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In organised communities, such as England, every citizen and every sojourner enjoys certain benefits from the presence of his fellow-creatures and the existence of a Government. He has society; his life and property are protected; he can carry on his trade or occupation in security; he has access to means of education; facilities for travel and transport are at his disposal. These and many other advantages are conferred by the community and its organ the Government, upon all the inhabitants. Upon this obvious fact is founded the supposed justification for taxing all the inhabitants according to their means. But in reasoning thus a most important matter is forgotten -- namely, that a section of the people, while enjoying all the benefits of civilisation conferred upon others, enjoy in addition a special gift which is the direct result of population and Government and the result of population and Government alone. This section of the people are the owners of land and kindred monopolies; this privilege is the value of the land or other monopoly owned by them.

Let us consider the matter. The Duke of Westminster and John Smith, one of his tenants are both citizens of England; both enjoy the advantages, lately indicated, of protection to life and property, &c. But John Smith owns no land, whereas the value of the Duke's estates is immense. Whence does this value come? The answer is indisputable. It arises from the demand for land occasioned by the presence of a population, who must have land to live upon; and this demand, which is the ultimate cause of land value, depends upon the existence of a huge population under a well-ordered Government, which permits its citizens to give full scope to their activities and ensures a return for them. On this return the Duke levies tribute. He has done nothing whatever to make the land valuable. He enjoys the proceeds of other people's labour, because in the time of the Stuarts one of his ancestors was so fortunate as to marry a cowkeeper's daughter, and through the marriage came into possession of fields in Mayfair which are now in the heart of fashionable London. Similar good fortune is enjoyed by a family named Howie, who are people of wealth and consideration in the United Kingdom, owing to the drunken freak of a grandfather or great-grandfather, once a humble market-gardener in the neighbourhood of Sydney, New South Wales. About seventy-five years ago this Howie came one day into Sydney, sold his vegetables, visited a public-house, and, going thence, looked in at a land sale where there were being offered at auction blocks of land in the infant village of Melbourne. Howie bid for one; it was knocked down to him for ten or twelve pounds. When sober he repented of his rashness, but was held to his bargain. He never saw the land, spent not a penny on it, but Melbourne grew into a great city, and now his family are drawing tens of thousands of pounds a year made by the labour of people in Australia as a reward for the insobriety of their ancestor the market-gardener.

To return to the case of the Duke of Westminster. We know that, if the people of London were to migrate elsewhere and the great city dwindled to a village, the estates of the Duke of Westminster would lose nine hundred and ninety-nine thousandths of their value. Land in regions where there are no people to use it has no value at all. Alternatively let us consider the population of London remaining and Government leaving, its place being taken by anarchy. Where would the value of the Duke of Westminster's estates be then? Who would collect his vast rents? Who would be willing to pay them? What could the Duke obtain for an acre, worth perhaps a million pounds now, if he desired to sell? If anarchy were complete he could get nothing at all. The people, in short, make the Duke's landed wealth for him, and the State is his rent collector. The same applies to all land-owners, great or small, in their degree. Their land would be valueless but for the demand of a population subject to law. Therefore it follows that the value of his land is something enjoyed by a land-owner over and above all the benefits accruing to himself and other men as members of the community, and to tax the owner of land in proportion to the value which the community thus creates and maintains would be in accord with the canon we are propounding, that every man should be made to contribute to the expenses of the State in proportion to the privileges conferred on him by the community of which the State is the representative.

Before going further it will here to convenient to give a definition to land value, and to show that it is the essential element in many forms of property not generally included under the term land, but dependent upon special rights to the use of land for a large part of the value they possess.

By land value we mean the price or rent which could be obtained in an open market for land divested of any improvements which may be in it or upon it. The price obtainable for such land by a sale of the freehold is its capital value the yearly rent it would fetch is its annual value. Improvements which would not be taxable under the land values tax consist of buildings and other erections; rails, road-bed, &c., of railway lines; shafts and workings in mines; drains, wells, fences, plantations, &c., on agricultural land; consist, in short, of all works of man effected in or upon any particular area of land of which the value is assessed for taxing purposes. This limitation of the meaning of improvements to existent and valuable works upon each piece of land considered individually is important. Its neglect leads careless thinkers sometimes to maintain that land has no value apart from improvements. Believing the value of a vacant block in London, for instance, to depend on the existence of highly improved property surrounding it, they assert that unimproved land value is a meaningless term defining the non-existent. They are mistaken in the cause they assign to land value. As a matter of fact, the value of a vacant block, or of a site covered with buildings, in great cities such as London, arises not from the existence of other buildings in its vicinity, but from the desire of those who can pay for the use of it to use it -- in other words, from demand. This demand is not necessarily increased by improvements in the neighbourhood. The value of the site of Chicago was greater the day after the fire had reduced the city to ashes than the day before the fire broke out. Men wanted the land because of its potentialities for manufactures and business. Sites in San Francisco maintained their value after the earthquake had covered them with ruins. Men saw that they could build anew and to better advantage. Nevertheless, in order to avoid all possibility of being misunderstood, we repeat that when we speak of the unimproved value of a piece of land we use the term to signify the price which could be obtained for it as it stands, if it be vacant, and without the improvements actually upon it when any improvements exist.

Further, it must be understood that the value of improvements bears no necessary relation to the cost of effecting them. The value of a building which may have been erected at huge expense is not greater at the most than the sum required to replace it by a building of the same kind or one which will adequately fulfil its purpose in every particular. Unsuitable expenditure on land, as by sinking shafts in search of minerals where they are found not to exist in payable quantities, may be a detriment rather than an improvement. And finally the value of some improvements of which the history cannot be traced, as, for instance, the conversion, hundreds of years ago, of bog or marsh into pasture, must for practical taxing purposes be considered to be merged in the value of the land. There is nothing really arbitrary in such an assumption, for all the work of man decays, and, where it appears otherwise, the fact is that natural forces have replaced and reconstructed man's handiwork The inevitability of decay in all improvements is well exemplified in the clearing of land in new countries. A man goes into the forest, and by dint of infinite labour removes gigantic trees and destroys heavy undergrowth. This is an improvement worth perhaps £20 an acre. In course of time his lonely clearing is surrounded by other farms also denuded of their timber; a township springs up; wood for building and wood for fuel is required. It must be brought from other districts where timber is still existent, and the original settlers find that the value of their clearing, which cost so much and was once so great is worn out, has decayed, is gone. The proof of this is irrefutable. If the trees upon the pioneer's farm were existent still, it would cost him nothing to remove them. He would, on the contrary, find many people willing to pay him handsomely for the privilege of clearing his land and selling the timber.

All that is commonly described as land consists then of land alone, or of a site -- which is everlasting -- having attached to it improvements which are perishable. Capital land value is the price which men will pay for the site; the value of the improvements is the price which they will fetch when sold with the land.

Land value, however, is inherent in other forms of property than those commonly spoken of as land. Lakes and rivers, for instance, which are land covered by water, have a value -- that is to say, will command a price when they are controlled by an owner who can permit or refuse access to them. Mines are land containing metals or minerals. The price which they would bring is their value, and the enormous royalties paid for the use of such land show how great its value often is. In the value of railway stock, of shares in gas companies, tramway companies, telephone companies, companies for the supply of water and electricity, the chief element is usually the value of land. For all such undertakings the use of certain land is essential, and in that use their promoters are granted a complete or partial monopoly. The more exclusive this monopoly the greater is the value of the business to its owners, as may be seen when railway companies, which compete in a mild way with one another, seek to combine.

As an example of the vast part that land value plays in constituting the property of a railway company, we need only compare the present value of its shares with the value of its buildings, lines, rolling stock, and all material of human workmanship. If the value of these things - improvements -- is one million pounds, and the value of the shares is two million pounds, it follows that the other million pounds is land value -- the value of the company's exclusive right to the sites of its buildings and more or less exclusive right to run trains on the narrow ribbon of land whereon the rails are laid.

As another example of the enormous land value possessed by a corporation, which would not have generally been placed in the category of great land owners, consider the case of the New River Company, which obtained nearly £6,000,000 when it sold its rights to supply Londoners with water and to overcharge them. The pipes and works with which it parted were not worth more than a mere fraction of the enormous ransom it exacted. The valuable thing which it sold was land value, i.e. the monopoly right to divert water from certain streams at certain places and to convey it under the land through the streets of certain districts. This land value the Company refused to surrender to the community which created it, gave it to them, and maintained it for them, until the community bought it back for millions of pounds. While this is an extreme instance, land value enters largely into the property of all companies or individuals who are given special rights of carrying pipes or wires or rails over or under the roads and streets. If it were not for these special rights, which could not be given to every one, and therefore confer a monopoly on those to whom they are granted, shares in such undertakings would not be worth anything like their present price. The difference between the value of a monopolistic business and the value of the tangible property belonging to it is the measure of the land value possessed by the owners of undertakings of this class. A more or less clear perception that rights over the highways belong to the people generally and should not be freely handed over to private individuals has occasioned a strong movement towards national railways and telephones and municipal tramways, water supply, gas and electric supply, &c. Municipal or national ownership of monopolistic enterprise is one means of preserving public rights in public property; another means is taxation proportionate to the value of the public property; another means is taxation proportionate to the value of the public property which has found its way into private hands. Another example of wealth arising out of land value is the income derived from tithes, the tithe-owner being in fact a person privileged to appropriate a portion of the annual value of land. Rights to levy tolls and the ownership of way-leaves and of docks and wharfs also imply the ownership of more or less land value. The owners of all these forms of property as well as the owners of land values in any other shape are endowed with sources of wealth which does not arise from anything that they themselves have done or from any expenditure of labour or capital by those from whom the present owners derive their title, but from the demand for land which is created by the needs of the people.

As a final example of the land value in disguise, discoverable in so many monopolies, we may mention licenees to sell liquor, which give a particular value to the premises upon which the liquor may be sold. This value does not attach to the house. It may be worth only a few hundred pounds while the licence and premises are worth thousands. The value attaches to the site. Burn the house down and the site will retain its value still, provided the licence to sell liquor on that site remains, for the house can be replaced. But were the licence cancelled the special land value would be destroyed, and were it made applicable to another site special land value would be immediately created in it.

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