The Menace of Privilege Chapter Two second half
|January 9, 2007||Posted by Staff under Progress Report, The Progress Report|
The Menace of Privilege, by Henry George Jr.
We are pleased to present, in installments, a very rare yet significant book written by former Congressman Henry George Jr.
Earlier installments are available at the Progress Report Archive.
conclusion of CHAPTER II, THE CAUSE OF INEQUALITY
Where practically all available land of a particular kind is subjected to private ownership, a monopoly of land is created. The power of this monopoly in the hands of any one — of an imbecile, if you please — might make him rich out of the tribute that would have to be paid by such as were driven by necessity to use his land.
Even if land were, as private property, originally divided equally among all the inhabitants of a country, some would soon have more than their original share, some less. The law of privilege works toward concentration. Private ownership in land in the end inevitably makes a few landlords and the mass landless.
We can see this concentrating movement all over our country: in the East, West, North and South; in the cities and their suburbs; in towns and villages; in the farming, mineral, timber and grazing regions. Everywhere there is concentrating ownership. (To be sure the great western land grants, those of railroads, for instance, are being cut up and sold off as farms, but that only signifies that they are entering a new and higher classification — from non-used to used lands. Becoming farming lands, the concentration principle at once reasserts itself. Later, it commences all over again, when the farms pass into a higher use as urban and suburban lots. This involves a new subdivision, followed by a new concentrating movement. With the advance of such land to a higher class, the number of users to owners is more disproportionate as compared with that which existed in the class below.)
Or to put this in another form: As population increases, competition among the many for the use of land increases, which forces up the value of land. This begets speculation on a future rise, and the value of land is determined, not by present uses, but by what it is expected future competition will compel users to pay for it. Expectancy forestalls the future. Rent — the payment for the use of land — advances with expectancy. It advances even faster than the increasing power to produce wealth. It tends to absorb all the advantage arising from multiplying inventions and improvements in the arts; it tends to appropriate the benefits of social growth and social improvement; it tends to pile up riches in the hands of its recipients at the expense of the mass of users, among whom competition increases as their numbers grow. Under speculation, rent, or ground value, as it is sometimes called, tends to rise, until the point is reached beyond which users cannot give more and at the same time retain enough of their produce to sustain them and encourage them to continue producing. The late Professor J. E. Thorold Rogers puts the case most aptly: —
- Every permanent improvement of the soil, every railway and road, every betterment of the genera] condition of society, every facility given for production, every stimulus supplied to consumption, raises rent. The land owner sleeps, but thrives. He alone, among all the recipients in the distribution of products, owes everything to the labor of others, contributes nothing of his own. He inherits part of the fruits of present industry, and has appropriated the lion’s share of accumulated intelligence.
We have only to look about us to realize that land values, taken as a whole, have swelled to enormous proportions in the United States. We have no adequate statistics on the subject, but whoever will look will observe the rise in villages, towns and cities; in agricultural regions, taking them at large; and in mineral and timber regions, taken similarly. A small lot at the corner of Broadway and Wall Street, New York City, which in 1827 sold for $18,000, in 1905 sold for $100,000. While the ratio of increase there may have been more or less than in other places, this case illustrates the general tendency. Speculation in land sucks and sucks; and it grows as it sucks. The greater and more lasting the prosperity of a community, the greater the stimulus to speculation. The more such stimulation, the higher goes the price of land, which means the more and more that must be paid for its use.
And since the ownership of land is rapidly concentrating, the speculative advance in the price of land means augmenting payment to a lessening number of persons by the masses of the people, who are not land owners, but who have to be land users, for no man can do without the use of land in some form.
Is it not obvious from this that the forced price of land arising from monopoly and speculation is an appropriation, a robbery? Speculation is going on generally. Wherever in the United States men are settled there is more or less effort to get possession of land, not so much for what labor can at the time produce from it, as for what its possessors may get from its “rise” — from the anticipation of what labor will after a while, when competition is keener, be forced to pay to use it.
The matter sums up to this: The power of production is fast increasing. The shares going to labor and capital, the active and passive factors in production, might reasonably be expected to increase accordingly. But they do not. They remain the same, or lessen. What seem like leeches absorb practically all the increase. And of these leeches, land speculation is the greatest. Wages and interest, the returns to labor and capital, remain stationary if, indeed, they do not fall, because of the increasing rent that must be paid for the use of land. Rising speculative rent and other forms of privilege make a colossal robbery from the productive activity of the country, since they appropriate the advances in material prosperity.
For an indication of the power of monopoly of all kinds of land, take an instance of one kind. The Chicago Tribune (January 1, 1903), referring to the fact. Ihat the Steel Trust was buying up competing steel companies, “not so much to get their plants as to get the mines they owned,” proceeded in explanation: –
- The mere purchase of the steel mills of independent concerns will not give the steel corporation that monopo]y of a great industry which the men at the head of it would like to acquire. There will always be capital available for the construction of iron furnaces and steel mills, except in the contingency that a sufficient supply of ore cannot be obtained. If the steel corporation shall become the owner of the cream of the ore lands, it will have a natural monopoly and will occupy an impregnable position. The supply of iron ore is not so limited as is that of anthracite, but some ore beds are rich and are so near the surface that they can be cheaply worked. Other deposits are of inferior quality and are not so easily worked. The independent company which had to depend on the inferior mines would find effective competition impossible.
The appropriating power of the private ownership of land can perhaps be more appreciated in that form embodied in grants to individuals of public highways — permits for long or short terms to transmit, without effective competition, through such highways intelligence, light, heat, power, water, products or persons. The rental value of naked “rights of way” possessed by public franchise corporations through the streets of New York City is estimated at this time to be not less than $40,000,000 annually.
And out of these various forms of land ownership comes a superimposed speculation, which, to those who can control it, is prolific. This is speculation in mining, railroad and “industrial” stocks. These stocks are issued by companies based upon land monopoly of some kind. Those controlling the companies can and do “get in on the ground floor” prices before the first sale to the public. They also can and do manipulate the stocks to greater or less degree, “unloading” at inflated prices to the public, and buying back again when the public has discovered the deception, and prices have fallen. The scion of one of our distinguished families, who was disinherited with a paltry million, but who, threatening long and costly litigation, was instead given seven millions, has, within a half-dozen years, while living like a prince and actually entertaining princes at home and abroad, increased his fortune, it is believed, to $25,000,000. In one year he is thought to have cleared $10,000,000. In the language of Wall Street, he “hit the market right.” In more precise language, he got in with the speculators. But for land and other monopoly elements in these stock market companies, there would have been no such stock speculation, and this young man would not now be known chiefly as a successful money getter, but would probably be earning honor, and incidentally a reasonable income for himself, as an inventor, for which he has, despite the present handicap of his millions, shown unmistakable aptitude, some of his locomotive contrivances being used with good results on large railroad systems of the country.
Private ownership of land has been treated at much length because in its direct forms, and in its indirect or public franchise forms, it constitutes the worst of all privileges, since it commits the heaviest robberies from the wealth producers. But there are other important kinds of privilege. One of these is taxation, when it is made to fall, as is generally the case, only slightly upon monopoly advantages, which it might be used to kill or to absorb into the public treasury. Instead of doing this, it is caused mainly to fall upon industry and the produce of industry. Such taxation burdens production and kills off competition among producers. The protective tariff is a shining example of such a law. It is sought by domestic producers to discourage foreign competitors. The higher such tax, the less the competition and the greater the centering of production in a few hands.
Still another is embodied in opportunities and immunities under the laws and in the courts enjoyed by certain individuals and combinations of individuals called “corporations,” which, although not very important in themselves, become enormously powerful when used to exploit other forms of privilege, such as natural opportunities and franchise grants, as will later be seen.
There are still other subsidiary forms of privilege, but speaking in a general way, the privileges causing the unequal distribution of wealth may be named in four divisions, to wit: (1) natural opportunities privately held under special or general laws; (2) various kinds of taxation on production and its fruits; (3) franchise grants; (4) powers of incorporation and various sorts of immunities in the courts.
These different kinds of privilege empower their holders to appropriate, without compensation or adequate compensation, a large or small share of the produce of labor. When the production of wealth is great, the powers of appropriation enable their possessors to heap together masses of wealth.
The existence of these various forms of privilege explains, and nothing else will explain, the sudden rise of private fortunes in the United States. So long as privileges were few and carried only weak appropriating powers, the mass of the people of the country had practically equal access to natural opportunities, and were deprived of but a small share of the produce of their labor. The country was then, as observed by Mr. Bryce, practically a land of equality in respect to the production and distribution of wealth.
But as the monopoly of land and other privileges appeared and strengthened, great private riches, accompanied by degrading and imbruting poverty, began to appear.
This is not to set intelligence, energy, honesty, and thrift at naught. With a fair field and no favor, they should count for everything. But is there such a thing amongst us as a fair field and no favor? Surely not with great privileges in existence. Thousands upon thousands who have the qualities of intelligence, energy, honesty, and thrift, under present social adjustments find intense difficulty in getting subsistence. Privilege forestalls them, and sells to the highest bidders opportunities to get subsistence or better.
Nor is it to be supposed that because social conditions were more equitable a century ago than they are now, the men then were inherently better than they are now. I do not revert to the past as to an age when men were perfect. Human nature does not change. What do change are its manifestations, and these vary with environments. John Hancock vainly tried to make a corner in whale oil. Had he lived in this period, he might have been a Rogers or a Rockefeller. Washington was as keen after landed possessions as many of our Western ranching or lumber kings. Advertisements in Franklin’s paper, The Gazette, give strong suspicion that that philosopher in the early half of his life engaged in the purchase and sale of slaves. While Jefferson publicly and privately condemned slavery, and feared the wrath of a “just God” would be visited upon his country for permitting the existence of the institution, he acted as Southern men of his means and station did — he kept slaves. Alexander Hamilton was the master spirit in a franchise grab which, if attempted today in any of our cities, would make a furious municipal scandal and uproar. I revert to the past not as to an age when human nature was any better than it is now, but to a time when there were more equal opportunities.
In those early days of the Republic subsistence was the thing that all could get, and get it without cringing to any. Now multitudes are haunted by the wolf of the mind — the fear of want. And since “all that a man hath will he give for his life,” everything may be sacrificed in the strife for a living. Even though we enjoy a republican form of government, and have none of the monarchical civil distinctions, yet the superabundance heaped up for the possessors of privileges will outrival that of princes. Republican citizens will become, in effect, princes in riches. They will, in fact, become very Princes of Privilege.
- Next week — all about the Princes of Privilege.
This installment is one of the best summaries ever written of how our civilization operates, of why poverty continues to accompnay progress. What’s your view on privilege? Did Mr. George leave anything out?