Unearned increments
in land are not the only form of unearned or undeserved profit, but they are
the principal form of unearned increment, and they are derived from processes,
which are not merely not beneficial, but positively detrimental to the general
public.
Land, which is a necessity of human existence, which is the
original source of all wealth, which is strictly limited in extent, which is
fixed in geographical position -- land, I say, differs from all other forms of
property, and the immemorial customs of nearly every modern state have placed
the tenure, transfer, and obligations of land in a wholly different category
from other classes of property.
Nothing is more amusing than to watch the efforts of
land monopolists to claim that other forms of property and increment are
similar in all respects to land and the unearned increment on land.
They talk of the increased profits of a doctor or
lawyer from the growth of population in the town in which they live. They talk
of the profits of a railway, from the growing wealth and activity in the
districts through which it runs. They talk of the profits from a rise in stocks
and even the profits derived from the sale of works of art.
But see how misleading and false all those analogies
are. The windfalls from the sale of a picture -- a Van Dyke or a Holbein -- may
be very considerable. But pictures do not get in anybody's way. They do not lay
a toll on anybody's labour; they do not touch enterprise and production; they
do not affect the creative processes on which the material well-being of
millions depends.
If a rise in stocks confers profits on the fortunate
holders far beyond what they expected or indeed deserved, nevertheless that
profit was not reaped by withholding from the community the land which it
needs; on the contrary, it was reaped by supplying industry with the capital
without which it could not be carried on.
If a railway makes greater profits it is usually
because it carries more goods and more passengers.
If a doctor or a lawyer enjoys a better practice, it
is because the doctor attends more patients and more exacting patients, and
because the lawyer pleads more suits in the courts and more important suits. At
every stage the doctor or the lawyer is giving service in return for his
fees.
Fancy comparing these healthy processes with the
enrichment which comes to the landlord who happens to own a plot of land on the
outskirts of a great city, who watches the busy population around him making
the city larger, richer, more convenient, more famous every day, and all the
while sits still and does nothing.
Roads are made, streets are made, services are
improved, electric light turns night into day, water is brought from reservoirs
a hundred miles off in the mountains -- and all the while the landlord sits
still. Every one of those improvements is effected by the labour and cost of
other people and the taxpayers. To not one of those improvements does the land
monopolist, as a land monopolist, contribute, and yet by every one of them the
value of his land is enhanced. He renders no service to the community, he
contributes nothing to the general welfare, he contributes nothing to the
process from which his own enrichment is derived.
While the land is what is called "ripening"
for the unearned increment of its owner, the merchant going to his office and
the artisan going to his work must detour or pay a fare to avoid it. The people
lose their chance of using the land, the city and state lose the taxes which
would have accrued if the natural development had taken place, and all the
while the land monopolist only has to sit still and watch complacently his
property multiplying in value, sometimes many fold, without either effort or
contribution on his part!
But let us follow this process a little further. The
population of the city grows and grows, the congestion in the poorer quarters
becomes acute, rents rise and thousands of families are crowded into tenements.
At last the land becomes ripe for sale -- that means that the price is too
tempting to be resisted any longer. And then, and not until then, it is sold by
the yard or by the inch at 10 times, or 20 times, or even 50 times its
agricultural value.
The greater the population around the land, the
greater the injury the public has sustained by its protracted denial. And, the
more inconvenience caused to everybody; the more serious the loss in economic
strength and activity - the larger will be the profit of the landlord when the
sale is finally accomplished. In fact, you may say that the unearned increment
on the land is reaped by the land monopolist in exact proportion, not to the
service, but to the disservice done. It is monopoly which is the keynote, and
where monopoly prevails, the greater the injury to society the greater the
reward to the monopolist. This evil process strikes at every form of industrial
activity. The municipality, wishing for broader streets, better houses, more
healthy, decent, scientifically planned towns, is made to pay more to get them
in proportion as is has exerted itself to make past improvements. The more it
has improved the town, the more it will have to pay for any land it may now
wish to acquire for further improvements.
The manufacturer proposing to start a new industry,
proposing to erect a great factory offering employment to thousands of hands,
is made to pay such a price for his land that the purchase price hangs around
the neck of his whole business, hampering his competitive power in every
market, clogging him far more than any foreign tariff in his export
competition, and the land price strikes down through the profits of the
manufacturer on to the wages of the worker.
No matter where you look or what examples you select,
you will see every form of enterprise, every step in material progress, is only
undertaken after the land monopolist has skimmed the cream for himself, and
everywhere today the man or the public body that wishes to put land to its
highest use is forced to pay a preliminary fine in land values to the man who
is putting it to an inferior one, and in some cases to no use at all. All comes
back to land value, and its owner is able to levy toll upon all other forms of
wealth and every form of industry. A portion, in some cases the whole, of every
benefit, which is laboriously acquired by the community increases the land
value and finds its way automatically into the landlord's pocket. If there is a
rise in wages, rents are able to move forward, because the workers can afford
to pay a little more. If the opening of a new railway or new tramway, or the
institution of improved services of a lowering of fares, or of a new invention,
or any other public convenience affords a benefit to workers in any particular
district, it becomes easier for them to live, and therefore the ground landlord
is able to charge them more for the privilege of living there.
Some years ago in London there was a toll bar on a
bridge across the Thames, and all the working people who lived on the south
side of the river had to pay a daily toll of one penny for going and returning
from their work. The spectacle of these poor people thus mulcted of so large a
proportion of their earnings offended the public conscience, and agitation was
set on foot, municipal authorities were roused, and at the cost of the
taxpayers, the bridge was freed and the toll removed. All those people who used
the bridge were saved sixpence a week, but within a very short time rents on
the south side of the river were found to have risen about sixpence a week, or
the amount of the toll which had been remitted!
And a friend of mine was telling me the other day
that, in the parish of Southwark, about 350 pounds a year was given away in
doles of bread by charitable people in connection with one of the churches. As
a consequence of this charity, the competition for small houses and single-room
tenements is so great that rents are considerably higher in the parish!
All goes back to the land, and the landowner is able
to absorb to himself a share of almost every public and every private benefit,
however important or however pitiful those benefits may be.
I hope you will understand that, when I speak of the
land monopolist, I am dealing more with the process than with the individual
landowner who, in most cases, is a worthy person utterly unconscious of the
character of the methods by which he is enriched. I have no wish to hold any
class up to public disapprobation. I do not think that the man who makes money
by unearned increment in land is morally worse than anyone else who gathers his
profit where he finds it in this hard world under the law and according to
common usage. It is not the individual I attack; it is the system. It is not
the man who is bad; it is the law which is bad. It is not the man who is
blameworthy for doing what the law allows and what other men do; it is the
State which would be blameworthy if it were not to endeavour to reform the law
and correct the practice.
We do not want to punish the landlord.
We want to alter the law.