The Daily Telegraph (Sydney, NSW: 1883-1930) Sat 9 Nov 1889 Page 10
The Philosophy of the Single Tax
by J. Farrell
No. IV The Heart of the Matter
by J. Farrell
No. IV The Heart of the Matter
"The laws of distribution are obviously laws of proportion, and must be so related to each other that any two being given the third may be inferred." When it is known what the total value of a product, is, what portion of that value is taken as rent, and what as interest upon invested capital, it can readily be ascertained how much will remain to go in the shape of wages to those who engaged in the work of production. Presuming that the readers who have followed me up to this point have perfectly comprehended the differences between Henry George and the earlier teachers, and the important difference in conclusions which they must involve, I will now proceed to deal with a part of the question in which he is practically in accord with them — the law of Rent.
This, as stated by Ricardo, who more than any former writer devoted himself to the subject and who has been widely accepted as the standard authority, is as follows: — "The rent of land is determined by the excess of its produce over that which the same application of labor can secure from the least productive land in use." Here the definition of the word "land" must be borne in mind. It must be remembered that "land" means not only the surface of the earth but all natural agencies and means of production, such, for instance, as forests, mines, fisheries, &c. Rent is the advantage (expressed usually in money) which one natural avenue of production possesses over another, and can only refer to natural advantage. Rent is commonly and erroneously accepted as meaning payment for the use of buildings or improvements of any kind effected by labor or capital, but that error must be avoided. Such payment is wages or interest for the labor or capital expended in making the buildings or improvement, not rent. It must be remembered, too, that rent arises not only when the owner of land and the user of it are separate persons. If the owner and user are one and the same person, that portion of his income which he might obtain if he leased his land to a second party instead of putting it to use himself is rent. When land is purchased the purchase money — exclusive of any sum paid in consideration of improvements upon it — is simply rent capitalized. The purchaser pays in a lump sum what, if he leased the land, he would pay in rent. It must not be supposed that Ricardo's law assumed usefulness to be the basis of rent. No matter what especial advantages a piece of land possessed, rent could not attach to it while another piece, equal in every respect, was open to free use. And the expenditure of labor or capital upon such a piece of land would not in any way affect its rental. If improvements worth a million pounds stood upon it still not a single
penny of rent could be obtained for it if a similar piece of land without any improvement were obtainable without paying rent. "Remember this: it is a truth you can verify by observation every day of your life, that land can yield no rent, and have no value until someone is willing to give labor or the results of labor for the privilege of using it, and what he will give depends, not upon the usefulness of the land, but upon its usefulness as compared with the usefulness of land that is not owned. Rent, therefore does not represent any help given to production, but simply the power of securing part of the results of production."
This being so it becomes manifest that of all wealth produced, all over the amount which the labor and capital employed in its production could secure by applying themselves to free land is Rent. If a given amount of labor and capital applied to, say a coal mine, produced 100 tons of coal, while the same labor and capital applied to a second mine produced 150 tons, and to a third 200 tons, their providing the first mine were free to whoever chose to use it, the rental of the second would be the value of 50 tons of coal and the rental value of the third the value of 100 tons. In all three cases there would be but a hundred tons left for division between labor and capital to pay for the whole of their production. This illustration exactly fits every possible case that can arise where natural advantage is in question. And the meaning of it is that "Wages and interest do not depend upon the produce of labor and capital, but upon what is left after rent is taken out, or upon the produce which they could obtain from the poorest land in use." Rent, it will thus be seen is the key to the problem of industrial depression and social misery and misfortune. Wages and interest do not increase with increased productive power, for a very obvious reason. Rent keeps up with every advance of science and invention. As more is produced by improvement and development of productive power, Rent asks the whole of that "more" and contrives to get it. The effect of our advancement and progress has been to enhance the profits of the owner of the lend, who has not only done nothing to help production, but whose especial province is to prevent it by only allowing those who will outbid all others in purchasing the privilege of producing to go to work. The working partners of production, labor and capital, have not had a rise of wages or interest.
Touching the law of interest, by which is determined the ratio between interest and wages or how the amount of their product left to capital and labor by the tender mercy of rent will be divided between them, Mr. George's verdict is that "the relation between wages and interest is determined by the average power of increase which attaches to capital from its use in reproductive modes. As rent rises interest will fall just as wages fall, or will be determined by the 'margin of cultivation.'" And although this appears to be strictly true and is accepted by the students of the new economy as proven, it involves the one point of difference between George and a large number of his followers. Many of these, having made close examination of his philosophy and endorsed every other part of it, oppose the conclusion that interest, in its sense being a premium paid by borrowers to lenders for the use of capital, is a natural law and continues to exist after opportunities of production have been placed upon equal conditions within the reach of all. But, as I have already said, no main issue is affected by this doubt. The term "the margin of cultivation" requires explanation here. It is "the rent line." The poorest land in use has no rental value. But if poorer land still is forced into use that which hitherto was poorest begins to command some rent. The forcing of such poorer land into use lowers interest, while it raises rent. Then it is said "the margin of cultivation falls." If, on the contrary, for any reason, the poorest land is thrown out of use and only better land is used ''the margin of cultivation rises." With its rise interest rises and rent falls.
There is not a common rate of wages in the same sense that there is a common rate of interest. The reason of this is that wages, by which term is meant all returns to labor, vary considerably according to differences in the productive power of individual laborers and differences between the various branches of industry. But there is a correlation between all these branches. When the reward of labor in the primal or lowest divisions of industrial production is low, that in the highest branches is also low. The great cardinal law upon which the science of political economy rests, as upon enduring granite, is that man seeks to gratify his desires with the least possible exertion. This is the law which maintains relativeness between the various grades of occupation, and holds the rewards of them in something like a uniform ratio to the cost of acquiring proficiency in them. Stated tersely, one man will not work for another man unless he can gain more than if he were working for himself, and an employer will not pay him more than he could make if he did so work. Thus, though wage-earners seek to get as much as possible, and employers to give as little as possible, wages will remain level at the point of the highest productiveness free to laborers, which can truly be said to be the lowest point at which production will be carried on — "the margin of cultivation." At this point rent does not exist, and the whole of production goes to labor and capital. Labor and capital are practically kept at the ''margin of cultivation" all the time. No matter how far within it they may appear to be, no matter how much better is the land they are using than the poorest in use, rent takes the whole of the advantage and leaves them no better off than those who are in truth and actuality working at the "margin" itself. The law of wages, it will thus be seen, bears the same relation to the law of rent as does the law of interest. Like interest, which is after all but a subdivision of labor, wages fall as rent rises and rise as rent falls.
Why do not wages rise with increase of productive power? Why, indeed? Because rent does all the rising that there is any occasion for. It gets the first opportunity of taking a share from new production, and it takes so much that labor and capital get no more than they had before. Suppose a new process or machine is perfected which compasses a huge saving of human labor. Someone owns the supply of raw material upon which alone the process or machine can work, and that someone stands at the gate and says: — "By the aid of this process or machine you will be enabled to produce enormously more with the same expenditure of human labor than you have hitherto done. But before you go in here with it — before you can get any raw material to operate upon, I want increased gate money. You will have to pay me the difference between what you could produce yesterday without your process or machine and what you can produce today with it." That is why wages tend to a minimum below which the laborers cannot subsist, and why interest goes down and down, while on the banner of rent is written "Excelsior." Increase of population, better government, railway and road extension, everything in fact that is a part of progress, causes keener demand for land. This demand can only be satisfied by resorting to poorer land than has hitherto been in use. By "poorer," it must not be supposed that fertility or agricultural productiveness alone is meant, but poorer for any of the manifold uses to which land may be put — poorer for coal, gold, tin, iron or silver mining; poorer as a site for any shop, or hotel or factory, or any other business. This forced resorting to poorer land is a lowering of the "margin of cultivation." It results in, or rather is synonymous with, a lowering of wages, until the lowest and most poorly paid grade of wage-earners live on the verge of starvation, with one here and there slipping over it and ceasing to live.
This forcing of poorer land into use is enormously accelerated by speculation, which arises from and is built upon the principle of private ownership of land. It is known, or felt, in certain localities that population will increase either naturally in its usual degree or rapidly for some special reason. This increase of population, or of demand for land, is reckoned upon by speculators, who prepare to block it by securing in advance the land which will be required. Population coming along presently, and wanting land whereon to live and work for itself, finds that it has been forestalled. Someone has got there first and secured it all. Not anyone who wanted it, as population does, for use, but someone who bought it to prevent population from using it, until permission to do so was purchased from him — until he was bought off, in fact. Thus is the lowering of the margin of cultivation hastened along, and the earnings of coming population in a great degree diverted into the pockets of those who have earned nothing. The only choice left to the units of a population coming to any place where land is in private possession is to pay what is asked for the use of such land or suffer at least equal loss by going on until they can find cheaper. I say equal loss, for a less price means in every case less desirability on the part of the thing for which it is paid. Speculation in land thus results in some of the best land being held idle while labor and capital have to employ themselves on some of the worst. "The rent line or margin of cultivation separates not merely the poorest land in use from better land, but actually the poorest land from all other land. That being so, it follows that the rate of wages is fixed by what labor can produce from the poorest land. Hence poverty, immorality, ignorance, business depressions, disease and crime."
I will ask the reader to go back with me in imagination to the beginning of civilization in this colony. I will do this in order to give him, in the shape of an object lesson on our own history, an example of how land monopoly works, what evil it has wrought for us already, and what it will inevitably lead us to in the future if it is permitted to remain unassailed. The first arrivals here naturally chose the most advantageous parts of the land to settle upon. They were allowed certain areas, either as grants or purchases, and, of course, took the best — the best agricultural land or part of the site of a future city. Those who immediately followed them chose the next best. The first-comers, it will thus be seen, had one point of advantage over the second, inasmuch as that a given expenditure of labor or capital upon their land would yield the best return. The name of this one point would be Rent, and the margin of cultivation would be lowered one point. The third batch of comers would take the best land then open to them. The first-comers would have a gain over them of two points of rent and the second of one point, while the margin of cultivation would have fallen two points. And so on, until, after all the most desirable parts of the land had fallen into the possession of private owners, the last-comers would find the margin of cultivation lowered 60 points for themselves and rent raised 50 points for the first-comers.
Let us consider the ownership of any one of the highest natural advantages or unimproved values — that is, values to the creation of which the owners have not contributed by labor or capital — to be found among us. Rich coal or gold-bearing lands, lands which formed part of the site for a future city or the frontage or approach to a landing place, would form the best examples. Take an acre fronting George-street, for instance, which many years ago, as a piece of mean and worth less scrub-covered sandstone, passed into the possession of somebody for a mere trifle — perhaps as much as, or more than, its worth for any use it could be put to at the time. Today, if it were denuded of every betterment that has been placed upon it and left in the precise condition in which it was when the first fleet came through the Heads it would be worth, say, half-a-million pounds! It would be half-a-million times more valuable than the same quantity of agricultural or pastoral land worth £1 per acre, and the owner, without necessarily having done anything but get possession before the presence of population had given value to it, would have £499,999 of advantage in the shape of rent over the owner of one of such pastoral or agricultural acres as I have alluded to. A man owning an acre of George-street would (estimating the matter merely on the surface for a rough comparison) be as well situated with regard to amassing wealth as one possessing over 700 square miles of country land of the value named!
Before glancing at the effects of this incredible advantage possessed by one man over another, let me ask why it should exist. What justification is there for such a thing? I know the plea about pioneers who have borne the brunt of the work of colonization, and how their work deserves its reward, and I know that it is generally a false plea. There is no more over-estimated fraud in the world than this same pioneer. One like Stanley, who makes it his life-work to open up a new country for the advantage of the world and the good that he can do, deserves gratitude and honor, as well as the amplest material reward. But the average pioneer has no such claim. He only assumes the role because it is to his interest to do so. The forefathers of New South Wales came out here, not from any consideration for posterity, but in order to do what they could for themselves. They may have had rough experiences and hard times, but they deliberately took the risk of these for whatever gain there might be, just as gold-diggers starting for Kimberley or Croydon might. Like such diggers they left the places they were in because the places to which they were going seemed preferable, and that is all there is of it. The pioneer has a halo of romance around his head which he has obtained in many cases under false pretenses. As one who has left his native shore and braved the perils of the deep he appeals pretty successfully to that kind of sentiment which is always on the watch for heroes. But the real hero probably was the man who could not leave his native land, but faced in it, as so many thousands do in every land, a life infinitely harder than that of any pioneer. There was nothing in the service rendered by any of them to New South Wales which earned the rewards of wholesale division among them of much of the best of the territory. But a shameful wrong was done to those coming after them, a wrong which it will be one of the serious tasks of the future to undo.
To return to that George-street acre. The owner of it has secured a power to levy toll upon production to a huge amount, and does levy it accordingly. He may have built upon it or he may not — most probably he has let it on a building lease, which is the usual plan, and on the expiration of the term will become possessed of the buildings erected by the tenant and will grant him a new lease at a greatly increased rental, if he receives a bonus in the shape of a pretty considerable lump sum for doing so. But assume that he has himself erected the buildings. The same building erected upon the same area in an up-country town would cost about the same expenditure of capital — probably they would cost somewhat more. But what sum would the users of them pay for the right of occupation? Probably not one-tenth part of the amount they would have to pay in Sydney, for the reason that in the country town the largest part of the payment would be interest upon capital expended in the erection of buildings, while in the city the largest part would be payment for the natural advantage of proximity of population — Rent, pure and simple. The occupants of the city buildings (say stores or shops) would do perhaps 10 times the amount of business done by the occupants of those in the country town; they would pay 10 times as much for the privilege of doing it, and would not, consequently, secure any better return than the others. What I have here tried to show is that equal amounts of capital invested in buildings in the country anywhere and in the city will return about the same rate of interest to the capital used in building them, and that persons engaging a given amount of capital in any business, such as storekeeping, in the country get just about the same return upon it as those doing the same in the city. Rent takes the difference.
We see farmers struggling to make a mere living in very remote places where the rainfall is uncertain, the land bad, and the market distant. We know that there is better and more favorably situated land in plenty lying comparatively unused, but owned by somebody. If the farmer sought to use that better land the owner would ask just such a price for its use as would take away all the difference in advantage between it and that on which he tries to eke out a subsistence. We see businesses and occupations of every kind dragging along a feeble and flickering life in places unsuitable to them, just for the reason that if those who engage in them were to establish themselves in suitable places the whole of the suitability would be accurately estimated and charged in rent and they left no better off. Rent is the power which keeps productive industry out against the "Margin of cultivation," and so near the point beyond which it is not possible for labor to live or capital to reproduce itself, that any sudden rigor of conditions, such as drought or an unexpected tightening of the money market, causes widespread depression and disaster. When this point is arrived at rent falls for a time and labor and capital consequently begin to recover themselves somewhat. But even as they do, rent gets on their track again and keeps them to the old terms. That is, briefly, the law of the recurring periods of depression which are everywhere remarked upon. I need not multiply illustrations of the truth that rent increases with every advance in human conditions, caused by legislation, invention, fruitful seasons or anything, else. It has possession of raw material, and has the strength to take to itself the first fruits.
This is the heart of the whole matter. Private ownership of land conveys private ownership of those who must, if they live at all, inhabit the land. For it conveys the right to make them compete with each other in their bidding for the use of land, until the highest bidder gives all he can produce save what will keep him alive. "Can the landlords rightfully use the lands so as to cause the natives to perish of hunger and cold? If they can, then have the landlords the right to kill, and the miserable people of England are placed upon a footing with the beasts of the field and the fowls of the air." So wrote William Cobbett, and this thing, true of England, is just as true of New South Wales and of everywhere else. Only as yet the fighting to death for room in which to live has not fully set in here. We are separated by a distance, which their circumstances render absolutely impassable to them from those who inhabit teeming centers of misery in the old world, and there is so much space and so few people here that monopoly of land has not yet such dire effect to show as elsewhere. It is hardly likely, judging by the present state of the world's thought, that it ever will have them to show. But magnificent preparations have been made. Estates exist not only in Sydney but in many parts of the colony which have already stolen (legally stolen) millions upon millions of money, in the shape of unearned increment of value, from the people, whose presence and needs alone brought such value into existence. In the name of common sense and justice I ask my reader to consider this: Years ago someone of a generation before ours rendered service (say the payment of value) to that generation in return for a certain area of land, which in the state of population at that time had not much value. But for one man who needed the land then fifty need it now. The descendants of the original purchaser can go on under present conditions taking tribute in a larger and larger degree as population grows, without rendering anything in return. At first the tribute paid to the owner of an acre of such land by the user might have been the annual produce of one man's labor, while at the present time the tribute claimed and received may have grown to be the annual produce of 500 men's labor, and as population grows this tribute will keep on increasing. Who can defend such a principle or say that it is other than evil and unnatural? Service was rendered by the original owner of the land to the State, which the State requited with the land, which at its then value was the price paid. Did the people of that generation foresee that the ownership of the land they parted with would confer upon the children of the purchaser the power to command, each of them, in some future time the earnings of 10 or 20 of the children of others? Certainly they did not. But if they had done so, we are the makers and the repealers of laws, and it is ours to say what is just and what unjust, apart altogether from what our ancestors may have thought. We need not endorse the sale of the majority of ourselves into practical slavery because it was decided upon before we were born.
This being so it becomes manifest that of all wealth produced, all over the amount which the labor and capital employed in its production could secure by applying themselves to free land is Rent. If a given amount of labor and capital applied to, say a coal mine, produced 100 tons of coal, while the same labor and capital applied to a second mine produced 150 tons, and to a third 200 tons, their providing the first mine were free to whoever chose to use it, the rental of the second would be the value of 50 tons of coal and the rental value of the third the value of 100 tons. In all three cases there would be but a hundred tons left for division between labor and capital to pay for the whole of their production. This illustration exactly fits every possible case that can arise where natural advantage is in question. And the meaning of it is that "Wages and interest do not depend upon the produce of labor and capital, but upon what is left after rent is taken out, or upon the produce which they could obtain from the poorest land in use." Rent, it will thus be seen is the key to the problem of industrial depression and social misery and misfortune. Wages and interest do not increase with increased productive power, for a very obvious reason. Rent keeps up with every advance of science and invention. As more is produced by improvement and development of productive power, Rent asks the whole of that "more" and contrives to get it. The effect of our advancement and progress has been to enhance the profits of the owner of the lend, who has not only done nothing to help production, but whose especial province is to prevent it by only allowing those who will outbid all others in purchasing the privilege of producing to go to work. The working partners of production, labor and capital, have not had a rise of wages or interest.
Touching the law of interest, by which is determined the ratio between interest and wages or how the amount of their product left to capital and labor by the tender mercy of rent will be divided between them, Mr. George's verdict is that "the relation between wages and interest is determined by the average power of increase which attaches to capital from its use in reproductive modes. As rent rises interest will fall just as wages fall, or will be determined by the 'margin of cultivation.'" And although this appears to be strictly true and is accepted by the students of the new economy as proven, it involves the one point of difference between George and a large number of his followers. Many of these, having made close examination of his philosophy and endorsed every other part of it, oppose the conclusion that interest, in its sense being a premium paid by borrowers to lenders for the use of capital, is a natural law and continues to exist after opportunities of production have been placed upon equal conditions within the reach of all. But, as I have already said, no main issue is affected by this doubt. The term "the margin of cultivation" requires explanation here. It is "the rent line." The poorest land in use has no rental value. But if poorer land still is forced into use that which hitherto was poorest begins to command some rent. The forcing of such poorer land into use lowers interest, while it raises rent. Then it is said "the margin of cultivation falls." If, on the contrary, for any reason, the poorest land is thrown out of use and only better land is used ''the margin of cultivation rises." With its rise interest rises and rent falls.
There is not a common rate of wages in the same sense that there is a common rate of interest. The reason of this is that wages, by which term is meant all returns to labor, vary considerably according to differences in the productive power of individual laborers and differences between the various branches of industry. But there is a correlation between all these branches. When the reward of labor in the primal or lowest divisions of industrial production is low, that in the highest branches is also low. The great cardinal law upon which the science of political economy rests, as upon enduring granite, is that man seeks to gratify his desires with the least possible exertion. This is the law which maintains relativeness between the various grades of occupation, and holds the rewards of them in something like a uniform ratio to the cost of acquiring proficiency in them. Stated tersely, one man will not work for another man unless he can gain more than if he were working for himself, and an employer will not pay him more than he could make if he did so work. Thus, though wage-earners seek to get as much as possible, and employers to give as little as possible, wages will remain level at the point of the highest productiveness free to laborers, which can truly be said to be the lowest point at which production will be carried on — "the margin of cultivation." At this point rent does not exist, and the whole of production goes to labor and capital. Labor and capital are practically kept at the ''margin of cultivation" all the time. No matter how far within it they may appear to be, no matter how much better is the land they are using than the poorest in use, rent takes the whole of the advantage and leaves them no better off than those who are in truth and actuality working at the "margin" itself. The law of wages, it will thus be seen, bears the same relation to the law of rent as does the law of interest. Like interest, which is after all but a subdivision of labor, wages fall as rent rises and rise as rent falls.
Why do not wages rise with increase of productive power? Why, indeed? Because rent does all the rising that there is any occasion for. It gets the first opportunity of taking a share from new production, and it takes so much that labor and capital get no more than they had before. Suppose a new process or machine is perfected which compasses a huge saving of human labor. Someone owns the supply of raw material upon which alone the process or machine can work, and that someone stands at the gate and says: — "By the aid of this process or machine you will be enabled to produce enormously more with the same expenditure of human labor than you have hitherto done. But before you go in here with it — before you can get any raw material to operate upon, I want increased gate money. You will have to pay me the difference between what you could produce yesterday without your process or machine and what you can produce today with it." That is why wages tend to a minimum below which the laborers cannot subsist, and why interest goes down and down, while on the banner of rent is written "Excelsior." Increase of population, better government, railway and road extension, everything in fact that is a part of progress, causes keener demand for land. This demand can only be satisfied by resorting to poorer land than has hitherto been in use. By "poorer," it must not be supposed that fertility or agricultural productiveness alone is meant, but poorer for any of the manifold uses to which land may be put — poorer for coal, gold, tin, iron or silver mining; poorer as a site for any shop, or hotel or factory, or any other business. This forced resorting to poorer land is a lowering of the "margin of cultivation." It results in, or rather is synonymous with, a lowering of wages, until the lowest and most poorly paid grade of wage-earners live on the verge of starvation, with one here and there slipping over it and ceasing to live.
This forcing of poorer land into use is enormously accelerated by speculation, which arises from and is built upon the principle of private ownership of land. It is known, or felt, in certain localities that population will increase either naturally in its usual degree or rapidly for some special reason. This increase of population, or of demand for land, is reckoned upon by speculators, who prepare to block it by securing in advance the land which will be required. Population coming along presently, and wanting land whereon to live and work for itself, finds that it has been forestalled. Someone has got there first and secured it all. Not anyone who wanted it, as population does, for use, but someone who bought it to prevent population from using it, until permission to do so was purchased from him — until he was bought off, in fact. Thus is the lowering of the margin of cultivation hastened along, and the earnings of coming population in a great degree diverted into the pockets of those who have earned nothing. The only choice left to the units of a population coming to any place where land is in private possession is to pay what is asked for the use of such land or suffer at least equal loss by going on until they can find cheaper. I say equal loss, for a less price means in every case less desirability on the part of the thing for which it is paid. Speculation in land thus results in some of the best land being held idle while labor and capital have to employ themselves on some of the worst. "The rent line or margin of cultivation separates not merely the poorest land in use from better land, but actually the poorest land from all other land. That being so, it follows that the rate of wages is fixed by what labor can produce from the poorest land. Hence poverty, immorality, ignorance, business depressions, disease and crime."
I will ask the reader to go back with me in imagination to the beginning of civilization in this colony. I will do this in order to give him, in the shape of an object lesson on our own history, an example of how land monopoly works, what evil it has wrought for us already, and what it will inevitably lead us to in the future if it is permitted to remain unassailed. The first arrivals here naturally chose the most advantageous parts of the land to settle upon. They were allowed certain areas, either as grants or purchases, and, of course, took the best — the best agricultural land or part of the site of a future city. Those who immediately followed them chose the next best. The first-comers, it will thus be seen, had one point of advantage over the second, inasmuch as that a given expenditure of labor or capital upon their land would yield the best return. The name of this one point would be Rent, and the margin of cultivation would be lowered one point. The third batch of comers would take the best land then open to them. The first-comers would have a gain over them of two points of rent and the second of one point, while the margin of cultivation would have fallen two points. And so on, until, after all the most desirable parts of the land had fallen into the possession of private owners, the last-comers would find the margin of cultivation lowered 60 points for themselves and rent raised 50 points for the first-comers.
Let us consider the ownership of any one of the highest natural advantages or unimproved values — that is, values to the creation of which the owners have not contributed by labor or capital — to be found among us. Rich coal or gold-bearing lands, lands which formed part of the site for a future city or the frontage or approach to a landing place, would form the best examples. Take an acre fronting George-street, for instance, which many years ago, as a piece of mean and worth less scrub-covered sandstone, passed into the possession of somebody for a mere trifle — perhaps as much as, or more than, its worth for any use it could be put to at the time. Today, if it were denuded of every betterment that has been placed upon it and left in the precise condition in which it was when the first fleet came through the Heads it would be worth, say, half-a-million pounds! It would be half-a-million times more valuable than the same quantity of agricultural or pastoral land worth £1 per acre, and the owner, without necessarily having done anything but get possession before the presence of population had given value to it, would have £499,999 of advantage in the shape of rent over the owner of one of such pastoral or agricultural acres as I have alluded to. A man owning an acre of George-street would (estimating the matter merely on the surface for a rough comparison) be as well situated with regard to amassing wealth as one possessing over 700 square miles of country land of the value named!
Before glancing at the effects of this incredible advantage possessed by one man over another, let me ask why it should exist. What justification is there for such a thing? I know the plea about pioneers who have borne the brunt of the work of colonization, and how their work deserves its reward, and I know that it is generally a false plea. There is no more over-estimated fraud in the world than this same pioneer. One like Stanley, who makes it his life-work to open up a new country for the advantage of the world and the good that he can do, deserves gratitude and honor, as well as the amplest material reward. But the average pioneer has no such claim. He only assumes the role because it is to his interest to do so. The forefathers of New South Wales came out here, not from any consideration for posterity, but in order to do what they could for themselves. They may have had rough experiences and hard times, but they deliberately took the risk of these for whatever gain there might be, just as gold-diggers starting for Kimberley or Croydon might. Like such diggers they left the places they were in because the places to which they were going seemed preferable, and that is all there is of it. The pioneer has a halo of romance around his head which he has obtained in many cases under false pretenses. As one who has left his native shore and braved the perils of the deep he appeals pretty successfully to that kind of sentiment which is always on the watch for heroes. But the real hero probably was the man who could not leave his native land, but faced in it, as so many thousands do in every land, a life infinitely harder than that of any pioneer. There was nothing in the service rendered by any of them to New South Wales which earned the rewards of wholesale division among them of much of the best of the territory. But a shameful wrong was done to those coming after them, a wrong which it will be one of the serious tasks of the future to undo.
To return to that George-street acre. The owner of it has secured a power to levy toll upon production to a huge amount, and does levy it accordingly. He may have built upon it or he may not — most probably he has let it on a building lease, which is the usual plan, and on the expiration of the term will become possessed of the buildings erected by the tenant and will grant him a new lease at a greatly increased rental, if he receives a bonus in the shape of a pretty considerable lump sum for doing so. But assume that he has himself erected the buildings. The same building erected upon the same area in an up-country town would cost about the same expenditure of capital — probably they would cost somewhat more. But what sum would the users of them pay for the right of occupation? Probably not one-tenth part of the amount they would have to pay in Sydney, for the reason that in the country town the largest part of the payment would be interest upon capital expended in the erection of buildings, while in the city the largest part would be payment for the natural advantage of proximity of population — Rent, pure and simple. The occupants of the city buildings (say stores or shops) would do perhaps 10 times the amount of business done by the occupants of those in the country town; they would pay 10 times as much for the privilege of doing it, and would not, consequently, secure any better return than the others. What I have here tried to show is that equal amounts of capital invested in buildings in the country anywhere and in the city will return about the same rate of interest to the capital used in building them, and that persons engaging a given amount of capital in any business, such as storekeeping, in the country get just about the same return upon it as those doing the same in the city. Rent takes the difference.
We see farmers struggling to make a mere living in very remote places where the rainfall is uncertain, the land bad, and the market distant. We know that there is better and more favorably situated land in plenty lying comparatively unused, but owned by somebody. If the farmer sought to use that better land the owner would ask just such a price for its use as would take away all the difference in advantage between it and that on which he tries to eke out a subsistence. We see businesses and occupations of every kind dragging along a feeble and flickering life in places unsuitable to them, just for the reason that if those who engage in them were to establish themselves in suitable places the whole of the suitability would be accurately estimated and charged in rent and they left no better off. Rent is the power which keeps productive industry out against the "Margin of cultivation," and so near the point beyond which it is not possible for labor to live or capital to reproduce itself, that any sudden rigor of conditions, such as drought or an unexpected tightening of the money market, causes widespread depression and disaster. When this point is arrived at rent falls for a time and labor and capital consequently begin to recover themselves somewhat. But even as they do, rent gets on their track again and keeps them to the old terms. That is, briefly, the law of the recurring periods of depression which are everywhere remarked upon. I need not multiply illustrations of the truth that rent increases with every advance in human conditions, caused by legislation, invention, fruitful seasons or anything, else. It has possession of raw material, and has the strength to take to itself the first fruits.
This is the heart of the whole matter. Private ownership of land conveys private ownership of those who must, if they live at all, inhabit the land. For it conveys the right to make them compete with each other in their bidding for the use of land, until the highest bidder gives all he can produce save what will keep him alive. "Can the landlords rightfully use the lands so as to cause the natives to perish of hunger and cold? If they can, then have the landlords the right to kill, and the miserable people of England are placed upon a footing with the beasts of the field and the fowls of the air." So wrote William Cobbett, and this thing, true of England, is just as true of New South Wales and of everywhere else. Only as yet the fighting to death for room in which to live has not fully set in here. We are separated by a distance, which their circumstances render absolutely impassable to them from those who inhabit teeming centers of misery in the old world, and there is so much space and so few people here that monopoly of land has not yet such dire effect to show as elsewhere. It is hardly likely, judging by the present state of the world's thought, that it ever will have them to show. But magnificent preparations have been made. Estates exist not only in Sydney but in many parts of the colony which have already stolen (legally stolen) millions upon millions of money, in the shape of unearned increment of value, from the people, whose presence and needs alone brought such value into existence. In the name of common sense and justice I ask my reader to consider this: Years ago someone of a generation before ours rendered service (say the payment of value) to that generation in return for a certain area of land, which in the state of population at that time had not much value. But for one man who needed the land then fifty need it now. The descendants of the original purchaser can go on under present conditions taking tribute in a larger and larger degree as population grows, without rendering anything in return. At first the tribute paid to the owner of an acre of such land by the user might have been the annual produce of one man's labor, while at the present time the tribute claimed and received may have grown to be the annual produce of 500 men's labor, and as population grows this tribute will keep on increasing. Who can defend such a principle or say that it is other than evil and unnatural? Service was rendered by the original owner of the land to the State, which the State requited with the land, which at its then value was the price paid. Did the people of that generation foresee that the ownership of the land they parted with would confer upon the children of the purchaser the power to command, each of them, in some future time the earnings of 10 or 20 of the children of others? Certainly they did not. But if they had done so, we are the makers and the repealers of laws, and it is ours to say what is just and what unjust, apart altogether from what our ancestors may have thought. We need not endorse the sale of the majority of ourselves into practical slavery because it was decided upon before we were born.
source: https://trove.nla.gov.au/newspaper/article/235812777
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