DEFECTS OF THE EXISTING LAND SYSTEM
Starting from the principle that the rightness or wrongness of any
system of land tenure is determined not by metaphysical and intrinsic
considerations, but by the effects of the institution upon human
welfare, we arrived at the conclusion that private landownership is
not unjust, so long as no better system is available. By the same test
of human welfare we found that it would be wrong to substitute a
better system through the process of confiscating rent, while leaving
interest undisturbed. A further step brought us to the conclusion that
complete Socialism would certainly, and the complete Single Tax
probably, be inferior to the present system. As a sort of corollary,
the social and moral superiority of private landownership was stated
in terms of natural rights. Finally, the question was raised whether
the landowner has a right to take rent, and to take all the rent.
In stating the superiority of the present system, we explicitly noted
that we had in mind the system as capable of improvement. This implied
that there are defects in the present form of land tenure, and that
these can be eliminated in such a way as to make the system more
beneficial and more in harmony with the principles of justice. In the
present chapter we shall give a summary review of the principal
defects, and in the following chapter we shall suggest some methods of
reform. All the defects and abuses may conveniently be grouped under
three heads: Monopoly; Excessive Gains; and Exclusion from the Land.
_Landownership and Monopoly_
In the literature of the Single Tax movement the phrase, "land
monopoly," is constantly recurring. The expression is inaccurate; for
the system of individual landownership does not conform to the
requirements of a monopoly. There is, indeed, a certain resemblance
between the control exercised by the owner of land and that possessed
by the monopolist. As the proprietor of every superior soil or site
has an economic advantage over the owner of the poorest soil or site,
so the proprietor of a monopolistic business obtains larger gains than
the man who must operate in conditions of competition. In both cases
the advantage is based upon the scarcity of the thing controlled, and
the extent of the advantage is measured by the degree of scarcity.
Nevertheless, there is an important difference between landownership
and monopoly. The latter is usually defined as that degree of unified
control which enables the persons in control arbitrarily to limit
supply and raise price. As a rule, no such power is exercised by
individuals, or by combinations of individuals with regard to land.
The pecuniary advantage possessed by the landowner, that is, the power
to take rent, is conferred and determined by influences outside of
himself, by the natural superiority of his land, or by its proximity
to a city. He can neither diminish the amount of land in existence nor
raise the price of his own. The former result is inhibited by nature;
the latter by the competition of other persons who own the same kind
of land. To be sure, there are certain kinds of land which are so
scarce and so concentrated that they do fall under true monopolistic
control. Such are the anthracite coal mines of Pennsylvania, and some
peculiarly situated plots in a few great cities, for example, land
that is desired for a railway terminal. But these instances are
exceptional. The general fact is that the owners of any kind of land
are in competition with similar owners. While the element of scarcity
is common to landownership and to monopoly, it differs in its
operation. In the case of monopoly it is subject, within limits, to
the human will. This difference is sufficiently important, both
theoretically and practically, to forbid the identification or
confusion of landownership with monopoly.
A notable illustration of such confusion is the volume by Dr. F. C.
Howe, entitled, "Privilege and Democracy in America." He maintains
that bituminous coal, copper ore, and natural gas are true monopolies,
but gives no adequate proof to support this assertion. Moreover, he
exaggerates considerably the part played by landownership in the
formation of industrial monopolies. Thus, his contention that the
petroleum monopoly is due to ownership of oil-producing lands is
certainly incorrect; for the Standard Oil Company (or companies) has
never controlled as much as half the supply of raw material. "The
power of the Standard does not rest upon a direct monopoly of the
production of crude oil through ownership of the wells."[49] Perhaps
the most remarkable misstatement in the volume is this: "The railway
is a monopoly because of its identity with land."[50] Now there are a
few important railway lines traversing routes or possessing terminal
sites which are so much better than any alternative routes or sites as
to give all the advantages of a true monopoly. But they are in a small
minority. In the great majority of cases, a second parallel strip or
parallel site could be found which would be equally or almost equally
suitable. Neither the amount nor the kind of land owned by a railroad,
nor its legal privilege of holding land in a long, continuous strip,
is the efficient cause of a railway monopoly. To attribute the
monopoly to land is to confound a condition with a cause. One might as
well say that the land underlying the "wheat king's" office is the
cause of his corner in wheat. It is true that in a few of the great
cities the existing railroads may, through their ownership of all the
suitable terminal sites, prevent the entrance of a competing line. In
the first place, such instances are rare; in the second place, the
fact that there are several roads already in existence shows that
competition was possible without the entrance of another one. The
influence impelling them to form a monopoly for the regulation of
charges is not their ownership of terminal sites. No sort of uniform
action with regard to terminals would produce any such effect. The
true source of the monopoly element in railways is inherent in the
industry itself. It is the fact of "increasing returns," which means
that each additional increment of business is more profitable than the
preceding one, and that in most cases this process can be kept up
indefinitely. As a consequence, each of two or more railroads between
two points strives to get all the traffic; then follows unprofitable
rate cutting, and finally combination.[51] The same forces would
produce identical results if railroad tracks and terminals were
suspended in the air.
Dr. Howe asserts that the monopolistic character of such public
utility corporations as street railways and telephone companies is due
to their occupation of "favoured sites."[52] How can this be true,
when it is possible to build a competing line on an adjoining and
parallel street? If the city forbids this, and gives an exclusive
franchise to one company, this legal ordinance, and not any
exceptional advantage in the nature of the land occupied, is the
specific cause of the monopoly. If the city permits a competing line,
and if the two lines sooner or later enter into a combination, the
true source and explanation are to be found in the fact of increasing
returns. Combination is immeasurably more profitable than cut-throat
competition. Moreover, the evils of public service monopolies can be
remedied through public control of charges and through taxation.
Neither in railroads nor in public utilities is land an impelling
cause of monopoly, or a serious hindrance to proper regulation.
Most of Dr. Howe's exaggerations of the influence of land upon
monopoly take the form of suggestion rather than of specific and
direct statement. When he attempts in precise language to enumerate
the leading sources of monopoly, he mentions four; namely, land,
railways, the tariff, and public service franchises.[53] Nor is he
able to prove his assertion that of these the most important is land.
Nevertheless, land is one of the foremost causes. The most prominent
examples of land monopoly in this country are the anthracite coal
mines and the iron ore beds. Fully ninety per cent. of our anthracite
coal supply (exclusive of Alaska) is under the control of eight
railway systems which in this matter act as a unit.[54] According to
Dr. Howe, the excessive profits reaped from this monopolistic control
amount to between one hundred and two hundred million dollars
annually.[55] In other words, the consumers of anthracite coal must
pay every year that much more than they would have expended if the
supply had not been monopolised. On the other hand, the formation of
monopoly would have been much more difficult if the railroads had been
legally forbidden to own coal mines. As things stand, railway monopoly
is an important cause of the anthracite coal monopoly. Some
authorities are of the opinion that a similar condition of monopoly
will ultimately prevail in the bituminous coal mines. Iron ore has
been brought under the control of the United States Steel Corporation
to such an extent that the Commissioner of Corporations writes:
"Indeed, so far as the Steel Corporation's position in the entire iron
and steel industry is of a monopolistic character, it is chiefly
through its control of ore holdings and the transportation of
ore."[56] From this statement, however, it is evident that the
monopoly depends upon control of transportation as well as upon
ownership of the ore beds. If the former were properly regulated by
law, the latter would not be so effective in promoting monopoly.
Speaking generally, we may say that when a great corporation controls
a large proportion of the raw material entering into its manufactured
products, such control will supplement and reinforce very materially
those other special advantages which make for monopoly.[57] Prominent
examples are to be found in steel, natural gas, petroleum, and water
powers. In his "Report on Water Power Development in the United
States," the Commissioner of Corporations (March 14, 1912) declared
that the rapidly increasing concentration of control might easily
become the nucleus of a monopoly of both steam and water power. Ten
great groups of interests, he said, already dominated about sixty per
cent. of the developed water power, and were pursuing a policy
characterised by a large measure of agreement.[58] As a rough
generalisation, it would be fair to say that in one or two instances,
at least, landownership is the chief basis, and in several other cases
an important contributory cause of monopoly.
Even an approximately accurate estimate of the amount of money which
consumers are compelled to pay annually for the products of such
concerns over and above what they would pay if the raw material were
not wholly or partially monopolised, is obviously impossible. It may
possibly run into hundreds of millions of dollars.
_Excessive Gains from Private Landownership_
The second evil of private landownership to be considered here, is the
general fact that it enables some men to take a larger share of the
national product than is consistent with the welfare of their
neighbours and of society as a whole. As in the matter of monopoly,
however, so here, Single Tax advocates are chargeable with a certain
amount of overstatement. They contend that the landowner's share of
the national product is constantly increasing, that rent advances
faster than interest or wages, nay, that all of the annual increase in
the national product tends to be gathered in by the landowner, while
wages and interest remain stationary, if they do not actually
decline.[59]
The share of the product received by any of the four agents of
production depends upon the relative scarcity of the corresponding
factor. When undertaking ability becomes scarce in proportion to the
supply of land, labour, and capital, there is a rise in the
remuneration of the business man; when labour decreases relatively to
undertaking ability, land, and capital, there is an increase in wages.
Similar statements are true of the other two agents and factors. All
these propositions are merely particular illustrations of the general
rule that the price of any commodity is immediately governed by the
movement of supply and demand. In view of this fact, it is not
impossible that rent might increase to the extent described in the
preceding paragraph. All that is necessary is that land should become
sufficiently scarce, and the other factors sufficiently plentiful.
As a fact, the supply of land is strictly limited by nature, while
the other factors can and do increase. There are, however, several
forces which neutralise or retard the tendency of land to become
scarce, and of rent to rise. Modern methods of transportation, of
drainage, and of irrigation have greatly increased the supply of
available land, and of commercially profitable land. During the
nineteenth century, the transcontinental railroads of the United
States made so much of our Western territory accessible that the value
and rent of New England lands actually declined; and there are still
many millions of acres throughout the country which can be made
productive through drainage and irrigation. In the second place, every
increase of what is called the "intensive use" of land gives
employment to labour and capital which otherwise would have to go upon
new land. In America this practice is only in its infancy. With its
inevitable growth, both in agriculture and mining, the demand for
additional land will be checked, and the rise in land values and rents
be correspondingly diminished. Finally, the proportion of capital and
labour that is absorbed in the manufacturing, finishing, and
distributive operations of modern industry is constantly increasing.
These processes call for very little land in comparison with that
required for the extractive operations of agriculture and mining. An
increase of one-fifth in the amount of capital and labour occupied in
growing wheat or in taking out coal, implies a much greater demand for
land than the same quantity employed in factories, stores, and
railroads.[60]
As a consequence of these counteracting influences, it appears that
the share of the landowners has not increased disproportionately. The
most comprehensive endeavour yet made to determine the growth and
relative size of the different shares of the national product is
embodied in Professor W. I. King's volume, "The Wealth and Income of
the People of the United States," published in 1915. It estimates
that the total annual income of the nation increased from a little
less than two and one-fourth billions of dollars in 1850 to a little
more than thirty and one-half billions in 1910, or slightly more than
fifteen times. During the same period rent, the share of the
landowners, advanced from $170,600,000 to $2,673,900,000, or about
fifteen and three quarter times. In the year 1910, therefore, the
landowners were receiving but a very small fraction more of the
national product than their predecessors obtained sixty years
earlier.[61] As to the relative size of the shares going to the
different factors in 1910, the figures are even more remarkable. Wages
and salaries absorbed 46.9 per cent.; profits, 27.5 per cent.;
interest, 16.8 per cent.; and rent, only 8.8 per cent.[62] This was
exactly the same per cent. that the landowners received in 1860. To be
sure, these figures are only approximations, but they are probably the
most reliable that can be obtained from our notoriously incomplete
statistics, and they will deserve respectful consideration until they
have been refuted by specific criticism and argument. In the opinion
of their compiler: "The figures for wages and salaries are believed to
be fairly accurate; those for rent are thought to have an error of not
more than twenty per cent. The separation of the share of capital from
that of the entrepreneur is very crudely done and no stress should be
laid on the results. The total for all shares is thought to be more
accurate than the mode of distribution, and for the last three census
years should come within ten per cent. of the correct statement of the
national income. For earlier years the error should not be over twenty
per cent. at the outside."[63] If we make the maximum allowance for
error in reference to the share of the landowner, and assume that the
rent estimate is twenty per cent. too low, we find that it was still
only ten and one-half per cent. of the total product in 1910, which
represents an increase of less than three per cent. since 1850. It is
significant that Dr. Howe, who has no bias toward belittling the share
of the landowner, suggested as his minimum and maximum estimates of
the land values of the country in 1910 figures which are respectively
fifty per cent. below and only five per cent. above the amount taken
by Professor King as the basis for his estimate of rent.[64] There is,
consequently, a strong presumption that Professor King is right when
he stigmatises as "absurd" the contention of the Single Taxer, "that
all the improvements of industry result only in the enrichment of the
landlord.... The value of our products has increased since 1850 to the
extent of some twenty-eight billions of dollars, while rent has gained
less than three billions. Evidently it has captured but a meagre part
of the new production."[65]
There are strong indications, however, that the per cent. of the
product going to the owners of land has increased considerably in the
last twenty years, and that this movement will continue indefinitely.
According to Professor King's calculations, the per cent. of the total
product assignable as rent advanced from 7.8 in 1900 to 8.8 in 1910,
which meant that during that period the national income increased only
70 per cent., while the share of the landowner increased 91 per
cent.[66] It is true that a disproportionate advance in rent has
occurred between other census years, only to be neutralised by
subsequent decreases; but the present instance seems to include
certain features which did not characterise any of the former gains in
the relative share of the landowner. Since 1896 the prices of food
products "rose most rapidly in the case of meat, dairy products, and
cereals, which were derived directly from the land. The prices of raw
materials show a like relation. Timber, grain, and other raw materials
obtained directly from the land have risen rapidly in price, while
semi-manufactured articles have increased less rapidly, or have
decreased in price.... There is no parallel in any other field to the
advance in those land values upon which civilisation most directly
depends--timber lands, fertile agricultural land, and land in large
commercial and industrial centres. The recent rise in land values has
been little short of revolutionary."[67]
Between 1900 and 1910 the value of farm lands _per acre_ in the United
States advanced 108.1 per cent.[68] During the eight years beginning
with July 1, 1906, the value of land in Greater New York increased
something more than one-third; in the principal cities of New Jersey,
and in Worcester, Washington, Boston, and Buffalo, somewhat less; in
Springfield and Holyoke, considerably more. In the most recent ten
years for which figures are available (since 1900 in every case) the
land values of Milwaukee, St. Louis and San Francisco averaged only a
slight degree of expansion, while those of Kansas City doubled, and
those of Houston, Dallas, Los Angeles, and Seattle trebled. To quote
Professor Nearing, from whose compilations these estimates have been
summarised: "The total extent of the increase in American city land
values may be hinted at rather than stated with any certainty. The
scattering instances in which land and improvements are separately
assessed led to the conclusion that in a large, well-established city,
growing at approximately the same rate as the other portions of the
United States, the land value is doubling in from ten to twenty-five
years. In the new, rapidly growing city of the middle and far West and
in some of the smaller cities of the East, the ratio of increase in
land values is far greater, amounting to two-fold or even three-fold
in a decade. In a few instances the rate of increase is much smaller,
and in one case, Jersey City, land values over a period of seven years
have actually decreased.... Nevertheless, the few available long range
figures indicate a widespread and considerable increase in American
city land values."[69]
The rise in the value of timber lands during the last thirty years has
been, in the words of the federal investigators, "enormous." For the
ten-year period ending in 1908, "the value of a given piece of
southern pine taken at random is likely to have increased in any ratio
from three-fold to ten-fold." About the same ratio of increase
obtained in the Pacific Northwest, and a somewhat smaller increase in
the region of the Great Lakes.[70] While a considerable decline has
taken place since 1908, it is only temporary; for the demand for
timber is notoriously increasing several times as fast as the supply.
That this upward movement in the value of all three kinds of land will
continue without serious interruption, seems to be as nearly certain
as any economic proposition that is dependent upon the future.
Although millions of acres of arable lands are still unoccupied in the
United States and Canada, the far greater part of them require a
comparatively large initial outlay for draining, clearing, irrigation,
etc., in order to become productive. Hence there is no likelihood that
they can be brought under cultivation fast enough to halt or greatly
retard the advancing values which follow upon the growth of population
and the increased demand for agricultural products. In all probability
the greater part of them will not come into use until the prices of
farm products have risen above the present level. Obviously this
supposes an increase in the value of all farm land, old and new. Nor
is the adoption of better methods of farming likely to check seriously
the upward movement. Between 1900 and 1910 the urban population of
America increased 34.8 per cent., as against a gain of only 21 per
cent. in the total population. This disproportionate growth in the
number of the city dwellers will if continued make certain what is in
any case extremely probable, a steady and considerable advance in
urban land values and rents.
The circumstance that these remarkable increases in land values are a
comparatively recent phenomenon has prevented them from receiving the
attention that they deserve, either from the general public or from
the students of economic and social problems. The total value of the
land of the country has increased steadily from decade to decade, but
so has the total value of capital, and even between 1900 and 1910 the
increase in the share of the capitalist was exactly equal to the
increase in the share of the landowner, that is, 91 per cent.[71]
Those persons who complacently make such comparisons overlook the new
and significant feature of the more recent advances in land value;
namely, that they are due in only a slight degree to an expansion of
the _area_ of land under consideration. The increases of value quoted
in the foregoing paragraphs are increases _per acre_ and _per urban
lot_, not increases derived from bringing new land under cultivation
or new tracts within municipal limits. On the other hand, the
increases in the value of capital, now as always, represent for the
most part concrete additions to the existing stock of productive
instruments. Except where monopoly holds sway, particular capital
instruments, unlike particular pieces of land, do not increase in
value. Hence the owner of a given amount of capital does not profit by
the advance in the total value of capital as the owner of the average
parcel of land profits by the general increase in the value of land.
This means that all those consumers of products who are not
landowners must pay an increasing tribute to those who are landed
proprietors.
So much for the _proportion_ of the national product which goes to the
landowning class. Let us next inquire how the landowner's share, or
rent, is distributed throughout the population. If it were equally
divided among all persons, its increase relatively to the shares of
the other factors would, from the social viewpoint, be a matter of
considerable indifference. On the other hand, if it is secured by a
minority of the population, and if that minority tends to become
smaller as the share itself becomes larger, we have a socially
undesirable condition.
In the twenty years between 1890 and 1910, the proportion of farm
families in the United States owning farm land, mortgaged or
unmortgaged, declined from 65.9 per cent. to 62.8 per cent.; the
proportion of urban families owning their homes, encumbered or
unencumbered, increased from 36.9 to 38.4 per cent., and the
proportion of all families owning homes, encumbered or unencumbered,
fell from 47.8 to 45.8 per cent. Of the homes owned by their
occupiers, 28 per cent. were mortgaged in 1890, and 32.8 per cent. in
1910.[72] While a decline of two per cent. in the home owning and
landowning families in twenty years, and an increase of almost five
per cent. in the number of those families who hold their property
subject to encumbrance, may not seem very serious in themselves, they
indicate a definitely unhealthy trend. Not only are the landowning
families in a minority, but the minority is becoming smaller.
Nevertheless, when we consider the amount of gains accruing to the
average member of the landowning class, we do not find that it is
unreasonably large. The great majority of landed proprietors have not
received, nor are they likely to receive, from their holdings incomes
sufficiently large to be called excessive shares of the national
product. Their gross returns from land have not exceeded the
equivalent of fair interest on their actual investment, and fair wages
for their labour. The landowners who have been enabled through their
holdings to rise above the level of moderate living constitute a
comparatively small minority. And these statements are true of both
agricultural and urban proprietors.
It is true that a considerable number of persons, absolutely speaking,
have amassed great wealth out of land. It is a well known fact that
land was the principal source of the great mediæval and post-mediæval
fortunes, down to the end of the eighteenth century. "The historical
foundation of capitalism is rent."[73] Capitalism had its beginning in
the revenue from agricultural lands, city sites, and mines. A
conspicuous example is that of the great Fugger family of the
sixteenth century, whose wealth was mostly derived from the ownership
and exploitation of rich mineral lands.[74] In the United States very
few large fortunes have been obtained from agricultural land, but the
same is not true of mineral lands, timber lands, or urban sites. "The
growth of cities has, through real estate speculation and incremental
income, made many of our millionaires."[75] "As with the unearned
income of city land, our mineral resources have been conspicuously
prolific producers of millionaires."[76] The most striking instance of
great wealth derived from urban land is the fortune of the Astor
family. While gains from trading ventures formed the beginning of the
riches of the original Astor, John Jacob, these were "a comparatively
insignificant portion of the great fortune which he transmitted to
his descendants."[77] At his death, in 1848, John Jacob Astor's real
estate holdings in New York City were valued at eighteen or twenty
million dollars. To-day the Astor estate in that city is estimated at
between 450 and 500 millions, and within a quarter of a century will
not improbably be worth one billion dollars.[78] According to an
investigation made in 1892 by the _New York Tribune_, 26.4 per cent.
of the millionaire fortunes of the United States at that time were
traceable to landownership, while 41.5 per cent. were derived from
competitive industries which were largely assisted by land
possessions.[79] The proportion of such fortunes that is due, directly
or indirectly, in whole or in part, to landownership has undoubtedly
increased considerably since 1892.
With regard to great individual or corporate land holdings, there
exist no adequate statistics. A few conspicuous instances may be
cited. The United States Steel Corporation owns lands yielding iron
ore, coal, coke, and timber which are valued by the Commissioner of
Corporations at nearly 250 million dollars, and by the Steel
Corporation itself at more than 800 million dollars.[80] Three
companies own nearly eleven per cent., and 195 individuals or
corporations own 48 per cent. of all the privately owned timber in the
United States.[81] The United States Census of 1910 shows that the
number of farms containing 500 acres or over was about 175,000, and
comprised ten per cent. of the total farm acreage. One hundred and
fifty persons and corporations are said to own 220,000,000 acres of
various kinds of land. None of these holders has less than ten
thousand acres, and two of the syndicates possess fifty million acres
each.[82]
_Exclusion from the Land_
One of the most frequent charges brought against the present system of
land tenure is that it keeps a large proportion of our natural
resources out of use. It is contended that this evil appears in three
principal forms: owners of large estates refuse to break up their
holdings by sale; many proprietors are unwilling to let the use of
their land on reasonable terms; and a great deal of land is held at
speculative prices, instead of at economic prices. So far as the
United States are concerned, the first of these charges does not seem
to represent a condition that is at all general. Although many holders
of large mineral and timber tracts seem to be in no hurry to sell
portions of their holdings, they are probably moved by a desire to
obtain higher prices rather than to continue as large landowners. As a
rule, the great landholders of America are without those sentiments of
tradition, local attachment, and social ascendency which are so
powerful in maintaining intact the immense estates of Great Britain.
On the contrary, one of the common facts of to-day is the persistent
effort carried on by railroads and other holders of large tracts to
dispose of their land to settlers. While the price asked by these
proprietors is frequently higher than that which corresponds to the
present productiveness of the land, it is generally as low as that
which is demanded by the owners of smaller parcels. To be sure, this
is one way of unreasonably hindering access to the land, but it falls
properly under the head of the third charge enumerated above. There is
no sufficient evidence that the _large_ landholders are exceptional
offenders in refusing to sell their holdings to actual settlers.
The assertion that unused land cannot be rented on reasonable terms is
in the main unfounded, so far as it refers to land which is desired
for agriculture. As a rule, any man who wishes to cultivate a portion
of such land can fulfil his desire if he is willing to pay a rent that
corresponds to its productiveness. After all, landowners are neither
fools nor fanatics: while awaiting a higher price than is now
obtainable for their land, they would prefer to get from it some
revenue rather than none at all. As a matter of fact, almost all the
agricultural land that is immediately available for renting, is
constantly under cultivation. This refers to land that is already
under the plough, and is provided with buildings and other necessary
improvements. Practically none of this is out of use. New land which
is without buildings is not wanted by tenants, unless it is convenient
to their residences, because they do not desire to expend money for
permanent improvements upon land that they do not own. True, the
present owners of such land might erect buildings, and then let it to
tenants. In so far as new land might profitably be improved and
cultivated, and in so far as the owners are unwilling or unable to
provide the improvements, the present system does keep out of use
agricultural land that could be cultivated by tenants. Mineral and
timber lands are sometimes withheld from tenants because the owners
wish to limit the supply of the product, or because they fear that a
long-term lease would prevent them from selling the land to the best
advantage. As to urban sites, the contention that we are now examining
is generally true. The practice of leasing land to persons who wish to
build thereon does not, with the exception of a very few cities,
obtain in the United States for other than very large business
structures. As a rule, it does not apply to sites for residences. The
man who wants a piece of urban land for a dwelling or for a moderately
sized business building cannot obtain it except by purchase.
Cannot the land be bought at a reasonable price? This brings us to the
third and most serious of the charges concerning exclusion from the
land. Since the value of land in most cities is rising, and apparently
will continue to rise more or less steadily, the price at which it is
held and purchasable is not the economic price but a speculative
price. It is higher than the capitalised value of the present revenue
or rent. For example: if five per cent. be the prevailing rate of
interest, a piece of land which returns that rate on a capital of one
thousand dollars cannot be bought for one thousand dollars. The
purchaser is willing to pay more because he hopes to sell it for a
still higher price within a reasonable time. He knows that he cannot
immediately obtain five per cent. on the amount (say, 1,200 dollars)
that he is ready to pay for the land, but his valuation of it is not
determined merely by its present income-producing power, but by its
anticipated revenue value and selling value.[83] The buyer will pay
more for such land than for a house which yields the same return; for
he knows that the latter will not, and hopes that the former will,
bring a higher return and a higher price in the future. Wherever this
discounting of the future obtains, the price of land is unreasonably
high, and access to vacant land is unreasonably difficult.
This condition undoubtedly exists most of the time in the great
majority of our larger cities. Men will not sell vacant land at a
price which will enable the buyer to obtain immediately a reasonable
return on his investment. They demand in addition a part of the
anticipated increase in value. In the rural regions this evil appears
to be smaller and less general. The owners of unused or uneconomically
used arable land are more eager to sell their holdings than the
average proprietor of a vacant lot. So far as this sort of land is
concerned, it is probable that most of the denunciation of "land
speculators" and "land monopolists" overshoots the mark. Not the high
price at which unused arable lands are held, but the great initial
cost of draining, clearing, or irrigating them, is the main reason why
they are not purchased by cultivators.
While no general and precise estimate can be given of the extent to
which the speculative exceeds the actual rent-producing value of land
in growing cities, twenty-five per cent. would not improbably be a
fair conjecture. Even when a reaction occurs after a period of
excessive "land-booming," the lower prices do not bring the manless
land any nearer to the landless men. Only the few who possess ready
money or excellent credit can take advantage of such a situation. On
the whole the evil that we are now considering is probably greater
than any other connected with the private ownership of land.
All the tendencies and forces that have been described in the present
chapter under the heads of Monopoly, Excessive Gains, and Exclusion
from the Land, are in some degree real defects and abuses of the
existing system of land tenure. Most of them do not seem to be
sufficiently understood or appreciated by the more ardent defenders of
private ownership. To recognise them, and to seek adequate correctives
of them would seem to be the task of both righteousness and
expediency. In the next and final chapter of this Section, we shall
consider certain remedies that seem to be at once effective and just.
FOOTNOTES:
[49] "Report of the Commissioner of Corporations on the Petroleum
Industry," Part I, p. 8.
[50] P. 138.
[51] Cf. Ely, "Monopolies and Trusts," pp. 59, sq.
[52] P. 133.
[53] Pp. 68, 69.
[54] "Final Report of the U. S. Industrial Commission," p. 463; Bliss,
"New Encyclopedia of Social Reform," pp. 245, 770; Van Hise,
"Concentration and Control," pp. 32, 33.
[55] Idem, pp. 46, 47; cf. "Final Report of Industrial Commission,"
pp. 463-465.
[56] "Report of the Commissioner of Corporations on the Steel
Industry," Part I, p. 60.
[57] Cf. Hobson, "The Industrial System," pp. 192-197.
[58] Pp. 15, 16, 29-31.
[59] Cf. "Progress and Poverty," books III and IV.
[60] Cf. Walker, "Land and Its Rent," pp. 168-182, Boston, 1883.
[61] Page 158.
[62] Page 160.
[63] Page 158; footnote.
[64] "Privilege and Democracy," p. 307.
[65] Page 160.
[66] Op. cit., pages 160, 158.
[67] Professor Nearing in "The Annals of the American Academy of
Political and Social Science," March, 1915.
[68] Thirteenth Census, Bulletin on "Farms and Farm Property," page 1.
[69] _The Public_, Nov. 26, 1915. For an account of increases in the
principal European cities, see Camille-Husymans, "La plus-value
immobilière dans les communes belges"; Gand, 1909.
[70] "Report of the Commissioner of Corporations on the Lumber
Industry," Part I, pp. 214-216.
[71] King, op. cit., p. 158.
[72] Thirteenth Census, Vol. I, p. 1295.
[73] Hobson, "The Evolution of Modern Capitalism," p. 4; London, 1907.
[74] _Harper's Monthly Magazine_, Jan., 1910.
[75] Watkins, "The Growth of Large Fortunes," p. 75; N. Y., 1907.
[76] Idem, p. 93.
[77] Youngman, "The Economic Causes of Great Fortunes," p. 45; N. Y.,
1909.
[78] Howe, op. cit., pp. 125, 126.
[79] Cf. Commons, "The Distribution of Wealth," pp. 252, 257; N. Y.,
1893.
[80] "Report of the Commissioner of Corporations on the Steel
Industry," Part I, p. 314.
[81] "Summary of Report of the Commissioner of Corporations on the
Lumber Industry," pp. 3-8.
[82] From articles in "The Single Tax Review," vol. 9, nos. 5, 6.
[83] "In a growing city, an advantageous site will command a price
more than in proportion to its present rent, because it is expected
that the rent will increase still further as the years go on."
Taussig, "Principles of Economics," II, 98; N. Y., 1911.