Prosper Australia

By Winston Churchill

Speech given to the House of Commons

Land monopoly is not the only monopoly, but it is by far the greatest of monopolies - it is a perpetual monopoly, and it is the mother of all other forms of monopoly.

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 land owner 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 land owner 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.

Derived from the presentation by Lev Lafayette at the Hume Global Learning Centre, June 28, 2006

Introduction

Tonight I am representing Prosper Australia, an organisation which has, in various guises, been a part of Victoria for over one hundred years. One key objective of the organisation is the reduction, as much as possible of taxes on labour and capital, and for public finances to be derived instead from site rental. Because when it comes down to it, there are only two sources for public revenue; the goods and services which are produced or the resources that are used.

The idea of public financing through site rental was extremely popular in the early days of Australia, supported by both the Liberal Party of Alfred Deakin and his Labor opponent Andrew Fisher. Indeed Alfred Deakin illustrated the case quite succinctly when he said;

“The whole of the people have the right to the ownership of land and the right to share in the value of land itself, though not to share in the fruits of land which properly belong to the individuals by whose labour they are produced.”

In this period many local councils adopted site rental as the main source of income and for a period the Commonwealth derived much of its income from site rental. The idea was not subject to the partisanship of Party politics; famous supporters of site rental include Labor’s Arthur Calwell and Clyde Cameron and the Liberal Minister in the Menzies, Holt and Gorton governments, Sir Allen Fairhall.

Because we also have a candidate from the Liberal Party here tonight, I should also mention that I am a member of the Australian Labor Party. For several years I was the policy convenor of the Labor Left - Pledge Unions faction, the so-called “hard left” socialist group which strongly opposed the privatisation of public assets and had such disconcerting foreign affairs policies such as ending apartheid in South Africa, self-determination of East Timor, democracy in Indonesia and a state for the Palestinians.

The point of laying these cards on the table is to illustrate that regardless of whether one believes that economies are best served by markets or by planning, or whether social equity has a greater priority over economic efficiency that one can find good and just reasons to be part of the site rental movement, whose claims include equity, efficiency, markets and planning! The fact that you would find stubborn socialists such as Clyde Cameron in agreement with amicable liberals like Allen Fairhall should give indication of the adaptability of the basic principle of site rental.

This leads to the purpose of tonight’s presentation. Some elements of the last State budget seemed quite contrary to the Labor Party’s stated objectives as put in their National Constitution. That constitution refers to matters such as the abolition of poverty, a greater equality in the distribution of wealth, income and opportunity, and the abolition of exploitation. The assumption is that these decisions; decisions which will reduce opportunity and further impoverish those who are already poor, were made in ignorance rather than malice. Hence the title of tonight’s event: “Please Explain, Mr. Brumby”.

Something that should be said is that Prosper Australia made multiple attempts to contact Mr. Brumby and invite him to tonight’s function in his own electorate. However, he has chosen to attend a different engagement. Offers were also made to send a representative of his office or to have a written statement presented at the meeting. These opportunities also have not been taken up.

What Was In The Last State Budget?

The last State budget made (almost) everyone very happy. With a large surplus, the preparation to spend big in an election year and with the assistance of some rather optimistic economic projections, the mass media sang the praises of the State government and indeed, in most cases, this is deserved.

The last state budget witnessed a 10% reduction in Payroll Tax over three years costing some $533 million, and a $170 million reduction in WorkCover premiums. A $300 “School Starting Bonus” will be paid to families with children entering prep and year 7, along with a $500 Trades Bonus to those completing apprenticeships. A ten-year allocation of $10.5 billion has been made to improve mass transit facilities in Melbourne and regional Victoria. A budget surplus of $300 million per annum is planned and net financial liabilities remain below 7% of Gross Social Product.

There are flies in the ointment however; $100 million dollars was earmarked to the “Building Tomorrow’s Schools Today Fund” from the expected sale of Victoria’s share in the Snowy Mountains Hydroelectric Scheme. The budget also announced that schools in needy areas such as Broadmeadows, Altona, Western Heights and Dandenong would be modernised and upgraded. This announcement is now at risk because the Federal government pulled out of the sale of the Snowy leaving the State governments of New South Wales and Victoria with unfunded promises. Why the State government tied upgrades and maintenance of schools to the privatisation of a public asset is beyond reason.

One can also certainly argue that the cuts to payroll taxes are too modest and too slow. It is true that payroll taxes have a low compliance cost and it is also true that they effect a narrow band of employers (those whose payroll is greater than about $40 000 per month). But this does not change what the tax effectively is; a tax on employing too many people. This occurs when organisations like the Australian Industry Group claims that over 13,000 manufacturing jobs would be lost in Victoria this year.

But the biggest problem now facing Victoria is the issue of housing affordability. There is a real crisis in this issue and the actions in the State budget will make matter worse, contrary to the vested-interest claims of organisations such as the Real Estate Institute of Victoria and the Property Council of Australia. In particular the big cuts in land tax to those who have what is mis-named “investment properties” valued at over $2.7 million of unimproved site rental. This change, costing the public coffers some $167 million dollars, is on top of last years’ massive cuts which announced $823 million over five years.

Although this seems politically expedient, a very strong case can be made that this is not in the best interests of Victoria. Land is not like any other economic good. It is obviously in fixed supply and “investments” in buying land are demonstrably different to capital investments in buildings, manufacturing, or service-provision. If you spend money in any of these other areas goods are produced; people are employed. But putting money into land neither employs nor creates any additional goods or services. Indeed, what it does do is increase the cost of land as the available supply is reduced. Increases in the value of land are primarily due to inaction on the part of the landlord; either through community-provided infrastructure and economic activity, or by increases in population.

This matter can been seen rather simply and empirically. Research from the Housing Industry Association over the past thirty three years shows quite clearly that the cost of building a house in Australia has gone up slightly less than the rate of inflation, that is an increase of 8.4 fold. However, in the same period the price of land has gone up sixteen-fold in Melbourne, eighteen-fold in Perth, nineteen-fold in Brisbane, fifty-one fold in Sydney and a massive seventy-fold in Adelaide.

The only brake on this mindless speculation has been land tax. It stands to reason that if land is taxed and other goods and services are not, then an investor will strongly prefer to put their money in something productive. This has been well-known to economists since the days of Adam Smith and if you read the statements of Nobel Prize winners in economics over the last thirty years you will discover that they are virtually unanimous on this matter; from the left-wing to the right you find the likes of socialist Franco Modigliani, the iconoclastic William Vickrey, social democrats like James Tobin and the Keynesian Paul Samuelson, conservatives like Robert Solow and James Buchanan Jnr, and the arch-capitalist Milton Friedman.

These names are all Nobel Prize winners in economics; you can assume that they know something about the subject matter. The expert opinions in Australia say the same thing; the 2001 Harvey Commission on Business Productivity suggested rolling numerous property taxes into a single land tax. The Commonwealth’s Productivity Commission pleads to the states to broaden the base of the tax rather than thumping people with more onerous charges on the productive labour they carry out. Yet the politicians are not listening; or they are listening to the wrong people.

Future Problems and Solutions

Serious problems will arise due to the decisions made in the last state budget. Where a greater return is available from land speculation than from productive investment it is obvious that an investment will prefer the former; and whilst the individual speculator will benefit greatly in the short term the community as a whole will suffer in the longer term; this is as per the laws of the multiple prisoner’s dilemma problem in game theory. Ultimately it means that everyone loses - even those who gain in the short run relative to everyone else.

The most obvious effect of the changes will be that housing affordability will continue to worsen. Encouraging “investors”, to put money into landed estates rather than productive use will inevitably reduce the effective supply of land and reduce the quantity of dwellings produced. The rather dramatic statistics provided previously from the Housing Industry Association will get worse; the possibility of young people in this state ever owning their own home becomes increasingly remote and onerous.

Apart from the obvious loss of jobs in the home building industry resulting from such changes, one must also be aware of the losses in commercial and industrial building. And, as mentioned previously, whilst the modest cuts to payroll tax will slow down job losses it will not reverse them. The highly internationally competitive manufacturing industry will be harshly hit.

One final area of great concern is the viability and stability of returns on superannuation funds. Like any other individual investor, group investment organisations, like superannuation funds, will seek to maximise their return. If the taxation system is changed, as it has been, to encourage resource holdings rather than productive investment then the funds will follow; even if in the long-run there’s detrimental effects overall.

There are however some practical measures that can be taken to reverse these dire trends and some of the disconcerting changes in the last State budget and subsequent events. Indeed, it would be very remiss to come here with just criticisms and offering no solutions.

The first is to renege on the proposal to cut the top rate of land tax and use the monies raised to pay for the aforementioned school upgrades in needy areas. It makes sense to reduce a strong incitement to short-term speculation, preferring to encourage long-term investment to the more impoverished elements of society. The $167 million dollar gift to the biggest landlords in the state stands in stark contrast to the need to invest in our children and their future.

The second is to investigate the funding and provision of public transport infrastructure through increases in land values. The proposed construction of a train station at Coolaroo has, to say the least, taken far too long to be implemented in reality. To give an example of alternative method of funding consider California in 1890s who in 1887 passed the Wright Act which allowed communities to irrigate districts and pay for them by taxing the resultant rise in land value.

In the next ten years, the Central Valley was transformed into over 7,000 independent farms. Within a few decades, those tree-less, semi-arid plains became the “bread basket of America”, one of the most productive areas on the planet.

Thirdly, lobbying one’s local council is of critical importance. Despite an excellent history in Melbourne, following the forced amalgamations in the 1990s nearly all local councils rate property rather than land; Monash is the exception and the continuing success of that municipality is worthy of note. The rating of property rather than land means that rate-payers are punished for improving their home. A comparison can be made with cities like Pittsburgh and Harrisburg in the United States which rate land much more than property. The results are obvious; less vacant sites, less derelict buildings, more industry, more effective use of land. In the 1970s Dr. Ken Lusht, visiting from Pennsylvania State University, found those Melbourne councils that rated land alone had 50% more built value per acre than those that rated both land and buildings. Between 1974 and 1984, the last year the government released these statistics, the number of businesses in the towns taxing property decreased by 20% while in the towns taxing only land it increased by more than 10%.

Finally, joining Prosper Australia and advocating the justness and positive effects of land taxation is imperative. There are, undoubtably those who prefer to receive as much income as possible from the most unproductive investments. They are a powerful and well-financed lobby group. The distribution of income in Australia means that the the top twenty percent of Australia receives 48.5% of the national income whereas the bottom forty percent earns 13%, whereas in terms of household assets the top twenty percent have 63% of national household assets, whereas the bottom fifty has a mere 5%. One can be certain that the distribution of land values is worse still.

A handful of people in Australia receive the lion’s share of the site rent of this nation; this is monies extracted from labourers and productive investors and wealth created from such people. The economist, David Ricardo, saw with great clarity, describing the interest of the landlord (by which he meant literally - not the person who owns and invests in houses) as utterly opposed to the interests of all other classes. Then John Stuart Mill following this lead wrote;

“Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”

This simple principle of public finance, so far-reaching in its justness and effectiveness, is the orientation that Victoria needs.

Professor Thorold Rogers

“I have stated more than once that the fifteenth century and the first quarter of the sixteenth were the golden age of the English labourer, if we are to interpret the wages which he earned by the cost of the necessaries of life. At no time were wages, relatively speaking, so high, and at no time was food so cheap. Attempts were constantly made to reduce these wages by Act of Parliament, the legislature frequently insisting that the Statute of Labourers should be kept. But these efforts were futile; the rate keeps steadily high, and finally becomes customary, and was recognised by parliament. It is possible, that as the distribution of land for terms of years became habitual, the phenomenon of which has often been noted of peasant proprietorship, a high rate of wages paid to the free labourer, may have been exhibited in the period on which I am commenting.”

James E Thorold Rogers: Six Centuries of Work and Wages: The History of English Labour, T Fisher Unwin, London 1912, Eleventh Edition, p.326

Richard Cobden: Parliamentary Corn Law debates [1845]

“I warn ministers, and I warn landlords and the aristocracy of this country, against forcing on the attention of the middle and industrial classes, the subject of taxation ….. If you were to bring forward the history of taxation in this country for the last 150 years, you will find as black a record against the landowners as even in the Corn Law itself.

I warn them against ripping up the subject of taxation. If they want another league at the death of this one - if they want another organisation and a motive - then let them force the middle and industrial classes to understand how they have been cheated, robbed and bamboozled …..

For a period of 150 years after the conquest, the whole of the revenue of the country was derived from the land. During the next 150 years it yielded nineteen-twentieths of the revenue. For the next century down to the reign of Richard III it was nine-tenths. During the next 70 years to the time of Mary it fell to about three-fourths. From this time to the end of the Commonwealth, land appeared to have yielded one-half the revenue. Down to the reign of Anne it was one-fourth. In the reign of George III it was one-sixth. For the first thirty years of his reign the land yielded one-seventh of the revenue. From 1793 to 1816 (during the period of the land tax), land contributed one ninth. From which time to the present one twenty-fifth only of the revenue of the revenue had been derived directly from land.

Thus, the land, which anciently paid the whole of taxation, paid now only a fraction, or one twenty-fifth, notwithstanding the immense increase that had taken place in the value of the rentals. The people had fared better under despotic monarchs than when the powers of the state had fallen into the hands of a landed oligarchy who had first exempted themselves from taxation, and next claimed compensation for themselves by a corn law for their heavy and peculiar burdens.”

Clarence Darrow, Attorney, Philosopher

Clarence Darrow of Chicago became known and respected the world round as a courageous and intelligent foe of special privilege and monopoly. His social and economic philosophy rested on the same basic principles as those of Thomas Paine, Thomas Jefferson and Abraham Lincoln.

Everybody nowadays is anxious to help do something for the poor, especially they who are on the backs of the poor; they will do anything that is not fundamental. Nobody ever dreams of giving the poor a chance to help themselves. The reformers in this state have passed a law prohibiting women from working more than eight hours in one day in certain industries - so much do women love to work that they must be stopped by law. If any benevolent heathen see fit to come here and do work, we send them to gaol or send them back where they came from.

All these prohibitory laws are froth. You can only cure effects by curing the cause. Every sin and every wrong that exists in the world is the product of law, and you cannot cure it without curing the cause. Lawyers, as a class, are very stupid. What would you think of a doctor, who, finding a case of malaria, instead of draining the swamp, would send the patient to gaol, and leave the swamp where it is? We are seeking to improve conditions of life by improving symptoms.

Land Basic

No man created the earth, but to a large extent all take from the earth a portion of it and mould it into useful things for the use of man. Without land man cannot live; without access to it man cannot labour. First of all, he must have the earth, and this he cannot have access to until the single tax is applied. It has been proven by the history of the human race that the single tax does work, and that it will work as its advocates claim. For instance, man turned from Europe, filled with a population of the poor, and discovered the great continent of America. Here, when he could not get profitable employment, he went on the free land and worked for himself, and in those early days there were no problems of poverty, no wonderfully rich and no extremely poor - because there was cheap land. Men could go to work for themselves, and thus take the surplus off the labour market. There were no beggars in the early days. It was only when the landlord got in his work - when the earth monopoly was complete - that the great mass of men had to look to a boss for a job.

All the remedial laws on earth can scarcely help the poor when the earth is monopolized. Men must live from the earth, they must till the soil, dig the coal and iron and cut down the forest. Wise men know it, and cunning men know it, and so a few have reached out their hands and grasped the earth; and they say, “These mines of coal and iron, which it took nature ages and ages to store, belong to me; and no man can touch them until he sees fit to pay the tribute I demand”.

Pirates Demand Tribute

Nature prepared the earth for ages to make a mine of iron ore, which is so useful in civilized life. It was here before man came, and will be here after he is gone, and yet a plundering, soulless, conscienceless band of pirates, called the steel trust, have taken possession of all the iron in America, and they say to every man who will use it: “You must pay us tribute.” And every time two dollars is paid for their product one dollar goes to labour, and one dollar is taken as plunder pure and simple, because of the foolish laws of man. They can take from the farmer and labourer all that they earn except enough to keep them alive still to toil for the monopolist.

You may make eight-hour laws, you may make laws regulating sweat shops and factories, but so long as a few rich men own the earth, there will be a few rich and many millions of helpless poor. As population becomes more dense, the proportion of poor will increase.

Unions

The labouring man takes no account of fundamentals. Millions of working men have organized themselves into great unions to protect themselves, to force up their side to counteract the forcing up bv the other side. These millions have organized for a most impossible purpose. They seek to change the social life in an impossible way. Their higher wages will be handed back to monopoly in higher prices. If a small fraction of the energy and money that has been given by the working men to support labour unions had been spent to change fundamental conditions, there would be no need of a labour union in the world today. Everywhere about us we can see that the conditions cannot change while land monopoly continues.

Most of our laws were made by the dead, and the dead have no right to legislate for the living. The present generation has no right to bind its legislation upon the generation still unborn. When one generation is dead, it ought to stay dead and not reach out its dead hand to bind the living. We have no right to fix terms and conditions for those yet unborn; it is for each generation to fix the rules and regulations for itself. The earth should be owned by all men, the coal mines should belong to the people who live here, so they can take what they want while they live, as when they are dead they won’t need coal - they will be warm enough without it - and they should not have the power to say who shall have it when they are gone. Carnegie and Morgan cannot use or withhold it much longer, as they will soon be gone - that is one consolation.

Eminent Domain

Fundamentally, all law recognizes the right to eminent domain, to take the portion of any human being for the welfare of the public - that no man’s claim to any portion of the earth shall stand in the way of the common good. This is a common law, but in practice it only applies where a rich railroad wants to get the land of some poor widow.

Everybody who works is poor; nobody would work if they were not poor, and nobody can get rich working. I never tried it, but I have seen others try it. The land boomer comes along and gets good car service to this poor man’s home, and then charges him ten dollars per month instead of five. A lot of reformers are trying to get parks laid out in the slums, which only make the poor move, for they cannot pay the increased rent. The greater the population, the less the worker gets. As the land becomes valuable, more and more goes to rent. The bigger the city, the deeper the poverty; the bigger the city the more degradation, there are the almshouses and gaols filled to overflowing. It is better for the men who own the earth to have big cities - but for no one else. Every man, woman, and child adds to the wealth of the land owner; the others must secure land upon which to live, and they must bid with each other for the right to live.

Surplus to the Monopolist

Beyond a living all surplus goes to the monopolist, and it does go to him. You talk about a city of a million in 1915 - who would be benefited? Not the workingman; he would be far worse off than at present, for the greater the city the greater the poverty.

Taxes on goods are added to the price of goods and passed on to the consumer. There is only one kind of tax that is not a curse, and that is the land tax. If you tax a pair of shoes a dollar, the manufacturer will add that to the price of the shoes, and thus diminish the number of shoes the people can buy. The higher you tax the land the more land is thrown on the market and the easier it is to secure, and it is the only thing that increases by taxation.

The higher the tax on land the more it comes into use, and so “single tax” is a positive blessing. It is the only tax that does not come out of labour, it comes out of the monopolist; it stays right there, and that fact compels them to put the land to some use, and that employs labour.

Natural Fund

The single tax theory is that the public should take all the value of land, as it was made by the public. Land value goes up because of population, and not because of the owner of the title deed, and the value should be taken by the community, and thus create a natural fund from which to make improvements for the comfort of all, and thus make life easier. It would abolish poverty, that crime of the century, which has always come with civilization; inequality of wealth, which comes as the world grows older, and which we have never been able to cure, because man wants to hold what he cannot use, and pass on to future generations what they will not use.

The personal property tax always was a delusion, a humbug, and a snare; it never could be administered justly. The conscientious man, the widow and the orphans (whose fund is in trust) pay in full while the rich get off. It is unscientific, it is bad as a fiscal measure. What we are after is the earth, and it can be had in an easy, simple, direct way.

Every right-of-way of every railroad should be owned by the people; all public franchises, every mine and every forest, all should belong to the community itself. Then we would not need the repressive laws we have today.

Men love peace, and if not antagonized, they will behave, and until justice is done in that good time to come, all the gaols on earth cannot make them behave. It never did, and it never will.

The “single tax” is so simple, so fundamental, and so easy to carry into effect that I have no doubt it will be about the last reform the world will ever get. People in this world are not often logical; in fact, there is never any considerable number of them that are logical. I am pretty sure the people will never get started in the right direction; they will go a long way around.

Winston Churchill - From a Speech Delivered at King’s Theatre in Edinburgh on 17 July 1909

It is quite true that land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies - it is a perpetual monopoly, and it is the mother of all other forms of monopoly. It is quite true that unearned increments in land are not the only form of unearned or undeserved profit which individuals are able to secure; but it is the principal form of unearned increment which is derived from processes which are not merely not beneficial, but which are 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 in these primary and fundamental conditions.

Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same and are similar hl all respects to the unearned increment in land.

Misleading and False Analogies

They talk to us of the increased profits of a doctor or a lawyer from the growth of population in the towns in which they live. They talk to us of the profits of a railway through a greater degree of wealth and activity in the districts through which it runs. They tell us of the profits which are derived from a rise in stocks and shares, and even of those which are sometimes derived from the sale of pictures and works of art, and they ask us - as if it were the only complaint: “Ought not all these other forms to be taxed, too?”

But see how misleading and false all these analogies are. The windfalls which people with artistic gifts are able from time to time to derive from the sale of a picture - from a Vandyke or a Holbein - may here and there 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 at any point; they do not affect any of those creative processes upon which the material well-being of millions depends.

Rewards for Service

If a rise in stocks and shares confers profits on the fortunate holders far beyond what they expected or indeed deserved, nevertheless that profit has not been reaped by withholding from the community the land which it needs, but, on the contrary, apart from mere gambling, it has been reaped by supplying industry with the capital without which it could not be carried on.

If the 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, and if the service is too poor or the fees are too high other doctors and other lawyers can come freely into competition. There is constant service, there is constant competition; there is no monopoly, there is no injury to the public interest, there is no impediment to the general progress.

Fancy comparing these healthy processes with the enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, 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.

Enrichment Without Service

Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, 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. Many of the most important are effected at the cost of the municipality and of the ratepayers. 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 sensibly enhanced. He renders no service to the community, he contributes nothing to the general welfare; he contributes nothing even to the process from which his own enrichment is derived.

If the land were occupied by shops or by dwellings, the municipality at least would secure the rates upon them in aid of the general fund, but the land may be unoccupied, undeveloped, it may be what is called “ripening” - ripening at the expense of the whole city, of the whole country for the unearned increment of its owner. Roads perhaps have to be diverted to avoid this forbidden area. The merchant going to his office, the artisan going to his work, have to make a detour or pay a tram fare to avoid it. The citizens are losing their chance of developing the land, the city is losing its rates, the State is losing its taxes which would have accrued if the natural development had taken place, and that share has to be replaced at the expense of the other ratepayers and taxpayers; and the nation as a whole is losing in the competition of the world - the hard and growing competition of the world - both in time and money.

And all the while the land monopolist has only to sit still and watch complacently his property multiplying in value, sometimes manifold, without either effort or contribution on his part. And that is justice!

Monopoly is the Keynote

But let us follow the process a little further. The population of the city grows, and grows still larger year by year, the congestion in the poorer quarters becomes acute, rents and rates rises hand in hand, and thousands of families are crowded into one-roomed tenements. There are 120,000 persons living in one-roomed tenements in Glasgow alone at the present time. 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 till then, it is sold by the yard or by the inch at 10 times, or 20 times, or even 50 times its agricultural value, on which alone hitherto it has been rated for the public service.

The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been 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 on all fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in 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 will be.

Land Monopoly Hampers Industry

See how 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, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town the more it has increased the land value, and the more it will have to pay for any land it may wish to acquire.

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 round 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 values strike down through the profits of the manufacturer on to the wages of the workman. The railway company wishing to build a new line finds that the price of land which yesterday was only rated at its agricultural value has risen to a prohibitive figure the moment it was known that the new line was projected, and either the railway is not built, or, if it is, is built only on terms which largely transfer to the landowner the profits which are due to the shareholders and the advantages which should have accrued to the travelling public.

It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off 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 in- ferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry.

The Error of Public Tollways

A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in 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 a new tramway, or the institution of an improved service of workmen’s trains, or a lowering of fares, or a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are 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 appealed to the public conscience; an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved 6d. a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about 6d. a week, or the amount of the toll which had been remitted.

Neutralising Philanthropy

And a friend of mine was telling me the other day that, in the parish of Southwark, about 350 pounds a year, roughly speaking, was given away in doles of bread by charitable people in connection with one of the churches, and, as a consequence of this, the competition for small houses, but more particularly for single-roomed tenements, is, we are told, so great that rents are considerably higher than in the neighbouring district.

All goes back to the land, and the landowner, who, in many cases, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit however important or however pitiful those benefits may be.

Let Us Alter the Law

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. 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 a worse man 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 were it 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.

Take the case to which I have already referred, of the man who keeps a large plot in or near a growing town idle for years, while it is “ripening” - that is to say, while it is rising in price through the exertions of the surrounding community and the need of that community for more room to live. Take that case. I daresay you have formed your own opinion upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party generally, think that that is an admirable arrangement. They speak of the profits of the land monopolist, as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate.

The Dog in the Manger

We do not take that view of the process. We think it is a dog-in-the-manger game. We see the evil, we see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and in congested centres of population, and we say here and now to the land monopolist who is holding up his land - and the pity is it was not said before - you shall judge for yourselves whether it is a fair offer or not-we say to the land monopolist - “This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at 10 times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment then at least you shall be taxed at the true selling value in the meanwhile.”

Free Trade - Free Land!

Every nation in the world has its own way of doing things, its own successes and its own failures. All over Europe we see systems of land tenure which economically socially, and politically are far superior to ours; but the benefits that those countries derive from their improved land systems are largely swept away, or at any rate neutralised, by grinding tariffs on the necessaries of life and the materials of manufacture.

In this country we have long enjoyed the blessings of Free Trade and of untaxed bread and meat, but against these inestimable benefits we have the evils of an unreformed and vicious land system. ln no great country in the new world or the old have the working people yet secured the double advantage of Free Trade and Free Land together, by which I mean a commercial system and a land system from which, so far as possible, all forms of monopoly have been rigorously excluded.

An Hour of Tremendous Opportunity

Sixty years ago our system of national taxation was effectively reformed, and immense and undisputed advantages accrued therefrom to all classes, the richest as well as the poorest. The system of local taxation to-day is just as vicious and wasteful, just as great an impediment to enterprise and progress, just as harsh a burden upon the poor, as the thousand taxes and Corn Law sliding scales of the “hungry forties.”

We are met in an hour of tremendous opportunity.

“You who shall liberate the land,” said Mr. Cobden, “will do more for your country than we have done in the the liberation of its commerce.”

Winston Churchill’s Speech in the House of Commons, 4 May 1909, in response to Mr AJ Balfour, Leader of the Opposition

The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property.

Unearned Increment

When the Leader of the Opposition seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.

“If,” he inquires, “you tax the unearned increment on land, why don’t you tax the unearned increment from a large block of stock? I buy a piece of land; the value rises. I buy stocks; their value rises.” But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.

Landowner and Railway Co.

Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business aptitude and industry create a large carrying trade, then the railway, he contends, gets its unearned increment in its turn.

But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business - he cannot surely compare that process with the process of getting rich merely by sitting still? It is clear that the analogy is not true.

The Glasgow Example

I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year.

What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.

The “Poor Widow” Bogey

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement.

Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener - the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

What is the position disclosed by the argument? On the one hand, we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs - and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads and who would not really be in the least injured.