The invisible cause of unemployment
October 25, 2011 § Leave a comment
From our friends at The Progress Report:
Populist era economist and social reformer Henry George testified as part of the investigation conducted in 1883 by the Senate Committee Upon the Relations Between Labor and Capital. Below is part of his testimony, which remains surprisingly relevant to our economic debates today.
[Questioning by Senator Wilkinson Call, Florida Democrat]
Senator Call:: You have been engaged for some years, I believe, in looking into the labor question, the condition of the laboring population, and the relations of labor and capital, have you not?
Henry George:: For some time, with a great deal of attention.
Senator Call:: We should be glad to have a statement from you in your own way of any facts that may be within your knowledge in regard to the condition of labor in its relations to capital, and any suggestions of remedies which you think would bring about an improved condition of things.
Henry George: The general fact … is that there exists among the laboring classes of the United States a great and growing feeling of dissatisfaction and discontent. As to whether the condition of the laboring classes in the United States is getting any worse, that is a difficult and complex question. I am inclined to think that it is; but whether it is or not, the feeling of dissatisfaction is evidently increasing. It is certainly becoming more and more difficult for a man in any particular occupation to become his own employer. The tendency of business of all kinds, both in production and in exchange, is concentration, to the massing of large capital, and to the massing of men. The inventions and improvements of all kinds that have done so much to change all the aspects of production, and which are still going on, tend to require a greater and greater division of labor, the employment of more and more capital, and in turn to make it more and more difficult for a man who has nothing but his labor to become his own employer, or to rise to a position of independence in his craft or occupation.
Senator Call:: Can you state any economic reasons why that is the case?
Henry George:: I do not believe that there is any conflict of interest between labor and capital, using those terms in their large sense. I believe the conflict is really between labor and monopoly. Capital is the instrument and tool of labor, and under conditions of freedom there would be as much competition for the employment of capital as for the employment of labor. `When men speak of the aggressions of capital and of the conflict between labor and capital I think they generally have in mind aggregated capital, and aggregated capital which is in some way or other a monopoly more or less close. The earnings of capital, purely as capital, are always measured by the rate of interest. The return to capital for its employment, risk being as nearly as possible eliminated, is interest, and interest has certainly, for some time past, been falling, until now it is lower than it ever has been in this country before. The large businesses which yield great returns have in them always, I think, some element of monopoly.
Do you wish me to go right on and give my views generally, or do you desire me to limit myself to answers to your questions?
Senator Call:: I wish you would first give us the economic reasons why there are such aggregations of capital. I would like also to have you explain the sense in which you use the term “monopoly” when you speak of these aggregations of capital.
Henry George:: I use the term “monopoly” in the sense of a peculiar privilege or power of doing certain things which other persons have not. There are various kinds of monopolies. As, for instance, the monopolies given by the patent laws which give to the inventor or to his assigns the exclusive right to use a particular invention or process. There are certain businesses that are in their nature monopolies. For instance, in a little village if one puts up a hotel which is sufficient to accommodate all the travel there, he will have a virtual monopoly of that business, for the reason that no one else will put up another to compete with him, knowing that it would result in the loss of money; and for that reason our common law recognizes a peculiar obligation on the part of the innkeeper; he is not allowed to discriminate as between those who come to him for lodging or food. Again, a railroad is in its nature a monopoly. Where one line of road can do the business, no one else is going to build another alongside of it, and, as we see in our railroad system, the competition of railroad companies is only between what they call “competing points” where two or three roads come together, and as to these the tendency is to do away with competition by contract or pooling. The telegraph business is in its nature a monopoly; and so with various others. Then again, there is a certain power of monopoly that comes with the aggregation of large capital in a business. A man who controls a very large amount of capital can succeed by underselling and by other methods, in driving out his smaller competitors and very often in concentrating the business in his own hands.
Senator Call:: You see the term in a broader sense then, than that of a monopoly created by law. You include in it any exclusive right, whether created by facts and circumstances or by law?
Henry George:: Yes. As I have said, there are businesses which are in their very nature monopolies. The two most striking examples of that are the railroad and the telegraph.
Senator Call:: In your opinion, what are the economic reasons why business tends to become concentrated and why all industries have a tendency to aggregation in the hands of a few?
Henry George:: I think that is the universal tendency of all progress. It is because larger and larger capitals are required and because labor becomes more and more divided. … I believe you have it in testimony here that in the process of shoemaking now there are sixty-four different branches, thereby requiring that number of costly machines and differentiating the trade into that number of subdivisions…
Machinery, in my opinion, ought to be an advantage to labor. Its primary effect is simply to increase the product of labor, to add to the power of labor, and enable it to produce more. One would suppose, and in fact it was supposed at the beginning of the era of modern inventions, that the effect of the introduction of machinery would be to very greatly improve the condition of the laboring classes and largely to raise wages. I think it quite certain that its effect has not been that; that, while very many articles have been greatly cheapened in cost and in price, wherever there has been an increase in the wages of labor it can he traced to something else; generally to the efforts of the laborers themselves, by the formation of trades unions and organizations which have wrested from their employers a higher rate of wages, or to improvements in government, or improvements in intelligence, or improvement in morals. I think that whoever will thoroughly examine the facts will come to the conclusion that John Stuart Mill is right when he says that “all the labor-saving machinery that has hitherto been invented has not lessened the toil of a single human being.” …
The old-fashioned shoemaker, having learned his trade and purchased his kit of tools, was his own master. If he did not find work in one place he could find it in another place. He had the means of earning a livelihood wherever he could find people who wanted shoes. But now the shoemaker must find a great factory and an employer with a large amount of capital. Without such an employer he is utterly helpless: he cannot make a shoe; he can only make one tenth or one sixty-fourth part of a shoe, or whatever the proportion may be. It is the same way with all other trades into which machinery has largely entered. The effect of the introduction of machinery in any trade is to dispense with skill and to make the laborer more helpless. I think you all understand that effect of machinery.
Senator Call:: Your idea is that the introduction of machinery in the trades tends to prevent a man from mastering the whole of his trade — that he learns a part of the trade instead of the whole trade?
Henry George:: Yes. That in itself might not be a disadvantage: but it is a disadvantage under present conditions; those conditions being that the laborers are driven by competition with each other to seek employment on any terms. They must find it; they cannot wait. Ultimately, I believe the whole trouble to come from the fact that the natural field of employment, the primary source of wealth, the land, has been monopolized and labor is shut off from it.
Wages in all occupations have a certain relation to each other … but in a large sense they must all depend upon the wages in the widest occupation. That occupation in this country is agriculture, and everywhere throughout the world the largest occupations are those which concern themselves directly and primarily with the soil. Where there is free access to the soil, wages in any employment cannot sink lower than that which, upon an average, a man can make by applying himself to the soil — to those natural opportunities of labor which it affords. When the soil is monopolized and free access to it ceases, then wages may be driven to the lowest point on which the laborer can live.
The fact that in new countries wages, generally speaking, are higher than they are in old countries, is simply because in those new countries, as we call them, the soil has not yet passed fully into private hands. As access to the land is closed, the competition between laborers for employment from a master becomes more intense, and wages are steadily forced down to the lowest amount on which the laborer can live.
In a state of freedom the introduction of machinery could but add to wages. It would increase the productive power of labor, and the competition with each other of those having such machinery and desiring to employ labor would suffice to give the laborer his full share of the improvement. Where natural opportunities are closed up, however, the advantages resulting from the use of machinery, minus that part retained by monopolies arising from its use, must ultimately go to the owners of land, either in higher rents or higher prices. You can see that very readily if you consider a community in which one person or a small number of persons had full possession of the land. In such a case no one could work upon the land or live upon it save upon their terms. Those who had no land, having no means of employment, would have to compete with each other for the privilege of working for those who had the land, and wages would, of course, steadily sink to the point at which a man could barely live.
Now, if you imagine a labor-saving invention introduced there, no matter how much it might add to the productiveness of labor, the landlord could necessarily claim the whole advantage, just as he could claim any advantage arising from increased fertility of the soil. lf invention were carried to the farthest imaginable point, so that labor could be entirely dispensed with in the production of wealth, the raw material must still be obtained from the land [not to mention the factory must occupy land — ed.], and therefore the landowners would have all the wealth that could be produced, and would be absolutely independent of labor. There would be no use for anybody else, save as their servants or as pensioners on their bounty. This point is of course unattainable, but towards it labor-saving inventions tend, and their general effect is to raise the price of land. This is illustrated in the effect of railroads. Railroads very much reduce the cost of transportation, but that does not add anywhere to the wages of labor, nor yet, generally, to the profits of capital. It simply adds to the value of land. Where a railroad comes wages do not increase; interest does not rise; but land goes up in value.
All human production in the last analysis is the union of labor with land; the combination, transportation. or modification of materials furnished by nature so as to adapt them for the use of man. Therefore … where one man owns the land he must necessarily be the master of all the other men that live upon it. Where one class own the land they must necessarily be the ruling class. … In a state of society like ours, where the land is very largely divided up, you do not see this so clearly; but you can see it, on one side, in the large sums which the owners of land are enabled to obtain without doing anything themselves, and on the other, in the conditions which exist among the lowest class of laborers.
[Questioning by Sen. James Pugh, D-Alabama]
Senator Pugh:: We have a large public domain now, subject to settlement and cultivation under the homestead law — millions of acres of land unoccupied .
Henry George:: Where is it?
Senator Pugh:: Out in the western states and in the southern states.
Henry George:: Practically, that is of but little use to people here. But the extent of our public domain is very much exaggerated. The best part of it has been taken. What is left, the millions of acres that figure in the Land Reports, comprise all the deserts, all the mountain chains, all the poor land. An immense amount of land that is carried on the books of the Interior Department as public land is really now in private hands, consisting of railroad land which has not been surveyed and patented, of land upon which various claims have been filed but not yet perfected, and of land held by ownership of the water. All through the western part of this continent water is scarce.
I know, for instance, of a ranch of a million acres which is for sale in this city. It will probably be taken to London and sold there. Nearly all of that million acres is government land, and it is not the legal title that is for sale, but virtual possession. What the parties have obtained to by preemption and homestead entry is the banks of two streams. It is impossible to use that land for grazing (the only purpose that it is fit for) without access to the water. The man who commands the access to the water commands this million acres of land just as truly as though it were patented to him. All through the West enormous amounts of land are held in this way. That it is not an easy thing for a man who wishes to go upon government land to get any such land that he can use profitably is proved by the high rents that are paid. Men do not pay largely for what they can get for nothing. You will find that in all our new states arable land already commands a high price.
The rent of land in California, where it is rented on shares, varies from one-fourth to one-half the produce. In the new Northwest the rent is usually one-half. In New Jersey I inquired, the other day, of a farmer in a part of the state where I happened to be, and he told me that the rent there was one-half. That is an enormous rent. Buckle, in his History of Civilization, estimates the rent in Ireland as one-fourth of the product — and Ireland has always been supposed to be a very highly rented country.
Senator Pugh:: In the South you can find an abundance of rich land, uncultivated and unoccupied, which can be rented very much under that figure.
Henry George:: There may be special reasons, there probably are special reasons, why the stream of immigration has not been directed to the South.
Senator Pugh:: That is very true.
Henry George:: All these considerations must be taken into account. But I have seen men who started out to find a piece of the public domain upon which to make a home and who have come back disheartened. The last time I came across the plains I met one family who had sold a farm in the Platte Valley and had gone away to the Pacific Coast and up into Oregon, and who were coming back, the man intending to go to work on a railway. I found a long train of Southwestern men from the Choctaw Nation who had been as far as Washington Territory and Puget Sound and who were coming back. You will find them passing and repassing in that way all the time, and you will find generally that the man who starts out to get himself a homestead on government land will find that the cheapest way to get it is to buy or rent.
The speculator keeps just ahead of the settler. Our laws, although intended to secure every man a home, have operated just the other way, just as have the land laws of Australia and New Zealand. A large business has been carried on, and is now being carried on, in the making of entries. A man files a preemption claim or a homestead entry, perfects it, and sells it out to a capitalist, and then goes on to repeat the operation.
I noticed tbe last time I came across the continent that at Council Bluffs there was an advertisement of one of these land-grant railroad companies posted up offering some 2,500 improved farms for sale. I take it that those improved farms were pieces of railroad land on which men had settled, on which they had paid something down, giving a mortgage for the balance, and which they had been obliged to abandon, the land reverting to the railroad company, which was again offering it for sale. A great deal of that land through the West is not fitted by nature for agriculture. There still exists “The Great American Desert,” although land-grant agents wipe it out of the maps.
Senator Pugh:: Are not the unemployed classes very much increased in number, and is not the opinion that there is a scarcity of employment encouraged by the fact that the demand for employment is generally for particular kind of employment in a particular place? … They could go elsewhere and find employment, but they demand employment in New York or Boston, or Philadelphia or Chicago, and they cannot find it there, although they could find it elsewhere if they were willing to go and seek it.
Henry George:: All that you say may be true in individual cases, but it is not generally true. You will find today in all the cities unemployed men.
If you have any experience in these large cities, you are constantly beset by men who say to you, “I want something to do; I am willing to do anything.” Such men are always walking our streets and tramping along our roads; some even in the best of times, and when bad times come, a great many. There may be, at times, a surplus of labor in some branches of industry and not in others. That, under our present industrial system, is constantly likely to occur to some extent; but under a state of freedom it would be quickly relieved. Where too much of one thing was produced relatively to other things the price of that article would fall as compared with the prices of other articles, and capital and labor would naturally be attracted to the production of the others, thus quickly restoring the level.
There come times, however, when the supply of labor seems to be in excess of the demand, not in two or three occupations, but in all. In fact, to some extent this is true even in what we consider normal times. We are used to it, but it is really strange that there should ever be a seeming oversupply of labor when you consider that the real demand for labor is labor itself. The two hands are always accompanied by a mouth, and until human wants are satisfied, there must always be need for human labor. When you analyze trade you find that it is the exchange of commodities for other commodities, the exchange of the products of one kind of labor for the products of another kind of labor. So that it is really labor that creates the effective demand for labor.
The only explanation of these general depressions is to he found in the fact of the monopoly of the natural opportunities for labor; in the fact that labor is shut off from access to the land, so that it is unable to employ itself. You said awhile ago that all men could not go to farming. It is certainly true that all men would not want to go to farming; but in every trade you will find some men who probably would go to farming if there were profitable opportunity. If you were to open today a large body of agricultural land within convenient distance of these cities, and make it free, you would find a grand rush for it; a rush which would relieve labor in almost every trade, by reducing the number of those competing for work, and which again would increase the demand for labor in these various occupations. [Some readers may never think of becoming farmers; others of you would, if it paid better; and even if you wouldn’t, ask your local illegal immigrant population what they would do, given a piece of farmland at no cost — ed.]
Now, I think these industrial depressions, that seem to spread over the whole civilized world like great waves, can ultimately be traced to the fact that land is not thus open to labor. I think we can see their genesis in this country. For instance, there is an era of stimulation. We go largely into railroad building; business is brisk; there seems to be a good demand for everything. Now, there is one thing, and only one thing, which, during all this time, rises in price, and that is land. Your city lots increase in value; your agricultural lands also. Wherever your railroad goes land jumps up three, four, five, or six hundred, or perhaps a thousand percent. Now, the rise in the price of land means that the man who wants to use the land must pay a greater premium for doing so. The raising of the price of land is the raising of a barrier between labor and its natural opportunities. Then you find that these high prices of land check building, check settlement, check improvement. Thus comes a check to production at the very foundation of the industrial system, the stratum on which all our industries rest; and necessarily this cessation of production causes a cessation or reduction of demand, of demand for other things. That, in other avocations again, checks production, and so the impulse runs through the whole industrial network and produces what seems to be paralysis everywhere, and in all occupations you have men idle who would gladly be at work.
[Questioning by Sen. Henry W. Blair, R-New Hampshire]
Senator Blair:: Now there is a point that I would like to have you explain. You say as to land, yes; but I do not see how, logically, you can apply that principle to land and not carry it further. That is the difficulty in my mind as to your theory, I do not see any difference between a piece of land unoccupied and a piece of the same land occupied — real estate. I do not see any difference between land as a productive power and the mowing machine or the yoke of oxen or any other form of thing which is material, which is property. and which is made the tool of production. I do not understand why you stop the application of your theory at unoccupied land.
Henry George:: I do not stop at unoccupied land, not at all. Land, I say, including occupied and unoccupied land.
Senator Blair:: I do no. understand why you stop at land.
Henry George:: In short, you do not understand the distinction I make between land and such other kinds of property as you have spoken of — the mowing machine, oxen, etc.
Senator Blair:: It looks to me like this, and I would he glad to have it made clear: This division of production, or of the market price realized for production, from which wages and interest and rents are paid, from which all parties and all forces entering into the produced article are compensated — It looks to me as though this matter of division was one, as Mr. Smith said, of higgling in the market, and success in the higgling depends upon the intelligence and power which each higgler has to make his higgling successful. But I do not see how the working man, the wage-worker, unless we first produce the millennium or some entirely new order of things which cannot result until we are all dead and until our children and grandchildren are all dead (and that is too late for the purposes of this investigation) — unless by some such means I do not see any way by which the wage-worker can get any more pay out of it, unless by his intelligence and his personal force or his personal force combined with the forces of others of his own class, he can stand up and say, “I will not work until you give me so much.” And he must have accumulated something so that he can live a part of a year, or a year, in order to enforce his demand. Capital cannot live forever. It is the annual production that keeps the world in motion, and when a combination of laborers are able to take care of themselves one year, capitalists and monopolists must agree to a fair distribution or a fair payment of wages, or else submit to destruction. And the destruction of the capitalist in that way, or of his property, continued for a year or for a reasonahle length of time, makes him “hungry” and places him upon the same level as the wage-worker, whose personal necessities and sufferings, in the shape of cold and starvation, often compel him to yield.
Henry George:: You have asked me questions that involve a great deal, and I shall have to go over a good deal of ground to answer them. You ask me first what distinction I make between land and other species of property — oxen, machinery, etc. There are very essential distinctions. In the first place, the land is a natural element, the machine, the house, even the yoke of oxen, are the product of human labor. In the next place, land is something that exists from one generation to another, which each generation in its turn and in its time must apply to for its subsistence.
Senator Blair:: Permit me to ask you if the land in our condition of things is any more necessary to the existence of the man, to his actual existence, I mean, than is the milk which is produced by the cow which feeds upon the land, or the grain which grows from the land? We do not eat the land; we do not wear the land. The land is the primary cause, just the same as the Almighty is, and you might as well say that we must distribute the Almighty pro rata among human beings, or that He must become common property, as to say that the land which He has created must become common property. It is the necessity that I feel today for protection against the elements and for the nourishment of my body that is the exacting thing, and I do not think the land is any more necessary to human life than the other elements.
Henry George:: You must certainly agree to this, however, that while those other forms of property exist for a little while, land is something that exists from one generation to another.
Senator Blair:: How is that? “Land” is not a definite mathematical term; land is of no use unless improved by human labor. It is only as it can be immediately utilized that land is of any consequence. Land in Africa is of no consequence to us because we cannot use it. Land here is of consequence to us provided we can use it; but even land here is of no account unless we can use it — of no more account than if it was real estate in the moon or the distant stars. It must be improved and utilized by actual immediate occuption in order to be useful to us, and it may be that land which is of some account today will be of no account tomorrow. So that it is not a fact that the same land is a perpetuallv available element in the matter of human sustenance any more than personal property which perishes in the using.
Henry George:: Please let me go on to state the differences between land and other property. There is a difference in the origin; there is a difference in the permanence, and there is a difference as to value. The value of a cow, of a machine, or of a house, depends upon the amount of labor that, upon the average, is required to produce it. The value of a piece of land is not that. Nobody produces land. The value of it is the amount of the produce of labor that the ownership of that land will enable the owner to get from the man who does use it. Take these buildings that we see around here, thet big building over there of Mr. Bennett’s, for instance; that building represents a certain amount of labor expended in getting the materials, putting them upon the ground, and erecting the structure. That is something that Mr. Bennett has done, or has had done. The value of the land on which that building stands results not from the exertions of Mr. Bennett, but from the fact that there are two million people around this place. It is they, and not Mr. Bennett, who have given that land its value.
Senator Blair:: Now, is it so? Does it not result from the additional fact that Mr. Bennett has obtained raw material and has combined it with the land?
Henry George:: Not at all.
Senator Blair:: Until that land is utilized is it of any more account than a piece of somebody’s cow pasture?
Henry George:: Certainly. Right here near it is another lot which is vacant, with a board fence around it, yet that lot is worth $500,000. What gives that land its value?
Senator Blair:: The fact that it can be combined with human labor, and nothing else.
Henry George:: If that land was in the interior of Africa it could be combined with human labor just as well, but it would not have the same value.
Senator Blair:: It could not, without an enormous cost for transportation and building up a city around it; and this land is only valuable because it has been utilized; and it is utilized only because you have that city around it. I do not see the distinction in this respect between land in the unoccupied condition you speak of and land in that condition which affords opportunities of transacting business.
Henry George:: Take the Astor House across the street. Suppose you go out on the plains and put up a building as good as the Astor House; do you thereby make the ground on which that building stands as valuable as that on which the Astor House stands?
Senator Blair:: No; and why not? Simply because the Astor House in a desert supplies no human wants. It is like property destroyed. And so this vacant lot here is of no value.
Henry George:: Until you surround it by a great city.
Senator Blair:: But you leave this lot unoccupied, surrounded as it is by a great city, and it is of no more value than the land in the desert so far as the supply of human wants is concerned. It has a market value now because it is available for such purposes.
Henry George:: You were speaking of the value of the land.
Senator Blair:: But what is it that sells? It is not the value of the land. It is the availability of the land for use.
Henry George:: Unquestionably it arises from the fact that it is here in the center of a great city.
Senator Blair:: And if you do not convert it to use it is not available. Its availability for conversion to use, and the conversion of it in combination with labor and other things, is what makes it valuable. [What does it mean to “make land available for conversion to use”?– ed.]
Henry George:: But that vacant land is not so combined. It is still lying to all intents and purposes in a state of nature.
Senator Blair:: But it is not the land in and of itself that is valuable. It is the land plus its situation which makes it available, that gives it value. Until that availability is made use of it does not yield actual valuable results, but it can be so made use of at any time.
Henry George:: Precisely. Therefore the value of that land is only the power which the owner has to obtain a revenue from it whenever he wishes to.
Senator Blair:: Precisely.
Henry George:: And that revenue must come from the labor of other people.
Senator Blair:: But it is the power to combine that land with human labor and with wood, with brick, with mortar, with various other things, which in combination constitute a building that renders it valuable.
Henry George:: The power to erect a house on it?
Senator Blair:: The power to have a house erected upon it; the power to convert it to an available purpose.
Henry George:: Not [at] all. If you had a piece of land in the interior of Africa you could erect a house on it.
Senator Blair:: You would not have the power of utilization in that case; you would have only the power of waste. Land has no value until von can utilize it.
Henry George:: But you can utilize it. You will find in small towns large edifices as good as many in Paris or New York. But you do not find the erection of those edifices gives equal value to the land underneath. What gives value to the lot is that its owner has the power to command a large revenue from it. No matter how rich land may be, no matter how well situated it may be, or how available it may be, it is worth absolutely nothing until somebody is willing to pay a premium for its use. That constitutes the value of land. Now the value of a horse, or of clothes, or of anything else comes from the human labor expended in producing it, in creating it, to speak metaphorically; but no human labor created the land. It existed before we came into the world and it will exist after we are gone. It is the field of our exertion. That is the difference between land and other kinds of property….
Senator Blair:: I do not undentand how you make your distinction between the land itself as property and the superstructure which is upon it, or between the land and the implements that are essential in order to carry on production for the supply of human wants. In other words, I think that in claiming that land should be owned in common you substantiallv claim that all property which supplies human wants should be held in common.
Henry George:: Not at all. As a matter of right, or as a matter of expediency, whichever way you take it, there is a very clear and broad distinction. That distinction is that this property which is the result of labor is properly the reward of labor. You rightfully own your coat; I rightfully own mine, because I have got it from the man who made it and have paid him for it. Nobody can show me a title of that kind to land. So far as the question of expediency goes, to make property which is the result of labor common would be to destroy the incentive to production. If I had to divide whatever I produced with everybody I would have very little or almost no inducement to produce anything. To take from a man that which is the result of his own labor, his own exertion, is to check his desire to labor. But, no matter how much you might make the value of land common, you could not check the production of land; you could not make land any less valuable. It would still have all the properties that it had before.
Our present system of taxation, for instance, is a discouragement to the production of wealth. We tax a man according to what he has done, according to what he has added to the wealth of the community. Now, it is really a good thing to add to the wealth of the community. No matter how selfish a man may be be cannot keep it all to himself. The more there is, the more, other things being equal, we can all get; and it ought to be the effort of everybody to stimulate production as far as possible. But instead of that we tax men for producing; we tax a man for getting rich; we tax a man for his economy. What we ought to do is to tax man according to the natural opportunities which they have and do not use.
Take that building over there. According to my notion that building is an ornament and a convenience to the city. It does not injure anybody. It is better that there should be a building there than an unsightly vacant lot; therefore I would not tax the man one cent for putting up that building, but I would tax him upon the value of the land upon which the building stands. Under such a system of taxation the man who has that fine building upon his lot would not pay any more taxes than the man who has this vacant lot with the ugly fence around it, and the effect would be to stimulate building, and to induce the holders of the land to take a lower price for it or to let it to somebody who would use it.
Senator Blair:: You would still tax upon the value of the land, you say. Upon its value at what time? Upon the value in a state of nature, or upon the value with all the surrounding improvements?
Henry George:: Upon the value at the time the taxation was imposed. For instance, I would tax it in 1883 according to the value of the land in 1883 [as] if the particular building upon it were swept away by fire.
Senator Blair:: Then all the land, occupied or unoccupied, would be taxed upon that primary valuation?
Henry George:: Certainly. Here you have an enormous population crowded onto one-half of this island. The population is denser in these downtown districts around us here than anywhere else in the world.
Senator Call [chiming in] Except in the Eastern countries.
Henry George:: They do not build in our way in the Eastern countries. They build low there. Notwithstanding this crowding, if you take a ride up on the Sixth Avenue Railroad you will find any quantity of land in a state of nature, but if you want to build a house upon it you will be met by the owner who will demand $5,000 or S10,000 or S25,000 for a lot. You pay that and put up your house, and then along comes the tax gatherer who taxes you for the house, for the improvement you have made, for the increased accommodation you have furnished for the people of this city as well as for yourself, and in all probability he taxes you more on the value of the house or on the value of the land on which the house stands than he taxes the other land beside it which is lying vacant. I think that is the general rule all over the United States, that the occupied land, especially where it is in the hands of small owners, is taxed even on its value as land, higher than that which is lying beside it unused. We ought, on the contrary, to discouage the dog-in-the-manger business, these people who are doing nothing themselves to improve the land and are preventing others from doing anything.
Senator Blair:: I was going to ask you whether you would confine taxation of occupied land to the value of the land before it was occupied?
Henry George:: Not at all. I would tax it whether it was occupied or not so long as it had a value.
Senator Blair:: Would you tax any other forms of property?
Henry George:: I would not. I do not think it would be necessary. I would say to the people, “Produce all you can. The more everybody produces the more there will be to divide, and the more each can get for his share.”
Senator James George of Mississippi. In your theory you disconnect the improvements entirely from the land?
Henry George:: Certainly.
Senator Blair:: And you would make the land common property?
Henry George:: That would be in substance making it common, but I would not in form make it common. I would let the present holders call it their land, just as they do now.
The testimony concludes. What was achieved? As a result of the committee’s hearings, a smal bill restricting contracts with immigrant laborers was passed — obviously not supported by Henry George. And one other outcome — the Bureau of Labor Statistics was first established. That Bureau has compiled and provided valuable information for over 100 years. However, George’s real recommendations — of opening and distributing land via his “Single Tax,” coupled with the ending of all taxation or other impediments to production and trade — have never yet been implemented.