This is a short report. Some
Georgists will perhaps be interested in hearing something about what is
happening under the new Government in Denmark, because it is still rather
unusual that Georgists take an active part as members of a government.
The ideas of land value taxation and free trade
are old in Denmark. Therefore, the philosophy of Henry George is popular
in Denmark. It is blood of our blood.
Denmark has only one chamber in its Parliament
with 179 seats. Of these "Danmarks Retsforbund" – what you call the Justice
Party or The Danish Georgists – had only 6 before the election in 1957. There
are 6 parties represented in the House, and some representatives for Greenland,
The Faeroe Islands and Slesvig. In the election of May 14, 1957 the Social
Democrats went down from 75 to 70, and the Socialist minority government
resigned. The Liberals (Venstre) gained 3 seats and rose from 43 to 46. The
Conservatives got 30 unchanged, and The Radical Liberals 14 unchanged. The
Communists were reduced from 8 to 6.
The Georgists, in spite of the Gallup predictions
and prophecies of annihilation, gained 3 seats and rose from 6 to 9, an
improvement of 50 per cent in representation, and 60 per cent in votes. Even
if 9 seats in a house of 179 are not everything. it is something, and the
result of the election gave the vested capital interested in the preservation
of monopolies a shock.
The victors of the election were the Georgists
and the Liberals, both of whom had gained 3 seats. There were some negotiations
between the two parties with a view to forming a liberalization-government,
but the Liberals' plans were not liberal and in any case the combined strength
of the two parties was too small. If the Conservatives had joined such a
government, a coalition government would have been a possibility, but the
Conservatives are not liberal, but protectionists, even if they are against
The Radicals proposed a strong majority-government,
consisting of the four biggest parties, and nobody can deny that 160 seats
would be a majority in a house of 179, but neither the Socialists, nor the
Liberals, nor the Conservatives wanted to enter such a government; and then
the majority was gone.
From 1950 till 1953 the Liberals and the Conservatives
had formed a minority coalition government, and now they proposed to try
again. But both the Radicals and the Socialists declared that they would
vote against such a government, and the Georgists would not support it, but
preferred to wait and see. Thus this plan failed.
The Radicals then proposed that the Liberals
alone should form a minority-government and negotiate for support from the
other parties; but the Liberal leader, the former Prime Minister Mr. Erik
Eriksen, would not consent to this out of loyalty to the Conservatives, with
whom he had been in close co-operation between 1950 and 1953. He hoped for
renewed co-operation in the future.
It is believed that had the Conservatives suggested
that Erik Eriksen should form a Liberal government, he would have done
so. But they did not. In this way the Conservatives made a Liberal government
impossible - and the new government possible.
It was in this situation that the Georgists
suggested forming a majority-government consisting of the Social Democrats,
the Radicals and the Georgists with land value taxation as its foundation
and uniting cement. All three parties, to a greater or less extent, support
land value taxation.
THE PRESS WAS OUTRAGED
Most of the Danish newspapers are owned by the
wealthy Conservatives and Liberals, and they grinned at this curious idea
of a government which included such queer people as the Georgists. They firmly
believed that the negotiations would break down, and then, after all, a
Liberal-Conservative government would be the happy ending. But, in spite
of the newspapers, the negotiations succeeded, and the new government was
formed. The newspapers flew into a rage and attacked the Georgists, charging
them with everything short of murder: They had deceived the electors! They
had broken their promises! They would ruin the country!
Had the Georgists refused to join the government,
I am sure, the papers also would have accused them of breaking their promises,
saying: "The Georgists have been demanding further land value taxation for
years, and now when they can have it, they do not dare - what silly
cowards ! "
Some people believe that the vested interests
behind the land monopoly have said to be the two old parties: "What an
awful mess you have made. You have allowed the Georgists to play the ball
right up to the goal mouth. The only way to prevent them from scoring is
to attack the Georgists with all means available so that they break down."
And they tried it - without success - using a barrage of articles, pamphlets,
cartoons, backbiting and anonymous letters. In a way it is a compliment
because few people use their elephant-guns against small game.
PROPHECIES AND PERFORMANCE
The newspapers prophesied that everything would
go wrong. The price of bonds and stocks would fall, interest rates would
rise, the balance of foreign currency would shoot down, production would
stop, savings and investment would shrink, unemployment would swell to enormous
proportions and the younger generation would emigrate.
And what happened? The opposite! The deficit
in the budget was made good. The great deficit in foreign currency of a quarter
of a billion kroner was changed to a surplus of one and a quarter billion
kroner, the greatest surplus in many, many years. The price of bonds and
stocks rose. so that half of the loss due to depreciation has been regained,
and people can borrow money to build and buy more cheaply. The effective
interest on bonds has fallen one and a half per cent - a great help to the
building industry. The discount of the National Bank has fallen one per cent--a
great benefit to trade and enterprise. Savings have risen enormously because
people have more confidence in the value of Danish currency. Investments
have risen. Exports of industrial goods rose 10 per cent last year. Construction
of buildings for industry and trade rose by 35 per cent during the same period.
Unemployment is at its lowest level for many years, and emigration has dwindled
from 12,000 to 2,000. The whole economic atmosphere and temperature has changed
in two years.
Where is the explanation? Some of it is due
to international conditions with falling import-prices on raw materials,
but the export-prices for Danish agricultural products have not been good,
due to protectionism, restrictions and state-subsidies in other countries.
Some of it is due to the new government, not to the Georgists alone, but
to the co-operation between the three parties in power.
Inflation is a scourge in most countries. Before
the election in 1957 there was a whisper of a new devaluation of the Danish
currency. But, when the new government was formed, confidence, which is
very precious thing, was re-gained, and people began to save and invest.
The energetic balancing of the budget is another factor.
It is evident that, when three different parties
join in a coalition, compromise is necessary. The Georgists are for land
value taxa.ion and free trade, and against inflation and taxation on labour
and buildings but they cannot expect all their wishes fulfilled at once.
They will have to vote for many things that they are against, but which would
have been carried through in any case under other governments - in order
to gain results that would not have been gained under other governments.
A small party of 9 has too little power in Parliament, but in a government
it has influence.
In the cabinet the Social Democrats have nine
members including Mr. H.C. Hansen as Prime Minister. The Radicals have
four members, and the Georgists three, one being the Minister of internal
affairs, one Minister of Fisheries, and one a political Minister without
portfolio. As this is the first time that the Georgists have held office,
it is important to stress that the country is run by a three-party government,
and not by a Socialist government with participation of others.
LAND VALUE INCREMENT TAXATION INCREASED
Last year the government passed an act improving
the law governing the taxation of increments in land values. This taxation
is now 4 per cent of all unearned increments since 1958 with the exception
of general rises due to conjecture or inflation. The Georgists are against
such an exemption, but have not yet been able to convince their partners.
Post-war rent control of old flats in the towns
led to a great disparity in the rents charged. The Coalition government
restored a free market in rented accommodation with the result that these
artificial differences have disappeared. Higher house rents would have conferred
great benefits on the owners of real estate. Therefore, in the towns the
municipal land value tax has been more than doubled - increased from 1.2
per cent of the assessed capital value by 1.4 per cent to 2 6 per cent.
This is a permanent land value tax which the municipalities are not allowed
CLEAR TAX SHIFT FROM LABOUR TO LAND
To this was added a temporary tax on the capital
value of old buildings - the new are tax free - in order to equalize the
conditions, and because the owners now were able to obtain a higher rent.
It is l.4 per cent, but in the coming years it will be gradually reduced,
so that after 40 years all buildings will be tax-free. Together these taxes
will yield an annual revenue of 140 million kroner to the municipalities,
most of it deriving from land and some of it from old buildings. This revenue
is used to reduce the local income tax - a clear tax shift from labour to
Of course, the Conservatives were very upset,
and claimed all the advantages for the owners of real estate. They were
so upset that they blurted out that but for these laws the land-owners would
have gained a capital sum of 2,800 million kroner. It was prevented. Not
a bad result.
These laws also provide for a gradual elimination
of the state-financing of the building industry with a shift to private
finance and private initiative.
THE NEXT STEP
lnside the government the next step is investigated:
How to devise a system to effect a voluntary transfer from private mortgaging
of land values to a land value taxation with a ground-rent arrangement,
especially when real estate is transferred. It is intended to be a further
evolution of the special Danish laws of October 4th, 1919, under which young
people can obtain land with full owner-ship, but without paying any purchase
price for the land. We have in Denmark under the old law 10,000 such small
ground-rent-holdings, and now we will try to develop this system. If it can
be brought about the landholders concerned will then have to pay the full
land value taxes - the economic rent - due to the periodical assessments.
Details are not yet available.
TAX-FREE INVESTMENT AND FREER TRADE
Two new laws which have made a very important
contribution to the improvement in the Danish economy are those giving
tax-freedom for investment funds - monies earned by companies which are
re-invested in the firm - and for the right of writing off machines in the
Although the government has not promised liberalisation
of trade -the Georgists, of course, are for it - some progress in this direction
has been made. Some restrictions have been removed, import licenses have
been made more freely available, and the range of commodities which may be
imported from the Dollar Area free from licence has been raised from 55 per
cent to 88 per cent.
Many other problems have been dealt with, but
cannot be explained here, because they are only of interest for the Danes
The cost of living has risen, but only half as much as in other European
countries. The most important results of the new government in its first
two years are improvements in practically all spheres of economic life,
progress in the taxation of land values, and a hard braking of inflation.
Of course, land prices are still rising, but land-speculation as such has
Every step forward will be encouraging for Georgists.
We have seen that it is possible to gain influence, whereas 30 years ago
few would have believed that a government could be formed with land value
taxation as one of its main objects. Even if this world - and especially
Europe - is badly hurt by protection and restrictions, it is encouraging
to see that today liberalization is earnestly discussed in all the different
The experiment of taking responsibility in a
government has been justified. No experience has occurred that could prove
that the ideas of Georgeism are wrong. On the contrary: Righteousness will
always be right.
First published 1959.