Natural Taxation and the Problem of Unemployment

Charles R. Eckert

[A speech delivered in the U.S. House of Representatives, 24 April 1936]

Mr. Chairman, I am one of the very few persons who believes that nature, in every growing community, provides a fund for revenue purposes. Therefore, I feel the bill under consideration, in common with the general run of tax legislation, either State or Federal, violates in large measure the fundamental canons of taxation.

CANONS OF TAXATION

A tax levied for public revenues ought to conform as closely as possible to the following conditions:

First. That it bear as lightly as possible upon production, so as least to check the increase o£ the general fund from which taxes must be paid and the community maintained.

Second. That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers, so as to take from the people as little as possible in addition to what it yields the Government.

Third. That it be certain, so as to give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to lawbreaking and evasion on the part of the taxpayers.

Fourth. That it bear equally, so as to give no citizen an advantage or put any at a disadvantage, as compared with others.

Mr. Massingale a few days ago delivered a speech on the floor of this House in which he reminded the Members that -

A state can be laid low just as effectively by wrong ideas as by an invading army, and there is no agency of destruction known to chemists that is half as formidable as the TNT of bad economics.

There is no branch of the social sciences to which this observation applies with greater force than the subject of taxation, for the taxing power of government can be wielded either to kill or to keep alive and therefore tax measures ought to conform as nearly as possible to the fundamental canons of taxation and sound economics. The present bill does not meet these requirements, and hence falls into the same class of tax legislation that now generally obtains. This, of course, must be expected. Inasmuch as public opinion is in a state of confusion on the subject of taxation and not sufficiently syncretized to support the system ordained by Nature, legislators are bound to follow the accepted method for raising public revenues. In all fairness, it must be said that the bill under consideration represents an earnest and conscientious effort to equalize the burden of taxation as well as to increase the public revenues, and for this the majority of the Ways and Means Committee and the committee's distinguished chairman, Mr. Doughton, are to be complimented.

MORE REVENUE NEEDED

The President, in his message of March 3, called attention to the fact that if the policy established in the spring of 1933 of trying to meet the ordinary expenses of government by guaranteed income it will be necessary to raise by some form of permanent taxation an annual amount of $62,000,000. If the request of the President is to be heeded, new sources of revenue will have to be provided, and inasmuch as practically every nook and corner of the economic world has been explored for things to tax, the discovery of a fund that would provide the revenue necessary for the support of government ought to be an event of unbounded joy and delight, especially to those distinguished gentlemen from both sides of the aisle, who for weeks and months have been admonishing the Congress and the country of the danger of debts and taxes. And be it said, their counsel regarding debts and taxes is timely and wise, even if old and commonplace.

Poor Richard, in his day and generation, was loud in his preachments of thrift and economy and pointed out the pitfalls and anxieties of notes falling due on Easter. Political parties have been zealous in decrying mounting public debts and high taxes. Efficient government, economically administered, is a stock phrase for party platforms. In fact, all agree that both debts and taxes are unwelcome in either public affairs or private life. And yet nearly everyone is a victim of both. And so it would seem, for the greatest happiness of all, that the one be kept at the lowest possible point and the other in its proper sphere.

Before discussing the low point of debt and the incidence of taxation, let it be known that there may be things even more dangerous than debt and more undesirable than taxes. The complaint is frequently made that the Federal Government is engaged in a spending spree that is not only endangering the Nation's credit but placing upon the backs of the people burdens that are impossible to be borne. But what are the facts? It is true that since 1929 the public debt has been mounting. During the Hoover administration the national debt increased many billion dollars. Since then more billions have been added. But why the increase?

WHY TAXES ARE HIGH

Since 1929 the United States has been experiencing a disastrous economic crisis-a crisis in many respects more devastating than war, and to arrest the ravages of this economic debacle the resources of the Federal Government were brought into action. Financial aid was extended to farmers, home owners, manufacturers, railroads, and financial institutions. Besides, the Government set up a number of government agencies to provide work for the unemployed, and in addition, was compelled to assume the relief burden throughout the nation. During the World War the Federal Government increased the national debt by leaps and bounds. 'In the absence of conscription ot wealth there was nothing else to do. No one seriously objected to the action of the Government then. Why so much criticism now in its ettorts to combat an enemy more disquieting than the World War?

Public debts are disturbing. They ought to be created only under stress of dire necessity. Taxes are burdensome and ought to be raised only for proper purposes. But there are some things worse than debts and taxes.

Representative Ludlow, in discussing the Post Office and Treasury appropriation bill, stated the case of the expenditures of the present administration correctly and eloquently when he said:

The spending Has indeed been enormous - much greater than many of us approved-but regrettable as it is and important as it is that such drafts on the Treasury shall not occur again, there are, after all, some things that are worse than big expenditures. Revolution is worse than big expenditures. Starvation stalking through the land is worse than big expenditures. Who can say that the money paid out so lavishly may not have staved oft something immeasurably worse than anything this country has ever experienced? Anyway, the hungry have been fed and the naked have been clothed, and the situation has been handled so that in a depression as black as midnight peace has reigned and the faith of the people in their Government has been maintained.

Of course, government budgets must be kept within sane bounds, but when this policy is observed it is not so much a question of "How large the Budget?" as "What do the people get for their money?"

Let us examine our tax bill with a view of getting a picture of governmental expenditures. The country's total tax bill is approximately SIO.000,000,000. Of this sum the Federal Government, in normal times and for ordinary purposes, spends approximately $3,000,000,000, while State and local governments use the balance. A large portion of the Federal Budget is needed for the maintenance of the Military Establishment of the country and to pay for past wars. No doubt there are honest differences of opinion as to the wisdom of spending ever and ever larger sums for Army and Navy maintenance. It must be remembered, however, that the world is an armed camp, and jealousies and fears are lurking everywhere, and this condition impels the mad race for armaments and preparation for war. Let us hope that the people of the world ere long will regain their mental and spiritual balance and put an end to this insanity.

The Government is also charged with being wasteful and extravagant. Perhaps so. Waste and extravagance, however, are not peculiar to governments alone. There have been waste and extravagance in so-called private enterprise - the railroads, the power groups - in fact, nearly all public utilities have had their spree of waste and extravagance, all of which indicates that both governments and those engaged in quasi-governmental enterprises have not yet developed that civic mind and social conscience so essential for honest, efficient and economical administration of government and public utilities. In the light of the moral delinquencies on the part of governments and public-utility companies, it is not only the right but the solemn duty of the people to demand at the hands of their governments and public-utility managers the correction of these delinquencies and shortcomings. Our tax bill is large, but much is being demanded of government these days. If the people expect an infinite variety of services from government, the cost necessarily must be correspondingly high, no matter how efficiently and economically administered.

THE PRODUCTIVE PROCESS ANALYZED

Since the high cost of government is disturbing the complacency and peace of mind of some of our worthy citizens, an honest and candid examination of the tax problem is in order. How often have we heard from the floor of this House the wail, "Where are you going to get the money?" This is a very proper and timely question. It is a very vital and important question, and upon its correct answer may turn the destiny of the American Republic. The problem of taxation is the most vital problem that can engage the attention of lawmakers and statesmen. For upon the sane and rational application of the incidence of taxation, depend the peace, prosperity, and happiness o£ the people. The Supreme Court of the United States, in a celebrated case said:

The power to tax is the one power upon which the national fabric is based. It is not only the power to destroy, but also the power to keep alive.

This dictum of the Supreme Court is sound and attains its validity from the nature of the economy of the social structure. Since public revenues must be obtained from production and the taxing power may be used to destroy or to build, to kill or keep alive, it would seem that the first duty of the lawmaker and statesman is to reduce the productive process into its constituent parts so that the incidence of taxation may be applied wisely and scientifically to the end that the artificial obstructions now hampering industry and impeding the free flow of trade may be removed. With this in mind, let us examine the conditions under which man lives and has his being.

We find man to be an inhabitant of the earth and beset by certain definite wants that must be gratified if life is to be maintained. The elements for the satisfaction of his wants must be drawn forth from the earth - the great storehouse from which the things are obtained that satisfy man's needs. The active factor in the process of drawing forth or producing the necessities of life on the part of the individual is labor. Another factor in the process of production is capital - tools employed by labor. Therefore there are three primary factors in the productive process: The earth - land in its comprehensive sense - and labor and capital. The product produced or drawn forth from the earth by labor and capital make up the infinite variety of things that gratify the physical wants and necessities of man and constitutes wealth in the true economic sense. This, then, is the simple picture of the productive process in which the great body of mankind is engaged in order to obtain their livelihood and maintain civilization.

Let us next examine how wealth, the product of production, is snared. Since the three primary factors in the process of production are land, labor, and capital, it is reasonable to assume that each factor is entitled to a share of the product; and, generally speaking, this is true, excepting m communities where land is free - that is, where land may be had for the taking, as in the settling and homesteading of our western frontier during the last century. The moment, however that land becomes monopolized and free land can no longer be had for the asking, then those in control of the land demand a share of me wealth produced by labor and capital.

And let it be observed that the demands of the owners of monopolized land increase and multiply with the increase of population and the progress of the race. The higher the race advances in the scale of civilization - materially, intellectually, spiritually - the greater will be the exactions of those in control of the land. This is due to the fact that the benefits of human progress are absorbed by land. These benefits are reflected in the value of the land, thus enabling the landowners to appropriate from the products of labor and capital the equivalent of a fair return on the capitalized value of land. Therefore, those in control of monopolized land are in a position to appropriate all the wealth produced by labor and capital, excepting the portion needed to lure capital into productive enterprise and enable labor to live and-reproduce. Landowners of monopolized land, as such, do not contribute anything whatsoever in productive effort. They are drones and parasites on industry. They reap where they have not sown and devour that which in justice and right reason belongs to all the people. Since the benefits of advancing civilization are absorbed by land, and the profits issuing therefrom appropriated by private interests rather than by society, it is obvious that private interests are enjoying what in justice ought to accrue to all. This fact must be taken into consideration in any serious study of the subject of taxation, for so long as we permit the few to appropriate what manifestly is the creation of all the people there can be no solution of the problem of unemployment and its companion problem, involuntary poverty. Nor can the ever perturbing problem of taxation, with its injustices, be solved.

ORIGIN - NATURE AND GROWTH OF LAND VALUE

There is a disposition on the part of lawmakers, statesmen, and economists to disregard the subject of land value and ignore the part it plays in our industrial economy. The manifestation of land value may be observed wherever people happen to establish a community. It appears in most striking form in the great centers of population, but the moment an effective demand arises for land by capital and. labor exactions are demanded for the use of land, so that in village and hamlet, in agricultural sections, as well as in the great centers of population, land value appears. This social phenomenon is portrayed by Henry George, in Progress and Poverty, in these words:

Here, let us imagine, is an unbounded savannah, stretching off in unbroken sameness of grass and flower, tree and rill, till the traveler tires of the monotony. Along comes the wagon of the first immigrant. Where to settle he cannot tell-every acre seems as good as every other acre. As to wood, as to water, as to fertility, as to situation, there is absolutely no choice, and he is perplexed by the embarrassment of richness. Tired out with the search for one place that is better than another, he stops-somewhere, anywhere-and starts to make himself a home. The soil is virgin and rich; game is abundant; the streams flash with the finest trout. Nature is at her very best. He has what, were he in a populous district, would make him rich; but he is very poor. To say nothing of the mental craving, which would lead him to welcome the sorriest stranger, he labors under all the material disadvantages of solitude. He can get no temporary assistance for any work that requires a greater union of strength than that afforded by his own family, or by such help as he can permanently keep. Though he has cattle, he cannot often have fresh meat, for to get a beefsteak he must kill a bullock. He must be his own blacksmith, wagonmaker, carpenter, and cobbler -- in short, a "jack of all trades and master of none." He cannot have his children schooled, for to do so he must himself pay and maintain a teacher. Such things as he cannot produce himself he must buy in quantities and keep on hand, or else go without, for he cannot be constantly leaving his work and making a long journey to the verge of civilization; and, when forced to do so, the getting of a vial of medicine or the replacement of a broken auger may cost him the labor of himself and horses for days. Under such circumstances, though Nature is prolific, the man is poor. It is an easy mailer for him to get enough to eat; but, beyond this, his labor will suffice to satisfy only the simplest wants in the rudest way.

Soon there comes another immigrant. Although every quarter section of the boundless plain is as good as every other quarter section, he is not beset by any embarrassment as to where to settle. Though the land is the same, there is one place that is clearly better for him than any other place, and that is where there is already a settler, and he may have a neighbor. He settles by the side of the first comer, whose condition is at once greatly improved and to whom many things are now possible that were before impossible, for two men may help each other to do things that one man could never do.

Another immigrant comes, and guided by the same attraction, settles where there are already two. Another, and another, until around our first comer there are a score of neighbors. Labor has now an effectiveness which, in the solitary state, it could not approach. If heavy work is to be done, the settlers have a log-rolling, and together they accomplish in a day what singly would require years. When one kills a bullock, the others take part of it, returning when they kill, and thus they have fresh meat all the time. Together they hire a schoolteacher, and the children of each are taught for a fractional part of what similar teaching would have cost the first settler. It becomes a comparatively easy matter to send to the nearest town, for someone is always going. But there is less need for such journeys. A blacksmith and a wheelwright soon set up shops, and our settler can have his tools repaired for a small part of the labor it formerly cost him. A store is opened and he can get what he wants as he wants it; a post office, soon added, gives him regular communication with the rest of the world. Then comes a cobbler, a carpenter, a harnessmaker, a doctor; and a little church soon arises. Satisfactions become possible that in the solitary state were impossible. There are gratifications for the social and the intellectual nature, for that part of the man that rises above the animal. The power of sympathy, the sense of companionship, the emulation of comparison and contrast, open a wider and fuller and more varied life. In rejoicing, there are others to rejoice; in sorrow, the mourners do not mourn alone. There are husking bees and apple parings and quilting parties. Though the ballroom be unplastered and the orchestra but a fiddle, the notes of the magician are yet in the strain, and Cupid dances with the dancers. At the wedding there arc others to admire and enjoy; in the house of death, there are watchers; by the open grave, stands human sympathy to sustain the mourners. Occasionally, comes a straggling lecturer to open up glimpses of the world of science, literature, or of an; in election time comes stump speakers, and the citizen rises to a sense of dignity and power as the cause of empires is tried before him in the struggle of John Doe and Richard Roe for his support and vote. And by and by comes the circus, talked of months before, and opening to children whose horizon has been the prairie, all the realms of the imagination - princes and princesses of fairy tale, mail-clad crusaders and turbaned Moors, Cinderella's fairy coach, and the giants of nursery lore; lions such as crouched before Daniel, or in circling Roman amphitheater tore the saints of God; ostriches who recall the sandy deserts; camels such as stood around when the wicked brethren raised Joseph from the well and sold him into bondage; elephants such as crossed the Alps and Maccabees; and glorious music that thrills and builds in the chambers of the mind as rose the sunny dome of Kubia Khan.

Go to our settler now and say to him, "You have so many fruit trees which you planted, so much fensing, such a well, a barn, a house - in short, you have by your labor added so much value to this farm. Your land itself is not quite so good. You have been cropping it, and by and by it will need manure. I will give you the full value of your improvements if you will give it to me and go again with your family beyond the verge of settlement." He would laugh at you. His land yields no more wheat or potatoes than before, but it does yield far more of all the necessaries and comforts of life. His labor upon it will bring no heavier crops, and, we will suppose, no more valuable crops, but it will bring far more of all the other things for which men work. The presence of other settlers - the increase of population - has added to the productiveness, in these things, of labor bestowed upon it, and this added productiveness gives it a superiority over land of equal natural quality where there are as yet no settlers. If. no land remains to be taken up except such as is as far removed from population as was our settler's land when he first went upon it, the value or rent of this land will be measured by the whole of this added capability. If, however, as we have supposed, there is a continuous stretch of equal land over which population is now spreading, it will not be necessary for the new settler to go into the wilderness, as did the first. He will settle just beyond the other settlers and will get the advantage of proximity to them. The value or rent of our settler's land will thus depend on the advantage which it has, from being at the center of population, over that on the verge. In one case the margin of production will remain as before, in the other the margin of production will be raised.

Population still continues to increase, and as it increases so do the economies which its increase permits, and which in effect add to the productiveness of the land. Our first settler's land, being the center of population, the store, the blacksmith's forge, the wheelwright's shop, are set upon it, or on its margin, where soon arises a village, which rapidly grows into a town, the center of exchanges for the people of the whole district. With no greater agricultural productiveness than it had at first, this land now begins to develop a productiveness of a higher kind. To labor expended in raising corn, or wheat, or potatoes, it will yield no more of those things than at first; but, to labor expended in the subdivided branches of production which require proximity to other producers,, and especially, to labor expended in that final part of production, which consists in distribution, it will yield much larger returns. The wheat grower may go farther on, and find land on which the labor will produce as much wheat, and nearly as much wealth; but the artisan, the manufacturer, the storekeeper, the professional man, find that their labor expended here, at the center of exchanges, will yield them much more than if expended even at a little distance away from it; and this excess of productiveness for such purposes the landowner can claim just as could an excess in its wheat-producing power. And so our settler is able to sell in building lots a few of his acres for prices which it would not bring for wheat growing if its fertility had been multiplied many times. With the proceeds he builds himself a fine house, and furnishes it handsomely. That is to say, to reduce the transaction to its lowest terms, the people who wish to use the land build and furnish the house for him, on condition that he will let them avail themselves of the superior productiveness which the increase of population has given the land.

Population still keeps on increasing, giving greater and greater utility to the land and more and more wealth to its owner. The town has grown into a city - a St. Louis, a Chicago, or a San Francisco-and still it grows. Production is here carried on upon a great scale, with the best machinery and the most favorable facilities; the division of labor becomes extremely minute, wonderfully multiplying efficiency; exchanges are of such volume and rapidity that they are made with the minimum of friction and loss. Here is the heart, the brain of the vast social organism that has grown up from the germ of the first settlement; here has developed one of the greatest ganglions of the human world. Hither run all roads, hither set all currents, through all the vast regions round about. Here, if you have anything to sell, is the market; here, if you have anything to buy, is the largest and choicest stock. Here intellectual activity is gathered into a focus, and here springs that stimulus which is born of the collision of mind with mind. Here are the great libraries, the storehouses and granaries of knowledge, the learned professors, the famous specialists. Here are museums and art galleries, collections of philosophical apparatus, and all things rare and valuable and best of their kind. Here come great actors and orators and singers from all over the world. Here, in short, is a center of human life, in all its varied manifestations.

So enormous are the advantages which this land now offers for the application of labor that, instead of one man with a span of horses scratching over acres you may count in places thousands of workers to the acre, working tier on tier, on floors raised one above the other, five, six, seven, and eight stories from the ground, while underneath the surface of the earth engines are throbbing with pulsations that exert the force of thousands of horses.

All these advantages attach to the land; it is on this land and no other that they can be utilized, for here is the center of population - the focus of exchanges, the market place and workshop of the highest forms of industry. The productive powers which density of population has attached to this land are equivalent to the multiplication of its original fertility by the hundredfold and the thousandfold. And rent, which measures the difference between this added productiveness and that of the least productive land in use, has increased accordingly. Our settler, or whoever has succeeded to his right to the land, is now a millionaire. Like another Rip Van Winkle, he may have lain down and slept' still he is rich - not from anything he has done but from the increase in population. There are lots from which for every foot of frontage the owner may draw more than an average mechanic can earn; there are lots that will sell for more than would suffice to pave them with gold coin. In the principal streets are towering buildings of granite, marble, iron, and plate glass, finished in the most expensive style, replete with every convenience. Yet they are not worth as much as the land upon which they rest - the same land, in nothing changed, which when our first settler came upon it had no value at all.

Here, in poetic prose, is told the story of the nature, origin, and development of land value. The profit derived from capitalized land values is known in political economy as economic rent. J. Ramsay MacDonald, former Prime Minister of England, referring to this factor in the economic structure, said:

Rent (ground rent) is a toll, not a payment for services. By it social values are transferred from social pools into private pockets, and it becomes the means of vast economic exploitations. …Rent is obviously a common resource. Differences in fertility and value of site must be equalized by rent, but it ought to go to common funds and be spent in the common interest.

NATURAL FUND FOR PUBLIC REVENUE

"Where are you going to get the money?" has echoed and reechoed through this historic Chamber for many months. On more than one occasion the distinguished gentleman from Pennsylvania (Mr. Rich) has made it the burden of his song. The problem of mounting debts and taxes in all conscience is serious and, as everyone knows, the burden of the cost of government - both Federal and local - is reaching proportions almost too grievous to be borne. But those who are alarmed at the extraordinary expenditures and disturbed at the refrain of the distinguished gentleman from Pennsylvania, let them explore for revenue purposes the possibilities of the fund represented by the Nation's land values and the values of the public-utility franchises; in other words, the ground rent to which J. Ramsay MacDonald refers.

An honest, impartial, intelligent investigation will disclose the fact that the land values of America and the public-utility franchise values constitute a fund provided by Nature and Nature's God that will supply not only the means of every legitimate public expense but will meet every canon of sound taxation. Yea, it will do more. It will go far to solve the problem of unemployment and involuntary poverty. it will lay the basis and point the way for the honest and equitable distribution of wealth. It will give light and leading to the baffled and Perplexed educators, statesmen, and philosophers that are grappling with these problems.

The question is frequently asked: "Why so much want in the midst of plenty?" President Roosevelt, in his Atlanta speech, put the same question in this form:

I think it is of interest to point out that national surveys prove that the average of our citizenship lives today on what would be called by the medical fraternity "a third-class diet." If the country lived on a second-class diet, we would need to put many more acres than we use today back into the production of foodstuffs for domestic consumption. If the Nation lived on a first-class diet, we would have to put more acres than we have ever cultivated into the production of an additional supply of things for Americans to eat.

Why, speaking in broad terms in following up this particular illustration, are we living on a third-class diet?

And proceeds to answer by saying:

For the very simple reason that the masses of the American people have not got the purchasing power to eat more and better food.

And the President properly might have pursued the question further and included not only better food but better clothes, better housing, not to say anything about modern conveniences.

LACK OP PURCHASING POWER

Why do the people lack purchasing power? It is not due to the people's unwillingness to labor and produce wealth. It is not due to lack of capital nor to the niggardliness of nature. All about us we see natural resources that willing hands and idle tools are anxious to exploit. The natural resources of the Nation, if touched by the magic hand of labor and capital, would supply enough and to spare for all.

The Bureau of Home Economics of the Agricultural Department, after a careful survey of the needs of an average family in the United States, found that an annual income of $2,500 was necessary to maintain a reasonable standard of living. When it is remembered that in 1929, the year of our peak prosperity, there were 6,000,000 families in the United States with incomes of less than $1,000, 12,000,000 families with incomes under $1,500 and over 19,000,000 families - over 71 percent of our entire population - with incomes less than S2,500, it is obvious that the wants of the people were far from satisfied. In periods of depression and in times of ordinary business conditions, the income of the average family is considerably less. These facts indicate the inadequate and limited purchasing power of the great mass of the people either in so-called good or bad times. They further indicate that there is among our own people a great potential market that will be available with the advent of adequate purchasing power in the hands of the masses. It is estimated that if the income of the average family were $2,500 per annum, the farms, mills, and factories would be required to produce 75 percent more wealth or consumers' goods in order to supply the demand of the American market.

These facts confirm the findings of the Brookings Institution, of Washington, D. C., which found, after an exhaustive investigation and study of the problem of production and distribution of wealth, that at the very peak of our so-called prosperity, in 1929, 13 percent of the people of the United States owned 90 percent of the wealth and that the income of the other 87 percent was so low that only a few of them consumed any luxuries or conveniences at all, and that practically all of the 87 percent were compelled to spend their entire income for the bare necessities of life, and further discovered that if the income of the other 87 percent were sufficient to enable them to maintain a standard of living such as the Bureau of Home Economics of the Agricultural Department describes as reasonable, there would be a marked increase in production and consumption.

In our exploration for an answer to the question of "Why want in the midst of plenty?" and to President Roosevelt's observations about inferior diet and lack of purchasing power, and the Brookings Institution's discovery of the inequitable distribution of wealth and the low purchasing power of 71 percent of the American people, we may, perchance, also discover the Eldorado where the money may be had with which to pay the tax bills.

Recalling Henry George's story of the nature, origin, and growth of land values, let us, for example, take the city of New York. The report of the commissioner of taxes and assessments for the year 1934 discloses the fact that the land values of the city of New York are $8,000,995,996, while the improvement values total $8,456,173,777. It will be observed that the value of the land and the value of the improvements are about equal. And here let it be noted that rows upon rows of buildings and skyscrapers in the city of New York represent a tremendous amount of human labor - every building, every home, every office, every factory, every skyscraper came into being only as the result of the labor of thousands upon thousands of workmen. Not so with the value of the land. The increment of land value is not a labor product. It is the result of the people as a whole functioning as society - as a social organism. The origin of the value of improvements and the value of land are totally different. One is a labor value, and the other a social value. The former is the result of productive effort, the latter the growth and progress of society.

What is true of the city of New York is true of every community, large or small. The land values and public-utility franchise values of the Nation in normal times are estimated at $200,000,000,000. The value of the Nation's permanent labor products in normal times is approximately two hundred billions. And inasmuch as the one is the product of society and the other the product of labor, are we not within the bounds of logic, good morals, and sound law in concluding that labor ought to receive the share it produces and society be rewarded for the share it produces? Why are the products of labor so illy shared? Why is wealth so inequitably distributed?

Lincoln, in discussing this problem said:

Inasmuch as most good things are produced by labor, it follows that all such things belong to those whose labor has produced them. But --

Continued Lincoln -

it has happened in all ages of the world that some have labored and others, without labor, have enjoyed a large proportion of the fruits.

Applying this line of reasoning to the problem in hand, who is the rightful owner of the profits issuing out of the land values not only of the city of New York but of the land values and public-utility franchise values of the Nation? Manifestly they belong to the people. But under present law and custom we permit a few to appropriate to their own use that which obviously belongs to all. And so Lincoln's observation is still true - that there are some who, without labor, enjoy a large proportion of the fruits of labor. It is this fact which explains President Roosevelt's and the Brookings Institution's observation about the lack of purchasing power of the great mass of mankind and furnishes an answer to the disquieting question, Why want in the midst of plenty?

WHY POLITICS AND GOVERNMENT ARE CORRUPT

It explains even more. It is this fact in our economic society that accounts for much of the vulgarity and corruption in government and politics. Albert Jay Nock, a publicist and fundamental thinker of note, puts the case in this fashion. He says:

So long as the State stands as an impersonal mechanism which can confer an economic advantage at a mere touch of a button, men will seek by all sorts of ways to get at the button, because law-made property is acquired with less exertion than labor-made property. It is easier to push the button and get some State-created monopoly, like a land title, a tariff, a franchise, or other governmental concessions, and pocket the proceeds than to accumulate the same amount by labor.

Man seeks to gratify his desires and wants with the least possible exertion. There are only two ways by which these wants and desires can be gratified -one is by labor or rendering service, the other by stealing or extorting service. It is, of course, plain why men seek to get at the button to which Nock directs our attention. But it is also clear that we cannot exist as a people or a Nation by robbing each other, whether by the ordinary highway method of stand and deliver or the more refined way of using the power of government.

Since wealth is brought into existence by human labor alone, it follows that some must labor and produce the things that man needs for the gratification of his wants and desires, and therefore it would seem that, since all cannot hope to derive their living off the labor of others, that we put an end to the stealing of the few by organizing society in such fashion that none would reap where others have sown. It is obvious if we wish to establish an economic order based upon the foundation of social justice that the burden of taxation now "resting upon the products of industry and labor must be removed and the profits that issue from governmental concessions, such as land titles, franchises, and the like, must be used for public purposes so that all; the people will enjoy their share of the community fund. Incidentally, this would put an end to the great prizes for which many of our foremost most citizens are ready and eager to grovel in the dirt and slime of politics in order to get at the governmental button. If the problem of unemployment is to be solved and involuntary poverty abolished, then government must be administered in such fashion that legal privilege of whatsoever nature will be destroyed. In other words, the economic advantages derived from pushing the governmental button must be removed from the realm of government and politics.

NATURAL LAWS vs. ARTIFICIAL LEGISLATION

This can be accomplished by the simple process of non-interference with the natural growth and development of human society and the sane and rational use of the taxing power. Too many well-meaning and kindly disposed persons are unmindful of the fact that the operation of natural law in the field of economics can be trusted to bring about just, equitable, and beneficial results, while artificial legislation is bound to go astray. President Roosevelt has declared that we today are engaged in a great crusade in every part of the land to cooperate with Nature and not to fight her. This is fine. But in our effort to cooperate with Nature let us make certain that we are in very truth cooperating with her and not running counter to her all-wise and beneficent laws.

The great Italian economist of the eighteenth century, Gaetano Filangieri, in his Science of Legislation, said:

There are certain natural laws governing our economic life. If we regulated our lives according to these natural laws, we would abolish poverty and secure justice and prosperity for all.

Another eminent economist, also of the eighteenth century, said:

There is in human affairs one order which is the best. It is not always the order which exists, but it is the order which ought to exist for the greatest good of humanity. God knows it and wills it, Man's duty is to discover and establish it.

Patrick Edward Dove, a profound economist of the nineteenth century, in The Theory of Human Progression, demonstrates the same truth, while Henry George, in his monumental work, Progress and Poverty, analyzing and developing his social philosophy, demonstrates logically, scientifically, and conclusively the truth declared by these eminent economists. If we are going to cooperate with Nature, we must learn her laws and obey her commands.

Blackstone, the great English commentator, said:

God has graciously reduced the rule of obedience to this one paternal precept "that man should pursue his own true and substantial happiness." That this precept is the foundation of what we call ethics or natural law and that no human laws are of any validity if contrary to this, and all of them that are valid derive all their force and all their authority from this origin.

Since the validity of all human law derives all its force and authority from the moral or natural laws, any human enactments in relation to the problem of taxation must likewise derive their validity from the same source.

MORALS AND SOUND TAXATION

One of the most important natural laws that govern our economic life is the law of economic rent. Therefore let us put the proposal of taking the economic rent of land or the profits issuing from land value for public use to the test of the inexorable rule of Nature. And first let it be observed how beautifully and wisely Nature has provided for the needs of a growing and advancing community. Someone has said:

That Nature has intended the state to obtain the revenues it needs by the taxation of land values is shown by the same order and degree of evidence that snows that God has intended the milk of the mother for the nourishment of the babe. For no sooner does the state arise, it needs revenues. This need for revenue increases with the increase of population and the development of human society. The increasing need for public revenues with social advance, being a natural need, there must be a right way of raising them. It is clear that this right way must accord with the moral or natural law.

Wherein lies the right way?

Let us consider the taxes on the processes and products of industry by which our present public revenues are collected. The taxes on occupations, on earnings, on investments, on buildings, on houses, on the cultivation of fields, on industry and thrift in all forms have none of the characteristics indispensable in any plan we can deem a right one. All these taxes violate the moral law. For they take by force what belongs to the individual; they give to the unscrupulous an advantage over the scrupulous; they corrupt government; they make oaths a mockery; they shackle commerce; they fine industry and thrift; they lessen the wealth that man might enjoy, and enrich some by impoverishing others.

Now, what about the tax on land values? We have observed that land values are the result of community growth and advancing civilization. They do not come into being as a result of the activity of any particular individual, but by the activity of all the people functioning as a social organism. Therefore, since no particular individual is responsible for the origin and growth of land values, but are due to the activity of all the people, it is clear that the profits issuing from land values belong to all the people.

And also let it be further observed that a tax upon land values is the most just of all taxes, for, as Henry George says -

It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.

This is a consummation devoutly to be wished. But inasmuch as public opinion has not yet been developed sufficiently to recognize the inequity of the present tax system nor the justice of the taxation of land values, it is obvious that the present need is education and more education, to the end that a healthy and wholesome public opinion may be developed on the vital question of taxation. In order that such education may not be misguided and destructive of its own ends, the promulgation of ideas in relation to taxation and the subject of political economy contrary to the social order ordained by Nature and Nature's God is charged with TNT of bad economics and in the very nature of things will be destructive of the very society and civilization for which the friends of social justice live and labor and sacrifice.