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The Pamphlet Collection of Sir Robert Stout: Volume 76

[introduction]

Note.—The substance of the following paper appeared in the correspondence columns of the "New Zealand Herald" during the years 1890-1896. I have been very frequently asked to republish, in connected form, the arguments then used against this iniquitous proposition, hence the following:—

My connection with the Single Tax controversy dates from the year 1890. Some time previously the Single Tax organisation in Auckland sent to me a special deputation of four of their leading members to "convert" me, as they said, to their views. They were good enough to say that from the way I had dealt with the railway, and other social questions, they were sure that if I would only study the Single Tax question I should soon be convinced of the justice and beneficial nature of their proposal, and become an ardent advocate of the Single Tax.

After a good deal of persuasion I very reluctantly agreed to investigate the matter. As they were leaving, one of them placed a pile of books on my table, and pushed them towards me. "What are these?" I asked. "Oh, Henry' George's and Wallace's works." "Yes, and what are they for?" "Why, for you to read." "But why should I read them?" "Have you not just promised us you will study this question? How can you do it without reading what the founders of the system say?" "That is not my method. What I have promised is that I will study the question of a Single Tax; not that I will study Henry George and Wallace. I have no wish to have my mind influenced by them in any way. Your proposition is a very simple one. It is, I believe, this. You say:—
"1.The land, the whole of the land, belongs to the community collectively, and no individual has any right to private ownership of any portion of it.
"2.The improvements, the whole of the improvements, belong to the individual occupier, and the community collectively has no right to any portion of them.

"That, I believe, is the whole of your proposition. If you do not think me able to deal with it without the aid of Henry George and Wallace, kindly relieve me from my promise."

They said the case was correctly stated, and hoped I would go on with the study. Well, I have done so, and the Single Taxers do not like my verdict.

In studying this problem three questions arise:—1. Can the proposition be carried out? 2. If carried out would the effect be page 80 beneficial to the community generally? 3. Is it fair and honest as between man and man? To all these questions I reply emphatically, No.

1. Can the proposition be carried out? I say positively that it cannot.

The Single Taxers propose that the State shall be the sole landlord, and it shall take the utmost rent that can be obtained for the land. In order to effect this, they propose that the Government valuators shall assess the rental values of the land year by year, and compel the occupiers to pay that rental, or give up his holding and sell his improvements for just what he can get

Now, everybody knows that improved properties are constantly sold at a loss, that is to say, at a less price than the fair market value of the land, with the fair market value of the improvements added. It is evident that under the Single Tax, absolutely the whole of the loss made must fall on the owner of the improvements. No portion of the loss could by any possibility fall on the landlord, the State, because its claim would be secured by being the absolute owner of the land with its rentals secured by the occupier's improvements. The worst that could happen to the State would be that sometimes—I say very often—it would find itself the owner of an "empty house," but in that case it would hold the land and the improvements, and the unfortunate "occupier" would soon lose the whole of them for arrears of rent of premises he was not in any way using, and in the meantime his wife and children would be starving. What a marvellous way of curing poverty. It is about equal to the Zulu chief's plan of slaughtering all the cattle, and destroying all the crops, in order to save his people.

The position between the State, the owner of the land, and the position of the "occupier," the "user" and the supposed owner of the improvements, would be the same as secured and unsecured creditors in a bankrupt estate. The secured creditor, the State, would have all the best of it, and the occupier would suffer as unsecured creditors always do.

We shall best understand the position by supposing a case. A man takes a piece of land at a rental, say, of £100 per annum, and largely improves it. He dies, and his "improvements" are all he has to leave to his widow and children. These are valued, and both sides agree that they are fair value for £2000. But how is this to be realised?

In the first place, it cannot be realised at all until a new occupier is found, and this may, and constantly would take years, for, under the Single Tax, properties would remain empty much longer than leasehold properties do now, for this simple reason: Any new occupier would know that, he could not obtain one penny of the increment in land value, and that he must look to the improvements alone; he, therefore, would not take these unless they exactly suited him—and how often would this be the case?

page 81

Who is there now that buys either a freehold or leasehold property, and does not find that he has to spend money in altering "improvements?" Would not the buyer take this into account, and pull down the price accordingly? Again, would he not say the best portion of the life of these improvements is gone, the buildings are of wood and more than 30 years old, there will be an increasing cost of repairs?

Still, again, under this wretched Single Tax, the more rapidly a district improved the worse would be the position of the unfortunate owner of the "improvements," for an improving district would mean an increasing "ground rent."

No portion of the increase in value would attach to the improvements; under the Single Tax it would be attached to the land, and be taken by the State. The improvements would be valued at the cost of construction and production only, and that subject to all past, and a considerable portion of future deterioration.

Would not all sane buyers take these things into account, and provide against them, and where is the provision to come from? It must come from the widow and children's portion, for the State would be absolutely secured in its share. How speedily then would their £2000 dwindle down to less than £1000, and how often would they starve before even that could be realised?

It will thus be seen that in taking the whole of the land, the State must in nearly every case (the only exceptions would be when the buyers of improvements were fools) take a large portion, and in many instances, the whole of the improvements with it. This loss of improvements would fall most frequently and most, severely on what are called the working classes, for they could least afford to wait for a buyer, and it must be borne in mind that, sold or unsold, let or unlet, the ground rent must be paid.

These are the reasons why I say it is impossible to separate th: two values and pay to each party the full value of their respective shares. I do not mean with mathematical precision, but I say not within 20, 30, or even 50 per cent, of it.

Suppose, again, an occupier dies, and his improvements cannot be sold, what is to become of them? Is the State to take them after rent has remained unpaid for a certain period, and so make money by robbing some widow and orphans?

There is another reason why this theory cannot work out in actual practice. It is this:—

The proposition of the Single Taxers is that the State as represented by the Government shall be the universal landlord, and that the State as represented by the great mass of the people shall be the tenants.

Now, I want to know how the State can act in this dual capacity, and do what is right in both positions? It certainly cannot.

We have good authority for saying, "Ye cannot serve two masters." I have a pretty large experience of landlords and page 82 tenants, and I find that, as a rule, the landlord wants the highest rent he can get and to make the smallest possible amount of improvements. On the contrary, with the tenants, I never knew, nor do I suppose anyone else ever did, a time when tenants as body did not want rents reduced, and many improvements made; and unfortunately very few people think it wrong to impose on the Government, as witness the constant attempts to avoid Customs and Stamp duties.

In this case the tenants would absolutely have the master in their own hands. They would have to elect their landlord, and they would take good care to elect one that would reduce their rent. What then would become of the Single Tax, Can anybody imagine a greater absurdity than tenants electing their own landlord?

Before proceeding further, let me state as clearly as possible what the Single Tax proposal really means:—
1.To take absolutely from every man the whole of any land he may possess, and without giving him any compensation whatever. In other words, they propose to take from him all that portion of his estate which has a permanent, imperishable, and improving value, and to leave to him, his wife, and children only that portion which rapidly deteriorates and ultimately becomes valueless.
2.While taking his land to make him responsible for all the duties pertaining to a landowner. As Henry George expresses it, they "will take the kernel and leave him the husks."
3.They propose to take from every individual or company, every charity, every friendly society, every penny or other savings bank, and also without giving any compensation, every pound of capital they may have invested in mortgages over land.
4.To make "land occupiers and users" solely responsible for collecting the whole revenue of the State, leaving them to recoup themselves if they can by charging a higher price for their products.
5.To create such a tenancy as would render it impossible for the leaseholder to realise the value of his improvements.
6.To reduce the whole nation to the position of yearly tenants paying the highest rack-rent that can be wrung out of them.
7.To destroy all securities for the payment of life insurance policies.
8.To destroy all security for the payment of trust funds, bank deposits, friendly societies' funds, etc.
9.To destroy all protection for our local industries.
10.To throw our markets open to the cheap products of American gaols, Chinese, German, and other factories.
11.To throw the liquor traffic open, and allow everybody to brew, distil, or sell drink as they think proper.page 83
12.To make the country land "occupier" provide free gas, free water, free baths, free trams, free electric light, etc., for the use of city residents, while from the nature of things he cannot enjoy these "luxuries" himself.

Let us now examine our second proposition. If the Single Tax were brought into actual operation, would the effect be beneficial to the community generally? I say, No.

I am a thorough believer in, and have always supported, a land tax, but in view of the avowed object of the Single Taxers this tax will have to be very carefully watched. Land, like other things, should bear its fair share of the burden, but an attempt to make it bear the whole, must, and, if carried out, certainly would, result in the most disastrous failure.

I am also a great believer in endowments. I believe that in every village, town, city, and country district, one-third of the land ought to be set aside as endowment. I say one-third because in my opinion that is the largest quantity that could be taken with advantage to the public.

We see that the Government leaseholders are already agitating for a reduction of rentals; and this will always be so until human nature can be altered. If, say one-half, were taken for endowments, then the freeholders and leaseholders would be balanced as regards political power, and the leaseholders would in all probability succeed in getting their rents reduced, and thus the State would suffer. If two-thirds of the land occupiers were freeholders, they would be pretty certain to see that the rents were maintained at a fair figure.

I must guard myself by saying that I should be quite opposed to these rentals being assessed annually, or even as at present every 21 years; I consider the country would reap a greater benefit if the time were not less than 50 years, because this would secure better and more permanent improvements, which would ultimately become the property of the State, and these, after a time, would always be falling in year by year.

What the Single Taxers really propose is to take from every man to the uttermost farthing, not only the whole realisable value of his land, but also all his mortgage securities, and they say that by doing this not Only will they put an end to poverty, but that in addition they will give to the whole community exemption from all other forms of taxation, and in addition, the following "luxuries":—Free water, free gas, free electric light, free baths, free trains, free libraries, free coals, etc. I am not sure if the "free" list includes hospitals, workhouses, and lunatic asylums, but it ought to, for there certainly would be a largely increased demand for them.

This is Henry George's statement, and I have heard one of his admirers on the platform add, and "free everything." Well, he is just as likely to be right as Henry George is. More and more I marvel that-sane men can expect such results from such page 84 a measure. What a marvellous testimony it is to Henry George's ability as a writer and speaker. Had his power of thought been equal to his command of language, what an instrument for good he might have been. As it is, probably no man, while seeking to do good, has done so much harm as he has done. This, by the way. The question is: Would the Single Tax be beneficial?

To my mind it is the most ill-considered and absolutely dishonest measure that was ever seriously offered to the world for acceptance. I do not think the leaders of this movement can have ever carefully thought out the matter, or can have considered the results that would ensue if it were enforced. They can never have really apprehended the great difference between the present endowments and leaseholds and the proposed Single Tax yearly tenancy. The two things are as widely different as black is from white. Because endowments as at present used have conferred great benefits on the districts to which they belong, the Single Taxers have jumped to the conclusion that if the whole of the land were seized and its utmost rental value extracted from the users, that proportionately good results would be obtained, but this cannot be so.

The difference between the proposed Single Tax holding—if it can be properly called a holding—and leaseholds as they now exist, is this: The present leasehold is given and taken for any fixed period up to 999 years at a rental usually calculated at a low rate of interest on the capital value of the property at the time the lease is made. Consequently all the unearned increment in the rental value for the period of the lease belongs to the leaseholder, and not to the landlord. This often amounts to a large sum. Some years ago I owned a leasehold property, which, with the improvements, I sold for £6,500. Under the Single Tax yearly tenancy I very much doubt if it would have realised £1,000.

The Single Tax holding, instead of being a lease, would be only a yearly tenancy, the "occupier" having the right to remain just as long as he chose to pay the rent the Government valuer demanded from him year by year. This rent the Single Taxers expect would be constantly rising, and the moment the unfortunate occupier found himself unable to pay the rental fixed for him, and in which he would have no say whatever, out he would have to go, and do the best he could with his improvements, and in nine cases out of ten he would lose more than half of them, and in very many cases the whole.

This is the real difference between the two holdings, and yet the Single Taxers, affirm that under their tenure the occupier would have far the best security for his improvements. It is absolutely' certain that he would have no security whatever for his improvements.

Under the Single Tax no man, unless compelled by the force of circumstances to do so, would take up land to build upon or otherwise improve it, because he or his successors must lose on his investment-. He would always be seeking to rent one of the page 85 improved properties that had fallen into the hands of the Government, and so long as any of these were available, no new building or other improving would take place. The consequence would be that the area of occupied and improved land would greatly decrease and next-increase.

As no man would know from year to year what his rent would be, and as he would be at the mercy of a very inferior set of valuators, and as no profit could possibly be made on the realisation of his improvements, any improvements made would necessarily be of the most inferior character and of the most flimsy description. The barest wants of the hour would be all that would be provided for.

If an "occupier" greatly improved the land he leased, he would always run the risk of someone offering to the valuator a larger rent than he was paying, and this the valuator would no doubt demand as "unearned increment contributed by the whole community," whereas it would be due to this particular man's work, and for doing which he would have to pay increased taxation.

Everybody who could, would avoid being a land "occupier," because while the "occupiers" would not have the least interest in the value of the land, on them would be thrown the heavy responsibility of collecting the entire revenue of the country. This is no doubt what, Henry George intends when he says: "We will take the kernel and leave the landowners the shell." While they are to be deprived of all the benefits of land ownership, they are to have all its responsibilities thrust upon them.

It would greatly decrease the demand for labour, because no sane man or company of men would lay out large sums of money on erecting expensive buildings or making other improvements on land for which they would not know what rental would be demanded from one year to another. Thus would certainly discourage the opening of factories and workshops, when a large expenditure would be required in the erection of buildings. The same rule would apply to farm lands, as for instance in reclaiming swamps.

Another reason why it would greatly decrease the demand for labour is this: A very large proportion of the money now expended in making improvements on land, and in carrying on other industrial operations, is money borrowed on the freehold of the land. As under the Single Tax this security would be clean swept away, the money so obtained must go out of employment, and with it the workers also. It is probable that at one stroke half the men and women now earning wages would find themselves idle, because the employers would not be able to raise the money wherewith to pay them, and because they would not care to lay out such money as they had by them on such an uncertain tenure. Nor is it the labourer and artisan class alone that would suffer. Borrowed capital is often necessary for the purchase of material for working up in the factories, so the merchant and trader must suffer.

page 86

The avowed aim of the Single Taxers is to relieve poverty and distress, and they propose to do this by taking the land from all those who are now occupying and using it, and they say they more particularly want to take the cities and the land immediately around them. They say that they do not want the distant land, and many of them are of opinion that it is an evil to occupy such land. What then they seek to do is to perpetuate and intensify the enormous evil of crowding people in and around the cities.

Surely right-minded, intelligent, and thoughtful men, men who aspire to lead a great, public movement and carry out a [unclear: great] social reform, should be able to find better means than these.

What is the use, what good can arise from depriving people of their property, and giving them nothing for it but some problematic relief from, other forms of taxation, when there is so much unoccupied land? Is not the true problem, how to make these lands available?

What the Single Taxers propose is to compel every man or woman to pay rent for the land or house he or she occupies. Under no condition are they to have free land or a free house. No matter whether they are old or young, sick or strong, poor or rich, this rent., this heavy burden, is to hang over them. And it must be borne in mind that it is not an ordinary rent they will be called upon to pay, such a rental as they would pay now, but a rack-rent of the greatest amount, that can be forced out of them year by year, or out they go, and no doubt Henry George and his followers, among other "luxuries," will provide them with a "free" workhouse. What, multitudes in their old age must fail in their ability to pay this rack-rent.

I wish to draw attention to the fact that these luxuries, which it is proposed to provide by seizing every man's land, can only be enjoyed by the dwellers in cities—no doubt the farmer will be grateful—and thus it will be seen that the Single Tax would greatly increase the overcrowding of the cities, which is now universally admitted to be one of our worst social evils, for if the "free list was open to city dwellers while country people have to pay, everybody would certainly strive to live in a city, and the country districts would be more than ever deserted.

Stripped of the wonderful verbosity with which Henry George has surrounded and wrapt it up, and exhibited it in its naked truth, that is the proposal of the Single Taxers.

It must be borne in mind that in addition to taking every man's land, the Single Taxers also propose taking, without compensation, all mortgage securities over land.

In doing this they also take all our life insurance policies, all our fire insurance policies, all Savings Bank funds, all friendly societies' funds—for is not the ability of these institutions to discharge their liabilities due to the fact that their accumulated funds are for the most part, invested in the mortgage of freehold page 87 estate, and if these are taken, they must and will be unable to pay; for the largest and best portion of their assets would be lost to them.

Let anyone for a moment contemplate what would be the effect of ruining the life insurance associations of the world. No one would escape. From the crowned heads of Europe, to the labourers of the colonies, everybody would suffer. None of the life policies could be paid; none of the dividends on which so many women and children subsist could be paid; the tens of thousands of men employed would lose their situations, and all the premiums paid, in many cases with so much difficulty, would be lost. Add to this the fact that all the fire insurance companies, savings banks, and friendly societies would all be placed in the same position, and we may have a faint-idea of the state of chaos that would ensue on the introduction of the Single Tax.

As compensation for all this loss, destruction, and misery, what are we to get? Simply the Single Taxers: "We say" that, if you will be so very good and simple as to give up all your land and mortgage securities, and, after doing this, will pay the highest rental we can possibly wring out of you for the use of your own land, then we, the three tailors of Tooley Street, the Single Taxers, say that you shall not be called upon to pay any other form of taxation, and in addition shall be given free luxuries as per list, already quoted. Well, I think every grain of common sense has not yet passed out of the British nation.

Again, the Single Taxers propose that all the articles made in the gaols of America, the factories of China, Japan, India, Germany, and France, the products of the criminal and cheap labour of these countries, shall be admitted absolutely duty free. What would be the effect on our local industries?

Would not the effect be to throw out of work all the people now employed in our factories and workshops? Most certainly it would. The army of the unemployed would be vastly increased, and distress would be universal.

At the same time the Single Taxers propose to throw the liquor trade open and free to everybody. Anyone is to be at liberty to start a still, to establish a brewery, or to open public houses whenever and wherever they think fit, a dozen in a street if they like. I hope none of the Prohibitionist party are so inconsistent as to be Single Taxers.

It is impossible for the human mind to conceive the state of utter disorganisation of society that must supervene if an attempt were made to enforce this idiotic measure. In a few weeks the world would become a very pandemonium. Every financial institution ruined, every home maintained on the savings of former years ruined, all the friendly societies ruined, no employment for capital, our workshops and factories silent, no employment for labour: every brothel, every low lodging house, every small shop a grog saloon, selling liquor of all kinds at page 88 about a tenth part of the present price; the vast army of unemployed men and women, in too many cases, drinking, gambling, and quarrelling. Should we not soon have a very hell upon earth!

All capable of thinking this matter out will agree that my picture is not overdrawn, and yet we are gravely told that the Single Tax is the only honest way of dealing with the land, and only way to cure poverty and misery.

It is difficult to believe in the sanity of the men who can advocate such a measure and say that it is the only honest one and the only cure for poverty. The fact is that most of them have never really thought the question out. They have been led away by the plausible writing of Henry George, and have taken his assertions for truths.

My third question is: Is the Single Tax proposition fair and honest as between man and man?

How can it be if what I have previously stated is correct? Let us again examine how it would work out. There are numbers of working men and women in this colony, who by hard work and careful saving, have acquired freehold homes of their own; some of these, owing to careful selection of site, have become very valuable. Forty years ago a young couple may have purchased a site for £50, and have erected on it a wooden cottage at a cost of £200. This couple have lived and brought up a family here, and in their old age are still in occupation. The land during the forty years has become worth £500, and they think this will be something to leave to their children. Age has reduced the cottage to something like a ruin, and no one would value it at more than thirty or forty pounds.

The Single Taxer comes along and says to the old people: Yes, it is quite true that by self-denial you managed to screw out 10s per week, and so acquired this property, but "We say" you have no right to this land; you did not give it its value. We who came yesterday did quite as much towards that as you did, who worked here for 50 years; so we are going to take the £500, and you can leave the £30 or £40 to your children. However, "We say" your children will be greatly benefited by this operation; it will not only absolutely save them from poverty, but will enable them to live in luxury. Somehow, I think the old people would entertain a different idea. This is no overdrawn picture, but one that must occur in thousands of instances. Is there any justice in such a transaction?

The Single Tax is such an utterly dishonest and absolutely impracticable measure that it never can, and never will, be brought into force; but a Parliament that could discuss a measure like the Fair Rent Bill might be induced to make the attempt, and the consequences would be disastrous. It is to be hoped that at the coming elections every candidate, who in any way supports this monstrous proposal, will be promptly rejected.

The Single Taxers say they are not Socialists. They are right; they are not, but they are infinitely worse. There is some page 89 honesty about the Socialistic proposal; there is none whatever about the Single Tax proposal.

The Socialists see and acknowledge that if the State takes the land the State must also take over its financial liabilities, and the Other duties pertaining to the ownership of land. This is so far honest.

The Single Taxers say the State shall take the land, but the State shall not take over the financial liabilities of the land. In this and other countries, when a personal liability attaches to a mortgage, that shall be paid by the occupier out of his "improvements" and other personalty. In all other cases it shall be absolutely lost to the man or the woman who has lent the money. In either case the State shall seize it. We will also impose upon the occupier every other duty in connection with the land, and in addition we will compel him without any remuneration to collect, if not to pay, the whole revenue of the country. Is this honest:? Will St do away with poverty?