Chapter XIII.

Production is Stunted, Unjust Distribution and Poverty Are Caused, by this Central Fault.

In discussing the evil effects of the monopolisation of ground rent it will be necessary to tabulate the principal features which present themselves when the present land system is examined. Before doing so it may be well to premise that the landlord and tenant phase of the question exhibits the anomalies most strikingly. But Single Taxers do not confine their objections to the absorption of ground rent by landlords only; they object to it, also, though the evils are not so glaring, in the ease of owners who use their lands personally. They contend, also, that it is not merely individuals who suffer therefrom, though they certainly bear the brunt of the battle, but that the community suffers through them. It is therefore a matter which concerns every man in the country, whether he rents land or not, and it is a matter of great consequence that every intelligent person should inquire into the working of the system. It is often asserted in a taunting way to well-to-do reformers, "Well, you've done very well, in spite of it; you have no cause to complain." The answer to this is that a man is a very mean creature, and a very poor patriot, who is content simply to have drawn his own chestnuts out of the fire, but will not look after the interests of his less fortunate neighbours.

But without further preface, the following features may be pointed out as existing in the present system of land ownership:—

1.	That the land laws acknowledge the right of individuals to own land which they do not personally use, and that they allow them either to hold it out of use or to let or sell it to others who desire to use it.
2.	That working proprietors have to pay more for land owing to the competition of those who hold it for other purposes than personal use.page 24
3.	That much land is held entirely out of use by speculators.
4.	That much land is let for uses which are below its capabilities while the owner is waiting for a rise in value.
5.	That tenants, however long their leases may be, do not cultivate as thoroughly as owners do.
6.	That men of small means buy land in the endeavour to escape the disabilities under which tenants labour. That in order to do so, and still to avoid having all their funds locked up in the purchase, they are obliged to borrow upon the security of the land, so as to provide money for working capital.
7.	That the ground-rent fund is received by landowners only.
8.	That the owners do no more than the rest of the community towards creating this fund.
9.	That the ground-rent fund does not remain stationary in progressive countries, but increases in the three following ways: (a) By the constant increase of the area needed by the increasing population. (b) By the increase of competition for the most favoured areas. (c) By the increased demand for land caused by the introduction of improved facilities for the production of wealth.
10.	That the selling value rises where the ground rent rises.
11.	That the immensely increased power devoted during the present century to production, while it has added to the total amount of wealth, has not raised all the people above poverty, or the bulk of them above a comparatively meagre standard of living.

The following indictments may be brought against the system which exhibits the foregoing peculiarities. Take, first, its influence in retarding the production of conveniences and wealth:—

1.	The community is injured by the prevention of any production upon land held by speculators out of use and by the letting of other lands for inferior uses.
2.	The interests of working proprietors are injured by landlords and speculators—neither of whom personally use the land they secure—competing with them in purchasing land, and so raising the prices and reducing the area of their choice.
3.	The community is injured in the case of every working proprietor by the extent to which the productions which he could otherwise offer it are reduced through the purchase of his land crippling his powers. The reason of this crippling is that the retention of this capital would have enabled him to effect more improvements, and to cultivate more extensively and economically than he can now do. The community is also injured by the same hindrance preventing many men from ever becoming working proprietors.
4.	The community is injured in the case of tenants by the extent to which their total production is reduced by the necessity imposed upon them of paying taxes. This cripples their power of making page 25 such improvements to the Land as would bring it into the most favourable condition for large production.
5.	The community is injured in the case of tenants by the fact that the limited term for which they can obtain land, coupled with the uncertainty as to what rent may be demanded for a renewal, indisposes them to make such improvements as are still within their power to make.
6.	The community is injured in the same way by the fact that the poor chance which a tenant has to realise the value of his unexhausted improvements at the end of the term acts as a further deterrent.

These six indictments assert that a reduction is caused by the action of the present system in the production of conveniences and of wealth. This is not a small charge to bring against it, and it is one that has proved sufficient to condemn many a method of production, and to cause it to give way to a more expeditious plan. Men are continually contriving means for increasing the rate of production and for reducing the amount of waste of material involved. Costly machinery is bought without stint, and the most competent overseers are engaged at high salaries. The desire to increase the supply of conveniences, and the storing up of wealth, is so strong and so universal that it may be described as an "instinctive" one. Let not those who speak so energetically about the "instinctive" desire of a "freehold" overlook this other desire. Single Taxers do not ignore either of them, and herein they claim to be consistent in their demands.

But the charge of cramping production is not by any means the only one brought against the present system, nor is it the most serious. The most serious charge is that it effects an artificial and unjust distribution of all that is produced.

The comparison between the two charges may be made clear by using an illustration. Let it be supposed that mankind had been accustomed to enjoy, on the average, a bowl of milk every day, and that after a time a set of rulers arose who decreed that a change should be made: the change to be that, for the future, a smaller number of cows should be kept, so that each individual should only have on the average three-quarters of a bowlful per day. This would run entirely counter to the general wish to increase supplies, and would be justly regarded as a retrograde step. Still, there would be some consolation in the fact that all were to be reduced alike, and that no invidious distinction was to be drawn.

But suppose that the next step taken by the rulers was to issue another decree in favour of a certain minority of their subjects. Suppose that they commanded that the majority of their subjects should henceforth allow their three-quarter bowls of milk to stand until the cream had risen to the surface; that they should then skim off the cream and deliver it to the minority of their fellows, who were to be favoured. This would affect the distribution amongst mankind page 26 of the reduced quantity of the good things, by allowing some to retain the cream on their own bowls, and to receive that also which rose to the surface of the bowls of the majority. The second decree would be essentially an invidious one, and would therefore result in much greater heart-burnings than the former one did. The first would reduce the production, while the second would distribute the reduced produce unjustly.

It may be fairly claimed by Single Taxers that this illustration is parallel, in every important respect, to the operation of the existing system of landownership, which they condemn. It will shortly be shown that historically it is parallel, seeing that the system is a comparatively modern one, devised by rulers, and not applicable to a community of brethren. It is universally admitted, as has been pointed out, that the tenancy system causes the methods of production to be less efficient than they are where the user is the owner. It is also self-evident that the landlord does not produce that which he receives from the tenant as rent; that the tenant would produce just as much if the owner had no existence; that it therefore follows that an unjust distribution takes place when the landlord, who does not produce it, receives the ground-rent fund instead of the community, whose presence creates it.

It will, however, be pointed out by the upholders of the present system that this illustration does not run on all fours with the principle which enables landowners to receive ground rent from their tenants; that the analogy assumes that rulers have arbitrarily selected certain favourites to enjoy the free use of the land which they actually occupy, and to receive ground rent from the rest of their countrymen. It will be pointed out that the illustration is at fault, inasmuch as it ignores the fact that the minority have become lawfully possessed of the land. That, this being so, it follows legally, and as a matter of course, that they should enjoy the free use of what they occupy, and also that they should be allowed to charge a rent for what they lend to their tenants.

Single Taxers will freely admit that the foregoing illustration does assume that rulers have arbitrarily selected a minority of their subjects to hold a special privilege. They are prepared, moreover, to prove that it is a correct assumption, and that arbitrary selection is the origin of landownership as it now exists. The proof will not be dealt with under this heading, which is devoted to exposing the faults, and not to proving the injustice, of the system.

To leave the illustration, and to explain further some of the faults of the system, it may be admitted that no system could be devised which would, in a community, enable a penniless man to start any use of land on his own account. He must necessarily first save enough to enable him to procure certain appliances or materials, such as implements, buildings, seed, etc., in addition to the supplies of food which would keep him alive, and in a condition fit for vigorous work, until his operations would bring in a return. It is therefore necessary page 27 that a man who has no means should begin by working for another, and saving part of his wages, until he has got together the necessary capital.

But what is alleged, in the first place, against the present system, is that this initial stage is rendered much more difficult of attainment than is at all necessary, by making it impossible for the wage-earner to obtain the full value of his labour.

The next objection is that the man who has mounted this first rung of the ladder is met by another great difficulty. He has to climb a high wall, erected by monopolists round all available land, before he can make a start to securely and efficiently produce or distribute anything on his own account. He is restricted to three alternatives as a preliminary to being able to do this. He must either (1) continue to work for someone else until he has saved enough to buy a piece of land outright; or (2) work on until he has saved enough to buy it with the help of a loan; or (3) he must rent a piece.

To summarise this position as it appears to intending land users, it will be found that the only opportunity open to the man who has not saved anything towards buying land is to rent a piece and to suffer the uncertainties of a tenancy. The next better opportunity is to the man who has saved a little, and is thus able to buy land by paying part and borrowing the remainder. The best chance of all is to buy the land outright, and this is possible only to the man who has sufficient capital for the purpose. All three of these alternatives entail upon a man certain disabilities before he can attain the initial purpose of obtaining permission to work on his own account. At the same time, he suffers, under each condition, from the imposition of existing taxes. It would be for the general good that all should be able to get access to land without any expenditure of capital. There can be no objection to the payment of ground rent by all, provided that it shall go to form the public revenue, and that it shall not be accompanied by any of the uncertainties attaching to tenancy. It would also be immensely for the general good that everyone should be relieved from taxation. The saving thus effected would be mostly devoted to improvements, and this would result in the increased efficiency of all productive operations.

Before a student of the Land Question can understand the very detrimental effect which its anomalies produce in the economic conditions of a people, he must grasp the fact that these effects are cumulative in their action. It has been shown that the annual saving to the tenant class produced by the Single Tax régime would consist of the taxes which would be remitted to them. In New Zealand this would amount to their proportion of about £2,500,000 annually, which must be a very large sum even for one year. But when it is considered that the first year's saving would be followed annually by a similar amount, and that nearly all of it would probably be devoted by the tenants to improvements, it is more easy to imagine what the steady, solid, and secure addition to the spending and saving power of this page 28 section of the people would amount to as time went on. In the first place, note that this large annual sum would he left with the tenants, instead of, as now, being taken from them. In the second place, the use which they would make of the hulk of it, in devoting it to improvements, would have the effect of adding to the efficiency and profitableness of their operations. This would result in an annual profit, which would amount to another substantial gain to the tenants, and this item would also increase cumulatively.

That part, also, which they chose to expend in increasing their comforts would be larger than that expended by its present recipients, seeing that the latter are so few in number. What is here meant, is that it may be safely assumed that ten men possessing £150 a year each will spend far more in clothing and other manufactured articles, and several times more in food and actual necessaries of life, than one man with £1,500 a year. This increase would have the effect of stimulating all these businesses, and therefore of offering more employment.

If the foregoing is at all a correct forecast of the results of the change, it will not require much effort of imagination to trace the general sluggishness of demand, the deficiency of employment, and the lack of purchasing power, also the periodical lower dips which occur, and which we call "commercial crises," to the action of the system which now renders such a diversion of funds from the tenants possible.

But, in order to render complete the chain of reasoning which connects the private monopolisation of ground rent with the prevalence of poverty, another point must be explained. In the absence of such an explanation, it may be plausibly stated that if the evil was really as serious as it has been represented, then landowners would be the only wealthy people, and no fortunes could be made in commerce or in manufactures. The existence of large fortunes in these departments might therefore be said to give the lie to such statements.

The two considerations which are overlooked in this reasoning are the following: In the first place, men are very diverse in their capacity, ability, shrewdness, and thriftiness. They are, consequently, capable of producing very different results compared with one another, even in cases where their respective opportunities may be nearly similar. The most capable men may make a great success under conditions where the medium ones can just obtain a fair living, and where the weakest will fail to make ends meet.

In the second place, it will be admitted that the amount of ground rent paid by one and all does not vary according to the strength of the payers. The landlord will not let his land for any less rent to the weak man, nor can he succeed in getting any more from the strong man. If all men were weak, it is self-evident that landlords could not get as much as they do now, and if all men were strong they could get more. Rent, then, is determined by the average power of men to pay. Thus the ground-rental conditions under which all tenants work are very nearly similar.

The combined effect of these two considerations—the inequality of strength in tenants and the approximate equality of the ground rent charge to all—is that which would be expected: the strong make fortunes, the medium make a living, and the weak go to the wall.

But it may be pointed out that these two considerations would remain the same under Single Tax conditions. Admitted; but the two advantages already alluded to would come into play in favour of all tenants, as the reverse conditions now act against them. They would be entirely relieved from taxes and rates, and, in addition, would in most cases be freed from the uncertainties incident to tenancy through becoming owners after the selling value of land was killed. These two conditions now act cumulatively against tenants, so that the effect of their removal would be very great.

But do the weak really go to the wall? Yes. They cannot maintain the pace which competition sets up as the standard. They fail to pay their rent, and consequently get into debt; each step they take downwards decreases their power of recovery; by-and-by the crisis is reached, and they have to fall out of the rank of tenants. The next thing is to offer their services to someone for wages, and in doing so they begin to compete with the wage-earners.

The investigation must now follow them into this class. It is not difficult to show that the same considerations which determine the struggle of the tenants largely influence that of the wage-earners. The more capable ones get the superior situations. Many men, in certain trades, judging truly that union is strength, combine together and present a united front to competition. This involves a levy from their wages to maintain the organisation, and practically necessitates a uniform wage; but it undoubtedly assists their average position. The old saying, "The de'il tak the hindmost," is very appropriate to the condition of the less capable ones and those who don't combine. The margin above bare subsistence is so small with even the most capable wage-earners, that it is not surprising that those who are weak, those who are unsupported by combination, those who suffer from sickness or other misfortune, or have an extra large family, fall into debt, Income hopeless, possibly take to dissipation, and end in poverty. If this is so with the men, what chance is there for widows and orphans? Does the chain of connection between poverty and the private monopolisation of ground rent need any more links to complete it? Surely not!