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The demands of a heavy medical practice have not prevented F. MASON PADELFORD, M.D., Fall River physician and author of the pamphlet of which this article is the first installment, from finding the time, after ministering to the physical needs of his patients, to delve deeply into the economic ills that afflict the world. Writing of Dr. Padelford and his booklet in the November FREEMAN, Dr. Janet Rankin Aiken of Columbia University, author of Surely Goodness and numerous other books and articles, said: "In twenty-eight pages he accomplishes the almost impossible task of presenting a complete summary of the Georgist philosophy so lucidly that to the student of fundamental economics it is inescapable in its logic." The author, a graduate of Boston College, writes: "I read Progress and Poverty more than thirty years ago. The truths in George's books are self-evident. They made me a Single Taxer. I count it a privilege to have known John Z. White and James R. Brown. In my judgment, the Single Tax movement, with all that this implies, is the most important of any that confront the modern world." A previous article by Dr. Padelford, "Constitutional Taxation," appeared in the August FREEMAN.

THE PROBLEM of wealth production, as far as present-day, or near future, requirements are concerned, has been solved. The more vital problem of wealth distribution, however, has not been solved. This involves the problem of wages, for if wealth is to be equitably distributed real wages must be greatly increased. Simply to increase money wages will not suffice; the increase must be in wages measured in labor goods.

Wages has been defined as a fraction whose numerator is the amount received by the worker, the denominator being the whole product of his labor.

The fact that over a period of years the numerators of wage fractions have steadily increased is interesting, but it is not adequate as a basis for judgment; it is imperative that knowledge also be had of denominators. If numerators, even though increasing, fail to keep pace with denominators, we by and by shall have to deal with over-stocked warehouses and unemployment.

The market may be likened to an immense reservoir, and labor products to water. If the average worker carries to this reservoir, each day, from springs which employers own or control, ten measures of water, and is paid in wages a sum which enables him to purchase but five, and five barely suffices for his daily requirements, ultimately the reservoir will be filled, and in its neighborhood will be found idle men in dire need of water, of which there is an abundance, but which, because of their lack of money, they are unable to buy.

Recurring periods of industrial depression, during which men whose families are in want seek in vain to find employment, and merchants whose stores are well stocked strive unsuccessfully to sell goods, indicate clearly enough that wages have not kept pace with increasing production: People are unable to buy the equivalent of what they produce.

A very natural next step is an attempt to export surplus products. If these products can be disposed of in foreign markets and if, in return, gold, or silver, or other money-metal, can be obtained, and if these metals, either by free coinage or exchange, easily can be transformed into money, it may be that notwithstanding the failure of the domestic market to increase as production increases, our productive machinery can be continuously operated, and that periods of industrial depression will not recur -- or at least that such of these periods as are due to "under-consumption" will not recur. But this, manifestly, is to demand the impossible.

No nation whose imports greatly exceed its exports, unless in possession of unlimited natural resources in gold or other money-metal, can pay with such metal its bills for imported goods, and keep intact its monetary system. This should be self-evident. The time may come when money which has no intrinsic value, or which is not immediately redeemable in some valuable commodity, will answer every purpose; but that time is not yet. Money metals still are needed. Paper money pays no foreign debts -- nor, for that matter, does any money, as such. If gold, or any other metal, in any great quantity, crosses international boundary lines, it crosses as a valuable commodity -- not as money, but as a representative of money. International trade is, and must be, barter.

It is but reasonable to expect that the country which has for export products of the mill and factory will make every effort to establish favorable trade relations with nations which produce chiefly, and have for export, products of the soil. No nation, and certainly no nation which produces for export only agricultural products can, for any extended period at least, pay in money for its imported merchandise; its payments must be made in products. This can but mean that the country which seeks to stabilize its industries by exporting its surplus of manufactured goods must import agricultural products of approximately equal value. The importation of these products gluts, and then ruins, the domestic market for products of the farm. The farmer then, if he is to carry on, must export his surplus. Obviously he cannot expect to sell agricultural products, in any great quantity, to a nation of farmers. Only nations which are engaged chiefly in manufacture can be expected to buy these agricultural products. Such nations can pay only with goods. If such payments are accepted, the domestic market for manufactured products, in its turn, is ruined. A vicious circle from which there is no way of escape seemingly is established.

Until the fact is generally recognized that a nation's exports can not exceed its imports, efforts no doubt will be made to find in international trade a remedy for domestic economic maladjustments. Obviously, if a country which is growing industrially manufactures a surplus of goods which, if sold at all, must be exported, it must have foreign markets of ever-increasing capacity, and a "favorable balance of trade." But as other nations develop they likewise have need of these same markets. Commercial rivalry therefore ensues. This leads toward war -- is in fact the one great cause of war. That nation which would take the first step toward world peace should set in order its own house.

To bring about that much-talked-about, but undesirable "favorable balance of trade," protective tariffs are devised. If such tariffs increase prices they decrease sales, not only in domestic, but also in foreign markets. That nation which adopts a protective tariff policy gives to foreign manufacturers an advantage in foreign markets, and therefore destroys its own export business. If tariffs lessen imports they lessen also exports. They can facilitate in no possible way either domestic or international exchanges of goods. They cannot increase real wages. Wages are regulated, not by tariffs, but by supply and demand. When the supply of labor exceeds the demand, wages fall.

In the last analysis wages are a most important factor in the costs of production. There is little doubt but that many, if not most, manufacturing plants in this country are working on so close a margin that bankruptcy is inevitable if any considerable increase in money wages is not followed by a proportionate increase in the prices of manufactured goods. If the worker receives more money for his labor, and the cost of living increases quite as much, obviously nothing is gained.

Ten dollars a day may be a very small wage. Even a one dollar day wage may be very large. We have become so accustomed to considering wages in terms of money that we have lost sight of the major issue, which has to do with the purchasing power of the dollar rather than with the dollar itself. It is not enough to think of the individual as a producer only; he is also a consumer.

When a stage of competition, in some industry, has given way to a stage of monopolization, it may be difficult, or impossible, to determine what part of income is earnings and what part is merely tribute. A monopoly, having gained control of some franchise, or necessary commodity, may charge for service or products whatever promises to bring the greatest return. Selling prices now bear no necessarily fixed relationship to the cost of labor.

By resort to what amounts to force, Labor may exact from a monopoly an increase in real wages -- that is, an increase in money wages which is not followed by a corresponding increase in the prices of what the monopoly has to sell. As a general rule, however, an increase in money wages must needs be followed by an increase in prices of products.

High wages in the building trades are necessarily followed by high rental charges for houses. High wages paid to railroad workers will be reflected in retail prices of transported goods. High wages in the textile industries raise the manufacturing cost of cloth. Operatives employed in the manufacture of furniture, because textiles and other commodities have advanced in price, demand an increase in pay. This goes on, in one field of activity after another, until the circle is complete. In the end no advantage is apparent. Money wages have increased, and the cost of living has increased also. Between income and outgo, the relationship is much as before. Nothing really has been gained.

It is axiomatic almost that if any gain is made in real wages, by any one group of workers, this gain will be at the expense of other workers, and not of Capital -- except indirectly.

II

In view of the fact that Political Economy, or Economics, has been taught for many years, as a science, in our leading colleges it would seem but reasonable to anticipate that among those who supposedly are qualified to speak with authority there will be unanimity of opinion both as to the cause, or causes, of our politico-industrial troubles, and the remedy, or remedies, therefor. But instead we find the widest disagreement; on every side is confusion. Every imaginable criticism is made, and all sorts of remedies are suggested. One group would have machinery operated at higher speeds, and labor-saving devices used, so that, in place of one unit of output for each five dollars of labor cost, two will be produced. Another group, equally well-intentioned, attributing our difficulties to "over-production," would reduce, by law if necessary, the length of the working day, and the speed with which machinery is operated. They would indeed discard some machinery, and return to hand labor.

If we increase machine speeds and adopt such labor-saving devices as are recommended we shall of course reduce the unit labor cost of production. But if, under present-day methods of manufacture, we are producing an unsellable surplus of goods, what possibly can be gained by doubling output, even though the selling prices of products are reduced fifty per cent? Sales may be twice as great, but as production will have been doubled also, there will still exist that troubling surplus.

If the working day is shortened, or if the speed of machinery is reduced, the worker will lose, even though his money wages are not reduced. Shortening the working day, or reducing the speed of machinery, reduces the per man output of the manufacturing plant. If money wages are correspondingly reduced the prices of products need not be changed. The worker will receive less, and therefore have less to spend. If money wages remain as before the labor cost, per unit of output, will necessarily be greater. This must lead to an increase in the selling prices of products. As this automatically reduces the purchasing power of the dollar, it reduces real wages.

That the needy must be cared for is obvious. Almsgiving must at times be resorted to. Shortening, arbitrarily, the working day or week in order that employment may be given to greater numbers is but almsgiving under another name. Practically it is a pseudo-charitable scheme which provides, not that Peter shall be robbed to pay Paul, but that Paul shall be robbed to pay an even poorer Paul. It involves no increase in the production of wealth, and no increase in the aggregate purchasing power of the consuming public. It brings national purchasing power no nearer to the producing power level.

Men work, primarily, not for money, but for things. That exchanges of things may be facilitated, money is used. Money is not wealth; it is but a representative of wealth. It is defined as a medium of exchange, and a common measure of value.

As wealth production increases, and as real wages increase, it is but natural that fewer hours will be devoted to productive labor. But increase of leisure will be a result of better economic conditions, not the cause.

Civilization brings new privileges, and new powers; and it brings also new responsibilities. Increasingly, if civilization endures, machinery will be used. The machine will lighten men's toil, increase wealth, and bring increased leisure if, and only if, its products are equitably distributed. If they are not equitably distributed, complicated and expensive machines can but become so many instruments of oppression.

Every worker is entitled to wages which are the equivalent of the whole product of his labor. This is the moral law. If, in distributing labor goods, we violate this law sooner or later a privileged few will own the machinery and control the political State, and an impoverished many will constitute the subject class in a politico-industrial oligarchy.

A despotic government, by estimating needs, and by regulating production, regulating wages, regulating costs of transportation, and regulating commodity prices, may maintain equilibrium of production and consumption. But under this regime the individual has little choice as to occupation, income, or dwelling place. This is economic slavery. For centuries men have struggled for industrial and political liberty. Until this goal is attained there can be no lasting peace.

Those who urge that the working day be shortened lose sight of the fact that "leisure hours" may well be devoted to productive labor. Shortening by law the working day or week may not result in any lessening of production unless "leisure-time" activities also are brought under governmental control. Tyranny, to be successful, must be complete.

Minimum wage laws probably will benefit but little those who are underpaid. They are quite as likely to have the opposite effect: To deprive of employment, and then of any wages at all, those who, physically or otherwise, are handicapped. The employer who is compelled by law to make any considerable advance in wages must either charge more for the output of his factory, or discharge the least efficient of his employees. Competition will compel him, in many instances, to do the latter.

The fair exchange of commodities is possible only if relative values are known. These can be determined only in a competitive market. Competition is socially creative where industry and commerce are free; it is socially destructive when limited in its application, and a weapon of monopoly. It has rightly been termed "God's law of cooperation in a selfish world."

Economies in distribution, involving a reduction in the number of jobbers and retail dealers, and in the number of persons employed in selling goods, will no doubt make somewhat greater the purchasing power of the consumer's dollar. But where competition has free play no middlemen, or agents, except those who render necessary and economical services, can long survive.

The government, during periods of industrial depression, may undertake, by engaging in the construction of highways, canals, bridges, and public buildings, to provide work for the unemployed. But let us remember that this labor must be paid for, and that the government's only legitimate source of revenue is taxation. While those who find employment, under such conditions, will have more to spend, those who ultimately pay the bills will have less. The few will be helped; the already over-taxed many will be hurt. Nor will anything be gained, in market capacity, if by subsidizing agriculture, the purchasing power of farmers is increased. What the farmer gains the city worker will lose.

It is argued that surveys as to probable future demands should be made. Possibly so! But such surveys are, and must be, uncertain. In the case of foodstuffs, perhaps, some worthwhile information may be obtained. But as long as there are in the world multitudes of people who are starving, or near to it, it is absurd -- even a crime -- to contend that food is being produced in too great quantities.

Those who observe at all closely will have some difficulty in convincing themselves that there is any overproduction of either clothing or footwear. In few homes indeed are the furnishings, either in character or quantity, all that the family might reasonably wish for.

As a matter of fact we know very little about potential demands. People's wants seemingly are insatiable. When incomes become such as to permit the rank and file to satisfy their reasonable requirements, we may witness a demand for merchandise of all kinds far beyond anything that we can now anticipate.

We shall do well if we postpone our official surveys until such time as the greatest possible increase in real wages has been made.

It may be contended that manufacturers and merchants are not paying in wages all that they can. To avoid argument we concede that this may be true. We insist, nevertheless, that employers, acting as such, are powerless; that they are not in a position to materially increase real wages. When they have reached the absolute limit in this direction, other factors remaining the same, there will still exist so wide a gap between our producing power and our purchasing power that, periodically, and with a frequency which varies as this gap widens or grows less, we shall be confronted with unemployment and poverty, and all that these entail.

Old-age pensions, unemployment insurance, shorter hours of labor, reduced machinery speeds, efficiency methods of production and distribution, minimum wage laws, bestowals of subsidies, and attempts by governments to provide work for the unemployed, are palliatives, and this only. While collectively, they may suffice, for a time, to keep going institutions which already are tottering on the brink of disaster, they can afford no permanent relief. To regard them as curative remedies for our economic ills is folly.

Three factors are involved in the production of wealth. These are Labor, Land, and Capital. The returns going to Labor are Wages; those going to Land are Rent; and those to Capital, Interest.

Where the distribution of wealth is in accordance with justice, Products will equal Wages plus Rent plus Interest, Therefore Wages will equal Products minus Rent minus Interest. This seems simple enough and easy of attainment. The complicating factor is the matter of Taxation: Where is public revenue to be obtained?

Adam Smith's canon that "The subjects of every state ought to contribute toward the support of government as nearly as possible in proportion to their respective abilities," has gained general acceptance, and a futile effort is made -- or a pretence is made -- to apportion taxes in accordance with it.

Wealth used in the production of more wealth is Capital. Most of what is known as "taxable wealth" is Capital. A tax on a merchant's store and stock in trade will finally be paid by his customers. A tax on rented property will be paid by tenants. A tax on gasoline, collected from users of motor vehicles, and spent in highway construction, will bring about an increase in the price of land in the territory which is served. The owners of land will be the chief beneficiaries. The public, in the end, will pay twice -- once to the government, once to landowners.

An excise tax is a consumer's tax. Of an import tax and a sales tax, the same is true. A tax on earned incomes is direct. On investment incomes it may be indirect, and then but another burden on industry.

The cost of paying income taxes is not a matter of public record. To compile the detailed reports which the government demands, bookkeepers and experts must be employed. The wages and fees of these, in the aggregate, must be many millions of dollars each year. This is added to costs of production and finally is collected from consumers of manufactured goods.

An earned income is an index of the value of the services which the individual has rendered, directly or indirectly, to society. For rendering such services the individual should not be fined. A tax on income, or upon wealth or capital which, it must be assumed, is but accumulated savings from income legally obtained is, in effect, a penalty imposed for doing useful and necessary work. The greater the value of the work the greater the penalty. Only by specious pleading can this be defended.

Because improvements are taxed, antiquated and poorly constructed buildings, too often fire-traps, will be kept in use as long as tenants can be found; hence the slums. When buildings no longer are taxed slums will disappear.

As a general truth it may be stated that all taxes which are levied upon products of labor come finally to rest on the shoulders of consumers. The worker whose income is small, and whose family is large, will be the most grievously burdened.

The "ability to pay" theory, under any system of indirect taxation, manifestly, is unworkable. The owner of any capital-property which may be taxed will recover from those with whom he does business a sum equal to the tax, plus a profit. Every merchant through whose hands the goods pass will do the same thing. The final purchaser, the consumer, will bear the entire accumulated burden.

Currently produced wealth should be divided between those who work, those who own Capital, and the group which has a rightful title to Rent. Under a system of indirect taxation, and a non-ethical system of land ownership, a condition has developed wherein working people, as consumers, are required to pay, not only practically all the taxes, but also, either directly, or in enhanced commodity prices, speculative rents and speculative prices for land. Wages which should equal Products minus Rent minus Interest, now equal Products minus Rent minus Interest minus Taxes minus Speculative Rent. The poverty of the working masses is here accounted for.

We must have government. The government must be supported. The town-meeting, once adequate, has been outgrown. We now delegate to representatives our rights and powers. No assembly of representatives should be allowed to exercise any rights or powers except those which are delegated to it. No individual can delegate rights or powers which he does not himself possess. The right to take from any individual, without that individual's consent, any product of his labor, no person possesses. Therefore no person can delegate such power. Necessarily then, that government, in a democracy, which takes from individuals, by taxation, what their labor has produced or purchased, exceeds its rightful authority -- is guilty of usurpation.

In a monarchical, or an aristocratic, State there exist a ruling person, or class, and a subject people whose natural rights are denied. The coming of democracy marks the acceptance of the principle that men have rights which are antecedent to, and independent of, any government. In so far as the government, in a democracy, exercises powers which are not delegated to it, and which the electorate are not competent to delegate, despotism exists. Taxation, as now practised, is a relic of despotic governments. In a democracy it has no place; it should not be endured.

III

Indirect taxation has this one merit: It produces revenue -- but by methods which, in ethics, have no defense. Under it, the few are taxed by the government, and the many are more heavily taxed by these few. The many, entertaining the belief that only those who own property are taxed, manifest little interest in the management of the public's business, and too often, not only consent to, but actually urge all sorts of civic extravagance.

The taxes paid, directly and indirectly, by the average family of five persons in the United States amount to not less than $600 per year. This means that the inclusion of taxes in the prices which are paid for the many things which are purchased in the course of the year cripples the family's buying power by at least this amount.

To indirect taxation, and the evils incident to it, the failure of the capitalistic system to satisfactorily function must be attributed. That there are other causes, we must admit. Indirect taxation, however, is the major cause, and until this is done away with there can be neither industrial peace nor continued prosperity. While fault may be found with the capitalistic system, the fact remains that under it peoples have prospered as under no other. Because of its taxation handicap it is breaking down. It will function smoothly if, and only if, this handicap is removed.

No one will question the right of Labor to its wages. Few will deny the right of Capital to a legitimate return. But what is Rent? And to whom, from a moral standpoint, does it belong? In the whole realm of Political Economy there is no question of more vital importance.

It should be noted that the term "Rent," except when otherwise indicated, refers to ground, or economic, Rent. That which loosely is called "house rent" is, in reality, interest.

Rent is defined as "That which is yielded by land in excess of the yield of the poorest land in cultivation under equal conditions." To make clearer the meaning of this definition, let us translate it into terms of dollars and cents.

Picture a small but growing town in and about which there are available for cultivation sections of agricultural land of different grades of fertility, and in which there is an annual demand for one thousand bushels of wheat. Let us assume that, at a labor cost -- interest need not here be considered -- of $1,000 per section, there can be produced, in one year, upon the first, one thousand bushels of wheat; upon the second, nine hundred bushels; and upon the third, only eight hundred.

The yearly demand being for but one thousand bushels, obviously but one section of land will be cultivated, and this the best of those which are available -- that which may be called the "thousand bushel land." Wheat will sell for $1.00 per bushel, and the entire crop for $1,000.

When, owing to an increased population and a corresponding increase in the demand for wheat, the price of this commodity advances to $1.12 per bushel, the land of the second grade will be used. Nine hundred bushels of wheat, at this price, will bring $1,000. But now the crop obtained from the highest grade soil brings $1,120 -- of which $120 is Rent.

The poorest land will be resorted to when, for its crop, $1,000 can be obtained -- when wheat sells for $1.25 per bushel. When this point has been reached the crop grown on the best land will bring $1,250, and that on the land of the second grade, $1,125. All in excess of $1,000, in each case, is Rent -- $250 and $125.

If population grows less the demand for wheat will grow less, and the price of wheat will fall. Rent, therefore will decrease. The owner of Rent-producing land, regardless of his efforts and skill, will witness the shrinkage and perhaps ultimate disappearance of the Rent-part of his income.

The fact is suggestive that public expenditures rise and fall as population rises and falls, and as Rent rises and falls. To the reasoning observer this phenomena should be as instructive as was the falling apple to Isaac Newton.

Rent is a civilized-population consequent. Where justice rules it will be regarded as the property of the society which creates it. Morally it is the property of society.

Ground Rent is the result of high commodity prices, not the cause. Rent is high because prices are high; prices are not high because Rent is high. Distinction must be made, however, between true and speculative Rent. Power to exact speculative rent carries with it power to arbitrarily raise commodity prices.

This community of ours, to obtain revenue, may either tax land, on the basis of value -- which is but a means of appropriating Rent -- or it may tax wheat. If, by exercise of the taxing power, the entire $375 of Rent is turned into the public treasury, the price of wheat will not be affected. The cultivator of each section of land, the tax having been paid, will receive for his year of work, $1,000. Each worker will receive all that he earns, and none will be unjustly treated.

It may be that a tenant is paying to the owner of land its full Rent. Assume that the government levies on the land a tax equal to this Rent. The owner, to recover the tax, must collect from the tenant, not only the Rent, but also the tax. The tenant, being free to resort to not-taxed land at the margin, is under no obligation to pay the increase. The availability of free land is the tenant's protection.

If those who cultivate Rent-producing land attempt, by raising the price of wheat, to recover from consumers the Rent tax which they have been required to pay they will fail, and this for the obvious reason that the "marginal" producer, using land which produces no Rent, and which therefore is not taxed, will be able to sell wheat for $1.25 per bushel.

The price of commodities is established by the cost of production at the margin.

If wheat is taxed the tax will be added to its selling price, and consumers will pay. And if it so happens that before reaching the final purchaser the wheat passes through several hands, the ultimate selling price will include, not only this one tax, but several of such taxes, plus a profit on each one.

Too great emphasis can not be given to the fact that while taxes levied upon products of labor increase the prices for which these are ultimately sold, taxes on ground Rent decrease the selling price of land, and increase the selling price of no commodity.

A tax on Rent is not, and cannot become, a consumer's tax, if land at the natural margin is free. A tax on true Rent cannot be shifted.

In seeking to make clear the so-called "Ricardian Law of Rent," we have used, as an illustration, agricultural land. To explain in detail the application of this law to land used for other purposes, and in cities and towns, would require far more space than is here available. Suffice it to say that the law does apply to all land, wherever located and however used.

It can hardly be necessary to state that the land which brings the greatest Rent return is that in and about our cities and large towns. Farm land has relatively little value.

Civilization, as we know it, is based upon the right of the individual to own property. Men intuitively recognize that the products of their own labor belong to them; that to the producer belong the things produced. The right of the individual to own land rests upon no such foundation. Men will not build upon, or otherwise improve, land, unless they are given some guarantee that they will be able to hold it for a period at least as long as the probable life of the improvements. Therefore to make secure property in products, and to encourage productive enterprises, we have established by law private property in land. But private property in land should not involve private property in Rent. II Rent is regarded as private property it will be capitalized, and land will be bought and sold as a commodity.

IV

In our illustration, the best land, as it produces annually $250 of Rent, will sell, in a five per cent market, for $5,000. The second grade land, producing as it does but half as much Rent, will have but half this capital value; its price will be $2,500. The poorest land in use will be free; producing no Rent, it will have neither selling price nor investment value. If a two and one-half per cent tax is levied on land, on the basis of value, net Rent, and then capital value, will be reduced fifty per cent. The best land will then sell for $2,500; and that of the second grade, for $1,250. Land at the margin will be taxed not at all.

The selling price, or investment value, of land, is the capitalized value of its net Rent.

In ground Rent we have a fund which comes into existence as society develops. It grows as social expenditures grow. It measures, with an approach to mathematical accuracy, the value of the advantages, both social and natural, which each member of society enjoys. It is the government's natural revenue. Always, it is paid to somebody; if not to the government, then to individuals who, in return, give nothing whatever, in either service or goods. If the community, through its authorized agent, the government, appropriates it, no individual will in consequence be deprived of any property to which he has a rightful claim.

As long as the laws are such as to permit the private appropriation of Rent any person who proposes to build and operate a manufacturing plant must first secure a building site. Whether he buys land, or hires it, the financial burden will be much the same. In the one case it will cost him each year interest on the investment, in the other he will pay, in Rent, not less than the same amount. His overhead, when the plant is completed and in operation, will include this interest, or Rent, interest on money invested in buildings and machinery, and taxes on the entire property, land and improvements.

If society exercises its rightful title to Rent the sale value of land will be practically destroyed. This will make it unnecessary for any would-be manufacturer to invest any money in land.

If Rent suffices to defray the expenses of government, as beyond question it will, in normal times, if the public's business is conducted with due regard for efficiency and economy, no taxes except the one on Rent will be imposed. The improvement tax overhead will then be eliminated.

To illustrate, let us assume that land costs $40,000, this being the capitalized value of the $2,000 of Rent which it commands; that buildings cost $40,000, and machinery, $20,000. The overhead must include five per cent interest on the $100,000 investment, and taxes on the whole property at, say, a thirty dollar rate -- $8,000.

Taxes on improvements having been abolished, and no initial investment in land being necessary, in place of the $8,000 annual fixed charge, there will be a Rent tax of $2,000, and interest, say at five per cent, on $60,000 -- $5,000 in place of the previous $8,000. A saving of $3,000 a year is made.

This reduction in overhead makes possible a corresponding reduction in the prices of labor goods. Automatically then the purchasing power of the consuming public is increased.

Sight should not be lost of the fact that when we cease to tax buildings and machinery we shall cease also to tax farm improvements, livestock, merchandise, house and office furniture, stocks, bonds, incomes and inheritances.

When ground Rent supports the government, import tariffs, to provide revenue, will not be needed. When all products of private industry are exempted -from taxation goods will sell -for a natural price -- so cheaply in fact as to render unnecessary any import taxes for "protection." Then will international trade be in every way desirable, and always promotive of peace.

Private property in Rent leads to land and capital monopolization. Much valuable land is kept out of use or is inadequately improved. In advance of economic need land at, and even below, the natural margin of cultivation, or use, is taken up by individuals, or by groups, and held for speculative, or non-productive, purposes. This gives to those who own or control land the power to recover from tenants, or from purchasers in the event of sale, or from others in the course of business, any taxes which may be imposed -- limited only by the ability of tenants, or others, to pay.

Owners of land, collecting each year many millions of dollars of Rent, naturally make efforts to invest this money in paying enterprises. This can but lead to overbuilding of productive machinery, to the concentration of wealth, and to the creation of great estates in land.

If governments, recognizing that Rent is the property of society, were to treat it as such, less money would be available for investment, and much more, going to Labor as wages, would be spent for consumption goods.

Increased wages and increased mass purchasing power can but result in an orderly increase in capital investments -- demand regulating supply. When, however, capital investments are not in response to an increase in demand for products but are instead the consequence of desires to find profitable investments for vast sums of money annually collected as Rent, over-building, ruthless and ruinous competition, high-pressure selling, deferred-payment financing, and an ever increasing burden of debt, are inevitable. Also is disaster inevitable.

Unused land, at and below the natural margin, as it has no rental value, should be free -- a public domain. The area of the United States is 3,026,789 square miles. Its population is 122,774,045. The area of Germany is 183,381 square miles. Germany's population is 62,348,782. The area of France is 212,659 square miles; its population is 40,938,847. The area of the State of Texas is 265,896 square miles. These figures are suggestive indeed; they show pretty plainly what the public domain in the United States might be were the tax laws of the country consistent with the moral law. Most of this land is privately owned. Too little is adequately utilized, or available for use on terms which make its use possible. Hence the increasing army of unemployed.

Land in the public domain should be available at all times for the use of any dissatisfied, or unemployed, worker who cares to take it. What the worker can earn for himself, on free land, is the natural basis for the whole wage system.

If unused marginal land were free the exploitation of Labor would be impossible. Where there is no free land workers seeking employment have no alternative but to accept as wages anything that may be offered. This is economic slavery.

Gloss this over as we may, denied the right of self employment, man is not free. He possesses only the right to choose whether he will work for starvation wages, or live at the expense of his family, his charitably disposed friends, or the community. And bitter experience has shown that the opportunity to work, even for starvation wages, is not always to be had.

If an island on which ten persons live is owned by one, this one, obviously, will be able to dictate to the nine the terms under which the land may be used. He can collect from them, as "Rent," all that they produce except, of course, what is absolutely necessary for their bare support. Under landlordism of this character the status of Labor is fixed; from chattel slavery it is but once removed. Political reforms can be of little avail where this condition obtains.

Owing to the complexities of modern life the relationship of cause to effect is less easily traced. But that like causes will produce like effects, we may be sure. The land question is vital. It makes no difference, financially, to the landless worker whether all the land is owned by one man who takes from him all but a pittance, or by thousands of men under a system whereby really productive land is kept beyond his reach, and he is compelled to work upon that from which he can secure only enough to keep himself and his family alive.

Labor, the victim of the tax gatherer, and of an antisocial system of land ownership, is today economically helpless. Only under exceptional circumstances, and by the greatest self-denial, can any worker save enough to make possible his escape from this state of bondage. Some few, it is true, do escape; the many do not.

The poverty of the masses makes necessary a constant widening of the scope of governmental activities. This necessitates higher, and still higher, taxes. As the taxes mount, private initiative and industry are increasingly discouraged, and more and more business enterprises which should be left altogether in the hands of private owners, come under governmental control, or ownership. Somewhere, there must be a limit: There must sooner or later come a time when private industry can no longer provide the funds that are necessary for the support of government. What then?

When it becomes the determined policy of the government to take by taxation all of ground Rent, traffic in land will cease to be profitable. Private ownership of land will continue. Land will be owned for use. The monopolization of land will be impossible. Permanent title to any given section will be conditioned upon the payment of an annual "tax" which equals its Rent, or upon the payment of the capitalized value of this Rent in one lump sum.

In the event that the lump sum is paid no taxes thereafter will be paid unless, owing to changing conditions, ground rents in this locality increase.

To illustrate: Assume that the current rate of interest is five per cent, and that the annual Rent of a given parcel of land is $1,000. If $20,000 is paid for the land, the person receiving the money, whether principal or agent -- say agent of the government -- may deposit it and draw from the bank each year, $1,000. The purchaser of the land, it should be clear, in making this capital payment, pays for all time his taxes on this property.

Unfortunately, when land is bought and sold today the property rights of society are not recognized. The purchaser of land now pays to the individual who sells it, his taxes in capitalized form, and then pays annually to the government another tax equally as great. He therefore pays twice each year for the same public services.

Industry is now compelled, not only to support the government, but also to pay, in what amounts to annual tribute to a land-owning class, a sum at least equal to what is paid in taxes. In no possible way can ruin be averted if this double taxation is continued.

The right of the individual to own land is conceded. Land is made valuable by the growth and activities of a civilized population. The purchaser of land should pay to the seller a fair price for buildings and other improvements, and pay to the city or town the capitalized value of the land's annual Rent. He thereafter should pay no taxes whatever unless conditions change.

This "lump sum" method of tax paying may or may not be practicable; it probably is not. It remains true, nevertheless, that Under any ethical system of land ownership a title to land, acquired by the payment of the capitalized value of its gross Rent, gives to the purchaser the right to hold this land indefinitely and tax free -- except, as stated above, ground rents in this locality increase.

A fifth installment to this paper was to be printed in April, 1943. Unfortunately, The Freeman ended publication after the March, 1943 issue was distributed. No information on the final installment has yet been discovered.