I:    The Lands  of the United States
II:   The Lands of California
III:  Land and Labour
IV: Tendency of our Present Land Policy
V:  What our Land Policy should be


Our Land and Land Policy

by Henry George

III.      Land and Labour

Original publication: 1871
WHAT LAND IS
LAND, for our purpose, may be defined as that part of the globe's surface habitable by man—not merely his habitation, but the storehouse upon which he must draw for all his needs, and the material to which his labour must be applied for the supply of all his desires, for even the products of the sea cannot be taken, or any of the forces of nature utilised without the aid of land or its products. On the land we are born, from it we live, to it we return again—children of the soil as truly as is the blade of grass or the flower of the field.

OF THE VALUE OF LAND.
THOUGH land is the basis of all that we have, yet neither land nor its natural products constitute wealth. Wealth is the products—or to speak more precisely, the equivalent of labour. That which may be had without labour has no value, for the value of any object is measured by the labour for which it will exchange.  And when in speaking of "natural wealth," we mean anything else than the general possibilities which nature offers to labour, we mean such peculiar natural advantages as will yield to labour a larger return than the ordinary, and which are thus equivalent to the amount of labour dispensed with ¡t hat is, such natural objects or advantages as are scarce as well as desirable. If I find a diamond, I may not h~ expended much labour, but I am rich because I have some thing which it usually takes an immense amount of labour to obtain. If I own a coal mine which is valuable, it is because other people have not coal mines, and cannot obtain fuel with as little expenditure of labour as I can, and will therefore give me the equivalent of more labour for my coal than I have to bestow to get it. If diamonds were as plenty as pebbles, they would be worth by the cart load just the cost of loading and hauling. If coal could everywhere be had by digging a hole in the ground, the possession of a coal mine would make nobody rich.
     And so it is with land. It is only valuable as it is scarce. Land (of the average quality) is not naturally scarce, but abundant, and it may be doubted whether there is any country, even the most populous, where the soil could not easily support in comfort all the people, though the law of diminishing return, as laid down by the English economists, is doubtless true. But the density of population permits other economies which go far to make up for, and which, probably, in a right social state would fully make up for, any increase in the amount of labour necessarily devoted to agricultural production.
     But land is a fixed quantity, which man can neither increase nor diminish, and is therefore very easily made artificially scarce by monopolisation. And artificial scarcity arising from unequal division produces the same effect as real scarcity in giving land a value. There is no scarcity of building lots in San Francisco, for there is room yet within the settled limits for ten thousand more houses. But if I want to put up a house I must pay for the privilege, just as if there were more people wanting to put up houses than there is room to put them up on.
     And the value of land is the power which its ownership gives of appropriating the labour of those who have it not; and in proportion as those who own are few, and those who do not own are many, so does this power which is expressed by the selling price of land increase. We speak of railroads raising the value of land by reducing the time and cost of transportation. But If we analyse the operation by imagining the construction of a railroad through a country in which there are few settlers and land can be had for the taking, we will see that the direct effect of the railroad or other improvement which increases the value of the product of land is to increase the value of labour—or to speak more precisely, of the value of labour and capital, in the relative proportions determined by the circumstances which fix the shares of each and that it is only when the land is so far monopolised as to enable the landowners to appropriate to themselves this benefit that the value of land is increased. No matter how few people there might be, if the land were all in private hands the owners might appropriate to themselves the whole benefit. This is the result in a country like England, but in a new country, those owners having more land than they can work or desire to work, will, in selling or renting their lands, yield some of the new advantage in order to induce people to take their surplus land. It will be said: If the value of land is the power which its ownership gives of appropriating the labour of others, so it is the value of everything else, from a twenty-dollar piece to a keg of nails. But in this is the distinction: The twenty-dollar piece or the keg of nails are themselves the result of labour, and when given for labour the transaction is an exchange. Land is not the result of labour but is the creation of God, and when labour must be given for it the transaction is an appropriation. In the one case labour is given for labour; in the other labour is given for something that existed before labour was.

OF THE VALUE OF LAND AND THE COMMON WEALTH.
AND thus we see that the value of land, being intrinsically merely the power, which its ownership gives to appropriate the fruits of labour, is not an element of the wealth of a community. This principle is as self-evident as that two and two make four, yet we seem to have lost sight of it altogether. All over the country the increase in the value of land is cited as an increase of wealth. Year after year we add up the increased price which land will bring, and exclaim, Behold how rapidly the United States is growing rich! Yet we might with equal propriety count the debts, which men owe each other, in estimating the assets of a community. The increased price of his land may be increased wealth to the owner, because it enables him to obtain a larger share in the distribution of its products, but it is not increased wealth to the community, because the shares of other people are at the same time cut down. The wealth of a community depends upon the product of the community. But the productive powers of land are precisely the same whether its price is low or high. In other words, the price of land indicates the distribution of wealth, not the production. The manner of distribution certainly reacts on production, and so the price of land indirectly and gradually affects the wealth of the community; but this effect is the reverse of what seems generally imagined. High prices for land tend to decrease instead of adding to the wealth of a community. For high priced land means luxury on the one side, and low wages on the other. Luxury means waste, and low wages mean unintelligent and inefficient labour.

OF THE VALUE OF LAND AND THE VALUE OF LABOUR.
THE value of land and of labour must bear to each other an inverse ratio. These two are the "terms" of production, and while production remains the same, to give more to the one is to give less to the other. The value of land is the power, which its ownership gives to appropriate the product of labour, and, as a sequence, where rents (the share of the landowner) are high, wages (the share of the labourer) are low. And thus we see it all over the world, in the countries where land is high, wages are low, and where land is low, wages are high. In a new country the value of labour is at first at its maximum, the value of land at its minimum. As population grows and land becomes monopolised and increases in value, the value of labour steadily decreases. And the higher land and the lower wages, the stronger the tendency towards still lower wages, until this tendency is met by the very necessities of existence. For the higher land and the lower wages, the more difficult is it for the man who starts with nothing but his labour to become his own employer, and the more he is at the mercy of the landowner and the capitalist.

OF SPECULATION IN LAND.
THE old prejudice against speculators in food and other articles of necessity is passing away, for more exact habits of thought have shown that where speculators do not control all the sources and means of production (which is impossible as to most things in this age of the world , and speculation does not become monopoly, instead of causing scarcity, it tends to alleviate it; and this, on the one side, by giving notice of the impending scarcity, and thus inducing economy, and on the other by stimulating production.
     But land not being a thing of human production, speculation in land cannot have this result. A country may export people, but it cannot import land. Whatever be the price put upon it, the number of acres in any given place is just so many, with just such capabilities. And though high prices for land may lessen the demand by driving people farther away, this is not economy, but waste, as the labour of a diffused population cannot be so productive as that of a more concentrated population, combined action cannot be so effective and economical, and exchanges must be much more difficult and at a greater cost. It is sometimes said (and the English landlords piously believe that in raising their rents to the highest figure they are doing their best for their fellow-men) that the increase in the price of land leads to increased thoroughness of cultivation, yet how can that be when the increase in the price of land must take from the means of the cultivator, either by reducing his capital when he buys, or by reducing his earnings when he rents?  That the two things go together is undoubtedly true; but it seems to me that the increased thoroughness of cultivation is due to the increased pressure of population—to higher prices for produce and lower prices for labour rather than directly to the increased price of land.
     There is another attribute in which land differs from things of human production. It is imperishable. The speculator in grain must sell quickly, not merely because he knows another crop will soon come in, but because his grain will spoil by keeping; the speculator in a manufactured article must also sell quickly, not merely because the mills are at work, but because the articles in which he is speculating will spoil or go out of fashion. Not so with land. The speculator in land can wait; his land will still be there as good as ever. If he dies before he reaps the benefit, the land will be there for his children.
     Thus land, being a thing of limited quantity, of imperishable nature and of unchanging demand, is a thing in which there are more inducements for speculation than in anything else. And being, not the result of human labour but the field for human labour, the increased price caused by speculation is a tax for which there can be no beneficial return. Speculation in land is, in fact, but a shutting out from the land of those who want to use it, until they agree to pay the price demanded—the land speculator is a true "dog in the manger." He does not want to use the land himself, but he finds his profit in preventing other people from using it. The speculator knows that more people are coming, and that they must have land, and he gets hold of the land which they will want to use, in order that he may force them to pay him a price for which he gives them no return—that is, that he may appropriate a portion of their labour. Our emigrating race may be likened to a caravan crossing the desert, and the land speculator to one of their number who rides a little in advance, taking possession of the springs as they are reached and exacting a price from his comrades for the water which nature furnishes without price.

OF PROSPECTIVE VALUE AS AFFECTING THE
PRESENT VALUE OF LAND
ACCORDING to the doctrine of rent advanced by Ricardo and Malthus, and generally accepted by the best authorities on political economy, the value of land should be determined by the advantages, which it possesses over the least advantageous land in use. This would be true, though subject to the modifications arising from custom and the inertia of population, were it not for the influence which prospective value exercises upon present value. Where speculation in land is permitted—more so, where it is encouraged, as it is with us—the prospective value of land (the incentive to speculation) must exercise a very great influence upon the present value of land, and the value of land be determined, not by its actual advantages over the poorest land in use, but by its advantages, prospective as well as actual, over land which offers just sufficient prospective advantage to make its possession desirable. The prices of land in the United States to-day are not warranted by our present population, but are sustained by speculation founded upon the certainty of the greater population which is coming. Every promise, every hope, is discounted by land speculation. And land being indestructible and costing less to keep than anything else (for the taxes on unimproved land are generally lighter than on anything else), and being limited in amount (so that no increase in price brings about increase in supply), these anticipations form a firm basis for price. Land has no intrinsic value. It is not like a keg of nails, which costs about so much to produce, and the price of which cannot therefore, go much above or fall much below that point. It is worth just what can be had for it. If a man must have land where speculative prices rule, he must pay the price asked, and the price he pays is the gauge by which all the surrounding holders measure the value and assess the price of their lands. One rise encourages another rise, and the course of prices is up and up, so long as there is expectation of future demand. And whenever a temporary panic comes, the land prices recover as quickly as it is natural for hope to reassert itself in the human breast. A great singer buys a lot in a little Illinois town and real estate advances fifty per cent.; a train of cars comes to Oakland, and for miles around land cannot be bought for less than a thousand dollars an acre; a few men in San Francisco say to each other that the city is sure to be the second on the continent, and straightway the hill-tops for long distances are being bought and sold at rates which would be exorbitant if San Francisco really contained a million people, and he who wants a piece of land to use must pay the speculative price. We are thus compelled to pay in the present, prices based on what people will be compelled to pay in the future.

OF SPECULATION IN LAND, AND THE SUPPLY OF CAPITAL,
WE frequently hear it said: "Times are hard because land speculation has locked up so much capital." Now it is evident that no amount of buying and selling in a community can lock up capital, and the direct effect of a rise in land values, is to alter the distribution of wealth, not to affect its amount. But to some extent the same effect is produced as would be by the locking up of capital. When a rise in land values takes place, certain men find themselves much richer, without any addition to the capital of the community having been made. Some of these will employ part of their new wealth in unproductive uses—in building finer houses, buying diamonds for their wives, or travelling in the East, or in Europe. This reduces the supply of productive capital. At the same time the profits of land speculation, and the new security which the rise in values gives, will increase the number of borrowers, and competition between them will have a tendency to keep up rates of interest. But a fall in land prices does not at once increase the available supply of capital, as capitalists are made timid, and there is a tendency to hoard rather than lend.

OF THE NECESSARY VALUE OF LAND.
WHERE the monopolisation of land is not permitted, where a man can only take land which he wants to use, unused land can have no value—at least, none above the price fixed by the State for the privilege of occupying it. But as land becomes occupied, most of it would acquire a value—either from the possession of natural advantages superior to that still unoccupied, or from its more central position as respects population. This we may call the necessary or real value of land, in contradistinction to the unnecessary or fictitious value of land which results from monopolisation. To illustrate: If, on the outskirts of San Francisco, anyone who wished to build a house might take a lot from the unused ground, outside land would be worth nothing, but Montgomery or Kearney street property would still be very valuable, as, being in the heart of the city, it is more convenient for residences or more useful for business purposes. The difference, however, between this necessary value of the land of the United States and the aggregate value at which it is held must be most enormous, and the difference represents the unnecessary tax which land monopolisation levies upon labour.
    
OF PROPERTY IN LAND.
THE right of every human being to himself is the foundation of the right of property. That which a man produces is rightfully his own, to keep, to sell, to give, or to bequeath, and upon this sure title alone can ownership of anything rightfully rest. But man has also another right, declared by the fact of his existence—the right to the use of so much of the free gifts of nature as may be necessary to supply all the wants of that existence, and as he may use without interfering with the equal rights of anyone else, and to this he has a title as against all the world.
     This right is natural; it cannot be alienated. It is the free gift of his Creator to every man that comes into the world—a right as sacred, as indefeasible as his right to life itself.
     Land being the creation of God and the natural habitation of man, the reservoir from which man must draw the means of maintaining his life and satisfying his wants; the material to which it was pre-ordained that his labour should be applied, it follows that every man born into this world has a natural right to as much land as is necessary for his own uses, and that no man has a right to any more. To deny this is to deny the right of man to himself, to assert the atrocious doctrine that the Almighty has created some men to be the slaves of others.
     For, to permit one man to monopolise the land from which the support of others is to be drawn, is to permit him to appropriate their labour, and, in so far as he is permitted to do this, to appropriate them. It is to institute slavery.
     For whether a man owns the bodies of his fellow beings, or owns only the land from which they must obtain a subsistence, makes but little difference to him or to them.
     In the one case it is slavery just as much as the other.
     And of the two forms of slavery, that which pretends to the ownership of flesh and blood seems to me, on the whole, far the more preferable. For in England, where the monopolisation of land has reached a point which gives to the mere labourer a share of the product of his labour just sufficient to maintain his existence, the landowner gets from the labourer all that any master can get from his slave, while he is not affected by the selfish interest which prompts the master to look out for the wellbeing of his slave, and is not influenced by those warmer feelings which any ordinarily well-disposed man feels towards any living thing of which he claims the ownership, be it even a dog. For in free, rich England of the Nineteenth Century—England, whose boast it is that no slave can breathe her air—England, that has spent millions of pounds for the abolition of slavery in far-off lands, and that sends abroad annually hundreds of thousands of pounds for the conversion of the heathen—the condition of the agricultural labourer is to-day harder, more hopeless and more brutalising than that of the average slave under any system of slavery which has prevailed in modern times. And, going even further, I do not believe that the cold-blooded horrors brought to light by the various Parliamentary Commissions which have investigated the condition of the labouring poor of England, can be matched even by the records of ancient slavery, under which system slaves were sometimes fed to fishes, or tortured for sport, or even by the annals of Spanish conquests in the New World. Certain it is that the condition of the slaves upon our Southern plantations was not half so bad as that of the land monopoly slaves of England. Legrees there may have been in plenty, but I have yet to hear of the Legree who worked children to physical and moral death in his fields, or ground them, body and soul, in his mills.
     There is in nature no such thing as a fee simple in land. The Almighty, who created the earth for man and man for the earth, has entailed it upon all the generations of the children of men by a decree written upon the constitution of all things—a decree which no human action can bar and no prescription determine. Let the parchments be ever so many, or possession ever so long, in the Courts of Natural Justice there can be but one title to land recognised—the using of it to satisfy reasonable wants.
     Now, from this, it by no means follows that there should be no such thing as property in land, but merely that there should be no monopolisation—no standing between the man who is willing to work and the field which nature offers for his labour. For while it is true that the land of a country is a free gift of the Creator to all the people of that country, to the enjoyment of which each has an equal natural right, it is also true that the recognition of private ownership in land is necessary to its proper use—is, in fact, a condition of civilisation. When the millennium comes, and the old savage, selfish instincts have died out in men, land may perhaps be held in common; but not till then. In our present state, at least, the "magic of property which turns even sand into gold" must be applied to our lands if we would reap the largest benefits they are capable of yielding-must be retained if we would keep from relapsing into barbarism.
     And a full appreciation of the value of landownership tends to the same practical conclusion as the considerations I have been presenting. If the worker upon land is a better worker and a better man because he owns the land, it should be our effort to make this stimulus felt by all—to make, as far as possible, all land-users also landowners.
     Nor is there any difficulty in combining a full recognition of private property in land with a recognition of the right of all to the benefits conferred by the Creator, as I will hereafter attempt to show.
     We are not called upon to guarantee to all men equal conditions, and could not if we would, any more than we could guarantee to them equal intelligence, equal industry or equal prudence; but we are called upon to give to all men an equal chance. If we do not, our republicanism is a snare and a delusion, our clatter about the rights of man the veriest buncombe in which a people ever indulged.

Continued

Hovedside: Grundskyld - Henry George
Henry George
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Summary of pages in English: Land and taxation
  
April 2009