We are pleased to present, in installments, a very rare yet significant book written by former Congressman Henry George Jr. in 1905.
Earlier installments are available at the Progress Report Archive.
end of CHAPTER 24, TO FREE NATURAL OPPORTUNITIES
The coal operators' current motto is: "Kill competition among coal producers and exact the limit from coal consumers."
And what can Government Commissions and Government regulation do against this? Certainly nothing for the public in lower prices, while it would add to general demoralization by swelling the number of public officials to be bought or otherwise corrupted by the trust.
But a tax would bring the trust to its knees. A tax that would take from the coal landowners the full economic value of their lands - that would cause them to pay just as much into the public treasury on lands lying idle as if those lands were being put to their highest use - would hush all such brave speeches as "Kill competition among coal producers and exact the limit from coal consumers." The only purpose then in owning or controlling land would be to use it, and to use it to its highest capacity, since none but a fool would care to pay so dear to hold land idle.
If the trust tried to retain its monopoly of deposits and recoup itself for the increased tax, it could get no more than it is exacting now. For all things considered, its charge now is the limit, and to demand more would force the public to lessen its use of coal, either by turning to other kinds of fuel or by doing with less artificial heat - probably both. Hence the great coal fields of the country would be flung open and coal would pour forth, which would benefit our whole people with its abundance and cheapness, from the mill owner, who uses a carload a day, to the New York tenement dweller, who buys by the pailful; while it would make such a great and permanent demand for labor in the coal fields as to send up wages and keep them up. This would do much to cause mine workers to forget the need of unions, strikes and boycotts, and even the spirit that now belongs to the bitter struggle for a living and the conditions of passive industrial warfare.
There is truth in the common saying that "most of the trusts have their roots in the soil." Tax that soil, and you get them from the roots up. Apply such a tax to the Steel Trust, to the Oil Trust, to the Lumber Trust, to the Salt Trust, to the Borax Trust, to the hundred and one great industrial combinations, and they will go to pieces in the same fashion as the Coal Trust would. Transportation and tariff privileges, which later will be considered, enter into some of these trusts; but the monopolies of the storehouses of nature, of natural opportunities, are privileges without which such trusts could not exist.
Possessing them untaxed or practically untaxed, the trusts can laugh at all steps to "regulate" and "moralize" them. They are like men having legal possession of an oasis in a desert. Caravans that come that way must pay the owners' price for water and resting accommodation, or proceed on their way without stopping.
This clearly is true of the Steel Trust. The Carnegie Company became the backbone of the trust, and Mr. Carnegie early in his steel-making career secured coal, iron and lime fields. Did not Mr. Schwab, as president of the United States Steel Corporation (the trust), testify before the Industrial Commission at Washington that his company could carry its huge stock inflation because it had a monopoly of the Connelsville coal fields in western Pennsylvania, this coal making the best coke in the world for steel production?
Did he not further tell the Commission that his corporation possessed a very large interest in the best quality of steel-making ore in the Northwest, and did he not intimate that it hoped soon to have a practical monopoly of that great deposit? Is it not an additional fact that the Steel Corporation is quietly buying up steel company after steel company, not for their plants, since it already has more than enough to supply its business needs, but to secure the natural resources possessed by each of these concerns?
If the United States Steel Corporation can succeed in acquiring all the easily accessible, good-quality ore and coking-coal lands in this country, it can laugh at competition within our borders -- that is, if its lands shall go practically untaxed, as now. But apply heavy taxation to the real value of its land, and the Steel Trust would collapse like a house of cards. It could no longer play dog in the manger with mineral land it could not itself use in fifty years. Nature's raw materials for steel manufacturing would be thrown open to users, and competitors would spring up on every hand -- competitors whose only hope could lie, not in monopoly prices, but in "low prices and quick sales."
The public appropriation, through taxation, of the full economic rent would have a similar effect upon every trust or combination based upon a monopoly of natural opportunities, and most of them are so based. It would not lop off a little of the foliage here or there, which is the best that "regulation" of the trusts could do; it would strike at the roots.
And the tax that would go so vitally home to the trusts -- to the monopolizers of the vast unused mineral, agricultural, timber and grazing resources of the country --would fall with a killing hand upon land speculation in and about every city and town and village in the United States. It is probable that not a third of the available area of the city of Greater New York is in use; and this is more or less the condition in all our communities. The rise in value of urban land is so active that there is a general desire to obtain some of it so as to participate in this increase. This causes a great many people to regard land, not for its present use, but for its future value -- the increased price that growing needs of population will cause to be paid for it. And because this increased value is in expectancy, the owners of land will not part with it except they get some share of that benefit.
Every community must pay rent on the land it uses based upon what that land will be worth some time in the future. It makes an artificial scarcity of the land, insomuch as it puts a speculative or artificial value on it. And every betterment that occurs in the community, making it a more desirable locality for men to be in, adds to the value of land, as any who will may see when a street is paved, a new transportation line put through, or a public park opened. The speculator does nothing but wait. He waits for population to increase the demand for his land.
Now the mere talk of taxing land values checks speculation, and a tax based upon the selling value of urban land -- a tax that would take the whole rental value, as based upon that selling price -- would cause such speculation to turn into thin air and vanish.
For where would be the fruit of speculation if taxation absorbed the whole value, whether that value advanced or receded? The future would hold out no hope to speculation, and so land in and about urban centers would be held, not for a "rise," but for present use. And no one would keep land who could not use it, since the tax penalty would be too great.
Hence the price of land there would be based upon its use value -- its value in production, not its value in speculation. The price of land would shrink to this value in use; that is to say, urban land would be cheaper, much cheaper, than it is now. Obviously this would be a great benefit to all the users of land, and everybody in the city, town or village uses it, some more, some less. To cheapen land would benefit the storekeeper, the factory and mill owner, the banker, the professional man, the clerk, the mechanic, the seamstress - all the inhabitants of the community except the land speculator, who would lose; yet he, too, would be a gainer to the extent that he would live in a community so much more prosperous.
In other words, taxing economic rent into the public treasury would destroy monopoly of natural opportunities in the urban centers just as it would destroy land monopoly elsewhere. The land that Nature offers for building sites would be thrown open for such use, instead of being fenced in and marked, "Reserved for future use." Labor and capital would have to pay less for the use of this land, and every channel of production in these centers would receive a great and permanent stimulation.
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