b. All wealth is a product of human labor.

That sign you paint, if made of wood, was once a part of
a tree, the paint is a mixture of chemicals which have been
dug out of the earth, the bristles of the brush come from
off the back of a hog, which grazed on the ground.

Your milk comes from a cow who had to eat grass, your
bread from wheat grown in Minnesota, your woolen suit
from the back of a sheep which grazed on a Wyoming or
Australian plain. Every brick, piece of lumber, bit of
glass, Cadillac car, Stromberg Carlson in your home had
to be got out of mother earth.

Your home stands on the earth. You yourself are com-
posed of sixteen mineral elements that make up the dust
and when you die, you are lowered back into the earth
and again become part of the dust.

So you see, you are chained to the good ship earth and
you cannot get away from it, if you would.

Now, this wealth, which human beings need to gratify
their wants and needs, does not just grow out of the earth.
It takes human labor (which includes brains) to produce it.

We must plant seed to grow wheat; we must dig ore to
fashion steel; we must make nets and lines to catch fish;
we must cut down trees to make beds; we must spin cotton
to produce cloth; we must apply paint to make signs. In
short, labor applied to land, that is, labor applied to the
forces of nature, produces wealth. This is the elementary
definition of wealth.

Later as society becomes more complex, a portion of
wealth, instead of being consumed directly, is set aside to
aid in the production of still more wealth.

In a simple society, for example, seed is dropped into the
ground by hand; later someone invents a machine which
is able to plant ten or twenty or fifty acres where before
labor could plant only one.

This machine, however, is a product of labor. Every
part of it had to be fashioned out of material dug from the



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LAND AND FREEDOM



earth. Instead of the iron or wood or steel of which it is
composed having been utilized as such, they have been
assembled into a machine and are now used to aid in the
more efficient production of wealth.

In economics the machine is classified as capital. In
other words, that part of wealth which, instead of con-
suming, we set aside to aid in the production of more wealth,
we term capital.

This machine being a product of labor in time wears
out and must be replaced. We can make as many mach-
ines as we want, if only we have labor and access to
the earth out of which we get the raw material to make
the machine.

The owner of the machine (capital) can profit only as he
uses the machine. He can receive interest for the use of
his machine only as his machine makes production more
fruitful than it otherwise would be.

True capital is an offshoot or product of labor.

True capital therefore can never harm society.

It is dependent on labor for its origin and can profit only
as it is constructively used. This is the true definition of
capital.

I know, that to both socialists and communists and to
many Americans, capital is a monster. In Russia today
they are teaching the children to hate capital and capi-
talists. The fact is they don't know what capital really is.

As I have stated, capital is that portion of wealth,
which, instead of being consumed, has been set aside to
aid in the production of more wealth.

It is truly a child of labor and its interests are identical
with those of labor. It is subject to wear and tear as is
labor. It is capable of illimitable expansion as is labor;
(you can without difficulty make one thousand machines,
where you now have one).

The reason that socialists and communists hate capital
is that they confuse it with monopoly, particularly land
monopoly. Very often a capitalist puts a part of his
wealth in land speculation. He then becomes a monopo-
list or landlord.

It is only in his capacity as landlord that the capitalist
then is open to criticism.

The same is true of the laborer. If he has surplus capital
and instead of consuming it, puts it in land speculation,
he becomes to that extent a monopolist.

Summary We have seen:

1. That human beings have needs.

2. That it is the function of business to satisfy those
needs.

3. That it is the application of labor to land which pro-
duces the wealth that satisfies our needs.

4. That as society becomes more complex, a certain
part of wealth is set aside to assist in the production of
still more wealth and that this surplus wealth is termed
capital.



The product, which labor applied to land assisted by
capital produces, must be distributed equitably to those
who have produced it, to each according to the part he
played in the producing of wealth.

In a rational society, the laws of supply and demand will
regulate the return labor will receive as wages, as well as
the return capital will receive as interest.

The trouble is that before these two can share the pro-
duct they have produced, a third fellow comes along and
says:

"Halt, before you fellows get anything, you have to pay
me."

"What for?"

"Didn't you use my earth, didn't you use my land. I
take my share out of your wealth you have produced. I
would charge you for the wind, the sunshine, the rain
and the ocean, also, if only I could devise some method to
make these forces of nature private property as I have
succeeded in making the earth private property. I must
get rent before you fellows get anything."

(Rent as I am using it in its economic sense, is the price
paid for the use of land alone, not what is paid for the use
of buildings and improvements.)

These latter are capital. The products of labor and
capital are wealth and what we term rent for their use is
in reality interest.

You see, two dynamic factors, labor and capital, pro-
duce wealth when applied to the static factor, land or
nature.

The essential trouble in society is that while two factors
produce wealth (Labor and Capital), THREE (Land, Labor
and Capital) divide the wealth.

Isn't it clear, that the more any one of the three factors
gets, the less there is left for the other two to divide be-
tween themselves?

The landlord, and by landlord I refer to that class who
claim to own the land, is becoming increasingly more
able to appropriate in the shape of rent a greater amount
of wealth.

The reason for this is that the quantity of land is limited,
while the number of people who are pressing on the land
is constantly becoming greater and greater. Land thus
automatically and without any work on the part of the
landlord, becomes more and more valuable and thus land-
lords are able to extract more and more wealth without
rendering service.

In the United States today, the bare land is worth about
170 billion dollars. The landlords are taking as land rent,
between five and six per cent, annually on this amount.

That is, between 10 J^ billion and 11 billion a year.

This is the first charge on industry that must be paid
before labor and capital have one dollar to divide between
themselves.

For this 10 Yi to 11 billion dollars annually (and it is
constantly increasing) the landlords do not render one



LAND AND FREEDOM



79



dollar's service. All they do is to allow capital and labor
to use the land of the United States.

The consequence is that after the landlord has taken
his economic rent, labor and capital have not enough left
to divide between themselves. Labor now lacks purchas-
ing power. It is unable to purchase the products of other
labor. Likewise, capital is in difficulties. It is unable
to dispose of the products which it, in association with
labor, has produced.

A prolonged or general condition wherein labor is unable
to purchase the necessities of life, we call a panic.

THE REMEDY?

It is to establish an Economic Order wherein the land-
owning class shall be unable to acquire wealth without
rendering service.

It is to introduce an economic order which will recog-
nize the earth as belonging equally to all mankind. In
a word, the community shall recognize ground rent as
common property and shall take it in the form of taxation.

I ask you to study this proposition more thoroughly.

The Single Tax is no palliative for our present disorders.
It is a real cure, because it goes to the root of our trouble.

Let the Farmers

Themselves Answer

A LTHOTJGH extensive and definite statistics have not
^* been gathered, there seems reason to believe that the
removal of taxes from improvements and concentrating
them on bare-land values would mean a real relief to most
working farmers. This is especially the case now when
we have been going through a period of agricultural
depression. Why don't the farmers agitate, then, for
such taxation? Well, most of them like most other
people don't know what is meant by bare-land value.
The bare-land value of a farm is what would be left after
subtracting the value of buildings, of fruit trees, of fences,
installed drainage, growing crops, tools and machinery,
horses and cattle, and fertility also in so far as it has been
built up or maintained by fertilization and careful culti-
vation. A tax on the bare-land value of a farm would
therefore, be really, a tax on the "run down" value of
the land, after the value of all the so-called improvements
had been substracted. Where such "run-down" value
is zero, a tax on the bare-land value of the farm, no matter
how high the rate of taxation, would be a zero tax! If
American farmers realized this, would they not, like farm-
ers in Denmark, try to get the tax system changed in that
direction?

Another way of expressing the matter is to say that a
bare-land-value tax certainly should not take more than
the entire economic rent, and the entire economic rent,
in the case of many farms, is nothing. For what is eco-
nomic rent? Suppose a man owns a farm which he leases



to a tenant by the year. Before we know what is the
economic rent, we must substract from the yearly payment
made for the farm by the tenant, not only enough to cover
depreciation of improvements, but also a reasonable per-
centage of interest on the value of all improvements, in-
cluding fruit trees and including the fertility value built
up or maintained by fertilization, careful crop rotation,
etc. Only the surplus above such interest is economic
rent or the rent of the bare land. A tax on bare-land
value could not take any thing beyond such economic rent.
If it did, it would be a tax on improvements, too, and not
just a tax on bare-land value. A tenant farmer, of course,
doesn't receive any economic rent at all.

Let's look at the matter in still another way. If the
owner runs his own farm i.e. if he is a typical American
working farmer what really is his economic rent which
is all that would be taxed under a bare-land-value tax?
To find what is his economic rent, we must first substract
from his total income as pay for his work, all that he
would make as a tenant if someone else owned the farm.
Then, second, we must subtract from the remainder enough
to cover not only depreciation but also a reasonable per-
centage return as interest on the value of all improvements.
And in these improvements must be counted the fertility
value built up or maintained by wise cultivation and proper
fertilization. Only what is left after making these sub-
tractions, is ecomonic rent. A tax on this remainder would
be a tax on bare-land values. And a tax on bare-land
values alone could not take more than this remainder. A
tax taking more than this would not be a tax on bare-land
values alone but on improvements also. A bare-land
value tax is a tax on the run-down value of the land not
counting any improvements. It is important that those
who submit land-value taxation measures to the public
should see that their proposed changes clearly conform
to the principle of not penalizing the maintenance or im-
provement of fertility.

One would think that farmers and farm leaders would
devote themselves enthusiastically to putting into effect
such a scheme of taxation of bare-land values. For this
would be practically no tax at all on a considerable pro-
portion of farmers. Especially in this recent period of
agricultural depression when all sorts of nostrums have
been advocated to cure the evil, is it not amazing that more
farmers have not demanded scientific taxation which would
leave them all the wages of their labor and interest on all
their improvements, which would tax only their economic
rent, if and when they received any, and which would
never penalize them for improving their farm, by raising
their taxes? How great is their surplus above wages
for their work and interest on all their improvements?
How many farmers think they get any such surplus? How
much of a burden on them would be a bare-land-value
tax which would not take more than such a surplus? Is
it not one of the most amazing things of all the ages that



80



LAND AND FREEDOM



farm leaders don't look into this matter and "start some-
thing"? Do they think the farmers can not understand
it and will throw over the leaders who advocate it? Or
are they afraid of the opposition of land speculators?
Or are our so-called leaders, in practice, usually followers,
lest they lose their "leadership" by leading!

Such a tax system would be much fairer than the present
system. In taxing bare-land value we are taxing a value
which is due to the growth and development of the com-
munity rather than to individual labor and thrift. We
all know that the annual rent which an owner could charge
for a piece of bare land in Chicago's Loop district, to a pro-
spective builder desiring a long lease, is not a consequence
of the owner's saving the land or making the land, but is
the consequence of the growth of Chicago and surrounding
territory. An eighth of an acre at the corner of State and
Madison streets in Chicago has been expertly appraised
as worth, bare-land value, about two and a half million
dollars or at the rate of twenty million per acre. Where-
in is such an eighth of an acre better than an eighth of an
acre of farm land worth twelve or fifteen or twenty dollars?
Is the additional value of the land in Chicago due to the
owner's activities? Everyone who is honest with himself
knows it is not. It is the result of the growth and develop-
ment of the geographically tributary country, and of
Chicago as a port and a market center.

The same is true of the several billions of dollars of
land value in New York City. New York is situated on
a great natural harbor. If there were none to use it except
a few pioneer farmers on Manhattan Island trading some
of their surplus produce for the textiles and other goods
of Europe, landing space for a very few boats or perhaps
for a single one would be all that would be needed. But
as the rich interior of the North American continent was
settled, with its mines of iron ore, copper and coal, its prairie
and river-bottom wheat and corn lands, and its other
resources, more and more goods were produced to be poured
through the port of New York into foreign countries and
more and more foreign goods were wanted in exchange
which could most advantageously pass through the same
port. Today there is needed in New York City a large
population to meet the requirements of this great hinter-
land (as the Germans would say) or tributary country.

If all the present working population of New York were
whisked away overnight, the land of New York would still
have great value because of the need for millions of men
and women on it to serve the commerce of the back country.
A new population would move in and take up the important
work for the rest of us which can be done nowhere else so
well; and those who own that part of the earth's surface
would be in a position to make this new population pay
handsomely for the privilege of working for us and of living
where we need to have them live in order that this work
may be effectively done.

The demand of the tributary country for this service



makes a demand for the use of the land by the people who
must live and work there to render the service. Incident-
ally, too, it makes a tremendous demand and correspond-
ingly high rents and values for the use of especially well-
situated lots for the location of department stores, lunch
rooms, banks, lawyer's offices, etc., necessary to supply
near-at-hand the requirements of those who live there to
serve the non-seacoast sections.

It is fair enough, then, that the economic rent of valuable
city land, which is due so largely to the development and
trade of the surrounding country, should be taken in tax-
ation and used for the benefit of all. Thus, the children
of the more remote country districts, where bare-land
value may be almost nothing, can have good schools,
good roads, and other advantages, paid for by land value
in the cities but which value their country communities
help to create.

Why don't more farmers agitate for this change and work
for and support it as do so many farmers in Denmark?
These Danish farmers, some of our American " farmers'
friends " politicians claim to admire for their development
of cooperative marketing, but the Danish farmers' support
of land-value taxation they say nothing about. Yet
recently, and with large support from the farmers, Denmark
has passed legislation providing for higher local rates of
tax on land values than on improvement values. When
will American farmers wake up! Let the farmers them-
selves answer whether a bare-land value tax would not be
better for them than the present system?

HARRY GUNNISON BROWN,
Professor of Economics,

University of Missouri.

Colorado's Amendment

THE campaign for the Single Tax amendment noted
in March-April issue is proceeding slowly. Only
5000 names have been secured, but the committee have
400 petitions still out that may yet come in filled or partly
filled. Five thousand names in four months is slow work
and it is inevitable that it must be slow if our friends are
to rely on volunteer work. Unless money is paid for solici-
ting signatures to the petitions the work must fail.

It is to be hoped that it will not fail. The St. Louis
Single Taxers headed by E. H. Boeck, Percy Pepoon,
Charles Lischer and Henry George Heigold have promised
financial support to the campaign and will send out a
general appeal. They say: "The importance of getting
signers to a legal petition is that it makes it a live matter.
People become interested and as the campaign advances
the interest deepens, and though the measure may not
carry the cause is advanced in proportion as there was
means to present it."

The last Single Tax measure submitted got a big vote.
The Lower Rent bill received 30 per cent, of the vote in
Denver, and the Landlords got the scare of their lives.



LAND AND FREEDOM



81



The petitions for the pending measure must be signed
before July 1st by 25,000 qualified electors. The vote is
on Nov. 6. Our friends are therefore urged to communi-
cate with Barney Haughey, secretary Single Tax and Old
Age Pension League, 1605 Larimer Street, Denver, Col-
orado. The pamphlet containing instructions to circula-
tors of the petition is a carefully prepared argument which
does credit to Mr. Haughey's committee.

Prof. Harry Gunnison Brown will send his " Tale of Two
Cities " for distribution by thousands throughout the state
in addition to which, if funds are available, reprints of
Prof. Brown's article on the Farmer in this issue of LAND
AND FREEDOM will be widely circulated.

Single Taxers Planning for

Chicago Convention

/COMMITTEES to take care of every phase of the
^-^ third annual Henry George Congress have now been
organized under the able leadership of General Chairman
Clayton J. Ewing, who is also the popular President of
the Chicago Single Tax Club, having recently been re-
elected to that office in recognition of the good work ac-
complished during the first year of the re-organized club's
activities. Stimulated by the success of the two Con-
gresses which met in Philadelphia and New York, the
Chicago Club is eager to do all that is possible to make
the Congress in that city one that will be remembered
as another milestone in Single Tax progress.

It is too early to make announcements concerning the
actual programme for the Congress, but we are assured
that there will be a number of prominent figures in the
movement and that discussions will be provided to cover
all of the more important phases of the Single Tax pro-
gress to the extent of the capacity of the three-day session
which opens Monday, September 10th at the Congress
Hotel. This Hotel has reserved for our convention, meet-
ing rooms admirably adapted to the purpose and the
management is lending its hearty cooperation.

The following sub-committees have been named:

Reception Committee: Henry Tideman, Chairman;
George C. Olcott, Joseph L. Murray, John F. Connors,
Mildred Tideman, Mrs. Angeline Loesch Graves.

Registration: John Lawrence Monroe, Chairman;
Marien Tideman.

Press Publicity: Leo Heller, Chairman; Emil O. Jorg-
ensen, E. A. Howes, Joseph Bauer.

Local Transportation: Otto Cullman, Chairman; Dr.
Walter Verity, Edwin Hamilton.

George M. Strachan has been appointed Vice Chair-
man of the general committee.

Mrs. Henry Martin, Secretary of the Henry George
Lecture Association, reports a keen interest on the part



Online LibraryOutdoor Advertising Association of AmericaLand and freedom (Volume 28) → online text (page 18 of 44)