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 http://www.archive.org/details/cu31924055818870 
 
The Problem ol the Unemployed 
 
 A Work on Political Economy, 
 
 In Which an Attempt is made to show the Un/* 
 
 derlying Cause of InvoluntcU-y Idleness and the 
 
 Failure of Wages to Keep Pace with the 
 
 Increasing Wealth-Producing Power 
 
 of Wage Earners, 
 
 ANONYMOUS. 
 
 
 The AUTHOR'S Edition. 
 
 FOR PRIVATE CIRCULATION ONLY. 
 

 COPYRIGHT, 1905, BY 
 J. J. PASTORIZA. 
 
TO THE WIFE 
 
 WHO, AS COMPANION, COMRADE AND MENTOR, 
 
 FOR MORE THAN TWENTY-FIVE YEARS 
 
 HAS GLADDENED THE HEART 
 
 AND THE HOME OF THE 
 
 AUTHOR, THIS WORK 
 
 IS AFFECTIONATELY DEDICATED. 
 
Table of Contents. 
 
 CHAPTER I. 
 INTRODUCTORY. Page'' 
 
 Questions for the Political Economist to Answer .... 1 
 
 CHAPTER II. 
 DEFINITIONS. 
 Of Wealth, Land, Capital and Labor ; and of Rent, 
 
 Interest and Wages 11 
 
 CHAPTER III. 
 THE NATURE OF INTEREST 29 
 
 CHAPTER IV. 
 THE NATURE OF RENT 39 
 
 CHAPTER V. 
 EFFECT OF IMPROVEMENTS 
 
 In Labor-Saving Machinery and of Progress Gen- 
 erally on Rent, Interest and Wages 47 
 
 CHAPTER VI. 
 THE ALL IMPORTANT QUESTION. 
 Why do not Improvements in Labor-Saving Pro- 
 cesses Naturally Increase Wgges ? 67 
 
 Property of 
 
vi TABLE OF CONTENTS. 
 
 CHAPTER VII 
 
 OBSTACLES TO EMPLOYMENT 
 
 Of Capital and Labor 81 
 
 CHAPTER VIII. 
 
 EFFECT OF A REAL SCARCITY OF LAND 
 
 On Rent, Interest and Wages 105 
 
 CHAPTER IX. 
 EFFECT OF AN ARTIFICIAI SCARCITY OF LAND 
 On Rent, Interest and Wages 117 
 
 CHAPTER X. 
 LABOR'S DEPENDENCE ON CAPITAL ... 127 
 
 CHAPTER XL 
 THE WAGE FUND 143 
 
 CHAPTER XII. 
 
 THE DISTRIBUTION OF WEALTH. 
 
 Causes AflEecting the Division of Wealth between 
 Land Owners on the one hand and Capitalists 
 and Laborers on the other hand. Also the 
 Law of Rent and Its Corollary, the Law of Wages 153 
 
 CHAPTER XIII. 
 
 THE DISTRIBUTION OF WEALTH, CONTINUED 
 
 Causes Affecting the Division of Wealth between 
 Capitalists and Laborers, and between Em- 
 ployers and Employees 177 
 
TABLE OF CONTENTS. vii 
 
 CHAPTER XIV. 
 THE ULTIMATE REMEDY 
 And Why it Should be Considered by the Politi- 
 cal Economist 191 
 
 CHAPTER XV. 
 
 IMMEDIATE NATIONALIZATION OF LAND, 
 
 With Compensation to Land Owners 207 
 
 CHAPTER XVI. 
 
 THE NATIONALIZATION OF LAND, CONTINUED. 
 
 Speculations in Regard to Effects which would 
 flow from it, Including its Effect on Labor 
 Unions, Trusts, and Socialism 221 
 
 CHAPTER XVII. 
 NATURAL TAXATION 241 
 
 APPENDIX. 
 
 Extracts from Herbert Spencer's "Social Statics," 
 Chapter IX, on "The Right to the Use of the 
 Earth" 275 
 
Note. 
 
 This edition of The Problem of the Unemployed 
 contains many errors, typographical and otherwise. 
 The author cordially invites from the reader criticisms 
 and suggestions, so that the edition intended for gen- 
 eral circulation may be an improvement on this one 
 in matters of substance, perhaps, as well as of form. 
 
 the hull, of day following Tf^ff^' and' of planfefg changmg 
 their courses in the sky, were studied by astronomers 
 for centuries before the simple explanation was ad- 
 vanced that the earth is round, turns on its axis, and 
 revolves about the sun; and yet for many years after- 
 wards this theory was disputed in all the great institu- 
 tions of learning in the world. Its very simplicity, to 
 some extent no doubt, as well as the powerful influence 
 of ecclesiastics, Protestant and Catholic alike, retarded 
 its acceptance; but finally, from the teachings of Kep- 
 ler, Copernicus, Galileo and Newton, the present beauti- 
 ful theory of the solar system was was made the basis 
 of an exact science in place of the jargon which had 
 bew solemnly expounded as astronomy since the days 
 
CHAPTER I. 
 INTRODUCTORY. 
 
 QUESTIONS FOR THE POLITICAL ECONOMIST TO 
 ANSWER." 
 
 WHEN the real explanation of any puzzling phenom- 
 enon in nature is discovered, it is invariably found 
 to be simple and easily understood. This does not always 
 insure an immediate admission of the truth, however, 
 on the part of experts and the public generally, no matter 
 how clear and easy of proof the explanation may be. 
 The mind will not act impartially, when biased by pre- 
 viously conceived ideas, or long training in the accepted 
 canons of any art, or when warped by self-interest. 
 The phenomena of the sail of a ship being seen before 
 the hull, of day following night, and of planets changing 
 their courses in the sky, were studied by astronomers 
 for centuries before the simple explanation was ad- 
 vanced that the earth is round, turns on its axis, and 
 revolves about the sun; and yet for many years after- 
 wards this theory was disputed in all the great institu- 
 tions of learning in the world. Its very simplicity, to 
 some extent no doubt, as well as the powerful influence 
 of ecclesiastics, Protestant and Catholic alike, retarded 
 its acceptance; but finally, from the teachings of Kep- 
 ler, Copernicus, Galileo and Newton, the present beauti- 
 ful theory of the solar system was was made the basis 
 of an exact science in place of the jargon which had 
 been solemnly expounded as astronomy since the days 
 
2 THE PROBLEM OF THE UNEMPLOYED. L 
 
 of Ptolemy. And so as to the new system of political 
 economy, history may yet show a striking parallel be- 
 tween its reception and that which first greeted the 
 true theory of sidereal motion. It is possible that an 
 underlying cause, controlling the distribution of wealth 
 and accounting for sociological phenomena which have 
 heretofore baffled philanthropists and statesmen, has 
 at last been discovered, and that from it has been 
 evolved, as claimed by many thoughtful minds, a sys- 
 tem of political economy as simple and yet as compre- 
 hensive as the science which explains the movements 
 of the stars. And, as the thought of Galileo was at 
 first ignored and ridiculed* by experts and others who 
 conceived it imprudent from the view-point of self- 
 interest to do otherwise, so also it is possible that the 
 general diffusion of a knowledge of the system of po- 
 litical economy referred to may in like manner have 
 been retarded. 
 
 Wealth in a civilized community is always produced 
 by a combination of land, capital and labor. Land 
 furnishes the material, capital the machinery, and labor 
 does the work, including the work' of planning and 
 superintending. Wealth, when produced, is divided un- 
 der normal conditions, among the factors entering into 
 its production, a portion of it going to land as rent, 
 another to capital as interest, and the remainder to 
 labor as wages, the latter including compensation for 
 superintendence and also for direction of the use of 
 capital, a service which is often performed by the owner 
 of the capital employed. 
 
 Land and rent, capital and interest, labor and wages 
 are the primary factors to be taken into account in the 
 
 ♦See'letter from Galileo to Kepler, of Aug. 4, 1579. 
 
QUESTIONS TO BE ANSWERED. 3 
 
 study of the science of political economy. Properly de- 
 fined from an economic standpoint, they not only en- 
 compass all that need be considered in ascertaining 
 with reasonable certainty the laws which control the 
 production of wealth and fix the ratio of its distribu- 
 tion among land owners, capitalists and laborers, but 
 also explain and account for the most important of 
 sociological phenomena. If political economy is a sci- 
 ence, it will not only do this and show the bearing of 
 existing laws upon such phenomena, but it will also 
 show the effect of legislative changes which a compre- 
 hensive grasp of the science may suggest. Legislation, 
 however, must be viewed by the political economist 
 from a cold and purely scientific point of view, without 
 reference to the justice or the injustice of it, but solely 
 as to its effect upon the production and distribution 
 of wealth. Questions of ethics, of compensation, of 
 equitable distribution, of the effect of popular prejudice 
 and passions which may arise, should it ever be proposed 
 to apply to practical politics the knowledge obtained 
 from the study of political economy, have nothing to 
 do with the science itself. Such questions are for the 
 moralist and the statesman, not for the student of eco- 
 nomic science. The latter's work should neither be 
 embarrassed nor confused by considerations relating to 
 them. Neither should his judgment be biased by in- 
 terest in any so-called reform or by prejudice in favor 
 of what future generations may perhaps regard as hoary 
 wrongs.* 
 
 *The author while agreeing in the main with the majority 
 of those to whom he refers as political economists of the new 
 school, disclaims any attempt to reflect the views commonly 
 accepted by them. Those of this school who may be disposed 
 to criticize some of his positions are reminded that the objects 
 of this work, as stated on the title page, is 'simply to show, 
 
4 THE PROBLEM OF THE UNEMPLOYED. L 
 
 ■ It is possible that economic science may point with, 
 unerring certainty to the necessity of changes in legis- 
 lation in the interest of an overwhelming majority of 
 the people, modifying to some extent now accepted 
 rights of property and affecting the distribution of 
 wealth; but even so, the timid conservative need not 
 be alarmed on this account, nor should he for this reason 
 shrink from a thorough investigation of one of the 
 most important and interesting subjects of human 
 thought. As has ever been the case in the progress 
 of the race toward improved social conditions, such 
 changes as may be found desirable will come slowly, 
 periods of reaction following those of action, and the 
 losses, if any, accompanying unavoidable readjustments 
 of economic conditions will necessarily be largely diffused 
 among all. 
 
 It is generally claimed, whether true or not, that 
 wages do not keep pace with the wealth producing 
 power of the laborer. And not only so, but that the 
 disproportion between the total amount of wealth pro- 
 duced and the portion of it going to labor as wages is 
 becoming more and more marked, as, with accelerated 
 ratio, labor-saving inventions increase and multiply. 
 Wages of individual members of the highly skilled class 
 of laborers have risen and are undoubtedly higher than 
 ever before. The prizes offered for exceptional ability 
 on the part of such laborers are of dazzling magnificence, 
 and the law of the survival of the fittest gives to the 
 child of the poor, when highly endowed by nature, an 
 equal chance with the child of the rich to win in the field 
 
 from the cold stand point of science, the underlying cause 
 of involuntary idleness and the failure of wages to keep pace 
 with the increasing wealth-producing power of the wage earner; 
 also that remedies are discussed in this work for the purpose 
 only of proving the correctness of conclusions announced, 
 
QUESTIONS TO BE ANSWERED. 5 
 
 of mighty enterprise. The lives of the captains of in- 
 dustry and the self-made men of America tend to prove 
 that this is true. Still, as is always the case with prizes, 
 while all may have equal opportunity to strive for them, 
 success can only crown the efforts of the few. As to the 
 overwhelming majority, labor-saving processes have not 
 as yet relieved them from the necessity of working al- 
 most as hard as ever before for a bare living, nor does 
 the struggle for existence appear to be less intense or 
 the fear of the loss of employment less disquieting, than 
 when wheat was cut with a sickle and the whir of the 
 bobbin was heard at every door. 
 
 Is the failure of wages to advance more rapidly and 
 the inability of the laborers sometimes to find em- 
 ployment justly attributable to the faults of laborers 
 themselves.? The teeming millions, under any condi- 
 tion of society, must perform the manual and clerical 
 work of the world, and if every one working for stated 
 wages were to become a Washington in honesty and 
 a Franklin in ability and thrift, is it clear that the 
 demand for labor would increase thereby? The effi- 
 ciency of the laborer and the amount of wealth produced 
 would be increased; but this is what labor-saving ap- 
 pliances have already accomplished and what they bid 
 fair to accomplish in far greater degree. In many lines 
 of employment the most idle and trifling of laborers, 
 with the aid of such appliances, produce wealth in far 
 greater quantities than was possible on the part of the 
 most conscientious and intelligent fifty years ago. Why 
 then should increased efficiency of labor, brought about 
 by improvement in the character and ability of all la- 
 borers, increase the demand for labor and the wages of 
 laborers more than increased efficiency of labor produced 
 by improvements in labor-saving appliances? 
 
6 THE PROBLEM OF THE UNEMPLOYED. I. 
 
 Is it true, as popvdation increases, that the wages 
 of the poorest paid class of labor naturally tend to fall 
 to the point at which the laborer can barely subsist, 
 and that the wages of all other classes tend to fall in 
 like proportion? If this is the case, what reason shall 
 be given in explanation of it? It would be natural to 
 suppose that the more wealth working men as a class 
 produced, either with the aid of labor-saving machinery, 
 or by working more hours in a day, or by greater faith- 
 fulness to employers, the higher wages would be for all. 
 Such, however, does not seem to be the case. The im- 
 pression that a labor-saving device, by dispensing with 
 the work of laborers, to that extent reduces the demand 
 for labor and the wages of the laborer, still lurks in 
 the mind of the working man; and improvements in 
 machinery which increase his capacity to produce wealth 
 are dreaded and feared, instead of welcomed as the 
 means by which his burdens can be lightened and his 
 hours of leisure increased. The late Thorold Rogers, 
 formerly Professor of Political Economy at Oxford Uni- 
 versity and Member of Parliament, in his "Six Centu- 
 ries of Work and Wages," states that the darkest period 
 in the history of the English workingman was in the 
 latter part of the 18th and the beginning of the 19th 
 century, since which time his condition "has experienced 
 a slow and partial improvement," but that "relatively 
 speaking, the working man of to-day is not so well off 
 as he was in the 15th century." 
 
 If it is true that labor-saving processes do not increase 
 wages in the same proportion in which they increase 
 the laborer's ability to produce wealth, where does the 
 increasing difference between the wealth which he pro- 
 duces and that which he receives as wages go? Who 
 gets it, and what becomes of it, and what is the law 
 
QUESTIONS TO BE ANSWERED. 7 
 
 which controls its distribution? 
 
 Mr. Carrol D. Wright, formerly United States Labor 
 Commissioner, who is usually able to prove by figures 
 that social conditions, no matter how bad, are better 
 now in all respects than ever before, states, in "Practi- 
 tical Sociology," that the census of 1900 shows that 5% 
 of the workers of the United States (about 1,250,000) 
 are involuntarily idle all the time. Why is it that in 
 the midst of unlimited opportunities for work which 
 unused lots and lands afford, such immense numbers 
 of men, willing to work and begging for work, should 
 be unable to obtain it? 
 
 In 1880, tenants operated 25% of the farms in the 
 United States; in 1890, 28%; in 1900, 35%.* Is it 
 necessary that others should own the land on which the 
 real farmer toils, or that the number of land owning 
 working farmers in America should steadily decrease 
 as wealth increases? 
 
 The census shows that the average amount of wealth 
 in the United States in 1850 was $308 for every man, 
 woman and child, while in 1900, it was $1,243 — a four 
 fold increase. If capital and labor can thus produce 
 wealth in such immensely increasing quantities, why is 
 it that in a free and enlightened country the average 
 wages of the great majority of wealth producers are 
 still little more than barely sufficient for the support of 
 life, while in many instances men, in a single lifetime, 
 accumulate millions, tens of millions, and even hundreds 
 of milions of dollars? Mr. Frank A. Fetter, Professor 
 of Political Economy at Cornell University, in "Prin- 
 ciples of Economics," states that 1% of all the families 
 in the United States own more wealth than the remain- 
 
 *U. S. Census Reports, 1900. 
 
8 THE PROBLEM OF THE UNEMPLOYED. L 
 
 ing 99%. Shall this apparently increasing inequality 
 in the distribution of the wealth in this country be wholly 
 attributed to the superior virtues of men of the class of 
 Rockefeller, Morgan and Carnegie, or to the maladmin- 
 istration of the forces of government? And if to the 
 latter, in part at least, in what respects are the powers 
 of government misapplied? 
 
 In England to-day, where wages are higher than in 
 most of the countries of Europe, and where labor-saving 
 appliances are utilized to the fullest extent, it is claimed 
 that one- fifth of the population is "condemned to a 
 poverty which destroys them physically and spiritually, 
 * * * they do not have enough to eat, are inadequately 
 clothed, sheltered and warmed in a rigorous climate, 
 and are doomed to a moral degeneracy which puts them 
 lower than the savages in cleanliness and decency. ' ' Com- 
 menting on this statement from the "People of the 
 Abyss," by Jack London, and referring to the fact that 
 Mr. London's conclusions are supported by those of 
 Mr. Charles Booth, Mr. B. S. Rountr6e and others who 
 have investigated the matter. The Public, published in 
 Chicago, says: 
 
 " College settlements, missions, charities and what 
 " not can make no perceptible impression on the 
 rising tide of poverty accompanying increase of 
 " population and produced by an artificial scarcity 
 of land. 'In the nature of things,' says Mr. Lon- 
 don, ' they cannot be but failures. They are wrong- 
 ly though sincerely conceived. They approach 
 life through a misunderstanding of life, these good 
 folks. * * * The very mon^y they dribble 
 " out in their child's schemes has been rung from 
 " the poor.' Shall thrift be preached? 'It is sheer 
 nonsense,' he replies, 'to preach thrift to the one 
 " million eight hundred thousand London workers 
 who are divided into families which have a total 
 
QUESTIONS TO BE ANSWERED. 
 
 " income of less than $5.25 per week, one quarter 
 " to one half of which must be paid for rent.' " 
 
 We seem to be approaching similar conditions in the 
 United States. Thus, a correspondent of The Outlook 
 for August, 1904, after describing the dreadful homes in 
 which the striking packing-house employees of Chicago 
 were living, says: 
 
 " ■_ I have never had a child come to me for treat- 
 ment,' said a local doctor, 'who has not had en- 
 larged glands of the neck. These glands are meant 
 to absorb poisonous matter. These little children 
 live in homes so foul and overcrowded, they take 
 in so much poison that their glands are over- 
 worked. They suffer, too, from under-feeding, 
 and hence anaemia. In the blood of a healthy 
 person, the "count" should be between 85 and 95. 
 Among my patients, I rejoice at finding the count 
 of 50. I have found it as low as 28.' 
 " In such homes, it is hard for family life to keep 
 wholesome and pure. 'Any man who has a fam- 
 ily of little children here,' said a Polish doctor, 
 'simply cannot keep it alive on the un-American 
 wage of six or seven dollars a week, especially 
 since the cost of living is rising so high. To keep 
 the home alive on such a wage, the mother, too, 
 must work in the yards, and sometimes she not 
 only works by day, but comes home at night to 
 cook for the six boarders who are crowded with 
 the family into the small four or five room flat. 
 With no money for wholesome recreation, and 
 with the home so over-crowded with boarders, 
 it is natural enough that drinking is so heavy, and 
 that in many cases immigrant wives and daughters 
 grow inured to sexual immorality — or rather un- 
 morality.' The moral is — don't have families." 
 
 Why is it that in every great center of wealth and civ- 
 ilization a submerged class is found, whose condition, 
 as stated by Huxley, is more deplorable than that of 
 
10 THE PROBLEM OF THE UNEMPLOYED. I. 
 
 the man-eating South Sea Island savages? 
 
 What are the causes of the constantly recurring periods 
 of financial depression known as panics, when people 
 talk of over production, and when warehouses are filled 
 with merchandise which cannot be sold, while vast num- 
 bers of human beings, who would work if they could 
 get work, stand idly by and suffer from want in the midst 
 of plenty? 
 
 Is it correct to believe that man's social as well as 
 physical relations are regulated by natural law, and that 
 a violation of the laws which control the former must 
 be as disastrous to his well-being as a violation of those 
 which control the latter? If this is so, does obedience 
 to the natural law tend toward individualism or toward 
 socialism? Does it tend toward freedom or toward des- 
 potism? When strikes, lockouts and boycotts, and the 
 hatreds and the passions engendered by the present 
 wasteful system of industrial warfare shall have passed 
 away, what then? 
 
 Political economy is a dull and profitless study unless 
 it answers, or at least attempts to answer, questions of 
 this character. 
 
CHAPTER II. 
 
 DEFINITIONS OF WEALTH, LAND, CAPITAL 
 
 AND LABOR; AND RENT, INTEREST 
 
 AND WAGES. 
 
 DEFINITIONS of the terms used in the study of any 
 science are of the greatest importance; and, as is 
 often the case, the scientific definition is sometimes more 
 and sometimes less comprehensive than the popular 
 one. This is especially the case in political economy, 
 since the terms of this science are necessarily those 
 loosely used in ordinary conversation. It is all import- 
 ant, however, that the definitions given should fit, for 
 unless the term employed in any instance means the 
 same in all instances of like character, clearness either 
 of thought or statement is impossible, and definitions 
 which do not stand this test must be rejected. It is, 
 therefore, first in order to define wealth and the factors 
 already mentioned as primary factors which control its 
 production and distribution. The distinction between 
 the definitions thus given and the customary meaning 
 of the words defined must always be borne in mind. 
 
 WEALTH is any material thing produced by human 
 toil which gratifies a human desire, and nothing can 
 be regarded as wealth in an economic sense which does 
 not come within the scope of this definition. Wealth 
 includes food, clothing, buildings, machinery, ships, and 
 all improvements produced by labor. It is always some- 
 
 11 
 
IS THE PROBLEM OF THE UNEMPLOYED. IL 
 
 thing of sea or land which has been molded, or fashioned, 
 or transported, by the application of human skill and 
 industry. It does not owe its existence to legal enact- 
 ments, though its price, or exchangeable value, may be 
 enhanced, impaired or destroyed by legislation, yet the 
 substance itself constituting wealth can never be blotted 
 out of existence by the mere fiat of the law. A book is 
 wealth, as defined above, but not so as to the copyright, 
 the existence of which depends upon legislation, and 
 which can be made valueless by a mere legislative act. 
 The copyright is a special privilege conferred by law, 
 and while the repeal of this privilege, which means the 
 repeal of the right to dictate the terms of publication 
 and sale, might make the owner of the copyright less 
 wealthy, according to the popular meaning of the word, 
 the amount of wealth in the world would not be affected 
 thereby. This is also true with respect to patent rights 
 and all other special privileges founded on governmental 
 law. 
 
 The mere fact that a thing may be bought and sold, 
 and that its owner may obtain wealth in exchange for 
 it, does not bring it within the definition of wealth. 
 Shares of stock in companies and corporations do not 
 constitute wealth as here defined. A certificate of stock 
 simply shows that the holder is the owner of a definite 
 undivided interest in the tangible property of the cor- 
 poration to which it relates, and in the special privileges 
 which the corporation may enjoy. So, also, bonds and 
 promissory notes, whether secured by mortgages or not, 
 do not come within the definition of wealth. They are 
 but promises to repay wealth previously borrowed. In 
 respect to them as well as to stock in companies and cor- 
 porations, the seat of the tangible wealth to which they 
 refer may be thousands of miles distant and subject to 
 
DEFINITIONS. 13 
 
 the jurisdiction of a government foreign to that under 
 which the owner lives. If these evidences of ownership 
 and promises to pay were destroyed, or rendered value- 
 less by the repeal of special privileges, or by other legis- 
 lation, the amount of real wealth in the world would 
 not be thereby lessened one iota. The things to which 
 they refer would still remain unchanged. 
 
 Money in itself, either on hand or in bank subject to 
 the owner's order, is not wealth, although coin considered 
 as bullion is wealth, its value as such depending upon 
 its weight and fineness. Money simply represents com- 
 modities, that is to say, wealth, previously exchanged 
 for it, and for which it can at any time be re-exchanged, 
 or exchanged for other commodities at the owner's op- 
 tion. Sound money is like a warehouse receipt. It evi- 
 dences the fact that the owner of the money has in effect 
 deposited in the great warehouse of the world, com- 
 modities of a certain value, for which he has been given 
 a receipt; that on presentation of this receipt in the 
 world's clearing house, he will be entitled to have re- 
 stored to his possession the articles originally given in 
 exchange for it (subject to fluctuations in prices) or an 
 equivalent in other commodities. 
 
 It is possible to conceive of trade and an exchange 
 of commodities being carried on without money or any 
 circulating medium, just as a game of poker or any other 
 betting game can be played without money, or emblems 
 such as "chips," representing the amount of the stakes. 
 This could be done by means of a possible, though ex- 
 tremely complicated and expensive, system of book- 
 keeping conducted by a bureau of the government^ 
 in which would be noted A's sales to B and B's to C 
 and C's to D and D's to A, thus closing the circuit and 
 cancelling the accounts between all parties as effect- 
 
14 THE PROBLEM OF THE UNEMPLOYED. 11. 
 
 ually as a fifty dollar bill passing from one to the other 
 might do it. But, as in the game of chance, it is much 
 more convenient and expeditious to use emblems rep- 
 resenting the amounts bet than to note them down in 
 writing, so in carrying on the trade of the world, it is 
 much easier and more economical to use tokens, i. e., 
 money, than to resort to bookkeeping. Money in fact 
 is but a labor-saving appliance which dispenses with 
 the vast amount of work which would be involved in 
 the barter or direct exchange of commodities, or in any 
 system of bookkeeping which might be substituted for 
 it; and while money in this sense is doubtless suscept- 
 ible of improvement in matters pertaining to its issuance 
 and volume, and affecting its utility as the measure of 
 values — -improvement which would save waste and in- 
 crease production — yet all this would only amount to a 
 saving of labor, and in the end would have no more 
 effect upon the production and distribution of wealth 
 than any other improvement in a labor-saving device. 
 To have a clear conception of the laws which regulate 
 the production and distribution of wealth, one must 
 be able habitually to associate sound money with 
 tangible things and commodities. When we say that 
 a man has ten thousand dollars in money, we must in- 
 stantly see and realize that what he in effect really owns 
 and has in his possession consists of two thousand bar- 
 rels of flour of the value of five dollars a barrel, or five 
 thousand pairs of shoes of the value of two dollars a pair' 
 or ten thousand yards of cloth of the value of one dollar 
 a yard, or ten thousand dollars worth of any of the 
 things to be found in the markets of the world. The 
 man who is the owner of the money has himself in effect 
 already deposited these identical things or the equivalent 
 of them in the warehouse of the world's market, just as 
 
DEFINITIONS. 15 
 
 he may have deposited his currency or gold in a savings 
 bank; and, as on presentation of his pass book to the 
 bank he can draw out his money in lots to suit, so on 
 presentation of his money in the markets of the world, 
 he can draw out the identical commodities previously 
 deposited by him, or others of equal value, in lots to suit. 
 
 We say, for instance, that Farmer A has ten thousand 
 dollars cash in hand which he saved in ten years. This 
 means that his receipts during this period exceeded his 
 expenditures by ten thousand dollars ; or, in other words, 
 that the value of his deposits of wealth in the markets of 
 the world in the form of wheat, cattle, vegetables, etc., 
 exceeded his withdrawals of wealth from the same mark- 
 ets in the form of clothing, groceries, furniture, imple- 
 ments, etc., by ten thousand dollars. At the end of the 
 ten years, he had in effect remaining to his credit in the 
 great warehouse referred to, a portion of the cattle and 
 things which he had previously deposited there, and 
 this remainder was of the value of ten thousand dollars, 
 for which he received from the world's clearing house 
 ten thousand dollars in money. The money simply 
 certified that he was entitled on its presentation to with- 
 draw, in lots to suit, these identical commodities left by 
 him in this storehouse and resume possession of them ; 
 or, if he so preferred, receive the equivalent of them in 
 other commodities. While the wealth which the day 
 laborer or the mechanic or merchant may save and ac- 
 cumulate cannot be so readily traced and illustrated as 
 that saved by the farmer, the process, as will readily 
 appear on reflection, is precisely the same. When we 
 save money we are saving the things for which money 
 can be exchanged. 
 
 Improvements on land come within a correct defini- 
 tion of wealth, including such improvements as result 
 
16 THE PROBLEM OF THE UNEMPLOYED. II. 
 
 from the artificial fertilization of the soil, or the break- 
 ing of J;he prairie sod, or the clearing away of the primeval 
 forest. Wealth does not include coal beds and mineral 
 deposits, but it does include improvements used in con- 
 nection with them to the extent to which the shaft, the 
 tunnel and the appliances for reaching and bringing 
 to the surface the coal or the ore, represent the appli- 
 cation of human toil and skill. Wealth also includes 
 domestic animals, since human labor and skill to a 
 greater or less extent are employed in raising and making 
 them useful to mankind. 
 
 Wealth in the sense here used may be produced with- 
 out making any physical change in the object itself to 
 which it relates. This is effected by a change in the po- 
 sition of such object or in its relationship to other ob- 
 jects. One hundred bushels of wheat in the hands of a 
 farmer in the west is worth, say, eighty dollars. By 
 means of facilities furnished by capital and the efforts 
 of labor as applied by teamsters, railroad employes, 
 merchants, brokers and others, these hundred bushels 
 of wheat are transported and placed in an elevator in 
 New York with 100,000 bushels of other wheat, thus 
 reducing the cost of handling it and putting it in closer 
 proximity to consumers. This wheat is now worth a 
 hundred dollars; for, by thus changing its position, 
 wealth of the value of twenty dollars has been produced 
 and added to it just as effectually as is the case when, 
 by the application of capital and labor to the polishing 
 of a piece of furniture, twenty dollars may be added to 
 its value, or in other words, twenty dollars more of wealth 
 attached to it. Additional values added to any product 
 in this way by changing its position or relationship to 
 other things has the same effect on the production and 
 distribution of wealth as when capital and labor are ap- 
 
DEFINITIONS. 17 
 
 plied to the making or producing of the thing itself. It 
 is found more convenient and accurate, however, to refer 
 to the change thus obtained as additional wealth pro- 
 duced and added to the article in question than as addi- 
 tional values added to it. 
 
 Wealth, under some circumstances, may also be pro- 
 duced by the so-called speculator who buys surplus prod- 
 ucts when cheap and holds them for a future rise in prices, 
 provided the "cornering" of the market is not attempted. 
 Thus, the buying of the farmer's wheat or cotton as 
 soon as it is raised, and holding it with the expectation 
 of its advancing in price before the next crop matures, 
 tends to equalize prices and to prevent the sale of pro- 
 ducts at abnormally low prices when first marketed and 
 and the waste thereby resulting. 
 
 In general, neither land nor any material thing as it 
 lies untouched in the great storehouse of nature is wealth, 
 but it becomes wealth after it has been operated upon 
 and placed, by the hand of man, in a position or condi- 
 tion in which it can minister to his wants and wishes. 
 This, then, is a correct and comprehensive definition of 
 wealth, one easily understood and applied, and which 
 means the same thing under all circumstances, viz: 
 Wealth is any tangible thing which gratifies human de- 
 sires, the raw material of which comes from the earth, 
 and which owes its changed condition to human effort. 
 In an economic sense, nothing else is wealth. It is to 
 those things which come within this definition of wealth 
 that the science of political economy applies. 
 
 LAND includes all material things which do not con- 
 sist of wealth as defined above. Land is the material 
 on which and out of which wealth is produced. It in- 
 cludes all the raw material in the great storehouse of 
 2 . 
 
18 THE PROBLEM OF THE UNEMPLOYED. IL 
 
 nature, which has been furnished for the use of mankind. 
 Embracing as it does the surface of the earth, it cannot 
 be increased or decreased to the extent of a single square 
 yard. Portions of the earth's surface covered by water, 
 for instance, may be drained or filled in, and wet land 
 changed into dry land, but improvements of this char- 
 acter generally constitute wealth and must be considered 
 separate and apart from the site or the surface of the 
 earth which they occupy. Land includes the sites on 
 which the railroad tracks and terminals are constructed, 
 on which farms are located, and dwelling-houses and 
 factories are built. It includes the coal beds and the 
 mineral deposits and the undomesticated animals of land 
 and sea, and in fact all the products of the earth as they 
 lie unused and untouched by the hand of man. 
 
 Wealth is not only produced on land devoted to agri- 
 culture, but it is also actually produced in far greater 
 quantities on land devoted to commerce, mining, manu- 
 facturing and to other business purposes. As already 
 shown in defining wealth, it is as accurate to say that 
 the wealth of the world is increased by the work of 
 merchants and brokers as that it is increased by the work 
 of farmers and mechanics. The city lot on which the 
 work of exchanging commodities is carried on, is as 
 much devoted to the production of wealth as the land 
 on which the commodities themselves are raised or man- 
 ufactured. Every one of the acts in the ordinary course 
 of business by which wheat, for instance, is transported 
 to the mill, ground into flour, baked into bread, and 
 placed in the hands of the consumer, adds a certain 
 amount of wealth to it, the aggregate of which usually 
 exceeds by many fold the value of the original product. 
 One of the most important acts by means of which a 
 few bushels of wheat in the hands of a farmer in Iowa 
 
DEFINITIONS. 19 
 
 are finally exchanged for a pair of shoes in the hands of a 
 shoemaker in Massachusetts, may be performed by a 
 broker in an office on Wall Street. Wealth thus pro- 
 duced and added to the wheat by this broker operating 
 on land in Wall Street does not differ in effect from the 
 wealth which the farmer produced in raising the wheat 
 on land in Iowa. Owing to the favorable location of 
 Wall Street land for the purpose, great numbers of such 
 exchanges are effected upon it annually, involving enor- 
 mous amounts of products and adding to them in the 
 aggregate enormous sums of wealth. The wealth thus 
 actually produced on a single city lot may exceed the 
 wealth produced on a thousand farms in Iowa. Men 
 will pay more for the privilege of producing wealth on 
 such a lot thaji a thousand farms in Iowa will sell for, 
 since a lot of this kind often sells without reference to 
 improvements for more than the price of a thousand 
 farms. Thus, land on Wall Street, exclusive of im- 
 provements on it, has sold at the rate of millions of dol- 
 lars per acre, one acre often being worth more than a 
 thousand farms. Hence, the importance of the factor 
 of land in fixing the ratio of the distribution of the pro- 
 ducts of labor does not depend upon area but upon 
 value; nor does it lie so much in land devoted to agri- 
 culture as in land devoted to business, manufacturing, 
 mining, and speculative purposes, including railroad 
 rights of way and terminals, the aggregate value of all 
 of which in the United States is now many times greater 
 than that of all lands in actual cultivation, exclusive of 
 improvements on them. In Greater New York, for in- 
 stance, the tax assessment of 1904 shows that the value 
 of the land alone, exclusive of all improvements upon it, 
 is nearly four billion dollars. It is estimated that the 
 land values of this city equal th? land values of all the 
 
20 THE PROBLEM OF THE UNEMPLOYED. IL 
 
 land in actual cultivation west of the Mississippi river. 
 In this connection it is interesting to note the fact that 
 the buildings and improvements on land in New York 
 City are assessed at less than two billion dollars, or but 
 little over half as much as the land alone. 
 
 CAPITAL is wealth used to produce more wealth. 
 While all capital is wealth, all wealth is not capital. It 
 , is not difficult to draw the line of demarcation between 
 capital and wealth, since it is sufficient to say that 
 wealth which is not employed in the production of 
 wealth is not capital, while all wealth thus employed is 
 capital. An axe in the hand of a laborer is capital, as 
 much so as a dredging machine costing a hundred thous- 
 and dollars. 
 
 Capital includes all material instrumentalities, however 
 simple or complex, coming within the definition of 
 wealth, which are used in the production of wealth. Cap- 
 ital is something, the use of which saves labor, something 
 which makes labor more effective in the production of 
 wealth. It is in reality stored up labor. In the case of 
 the manufacturer, his machinery and the buildings in 
 which it is operated, are capital; the same is true in 
 regard to the raw material and manufactured products 
 which he finds it convenient or expedient to carry; so 
 also as to the money which he may have on hand, accord- 
 ing to the definition of money as already given. In the 
 case of the farmer, capital includes his farm buildings, 
 agricultural implements and livestock, and provender 
 and food carried from one harvest to another. In the 
 case of the merchant, it includes his stock of merchandise 
 and the building or the portion of it in which his business 
 is carried on. 
 
 Capital is always wealth in the form of some labor- 
 saving appliance, or wealth so used as to save labor. 
 
DEFINITIONS. 21 
 
 The capital, for instance, constituting the merchant's 
 stock of goods, is used as effectually in the saving of 
 labor as capital in the form of any labor-saving machine" 
 The accumulation at a place convenient of access to 
 consumers of the goods constituting his stock in trade 
 saves the enormous waste of labor which would otherwise 
 be involved were the producers themselves compelled 
 to journey around, seeking purchasers for their surplus 
 products. Wealth invested in a building to an extent 
 sufficient to house a laborer comfortably according to 
 the standard in the class of which he is a member, is 
 capital, since the workman cannot work and produce 
 wealth without the protection from the elements which 
 the building affords; hence such a building is wealth 
 used to produce more wealth. Capital is the fund from 
 which wages are drawn,* and since, as will be shown 
 later, capital is in effect stored up labor, it is proper and 
 convenient to refer to the capital in a community or 
 nation as the wage fund of such community or nation. 
 But capital can never include land, and no consistent or 
 logical system of political economy can be formulated 
 in which land, under any circumstances, is regarded 
 either as capital or wealth. 
 
 LABOR is work performed by the aid of capital upon 
 raw material furnished by land, by means of which 
 wealth is produced. Those who do this work are divided 
 into two classes, viz: employers and employees, the em- 
 ployee, however, being often his own employer. Labor 
 is human effort, either mental or physical, applied to 
 material things for the purpose of producing wealth. 
 
 ♦Capital being the product of labor, and in effect stored up 
 labor, it may not be strictly accurate to say that it is the fund 
 from which wages are drawn. This objection, however, seems 
 technical, since employees as a class cannot wait for the pay- 
 ment of wages until products are finjgh^d ^n^ placed on tn? 
 
22 THE PROBLEM OP THE UNEMPLOYED. 11. 
 
 When such effort is applied simply for the purpose of 
 acquiring wealth produced by others, it is not labor 
 within the economic meaning of the word, nor does 
 wealth thus acquired come within the definition of wages. 
 Labor includes work performed upon material which 
 may have already become wealth, by means of which 
 its value is increased or, in other words, wealth added to 
 it. Labor includes the work of the brain in organizing, 
 inventing, planning, managing, directing and superin- 
 tending, as well as that of the muscle in lifting and tug- 
 ging. It includes the work of the employer as well as 
 the work of the employee, and one is as much a laborer 
 as the other. 
 
 Since any kind of a tool is capital, it is perfectly ac- 
 curate to limit labor in the economic sense of the word 
 to work performed by the aid of capital in the production 
 of more wealth. While it is also proper to limit labor to 
 work which produces or increases wealth, such limitation 
 does not exclude the work of the merchant or broker 
 or any other middle man. It is obvious that work per- 
 formed, for instance, in manufacturing wheat into flour, 
 increases the amount of wealth in the world, and is labor ; 
 and on reflection, it must appear equally clear that the 
 work performed by the merchant or broker in selling the 
 wheat or the flour adds to its value and in effect adds 
 wealth to it. Labor also includes the work which is 
 often performed by the owner of capital in managing 
 the business in which his capital is invested and in plan- 
 ning the application of capital, by means of which he 
 is enabled to enjoy a larger income than would be the 
 
 market and sold. Few enterprises could be carried on under 
 modern methods but for the jjrevious accumulation of capital 
 from which the employee receives his wages as the work pro- 
 gresses, although he in effect produces in advance day by day 
 the wealth afterwards given him in exchange for his labor. 
 
iDfeFlNITIONS. 23 
 
 case if, like another capitalist, he simply loaned capital 
 out at interest to some one else who would perform the 
 labor involved in the management of it. The exercise 
 of judgment and discretion on the part of a capitalist 
 in buying stock, even, in a wealth-producing company or 
 corporation, may often come within the economic def- 
 inition of labor, for the performance of which wages 
 are paid. 
 
 The labor of employers, in the management and di- 
 rection of capital which they own or control, is as much 
 devoted to the production of wealth as that of mechanics 
 and self -employing farmers. It is simply extra skilled 
 labor. Wages received for service of this kind are often 
 much higher than those received by laborers working 
 for stated sums. Such wages, however, are contingent 
 on the success of enterprises. If losses and failures 
 could be estimated it is probable that the average wages 
 of employers would not be found to be excessive, as 
 compared with those of employees. 
 
 Work performed by the lawyer, the clergyman or the 
 author, while valuable to society, is not work done with 
 the aid of capital which directly affects any particular 
 tangible thing which may be defined either as land or 
 wealth, and hence is not strictly labor in an economic 
 sense. This is also usually true in regard to the work 
 of servants who simply minister to the comfort and ease 
 of their employers. It is neither necessary nor inter- 
 esting, however, to extend the definition of labor so as 
 to include work of this character, since it is not directly 
 instrumental in the production of tangible things coming 
 within the definition of wealth. Neither is work per- 
 formed for the purpose of acquiring wealth by theft, 
 or by combinations in restraint of trade, or by means of 
 
24 THE PROBLEM OF THE UNEMPLOYED. II. 
 
 special privileges, or in any other manner of like char- 
 acter, labor in the economic sense of the word. 
 
 RENT is what is paid for the use of land, without 
 regard to improvements on it or anything done to make 
 it available for use. It is what capital and labor pay 
 for the privilege of producing wealth from the raw mater- 
 ial of nature, which is land as previously defined. It 
 is what is paid for access merely to the storehouse of 
 nature. Since neither capital nor labor can be employed 
 for a single instant without the use of land, rent may 
 properly be considered the price paid for the opportunity 
 of employment. A royalty of so much per ton for the 
 privilege of sinking a shaft and producing wealth in the 
 form of coal available for use, is rent as here defined. 
 Ground rent, as known in England and subject to which 
 most of the buildings in the cities of that country have 
 been constructed, comes within the definition of rent. 
 There is a wide difference between the economic and 
 the popular meaning of the word rent, since the latter 
 includes what is paid for the use of buildings and im- 
 provements as well as what is paid for the use of the 
 land on which they are located. The additional income 
 which an owner obtains on account of improvements 
 on the land is not rent but interest received for the 
 use of the capital which such improvements represent. 
 
 Rent may be paid annually, or it may be paid in ad- 
 vance in the form of purchase money expended for land. 
 In either event, it is what is paid for the privilege of 
 access to land, and the result as to the production and 
 distribution of wealth is the same. This is also true, 
 even though the land owner and the capitalist and the 
 laborer be united, as often happens, in the same person. 
 In the case of improved real estate, the income which 
 the owner gets from it, over and above interest on the 
 
DEFINITIONS. 25 
 
 value of the improvements and an allowance for renew- 
 als, insurance and repairs, is rent. Thus, suppose the 
 improvements consists of a building worth ten thousand 
 dollars and that interest on an investment of ten thous- 
 and dollars at the rate per cent prevailing in the locality 
 where the property is situated, together with the cost 
 of keeping the building insured and renewed, amounts 
 to a thousand dollars annually, and that the entire prop- 
 erty, including the land, rents for two thousand dollars 
 a year. There is thus a difference, approximately, of 
 a thousand dollars between a sum equal to interest on 
 the ten thousand dollar improvement plus cost of insur- 
 ance, repairs and renewals, and the total income re- 
 ceived from the property. This difference is what the 
 owner gets for the use of the land alone, and it consti- 
 tutes the rent of the land according to the meaning of 
 the word as used in political economy. In this instance, 
 a thousand dollars is annually paid for access to the 
 land. With increase of population, the income from 
 this property may reach four thousand dollars a year, 
 without the expenditure upon it of any additional cap- 
 ital, and if so the price paid for the use of this land 
 would rise from a thousand to three thousand dollars 
 a year. 
 
 The following illustration shows what rent signifies 
 when the land owner, the capitalist and the laborer 
 are combined in the same person. Suppose potatoes 
 are grown by two working farmers without assistance 
 from other laborers, one of whom. Farmer Brown, owns 
 the land nearer the city and the other. Farmer Jones, 
 owns the land farther away. Farmer Brown raises and 
 delivers 1,500 bushels, for which he receives $750. 
 Farmer Jones works just as hard, but being compelled 
 to spend much of his time in hauling his potatoes nine 
 
26 THE PROBLEM OF THE UNEMPLOYED. 11. 
 
 miles farther to market, he only raises and delivers a 
 thousand bushels, for which he receives but $500. Not- 
 withstanding the difference in the incomes of these two 
 farmers, one receives no higher wages in an economic 
 sense than the other. Each, with respect to the potato 
 raising enterprise in which he is engnged, is a capitalist, 
 a landlord and a laborer. Both have probably about 
 the same amount of capital represented by buildings, 
 tools and teams, but Farmer Brown's interest as a land- 
 lord is much greater than Farmer Jones', his land being 
 worth, perhaps, many times as much as that of Farmer 
 Jones. The difference in the incomes is not a differ- 
 ence in wages, but results solely from the fact that 
 Farmer Brown received in effect $250 more rent per 
 annum from his land than Farmer Jones received from 
 his. 
 
 INTEREST is what is paid for the use of wealth. 
 WAGES is what is paid for service rendered by labor in 
 producing or attempting to produce wealth. Interest 
 is the share of the product going to capital; wages is 
 the share going to labor. In an economic sense, wages 
 includes profits, since the word profit in popular par- 
 lance often means interest on a comparatively small 
 capital plus the wages of an employer or highly skilled 
 laborer. Thus, a man of more than ordinary ability, 
 by the use of, say, ten thousand dollars of capital in 
 some wealth-producing enterprise, may secure an income 
 of ten thousand dollars a year; but the principal factor 
 which brings about such a result is not his capital of 
 ten thousand dollars, but his mental effort, or in other 
 words, highly skilled labor, as heretofore referred to. 
 Wages, in an economic sense, is what he receives over and 
 above interest at the prevailing rate on the ten thousand 
 dollars of capital. Say five hundred dollars a year be 
 
DEFINITIONS. 27 
 
 deducted for interest, then there would be left nine 
 thousand five hundred dollars for wages, it being as- 
 sumed that no part of the income is from rent or from 
 the fruits of monopoly or special privileges, as will be 
 hereafter explained. This sum of nine thousand five 
 hundred dollars a year for wages may seem excessive, 
 but if so, it must nevertheless be regarded simply as 
 high wages paid for skilled service. The fact that such 
 services may be overpaid, that the merchant, the broker 
 or the manufacturer may receive as wages in payment 
 for his services more of the wealth produced than he 
 would get under a less wasteful system of production and 
 distribution, say, one founded in part on voluntary co- 
 operation, does not require the creation of any additional 
 term to fit the case. 
 
 Wages and profit, therefore, in an economic sense, 
 are often synonymous terms, and since both represent 
 the share of wealth produced which goes to labor, it is 
 immaterial whether the portion which labor receives as 
 its share is called wages or profit; the result, so far as 
 the other portion which goes to land is concerned, is the 
 same. Since labor covers every character of service in- 
 strumental in the production of wealth, wages is a term 
 broad enough to include the entire product of any 
 wealth-producing enterprise which does not go to capital 
 as interest, or to land as rent, and the word rent is broad 
 enough to include all which goes to land. To attempt 
 to draw additional distinctions and subdivisions would 
 be profitless, and could only result in needless confusion 
 of thought. 
 
 Wages includes not only the salary of the bank pres- 
 ident and the per diem stipend of the hod carrier, but 
 also all of any person's income from any wealth-pro- 
 ducing enterprise pursued by him, no matter how great 
 
28 THE PROBLEM OF THE UNEMPLOYED. IL 
 
 such income may be, which is not attributable to rent 
 and interest, and not within the exceptions hereafter 
 referred to. By a wealth-producing enterprise, how- 
 ever, is meant one which actually increases the wealth 
 of the world, and not one which merely draws to those 
 interested in it wealth produced by others. 
 
 To summarize: Wealth is a tangible thing produced 
 by human labor which gratifies a human desire; land 
 furnishes the material from which and the place on which 
 wealth is produced ; capital furnishes the machinery and 
 labor does the work; rent is the portion of the product 
 which goes to land, interest the portion which goes to 
 capital, and wages the portion going to labor. The por- 
 tion of the product sometimes diverted by combinations 
 in restraint of trade, and various forms of special privi- 
 lege, and otherwise, comes within exceptions to the general 
 rule. Such exceptions, while reducing the amount to 
 be distributed, do not affect the ratio of the distributions 
 among the factors of production. 
 
CHAPTER III. 
 THE NATURE OF INTEREST. 
 
 THE causes which affect rent, interest and wages can 
 be traced under the most simple as well as the most 
 complex conditions of society. To illustrate this, let it 
 be assumed that from the very dawn of civilzation, 
 personal rights were safeguarded by custom and law, 
 and that, under such conditions, the primitive man, 
 naked and with no tool or implement, waded into the sea 
 and dug clams with his unaided hands. Clams became 
 wealth as soon as detached from land. Once in his 
 hands, a clam was a tangible thing produced by human 
 effort which gratified a human desire. It was wealth 
 according to the economic definition of the word. Here 
 labor was applied to land, but the factor of capital was 
 missing. Wages absorbed the entire product, none of 
 the clams being given to any landlord as rent nor to any 
 capitalist as interest. 
 
 -Let it be assumed that capital first appears in the 
 form of a labor-saving device with which to move the 
 sand which covers the clams, some one, after months of 
 toil with sharply pointed stones, having made a wooden 
 shovel, by means of which twice as many clams can be 
 produced in a given time. After shovels have come into 
 general use, there will still be people in the community, 
 including the young just old enough to work and others 
 too ignorant or too shiftless to make shovels for them- 
 selves, who will nevertheless want to use them. One of 
 
 29 
 
30 THE PROBLEM OF THE UMEMPLOYED. III. 
 
 this class naturally tries to borrow a shovel, and perhaps 
 expects to get the use of it for nothing. The owner, 
 however, thinking of the self-denial practiced in making 
 the shovel, refuses to surrender the use of it without 
 compensation; and justly so, since to give gratuitously 
 the use of a thing confers as great a benefit as to give 
 the thing itself. He therefore demands for its use one- 
 fourth of the clams gathered with it. The borrower, 
 knowing that he can pay this and still have more clams 
 left as the net fruits of his labor than would be the case 
 if he gathered them without using a shovel, agrees to 
 these terms, and in doing so he in effect consents to the 
 payment of this rate of interest. The product, the clams 
 constituting the wealth produced, will now be divided 
 between capital and labor. Capital gets one-fourth as 
 interest, and labor the other three-fourths as wages, 
 none of the product, however, going to land as rent. 
 The arrangement is mutually beneficial. The tool maker 
 is rewarded for his industry and self denial, and stim- 
 ulated to renewed activity in the making of shovels, 
 while the laborer, by the aid of capital, makes higher 
 wages than would be possible without it. This might 
 not be the case, however, if land received a portion of 
 the product as rent. But the landlord has not yet ap- 
 peared. 
 
 Another industrious member of this primitive com- 
 munity builds for himself a comfortable house. Others 
 who would like to live in houses like it are unwilling to 
 practice the industry and economy involved in building 
 them. This class, as also the juniors just becoming of 
 adult age, will remain without the ownership of such 
 houses after others in the community have supplied 
 themselves with them. A house, like any other kind of 
 capital, is also a labor-saving device, and is useful in the 
 
THE NATURE OF INTEREST. 31 
 
 production of wealth. It is located near a spring of 
 water, and convenient to the sources from which food 
 can be obtained, and thus saves the labor and time in- 
 volved in seeking a distant cave or hollow tree for pro- 
 tection from the storms. The warmth and shelter and 
 opportunity for rest and recuperation which it affords 
 enables its occupant to work to greater advantage and 
 produce more wealth, and thus make higher wages than 
 would be possible without it. After the industrious and 
 thrifty have supplied themselves with houses, why 
 should one of this class already owning his own house 
 exert himself to obtain a surplus house which he cannot 
 use and for which the homeless ones haye nothing to 
 give in exchange? What is the motive for further in- 
 dustry and self-denial on his part in the house producing 
 line? Without a motive for exertion, and a strong one 
 too, he will cease to be industrious and frugal. It is ab- 
 surd to suppose that he will continue to toil and sweat 
 in the production of houses which cannot be sold, unless 
 he is to receive compensation for his labor in some 
 other way. To give one the free use of a house or shovel, 
 or the free use of any other article of wealth, is equiv- 
 alent to donating to another the product of one's own 
 labor, and the placing of the idler and the spendthrift 
 on an equal footing with the industrious and the capable. 
 The owner of the surplus house, therefore, charges a 
 price for the use of it. This price the non-owner gladly 
 pays, if for no other reason than that the use of the house 
 enables him to produce more wealth and retain a greater 
 portion of it as wages, just as in the case of the borrow- 
 ing of the shovel. What the owner of the house receives 
 for its use is interest on the capital invested in building 
 it, nothing being received as rent, in the economic sense 
 of the word, since nothing is received for the use of the 
 
32 THE PROBLEM OF THE UNEMPLOYED. III. 
 
 land on which the house stands. This is the case because 
 land as yet is free. It is still unlimited in quantity in 
 proportion to population, there being no greater demand 
 for one site than for another. Hence it seems to be as 
 natural and as equitable to pay for the use of a thing as 
 to pay for the thing itself, and this is what interest 
 amounts to. 
 
 Again, suppose by some accident it is next discovered 
 that aerolites can, by long and tedious grinding pro- 
 cesses, be fashioned into axes, and that one man with the 
 aid of such an ax can do the work of twenty men without 
 it in making useful articles; also that on an average it 
 takes a man three hundred days to make an ax. Will 
 the possessor of an instrument of this kind, in the pro- 
 duction of which so much patient industry has been ex- 
 pended, yield the use of it to another for nothing ? Will 
 he thus give him the benefit gratuitously of the three 
 hundred days of labor which have been accumulated and 
 stored in the ax, representing as it does months of weari- 
 some toil, and the practice, perhaps, of the most rigid 
 economy in living expenses? Assuredly not. Other- 
 wise, altruism would mean the making of a slave of one's 
 self for the benefit of the idle, the weak and the prodigal. 
 But the altruist may still insist that the borrower, after 
 having by partial payments returned wealth equivalent 
 to the cost of the ax, should then become the owner of 
 it absolutely, and that the seller in good conscience 
 ought not in the meantime charge interest on the price, 
 or charge for the use of the ax. This means that the 
 owner should receive no benefit or premium for the in- 
 itial industry and frugality practiced and privations per- 
 haps suffered in compressing into the ax three hundred 
 day of work. If law or custom prohibited the owner 
 from charging interest and enjoying this premium, why 
 
THE NATURE OP INTEREST. 33 
 
 should he not also wait for some one else to make an ax 
 and then borrow it himself ? Why should he, rather than 
 another, submit to the sacrifice always involved in the 
 saving of a surplus from one's earnings over and above 
 one's expenditures? 
 
 What this primitive community needed, and what 
 all communities have always needed, is a constantly in- 
 creasing supply of capital, without which no material 
 progress can be made, since capital always takes the 
 form of a labor-saving appliance. Four-fifths or more of 
 the wealth produced by any community is consumed for 
 the necessities, comforts and luxuries of life as fast as 
 produced ;* the residue, most of which consists of build- 
 ings, machinery and material things coming within the 
 definition of capital, is wholly the result of the ability 
 and willingness of the few to live on less than their in- 
 comes. No one, rich or poor, can do this without the 
 exercise of some degree of self-restraint and self-denial. 
 But for the hope of increasing one's income by means of 
 interest, there would be little or no motive for the prac- 
 tice of the economy necessary for the accumulation of 
 capital. While the wants of mankind are insatiable, 
 and man will cheerfully work for wages with which to 
 procure things which can be immediately used or con- 
 sumed in ministering to the necessities and pleasures of 
 life, there must be a motive beyond this to induce the 
 conservation of wages. Thus the accumulation of cap- 
 ital calls for more than industry. It calls for forethought 
 and self-denial, and but for the payment of interest, it 
 
 ♦Carrol D. Wright, in Practical Sociology, estimates that 
 the entire wealth of the world about equals its aggregate earn- 
 ings for five years. 
 
34 THE PROBLEM OF THE UNEMPLOYED. III. 
 
 appears that the reward for the exercise of these virtues 
 would to a great extent be lacking. 
 
 In the primitive community referred to, if all were 
 equally favored by fortune and equally endowed morally, 
 mentally and physically; if all had precisely the same 
 tastes and inclinations, and were alike in every partic- 
 ular; if no one had any advantage over another with 
 respect to the land which he occupied, then there would 
 be no such thing as interest. All would produce and save 
 alike; all would have the same amount of wealth, and 
 no one would have occasion to buy from another on 
 credit. While one man was storing his surplus wealth 
 in an ax, another would he storing his in something 
 equally as desirable; if the latter borrowed the ax, he 
 would have something equally as valuable to loan the 
 ax owner in exchange for it. But in this community, as 
 in all communities, some are weak and some are strong; 
 some idle, others industrious; some selfish, others gener- 
 ous; some are provident and others improvident. All 
 have different tastes and inclinations, while there is ever 
 arriving on the stage of human endeavor a new generation 
 possessed of no wealth or capital whatever, and who 
 have had no opportunity of accumulating it. Hence, 
 it seems equally clear that the payment of interest is 
 founded on the fact of the diversity of human tastes and 
 inclinations and the inherent differences in human capac- 
 ities. 
 
 When one borrows a thousand dollars, he is really 
 borrowing the things which he obtains in exchange for 
 the money. This is evident from a clear understanding 
 of what money really is, as already explained. When 
 the borrower pays the debt, he is in effect returning the 
 things borrowed. Thus, I wish to engage in business as 
 a merchant. I need so many dozen pairs of shoes, so 
 
THE NATURE OF INTEREST. 35 
 
 many bolts of cloth, so many sacks of flour, and various 
 quantities of other articles, constituting a stock of gen- 
 eral merchandise. I have neither the goods nor the 
 money with which to purchase them. I borrow from a 
 friend, however, a thousand dollars to be used in buying 
 the goods which I need. This means that I have ob- 
 tained from my friend what is equivalent to a warehouse 
 receipt, calling for a thousand dollars' worth of any of 
 the infinite variety of commodities stored in the great 
 warehouse of the world's markets. When I borrow 
 the thousand dollars, my friend in effect gives me an 
 order for the goods, the use of which I need in my 
 btlsiness. When I pay the debt with interest, I am in 
 effect returning these same goods to him, with payment 
 for the use of them, since I supply him with the means of 
 obtaining them or other commodities of equal value 
 from the same warehouse. Hence, in the complicated 
 conditions of modern life, as well as at the very beginning 
 of civilization, the payment of interest, according to 
 the economic definition of the word, is simply the pay- 
 ment of something for the use of material things pro- 
 duced by labor; and there is no difference between the 
 payment of interest on borrowed money and the pay- 
 ment of a stipulated sum for the use of a machine or 
 building. In this connection, however, the distinction 
 between interest and rent must ever be borne in mind; 
 for when borrowed money is invested in land, whether 
 improved or otherwise, the payment of interest on such 
 proportion of the indebtedness as was incurred for the 
 purchase of the land, exclusive of the improvements, 
 if any, means the payment of rent, since it is not paid 
 for the use of anything produced by human labor, but 
 is paid for the use of land. 
 
 The ax to which reference has been made was stated 
 
36 THE PROBLEM OF THE UNEMPLOYED. IIL 
 
 to be the product of the labor of three hundred days. 
 This labor was not devoted to the production of things 
 to be consumed, as comforts and luxuries of life, but to 
 the making of a tool which would assist in producing 
 such things. While labor was employed in producing 
 the ax, it received no wages, and'it might never have re- 
 ceived wages for the work thus performed, but for the 
 fact of its being able to get pay for the use of the ax ; in 
 other words, but for the payment of interest on the cap- 
 ital which the ax represents. Suppose the tool maker, 
 after completing the ax, was physically unable to use it, 
 and that while there were many people in the community 
 able and anxious to use the ax, none of them were 
 able to buy it, since none of them had anything to give 
 in exchange for it. It is clear that so long as such con- 
 ditions existed, labor would receive no wages for the toil 
 expended on the ax unless permitted to receive interest 
 for its use. Under such circumstances, when would 
 labor begin to receive wages for work performed in mak- 
 ing the ax? The answer is, just as soon as it began to 
 receive something for the use of the ax, or in other words, 
 as soon as it began to receive interest on the capital 
 which the ax represented, and not before. Hence, in 
 this instance at least, interest would be in effect wages 
 paid for labor employed in making the ax; nor would 
 the fact that the tool maker was capable of using the ax 
 himself alter the situation and make the payment of 
 interest for its use anything more or less in reality than 
 the payment of wages for labor performed in produc- 
 ing it. 
 
 And so it will be found in all cases, under modern as 
 well as primitive conditions, interest on capital is always 
 in effect the deferred payment of wages to labor. The 
 capitalists may advance the laborer wage money as the 
 
THE NATURE OF INTEREST. 37 
 
 work progresses, but on its completion, when the cap- 
 italist collects interest on the cost of the appliance, he is 
 simply getting back the wage money which he advanced 
 to the laborers who made it. And this is also the case 
 even though the finished labor-saving appliances may 
 be the product of a multitude of individual laborers who 
 have been assisted by capital in producing it and who have 
 been paid wages as the work progressed. If, in the case 
 of the ax, what the ax owner got for its use was in effect 
 wages, then what the owner of a steamship costing a 
 million dollars gets for its use must in effect be wages 
 also. Interest therefore in reality is wages paid for 
 stored up labor. 
 
 A vast amount of interest is paid on indebtedness in- 
 curred, however, not for the use of capital, but for 
 things in the nature of wealth intended for immediate 
 consumption, such as articles consumed in war and in 
 the preparation for war, and in living expenses, and for 
 capital that has been lost or destroyed; and, most im- 
 portant of all, for indebtedness incurred for land and 
 the use of land. It is obvious that interest paid on in- 
 debtedness of this kind, as well as indebtedness incurred 
 in the purchase of land, cannot be regarded as being in 
 the nature of wages paid to labor, since it is not paid for 
 the use of appliances produced by labor which assist 
 in the production of wealth. 
 
 The conclusion, therefore, with respect to the nature 
 of interest is, that it is what is paid for the use of wealth 
 employed as capital in the production of more wealth; 
 that it is the reward given for thrift and self-denial; 
 that its payment is inevitable, owing to the inherent 
 differences in the abilities and tastes of mankind; that 
 it is but the deferred payment of wages to labor, and 
 that its payment works no hardship upon labor, nor 
 
38 THE PROBLEM OP THE UNEMPLOYED. IIL 
 
 does it lessen the portion of the product which labor 
 would otherwise receive, since but for its payment, 
 there would be no incentive to provide labor with the use 
 of labor-saving appliances. Interest, as thus explained, 
 however, must be limited strictly to the economic defi- 
 nition of the word. 
 
CHAPTER IV. 
 THE NATURE OF RENT. 
 
 THAT there exists to some extent a popular prejudice 
 against the payment of interest, and apparently 
 none at all against the payment of rent, is due to the fact 
 that the distinction between land and wealth, and the 
 difference between the payment of rent to land and the 
 payment of interest to capital, is not fully understood. 
 Briefly stated, it is this: Rent is what labor pays for 
 permission to produce wealth, while interest is what it 
 pays for the use of appliances which immensely increase 
 its wealth-producing powers. The former is paid for 
 the license to use the machine ; the latter is paid for the 
 use of the machine itself. Hence it would seem to follow, 
 since interest is but the deferred payment of wages, 
 that if nothing vfere paid land for the privilege of use, 
 all \<^ealth, including that produced with the aid of the 
 machinery, would go to labor as wages. In this connec- 
 tion, it is not meant that employees would get the en- 
 tire product, but that the wages which they would re- 
 ceive, together with the portion going as wages, as al- 
 ready explained, to the employers and to capitalists, 
 would include it all. In such event free competition 
 would so regulate the division of the product that each 
 would receive, approximately, the portion of the wealth 
 which he produced. The difficulty is, however, that as 
 soon as the factor of rent comes into play, competition, 
 which fixes the price of everything connected with the 
 
 39 
 
40 THE PROBLEM OF THE UNEMPLOYED. IV. 
 
 industrial world, and regtdates interest and wages, is 
 no longer free; for although any product of labor can 
 be indefinitely increased according to the demand for it, 
 an increased demand for land can only increase the 
 price which capital and labor must pay for the privi- 
 lege of using it. 
 
 The laws of supply and demand do not affect land 
 and capital and labor in the same way; increased de- 
 mand for anything produced by labor will increase the 
 supply, and only temporarily affect the price, while an 
 increased demand for land cannot increase the supply, 
 but will permanently increase the price. Thus, an in- 
 creased demand for axes will increase the number of 
 axes produced, while competition among ax producers 
 will soon reduce the price charged for axes, or for the 
 use of axes, to the point where labor, applied to the pro- 
 duction of axes, will be no more profitable than labor 
 applied to the production of other articles; but since 
 increased demand for land cannot increase the area of 
 the earth, the effect of growth of population, which in- 
 creases the demand, is simply to increase the portion of 
 the wealth produced which goes to the owners of land. 
 
 In the primitive community referred to rent made 
 itself felt in the distribution of wealth as soon as one 
 piece of land acquired a greater value than another. 
 This must have happened at the very dawn of civiliza- 
 tion, and with civilization came the private ownership 
 of land. Wherever land has become valuable, a private 
 owner for it has always been recognized by law and cus- 
 tom. The right of an individual to the untrammeled 
 control of the tract of land to which he has acquired a 
 titled approved by the government having jurisdiction 
 over it, has been admitted from time immemorial. In- 
 vestments in land have generally been made in good 
 
THE NATURE OF RENT. 41 
 
 faith by all classes of people under an implied agreement 
 that society would continue to protect property in land 
 in the future as in the past. For this reason it is some- 
 times insisted that no legislation should be even con- 
 templated which would abolish the privileges which the 
 ownership of land confers — -privileges in which it is 
 claimed all have the right to participate on payment of 
 the price demanded. Good faith and good conscience 
 apparently, and the enormous power and influence in- 
 terested in maintaining intact the benefits flowing to 
 individuals from private ownership of land, as well as 
 the obvious impracticability of any other form of owner- 
 ship, renders the subject to which this chapter relates of 
 little interest at present to the practical politician. 
 Nevertheless, no headway toward acquiring a knowl- 
 edge of the fundamental truth on which the science of 
 political economy is founded can be made, without a 
 clear conception of the essential differences between 
 property in land and property in the products of labor. 
 In stating the facts, however, on which these differ- 
 ences are founded, no attack on vested rights is to be 
 inferred, for political economy has nothing to do with 
 vested rights or vested wrongs, but all and only to do 
 with truth. However injurious in some respects the 
 result of the system by which the bounties of nature 
 have so far been regulated and controlled may be to an 
 overwhelming majority of mankind, nevertheless it need 
 not be assumed that such salutary changes (belonging 
 doubtless to the distant future) as science may suggest 
 cannot or will not be made without proper compensation 
 to all whose wealth has been invested in land on the 
 faith of the permanency of conditions now existing. 
 The title to an article constituting wealth can be 
 traced to the maker of it, to the person or persons whose 
 
42 THE PROBLEM OF THE UNEMPLOYED. IV. 
 
 toil created it, to someone who clearly had a right to use 
 and dispose as he saw fit of the thing which his own 
 labor had produced, either by sale, or gift, or otherwise. 
 Not so, however, as to land. No one's title to land can 
 be traced back to the creator of it, since land is not the 
 product of labor. Take the chain of title to any tract 
 of land and go back with it, step by step, to its beginning, 
 and it will be found to have originated in an agreement 
 on the part of those who constituted the government 
 at that time, made anywhere from fifty to a thousand 
 years ago or more, to the effect that John Smith and his 
 heirs and assigns should forever dictate the terms on 
 which men of that and all succeeding generations should 
 have the privilege of producing wealth on or from the 
 particular tract of land thus granted to the said John 
 Smith. The agreement gave John Smith the right either 
 to produce wealth on this land himself, or to say how 
 much of the wealth produced on it by others should 
 be given him for consenting to its being used for that 
 purpose. Private ownership of land means that by 
 virtue of a compact between the then existing govern- 
 ment and some individual, made it may be centuries 
 ago, the present-day owner of a tract of land has the 
 power to prevent any and all men from using it for 
 wealth-producing purposes, or for any other purposes, 
 except on terms satisfactory to such owner, subject 
 only to the right of eminent domain on the part of the 
 State. 
 
 The nature of a title to land may be shown by the fol- 
 lowing illustration: The government of England, as 
 embodied in William the Conqueror nine hundred years 
 ago, might have given one of the courtiers of that day, 
 as a reward for almost any kind of service, infamous or 
 otherwise, a patent of nobility, and decreed that he 
 
THE NATURE OF RENT. 43 
 
 and his eldest male lineal descendant, as the Earl of 
 Enfield, should receive one tenth of the income of every 
 worker living on a definitely described tract of land 
 known as Enfield, at that time or at any time thereafter 
 in all the ages to follow. This would not have been an 
 unreasonable act of legislation for those times, and es- 
 pecially so since by its terms no working man was com- 
 pelled to live in the Parish of Enfield. As to whether or 
 not the Parish of Enfield would have increased in pop- 
 ulation as rapidly as the surrounding parishes, would 
 have depended on the terms on which the land owners 
 of Enfield allowed wealth-producers, meaning workers 
 of every class engaged in the actual production of wealth, 
 to use land in Enfield for wealth-producing purposes. 
 It would, of course, have been impossible for them to 
 obtain as much for it as the owners of land in adjoining 
 parishes received for land of the same quality; but by 
 reducing rents, or by reducing the price of land (and this 
 they would have been compelled to do in order to receive 
 any income from the land at all), the landlords of Enfield 
 would have made that parish as desirable as any other 
 place for wealth-producers to live in. Thus, since 
 the aggregate amount of wealth paid by wealth pro- 
 ducers to land owners for the privilege of producing 
 wealth amounts to probably more than ten per cent of 
 the total product, if the workers in the adjoining parishes 
 were required to pay, say, the equivalent of fifteen per 
 cent or more of their incomes to landlords as rent, as 
 would doubtless have been the case, then the landlords 
 of Enfield, by charging rent equivalent to, say, only five 
 per cent of the wealth produced, would have placed the 
 workers of Enfield on a parity with those in the adjoining 
 parishes. The difference would have been that the fif- 
 teen per cent of a worker's income paid for the privilege 
 
44 THE PROBLEM OF THE UNEMPLOYED. IV. 
 
 of living in Enfield would have been divided between the 
 Earl of Enfield and the landlords, while the same per- 
 centage jsaid for the privilege of living in an adjoining 
 parish would have gone to the landlords alone ; hence 
 it is evident that rent is the same as a tax on the in- 
 comes of wealth-producers, only it is paid to individuals 
 instead of being paid to the government. 
 
 Recurring to the illustration, it will be assumed that 
 a city with a population of several hundred thousand 
 grew up within the confines of Enfield, and that to-day 
 the aggregate income of its inhabitants is twenty mil- 
 lion dollars a year, of which the eldest male lineal de- 
 scendant of the Earl of Enfield is receiving ten per cent 
 or two million dollars annually. It would seem at first 
 thought preposterous to assume that the law conveying 
 to the original Earl and his successors one tenth of the 
 income of every person living in Enfield would not have 
 been repealed long ago; or that a free people in an en- 
 lightened age would feel that it was just and proper for 
 them to hand over to the present Earl one-tenth of their 
 incomes simply because of the fiat of William the Con- 
 queror made nine hundred years before. But suppose* 
 their fathers and forefathers for a score or more of gen- 
 erations had submitted to the law and adapted them- 
 selves to it, and permitted the long succession of Earls 
 of Enfield to collect this tribute and to rely in good 
 faith on its being paid, and to live in a style of magnifi- 
 cence commensurate with this ever increasing income, 
 and thereby become in themselves, for the benefit of 
 the ignorant and lowly, the embodiment of the highest 
 examples of culture which wealth and lineage can be- 
 stow. Suppose also, that, instead of the case of Enfield 
 being an exceptional one, the same percentage of the 
 incomes of people living in other places, and in fact on 
 
THE NATURE OF RENT. 45 
 
 all the other tracts of land in the Kingdom, had also been 
 alloted by William the Conqueror and his successors 
 to various and sundry other persons and their descend- 
 ants, together with permission to sell and assign the 
 rights and privileges thus acquired, and subdivide the 
 territory to which the same applied. That thus a power- 
 ful minority of the people, embracing most of the wealth 
 and social influence of the land, was interested, and had 
 always been interested, in maintaining the laws on which 
 these privileges were founded. In such event, a very 
 different situation would be presented. To repeal the 
 law and cut off the privileges in the purchase of which 
 many people had invested a large portion of the savings 
 of a lifetime; to suddenly reduce from luxury to but a 
 competency, and in some instances to actual want, many 
 of the best people in every community, would probably 
 seem to most honest minds unjust, and nothing short of 
 confiscation and robbery. In view especially of the fact 
 that organized society had for hundreds of years per- 
 mitted these privileges to be enjoyed and sold and dis- 
 posed of without objection or protest, most people would 
 be likely to insist on the adoption of some plan of com- 
 pensation whereby the losses, for which society as a 
 whole was responsible, should be apportioned among 
 all. But be this as it may, the question of ethics sug- 
 gested at this point is not one to be decided by the polit- 
 ical economist. 
 
 The fact is, that while neither William the Conqueror 
 nor any of his successors ever granted in express terms 
 to the Earl of Enfield, or to any other person, the right 
 to collect one tenth or more of the incomes of all the 
 people then living, and thereafter to live, on any spec- 
 ified tract of land, the same thing was nevertheless ac- 
 complished in a much more effectual manner when the 
 
46 THE PROBLEM OF THE UNEMPLOYED. IV. 
 
 title to such tract of land was granted to the Earl of 
 Enfield, "his heirs and assigns forever," as the legal 
 phrase runs; and this is what private property in land 
 means. It means nothing more or less than that the 
 owner, by virtue of a legal enactment, probably made by 
 men long since dead and buried, has the right to collect 
 a constantly increasing portion of the income of all who 
 are allowed to employ themselves in the production 
 of wealth on the land which his title embraces That 
 such collection may be made in advance when one buys 
 and pays for the site on which his own home or farm or 
 business establishment is located, instead of paying rent 
 annually or otherwise for its use, does not change the 
 character of the payment — it is in such instances, as 
 in all other cases, the payment of tribute money, not 
 for wealth nor for the use of wealth, but for the priv- 
 ilege of producing wealth — tribute paid not to the gov- 
 ernment but to individuals. 
 
CHAPTER V. 
 
 EFFECT OF IMPROVEMENTS 
 
 In Labor-Saving Machinery and Progress 
 
 Generally on Rent, Interest and 
 
 Wages. 
 
 AN attempt will now be made to apply the factors 
 of production and distribution, as heretofore defined 
 and explained, to the solution of the economic problems 
 referred to in the first chapter. Under the plan adopted 
 for presenting the subject, objections which may arise 
 in the mind of the reader to propositions when first 
 announced and but briefly explained, will often be found 
 anticipated and answered in subsequent pages. 
 
 Wealth can only be produced in a civilized community 
 by the use of land and capital as well as by the expendit- 
 ure of human labor. A portion of the product of every 
 wealth producing enterprise, in effect, goes to a land 
 owner as rent, another portion to a capitalist as interest, 
 and another portion to a laborer as wages. As a general 
 rule all incomes, except those of the character presently 
 referred to, are made up of rent, interest or wages singly 
 or in combination with each other. Causes which in- 
 crease rent, or the value of land (which is the same thing), 
 without increasing wages and interest in a corresponding 
 degree, result in increasing disproportionately the in- 
 comes of those whose wealth is principally derived from 
 
 47 
 
4§ THE PROBLEM OF tHfi tNEMpLOYfiD. V. 
 
 the rent of land or from increase in the value of land; 
 causes which increase wages without increasing in a 
 corresponding degree rent and interest, result in putting 
 a greater portion of wealth into the hands of those 
 whose incomes are derived principally from wages, and 
 so also as to causes affecting interest. 
 
 It is thus apparent that the natural law which con- 
 trols the distribution of wealth must be found in the 
 study of causes affecting, respectively, rent, interest 
 and wages. The income of the mechanic owning the 
 house in which he lives is made up of rent, interest 
 and wages. Say that his house is worth a thousand 
 dollars, the land on which it stands five hundred dollars, 
 and that interest is 6% per annum. To arrive at his 
 income there must be added to his wages of, say, six 
 hundred dollars per year, 6% on the value of the land 
 and 6% on the value of the improvements. His total 
 income, therefore, is $690 per year, of which $60 is rent, 
 $30 interest and $600 wages. As to a mechanic thus 
 situated, a 10% increase in wages would be of greater 
 benefit than a 10% increase in rents or in land values. 
 Reflection will show that all incomes can thus be analyzed 
 and portions of same traced to one or more of the factors 
 of rent, interest and wages. 
 
 While it is true that a vast amount of wealth in this 
 country is acquired in connection with incomes which 
 cannot be attributed wholly to rent, interest, or wages, 
 still the aggregate amount of wealth thus appropriated, 
 for which no equivalent is given in the furnishing of 
 land, or capital, or in the giving of service, is small in 
 comparison with the entire annual product, of probably 
 fifteen billions or more. The conditions under which 
 wealth is thus diverted, however, are not natural but 
 exceptional and temporary, and are often attributable 
 
Effect of imiprovements. 49 
 
 to an improper exercise of governmental powers' 
 Among such exceptions are incomes in the nature of 
 pensions from the government, incomes acquired by 
 fraud, or theft, or by extortions forced by combinations 
 in restraint of trade, or by speculations, or by means of 
 special privileges, such as patent rights, and privileges 
 founded on a protective tariff, or on discriminations in 
 railroad rates. Uniform natural laws can no more con- 
 trol the manner of the acquisition of wealth thus ob- 
 tained, though no doubt much of it is honestly acquired, 
 than in the case of wealth stolen by highwaymen. But 
 the fact that a portion of the product of any wealth- 
 producing enterprise may be diverted under such ex- 
 ceptions can in no way affect the causes constantly in 
 operation, which control the distribution of the remain- 
 der of it among the three factors of production, viz: 
 Land, Capital and Labor. It is, therefore, neither neces- 
 sary nor profitable, at this point, to consider at length 
 exceptions of the character mentioned to the general 
 rule that incomes are made up of rent, interest and 
 wages. 
 
 Since in any wealth-producing enterprise, a man may 
 be interested as a land owner, a capitalist and a laborer 
 at the same time, and his income from it may be attrib- 
 utable in part to rent, in part to interest, and in part to 
 wages, confusion of thought will arise unless the dis- 
 tinction between the land owner, the capitalist and the 
 laborer, as such, is sharply drawn in the reader's mind. 
 To discover the causes which effect the distribution of 
 wealth the sources of incomes must be separately consid- 
 ered. It must also be remembered that the word 
 "labor" includes all effort, either mental or physical, 
 put forth in the production of wealth; also, that the 
 so-called profits of capital, not attributable to rent or 
 
50 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 interest, and not coming within the exception just re- 
 ferred to, are but the wages of employers. Such wages 
 under present conditions may be excessive, but never- 
 theless all wealth acquired from service of this char- 
 acter comes within the true economic definition of wages. 
 The portion of an employer's effort, however, as noted 
 above, expended on some scheme by which he seeks to 
 acquire wealth produced by others, as, for instance, by 
 means of organizing and carrying on a combination in 
 restraint of trade, is not labor, nor are the fruits of such 
 effort wages. This is the case because such labor is not 
 expended in the production of wealth. It does not in- 
 crease the world's store of wealth. 
 
 Bearing in mind the definitions of the terms used, 
 and especially the distinction between land on the one 
 hand and capital on the other hand, no difficulty will 
 be experienced in determining the class to which must be 
 assigned the lion's share of the benefit, as between land 
 owners, capitalists and laborers, as such, directly result- 
 ing from improvements in labor-saving appliances and 
 growth of population, as well as from moral and material 
 progress of every description. It is clear that if pro- 
 gress of the character referred to benefits land owners, 
 it will be indicated by an increase in the value of land; 
 if it benefits laborers, by an increase in wages, including 
 the wages of employers,; and if it benefits capitalists 
 as such, it will be indicated by an increase in the rates 
 of interest. We can thus determine, approximately, 
 the effect of labor-saving appliances and material pro- 
 gress generally on rent, interest and wages; or in other 
 words, on land owners, capitalists and laborers, respect- 
 ively. If the direct effect in the long run is only to in- 
 crease rent or the value of land, then land owners alone 
 can be directly benefited by it. If it appears that most 
 
EFFECT OF IMPROVEMENTS. 51 
 
 if not all the benefit goes to land, then little or none 
 can go to labor; therefore, if improvements of the char- 
 acter referred to do not naturally and directly increase 
 wages, then in the fact just stated, viz: the fact that the 
 principal part of all the increased wealth produced by 
 such improvements in the long run goes to land, and is 
 absorbed in the increase in the value of land, will be 
 found the reason for the failure of wages to increase in 
 the same proportion as the wealth-producing power of 
 the wage earner increases. If contemporaneously with 
 improvements in labor-saving appliances, growth of pop- 
 ulation and progress generally, we find an increase of 
 rents, or an increase in the value of land, with no cor- 
 responding increase in wages, or in rates of interest, 
 then the inference follows that the ultimate effect of 
 such progress is to increase the value of land only, hence 
 neither rising wages nor rising rates of interest can natur- 
 ally and inevitably result from it, no matter to what 
 extent the wealth producing capacity of laborers may 
 be increased thereby. 
 
 The questions then to be answered in the first place 
 are these: (1) Do improvements in labor-saving ma- 
 chinery, and material progress generally, naturally and 
 inevitably increase interest ? (2) Do they naturally and 
 inevitably increase wages? (3) Do they naturally and 
 inevitably increase rent or the value of land ? The ques- 
 tions thus propounded will be answered in the order 
 stated. 
 
 The popular impression, especially among those with 
 socialistic tendencies, is that capital, as such, is the 
 chief recipient of the benefits arising from industrial 
 progress. This impression exists because the points of 
 difference between land and capital, and also between 
 the ownership of capitg.1 and the use of capital by itg 
 
52 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 owner, or by the borrower of it, are not clearly under- 
 stood and appreciated. The obvious and indisputable 
 fact, however, regardless of any theory about it is, that 
 increase in population and improvements in the arts and 
 sciences, while accompanied by rising land values and 
 increasing rents on one hand, are always followed by a 
 fall in the rates of interest on the other hand. The first 
 question must therefore be answered in the negative. 
 
 In sparsely settled and disorderly communities the 
 world over, interest is high and rent is low; in other 
 words, in such communities, comparatively large sums 
 are paid for the use of capital or wealth, while com- 
 paratively small sums are paid for the use of land or for 
 the purchase of land. With improvements in govern- 
 ment and growth of population, this is always reversed, 
 and the rate of interest falls, while the price of land 
 rises. Thus, on Manhattan Island, two hundred and 
 fifty years ago, interest was 15% per annum, and a lot 
 suitable for business purposes could have been bought 
 for $500, or the use of it obtained for a rental of $75 a 
 year. To-day, in New York, interest has fallen to 4% 
 per annum, but the same lot is worth a million dollars, 
 and the use of it can not be had short of thirty thousand 
 dollars a year. In London and in New York, where 
 population is most dense, and the arts and sciences 
 have reached the highest degree of perfection, land is 
 high, but the rate of interest is low; while in frontier 
 towns and cities, interest is high and land is low. 
 
 The correctness of the answer given is also conclus- 
 ively shown by the fact that while inventions have multi- 
 plied enormously, within the memory even of the present 
 generation, nevertheless rates of interest are lower now 
 than ever before. And in the most highly civilized 
 countries, where labor-saving improvements are most 
 
EFFECT OF IMPROVEMENTS. 53 
 
 extensively used, interest is lower than in partially 
 civilized ones where they are little used. 
 
 That growth of population and progress of the char- 
 acter referred to do not increase the value of building 
 improvements, or interest on the capital represented by 
 them, is obvious, yet confusion of thought on this point 
 is sometimes manifested by confounding ground rent 
 with the interest on the capital which the building rep- 
 resents. The total rent of a building, including the 
 ground, may increase from ten thousand dollars to 
 twenty thousand dollars a year, but it is not the building 
 that has become valuable, nor is the increased income 
 obtained from the use of the entire property attributable 
 to increase in rates of interest. In fact, the building 
 may have depreciated in value. It is the land, and the 
 land alone, on which the building stands, which is more 
 valuable. The increase in rent which the tenant pays 
 is not for the use of the building, or any part of it, but 
 for the use of land which has become more valuable. 
 That such improvements do not increase in value from 
 causes which increase the value of land, is apparent also 
 from the fact that insurance companies never know- 
 ingly insure a building for more than it will cost to 
 replace it. 
 
 As to the second question, it will be noted that the 
 subject of inquiry is confined to the "natural and in- 
 evitable" effects upon wages of labor-saving improve- 
 ments and progress generally, or, in other words, to the 
 direct as distinguished from the indirect effects. Thus, 
 contemporaneously with an enormous increase in the 
 wealth-producing power of the employee, there may 
 be a considerable increase in the purchasing power of 
 his wages. Some classes especially, if not all classes 
 pf laborers, may be better off now than they were, for 
 
54 THE PROBLEM OP THE UMEMPLOYED. V. 
 
 instance, fifty years ago, although this is denied by 
 many who have investigated the matter; yet, neverthe- 
 less, should this be the case, it may not be attributable 
 to the direct effect of labor-saving inventions. Im- 
 provements in labor-saving machinery might, for in- 
 stance, enormously increase the amount of wealth pro- 
 duced by slaves, but in such event, free competition 
 and the law of supply and demand would not operate 
 with irresistible force to compel masters to spend more 
 in the better maintenance of slaves, or, in other words, 
 to pay slaves higher wages. The increased ability of 
 masters, however, to do so, coupled with kindly feelings 
 and a disposition to make the slave less discontent- 
 ed with his lot, would doubtless bring about some 
 slight improvement in his condition, not as the direct, 
 but as the indirect effect of the increased amount of 
 wealth produced by slaves. So, in the same way, the 
 improvement, if any, in the condition of employees, 
 may not be attributable to the natural and inevitable 
 result of inventions under the operation of the law of 
 supply and demand and free competition, but to com- 
 binations of workingmen, and to public sentiment which 
 demands that laborers shall receive some benefit from 
 inventions. It may also be attributable in part to a 
 vague fear of revolution if wages were crowded to the 
 lowest possible point; also in part to sympathy of many 
 employers toward their employees, as well as to other 
 causes of like character. 
 
 It will be found that labor-saving processes, as well 
 as increase of population, under the operation of the 
 laws of supply and demand and free competition, have 
 the direct effect of enhancing the value of land and the 
 price paid for the use of it; the question is, do these 
 forces, in the same way, also directly increase the price 
 
EFFECT OF IMPROVEMENTS. 55 
 
 paid for labor? It cannot be answered in the affirm- 
 ative by simply showing, if it can be shown, that wages 
 are higher now than formerly. For wages might rise 
 to some extent, as shown above, even though the un- 
 restricted operation of the laws of supply and demand 
 would inevitably cause them to fall with increase of 
 population, notwithstanding increase in the wealth-pro- 
 ducing powers of laborers. 
 
 The question as to whether wages of employees are 
 in fact rising or falling — as to whether they are rela- 
 tively higher to-day than before the introduction of 
 modern labor-saving appliances — is one about which 
 much difference of opinion exists. The difficulty does 
 not lie so much in ascertaining the amount in dollars, 
 or shillings and pence, paid employees in former days, 
 as in arriving at the purchasing power of money at 
 that time. In this connection, it is instructive to take 
 at random the views of those who have a personal ex- 
 perience of forty or fifty years to draw upon. It will 
 be found that the man who has made a success of life 
 from a pecuniary point of view is more apt to think 
 that wages are higher and are growing higher, than the 
 less successful one who is still working in the ranks. 
 Those of the latter class usually insist that wages are 
 lower and that the struggle for existence is harder, and 
 this perhaps will be found to be the impression of a ma- 
 jority of all classes who are approached upon the sub- 
 ject. 
 
 Mr. Carrol D. Wright, in "Practical Sociology," es- 
 timates that hours of labor have been reduced 10% 
 since 1860, and that the purchasing power of wages in 
 1902, measured by wholesale prices, was 80% higher 
 than in 1860. On the other hand. Senator Fairbanks, 
 in an interview with Frank G. Carpenter in 1904, the 
 
56 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 former then being the Republican candidate for the 
 Vice-Presidency, in referring to the way in which he 
 managed to get through college, is reported as saying: 
 "I received good wages by working on Saturdays at 
 $L50 a day, which was equal to about $3.00 now." 
 
 The wages ef the agricultural and unskilled laborers 
 of England are now less than one-half of what they 
 were during the 15th Century, nor are they any higher 
 to-day than at the end of the 13th Century. This is 
 especially the case as regards the ability of the work- 
 ingman to provide himself with the essentials of life, 
 such as shelter, food, fuel and clothing. At the end 
 of the 15th Century, wages of employees generally in 
 England were from three to four times higher than in 
 the early part of the 19th Century. And not only so, 
 but from the middle of the 14th to the middle of the 
 16th Century, eight hours constituted a full day's work. 
 
 Professor Thorold Rogers, referred to in the intro- 
 ductory chapter, puts the result of twenty years of 
 patient investigation of comparative wages in his 
 "History of Agriculture and Prices." The sources of his 
 information were old exchequer bills, the college records, 
 the manor rolls, the farm accounts, preserved often by 
 accident in libraries and in public and private archives. 
 He collected thousands and thousands of records of 
 prices actually paid for different commodities, and he 
 gives all the facts and figures showing the details by 
 which his averages are arrived at. The accuracy of 
 his findings of facts on all important matters has never 
 been impugned, and he seems to be sustained by all 
 authorities upon the subject.* He began his studies 
 as an orthodox economist of the laissez-faire school, 
 
 ♦Leone Levi, F. S. S. — History of British Cornm^rce, 
 (j. R. Porter — Progress of th§ Nation, 
 
EFFECT OF IMPROVEMENTS. 57 
 
 opposed to trade unions, and under the impression, 
 evidently, that all social ills would cure themselves. 
 He saw no necessity for the discovery of the cause of 
 undesirable economic conditions, such as the enorm- 
 ous increase of private fortunes, and the fact that men 
 willing to work are often unable to find work, and that 
 multitudes of workers in a country like England are in 
 a condition of chronic semi-starvation. 
 
 The following extracts are taken from his "Six Centur- 
 ies of Work and Wages:" 
 
 " I have stated more than once that the fifteenth 
 century and the first quarter of the sixteenth 
 " were the golden age of the English laborer, if we 
 are to interpret the wages which he earned by the 
 cost of the necessaries of life" — p. 326. 
 " I am convinced that at no period of English 
 history for which authentic records exist, was the 
 condition of manual labor worse than it was in the 
 forty years from 1782 to 1821, the period in which 
 manufacturers and merchants accumulated fort- 
 unes rapidly, and in which the rent of agricultural 
 land was doubled." — p. 63. 
 " Relatively speaking, the working man of to-day 
 is not so well off as he was in the fifteenth cent- 
 " ury." — p. 356. 
 In summing up at the close of "Work and Wages," 
 he uses the following language : 
 
 " I have shown that from the earliest recorded 
 " annals, through nearly three centuries, the condi- 
 " tion of the English laborer was that of plenty and 
 " hope, that from perfectly intelligible causes it 
 
 Robert Giffin — Fall of Prices and Essays in Finance. 
 
 Adam Smith — The Wealth of Nations, and Roger's Notes in the 
 
 Labor Problem. 
 Journal of the Statistical Society. 
 W . Cunningham — The Growth of English Industries and Com-. 
 
 merce , 
 James A, Waterwgrth, in The Labor Prglpleni, 
 
58 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 " sunk within a century to so low a level as to make 
 " the workmen practically helpless, and that the 
 " lowest point was reached just about the outbreak 
 " of the great war between King and Parliament. 
 " From this time it gradually improved, till in the 
 " first half of the eighteenth century, though still 
 " far below the level of the fifteenth it achieved 
 " comparatively plenty. Then it began to sink 
 " again, and the workmen experienced the direst 
 " misery during the great continental war. Latter- 
 " ly, almost within our own memory and kno wedge, 
 " it has experienced a slow and partial improve- 
 " ment." 
 It is evident that the percentage of increase or de- 
 crease in wages in America in the past fifty years, 
 taking into account the purchasing power of the money 
 earned, can be but trifling at most, or there would be 
 no such differences of opinion about it; and it is ap- 
 parent, especially in view of the result of the investi- 
 gation made by Prof. Rogers and others, that so far, 
 labor-saving inventions have failed to raise the wages 
 of employees. In this connection, the fact is significant 
 that the trades in which there appears to be the 
 greatest increase in wages in England since the beginning 
 of the last century, are those most strongly dominated 
 by labor organizations. This tends to show that the 
 rise in wages in England during the past seventy-five 
 years is not the result of causes naturally flowing from 
 the operation of the law of supply and demand on ac- 
 count of increased production brought about by modern 
 labor-saving machines, but from combinations of work- 
 ing men. As shown by the authorities referred to, 
 the darkest days of the English laborer were from 
 1780 to 1830; since then there has been a slow but 
 steady improvement in his condition, but during this 
 period of improvement the great labor unions of Eng- 
 
EFFECT OP IMPROVEMENTS. 59 
 
 land, now the most powerful in the world, have steadily- 
 increased in strength and efificiency. Up to 1824, such 
 organizations were illegal and were often sternly sup- 
 pressed by law. 
 
 While there is some difference of opinion as to whether 
 wages of employees on the whole are slightly higher or 
 slightly lower, now than say fifty years ago, no one 
 doubts the enormous increase of wealth produced by 
 labor-saving inventions. Neither is there room for doubt 
 that the average increase in the power of the employed 
 laborer to produce wealth greatly exceeds the increase, 
 if any, in the wages received by him; the only question 
 being as to the ratio of such increase. 
 
 The laborer of to-day often produces more wealth in 
 an hour than his grandfather did in a week, and instances 
 in which the production is tenfold greater are almost 
 innumerable. Six or eight men with a modern cotton 
 gin will separate as much lint from the seed and bale it, 
 as several thousand could in the same length of time 
 before Whitney's invention; while improvements in 
 spinning and weaving enable a single laborer now to 
 do what was once the task of hundreds. Formerly one 
 person with a spinning wheel could spin five hanks of 
 twist in a week; to-day a man, with the help of one 
 or two children, will spin 50,000 hanks in the same 
 time. Benjamin Franklin printed one hundred copies of 
 his paper in an hour ; to-day, one machine in an hour 
 automatically prints, cuts, counts, pastes, and labels 
 80,000 copies, each of which is a hundred times greater 
 than the sheet which Franklin published. With a 
 planing machine, one man does the work of thirty 
 planing by hand; and as to numberless small articles 
 like tacks, nails and screws, the product of one man's 
 work exceeds that formerly produced by hundreds. A 
 
60 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 dozen men can make more flour, including the raising 
 of the wheat, than a thousand can consume. The Hon. 
 Edward Appleton, formerly of the Massachusetts Board 
 of Railroad Commissioners, estimated that in 1880, the 
 28,600 locomotive engines then in use in the United States 
 did what would have required the work of 13,500,000 
 men and 54,000,000 horses in the days of stage coaches 
 and oxen. This means that in the transportation bus- 
 iness the work accomplished by perhaps a hundred 
 thousand railroad employees is greater than that of 
 13,500,000 men with horses and oxen only. 
 
 It is impossible however, to ascertain with certainty 
 the ratio of the increase in the wealth-producing effect- 
 iveness of labor. In a recent magazine article, it was 
 gravely asserted that on an average the laborer of to- 
 day produces fifty times as much wealth as the laborer 
 of a hundred years ago, and it is not uncommon for the 
 ratio to be estimated at ten to one; but such guesses 
 are widely extravagant. The average farmer still milks 
 his cows, makes butter, looks after his stock, cuts wood, 
 hauls his produce to market, feeds chickens, gathers 
 fruit and eggs, raises vegetables, builds fences, and does 
 the great bulk of his work without the aid of other ap- 
 pliances than those in common use when Benjamin 
 Franklin was a boy. And this is largely true as to 
 storekeepers, clerks, accountants, carpenters, masons 
 and members of the building trades generally ; and so also 
 as to cooks, cabmen, waiters and housekeepers, and 
 workers in scores of other lines of employment. The 
 fact is that half, if not three-fourths, of the work of 
 the world is still done with the tools in use hundreds 
 of years ago. 
 
 An analysis of the material furnished by the Census 
 Bureau shows that it can throw little light upon the 
 
EFFECT OF IMPROVEMENTS. 61 
 
 question as to the total amount of wealth annually- 
 produced in the United States at the present time com- 
 pared with that produced, say, fifty years ago. The 
 conclusions of those who have attempted to sift this 
 material are absurdly conflicting, and range from ten 
 billion to twenty billion. Thus, Mr. W. A. Croffut, of 
 Washington, D. C, a distinguished newspaper writer, 
 who strongly denounces trade unions and all methods 
 for limiting competition in the labor market, puts the 
 entire amount of wealth produced in the United States 
 in 1900 at ten billion dollars, 54% of which, he esti- 
 mates, goes to eighteen million producers, as he styles 
 them. Mr. Wright, in "Practical Sociology," without 
 showing in detail how he arrived at the figures, esti- 
 mates the total amount of wealth produced in this 
 country in the same year at fifteen billion dollars. Mr. 
 Bolton Hall, in "Free America," estimates it at nine- 
 teen billion dollars. 
 
 The census returns do show, however, and without 
 juggling, that the wealth of the country per capita in 
 1850 amounted, as already stated, to $308, and in 1900 
 to $1248,* a fourfold increase in value ^er capita, which 
 can only be attributed to the effect of labor-saving im- 
 provements and processes.! If it be assumed that the 
 aggregate savings of a community or nation increase 
 in the same proportion as its aggregate increase of in- 
 comes, then the conclusion can be drawn from the figures 
 mentioned above that improvements in labor-saving 
 processes have, since 1850, increased tjie wealth-pro- 
 ducing powers of labor fourfold, and this is doubtless 
 
 *See "Practical Sociology," by Carrol D. Wright, p. 310. 
 
 *t Although in the census, land is improperly classed as 
 wealth, the ratio of the increase of wealth per capita is doubt- 
 less correctly shown, 
 
62 THE PROBLEM OF THE UNEMPLOYED. V. 
 
 approximately the fact. No one will contend, however, 
 that there has been a fourfold increase in wages during 
 the period referred to above, while even, Mr. Wright 
 claims less than twofold. Hence from the facts bearing 
 upon the subject, the theory that under existing condi- 
 tions and under the operation of the law of supply and 
 demand, labor-saving inventions do not directly in- 
 crease wages, is amply sustained by experience. The 
 second question is therefore answered in the negative. 
 
 That labor-saving inventions in themselves, as well 
 as increase of population, directly increase the value of 
 land and raise rent, is equally apparent. It will be found 
 that the third question must be answered in the affirm- 
 ative. To illustrate: 
 
 Electricity and the trolley line have superseded the 
 horse in the operation of street cars. Land miles away 
 has been brought in point of time to the very centers 
 of cities and thus greatly increased in value, and rents 
 on such land have advanced accordingly. By the aid- 
 of barbed wire the cheap lands of the South-west in 
 the timberless districts are being fenced for a fraction 
 of what it would otherwise cost, and for this reason 
 have been rendered more attractive to the home-seeker, 
 and the price of the land has on this acconut been in- 
 creased. Improvements in connection with the pump- 
 ing of water in great quantities, and also in harvesting 
 processes, were recently applied to the cultivation of 
 rice on the sour, fiat prairies of Southern Texas, and 
 these lands, within two or three years, doubled and quad- 
 rupled in value. Improved highways, telephone, light, 
 water and street car service, all combine to make the 
 land in connection with which such advantages can be 
 enjoyed, more desirable, and the fact of its being more 
 
EFFECT OF IMPROVEMENTS. 63 
 
 desirable adds to its selling price, and increases the rent 
 which must be paid for the privilege of using it. 
 
 So, also, good neighbors, good schools and good gov- 
 ernment make land more attractive and increase rents 
 accordingly. In one of the Southern cities, the sale of 
 intoxicatng liquors was prohibited for a number of 
 years. In commenting upon the results of the experi- 
 ment, one of the local papers stated that much of the 
 money which the working men of the town formerly 
 threw away in saloons was being invested by them in 
 building lots, and the great improvement in the local 
 real estate market was attributable to prohibition. Such 
 would naturally be the case. The practice of the virtues 
 of temperance and frugality cannot increase the rate 
 of interest or raise wages, but it can and does increase 
 rent and the values of land for two reasons; first, be- 
 cause a community inhabited by people of sufficient 
 intelligence, self-respect and firmness of character to 
 practice such virtues is a desirable one in which to live 
 and raise one's family, and, other things being equal, 
 population will be attracted to it, and land values and 
 rents will, as a consequence, be increased. Second, be- 
 cause the more wealth the people of a community save, 
 over and above living expenses, the more they have to 
 invest in land, as well as in other things, and this will 
 create a greater demand for land, and such demand will 
 increase the price. 
 
 That not only increase of population but every thing 
 which adds to the efficiency of labor and improves the 
 conditions under which men live, in the long run and 
 in the main, simply adds to the value of land and in- 
 creases the incomes of those whose interests as land 
 owners exceed their interest as laborers and capitalists, 
 
64 THE PROBLEM OP THE UNEMPLOYED. V. 
 
 will be made more clearly apparent, however, in subse- 
 quent pages. 
 
 The conclusion stated above, to the effect that land 
 owners, and only a portion of them, appear on the whole 
 and in the long run to be the beneficiaries of progress 
 of the character referred to, may not be assented to 
 except upon careful reflection, nor perhaps until the 
 end of the discussion is reached. It may be claimed, 
 for instance, that there are no indications of farmers, 
 who are the most numerous of the land-owning class, 
 being the recipients in any great amount of the wealth 
 resulting from improvements in labor-saving machinery. 
 The portion of the wealth produced which land receives, 
 however, depends not upon the amount or area of land, 
 but upon its value, and most of the land in cultivation 
 is of little value compared with that of urban lands 
 and lands held for other than agricultural purposes. 
 What is really claimed, however, is not that all wealth 
 produced is divided among the factors entering into its 
 production, but that as to the portion of it thus divided, 
 the part going to land is increased by labor-saving 
 machinery and progress of every character, while the 
 portion going to capital and labor is not thus increased 
 from the same cause, and that hence the land owner, 
 and not the capitalist or the laborer, gets the benefit of 
 such progress. Probably four- fifths of those engaged 
 in agricultural pursuits, as will be shown later, have 
 greater interests as capitalists and laborers than as 
 land owners, and this being the case, it is not to be 
 expected that farmers as a class would be greatly ben- 
 efited by causes which simply increase the value of land 
 without increasing interest or wages. 
 
 Again, the fact that immense private fortunes have 
 been accumulated during the present generation other- 
 
EFFECT OF IMPROVEMENTS. 65 
 
 wise than from an increase in land values, may also 
 be given as a reason for doubting the conclusion that 
 land owners in the end get almost the entire benefit 
 of material progress. As to these newly, enormously 
 rich, however, who have appeared simultaneously with 
 the recent wonderful improvements in labor-saving ap- 
 pliances, and whose incomes are only in small part, 
 comparatively, made up of rent or interest or wages, 
 reference has already been made to them as belonging 
 to an exceptional class, enjoying incomes for which no 
 equivalent in labor or the use of land or capital is given. 
 To this class must be assigned those whose incomes, 
 as already mentioned, constitute exceptions to the nat- 
 ural law which controls the distribution of wealth, and 
 in the main arise from disobedience of it. 
 
 The ratio of the division of wealth between the 
 factors of production, land, capital and labor, is not 
 fixed, but is determined by the law of supply and de- 
 mand. While the number of laborers and the amount 
 of capital is constantly increasing as well as the product- 
 ive capacity of the laborer, land remains a fixed quantity, 
 and rent, or the value of land, increases because the 
 supply of land cannot increase, hence the ratio of the 
 division of the product is constantly changing in favor 
 of land. 
 
 The further discussion of the subject, therefore, will 
 be carried on upon the assumption that improvements 
 in labor-saving processes and human progress generally, 
 in the long run, increases the value of land, but do not 
 naturally increase the wages of employees or rates of 
 interest. The truth of this assumption will be conclus- 
 ively established, not only by reference to additional 
 facts bearing upon the matter, but by showing that, in 
 5 
 
66 THE PROBLEM OF THE UNEMPLOYED. V 
 
 the very nature of things, under existing conditions, 
 neither wages nor rates of interest can naturally advance, 
 even though improvements were to be carried so far as 
 finally to enable the laborer to produce in an hour what 
 now requires the work of years. The assertion just 
 made has reference to the natural effect on wages and 
 interest of human progress generally. In the contin- 
 gency mentioned, other factors of the character referred 
 to by Mr. Ghent in his "Benevolent Feudalism," would 
 doubtless bring about a comparatively insignificant in- 
 crease in wages. 
 
CHAPTER VI. 
 
 THE ALL IMPORTANT QUESTION. 
 
 Why do not Improvements in Labor-Saving Pro- 
 cesses Naturally Increase Wages? 
 
 IT having been shown that increase of population 
 and improvements in morals, general intelligence and 
 government, as well as in labor-saving processes, raise 
 the value of land and increase the price which must 
 be paid for the privilege of using it, without increasing 
 interest, or the wages of the great mass of laborers, in 
 anything like the same proportion, if at all, the reason 
 for this fact is next to be considered. 
 
 In the first place, wages do not naturally rise with 
 the increasing wealth-producing power of the laborer, 
 simply because there are not enough jobs to go around. 
 
 The assertion is often made that any laborer who 
 really wants work can always get it, the inference being 
 that it is only the indolent and inefficient who ever fail 
 of having employment. It is doubtless true that the 
 working man who, by greater faithfulness and efficiency, 
 in effect gives more labor for the same wages, and in 
 this way unconsciously underbids his fellows, is always 
 reasonably sure of employment, even in times of de- 
 pression ; but it by no means follows that, if all working 
 men were equally as faithful and efficient, all would be 
 equally as sure of employment as the one who is now 
 
 67 
 
68 THE PROBLEM OF THE UNEMPLOYED. VL 
 
 exceptionally so. Such improvements in faithfulness and 
 efficiency on the part of all laborers would simply in- 
 crease the amount of wealth produced by them; but 
 as already remarked, this is what labor-saving machinery 
 accomplishes. Why, then, should increased efficiency 
 resulting from a general improvement in the character 
 of laborers do more? Both would result in an increase 
 of the output; but we have seen that an increase in the 
 amount of wealth which laborers produce does not nec- 
 essarily result in an increase of wages, otherwise labor- 
 saving machinery would naturally raise wages. 
 
 In any event, however, whether much or little of the 
 idleness on the part of laborers is voluntary or not, 
 large numbers of them are always eager for the places 
 of those who have steady employment. This is shown 
 by the fact that whenever a strike occurs, some men are 
 always ready to take the places of strikers, and many 
 more are only deterred from doing so by the moral and 
 physical duress exerted by labor organizations. It is 
 also the universal testimony of the managers of business 
 establishments and employment agencies, and of those 
 who occasionally advertise for labor, that in all lines of 
 employment, from the highest to the lowest, men are 
 always anxious for jobs, either because they are wholly 
 out of employment or but partially employed, or be- 
 cause they feel that they are underpaid in the positions 
 held by them. The numerous newspaper accounts of 
 men and women who commit suicide for want of em- 
 ployment would seem to indicate a real scarcity of jobs. 
 Again, how is it otherwise possible to account for the 
 apparent heartlessness of thousands of parents in this 
 country who consign their own children, sometimes even 
 under ten years of age, to the monotonous and health- 
 destroying slavery of mills, sweat-shops, chemical works, 
 
THE ALL IMPORTANT QUESTION. 69 
 
 coal breakers and match factories? And again, what 
 other reason can be given in explanation of the fact 
 that railroad companies, even though fixing the age 
 limit of new employees at forty- five years, and often 
 under that age, and subjecting them to severe physical 
 examinations, never fail of having on hand long lists of 
 applications for employment from men both competent 
 and eligible? 
 
 Complaint of a scarcity of labor is sometimes heard, 
 however, in this country, and in many quarters the 
 Chinese exclusion act is deprecated. But investigation 
 will invariably show that there is never any scarcity 
 of applicants for positions which are permanent, when 
 the wages are sufficient to enable the employee to live 
 according to American standards. The American labor- 
 er naturally objects to being forced to submit to as low 
 a standard of living as that prevailing among those of 
 his own calling in Europe. To accept employment for 
 wages which would imply the lowering of the standard 
 of living of his class would not increase the demand for 
 labor. It would simply tend to lower the wages of all 
 laborers. The self-respecting workingman, therefore, 
 often rightfully refuses to accept employment at reduced 
 wages until compelled to do so by abject want; but 
 this does not imply any scarcity of labor or an abundance 
 of opportunities for employment. 
 
 The tramp is often thoughtlessly referred to in support 
 of the claim that idleness on the part of laborers who 
 are out of employment is not involuntary. But many 
 who are classed as tramps will work when they can get 
 work, otherwise why is it that tramps are so much 
 more plentiful in periods of industrial depression than 
 in prosperous times? The confirmed tramp is usually 
 a laborer who, by being compelled to travel and beg 
 
70 THE PROBLEM OF THE UNEMPLOYED. VI. 
 
 for work, has lost his self-respect. Prior to 1850, there 
 was little complaint of a scarcity of jobs in the United 
 States, and up to that time there were no tramps or 
 beggars in this country. 
 
 Occasionally, as in harvest times, there may be a 
 temporary scarcity of help in some localities, or an un- 
 willingness may be shown on the part of laborers to work 
 for the wages offered when the employment is but tem- 
 porary. A slight increase in wages above the average, 
 especially when permanency of employment is assured, 
 will always fill to overflowing the labor market of the 
 locality where such wages are paid, and render any fur- 
 ther advance impossible. The law of supply and demand 
 regulates prices paid for labor, just as it regulates 
 prices paid for commodities, and as combinations 
 of manufacturers may sustain or raise the prices of 
 commodities, so combinations of workingmen may 
 sustain or raise the prices of certain kinds of labor. 
 But in neither case is there any escape from the pressure 
 of the law of supply and demand, and in most cases, 
 it overcomes all resistance and forces the price of labor 
 as well as the price of commodities to the minimum 
 point. 
 
 The claim that at all times large numbers of workers 
 in the United States are unwillingly idle is not a mere 
 matter of opinion, since it is esablished from data col- 
 lected by the census enumerators and shown in the cen- 
 sus reports. And here again reference is made to the 
 optimistic Carrol D. Wright, who states that on an aver- 
 age about 5% of the workers of the country are at all 
 times unable to obtain employment.* The last census 
 of Massachusetts, taken by the State authorities in 1895, 
 is especially valuable on this point. The maximum 
 
 ♦"Practical Sociology," p. 243. , 
 
THE ALL IMPORTANT QUESTION. 71 
 
 number of employees working at any one time, exclusive 
 of those engaged in agriculture and working as clerks, 
 bookkeepers, salesmen, and in other salaried positions, 
 was 518,744, the minimum number 371,249; the differ- 
 ence between these extremes 161,495. It thus appears 
 that in the State of Massachusetts, approximately one- 
 third of the so-called wage earners were involuntarily 
 idle at some time during the year. 
 
 A moment's reflection will satisfy one that so long 
 as 5%, or even 1%, of the workers in any line of employ- 
 ment are unemployed, wages in such line can never natur- 
 ally advance, though they may be slightly lifted artifi- 
 cially by the fear of strikes and from other causes. Why 
 should A pay B higher wages, when C stands ready to do 
 the same work for the same or even lower wages? The 
 one man in twenty out of employment and seeking em- 
 ployment is a constant menace to all the other nineteen 
 who are employed. His offer to work for lower wages 
 may result in lowering the wages of the other nineteen, 
 even though he fail of getting employment himself. 
 
 A small minority of laborers, unable to get work or 
 finding difficulty in obtaining it, must necessarily 
 prevent wages from rising, even though the overwhelm- 
 ing majority are regularly employed. If there are 
 jobs for only ninety- five laborers out of a hundred, 
 the five unemployed are always ready to take the places 
 of the employed, and the effect constantly of an unem- 
 ployed or but partially employed five per cent, or even 
 one per cent, anxious to get the places of some of the 
 employed ninety-nine per cent, will inevitably prevent 
 wages from naturally advancing, no matter what may 
 be the increased amount of wealth produced. Nor wou!ld 
 it make any difference whether the increase in produc- 
 tion resulted from greater faithfulness and energy on 
 
72 THE PROBLEM OF THE UNEMPLOYED. VL 
 
 the part of wage earners, or from improvements in labor- 
 saving appliances operated by them. On the other 
 hand, if there were always jobs for a hundred and five 
 or even a hundred and one laborers, when there were 
 only one hundred to be had, so that at all times men 
 wanting work could get it without difficulty, wages 
 would always tend to rise. 
 
 It is clear, under present conditions, that wages can- 
 not rise as the natural result of progress made in labor- 
 saving appliances, even though the wealth which the 
 laborer produces should be increased thereby ten fold, 
 or for that matter, a hundred or even a thousand fold. 
 It is equally true that there can be no increase in wages 
 from natural causes until every man wanting work can 
 readily get work, and that too without having to regard 
 it as a favor to himself to be furnished with work. The 
 solution of the problem of the unemployed, therefore, 
 involves the study of conditions affecting the demand 
 for labor, and this includes a consideration of the ob- 
 stacles to the employment of capital and labor. It 
 must logically follow, therefore, if there are artificial 
 obstacles to such employment, then in the fact of the 
 existence of such obstacles will be found a reason, if not 
 the reason for the lack of the full employment of labor.. 
 
 The scarcity of jobs referred to is not attributable 
 to improvements in labor-saving machinery. 
 
 To lessen the number of jobs means to lessen the de- 
 mand for labor and lower wages ; to increase the number 
 of jobs ineans to increase the demand for labor and 
 raise wages. Jobs, therefore, are most plentiful in pro- 
 portion to population in countries in which wages are 
 highest. It is a significant fact, also, that in such 
 countries, fortunes are most rapidly accumulated, which 
 tends to show that employers and business men as a 
 
THE ALL IMPORTANT QUESTION. 73 
 
 class have nothing to gain from a lower scale of wages. 
 In the United States, Canada, and the Australian Col- 
 onies, where land is still comparatively cheap, wages are 
 higher than anywhere else in the world, yet in no 
 other countries are labor-saving machines more ex- 
 tensively used. In fact, the world over, other things 
 being equal, wages are highest in the countries using the 
 greatest amount of labor-saving machinery, and lowest 
 in countries using the least amount. Besides, the com- 
 plaint of the unemployed in all the thickly settled 
 countries of Europe was as loud and bitter before the 
 introduction of modern labor-saving machinery as at 
 the present time. 
 
 There is no reason in the nature of things, why labor-, 
 saving appliances should reduce wages. This is ap- 
 parent from the following illustration: I have ten dol- 
 lars with which to buy a pair of shoes. By means of 
 a labor-saving invention, one man becomes able to do 
 the work of two in the making of shoes. The price of 
 a pair of shoes, therefore, is reduced to five dollars, and 
 many shoe-makers perhaps are forced to abandon the 
 making of shoes. I pay five dollars for the shoes, but 
 now I have five dollars left to spend for something 
 else, which but for this invention would have been spent 
 for the shoes, and in the buying of five dollars worth 
 more of something else, I will have increased the de- 
 mand for other kinds of labor to the same extent I would 
 have increased the demand for the labor of shoe-makers, 
 had the five dollars been spent for shoes. While the 
 adoption of labor-saving processes produces displace- 
 ments of labor and hardships to individual laborers, 
 no diminution in the ultimate demand for labor can 
 result therefrom. It is thus evident, from theory as 
 
74 THE PROBLEM OF THE UNEMPLOYED. VL 
 
 well as experience, that the scarcity of jobs cannot be 
 attributed to labor-saving processes. 
 
 Nor is the scarcity of jobs caused by mere increase 
 of population or any real scarcity of land. 
 
 A moment's reflection must satisfy one that there is 
 no real scarcity of land. More than half the dry land 
 of the world, suitable for agricultural purposes, is as yet 
 untouched by the hand of man, and immense areas 
 of virgin soil of unsurpassed fertility are still to be 
 found in nearly every country, and especially in South 
 America, Africa, Siberia and Australia. The State of 
 Texas alone could easily produce food and clothing for 
 all the inhabitants of France, for it has a larger area 
 and its soil is equally productive. It is estimated that 
 two acres of land of average fertility, when cultivated 
 with reasonable skill and diligence, are amply sufficient 
 with the least expenditure of labor, to produce in abund- 
 ance the raw material necessary for the sustenance of 
 a human being. Under an intensive and scientific sys- 
 tem of agriculture, such as density of population would 
 encourage, doubtless a single acre, or even half an acre, 
 would be amply sufficient. In Japan the land in culti- 
 vation amounts to less than one acre to each inhabitant, 
 and its entire cultivated area with its forty-five million 
 people, is less than the area of Illinois. More than half 
 the present population of the world could easily be 
 sustained within the limits of the United States alone. 
 More than one-fourth of the lands of Europe are un- 
 used. The uncultivated or but partially cultivated 
 lands of thickly settled Great Britain, which are now 
 held in comparative idleness, including the millions of 
 acres devoted to private parks and used as game pre- 
 serves, as well as the hundreds of thousands of acres 
 of unused land in cities and towns and their suburbs, 
 
THE ALL IMPORTANT QUESTION. 75 
 
 are doubtless capable of producing with ease all the 
 important food supplies imported into that kingdom. 
 And the use of these lands for agricultural purposes 
 is prevented only by the whim of owners and by the 
 amount of the purchase price demanded. Modern means 
 of transportation and facilities for exchanging the pro- 
 ducts of labor, make the unused lands of countries 
 thousands of miles distant in effect a part of the unused 
 lands of England, and the employment of additional 
 laborers on such lands would enable the English working 
 man to exchange his products for food produced by them. 
 
 In Greater New York, there are tens of thousands 
 of acres of land wholly unused, including more than 
 half the area of the city. This is the case also in Chicago, 
 there being within the corporate limits of the latter city, 
 on an average, less than three people to the acre, al- 
 though in the congested tenement districts the popula- 
 tion may exceed a thousand to the acre. In the United 
 States, four acres out of five are in fact unused or but 
 partially used. When land is referred to as being but 
 partially used, it is meant that it is not so used as to 
 produce the greatest amount of wealth with the least 
 expenditure of labor. 
 
 And so in all countries are to be found on every hand, 
 idle lands and unused coal beds and mineral deposits, 
 from which profitable returns to capital and labor could 
 be obtained but for the price required for the privilege 
 of using them. Such lands are not held out of use 
 because of any lack of fertility or on account of distance 
 from markets; they are often to be found within and 
 at the very gates of cities and towns, and in the midst 
 of highly developed farming communities. So long as 
 lands of this character remain unused, or but partially 
 used, neither the theory of Malthus nor the law of dimin- 
 
76 THE PROBLEM OF THE UNEMPLOYED. VL 
 
 ishing returns can have any real or necessary application. 
 
 Suppose three acres on an average to be required 
 for the comfortable maintenance of each human being 
 under present methods of cultivation. In the United 
 States, after deducting as waste land one-fourth of the 
 area of the country, there would remain twenty-one 
 acres per capita, or eighteen acres in excess of the neces- 
 sary umber. If the population were doubled, there 
 would be an excess of fifteen acres, and if trebled, an 
 excess of twelve acres, over and above the amount 
 required for the support of the entire population, and 
 so on. In point of fact, population in this country 
 cannot begin to crowd the means of subsistence for cen- 
 turies yet to come, even should it continue to increase 
 in the future as rapidly as in the past. So far as actual 
 experience is concerned population has never become 
 dense enough in any country to result in the full employ- 
 ment, or any thing like the full employment, of the 
 lands of such country. And idle men and women have 
 died of starvation in thickly settled communities, in 
 the midst of vast areas of unused or but partially used 
 lands. 
 
 When the civilized world was appealed to a few 
 years ago to assist millions who were starving in India 
 on account of a failure of crops in certain sections of 
 that country, contributions in money were wanted and 
 not ship loads of wheat, as some mistaken philanthro- 
 pists supposed. There was an abundance of food in In- 
 dia, and the wholesale price of it scarcely advanced at 
 all. People starved, not because there was no food, but 
 because they could not get employment. -The same was 
 the case in Ireland when the potatoe crop failed in 1845- 
 Food, with the exception of potatoes, was about as 
 cheap as ever, and there was plenty of it on the island 
 
THE ALL IMPORTANT QUESTION. 77 
 
 or within easy reach. All the starving populace wanted 
 was employment. During that period of distress, in 
 which tens of thousands were permitted to starve to 
 death, the vessels which crossed to England were loaded 
 down as usual with sheep, cattle, butter and eggs and 
 the miscellaneous products of the farms, sold for ship- 
 ment abroad to raise money due as rent to absent lands 
 lords. 
 
 It is not necessary to take up the time of the reader 
 in a discussion of the Malthusian theory of increase 
 in population. It is now discredited in all quarters. 
 The fallacy, if not the absurdity of it, seems to have 
 been admitted, tacitly or otherwise, by all economic 
 writers since Henry George's masterly treatment of the 
 subject in Progress and Poverty twenty-five years ago. 
 
 Every man comes into the world with two hands 
 with which to work and supply his wants. If cast away 
 upon an uninhabited but fertile island, he could make 
 a generous living with no other capital than an ax and 
 spade. In every civilized community the unemployed 
 man can always find within a few minutes, or at most a 
 few hours travel, an abundance of unused land on which, 
 if he had free access to it, he could make a living more 
 easily than the castaway referred to, yet he is often 
 compelled to fold his arms and sit in idleness and suffer 
 for want of food in the midst of unlimited unused natural 
 opportunities for employment. 
 
 When men starve for want of work, it cannot be 
 because of the niggardliness of nature. May it not be 
 because of the mal-adjustment of the forces of govern- 
 ment? 
 
 With an abundance of unused land, freely available 
 to capital and labor, growth of population in itself 
 would render the employment of labor more profitable, 
 
78 THE PROBLEM OF THE UNEMPLOYED. VI. 
 
 and increase rather than lessen the demand for labor. 
 Take the case of land a few miles from the center of a 
 thriving village. As population increases, macadamized 
 roads, telephone and trolley car service, good schools 
 and many othet public utilities become available to the 
 laborer employed in cultivating it. Better markets 
 spring up close at hand, and this makes his labor more 
 effective, and in numberless ways co-operation with 
 nearby neighbors saves labor and increases the products 
 of his industry. When the pioneer settles in the wilder- 
 ness, he can make little more than a bare living, no mat- 
 ter how fertile the soil, for he must be his own jack of 
 all trades. At every step he misses the help and assist- 
 ance which comes from co-operation with others and the 
 division of industry. When thousands have settled 
 around him, then, in numberless instances, he saves 
 energy formerly fritted away for small returns, and the 
 efficiency of his labor is immensely increased. 
 
 Seventy years ago, a few hundred families of Mor- 
 mons pushed out into the wilderness, crossed the Rocky 
 Mountains, and settling on free land fifteen hundred 
 miles beyond civilization, founded Salt Lake City. The 
 capital which they carried with them did not average 
 one hundred dollars to the family, and was represented 
 only by teams and a few agricultural and household 
 implements. Where but ten families would have failed, 
 hundreds of families succeeded. Unaided by outsiders, 
 they quickly brought an abundance of capital of their 
 own into existence. They constructed roads and irriga- 
 tion canals and ditches, and provided for other public 
 utilities and diversified their industries. In the saving 
 of labor resulting from co-operation of a large com- 
 munity is the explanation in great part of the prosperity 
 and success which so speedily rewarded their efforts. 
 
THE ALL IMPORTANT QUESTION. 79 
 
 It must be evident, on reflection at least, that so long as 
 there was an abundance of unused lands in the very 
 midst of the Mormon community, free of cost to the first 
 comer who desired to use it, increase of population would 
 tend to increase the demand for labor instead of lessen- 
 ing it, because of the inviting fields for the investment 
 of capital in the employment of labor which these unused 
 lands would afford, situated as they would be on good 
 roads, in congenial neighborhoods, and served by irriga- 
 tion ditches already constructed. 
 
 While free land may seem an idle dream, the effect 
 of it must nevertheless be considered in order to ascer- 
 tain the laws which control the distribution of wealth. - 
 Thus, given an abundance of raw material — of land, 
 freely available — increase of population cannot lessen 
 the demands for the product of labor, since as popula- 
 tion increases, consumption also increases, and with in- 
 crease of consumption will follow in the same ratio an 
 increased demand for labor. 
 
 It seems, therefore, to be demonstrable that neith ^ 
 a real scarcity of land, nor the increase of population, 
 nor improvements in labor-saving processes, can be as- 
 signed as the reason for involuntary idleness, and for 
 the failure of wages to advance naturally in proportion 
 to the increasing wealth-producing efficiency of the 
 laborer. As to whether capital increases as rapidly as 
 necessary for the full employment of labor will be con- 
 sidered in subsequent chapters. 
 
CHAPTER VII. 
 
 OBSTACLES TO EMPLOYMENT OF CAPITAL AND 
 LABOR. 
 
 AGRICULTURE is the primary and most important 
 of all industries. About one-third of all laborers in 
 the United States are engaged in producing wealth directly 
 from the soil. It is the occupation in which the work- 
 man most easily learns to do the work required of 
 him, and to which any laborer, whether skilled or other- 
 wise, can quickly adapt himself. Under favorable con- 
 ditions, it is attractive alike to the man with small 
 means or large means, to the inexperienced as well as 
 the experienced, and to the ignorant as well as the in- 
 telligent. 
 
 The wages of agricultural laborers furnishes the stand- 
 ard which gauges, to a large extent, the wages of all 
 laborers. If wages on farms are high, wages in other 
 lines of employment will be high also, since a demand 
 for agricultural labor at high wages will retain labor 
 upon farms and even attract it from cities and towns, 
 and thus increase the demand for labor in other than 
 agricultural pursuits. 
 
 In the settlement of new countries farmers come first, 
 and after them follow mechanics and merchants. Farm- 
 ers and miners must first be employed in the production 
 of the raw material, before those who work in stores 
 and factories can have employment. The business of 
 6 81 
 
82 THE PROBLEM OF THE UNEMPLOYED. VH. 
 
 the world, with all its ramifications and subdivided 
 branches of production and distribution, is based primar- 
 ily on labor applied directly to the soil. It is evident 
 that anything which obstructs the access of capital 
 and labor to land is an obstacle to employment, and it 
 may be sufficient to account for much, if not for all, 
 that is evil and wasteful in the present industrial sys- 
 tem. 
 
 It is also evident that anything which interferes with 
 the natural tendency of surplus capital and labor to 
 first use the vacant land nearest centers of population, 
 before going to more remote and less desirable land, 
 is an obstacle to employment. Why should farmers, for 
 instance, be forced into the wilderness, while on the out- 
 skirts of thriving cities and towns and in the midst of 
 well-settled communities, there is an abundance of un- 
 used land— land on which the same amount of labor 
 would produce wealth in far greater quantities? 
 
 In the suburbs of every city is to be found a zone of 
 almost wholly unused lands, with a few buildings scat- 
 tered over it. It includes the territory between the 
 thickly settled portion of the town and the culti- 
 vated fields of the adjoining country. Its area is inva- 
 riably many times greater than that of the city 
 proper. As the city grows, this zone widens and en- 
 croaches more and more on the surrounding lands in 
 cultivation. The price at which land is held within 
 these zones prohibits its purchase for any agricultural 
 use, and besides, the sale of it to speculators and in- 
 vestors, in small and isolated tracts, spoils its use for 
 such purposes. Nor is it profitable to encumber these 
 lands with leases which would protect the improve- 
 ments of the tenant farmer, since the rent would be tri- 
 fling in comparison with the value of the land. Town 
 
OBSTACLES TO EMPLOYMENT. 83 
 
 lots can generally be raised upon land of this character 
 more profitably than vegetables. Hence, such land is 
 often subdivided into lots and blocks a generation or 
 more in advance of any economic necessity for it. Not, 
 one acre in ten, often not one in twenty, between the 
 constantly extending lines by which these zones are 
 bounded, is used for any productive purpose ; yet on no 
 other lands in the country could so much agricultural 
 wealth be produced with so little effort. The market 
 would be at the farmer's door, and the fertilizing wastes 
 of the city equally as convenient. It has been found 
 from actual investigation that five per cent or more of 
 the working men of any city in the United States could 
 be profitably employed in the cultivation of these un- 
 used lands, if the natural availability of the lands for 
 such use was alone to be considered. 
 
 The questions suggested in this connection are these: 
 Why should the cultivation of the soil in the immediate 
 vicinity of the thickly settled portion of every thriving 
 town and city be so largely abandoned, ten or a dozen, 
 or perhaps twenty-five or even fifty years, or more, in 
 advance of any real economic demand for it for building 
 sites? Why should not the cultivation of this, the 
 most valuable of all lands for agricultural uses, continue 
 until the very time when it is really needed and actually 
 used for building purposes ? Why must energy be wasted 
 in transporting vegetables and food scores and hundreds 
 of miles while land in the very midst of consumers lies 
 unused and uncultivated? And this suggests other 
 questions: Why, in the building of cities and towns, 
 are residences on the outskirts scattered over such 
 wastes of unimproved lots, when convenience and econ- 
 omy, health and happiness would be better subserved 
 by a compact and natural order of settlement ? In nine 
 
84 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 cases out of ten, the lot most desirable and valuable 
 for a new residence, or a new business building, is the 
 first unused or but partially used one to be found, count- 
 ing from those already in use. Why should effort be 
 fritted away in passing by such unused lots and building 
 sidewalks, roads and sewers to those more remote and 
 less conveniently situated ? What natural and economic 
 necessity is there for such waste of human energy? 
 
 It is not necessary for all, or even any, of the unem- 
 ployed themselves to turn to the soil in order to relieve 
 the crowded labor markets of cities and towns. If 
 the cultivation of land now vacant were really profitable 
 — and that this would be the case as to much of it near 
 the centers of population, but for the enormous prices 
 demanded for access to it, can admit of no doubt — 
 laborers already having employment in other lines of 
 business, including those with small means, would be 
 attracted to the soil, and in many instances would 
 quickly vacate positions in cities and towns, to the 
 benefit of the unemployed remaining there. 
 
 The willingness of people in every trade and vocation 
 in life to go to unused land, and live upon it and cultivate 
 it when conditions are such as to render the cultivation 
 of it profitable, is shown, to some extent at least, in 
 recent years by the tens of thousands of applications 
 made for homesteads when reservations in the Indian 
 Territory have been opened for settlement. The de- 
 mand for these unused lands under conditions requiring 
 use and occupancy has far exceeded the supply. While 
 this demand was doubtless stimulated by the hope of 
 deriving profit from mere increase in value of land, 
 yet the settlement of the country would have been little 
 less rapid, had no other inducement been held out to 
 
OBSTACLES TO EMPLOYMENT. 85 
 
 landless families than escape from the payment of land 
 rent or land purchase money indebtedness. 
 
 This, then, is the situation: A few laborers are al- 
 ways out of work and ready to take the places of those who 
 have work. So long as such conditions prevail, wages 
 can never rise from natural causes, but must always 
 tend to fall. The proportion of the unemployed to the 
 employed in every line of industry is probably about 
 the same, but even if this were far from being the case, 
 it would be immaterial in view of the ease with which 
 labor in any other industry can adapt itself to most 
 of the work required in the cultivation of the soil. 
 Many of the unemployed have left the country, either 
 because of a lack of employment, or on account of the 
 small wages paid on farms, and are competing against 
 laborers in other lines of employment in cities and towns. 
 Some of these, as well as others, would gladly turn to 
 agriculture, if assured of higher wages or better positions. 
 If one-third, approximately, of the unemployed, usually 
 amounting perhaps to not even two per cent of all labor- 
 ers, according to the last census, went to work as farmers 
 on unused lands, it is evident that they would raise 
 food to exchange for things which the other two-thirds 
 of laborers at present unemployed could produce. A 
 demand being thus created for the product of the latter, 
 their employment would also follow, and thus all idle 
 men willing to work could get work without depriving 
 of work any of those previously employed. 
 
 The world never suffers from over-production, but 
 always from under-consumption. Millions, with but 
 a single suit of clothing each, would gladly buy more 
 garments if they had anything to give in exchange for 
 them. Mankind would consume more of the comforts 
 9.jli4 luxuries of life, if with unflaggring toil the where- 
 
86 THE PROBLEM OF THE UNEMPLOYED. VtL 
 
 withal with which to pay for them could be obtained. 
 The idle shoemaker needs clothing, and the idle spinner 
 needs shoes, and both need better houses, and the idle 
 carpenter needs both clothes and shoes, and all need 
 better food and more of it. The idle laborer who 
 might be employed on the vacant land so near cities 
 and towns, and in the cultivation of which the employ- 
 ing capitalist could afford to pay good wages, but for 
 the enormous investment required for its purchase, 
 also needs shoes, clothing and houses, and so it is in 
 all vocations and callings. If the idle shoemaker had 
 work, he could buy clothes ; if the idle spinner had work, 
 he could buy shoes; and if the idle carpenter had work, 
 he could buy shoes and clothes; and the spinner and 
 shoemaker could both live in better houses made by 
 the carpenter, and all could eat better food and more 
 of it, produced by the laborer working upon these 
 vacant lands. Hence, if all who are idle could be thus 
 fully employed, this employment would not lessen the 
 demand for the labor of those who are already em- 
 ployed, and the manufacturer, merchant and all other 
 business men engaged in legitimate wealth-producing 
 enterprises would participate in the general activity 
 and prosperity which would then ensue. Prosperous 
 times always come with increase in the demand for labor, 
 and such demand always produces higher wages for the 
 laborer. 
 
 Nothing is more fallacious than the notion that 
 the amount of work to be done in the world is neces- 
 sarily a fixed quantity, aijd that the employment of 
 one man robs another man somewhere of his job. Un- 
 less the laborer is employed, he can consume but little 
 wealth, for he has little or nothing to give in exchange 
 for it. If he has work, he and the capitalist and land 
 
OBSTACLES to fiMPLOYMfiNt. 87 
 
 owner, and sometimes others, among whom the pro- 
 duct of his labor is divided, consume as much wealth 
 produced by others as he produces himself. This 
 is so because the wealth which he produces is exchanged 
 for that produced by others, and the demand for labor 
 resulting from this consumption of the product of other 
 laborers exactly equals the supply of labor which his 
 own employment affords. 
 
 The problem of' the unemployed would seem to be 
 solved, therefore, if only a small additional percent- 
 age of the entire laboring population could get work 
 upon a very small percentage indeed of the unused 
 land. Such lands, suitable for most profitable agri- 
 cultural work, are to be found in quantities sufficient 
 for this purpose, in large part at least, in and near the 
 very suburbs of cities and towns, to say nothing of 
 unused or but partially used farming lands in every 
 farming community. When times are dull and the labor 
 market is glutted, the small capitalist and the laborer 
 must often look with longing eyes to the nearby unused 
 or but partially used lands. What is it which prevents 
 employment upon these lands? 
 
 It is obvious that there is some obstacle, artificial 
 or otherwise, which always prevents the full employ- 
 ment of labor. It is also evident, as has been shown, 
 that this obstacle is not connected with labor-saving 
 machinery, or necessarily due to mere increase of pop- 
 ulation, or to any real scarcity of land; also that the 
 removal of the obstacle, whatever it may be, would 
 give increased opportunities for employment, from which 
 could follow an increased demand for labor with in- 
 creased wages for the laborer and increased prosperity 
 in every wealth-producing enterprise. 
 
 But it is sometimes seriously urged that the so-called 
 
88 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 high wages insisted on by laborers in this country 
 is an obstacle to employment, and that if wages were 
 lower the demand for labor would be greater. This 
 simply means that if our workers would submit to the 
 standard of living prevailing among the workers of 
 the old world, and thus accept a smaller share of the 
 wealth produced by the partnership of land, capital 
 and labor, more of them would find employment. But 
 why, in the nature of things, should the giving to the 
 land owner or the capitalist more of the product increase 
 the demand for the product itself? Without an in- 
 creased demand for what labor produces there can be 
 no increased demand for laborers. If the scale of wages 
 were reduced the ability of laborers to consume would 
 also be reduced, and this surely would not tend to in- 
 crease the demand for things produced by laborers. 
 
 The notion that if wages were lower new enterprises 
 would be started, which now are impossible on account 
 of the prevailing rate of wages, originates from condi- 
 tions of which the following is an illustration: A 
 man is thinking of going into the sawmill business 
 in a certain locality. He has no timber lands of his 
 own. He finds that stumpage will cost him three dol- 
 lars per thousand and common labor a dollar and 
 seventy-five cents per day. On this basis he is un- 
 able to figure out satisfactory wages for himself after 
 allowing interest on his capital, so he drops the matter. 
 He tells some newspaper man that if he could have 
 employed common labor at the rate of, say, a dollar a day, 
 he would have gone ahead with the business. The 
 newspaper man at once jumps to the conclusion that 
 the alleged high price of labor has blocked this enter- 
 prise, and he accordingly writes about the scarcity of 
 labor, and advpgates the repeal of the Chines^ exclusion 
 
OBSTACLES TO EMPLOYMENT. 89 
 
 act. Had he inquired into the matter a little further, 
 he would have learned that the mill man would gladly 
 have paid a dollar and seventy-five cents a day for 
 labor, provided the land owner had priced the stumpage 
 at, say, $1.50 instead of $3.00 per thousand. The land 
 owner held out for $3.00 per thousand, however, as land 
 owners are doing everywhere with respect to the price 
 of land, because he believed that in a few years any 
 way, he could get that for it and perhaps more. He 
 knew the land would increase in value, with increase 
 of population. 
 
 Again, we read occasionally of some mine operator, 
 perhaps, who would open up this or that coal bed or 
 mineral deposit, if he could get cheaper labor. In 
 the first place, there is no economic necessity for the 
 using of such coal beds or mineral deposits, there being 
 plenty of better quality or nearer at hand which are 
 unused, and from which more wealth could be obtained 
 with less expenditure of labor And so it will be found 
 in every case where the high price of labor is mentioned 
 as an obstacle to the development of the country, that 
 it is the high price of land which either directly or in- 
 directly blocks the enterprise, and not the price of labor. 
 In other words, the real obstacle is the excessive amount 
 of tribute money demanded for the mere privilege of 
 employment. 
 
 The fact is, the less the employee gets, the more 
 the land owner, and not the employer as such, will 
 get in the long run. If employees consented to live 
 on starvation wages, in the hope of always being able 
 to find employment at some wage, they would be bit- 
 terly disappointed. A general reduction in wages could 
 not result in any general increase in the demand for labor. 
 If it had the effect, in the first instance, of making 
 
90 tHE PROBLEiM OF THE WNEMPLOVED. Vlt. 
 
 the working of certain coal beds and mineral deposits 
 and lands profitable, which would otherwise have re- 
 mained unused, there would follow an increased demand 
 for such lands. This would increase the price to be 
 paid for access to them, and the situation, with respect 
 to the demand for labor, would be the same as before, 
 no matter how low wages might fall. The owners of 
 valuable lands would alone, ultimately, be benefited by 
 a reduction in the scale of wages. This benefit would 
 come to them in the form of increased rents, or in the 
 form of increase in the value of lands. Nor would more 
 than a few, comparatively, of those who own land be 
 thus benefited, since the overwhelming majority of land 
 owners in this country have greater interests as capital- 
 ists and laborers than as landowners. 
 
 The conclusion that the lowering of wages would 
 neither increase the wealth of the country at large 
 nor the demand for labor, is supported by fact as well 
 as by theory. Thus, in the United States, the per 
 capita of wealth of the nation is increasing faster than 
 in any other of the great nations of the world. Times 
 are usually better and the demand for labor is greater 
 here than elsewhere, yet wages are higher, and there 
 are fewer unemployed in proportion to population, 
 than in Europe. Since low wages in Europe do not in- 
 crease the' demand for labor, why should it be supposed 
 that the lowering of the scale of wages here would have 
 that effect? The rising of the mercury in the ther- 
 mometer does not produce hot. weather, neither does 
 the falling of it produce cold weather; it simply indi- 
 cates the condition of the weather. In the same way, 
 high wages do not produce dull times, nor do low wages 
 produce good times, but when times are good, wages 
 rise, and when times are bad, wages fall. The scale 
 
OfiStACLES TO fiMfLOYMfeNt. 91 
 
 of wages, as it rises and falls, simply indicates whether 
 times are comparatively prosperous or otherwise. 
 
 A number of apparently different obstacles to the 
 employment of capital and labor can be easily pointed 
 out, all of which, however, are fundamentally the same. 
 
 It is apparent that until the factor of rent appeared- 
 in the primitive community referred to, wages would 
 increase with every invention which increased the 
 laborer's power to produce wealth. For the purpose 
 of illustration, let it be assumed that considerable 
 progress was made in the arts and sciences before land 
 acquired any value. With no opportunity to derive 
 an income from land, or to obtain gain by buying and 
 selling it, which gain is the same as rent, the owner of 
 wealth, in order to obtain any increase from it at all, 
 would have been compelled to use it as capital, or loan 
 it to one who would use it as such in the form of labor- 
 saving appliances. In the construction and operation 
 of such appliances labor would be employed. There 
 would be little or no opportunity for the profitable in- 
 vestment of wealth except in some enterprise giving 
 employment to labor, since it could not be invested in 
 the purchase of land. The illimitable resources of the 
 earth being absolutely free to'all, it is obvious that com- 
 petition among capitalists for laborers would enable 
 labor to command and receive in increased wages a far 
 greater portion of the additional wealth produced by 
 improved appliances, to say the least of it, than would be 
 the case if wealth could be profitably invested without 
 employing labor. Applying the line of thought thus 
 suggested to conditions as they really exist, it will be 
 seen that one of the reasons, in any event, why wages do 
 not increase with increased production is because wealth 
 can be profitably invested in land — because it can be in- 
 
92 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 vested otherwise than in the employment of labor. 
 
 In any prosperous country, a certain amount of wealth 
 is annually accumulated and saved, which must seek 
 investment in some form. Generally speaking, as al- 
 ready explained, there are but two ways in the main 
 by which the owner of such surplus wealth can invest 
 it so as to derive a permanent income from it. One 
 way is to invest it directly or indirectly as capital in 
 a wealth-producing enterprise which requires the em- 
 ployment of labor and increases the demand for labor. 
 This is done where the owner of wealth uses it or loans 
 it to one who uses it in farming, merchandising, mining, 
 or manufacturing. The other way is to invest it in 
 land. The latter form of investment does not need 
 the assistance of labor or require the payment of wages, 
 nor does it compel owners of wealth to bid against 
 each other for labor. Wealth may be thus invested 
 and large gains realized from it without its owner's 
 paying out one dollar in wages or contributing in the 
 slightest degree to the success of any wealth-producing 
 enterprise. It is also a safe form of investment, and 
 one attended with little hazard and no annoyance from 
 walking delegates and strikers, while every improve- 
 ment in the arts and sciences and in social relations, 
 as well as increase of population, adds to its value. 
 And so, as this surplus wealth accumulates and is saved 
 for permanent investment purposes, instead of all of 
 it being used in the employment of the additional 
 number of laborers annually needing employment with 
 increase of population, only a portion of it is used for 
 this purpose. With the remainder, land is purchased 
 for investment and speculative purposes only, and not 
 for the employment of labor. In fact, land is often 
 purchased for the avowed purpose of preventing capita! 
 
OBSTACLES TO EMPLOYMENT. 93 
 
 and labor from being employed upon it until enormous 
 sums can be exacted for this privilege. 
 
 The fact that wealth can be used in the purchase 
 of land not only affords an opportunity for its invest- 
 ment without giving employment to labor, but it often 
 gives land an unreal and fictitious value. This, also, 
 constitutes an obstacle to the employment of labor. 
 The unused natural opportunity, be it a vacant build- 
 ing or manufacturing site, or vacant land suitable 
 for a farm, or an unused coal bed or mineral deposit, 
 is usually held at a price in excess of its present value 
 for any productive purpose. It is so held in antici- 
 pation of an increase in value from increase of population 
 and general social improvement. The owner of the 
 land and the employing capitalist who wants it for 
 some useful enterprise, may not agree with each other 
 upon this uncertain and speculative value. The land 
 may or may not increase in value as rapidly as the 
 owners believe it will. Capital, under such circum- 
 stances, doubts and halts, and the land often continues 
 to lie idle and unused on this account. It may be so 
 situated in itself, without reference to its price, as 
 to insure far greater returns to capital and labor than 
 could be obtained from other lands perhaps equally 
 as suitable for the purpose intended, but which are 
 more remote from markets and centers ,of population. 
 The fact that one hundred dollars per acre, for instance, 
 is sometimes asked for unused land, the economic value 
 of which does not exceed fifty dollars, because the 
 sanguine owner thinks it will be worth one hundred and 
 fifty dollars within ten years, discourages the invest- 
 ment of capital and the employment of labor in its 
 cultivation. It has this effect, not only because it 
 requires so much more wealth to get hold of the land, 
 
94 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 but because there is always more or less doubt whether 
 it will actually increase in value fast enough to make 
 the entire investment a paying one. 
 
 Again, wealth in immense quantities is invested in 
 land, and especially in unused land, for speculative 
 purposes only. This is also one of the greatest ob- 
 stacles to the employment of labor. A man with money 
 to invest goes into a new country, or to the suburbs 
 of cities and towns, and buys vacant land in advance 
 of the home-seeker, not to produce wealth on it himself, 
 but in reality to prevent others from doing so. The 
 land is thus held in idleness until the necessities of 
 capitalists and laborers compel the payment to the 
 speculator of a profit as a reward for the latter's fore- 
 thought in first seizing the opportunity for employ- 
 ment which the land affords. The speculator must 
 usually be paid a sum not only equal to the economic 
 value of the land, regardless of what it may have cost 
 him, but also all in addition which any one, who is 
 willing to gamble in the bounties of nature, may be- 
 lieve it to be worth frora a speculative point of view. 
 
 The disposition, so widely prevalent among all classes, 
 to gamble in land gives it an abnormally fictitious 
 value. The price of unused land is often so high as to 
 absolutely prohibit its purchase for use in any wealth- 
 producing enterprise. This is the most important if 
 not the sole cause of the phenomenon known as a 
 financial panic. 
 
 A financial panic occurs, as follows: When, after 
 a period of dull times, one of comparative prosperity 
 arises, and many people begin to "save money," much 
 of the wealth which thus accumulates is naturally in- 
 vested in land. It goes into city and town lots, and 
 farming lands, and into stocks and securities based 
 
OBSTACLES TO EMPLOYMENT. 95 
 
 in large part on the o-wnership of land, including the 
 ownership of mineral deposits, and the right-of-ways 
 and immensely valuable terminals of railroads, and priv- 
 ileges enjoyed by public utility companies. Stocks 
 based on land begin once more to slowly increase 
 in price, as more and more wealth accumulates to be in- 
 vested in something from which ultimate gain or 
 a permanent revenue can be derived. Soon prices 
 begin to advance more rapidly. This renders such 
 investments attractive from a speculative and gambling 
 point of view, and prices advance with greater and 
 greater rapidity. This stimulates further investment, 
 and prices advance still more rapidly, and go still 
 higher and higher. After awhile a speculative craze 
 takes hold of many people, and the prices often 
 reach the point at which it is impossible for em- 
 ployers to reap any reward in connection with new 
 enterprises upon vacant lands, after payment of pre- 
 vailing rates of interest on the amount of wealth required 
 to be invested in purchasing them. It is invariably the 
 case, just before the "boom" bursts and the panic begins, 
 that the natural opportunities for employment, like 
 the vacant farming lands referred to as held at one 
 hundred and fifty dollars per acre, the unused factory 
 sites, mineral deposits and water fronts, the idle bus- 
 iness and residence lots, all become so dear, and so 
 much wealth is demanded for the mere privilege of using 
 them, that capital sees no profit in giving employment 
 to labor in connection with them. Meantime the labor- 
 ing population is naturally increasing. Surplus labor 
 resulting from such increase can only obtain work in 
 connection with these unused lands, which are held 
 at prohibitive prices. And rents also advance in sym- 
 pathy with the increase in land values. The house- 
 
96 THE PROBLEM OF THE UNEMPLOYED. VII. 
 
 holder and business man are required to pay more and 
 more to the landlord, and the longer the "boom" lasts, 
 the higher and higher is the amount of tribute which 
 the land owner demands. Finally when the burden 
 upon wealth-producing enterprises can be borne no 
 longer, when prices charged for wealth-producing op- 
 portunities have been so inflated that future valuations 
 can be no longer discounted even in the mind of the most 
 credulous and optimistic of speculators, the crash comes. 
 It usually comes suddenly, but it may come gradually. 
 Its coming under existing conditions is as inevitable after 
 a period of prosperity as the coming of winter after 
 summer. 
 
 Prosperity means the accumulation of surplus wealth, 
 and as such wealth accumulates much of it is invested 
 in land. This stimulates the demand for land and 
 brings about an advancing real estate market, and 
 this causes a greater eagerness to own land and reap 
 the benefit to be derived from advancing prices. This 
 of itself produces higher prices for lands and stocks 
 and bonds based on land values, and this is followed 
 by even greater anxiety to buy. And so, after every 
 period of depression, the boom gradually begins over 
 again, and rises and continues to rise higher and higher 
 until the inevitable collapse is followed by dull times and 
 a decline in prices, to be followed after awhile again by 
 prosperous times, from which prosperity itself is devel- 
 oped the force which choices it. The panics of 1837, 
 1857, 1873 and 1893 were all preceded by great real 
 estate booms, and followed by a marked decline in land 
 values. Nor can any period of prosperity be continuous 
 so long as conditions are such as often to make it more 
 profitable to invest wealth in the mere purchase of the 
 opportunities for the employment of labor which land 
 
OBSTACLES TO EMPLOYMENT. Ql 
 
 affords than to invest it in the employment of labor itself. 
 The same obstacles to employment which tend to 
 lessen the demand for labor, also, in numerous ways, 
 compel capital and labor to work to a disadvantage, and 
 consequently less wealth is produced from the amount of 
 labor expended than would otherwise be the case. For 
 instance, a tenant farmer of Illinois, after years of 
 economy, becomes a capitalist as well as a laborer. 
 Being thus the owner of a small sum of money, a team 
 and a few agricultural implements, he puts his wife 
 and children and the remnant of his scanty furniture 
 into his wagon and starts out to find unused land on 
 which his capital and labor can be profitably employed. 
 There is plenty of unused or but partially used land 
 in the very neighborhood which he is about to leave. 
 On this land, owing to its proximity to good markets, 
 as well as the fertility of the soil, he could produce 
 far more wealth with the same amount of labor than on 
 any of the land which he is seeking, but the price of 
 it as to him is prohibitive. After a weary journey 
 of many weeks, during which he passes within sight 
 of millions of acres of unused land, he reaches a thriving 
 town on a railroad in Texas. It has schools and churches 
 and in its neighborhood are fairly good highways. It is 
 the market place for the surrounding territory. On the 
 very skirts of this town lie plenty of unused and fertile 
 lands. Why does he not settle on some of this land, 
 close to town, where his family can have the benefit of 
 schools and social advantages, and where his crops, 
 when raised, will be near a railroad shipping point? 
 Simply because the price charged for it is also prohibit- 
 ive, so far as he is concerned. So he drives on twenty 
 miles further and settles in a wilderness, remote from 
 7 
 
98 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 neighbors and schools and churches, where the highways 
 are little more than trails through the woods and over 
 the prairies. He contracts for a hundred acres of land, 
 at the rate of five dollars per acre. He needs the use 
 of every dollar of his little hoard as capital with which 
 to provide a rude shelter and food for the first year, and 
 so he goes in debt as deeply as possible for his land. 
 This compels him to apply the money which he saves 
 to the payment of the purchase price of land, rather 
 than to the purchase of live stock and agricultural ma- 
 chinery which would enable him to produce wealth with 
 greater ease and in greater quantities. He and his fam- 
 ily begin single-handed what is always a lonesome and 
 sometimes a terrific struggle with unsubdued nature. A 
 tr p to market with a few eggs or a little butter, or a few 
 dollars worth of vegetables, means the loss of two days 
 for himself and team. This is the case, no matter how 
 little there may be to be carried either way. And so 
 almost as much energy is wasted in getting his crops to 
 market as is spent in raising them. As he hauls them 
 over the poor roads, he passes thousands of acres of un- 
 used land nearer the market, and perhaps of greater fer- 
 tility, on which his labor would be productive of far 
 more wealth, not alone to his advantage, but to the ad- 
 vantage of the entire business world. And so this farmer 
 may work all his life to an unnecessary disadvantage, 
 as millions of other farmers in greater or less degree are 
 doing in this country at the present time. And this 
 must always be so while unused land can be found on 
 which an eqiial expenditure of capital and labor will pro- 
 duce more wealth than on land in use. 
 
 The enormous waste of labor and energy seen in the 
 case of some farmers being driven into the wilderness, 
 of nearly all farmers being deprived in great degree of 
 
OBSTACLES TO EMPLOYMENT. 99 
 
 the benefits of social life, and compelled to contend with 
 poor highways in hauling crops over unnecessary dis- 
 tances, amounting as it doubtless does, in this country, 
 to hundreds of millions of dollars annually, would be 
 saved if all the unused land nearest centers of popula- 
 tion were first put into cultivation. Yet this is but part 
 of the story. The economic loss resulting from the same 
 cause is equally as great as if not greater in other lines 
 of industry, and in connection especially with the hous- 
 ing of workers of all classes in cities and towns. 
 
 We eagerly seize upon every mechanical device for 
 saving labor. Trusts and immense aggregations of ^cap- 
 ital are organized largely for this purpose. Human in- 
 genuity is taxed to the utmost to invent processes by 
 which the greatest amount of wealth can be produced 
 with the least expenditure of labor. But while on every 
 hand the waste resulting from the misuse of land, and the 
 poverty, discomfort and misery which this occasions is so 
 obvious, we pass the subject by without thought or com- 
 ment, as though such things were in harmony with the 
 natural law and required no explanation. In an age in 
 which the phenomena of the physical universe are studied 
 with the greatest eagerness and success, the indifference 
 everywhere shown to a knowledge of the laws which as 
 certainly control the relations of men to each other and 
 to the earth from which all must obtain subsistence, is a 
 remarkable psychological fact. Why should we be so 
 much more interested in the former than in the latter? 
 Why is it that even among the most highly educated, 
 so few will attempt to answer the questions propounded 
 in the first chapter of this work, and where is the college 
 or university in which this task is fearlessly and candidly 
 essayed? Is it because the questions are uninteresting? 
 
100 THE PROBLEM OP THE UMEMPLOYED. VII. 
 
 Is it because they do not pertain to the science of poHt- 
 ical economy ? 
 
 We laugh at the stupidity of the ant, which, on finding 
 a post standing in its path, carries its burden up one side 
 of it and down the other, instead of easily going around 
 it; yet man's way of using the earth in many instances 
 would not appear less absurd to a visitor from a world 
 in which obedience to the natural law prevailed. Sup- 
 pose such a being to drop suddenly into the tenement 
 district on the East Side, in New York City. He would 
 find people huddled together like beasts in a stock yard ; 
 families with children of all ages and sexes sometimes 
 occupying a single room. And thus, without privacy, 
 comfort or decency, babes are born and human beings 
 sicken and die. In some instances he would find a thous- 
 and men, women and children living, or trying to live, 
 in six and seven story houses, covering scarcely an acre 
 of ground. After he had experienced the noise and con- 
 fusion, and stench and dirt, and the intolerable discom- 
 fort of it, for a day and a night, he would certainly come 
 to the conclusion that this was a much crowded world, 
 and that land was very scarce. Imagine, then, his as- 
 tonishment on ascertaining that there were over a hun- 
 dred thousand acres of unused land, and millions of un- 
 used building lots, within the limits of Greater New 
 York; that the population of the city averaged but eight- 
 een to the acre; that there were hundreds of acres of 
 such lots in the northern part of Manhattan Island itself, 
 and thousands of unused, or but partially used lots, even 
 nearer at hand, and some of them verv close at hand; 
 that much of this unused land, owing to modern trans- 
 portation facilities, was already in effect but a few min- 
 utes walk from the shops and factories in which the 
 bread-winners of this district were employed, and that 
 
OBSTACLES TO EMPLOYMENT. 101 
 
 it was easily within the power of man to bring it all 
 within the same distance. 
 
 Imagine his surprise, again, on visiting a suburb of 
 the city, to see the exact reverse of what amazed him so 
 in the tenement district, for here he would find people 
 living too far apart, instead of too near together. In- 
 stead of the lawns and gardens, which surrounded many 
 of the houses, adjoining each other, and instead of all 
 the improved places being within as convenient distances 
 as possible from the near-by railroad station, there would 
 be wide and ugly gaps of unimproved lands intervening 
 everywhere, with signs of "For Sale. ' For every lot 
 improved within the square mile or so tributary to a 
 railway station, he would find perhaps ten or twenty un- 
 improved. He would find the houses and homes so scat- 
 tered over a wide area, that paved streets and sidewalks, 
 and sewerage and water, and electric service for all of 
 them, would require the expenditure of ten times as much 
 labor as would be necessary but for the intervening 
 spaces of unused lots, so often adorned with dead cats 
 and tin cans. 
 
 And not only in this suburb of New York, but in the 
 vicinity of every city, town and village, he would find 
 the same condition existing. In the aggregate, there 
 are tens of millions of people in this country thus need- 
 lessly living on muddy streets, with poor sidewalks, oj 
 no sidewalks at all. They are compelled to fill out daily 
 labors with unnecessarily long journeys to and from 
 homes and places of business, passing on the way dreary 
 wastes of unused lots. Millions are thus deprived of 
 numberless social advantages which add immensely to 
 the comfort and happiness of life and to the efficiency 
 of wealth producers, although there is no r§al eppnomig 
 necessity for it, 
 
102 THE PROBLEM OF THE UNEMPLOYED. VIL 
 
 Again, this celestial visitor would often find land in 
 which a coal bed or mineral deposit, for instance, was 
 so near the surface, or so near tide-water, or of so rich 
 a quality, that a minimum of labor would produce a 
 maximum of wealth, unused and just as the savages left 
 it; while in the same vicinity nien would pass it by and 
 apply effort to the production of coal and ore from lands 
 requiring twice as much labor to produce the same results. 
 And so, on every side, he would see men unnecessarily 
 increasing their burdens and displaying as little intelli- 
 gence, apparently, in respect to the use of land, as the 
 ant exercised in climbing over the obstacle instead of 
 going around it.* 
 
 *A lot of hogs breaking into a field of corn will quarrel over 
 it, scatter the com about, trample it into the mud, and for 
 every bushel eaten will destroy ten. Put before them in this 
 manner food enough for a year, and it will not last a month. 
 In the same way, under existing conditions, when men dis- 
 cover an extraordinarily rich deposit of some bounty of nature, 
 they will often act like hogs, and waste and destroy it as fool- 
 ishly and as recklessly. Thus, in 1901, the first paying oil 
 well in Southern Texas was brought in on Spindle Top, near 
 Beaumont. The oil and gas spouted far above the top of the 
 derrick, and the well flowed pure oil at the rate of a hundred 
 thousand barrels a day. There was no immediate market for 
 this immense production, and no facilities were ready for storing 
 and transporting it. Nevertheless, another well was at once 
 started near by, and it proved to be as productive as the first 
 one. Human beings then, manifesting the disposition of hogs, 
 and displaying as little intelligence in conserving and making 
 this, oil and the gas found with it useful to mankind, proceeded 
 to waste and destroy it as hogs would waste and destroy a field 
 of com. 
 
 The land was divided into small tracts, and subdivided 
 again and again into still smaller ones, the subdivisions, in many 
 instances, not exceeding a thirty-second part of an acre; it 
 was sold and resold, much of it being finally sold at the rate of 
 a hundred thousand dollars per acre. In less than two years 
 six hundred and fifty oil wells were put down within an area 
 of about eighty acres, each well with its equipmients costing 
 from four to ten thousand dollars, and many of them were less 
 than thirty feet from other wells. The waste oil was drained 
 away in ditches and burned on the open prairie at the rate of 
 
OBSTACLES TO EMPLOYMENiT. 103 
 
 20,000 barrels a day. It was not worth pumping into the storage 
 tanks, all of which being connected directly with the gushers 
 were filled to overflowing. Millions of barrels of oil were sold 
 at three cents a barrel. The oil field in the distance re- 
 sembled a closely wooded forest, so thick were the derricks, and 
 when one derrick caught fire and burned hundreds of others 
 burned also. The field was time and time again devastated by 
 fires which swept away hundreds of thousands of dollars worth 
 of property. Twenty wells would have been amply sufficient 
 to have obtained all the oil in the grounds covered by eighty 
 acres of land mentioned; hence the reservoir below holding 
 the gas which forced the oil up was needlessly pierced in more 
 than six hundred places by more than six hundred needless 
 wells. This caused the dissipation and loss of an immense 
 store of gas. Had this gas been properly cared for and left 
 in the ground until needed, it not only would have brought 
 the oil to the surface for many years as fast as it could have been 
 profitably consumed, but the gas would have afforded iuel 
 and Ught of the value of perhaps millions of dollars to the 
 neighboring city of Beaumont. The wells soon ceased to flow, 
 and expensive pumping plants had to be installed. Then salt 
 water appeared in the place of oil, and the production of the 
 original field fell, within four years, to less than 5,000 barrels 
 a day. 
 
 Many experts are of the opinion that it was the pressure of 
 this gas which held the salt water back, and that far greater quan- 
 tities of oil would have been taken out of Spindle Top if twenty 
 wells only, in place of six hundred, had been put down from 
 time to time as needed. But regardless of the opinion of ex- 
 perts, and all theories upon the subject, no one can dispute 
 the fact that from an economic point of view over ten millions 
 of dollars were wasted in extracting less than fifty million 
 barrels of oil from Spindle Top. 
 
CHAPTER VIII. 
 
 EFFECT OF A REAL SCARCITY OF LAND ON 
 RENT, INTEREST AND WAGES. 
 
 IT being evident, as shown in the preceding chapters, 
 that low wages and lack of employment cannct be at- 
 tributed to labor-saving machinery, nor to mere increase 
 of population, nor to any real scarcity of land, it will be 
 found both interesting and profitable to consider what 
 effect such a scarcity of land, if it in fact existed, would 
 have on rent, interest and wages. 
 
 Imagine the world to consist of an island which had 
 gradually attained a population of one hundred millions, 
 under conditions similar to those which prevail in the 
 real world; also that this island was capable of furnish- 
 ing food in abundance for only one hundred million in- 
 habitants. 
 
 At first, while there was plenty of unused land on the 
 island, both employers and employees would be largely 
 independent of land owners. If there were only ten 
 millions of people, there would be more land on which 
 food could be produced at a minimum expenditure of 
 capital and labor than there would be laborers to culti- 
 vate it, and fewer employing capitalists and laborers in 
 proportion to the amount of land would bid against each 
 other for the privilege of using it. This would be the 
 case, of course, not only as to agricultural lands and la- 
 borers, but also ^s to all lands and ^U laborers, tl?nc§, 
 
 105 
 
106 THE PROBLEM OF tHE UNEMPLOYED. VIlL 
 
 it would seem that both wages and interest would then 
 be higher than after population had become more dense, 
 and competition among those wanting the use of land 
 more intense. When the population of the island was 
 ten millions, there would be only one-tenth as many em- 
 ploying capitalists bidding for the use of land, and only 
 one-tenth as many laborers seeking employment on it, 
 as when the population had increased to one hundred 
 millions. In proportion as population increased, the de- 
 mand for land would increase, and competition between 
 capitalists and capitalists, and between laborers and la- 
 borers, for land on which to produce wealth, would be- 
 come sharper and sharper. Therefore, a constant in- 
 crease in the value of land and in the price to be paid 
 for the use of it would necessarily follow. The employ- 
 ing capitalist would be compelled to give up more and 
 more of the profits of his enterprise to the land owner 
 in order to successfully compete with other employers 
 in bidding for the privilege of using land; this would 
 tend to reduce interest. The employee would also be 
 compelled to accept employment at lower and lower 
 wages. It would seem, therefore, that the more unused 
 land on the island in proportion to population, the cheaper 
 the land would be, and the higher interest and wages. 
 
 Experience as well as theory proves that this would 
 be the case. Thus, when "Uncle Sam" had a fertile 
 farm, conveniently at hand, of one hundred and sixty 
 acres free of price, for every man who would settle 
 upon and improve it, land in this country was cheap, 
 interest was high, and wages were higher than any 
 where else in the world. Labor unions and strikes 
 were then almost unknown in America, although common 
 at that time in England. As the country became more 
 thickly settled, however, land became dearer, interest 
 
EFFECT OF A REAL SCARCITY OF LAND. 107 
 
 fell, and wages tended to fall; then came organized 
 labor, strikes, lockouts and boycotts. 
 
 The fact that cheap land and high wages go hand 
 in hand is a matter of common knowledge and obser- 
 vation. In 1901, the Merchants' Association of New 
 York sent a committee to Texas to examine its resources 
 and economic conditions, and ascertain, among other 
 things, whether cotton mills could be profitably oper- 
 ated in that State or not. The report was unfavorable, 
 for the reason, as stated, that the immense bodies of 
 cheap and fertile land which were accessible to labor 
 in Texas would attract the mill operatives to the more 
 profitable employment which agricultural pursuits af- 
 forded under such circumstances. It was also stated, 
 as a matter of course, that with increase of population 
 and increase in the value of lands, conditions would 
 change; wages would fall, and doubtless mills could 
 then be operated with profit. 
 
 It is interesting to note, in this connection, that 
 Charles Dickens, writing of his visit to this country 
 in 1842, in "American Notes," states that during his en- 
 tire trip he never saw a beggar. The incidental refer- 
 ences made by him to the working people of the Northern 
 States indicates at that time a comparatively ideal re- 
 lationship between employer and employee. So, also, 
 the speeches in Congress of Henry Clay and others 
 during the first half of the last century, in advocacy of 
 protective tariff, show a comparatively prosperous and 
 satisfactory condition of the laboring population. The 
 argument then was, not that a protective tariff would 
 make wages higher or that it was needed for this purpose ; 
 but that, wages being already so much higher in this 
 country than in Europe, the tariff was necessary for the 
 protection, not of the working man, but of the many- 
 
108 THE PROBLEM OF THE UNEMPLOYED. VIII. 
 
 facturer, "against the competition of foreign pauper- 
 made goods." 
 
 The following is a curious example of the univers- 
 ally admitted fact that cheap lands cause high wages: 
 Edward Gibbon Wakefield, who visited this country 
 in the first quarter of the last century, was horrified 
 at the "scarcity of labor" in the United States, and 
 at the high wages paid for labor and the independ- 
 ence of laborers. He sincerely believed that the "bet- 
 ter classes" who might emigrate to the Australian 
 Colonies should be protected against such unpleas- 
 ant conditions. In order, therefore, to bring about 
 in those new countries such "salutary scarcity of em- 
 ployment as would give cheap and abundant labor," he 
 proposed to the proper authorities that the land from 
 the start should be held at a price so high as to put 
 it beyond the reach of any of the class of farmers who 
 were willing to work with their own hands. The money 
 received by the state in this way, he proposed to devote 
 to paying the passage to the Australian Colonies of 
 suitable immigrants carefully selected from the "lower 
 classes." 
 
 A policy of the character mentioned above was, in 
 fact, to some extent, pursued for many years by the 
 English Government in connection with the disposition 
 of the public lands of its colonies. In 1890, however, 
 a radical change was adopted in New Zealand, on the 
 coming into power of the liberal party, which has since 
 been in control in that colony. The holding of large 
 bodies of land in idleness and the investment of wealth in 
 its purchase was made less profitable by a graduated land 
 tax. Laws were also passed, by means of which idle 
 lands in private hands could be condemned by the gov- 
 ernment 3.n4 leased Xq actuS'} settlers, suitable provision 
 
EFFECT OF A REAL SCARCITY OF LAND. 109 
 
 being made for the compensation of former owners. In 
 this way it became possible for a settler to safely invest 
 all of his capital in improvements and in the actual culti- 
 vation of land, without sinking any part of it in its pur- 
 chase or in the payment of land purchase money indebt- 
 edness. When this legislation was inaugurated New 
 Zealand was, and had been for some years before, suffer- 
 ing from acute "hard times." A change for the better 
 at once ensued, and a period of prosperity was imme- 
 diately begun, which was not appreciably interrupted by 
 the world-wide panic of 1893. In New Zealand to-day 
 wealth is more evenly distributed, wages are higher, 
 and the prosperity of all classes is more nearly universal 
 than in any other country in the world. And so it 
 must always be. Where unused land is cheap and easy 
 of access, wages must be high; where such lands are 
 dear and hard to obtain, wages must be low. What 
 would be the effect on wages and trade generally if all 
 unused land, no matter where situated, was always 
 cheap and easy of access to capital and labor? 
 
 Recurring to the island referred to, let it be assumed 
 that when its population reached one hundred millions, 
 every acre of land suitable for the purpose was so fully 
 and properly used that the greatest amount of food was 
 being produced with the least expenditure of labor, 
 just enough of it being obtained to give every inhab- 
 itant an abundant supply. Under such circumstances, 
 so long as the population of the island did not ex- 
 ceed one hundred millions, neither the theory of Malthus 
 nor the theory of diminishing returns could have any 
 necessary application. Up to this time there could 
 be no real scarcity of land, since, in point of fact, un- 
 der an intelligent system of husbandry, land with 
 constant cultivation will become more fertile rather 
 
110 THE PROBLEM OF THE UNEMPLOYED. VIII. 
 
 than less fertile; and this, too, without additional net 
 expense to the husbandman. But let the population 
 of the island increase beyond one hundred millions, 
 however, and continue to increase, then for the first 
 time in the history of such a world, the abstract theory 
 of Mai thus and the theory of diminishing returns would 
 begin to apply under inexorable natural conditions. 
 If there were a real scarcity of the raw material which 
 land affords, some of mankind would have to do without, 
 nor could this be wholly avoided by any change in the 
 laws regulating the right of access to land. Interest 
 and wages would then necessarily fall, bvit this would 
 result from the unchanging laws of nature, and not from 
 those of human enactment. 
 
 Suppose ten million laborers were engaged in pro- 
 ducing food on this island when its population was 
 one hundred millions. Let the population increase 20% 
 and twelve million laborers would then compete against 
 each other for agricultural employment, although only 
 ten million could be employed to the best advantage. 
 There being no unused land for the additional two million 
 laborers to turn to, competition among the twelve million 
 for employment would become exceedingly intense, and 
 the struggle for existence would compel each to under- 
 bid the other when possible. If the laws of supply 
 and demand were allowed to act without restrictions, 
 the wages of the lowest class of agricultural laborers 
 would inevitably fall to the point at which the laborer 
 could hardly subsist. Since a considerable portion 
 of all laborers v/ould be engaged in agriculture, it is 
 evident that the wages of all other laborers would fall 
 in the same proportion. Abnormally low wages in one 
 class of employment will cause laborers to leaye it 
 and crowd into other lines of employment, and this will 
 
EFFECT OF A REAL SCARCITY OF LAND. Ill 
 
 go on until wages in all lines have fallen to a corres- 
 ponding level. If a cause producing, say, a 50% re- 
 duction of wages applies to one-third or even less of 
 the laboring population, then the wages of all laborers 
 must fall in much the same proportion, and when the 
 equilibrium is restored all wages will be lower. 
 
 Competitive bids for the use of land, under the cir- 
 cumstances stated above, on the part of laborers with 
 barely enough capital for self-employment, and on 
 the part of those able to employ other laborers, would 
 be influenced also by the low rate of wages. This would 
 make land higher; hence the price paid land owners for 
 land or for its use would constantly tend to increase 
 with iiicrease of population, while wages would tend to 
 decrease. The land owner would naturally and inevit- 
 ably in the end get the entire product, less the smallest 
 amount on which laborers could subsist, and less the 
 least amount of interest sufficient to induce owners 
 or holders of capital to employ labor. This would be 
 the case except as the natural effect of the law of stipply 
 and demand might be modified somewhat by causes 
 of the character referred to in the preceding chapters. 
 Not only would employees bid against one another for 
 employment, but parties desiring to use their own or 
 borrowed capital, as employers, would also bid against 
 each other for the use of land on which to employ labor ; 
 hence the wages of employers as well as employees, 
 would also fall. In other words, the rewards of effort 
 on the part of employers as well as employees would grow 
 smaller and smaller as the demand for land increased. 
 And not only so, but it is evident that capitalists as 
 such would be compelled to accept lower and lower 
 rates of interest from employees, in view of the con- 
 stantly lessening opportunities of the latter to engage 
 
112 THE PROBLEM OE THE UNEMPLOYED. VIIL 
 
 in profitable wealth-producing enterprises; hence in- 
 terest would also fall. 
 
 What is stated above as the result of an increasing 
 demand for land caused by increasing population, is 
 not mere theory. The proof of it is found by com- 
 paring wages, rates of interest, land values and op- 
 portunities for profitable enterprises which prevail in 
 thickly settled countries like England, for instance, 
 with those to be found in thinly settled ones like the 
 United States and the English speaking colonies. 
 
 Wages under conditions resulting from a real scarc- 
 ity of land would thus naturally fall to the starvation 
 point, or to a point so low that any further reduction 
 would mean the destruction of the laborer, while land 
 values and rent would rise to enormous proportions. 
 This would be the case, no matter to what extent in- 
 ventions increased the amount of wealth produced. The 
 laborer, by means of improvements in labor-saving 
 processes now undreamed of, might be able on an aver- 
 age to produce more wealth in an hour, than his fore- 
 fathers produced in a month, yet the portion of it which 
 he would be permitted to retain would be compara- 
 tively infinitesimal, provided the law of supply and 
 demand were permitted to control. This would be the 
 case also, no matter to what extent increase in the 
 number of hours constituting a day's work, or improve- 
 ments in the character of the working man and in faith- 
 fulness towards his employer, added to the amount of 
 wealth which he created. But it is absurd to suppose 
 that any change for the better in the moral nature of 
 the working man would be possible under such conditions, 
 no matter what efforts were made for his spiritual 
 regeneration. For men would then fight for the chance 
 of employment as wolves fight for a bone, and even as 
 
' EFFECT OF A REAL SCARCITY OF LAND. 113 
 
 multitudes of half starved human beings now occasion- 
 ally fight for jobs on the docks of London — and even as 
 working men are already beginning to fight each other 
 in the same way in free America. Note the following 
 newspaper clipping: 
 
 "Chicago, September 23, 1904. 
 " The nine month's struggle of the machinists 
 ' and boiler makers of the Chicago, Lake Shore and 
 ' Eastern Railroad against a 10 per cent wagere- 
 ' duction is at an end. The company announced 
 ' that if the unions would call off their strike it 
 ' would reinstate as many of the former employees 
 ' as possible at the lower wages. The result was 
 ' a stampede of more than half the 400 strikers, 
 ' which caused fighting and brought out the police. 
 ' The company hired 100 of the old men. * * * 
 ' No strike breakers will be discharged." 
 
 It is apparent that as time passed and the scarcity 
 of land increased on the island referred to, the more 
 and more miserable and dependent would become the 
 condition of the laborer. The relation between land 
 owners and capitalists on the one hand (capitalists 
 being in large part land owners also), and employees on 
 the other hand, would soon practically become that of 
 masters and slaves. Society would then be made up of 
 millionaires and billionaires on one side, living in lux- 
 ury such as now but partially approached, whose sordid 
 pleasures would be ministered to by an army of cringing 
 servants. On the other side seething millions of work- 
 ing men would fight each other like beasts for the mere 
 privilege of employment, except as such horrible con- 
 ditions might be alleviated to some extent by the 
 Benevolent Feudalism of which Mr. Ghent has written. 
 It is also evident that these conditions would be ap- 
 8 
 
114 THE PROBLEM OF THE UNEMPLOYED. VIII. 
 
 proached long before there was such scarcity of food 
 as to render semi-starvation in the nature of things 
 the necessary lot of a single human being. 
 
 Suppose the surface of the earth from pole to pole 
 were owned by a single person, or by a corporation 
 like the Standard Oil Company. It would then be pos- 
 sible for such company at any time, by simply refusing 
 to permit the use of lands at present unused, to quickly 
 bring about the results above described. The refusal 
 of land owners generally to permit the use of unused 
 land, except on terms which would give them all the 
 wealth which could be produced on it over and above 
 what was necessary to enable the laborer to live and 
 work, would bring about the same consequences. Is it 
 clear that preconcerted action on the part of land own- 
 ers must be necessary in order to effect such condi- 
 tions? Will not the simple law of supply and demand, 
 as population increased, suffice to produce these results? 
 Who shall say that the necessities of the workers, the 
 fact that the unemployed are even now eagerly bidding 
 for the places of the employed, have not already pro- 
 duced conditions in part like those above described, 
 and that we are not rapidly approaching the full measure 
 of them?* 
 
 ♦Thomas Carlyle once said to an American: "Ye may boast 
 o' yer dimocracy, or any ither 'cracy, or any kind o' poleetical 
 roobish; but the reason why yer laboring folk are so happy 
 is thot ye have a vost deal o' land for a verra few people." 
 
 The following extract is taken from a recent number of 
 "The Independent;" "There seems to be no longer room to 
 doubt that the condition of the poorer classes in England is 
 continually growing worse. The reports of the medical ex- 
 aminers of recruits for the army showed such evidence of phys- 
 ical degeneracy as to cause general alarm, which was only 
 partially allayed by the investigation of a Parliamentary Com- 
 mission, which found the conditions exaggerated, although 
 serious enough to demand attention. The Commission report^cl 
 
EFFECT OF A REAL SCARCITY OF LAND. 115 
 
 that one of the chief causes of physical deterioration is that 
 many of the children do not get enough to eat. The Education 
 Committee appointed by the London County Council to in- 
 vestigate the subject found that many children do come to 
 school underfed and more of them ill-fed, and that it was im- 
 possible to secure the best results in education from either 
 ill-fed or underfed children. ****** The latest 
 statistics show that there is now more pauperism in England 
 than at any time since 1873, and that it has increased rapidly 
 in the last few years. ***** The present total is 
 without parallel in the record of Poor Law statistics. * * * * 
 and there has never before been a larger number of paupers 
 in the workhouses, while the ratio per 1.000 of the population — 
 15.8 — ^has not been greater in any past year. In 1865 it was 
 9.6; twenty years ago it was 13.3, ten years ago it was 14.1. 
 and last year it was 15.4." 
 
CHAPTER IX. 
 
 EFFECT OF AN ARTIFICIAI SCARCITY OF LAND 
 ON RENT, INTEREST AND WAGES. 
 
 THE ultimate condition of employees, caused by the 
 scarcity of land on the island referred to in the 
 preceding chapter, would come to pass gradually. The 
 investment of wealth in the purchase of land would 
 by degrees bring about an artificial scarcity of land 
 with all the effects of a real scarcity long before there 
 was such scarcity in fact. This is what has already 
 happened in the real world, for the real world differs 
 only from the one in the illustration in being an island 
 with fifteen hundred million instead of one hundred 
 million inhabitants. If we will open our eyes to the 
 matter, we can see on every hand at the present time 
 the same effects flowing from an artificial scarcity of 
 land which, as shown in the preceding chapter, would 
 necessarily result from a real scarcity. 
 
 In Chapter VI it was shown that as yet there is no 
 real scarcity of land in any country ; that in the United 
 States, many times its present population could be 
 supported without waste of human labor, and that in 
 point of fact, probably less than one acre in five of 
 the area of this county is so utilized as to produce the 
 greatest amount of wealth with the least amount of 
 labor. The price, however, at which unused land is 
 pften held, brings about an artificial scarcity of it, 
 
 117 
 
118 THE PROBLEM OF THE UNEMPLOYED. 1^. 
 
 almost as marked in its effects upon interest and wages 
 as would be the case if such land were blotted out of 
 existence altogether. 
 
 Some years ago, during a "boom" in California, un- 
 improved lands, useful at that time only for the raising 
 of wheat worth sixty cents a bushel, went up to one 
 hundred and fifty dollars per acre. No farmer could 
 buy this land, pay current wages, and make more than 
 two or three per cent on the entire investment. It is 
 evident that such unused land would mostly remain iin- 
 used until the price fell. Let the price fall, however, to 
 fifty dollars an acre, and additional plows and reapers 
 would begin to move — let it become free land, conditions 
 still remaining the same, and in a single season labor 
 would be employed in the cultivation of nearly every 
 acre of it, and the communities in which it was located 
 would present unparalleled scenes of prosperity. 
 
 The price which must be paid for unused land cre- 
 ates an artificial scarcity of it. That this may con- 
 stitute as great an obstacle to the employment of capital 
 and labor as a real scarcity, is shown in the opening 
 up to homesteaders of the Territory of Oklahoma a 
 few years ago. Up to that time, capital and labor of 
 white men could not be employed upon this Indian 
 reservation. While such was the case, the land in this 
 territory might just as well have been covered with 
 water ten feet in depth, so far as its availability for 
 the relief of an overcrowded labor market in the neigh- 
 boring towns and cities was concerned. This may be 
 said with almost equal truth in regard to the unused 
 wheat lands in California referred to, so long as the 
 price demanded remained at one hundred and fifty 
 dollars per acre. And so, also, as to all unused lands, 
 if they are held out of use to gratify the pleasure of 
 
teFPECT OF ARTIFICIAL SCARCITY OF LAJSTD. ll9 
 
 an owner, or if the price demanded is so high that after 
 the payment of current wages, current interest on the 
 entire investment cannot be made. As to such lands 
 it is correct, from an economic standpoint, to consider 
 the earth to be so contracted as to ehminate them from 
 its surface. But be the purchase price great or small, 
 it always helps to create an artificial scarcity of land, 
 and this is the greatest of all obstacles to the employ- 
 ment of capital and labor. It is the one thing, and, 
 as will be shown, the only thing, which prevents wages, 
 from naturally rising with the increasing wealth-pro- 
 ducing power of the wage earner. 
 
 Oklahoma, with its two million acres, was an un- 
 inhabited wilderness, having a single railroad running 
 through it. In the State of Texas, bordering on the 
 south, and in Kansas on the North, there were then, 
 as at the present time, fifty million acres and more 
 of unused land of equally as good quality, already 
 within settled and civilized communities, adjacent to 
 improved highways, and convenient to schools, churches 
 and markets. For this reason, these unused lands of 
 Kansas and Texas, often to be found in thickly settled 
 neighborhoods, in themselves presented far more in- 
 viting fields for the employment of capital and labor than 
 the land in the wilderness of Oklahoma. In themselves, 
 they offered greater inducements to men to leave the 
 congested ranks of labor in cities and towns for employ- 
 ment in the cultivation of the soil. But the lands 
 in Kansas and Texas were not free. The prices at which 
 they were held as effectually put them beyond the reach 
 of the overwhelming majority of homeseekers, including 
 workers in cities and towns, who would gladly go to 
 the soil for employment if they could improve their 
 condition by doing so, as though the lands had no ex- 
 
120 THE PROBLEM OF THE UNEMPLOYED. IX. 
 
 istence, or as though they were covered by inland seas. 
 Not so, however, as to the free lands of Oklahoma. 
 When it was announced that on a certain day and at a 
 certain hour, the Oklahoma Reservation would be opened 
 to homeseekers in parcels of one hundred and sixty 
 acres each, free and without price, many times as many 
 applications for land were filed as there were parcels 
 of it to be distributed Fifty thousand applicants, 
 most of whom had little capital, gathered on the borders 
 of the Territory to make a wild rush when the signal 
 guns wer fired, for the chance — one in five — of ob- 
 taining an opportunity to apply labor directly to the soil. 
 Within a single season after this rush occured, sixty 
 thousand people were living on these lands. The law 
 required them to do this, and the great majority wanted 
 the land for homes and not for speculative purposes. 
 The demand for it would have been only a little less 
 intense had there been no hope of profiting from its 
 future unearned increment. But for the opening up 
 of this land and the rendering of it available to capital 
 and labor a majority probably of these people would 
 now be competing against each other and against others 
 for employment in cities and towns, and thus assisting 
 in glutting the labor market. 
 
 And yet there are hundreds upon hundreds of millions 
 of acres of unused or but partially used land in the United 
 States, in addition to those referred to as being in Texas 
 and Kansas, on which labo ■ can to-day be more profit- 
 ably employed than on the Oklahoma lands. A drive 
 of a few minutes into the suburbs and beyond of any 
 city will di-close thousands of acres of such land. It 
 is to be found everywhere, inviting the small capitalist 
 and the poor'.y paid laborer to the more profitable 
 employment which its cultivation would afford, except 
 
EFFECT OF ARTIFICIAL SCARCITY OF LAND. 121 
 
 for the price demanded for access to it. But as to 
 the overwhelming majority, this price is prohibitive. 
 Yet 'he pric:; is all which stands in the way of an in- 
 exhaustible demand for labor upon unused land. Other- 
 wise on what reasonable theory can the rush for free 
 land nto the wilderness of Oklahoma and the rapidity 
 of the settlement of that territory be explained? What 
 else prevents a rush to unused land ying within a 
 few minutes ride of every idle capitalist and every 
 idle laborer in the country? 
 
 If these unused opportunities for employment, at 
 the very doors of banks congested with idle capital, 
 and in the very midst of laborers engaged in cut-throat 
 competition for employment, were condemned by the 
 government under its power of eminent domain, or other- 
 wise turned loose as the lands of Oklahoma were loosened, 
 would labor then have to beg for employment, or regard 
 it a favor to be employed? If the employer could in- 
 vest all his wealth in the means and appliances nec- 
 essary for the employment of labor on these unused 
 lands without being compelled to invest often the great- 
 er part of it in the purchase of the land itself, would 
 there ever be any lack of capital for the full employ- 
 ment of labor — would there be any talk then about an 
 insufficient wage fund and nonsense of that kind? As 
 it is now, more capital often is absorbed in the pur- 
 chase of place; on which to employ labor, than in the 
 purchase of the tools necessary for its employment. 
 Thus, sites alone for the employment of labor in Greater 
 New York, if fully utilized, would cost the employ- 
 ing capitalists, even at present valuations, the sum 
 of four billion dollars. What wonder then that labor's 
 share of the product, as well as that of capital, is so 
 small comparatively, when land alone in great pit es 
 
122 'fH£ PROBLEM OF THE UNEMPLOYED. IX. 
 
 is capitalized at the rate of millions of dollars per acre, 
 and everywhere else in like proportion, on the basis of 
 which capital and labor must pay tribute for the bare 
 privilege of employment! 
 
 The overshadowing feature of men's social relations 
 s the fact that wages do not keep pace with progress; 
 that wages do not rise in proportion to the constantly 
 increasing wealth-producing efficiency of the wage earner,' 
 and that men willing to work and begging for wok 
 are so often unable to obtain work. These are appar- 
 ently the most puzzling of sociological phenomena, and 
 the ones of all others which the political economist 
 is called upon to explain. Yet the explanation is as 
 simple and as easily comprehended by one free from 
 prejudice and unbiased by self-interest, as the ex- 
 planation which Gallileo gave for the movement of 
 the planets. It is the great underlying truth on which 
 any correct system of political economy must be based, 
 and it is this: Wages do not rise, but on the contrary 
 naturally tend to fall, with increase of population, not- 
 withstanding increase of wealth, and men beg for em- 
 ployment in the midst of idle lands simply because 
 wealth can be profitably invested in the purchase of 
 unused land. And the reverse :jf this will be found 
 to be equally true: If wealth could not be profitably 
 invested in the purchase of land, wages would rise and 
 continue to rise with every improvement in labor-saving 
 devices. Thus, it will be found that such improve- 
 ments now, as well as increase of population, under 
 free competition and the unobstructed operation of 
 the laws of supply and demand, can only natur- 
 ally in the long run increase the value of land 
 and the portion of the product going to land owners. 
 They do not increase either interest or wages, or the 
 
EFFECT OF ARTIFICIAL SCARCITY OF LAND. 123 
 
 portion going to capitalists and laborers. This being 
 true, it follows that, if it could be so arranged that 
 land would get nothing, the entire product would then 
 go to capital and labor in the form of interest and wages ; 
 and it can be made equally clear that if this were done, 
 every improvement which increased the efficiency of 
 labor would in the same proportion naturally and in- 
 evitably increase the wages of the laborer. 
 
 If land were free, for instance, or if by the applica- 
 tion of the taxing power, or the power of eminent 
 domain or otherwise, it was so arranged that wealth 
 could not be profiably invested in land, then cap- 
 ital as such would be absoUitely helpless and wholly 
 dependent upon labor, and competition between cap- 
 italists bidding for labor would be as intense 
 as it is now between laborers bidding for em- 
 ployment. As it is at present, however, capital 
 can snap its fingers at labor. It can buy land. This 
 means that the man who would otherwise be com- 
 pelled to remain a capitalist can invest his wealth 
 with profit in buying the privilege simply of collecting 
 tribute from capital and labor. He is not compelled 
 to use or permit the use of all of his capital in the em- 
 ployment of labor as would otherwise be the case. 
 
 At the end of any period sufficient for its accumu- 
 lation, people will have saved, say, fifty million dollars, 
 and the wealth of the country will have been increased 
 to that extent. There will then be additional com- 
 modities of the value of fifty million dollars produced 
 by labor, stored in the warehouse of the world, to be 
 used and invested so as to produce incomes for those 
 whose ownership of this additional wealth is evidenced 
 by money in their possession. Since this wealth has 
 been saved and added to an existing stock of wealth, 
 
124 THE PROBLEM OF THE UNEMPLOYED. IX. 
 
 all, or the equivalent of all of it, must be invested, 
 in land or in new enterprises requiring the employ- 
 ment of labor. Every laborer thus employed n a new 
 enterprise or in the enlargfement of existing enterprises, 
 will add to the total number of laborers previously 
 employed, and deprive none of them of employment. 
 Now, without burdening the mind by trying to think 
 how it could be accomplished, or whether it ought 
 to be accomplished, let it be assumed, for the sake of 
 the argument only, that all unused land was free land, 
 and that none of this additional fifty million dollars 
 of wealth could be invested in its purchase. In other 
 words, that the owners of this wealth could not use it 
 in buying land. It follows then that practically all of 
 it would be invested as capital in labor-employing en- 
 terprises, and hence labor would be in greater demand 
 than would be the case if any part of it could be in- 
 vested in land. 
 
 Again, since all unused coal beds and mineral de- 
 posits and unused tracts of land suitable for farms 
 and residences and stores and factories, etc., would 
 be as free to any one who would use them as were the 
 free lands of Oklahoma, the eagerness of capitalists 
 themselves to employ labor so as to take advantage of 
 these wealth-producing opportunities to be found in 
 every community, would also bring about a great de- 
 mand for labor. Nor would labor be wasted any longer 
 by the failure of laborers and employers to select in 
 every instance the best located unused land on which 
 labor could be applied to the greatest advantage. 
 
 The forcing thus of all wealth for income producing 
 purposes to be used as capital; the removal of all the 
 obstacles to the employment of capital and labor which 
 have been heretpfore pojnteti gut, and which would 
 
EFFECT OF ARTIFICIAL SCARCITY OF LAND. 125 
 
 follow if unused land were made free, and the enabling 
 of the employer in all cases to select from unused land 
 the portion of it on which the greatest amotint of wealth 
 could be produced with the least expenditure of labor, 
 would not only result in an increase in the demand 
 for labor, but also in an enormous increase in the amount 
 of wealth produced. From this would follow an in- 
 crease in the amount of wealth saved^ and since this 
 could be profitably invested only as capital, the wage 
 fund of the world would be increased in like proportion. 
 With more and more wealth thus seeking investment, 
 and with practically no other way for its profitable 
 investment except as capital in labor-employing en- 
 terprises, with all unused opportunities open and free 
 of cost for the use of capital and labor, how would it 
 be possible for rates of interest on capital to rise 
 also with improvements in labor-saving processes ? Such 
 improvements would have the effect of increasing the 
 amount of capital to be invested in the employment 
 of labor, thus intensifying competition among its holders 
 seeking such investments. 
 
 If land were free, therefore, every improvement in 
 labor-saving processes would have the ultimate effect 
 of reducing rates of interest, and since the entire portion 
 of wealth produced by human effort which is now 
 divided between the factors of land, capital and labor, 
 would then be divided between capital and labor only, 
 it follows inevitably that the share received by labor 
 would also constantly increase, and the share received 
 by capital as measured by rates of interest would as 
 certainly in the long run constantly decrease, with im- 
 provements in wealth-producing processes. And so the 
 laborer, including the employer as well as the employee, 
 wovild finally reap the full reward of his labors. 
 
CHAPTER X. 
 LABOR'S DEPENDENCE ON CAPITAL. 
 
 THE obstacles to the employment of capital and labor 
 to which attention has been called, arise from and 
 are generally supposed to be inseparably connected with 
 the private ownership of land. While the necessity 
 for such ownership is admitted by political economists 
 of the new school, no attempt is made by them to dis- 
 guise the consequences flowing from it. And therein 
 lies the difference between a true science and a spurious 
 one — between a system which explains things and shows 
 the causes of important phenomena, and one which 
 confuses things, hardly mentions such phenomena, and 
 makes little or no attempt to account for them. 
 
 Of what value is a conglomerate mass of disconnected 
 statements and finely drawn distinctions relating to 
 sociological topics, thrown together with no apparent 
 object in view, and without an earnest purpose to get at 
 the causes of the phenomena referred to in the intro- 
 ductory chapter of this book? 
 
 Ju.st as learned professors in the days of Gallileo 
 may have taught varied and confusing systems of 
 astronomy without calling attention to the movements 
 of the planets, so learned professors to-day are teaching 
 varied and confusing systems of political economy 
 without showing the ftmdamental difference between 
 property in land and property in the fruits of industry. 
 
 127 
 
12g THE PROBLEM OF THE UNEMPLOYED. X. 
 
 Not so, however, as to those of the new school; while 
 proposing no substitute for private ownership of land, 
 they do not ignore its far-reaching effects on the social 
 relations of men. It may be that the evils connected 
 with it, which have been pointed out as well as others 
 which will be referred to, are inevitable; it may be 
 that the simple change in the application of the forces 
 of government hereafter explained, which would re- 
 move these evils, cannot be sanctioned by the moral 
 law without compensation to land owners; and it may 
 be that the plan suggested for such compensation is 
 impracticable. But if even this be the case, why should 
 teachers of political economy hesitate to promulgate 
 the truth? Is the fear of arousing an unjustifiable 
 attack upon property rights a sufficient excuse for 
 obscuring the truth? Truth need not be denied, be- 
 cause we think it may lead to error. Why then shrink 
 from a full and frank discussion of the effects of private 
 ownership of land on the demand for labor and upon 
 the distribution of wealth? 
 
 The reader has now a general idea of the trend of the 
 argument. Summarized in part, it is as follows: Raw 
 material must first be produced from land, by farm- 
 ers and miners, before laborers, who handle and fashion 
 it as merchants, mechanics and manufacturers, can be 
 employed. There cannot be a demand for all the ad- 
 ditional workers annually seeking employment with in- 
 crease of population, unless the labor of perhaps a fourth 
 or more of them be applied directly to land which was 
 before unused or but partially used. It is evident 
 that the higher the price demanded, either as purchase 
 money or as rent, for access to this unused land, the 
 greater will be the obstacle to the employment of these 
 additional workers ; the lower the price, the less will 
 
LABOR'S DEPENDENCE ON CAPITAL. 129 
 
 be the obstacle, while if no price were charged, and 
 unused land were free land, this obstacle to employ- 
 ment would disappear entirely. It is also evident that 
 legislative forces so applied as to sustain and increase 
 the price of unused land must increase the obstacles 
 to employment; while the same forces so apphed as 
 to continually decrease the price of unused land must 
 lessen and ultimately remove these obstacles. 
 
 Political economists of the orthodox school, as well 
 as ultra socialists, not only ignore the natural effects 
 of the private ownership of land, but also the obstacles 
 to employment pointed out in the preceding chapters. 
 Many of them insist that the scale of wages depends 
 upon the volume or amount of capital, and that re- 
 lief to employees will come and can only come with 
 increase of capital. The fact that, as a general rule, 
 in new communities where there is the least capital, 
 wages are highest, while in old and thickly settled 
 communities where there is the most capital in pro- 
 portion to population, wages are lowest, is not referred 
 to, and the connection between cheap land and high 
 wages and dear land and low wages is hardly noticed. 
 Agreeing with the socialists, many teachers of political 
 economy apparently hold that wages of employees gen- 
 erally are fixed by what labor receives in immense man- 
 ufacturing establishments where enormous amounts of 
 capital are used, and where the subdivision of labor is 
 carried to the greatest extreme. Hence they teach 
 that labor is abjectly dependent upon capital. Like the 
 socialists, they fail to see that the scale of wages must 
 be fixed by what labor can earn under the simplest, 
 rather than under the most complex conditions of em- 
 ployment. They fail to see that the independence of the 
 9 
 
130 THE PROBLEM OF THE UNEMPLOYED. X. 
 
 laborer depends on the amount of capital necessarily 
 required to grow vegetables rather than on the amount 
 needed for the construction of locomotive engines. 
 
 Labor is not, in the nature of things, abjectly de- 
 pendent upon capital. Three-fourths or more of the 
 productes of the farm are still produced with appliances 
 of the cheapest and simplest character. The poultry 
 crop is but a few millions less valuable than the wheat 
 crop, while the hay crop sometimes almost doubles 
 the value of the cotton crop. The small farmer who 
 combines in himself a laborer, landlord and capital- 
 ist, will always have a greater income in proportion 
 to the capital invested and labor expended than the 
 so-called capitalistic farmer. The old saying that "He 
 who by the plow would thrive, behind it he.must drive," 
 is as true to-day as regards four-fifths or more of farm- 
 ers, as when first written by Poor Richard a hundred 
 and fifty years ago. The tendency is constantly to- 
 ward smaller farms and more intensive systems of culti- 
 vation. In this connection, of course, a farmer pure 
 and simple is referred to, and not a landlord who farms 
 other farmers, nor does "capital" include the wealth 
 sunk in the purchase of the privilege of using the land 
 on which the farms are located. 
 
 Four- fifths and more of the farmers of this country, 
 each working for himself and independent of any em- 
 ploying capitalist or any landlord, will naturally produce 
 more wealth than if working for large capitalists or 
 even for the captains of industry of a socialistic com- 
 monwealth. While large capital and a division of labor 
 may be often necessary in the interest of economy 
 to meet competition in connection with the manufacture 
 and distribution of commodities, very little capital 
 is needed in the production of cotton and most of the 
 
LABOR'S DEPENDENCE ON CAPITAL. 131 
 
 food crops. Neither is the amount of capital required 
 for successfully following any branch of agriculture 
 so large that an industrious and capable farmer cannot 
 speedily accumulate it with his individual labor when 
 he has free access to valuable unused land. This has 
 been demonstrated in hundreds of thousands of instances 
 on the fertile plains of the west. 
 
 A man with a few dollars' worth of tools and means 
 of support for a few months, a comparatively trifling 
 amount of capital, and easily within the reach of vast 
 numbers of employees in cities and towns, could make 
 a bountiful living on the valuable unused lands to 
 which attention has been called, without the aid of 
 any other capital, if he had free access to them. The 
 importance of this fact is ignored by orthodox pol- 
 litical economists as well as by socialists.. 
 
 In order then to determine the extent of labor's 
 necessary dependence upon capital, we must see how the 
 relationship between the two would stand if both had 
 free access to unused land. Let us then imagine condi- 
 tions which would prevail if the natural order were 
 observed in the use as well as in the appropriation 
 of land. 
 
 If there were no artificial obstacles to prevent it, 
 the most fertile or most favorably situated land would 
 always be first selected for use. There would then 
 be few, if any, of the intervening spaces, to which 
 attention has been called, of more valuable unused 
 land between lands in use. There would rarely if 
 ever be such space in cities and towns. Land most 
 conveniently situated and most valuable for use would 
 no longer be withheld from use. Capital and labor 
 would no longer pass by vacant lots and unused farming 
 lands, coal beds and mineral deposits, and apply energy 
 
132 THE PROBLEM OF THE UNEMPLOYED. X. 
 
 to lands more remote and naturally less valuable. The 
 waste of effort occasioned by the present custom would 
 be saved and the aggregate amount of wealth produced 
 vastly increased. 
 
 Let it be assumed then, for the purpose of argument 
 only, that the taxing power of the government was 
 so exercised as to make it unprofitable to withhold land 
 from the use to which it was best adapted, and that 
 no one could afford, as a business proposition, to own 
 land without putting it to such use. If this were the 
 case, vacant land would always be free land. Under 
 such conditions, there would be none of the interven- 
 ing spaces between business houses and between res- 
 idences and between cultivated or improved fields to 
 which attention has been called. Moving from the 
 center of any city, improved business lots would join 
 improved residence grounds, and the latter would join 
 cultivated or improved fields which would extend in 
 almost unbroken masses to the unimproved pasture 
 lands and unused lands beyond, except as such natural 
 order might be modified by difference in the fertility of 
 soils or other natural causes. The land beyond and 
 adjoining the last improved or cultivated fields would 
 thus be practically free land, open to the use of who- 
 ever cared to take a deed for it from the State, and use 
 and improve it. 
 
 Let it also be assumed, for illustration only, tha^ 
 the tax was so adjusted as to give the government ap- 
 proximately the unearned increment or increase in 
 value of land resulting from increase of population and 
 progress generally. The State would then take, in the 
 form of a tax, what the land owner now takes in the 
 form of rent, according to the economic definition of 
 rent heretofore given. In the division of the wealth 
 
LABOR'S DEPENDENCE ON CAPITAL. 133 
 
 produced, the portion attributable to land as rent 
 would then go to the government in the payment of a 
 tax. At present, it goes to an individual in the pay- 
 ment of rent. Of course, the tax would be levied on the 
 value of the land alone in lieu of all other taxes, without 
 regard to improvement. The tax on land would be 
 so adjusted from year to year as to take practically 
 the entire unearned increment, and hence no one would 
 have the slightest desire to accept a deed to land from 
 the government for speculation or investment purposes. 
 Hence, unused land would always be free land. When 
 with increase of population, the necessity for the use of 
 such land arose, no private owner would then stand in 
 the way of its use, and thus the purchase price of unused 
 land, the greatest of all obstacles to employment, would 
 disappear. 
 
 Let it be further assumed, for illustration only, that 
 under the conditions above shown, there would always 
 be free land thus conveniently located for the small 
 capitalist and the laborer to go to. This land would 
 not lie in a roadless wilderness, remote from markets, 
 schools and neighbors. It would always adjoin a com- 
 pact and thickly settled community, with macadamized 
 roads at every farmer's door, and all the social and 
 economic advantages which come with density of pop- 
 ulation. The settler upon it would at once become a 
 member of such community, and a participant of its 
 advantages. It would be land from which the bulk 
 of the product would often go almost directly to the 
 consumer, unaffected by trusts and combinations in 
 restraint of trade. What such advantages are worth 
 is apparent from the fact that men will often pay hun- 
 dreds of dollars per acre for raw land thus situated, 
 rather than ten dollars an acre for equally as fertile 
 
134 THE PROBLEM OF THE UNEMPLOYED. X, 
 
 lands twenty miles farther from the center of a neigh- 
 boring city. This difference in price arises in part 
 from the fact that while a day's labor on the remote 
 land will produce, say, a dollar's worth of wealth, the 
 same amount of labor on the other land will produce, 
 say, three times as much. Yet, under the condition 
 stated, this three dollar a day land wonld at fir t be 
 practically rent free. The tax, to begin with, would 
 be but nominal. It would only increase as with increase 
 of poptdation and material progress, labor applied to 
 the land would become more effective, and then the in- 
 crease of the tax would only be sufficient to give the 
 State, instead of the individual, the benefit of the un- 
 earned increment. The values created by the. commun- 
 ity woTild thus go to the community instead of to in- 
 dividuals. 
 
 With an abundance of unused land to be had on 
 such terms, situated as thus described, how absurd to 
 suppose that labor would then be abjectly dependent 
 upon capital, even though plants requiring an invest- 
 ment of hundreds of millions of dollars might be neces- 
 sary in many kinds of enterprises! How could the 
 wages of employees in such plants, or in plants of any 
 kind, be forced below the scale of wages fixed by what 
 labor could make on rent free land? What possible 
 combination of employing capitalists could compel em- 
 ployees to accept less than laborers would make on 
 lands of this character? Under the conditions de- 
 scribed, many laborers would be able practically to 
 employ themselves without the aid of capitalists, and, 
 speedily creating their own capital they would become 
 personally independent of all capitalists. Since agri- 
 culture is the simplest, most easily learned and most 
 generally followed of all trades, the independence of 
 
LABOR'S DEPENDENCE ON CAPITAL. 13^ 
 
 agricultural laborers would mean the independence of 
 all laborers. 
 
 The success of the Pingree potato patches proves 
 that the earnings of even common laborers on val- 
 uable free land would exceed those now usually earned 
 by ordinarily skilled laborers. No one can doubt that 
 with free access to nearby unused lands, more labor 
 would be employed, and that labor would naturally be- 
 come less dependent upon capital. As already stated, 
 the unemployed laborer himself might not go to the 
 soil, but if conditions were such as to make its culti- 
 vation highly profitable to other laborers and to small 
 capitalists, enough of his competitors would do so to 
 largely increase ,the demand for his labor, no matter 
 what the line of his employment might be. 
 
 It follows then that the extent of labor's necessary 
 dependence on capital does not rest upon the amount 
 of capital in existence, nor on the amount of capital 
 required to sucessfully carry on manufacturing and 
 commercial enterprises. It depends simply on the 
 amount actually needed to enable the laborer to produce 
 wealth on nearby unused lands; and, exclusive of the 
 price of the land, this amount is so small as to be within 
 the reach of every laborer possessed of moderate fore- 
 thought and prudence. Labor existed before capital, 
 and unaided, it brought forth capital. Given free access 
 to unused lands, and the laborer would be as independent 
 of the captialists under the most complex as under the 
 most simple conditions of society. Experience tends to 
 prove this to be true In new countries, where the 
 least amount of wealth is needed for the purchase of 
 conveniently located unused land, wages are highest; 
 in old countries, where the most is needed, wages are 
 lowest. 
 
136 THE PROBLEM OF THE UNEMPLOYED. X. 
 
 Increase of wages arbitrarily by trade union methods, 
 like increase of prices produced by trusts, means gain 
 for some and loss for others; but the independence of 
 the laborer, when brought about naturally by the 
 unrestricted operation of the law of supply and demand, 
 means greater wages for employers as well as em- 
 ployees, and greater prosperity for workers of every 
 kind. The reason for this difference will presently be 
 made clearly apparent. 
 
 The thought thus suggested for the purpose of show- 
 ing to what extent labor is necessarily dependent upon 
 capital, will be recurred to and more fully developed 
 in subsequent pages. Before leaving it, however, one 
 of the questions which may have arisen in the mind 
 of the reader in this connection, will be briefly an- 
 swered. The query is this: While the conditions re- 
 ferred to might exist and produce the results described, 
 jn a new and thinly settled country, what application 
 can it have to those countries in which there is little 
 or no vacant or but partially used land suitable for 
 agricultural purposes? The answer simply is, that in 
 no country in the world is there any lack of an over- 
 whelming abundance of such unused land, nor is it likely 
 that there ever will be, considering the probable re- 
 sults of the application of science to agriculture. When 
 such unused land is not literally close at hand, modern 
 transportation facilities can always in effect make it 
 practically so. 
 
 Where are the thickly settled countries to which the 
 question mentioned above is supposed to apply? The 
 population of India is but 100 to the square mile; of 
 China, 200 ; Japan, a little more than 300 ; France, about 
 150; the islands of Great Britain, a little over 300. 
 The population of the State of Massachsetts, which 
 
LABOR'S DEPENDENCE ON CAPITAL. 137 
 
 is 350 to the square mile, slightly exceeds in density 
 that of Great Britain. Holland is perhaps the only 
 country in the world, except Belgium, where the popula- 
 tion is more dense than in the State of Massachusetts, 
 and it has only about 400 to the square mile.* 
 
 The amount of unimproved land compared with im- 
 proved land in Massachusetts, therefore, must illustrate 
 to some extent at least the situation in all countries 
 in which population is supposed to crowd the means of 
 subsistence. The I'acts in this cennection, as shown by 
 the 1895 census of Massachusetts, prepared under the 
 authority of that State, are as follows: To begin with, 
 there are only 902,650 acres in Massachusetts classed 
 as "cultivated lands," or less than one- fifth of the 
 improvable land in the State; 1,320,522 acres are classed 
 as unimproved lands, and 1,460,994 as woodlands, mak- 
 ing a total of 3,847,749 acres used for agricultural 
 purposes. This leaves 1,437,434 acres in and near cities 
 and towns which are not used for agricultural purposes, 
 and on which about five-sixths of the population of the 
 State, or 2,100,000 people, were living. This was 
 enough to have given every five of these people two and 
 a fifth acres of land, after allowing one-third of the 
 total area for public parks and streets. Yet the lots in 
 actual use for residence and business purposes in the 
 
 *The enormous amount of unused land which careful invest- 
 igation brings to light in the most densely settled countries is 
 shown from the following extract taken from Thomas P. Mil- 
 lard's article on "The Financial Prospects of Japan" in the Sep- 
 tember number, 1905, of Scribner's Magazine: 
 
 "It will probably surprise many people to learn that there is 
 now only about one-half the arable land of Japan in cultivation. 
 Some time before the war the Japanese Government appointed 
 a commission to inquire into the state of agriculture in the 
 realm, which in due time reported certain facts bearing thereon. 
 Commenting upon the findings of this commisssion, one of the 
 leading and more conservative native journals had this to say: 
 'According to the latest statistics compiled by the Geological 
 
138 THE PROBLEM OF THE UNEMPLOYED. X. 
 
 cities and towns of Massachusetts do not probably aver- 
 age the one-tenth part of two and one-fifth acres of land 
 to the family unit of five. But say that the allowance 
 per family ought not to be less than an area of 100 
 by 100 feet, including business as well as residence 
 lots, and it follows that at least six-sevenths of the 
 1,437,434 acres of land referred to is wholly unused. 
 In other words, in Massachusetts there are considerably 
 over a million acres of land in and adjoining cities and 
 towns, spoiled for any present productive use because 
 its owners believe that in the sticceeding five, ten, 
 twenty, fifty or perhaps a hundred years, some of it may 
 be used as sites for buildings. The laborer and the 
 capitalist are unable to use this land for agricultural 
 purposes because of the high price demanded for it, and 
 so most of it is practically abandoned to the speculator 
 and to the mere land holder. Yet of all land in the 
 State, this, with few exceptions, is the most valuable for 
 farm'ng purposes. 
 
 As in Massachusetts, so everywhere in connection 
 with thriving cities and towns, an area from five to 
 ten or twenty times greater than that on which the 
 population would be concentrated under natural con- 
 ditions referred to, is excluded from use. In Massa- 
 
 Investigation Bureau of the Department of Agriculture and 
 Commerce, the present total area of cultivated fields in Japan 
 forms only 13 2-3 per cent of her total area. Comparing this 
 with the ratios of cultivated land in forei^i countries it will be 
 seen that the land cultivated by countries in Europe covers from 
 one-third to one-half of the total land area * * * From the 
 above (figures) it will be seen that Japan still has 48 per cent of 
 the total land area which can be turned into cultivated land. 
 There is at present about five million cho (a cho is equal to 2.45 
 acres) of cultivated land in the country, leaving some four and a 
 half million cho to be still cultivated. Should efforts be made 
 to turn this arable land to advantage, the increase of population 
 is little to be feared.' '- 
 
LABOR'S DEPENDENCE ON CAPITAL. 139 
 
 chusetts the amount thus excluded exceeds all the land 
 in cultivation in the State. 
 
 Had the natural order been observed in Massachusetts, 
 in the use as well as in the appropriation of land — 
 had the land most suitable for use always been first 
 used, doubtless most of the farmers of that State would 
 now be located on the most valuable and conveniently 
 situated 1,000,000 unused acres in the suburbs of cities 
 and towns, instead of upon the 902,650 acres classed 
 as "cultivated lands;" the remainder of the unim- 
 proved land in the State, amounting to over 2,400,000 
 acres, beside the 1,400,000 acres of woodland, would 
 still be unimproved, the only difference being that nearly 
 all the "cultivated lands" would then lie adjacent to 
 compactly built cities and towns. Of course, this is 
 but an approximation of what would really have hap- 
 pened under the conditions referred to, but in the 
 main, the lands of Massachusetts would have been settled 
 in the manner stated. Thf best and most valuable land, 
 considering the fertility of the soil and its proximity 
 to centers of population, would always have been first 
 used, and unused land would always have been the least 
 valuable land for use. Under the effects of the taxing 
 power applied in the manner which has been suggested, 
 the unimproved land in Massachusetts, amounting to 
 nearly 4,000,000 acres, would have been practically free 
 land. And, as heretofore shown, this free land would 
 generally have commenced where the cultivated fields 
 ended, and where labor could produce as much wealth 
 as when it is now applied to land held at perhaps hun- 
 dreds of dollars or more per acre. 
 
 A macadamized road at the farmer's door will often 
 alone add ten per cent and more to his gross income, 
 and quadruple the fund from which his possible savings 
 
140 THE PROBLEM OF THE UNEMPLOYED. X 
 
 must come. He can haul his crops over it when wet 
 weather suspends work upon the farm, and at such 
 times, especially, it facilitates the exchang ■ of visits 
 between neighbors, and adds immensely to the enjoy- 
 ment of life. It also enables him to constantly increase 
 the richness of his soil by easily placing upon it the 
 fertilizing material often obtained without price from 
 neighboring cities and towns. 
 
 Compare the lot of a man located on land of the 
 character referred to above with that of the average 
 husbandman on his oft mud-bound and storm-bound 
 farm. The former has almost all the advantages of a 
 city, including perhaps a telephone, a trolley line, and 
 electric light and power, and the best of educational 
 facilities close at hand; while the latter lives remote 
 from neighbors, schools and churches, deprived not only 
 of many economic advantages, but also of social pleas- 
 ures which would add so much to the happiness and 
 contentment of himself and family. What wonder that 
 so many of the sons and daughters of farmers crowd the 
 trades and profession in cities and towns! What else 
 could be expected when the social instincts of mankind 
 are taken into account? 
 
 There is no economic necessity for the hard and 
 dreary lives which so many farmers and their wives 
 and children are forced to live on lonely farms. Less 
 than half the money, for instance, now expended in the 
 construction and maintenance of dirt roads would put 
 macadamized roads and a telephone line to every farm- 
 er's home, together with electric light and power ervice, 
 if all farmers were located on the lands best situated for 
 farming purposes, and the remainder devoted to pastoral 
 uses. Not only so, but the same amount of labor 
 wholly applied to such lands, under such advantages, 
 
LABOR'S DEPENDENCE ON CAPITAL. 141 
 
 would produce double and quadruple the wealth at pres- 
 ent obtained from much of the farming lands in use. 
 
 What has been stated as to the enormous areas of 
 unused lands near the centers of population is not 
 exaggerated. Careful observation in and adjacent to 
 any city in America will convince the most skeptical 
 on this point. Start from the business center of any 
 average city, and note the proportion of improved to 
 unimproved, or but partially improved, land between 
 two parallel lines a quarter of a mile or so apart, running 
 into the country. Extend these lines until a region is 
 finally reached where the price of land is based upon 
 the wealth which it is capable of producing when devoted 
 to agricultural uses. Or, in other words, extend them 
 until land is reached, the value of which is not inflated 
 by the hope of its some time being used for other than 
 agricultural purposes. In every instance, it will be 
 found that not one acre in five, often not one in ten 
 or twenty, between these lines, is used for any pro- 
 ductive purpose whatever. 
 
 If the natural order of settling upon and using land 
 were observed, unused lands would be found every- 
 where in abundance immediately adjacent to thickly 
 settled communities. Given conditions under which 
 land could not be profitably appropriated in advance of 
 any economic demand for it for actual use, — let the 
 forces of government be so applied that all unused or 
 but partially used land would be practically free land, 
 and free land then could always be found where the 
 laborer upon it would be able to enjoy from the very 
 start the social and economic advantages of a densely 
 settled community. On such land most laborers, as 
 heretofore shown, could produce wealth without the aid 
 of any so-called capitalist, and the wages earned by 
 
142 THE PROBLEM OF THE UNEMPLOYED. X 
 
 them upon it would many times exceed what can now be 
 earned on the free land which can only be found at 
 present in the heart of a wilderness. 
 
 The necessary dependence of labor upon capital, and 
 of the labor upon the capitalist, can only be ascertained 
 when both are supposed to have access to free land 
 under the natural conditions which have been described. 
 Under such conditions, the agricultural laborer would 
 always be practically independent of the capitalist as 
 well as the landlord, and, as already remarked, his in- 
 dependence would bring about the independence of all 
 laborers. Under the natural conditions thus described, 
 employers would compete for the privilege of employ- 
 ing labor, even as laborers now compete for the privil- 
 ege of being employed, and wages would rise accord- 
 ingly. 
 
CHAPTER XI. 
 THE WAGE FUND. 
 
 CAPITAL is not only wealth used to produce more 
 wealth, but it is also wealth consumed in the produc 
 tion of wealth. The machine, no matter how strongly- 
 built, finally wears out, and is replaced by a new one. 
 Wealth in the form of statuary may last for centuries, 
 but wear and tear, moth and rust and decay finally pre- 
 vail, and the process of consumption as to every thing 
 produced by human hands is at last completed. If 
 wealth is not being consumed as capital, it is because 
 it has reached the final stage had in view during the 
 process of its creation, and is being consumed in the 
 gratification of human desires with no ulterior aim in 
 view. Thus, the reaping machine, which is instrumental 
 in the production of the wheat which makes the flour 
 which makes the bread, is capital; but the bread on 
 the table of the consumer is not capital — it is simply 
 wealth. 
 
 Things of the same class may often be consumed, 
 either as capital or as wealth only, according to 
 circumstances. The horse which drags the plow is being 
 consumed in the production of wealth, and is capital; 
 the horse which merely ministers to the pleasure of its 
 owner is being consumed like food, and is not capital. 
 The race horse, by its efforts on the race track, adds 
 nothing to the stock of wealth in th? world, although 
 
 143 
 
144 THE PROBLEM OF THE UNEMPLOYED. XI 
 
 it may enable some men to obtain wealth produced by 
 other men. Wealth which is not used to produce more 
 wealth may be conveniently referred to as wealth con- 
 sumed in living expenses; wealth thus consumed is not 
 capital. Generally speaking, wealth is always in the 
 condition of being consumed, either in living expenses, 
 or as capital in the production of more wealth. It is 
 unnecessary to make other distinction with respect to 
 it, since all wealth is either wealth in itself alone, or 
 it is wealth used to produce more wealth. 
 
 Wealth saved by individuals takes the form of cap- 
 ital, unless invested in land, and most of the wealth 
 which is not consumed as fast as produced is used as 
 capital. The aggregate amount of capital in any com- 
 munity can be appropriately called the wage fund of such 
 community. It constitutes the fund from whiich are 
 drawn the tools and supplies used by labor in producing 
 wealth. It is evident, other things being equal, that 
 the greater this fund, the greater will be the amount 
 of wealth produced, and that whatever tends to lessen 
 this fund also tends to lessen the production of wealth. 
 
 One of the most important things to be considered 
 in connection with the production and distribution of 
 wealth, is the simple fact that wealth used as capital, 
 and consumed in the production of wealth, increases the 
 wage fund of the world and makes it easier to produce 
 wealth while wealth consumed in living expenses has 
 the opposite effect; hence it follows that the less con- 
 sumed in living expenses, the larger will be the wage 
 fund, and the more wealth will beproduced by the same 
 amount of labor. A rich man may live extravagantly, 
 indulge himself without limit in expensive cigars, wines, 
 race horses and servants, and spend his entire income 
 on living expenses, thus taking from instead of adding 
 
THE WAGE FlJNiD. 145 
 
 to the wage fund; while, on the other hand, a man 
 with the same income, may spend half of it perhaps 
 on tenement houses and labor-saving appliances of 
 various kinds, and thus add to this fund. The expend- 
 i ures of the latter create as great a demand for labor 
 as those of the former; but in the former case wealth 
 is simply destroyed, while in the latter case it is saved 
 and made useful in the production of more wealth. 
 
 The so-called miserly men who economize and save 
 are public benefactors, as compared with the less prov- 
 ident whose incomes are entirely absorbed in living 
 expenses The former may not be so popular with tail- 
 ors and retail store-keepers as the latter, but if it were 
 not for the prudence and self-denial exercised by them, 
 the wage fund would be smaller, rates of interest would 
 be higher, and the comforts and luxuries of life would 
 not be so commonly enjoyed. While the senseless ex- 
 travagancies of the very rich creates a demand for labor, 
 labor would not be in less demand if the effort needed 
 for the production of things consumed in ostentatious 
 display were devoted to things useful in the production 
 of wealth. The rich man who spends a million dollars, 
 for instance, in the erection of comfortable and sanitary 
 tenement houses in the slums of a city, creates as great 
 a demand for labor as would be the case if he spent 
 it all on caterers, jewelers, servants and dressmakers. 
 So also, as to the hundreds of millions of dollars thrown 
 away annually by the working men of America for 
 tobacco, beer and whiskey — the demand for labor would 
 not be lessened, if this money were saved and invested 
 in other things needed by them, — say, in better houses 
 and additional furniture for wives and children; while 
 fewer men would be employed in such event in the liquor 
 10 
 
146 THE PROBLEM OF THE UNEMPLOYED. XI 
 
 business, more would be employed as carpenters and 
 furniture makers. 
 
 An approach to equality in the matter of incomes 
 tends to increase the wage fund, while inequality in 
 this respect tends to decrease it. Thus, suppose that 
 60 out of 1000 families in a given community have an 
 average income of $15,000 each, while the average in- 
 come of the remaining 950 is but $200 each. It is 
 evident, under such circumstances, that great numbers 
 of the latter would be employed as servants in minister- 
 ing to the pleasures of ■ he former, and would thus merely 
 consume wealth without producing it; hence, the wealth 
 produced, and the portion of it saved in such a com- 
 munity, would be much less than would be the case if 
 fewer of the population were thus employed. It is also 
 apparent that in such a community energy would be 
 devoted to the production of luxuries, which, under dif- 
 ferent conditions, would be devoted to the production 
 of labor-saving appliances, and nobles would vie with 
 each other in splendor of equipages, while peasants, for 
 want of horses, would harness women to plows. Rus- 
 sia presents an example of conditions which must neces- 
 sarily result from such excessive inequalities in the dis- 
 tribution of wealth.* 
 
 If every family in the community referred to had an 
 income of not less than $1,000, there would be com- 
 
 *The Czar owns 122 palaces. 100 of which must always be 
 ready for the master. These 100 palaces are administered 
 just as if the majesty was at home. The rooms are full of 
 flowers, and five elaborate meals are served to the marshal 
 and his family, representing the czar and grand dukes, and 
 every servant is at his or her post. In these 122 palaces 32.000 
 male and female servants are employed, year in and year out, 
 and their salaries, food and maintenance eat up $20,000,000 
 annually, which the Rvissian people must furnish. The ex- 
 ample thus set by the czar is imitated as nearly as possible 
 by the grand dukes and nobles generally. 
 
THE WAGE FUND. 147. 
 
 paratively few who, as personal servants of the rich, 
 would be mere consumers instead of producers of wealth. 
 More labor would also be applied to the production of 
 comfortable houses, barns, domestic animals and agri- 
 cultural implements, and less to the production of pal- 
 aces, jewelry and fine gowns; hence, the aggregate 
 amount of wealth consumed in living expenses would 
 probably be smaller; in any event, the amount added 
 to the wage fund would be larger. And so, in fact, in 
 all countries where wages are highest and differences in 
 incomes are least marked, the greatest amount of wealth 
 per capita is produced. 
 
 Although, as stated in the preceding chapter, the New 
 Political Economy offers no substitute for it, private 
 ownership of land under existing conditions does more 
 to check the growth of the wage fund than all other 
 causes combined It not only enables individuals to 
 reap the unearned increment which attaches to land 
 from increase of population, and also to obtain from cap- 
 ital and labor tribute money for its use, but the exchange 
 of wealth for land and for the use of land results in the 
 destruction of wealth which would otherwise be added 
 to the wage fund. 
 
 Since, however, the money which the grantee or the 
 tenant pays for land, or for the use of land, is ordinarily 
 spent or reinvested, the question may be asked as to 
 how the payment of rent or purchase money for land 
 can really lessen the amount of capital in the world. 
 The fact that money paid for land, or for the 
 use of land, is put into circulation by the per- 
 son receiving it, in the purchase of other things, in- 
 dicates nothing. Money, as heretofore explained, is 
 like a warehouse receipt. It only evidences the amount 
 of one's wealth on deposit in the warehouse of the world. 
 
148 THE PROBLEM OF THE UMEMPLOYED. XI 
 
 It has no more significance in the transfer of wealth 
 than the "chips" used in a game of poker. Chips keep 
 an account of the transfer of wealth between gamblers, 
 and money in the same way keeps an account of the trans- 
 of wealth between those who buy and sell. We care 
 nothing for the chips — for the money used for conven- 
 ience in the transaction We wish to know in this con- 
 nection what ordinarily becomes of the wealth actually 
 given in exchange for land, or for the use of land. While 
 a portion of it may be used as capital by the grantor or 
 the landlord, much of it is always consumed in living 
 expenses, and wealth in enormous quantities is thus de- 
 stroyed which would otherwise be added to the wage 
 fund. It makes mere consumers of people who would 
 otherwise be producers as well as consumers. This will 
 appear from the following illustration: 
 
 Some time ago, the lands containing coal beds and 
 mineral deposits in Northern Alabama, 99% of which 
 were wholly unused, advanced in value within a few 
 years from a million to fifty million dollars. Now, sup- 
 pose this land, when it was worth but a million dollars, 
 to have been owned by a thousand people, who, ten years 
 later, sold it to a thousand capitalists for fifty million 
 dollars. If this did not in effect occur, it is nevertheless 
 illustrative of and only differs in degree from what is 
 constantly occurring in every civilized community of the 
 world. Here a thousand capitalists paid a thousand 
 land owners fifty thousand dollars apiece on an average, 
 or fifty million dollars in all, for the bare privilege of 
 producing coal and iron and wealth generally from un- 
 used lands. Recurring again to the functions of money, 
 and it appears that the payment of fifty million dollars 
 for this privilege signified, that the thousand capitalists 
 
THE WAGE FUND. 149 
 
 in effect had teams, furniture, steam engines, tools, food, 
 clothing, merchandise and other things innumerable, in 
 the markets of the world, of the value of fifty million 
 dollars, which they gave in exchange for the land. The 
 money simply evidenced the fact of the ownership of this 
 wealth, and when it passed to the grantors, it gave the 
 latter power to draw from the wage fund of the world, 
 in lots to suit, things of the aggregate value of $50,000,- 
 000. Had they drawn ten million dollars' worth of gun- 
 powder and burned it in a grand celebration, the wage 
 fund of the world would have been lessened to that ex- 
 tent as one of the consequences of this investment of 
 wealth in the purchase of land. The wage fund could 
 also have been diminished in the same way by any other 
 extravagance in which the former land owners might 
 have indulged. Many of them, who would otherwise 
 have continued to work and produce wealth, would doubt- 
 less then have begun lives of ease and luxury with 
 retinues of servants to minister to their pleasures. They 
 and their servants would thus have become simple con- 
 sumers of wealth and mere pensioners on the people at 
 large, and the wealth thus squandered would diminish 
 the wage fund of the world as effectually as the wanton 
 burning of gunpowder. 
 
 The wealth which men acquire from the rent of land, 
 or from buying and selling land, is not earned by them, 
 but is wealth produced by others, which they are per- 
 mitted to appropriate and withdraw from the wage fund 
 and consume, if they choose to do so, in living expenses. 
 A man pays $10,000, for a tract of land which in course 
 of time he sells for $40,000, netting $25,000 on the trans- 
 action after payment of taxes and all expenses. This 
 gain to him of $25,000 — this unearned increment which 
 be individually appropriates — results frpin increase of 
 
150 THE PROBLEM OF THE UNEMPLOYED. XL 
 
 population and the enterprise of the community in which 
 the land is situated. He may never have been within 
 a thousand miles of it, or done any thing to add to its 
 value. Nevertheless, the $25,000 profit in the trans- 
 action enables him to draw from the storehouse of the 
 world, commodities of the value of $25,000, and consume 
 them in increased living expenses for himself and family, 
 or otherwise, and reduce the wage fund accordingly. 
 Of he may live in idleness on the things thus withdrawn, 
 and thereby become a mere pensioner, his claim to a 
 pensioner's support resting on the fact of his having, years 
 before, succeeding in forestalling capital and labor in the 
 purchase of a bounty of nature which other people have 
 made valuable. 
 
 It may be urged in this connection, however, that 
 employers engaged in wealth-producing enterprises often 
 live in needless luxury also, and consume wealth which 
 could be saved and added to the wage fund. This is 
 true; but it does not disprove the fact that the wage 
 fund would be larger if individuals were not permitted 
 to appropriate the rent of land and the increase in the 
 value of land. As well might it be said that since there 
 are some leaks in a ship which cannot be helped, it is 
 useless to consider those which can be stopped. The 
 right to collect tribute money, and diminish the 
 wage fund by consuming in living expenses wealth 
 produced by others, would not have accrued to the land 
 owners referred to above, but for the burden of taxation 
 being so adjusted as to make it often more profitable to 
 invest wealth in the purchase of land than in the em- 
 ployment of labor. 
 
 As already stated, there are in the main but two ways 
 in which accumulated wealth can be permanently in- 
 vested for income-producing purposes. One way is tp 
 
THE WAGE FUND. 151 
 
 invest it in effect in machinery, or in other words in 
 capital, with which to employ labor,^-or to loan it to 
 those who will use it for this purpose. The other way 
 is to invest it in land on which to use machinery, i. e. 
 capital. 
 
 For its advantageous employment labor needs capital 
 in the form of houses, teams, tools, implements, paving 
 upon highways, rails and ties and cuts and embank- 
 ments on railroad rights of way, rolling stock, ships 
 and unnumbered other mechanical appliances produced 
 by human labor; together with stocks of food, clothing 
 and merchandise with which to tide labor over from one 
 harvest to another, and from one cycle of exchange to 
 the next. The more there are of these things which 
 constitute the wage fund, the greater will be the pros- 
 perity of workers of every kind, employers as well a 
 employees. It is evident that the more paid for land on 
 which to use these appliances, the less will there be left 
 with which to purchase the appliances thernselves. 
 
 There is no limit to the extent to which capital can add 
 to the effectiveness of labor. With more and better 
 paved highways, for instance, time and effort otherwise 
 fritted away would be available for the production of 
 additional wealth. If the wage fund were larger, more 
 labor-saving devices would be used on the farms and in 
 the factories, shops and homes, and more wealth would 
 be produced; yet, strange as it may seem, labor is 
 everywhere diverted from the making of things which 
 add to the productive powers of nations, and in all 
 countries the forces of government are so applied as to 
 encourage the creation of luxuries and the maintenance 
 of hordes of personal servitors. 
 
 Imagine the increase in the wage fund of the world, 
 and the increased amount of wealth produced, if employ- 
 
152 THE PROBLEM OF THE UNEMPLOYED. XI. 
 
 ing capitalists were not compelled to pay land owners 
 such enormous sums for places on which to rest the 
 tools of production. In Northern Alabama, for instance, 
 as much if not more wealth in the aggregate was demand- 
 ed for the privilege of using the tools referred to than the 
 tools themselves were worth. And so it is everywhere. 
 The aggregate price demanded for land in every com- 
 munity equals or exceeds the value of all the wealth, in- 
 clusive of the capital which rests upon it. On Manhattan 
 Island the tax assessment rolls show that it exceeds it 
 by over a billion dollars. 
 
 It is the size of the wage fund, also, which determines 
 the relative strength as well as the wealth of nations. 
 If employing capitalists were not required to buy from 
 individuals the privilege of producing wealth on the soil 
 of Japan, for instance; if the obstacles to the employ- 
 ment of labor which have been pointed out were re- 
 moved, and the wage fund of that country permitted to 
 increase as it naturally would under such circumstances, 
 the expense of the war with Russia would be but a mere 
 bagatelle compared with the increased amount of wealth 
 which would then be produced. 
 
 There may be no help for it, yet nevertheless the 
 burden of private ownership of land has a more depress- 
 ing effect upon industry and enterprise than war, pesti- 
 lence or famine. The pressure from this burden is never 
 relaxed, nor is it lightened by material progress; on the 
 contrary, it is intensified by it and rendered less en- 
 durable, 
 
CHAPTER XII. 
 
 THE DISTRIBUTION OF WEALTH. 
 
 Causes Affecting the Division of Wealth be- 
 tween Land Owners on the one hand and 
 Capitalists and Laborers on the other hand. 
 Also the Law of Rent and its corollary, 
 the Law of Wages. 
 
 A SIMPLE illustration of the way in whxh wealth is 
 naturally distributed is seen in the case of a tenant 
 farmer, who borrows, say, $5,000, and opens up a farm on 
 unimproved land, not owned by him, but which he leases 
 from another. He uses this money to provide himself 
 with buildings, teams, implements, supplies, etc., these 
 things being in effect borrowed by him from the capital- 
 ist who loans him the $5,000. He might have arranged 
 to pay the capitalist interest, the land owner rent, and 
 the laborers wages, in wheat raised on the place; but 
 whether he does this or sells the wheat and pays them in 
 money, the wealth produced on the land is just as clearly 
 divided among the factors of land, capital and labor, 
 as would be the case if these payments were made in 
 kind. Say that he raises 2,000 bushels of wheat, which 
 are sold for $2,000, of which the land owner gets $300 as 
 rent, the capitalist $300 as interest, and the employees 
 $600 as wages, leaving a net gain of $800 to the tenant 
 farmer, This gain of $800 is the result of labor on the 
 
 153 
 
154 THE PROBLEM OP THE UNEMPLOYED. XH. 
 
 part of the latter. It is the reward received by the ten- 
 ant farmer for his industry and enterprise. To call any 
 part of it profit, or to give to it any other name than 
 wages, is to introduce needlessly a confusing distinction. 
 It constitutes, however, the wages of the employer as 
 distinguished from the wages of the employee. 
 
 Before discussing the causes which affect the division 
 of the product between employer and employee, it is first 
 in order to consider those which affect the amount to be 
 divided; for the portion to be thus divided depends on 
 what is left after land has received rent and after cap- 
 ital has received interest. In the discussion which fol- 
 lows, therefore, rent will be separated from the total 
 productj interest will be deducted from what is left, and 
 the remainder as wages will be divided ketween employer 
 and employee. In this way, we can ascertain the causes 
 which affect the ratio of the division among land owners, 
 capitalists, employers and employees, respectively. In 
 the illustration given, wheat, the product of the factors 
 of land, capital and labor, is sold for $2,000; in the divi- 
 sion of this product, land gets $300, capital $300, and 
 labor gets the remainder. Thus labor receives $1,400, 
 of which the employer gets $800 and the employees $600. 
 
 The product of every wealth-prodticing enterprise can 
 be thus divided into as many parts as there are factors 
 entering into its production ; and since wealth is brought 
 forth by a combination of land, capital and labor, the 
 product is naturally divided in the first instance into 
 three parts only, one representing rent, another interest, 
 and the other wages. Had the tenant, in the case cited, 
 owned the capital which he used, and thus combined in 
 himself the functions of a capitalist as well as a laborer; 
 or owning the land also, had he combined in himself the 
 functions of landlord, capitalist and laborer, the por- 
 
THE DISTRIBUTION OF WEALTH. 155 
 
 tions of his income attributable respectively to rent, in- 
 terest and wages, would have been the same, and could 
 have been just as easily ascertained. This has been ex- 
 plained in a previous chapter. 
 
 While the division of the product among the factors 
 of land, capital and labor is most easily seen in the case 
 of labor' applied directly to the soil, it can nevertheless 
 be observed in all wealth-producing enterprises. When- 
 ever the raw material of one stage is changed into the 
 ' finished product of the next, the additional wealth thus 
 produced is in effect divided among land owners, capital- 
 ists and laborers. The fact that in many instances there 
 is a remaining portion appropriated under exceptions to 
 the general rule, for which no consideration in the per- 
 formance of service, or in the furnishing of land or cap- 
 ital, is given, such as exceptions arising from special 
 privileges and combinations in restraint of trade and 
 otherwise, has already been alluded to. While it lessens 
 the amount to be divided among the factors of produc- 
 tion, it does not affect the ratio of the division. 
 
 Take the stage embracing the period from the time 
 when the tenant farmer places the 2,000 bushels of wheat 
 in the warehouse of the nearest railway station until it 
 is delivered from an elevator in a distant city to the 
 flouring mill. During this period^ valuable land has been 
 furnished for the storage and transportation of the wheat ; 
 land has also been furnished as sites for the buildings in 
 which merchants and brokers have expended mental ef- 
 fort in directing its transportation and in effecting its 
 exchange for other commodities ; land has also been fur- 
 nished for the houses in which the laborers lived who 
 had handled it, and without which the wheat could not 
 have been moved; capital has also been used in the form 
 of buildings and railway improvements and other ap- 
 
156 THE PROBLEM OF THE UNEMPLOYED. XII. 
 
 pliances, including the houses referred to, and labor, 
 both physical and mental, has been employed in bring- 
 ing the wheat to the end of what may be termed the sec- 
 ond stage of its existence. The wheat, on reach- 
 ing the flouring mill, is worth, independent of any 
 fluctuation in price, say, fifteen cents a bushel more 
 than it would have been worth had it remained in 
 the hands of the farmer. In other words, wealth, to the 
 extent of fifteen cents per bushel, has been as effectually 
 produced by labor, and by the use of land and capital, as 
 in the production of the original wheat itself, and added 
 to its original value. This additional wealth of fifteen 
 cents per bushel is as surely divided among the factors 
 of land, capital and labor, each of which has contributed 
 in a measure to its production, as was the original wheat 
 in effect divided among the same factors when it was 
 sold by the tenant farmer for $2,000. The fact that 
 money, instead of wheat, is paid for the labor and for the 
 use of the land and the use of the capital, and that hun- 
 dreds of thotisands of bushels of wheat are handled in 
 connection with the 2,000 bushels, is of course imma- 
 terial; and so, also, is the fact that we cannot tell just 
 how many cents of this additional wealth per bushel 
 goes respectively to land owners, capitalists and laborers. 
 It is the fact alone that the division is made which is 
 material; for it is evident, for instance, that a cause 
 which would decrease rent might, under certain condi- 
 tions, increase the portions going to capital and labor; 
 and a cause which would increase the independence of 
 employees might, under certain conditions, decrease the 
 employers' portion of the share received by labor. 
 
 In the study of the causes which thus affect the por- 
 tions received, respectively, by the various factors of pro- 
 
THE DISTRIBUTION OF WEALTH. 157 
 
 duction, is found, as stated in Chapter V, the key to the 
 solution of the economic problem. 
 
 Land is used by capital and labor, as shown above, in 
 producing the finished product as well as the raw mate- 
 rial. When the farmer sold the wheat, it was raw ma- 
 terial, and wealth was constantly produced thereafter 
 and annexed to it on its journey upon and in connection 
 with land occupied by office buildings, railroads, eleva- 
 tors, flouring mills, warehouses, and bakeries, until the 
 wheat was placed on the table of the consumer in the 
 form of bread. The wheat in the form of bread was 
 then worth, say, $3.00 a bushel. The owners of this land 
 received pay for its use, and this pay came from the addi- 
 tional $2.85 per bushel of wealth produced and annexed 
 to the wheat, as much so as the $300 rent paid to the 
 owner r.f the land on which the wheat was grown came 
 from the ."$2,000 received by the tenant farmer for his 
 crop. 
 
 The history of a loaf of bread, as gi -en abo\ e, does not 
 differ in uny material respect from the history of any 
 other article of wealth. Take the coat, the mal.'ing of 
 which begins with wool produced by farmers ; or the gown, 
 beginning with cotton which farmers raise; take the 
 watch spring, beginning with the ore which the miner 
 brings to the surface of the earth ; or take the chair, hav- 
 ing its inception in the timber which the lumberman fells. 
 In these, and in every other case of like character, wealth 
 is produced and added to the raw material by means of 
 appliances which come within the definition of capital, 
 and which rest on land, and which are operated by la- 
 borers using lands, just as from wheat, with the aid of 
 the instrumentalities referred to, bread is made and 
 placed on the table of the consumer ; ^nd in every in- 
 
158 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 stance this additional wealth is produced by the factors 
 of land, capital and labor. 
 
 The amount of wealth of the character referred to 
 above, produced on non-agricutlural land and imparted 
 to the raw material in its conversion into things useful 
 to man, and in delivering them to consumers, greatly ex- 
 cedes the amount of wealth represented by the material 
 itself as it comes from the hands of farme:s and miners. 
 Thus, a bushel of wheat, for which the farmer receives, 
 say, a dollar, is made into sixty loaves of bread, costing 
 three dollars — three-fold increase. Meat, for which the 
 farmer gets five cents a pound, is worth perhaps three 
 times that sum on the table of the consumer. A few 
 pounds of wool, for which the farmer is paid but a dollar 
 or less, may be worth from five to twenty dollars, or more 
 in the coat worn by the mechanic, and the cotton which 
 the farmer raises is often increased tenfold and more in 
 value when it is ready to be consumed as clothing. This 
 is also true of iron ore when it has been worked into 
 things ready for consumption. And so as to numberless 
 other articles, the value of the finished product vastly 
 exceeds that of the original raw material. 
 
 If we reflect for a moment on the thousand and one 
 things consumed and in the process of consumption by 
 us in our daily lives, and compare the value of them with 
 the value of the original material from which they have 
 been made, we can hardly fail to reach the conclusion 
 that the aggregate amount of wealth brought into being 
 ,by artisans, merchants and others of like class, and an- 
 nexed to the raw material furnished by farmers, miners, 
 lumbermen, hunters and fishermen, whose labor is ap- 
 plied directly to land, is often in the aggregate many 
 times greater than that of the original articles when first 
 produced. In this connection, however, it must be borne 
 
THE DISTRIBUTION OF WEALTH. 159 
 
 in mind, as already shown, that the labor of merchants 
 and brokers produces and annexes wealth to commodi- 
 ties as certainly as that of mechanics and manufacturers. 
 
 From all the wealth of the character above referred 
 to, which in the aggregate so largely exceeds the strictly 
 agricultural wealth of the country, the toll taken in the 
 form of rent by those on whose land it is created and an- 
 nexed to the original product, largely exceeds the rent 
 obtained by the owners of agricultural lands, the ratio 
 of the total amount appropriated by the former doubt- 
 less exceeding five to one that appropriated by the lat- 
 ter, and perhaps even more. If it is true that the wealth 
 produced on non-agricultural lands thus largel}' exceeds 
 that produced on agricultural lands, then the aggregate 
 value of the former ought to exceed the aggregate value 
 of lands in cultivation in approximately the same ratio. 
 This is in fact the case, and if the forces of government 
 were so applied as to insure the natural order in the use 
 as well as in the appropriation of land, probably two- 
 thirds of the lands in cultivation would have no economic 
 rental value whatever. As it is at present, four-fifths of 
 the rent received by individuals is for the use of lands 
 other than those in cultvation. The aggregate burden 
 thus borne by capital and labor in this country now ex- 
 ceeds two thousand millions of dollars annually.* That 
 is to say, in Free America, capital and labor are now, in 
 effect paying more than two thousand million dollars 
 every year, not to the government in lieu of every species 
 of taxation, but to individuals, as tribute money for the 
 bare privilege of employment! 
 
 One reason for the comparatively slight importance 
 attached by anarchists, socialists and many professors 
 of political economy to the influence of the factor of rent 
 
 *See "Natural Taxation." by Thomas G. Shearman, 
 
160 THE PROBLEM OF THE UNEMPLOYED. XII 
 
 in the distribution of wealth is the disposition to asso- 
 ciate rent almost exclusively with lands devoted to agri- 
 culture In point of fact, under natural conditions, such 
 lands would not yield ten per cent of the real economic 
 rent of a country like the United States, while under 
 actual conditions they yield less than twenty per cent. 
 Another reason is the fear of encouraging unjustifiable 
 legislation affecting the rights of those who are now per- 
 mitted to appropriate rent for private use. Progress is 
 often retarded by the notion that truth is sometimes 
 more dangerous than error. But be this as it may, the 
 faithful student will find in the law of rent the law of 
 wages. And he will also find in it the explanation of 
 the social paradox of increasing poverty in the midst of 
 increasing wealth. For it can be seen almost at a glance 
 that if the effect in the long run of inventions and ma- 
 terial progress is to add to the value of land only, and 
 thus increase rent without increasing wages, then in this 
 fact is the explanation of the failure of wages to rise in 
 proportion to the increased effectiveness of labor; while 
 the obstacles to employment pointed out in Chapter VIII 
 afford sufficient reason for men who are willing to work 
 being so often unable to find work. 
 
 The economic rent of land is the net income which can 
 be derived from its use in connection with a wealth- 
 producing enterprise adapted to its location, after cap- 
 ital has been paid current interest, and after labor has 
 been paid current wages. Rent when capitalized, or the 
 economic value of land, is the equivalent of a sum of 
 money which, if invested at current rates of interest, 
 will produce an income equal to the economic rent of 
 the land. Thus, if the economic rent is six hundred dol- 
 lars and interest is six per cent, the economic value of 
 the land will be ten thousand dollars. As already point- 
 
THE DISTRIBUTION OF WEALTH. 161 
 
 ed out, however, the price at which land is sold generally 
 exceeds its economic value, since the prospect of an ad- 
 vance in value is usually discounted and added to the 
 economic value. 
 
 The rent of land approximates the excess of wealth 
 which it will yield above the amount which can be pro- 
 duced with the same expenditure of effort on the least 
 productive land in use, and this excess alone increases 
 naturally as the efficiency of the laborer is increased by 
 the aid of labor-saving appliances. In accordance with 
 the law of rent, as stated above, rent and rent alone, or 
 the value of land, is directly increased in the long run 
 by improvements in labor-saving machinery, growth of 
 population and material progress generally. Further 
 illustrations of this, the most important truth in political 
 economy, will not be amiss. ' 
 
 Suppose there are three tracts of land situated, res- 
 pectively, one mile, ten miles and thirty miles from mar- 
 ket, and that the same amount of capital and labor is 
 applied to each tract, viz. : five hundred dollars of cap- 
 ital and the equivalent of one hundred days of common 
 labor. Other things being equal, most wealth will be 
 produced on the first tract nearest the market, less on 
 the second, and least on the third, because of the labor 
 involved in hauling the crops to market. Suppose the 
 amount of wealth produced on the first tract is three 
 hundred dollars, on the second tract two hundred dol- 
 lars, and on the third one hundred dollars. Of course, 
 the difference in the value or desirability of the tracts 
 of land, respectively, might as well arise from difference 
 in anything else affecting the value. It is evident that 
 in America, land on which less than one hundred dollars 
 worth of wealth can be produced with the use of five 
 11 
 
162 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 hundred dollars of capital and the application of one hun- 
 dred days of labor, will remain, or at least ought to re- 
 main, uncultivated. It will be assumed in any event, 
 however, that the third tract belongs to the class of land 
 which is the least productive of any in use. Applying 
 the law of rent, as quoted above, to this land, and it fol- 
 lows that the third tract will yield no economic rent, 
 while the second tract will yield economic rent to the 
 amount of one hundred dollars, and the first to the 
 amount of two hundred dollars. Given the prevailing 
 rate of interest, and from this data the economic value of 
 each of the respective tracts can be ascertained. As- 
 suming the rate of interest to be six per cent, and it fol- 
 lows that the third tract has no economic value, while 
 the economic value of the second tract is $1666, and the 
 first tract $3333. It will be found from observation that 
 the price ordinarily paid for land, irrespective of improve- 
 ments on it, is its economic value plus a speculative value 
 often added in anticipation of a future increase in real 
 value. The economic rent of land which is not devoted 
 to agricultural uses can be ascertained in the same way. 
 Under the law of rent, which is as unvarying in its 
 application as the law of gravitation, the entire advan- 
 tage from location or quality of land naturally goes to 
 the land owner, and none in the final adjustment of the 
 rent to either the laborer or the capitalist. A day's labor 
 on the first of these tracts of land mentioned above, 
 with the aid of five hundred dollars of capital, produces 
 three dollars' worth of wealth, while on the second tract 
 it produces only two dollars' worth, yet the wages paid 
 employees for work on the first tract are no higher than 
 those paid for work on the second tract. The economic 
 value of the first tract, however, is, say, one hundred 
 dollars per acre, while that of the second tract is per- 
 
THE DISTRIBUTION OF WEALTH. 163 
 
 haps but twenty dollars per acre. When tracts of land 
 thus situated, respectively, are rented, the difference in 
 the rent collected from each is usually such that the 
 tenant on one tract can make no more than the tenant 
 on the other ; in the long run, this is always the case. 
 
 Suppose that one day's labor applied to land on which 
 a certain coal bed is located will produce on an average 
 fifteen dollars' worth of wealth in the form of coal; yet, 
 in estimating the value of this land, wages at current 
 rates only will be considered ; the same is the case as to , 
 the rate of interest on the capital necessary for sinking 
 the shafts and operating the mine. In fixing the price 
 of the land without reference to improvements, at, say, 
 a thousand dollars per acre, the estimate as to the share 
 of the product which labor must have will be no greatei 
 than would be the case if labor could only produce three, 
 instead of fifteen dollars' worth of coal in a day; nor 
 will interest on the capital employed be estimated at 
 any higher rate on this account. Suppose the coal bed, 
 when the employer bought it at the rate of a thousand 
 dollars an acre, was in a lawless community, abounding 
 in liquor shops, with few schools and no refining social 
 influences, and where life was unsafe, and riots and labor 
 troubles were common; and that, within a few years, a 
 change for the better ensued, and the people became in- 
 telligent and law-abiding. It would then be safer and 
 more desirable to invest capital in the employment of 
 labor in this community; there would therefore be a 
 greater demand for coal beds there than otherwise would 
 be the case, and this would increase the price demanded 
 for the land containing them; hence, while neither in- 
 terest nor wages would rise on this account, land values 
 would. Labor as well as capital would be attracted to 
 such a community, but land owners only in the end would 
 
164 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 profit by the material advantage directly resulting from 
 the improvements in the intelligence and morality of the 
 laborers. 
 
 Again, suppose that, owing to inventions afterwards 
 discovered, twice as much coal with the same labor could 
 be mined as when the unused coal beds were bought at 
 the rate of a thousand dollars an acre; in estimating 
 what would be paid for the land then, however, no more 
 than current interest and current wages would be con- 
 sidered. The difference resulting from improvements in 
 methods of producing coal, which would increase the 
 output without increase of labor, would add to the value 
 of the land, and an employer would then have to pay, 
 say, two thousand dollars an acre instead of a thousand, 
 if the demand for coal remained the same. If the em- 
 ployer were fortunate enough to have bought this land 
 before the improvemnet in social conditions or in the 
 machinery occurred, he would not on this account pay 
 more as wages or receive more as interest. As an em- 
 ployer, he would continue to pay current wages, and as 
 a capitalist he would continue to receive current inter- 
 est; but as a landlord, he would demand and receive all 
 the benefit of the increased amount of wealth produced 
 from the- causes mentioned, unless prompted to do other- 
 wise by pure benevolence or the fear of a strike. Such 
 increase of rent would be shown in the increased net re- 
 ceipts of the enterprise. Thus, if before the improved 
 machinery was introduced the gross receipts were $10,- 
 000, and after its introduction $15,000, with no increase 
 of expenses, $5,000 would represent the additional rent 
 collected by virtue of the labor-saving appliance and im- 
 provements in social coiiditions. 
 
 The meaning of the law of rent and the correctness 
 of the definition given is readily seen when the applica- 
 
THE DISTRIBUTION OF WEALTH. 165 
 
 tion is made to farming and mining lands; reflection, 
 however, will show that it applies with equal force and 
 constancy to urban and all lands generally. The ad- 
 vantage of location in the city as well as in the country 
 always in the long run goes to the owner of the site on 
 which the business is located, rather than to the man 
 who builds the business up; and while on an average 
 misfortune and failure more often perhaps than other- 
 wise overtake the latter in the end, nothing interferes 
 in thriving communities with the steady increase of rent 
 year by year, or at least decade by decade. 
 
 What has been said in regard to rent would be proved 
 by experience in every instance if natural conditions 
 alone controlled. If special privileges and the combina- 
 tions in restraint of trade which usually originate in 
 them were abolished, and if free competition and the 
 law of supply and demand were allowed full play, all 
 aberrations and apparent exceptions to the law of rent 
 would quickly disappear. 
 
 It is not claimed, however, that the immediate effect 
 of every labor-saving appliance, even under natural con- 
 ditions, would be to enhance the value of land to such 
 an extent as to absorb the entire benefit; ultimate re- 
 sults only are referred to. The first effect of such appli- 
 ances in many, if not all, instances, is to increase the 
 wages of employers who use them as well as the value 
 of the land on which they are used. The employer, some- 
 times called an entrepeneur, Or enterpriser, by orthodox 
 political economists, often reaps a handsome reward for 
 his enterprise in introducing new inventions; but the 
 law of averages, and the effect of supply and demand, 
 sooner or later reduce his wages to the common level, 
 and in the end the land owner gets it all. Thus, in South- 
 em Texas and Louisiana, when the improved methods 
 
166 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 in the cultivation and harvesting of rice, to which atten- 
 tion has been called, were first introduced, small for- 
 tunes were rapidly acquired by employers while land 
 was only three or four dollars an acre. But in a few 
 years these lands advanced to thirty dollars an acre; 
 and then the cultivation of rice was no more profitable 
 than the cultivation of cotton ; the wages of rice raising 
 employers fell accordingly. So that land owners in the 
 end reaped the entire benefit. 
 
 A novel illustration of the fact that while the employer 
 or the laborer may at first profit from an advantage 
 suddenly conferred upon some special spot of land, the 
 owners themselves quickly reap the fruits of it, was seen 
 in recent years in connection with one of the slums of 
 London, This particular slum was so vile and so con- 
 veniently located as to attract sight-seers in great num- 
 bers during the year of the Queen's Jubilee. In conse- 
 quence of this, alms in extraordinary amounts were dis- 
 tributed among its wretched inhabitants. Dwellers in 
 other slums were thus attracted to this particular one, 
 and fierce competition arose for the chance of sharing 
 in this golden harvest. Since the tenements were rented 
 by the week only, rents at once advanced, and by the 
 end of the season the sums paid for the privilege of living 
 in these miserable dens were fourfold greater than be- 
 fore, and thus nearly all the gifts to tenants were appro- 
 priated by landlords. In the same way, the millions of 
 dollars sent by Irish immigrants in this country to rel- 
 atives in Ireland have simply enabled the landlords of 
 Ireland to demand and receive higher rents than would 
 otherwise have been the case. If, for instance, $10,000,- 
 000 were to be systematically distributed, year after 
 year, in charity among the deserving poor of the slums 
 of New York, the only effect of it, after a short time, 
 
f HE DISTRIBIJTION OF WEALTH. 16^ 
 
 would be to increase to that extent the rents of the 
 landlords owning the slums. It would have the effect 
 of increasing the demand for tenements in these slums, 
 and this increased demand would increase rent, 
 
 And so it is under all circumstances, the price of any 
 tract of land always covers every advantage which it 
 may have over any other tract, and from such advan- 
 tage neither capitalists nor laborers, as such, can derive 
 any permanent benefit — ^in the end it all goes to the 
 owner in the additional price charged for it, or for the 
 use of it. 
 
 Rent also paralyzes the. hand of charity, and renders 
 futile all attempts to alleviate the condition of the very 
 poor by means of benevolence only. Thus the students 
 of a theological seminary in New York, having had their 
 attention called to the cold dinners eaten from proverb- 
 ial dinner pails by the laborers on a nearby building, 
 concluded to play the part of practical Christians. So 
 they appeared on the works with hot coffee every noon, 
 until the building was completed, and served it to the 
 men gratuitously. This act of kindness was duly ap- 
 preciated. Suppose, however, it had been universally 
 emulated, and that all laborers, working for building 
 contractors in the same grade of employment in New 
 York, had been gratuitously served with hot coffee, or 
 better still, with a hot dinner every day by the charitable 
 rich. This would have been equivalent to, say, a ten 
 per cent increase in wages. Such an unnatural advance 
 of wages wotdd have attracted laborers from other places 
 and from other lines of employment, and competition 
 among them would have quickly reduced wages to the 
 former level. The laborer would then have been no 
 better off than before. In fact, he would be worse off, 
 for his personal dignity and pride of character would 
 
168 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 have been impaired by the acceptance of the gratuity. 
 In place of an independent self-respecting working man, 
 he would have become a fawning suppliant for favors at 
 the hands of the rich. The employing contractors would 
 have profited by it at first, however, since it would have 
 enabled them to obtain the laborer's services ten per 
 cent cheaper, just as, from the same cause, the Pullman 
 Car Company is able to hire its tip-accepting porters at 
 starvation wages. In the latter case, the charitable 
 dimes and quarters bestowed upon the porters are pock- 
 eted by the Pullman Company, because it is a monopoly ; 
 in the case of the building contractors in New York the 
 value of charity dinners would, in the long run, be pock- 
 eted by land owners, since competing contractors would 
 be compelled to erect buildings somewhat cheaper on 
 account of the reduction in wages resulting from this 
 benevolence. 
 
 When the law of rent is clearly understood, the reason 
 for the failure of improvements in labor-saving processes 
 to increase wages, is easily seen. Thus, to recapitulate: 
 Under natural conditions, wealth is divided wholly 
 among the factors entering into its production, a portion 
 of it going to labor as wages, another portion to capital 
 as interest, and the remainder to land as rent. Labor- 
 saving processes, and material progress generally, natur- 
 ally enhance the value of land and increase rent only; 
 hence the portion going to land owners is increased with- 
 out increase of the portion going to laborers and capital- 
 ists. It necessarily follows that labor-saving inventions 
 do not increase wages, simply because the natural effect 
 of them, in the end, is to increase land values alone. 
 Since all increase naturally goes to land as increase in 
 rent, none of it can naturally go to labor as increase in 
 wages, or to capital as increase in interest. If land 
 
THE DISTRIBUTION OF WEALTH. 169 
 
 owners get all of it, capitalists and laborers can get none 
 of it. What is more simple than this? Yet it is the 
 fundamental truth on which the science of political 
 economy is based. It is foolish to ignore it, or deny it, 
 or shrink from the consequences which necessarily fol- 
 low. When all, or nearly all, the profit of anything 
 goes to one man, or one class of men, none, or but little 
 of it, can go to another man, or another class of men. 
 If, under natural conditions, all the increase of the pro- 
 duct resulting from improvements in machinery ulti- 
 mately goes to those who own the ground on which the 
 machinery rests, then, under such conditions, none of it 
 can go to laborers for operating the improved machines, 
 or to capitalists for furnishing the use of them. 
 
 As already stated, the law of rent is also the law of 
 wages, the latter being the corollary of the former. 
 Since, under the law of rent, the owner of any tract of 
 land finally gets all produced upon it in excess of what 
 can be produced with the same expenditure of effort 
 on the least productive land in use, it follows that labor 
 on any land can only get as wages the equivalent of what 
 it could produce on such least -productive land. In the 
 sense used in this connection, however, labor includes 
 capital, and wages includes interest. This is the case 
 because capital is stored up labor, and interest is wages 
 paid for the use of such labor.* In the last analysis, 
 therefore, wealth is really the product of but two factors, 
 namely, land and labor ; and it is divided between them 
 as rent and wages. Thus, the $5,000's worth of capital 
 represented by the tools, teams, buildings, etc., used by 
 the tenant farmer was the product of labor, and its use 
 was the application to land of stored-up labor. The 
 interest of $300 a year, paid for the use of this capital, 
 
 *See pages 35 — 37, 
 
170 THE PROBLEM OF THE tJNEMPLOYED. Xll. 
 
 was wages paid for labor or effort, as much so as, the 
 money received by the hired hands; hence "effort," 
 when applied to land, has reference to the labor stored up 
 in the capital used upon it, as well as to the labor of those 
 by means of whose brains and hands the capital is ap- 
 plied. It follows, therefore, that although a certain 
 amount of capital and toil may be applied to one tract 
 of land, and less capital and more toil to another, or 
 more capital and less toil to still another, the amount 
 of effort applied to each, respectively, is not necessarily 
 different on this account. 
 
 Bearing in mind the meaning of "effort" as used in 
 this connection, it is easy to make an application of the 
 law of wages to the three tracts of land referred to, 
 situated respectively one mile, ten miles and thirty miles 
 from market. Let it be assumed that this land was 
 subject to conditions largely prevailing in the West 
 thirty or forty years ago, and that the tract thirty miles 
 from market was free land. On the last mentioned 
 tract, the equivalent of one hundred days of common 
 toil and the use of five hundred dollars of capital pro- 
 duced wealth of the value of $100. On this free land, 
 then, a certain amount of "effort" produced one hundred 
 dollars' worth of wealth, and the entire product went 
 to labor as wages, and none went to land as rent. But, 
 as was shown in the illustration, while the same amount of 
 effort produced two or three times as much wealth on 
 lands nearer the market, no more of the product went 
 to capital as interest or to labor as wages, because all 
 the excess went to land as rent. Hence the law of wages 
 to the effect that labor (meaning effort) on any land 
 receives as Wages only the equivalent of what it can ob- 
 tain on free land, or the least productive land in use. 
 
 The law of wages, as thus announced and explained, 
 
THE DIStRlBUTlON OF WEALTH. 171 
 
 states the principle in accordance with which wages are 
 regulated, rather than a rule governing in all cases with 
 mathematical accuracy. For practical purposes, it sim- 
 ply means that the greater the reward of effort, i. e. , toil 
 combined with capital, on available free land, or on the 
 least productive land in use, the greater will be its re- 
 ward on all land and in all kinds of wealth-producing 
 employment. Or, to put it differently, wages on free 
 land, or the least productive land in use, largely if not 
 wholly regulate wages of all kinds on all lands. 
 
 That what is stated above is true is abundantly proven 
 by experience and observation. It is not a mere theory, 
 but an indisputable fact. Many of the illustrations 
 already given bear it out, and others of the same kind 
 could be presented without limit. A striking example 
 of it was seen in California in the prosperous days of placer 
 mining. A man, then, with perhaps no more than one 
 or two hundred dollars of stored-up labor (capital) rep- 
 resented by his burro and the provisions and rude tools 
 which it carried, went into the wilderness, staked off his 
 claim, applied his own toil and capital to free land, and 
 produced on an average $16's worth of gold per day. 
 Here, "effort," represented by $200's worth of capital 
 and one day's toil, produced on free land $16, all of which 
 the laborer retained, none of it going to a landlord. So 
 long as the reward for this amount of effort averaged $16 
 per day on free land, it is evident that the same amount 
 of effort would not be applied for a less reward approx- 
 imately on any nearby land. Some men with an equal 
 amount of capital would perhaps prefer to work in town 
 for a reward of $10 per day, rather than put forth the 
 additional effort necessary to overcome the hardships 
 of the wilderness ; but the fact that the wages of Effort 
 were enormous when applied to free lands would make 
 
172 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 them enormous when applied to other lands. With an 
 unlimited amount of free land at hand, landlords could 
 not, by advancing rents, compel Effort to accept less on 
 their land than could be made on free land. 
 
 While the placer miner averaged $16 a day, the wages 
 of common laborers in California were $5 a day and up- 
 wards, and ordinary mechanics earned from $10 to $20 a 
 day. Suppose the returns from placer mining had risen 
 from $16 to $32 per day; it is evident that the scale of 
 wages on all nearby lands would have quickly doubled. 
 Or suppose the returns had fallen to $8 per day; it is 
 equally apparent that wages generally would have drop- 
 ped accordingly. Such rise or fall in wages would have 
 been in accordance with the law of wages to the effect 
 that the greater the reward of effort on available free 
 land, the greater will be its reward on all land. In point 
 of fact, this actually occured in California. As the 
 placer mines became exhausted and the average earnings 
 of Effort on free land fell, then the reward of effort or 
 wages generally on all lands also fell. 
 
 In the United States, for many years, available free 
 lands were abundant. A man, with, say, a thousand 
 dollars of capital or even less, could settle on a quarter 
 section of such land and make a bountiful living for him- 
 self and family, none of the wealth produced by him 
 being given up to any landlord. It would be absurd to 
 suppose that with such openings for the employment of 
 capital and labor, a farmer would be content to rent 
 land or buy it from another, unless he could make as 
 much upon his entire investment as upon free land. 
 Hence, the owners of private land were forced to sell or 
 rent in competition with free land, and the price de- 
 manded for privately owned land, or for the use of it, 
 was always necessarily low enough to enable Effort to 
 
THE DISTRIBUTION OF WEALTH. 173 
 
 make approximately as much upon such land as upon 
 nearby free land. Wages generally, including the re- 
 wards of effort of every kind, were, therefore, higher for 
 this reason in the United States than in the older coun- 
 tries of Europe where there were no free lands. 
 
 The application of the law of wages in communities 
 where there are no available free lands, is not less easily 
 made. Thus, suppose the three tracts of land just re- 
 ferred to were in England, and that the equivalent of 
 the one whose location is described as being thirty miles 
 from the market, instead of being free land, had a rental 
 value of $25. The net reward of effort on this, the least 
 productive land in use, would thus be $75 instead of 
 $100. But, as has been shown. Effort could get no 
 greater reward on the other two tracts, since all pro- 
 duced on either of them, in excess of $75, would go to 
 land as rent. If for any reason the net reward of effort 
 on the least productive tract were doubled, it would be 
 doubled on the other tracts alsp, and wages on all lands 
 would rise accordingly, just as from the same cause, 
 wages rose in California in the early days of placer 
 mining. 
 
 But why is it that rent free land is not to be found in 
 England? It is not because of any real scarcity of land, 
 since, as has been shown, there is an abundance of unused 
 or but partially used land in that country. It is because 
 the forces of government there, as everywhere, are so 
 applied as to press the margin of free land into remote 
 wildernesses so far from centers of population, that the 
 rewards of effort upon it are seldom more than sufficient 
 for a bare subsistence. Labor in England and on the 
 Continent is farther from free land than labor in Amer- 
 ica; and for this reason, the laborers of Europe are com- 
 pelled to submit to a lower standard of living, especially 
 
174 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 as regards unorganized labor. Effort, therefore, ac- 
 cepts $75 in Europe when it would insist on having not 
 less then $100 in America. The fact, however, that 
 there are other countries in which the rewards of labor 
 on the least productive land in use are greater than in 
 Europe, prevents the sinking of the standard of living in 
 Europe to still lower levels, since emigrants seek such 
 countries. Thus it is that free lands and cheap lands 
 elsewhere to some extent compete with the dear land of 
 Europe to the benefit of the laborers of Europe who do 
 not emigrate. In the United States and in the English 
 speaking colonies of Great Britain, land is rented and 
 sold in competition with free land and immense quanti- 
 ties of unused lands ; hence land owners in these coun- 
 tries are unable to appropriate so great a percentage of 
 the product as the land owners of Europe; and here, 
 again, the law of wages is proven by experience as well 
 as theory, for wages are in fact higher in the United 
 States and in the colonies referred to than in the countries 
 of Europe. 
 
 Suppose an island, as large as Europe, and with a soil 
 equally as fertile, were suddenly to appear in the Atlantic 
 Ocean; also that taxes on this island were so adjusted 
 that no land could be profitably withheld from the use 
 to which it was approximately best adapted, and that 
 hence unused land would continue to remain free land 
 until put into use. Can one doubt that wages all over 
 Europe would at once advance enormously, provided 
 laborers and small capitalists were free to emigrate to 
 this island? Land in Europe would then have to be 
 rented or sold in coinpetition with easily available free 
 land, and hence the land owner's percentage of the prod- 
 uct would be decreased and effort's percentage of it in- 
 creased. 
 
THE DISTRIBUTION OF WEALTH. 175 
 
 The opening up of cheap if not free lands in Siberia 
 was having precisely this effect on the wages i)f laborers 
 in Russia, when the government of that country for this 
 very reason put a stop to it in 1900. In that year it 
 was decreed that peasants should only be permitted to 
 purchase 30 acres of government land to the family in 
 the former country, while members of the nobility were 
 allowed to purchase 6,000 acres apiece at 50 cents per 
 acre. The plan recommended by Edward Gibbons 
 Wakefield, nearly a hundred years ago, for producing 
 "a salutary scarcity of employment," was thus frankly 
 and brutally adopted by the autocracy of Russia. 
 
 Since the bringing of available free land into competi- 
 tion with privately owned land must result in increasing 
 the rewards of effort on all lands, it follows that if the 
 forces of government in Evirope, for instance, were so 
 applied as to accomplish this result with respect to the 
 unused lands of Europe, it would have the same effect 
 on wages as the appearance of a new continent of nearby 
 free lands. This would be the case because, as already 
 shown, one-fourth or more of the area of Europe can be 
 classed as unused lands, much of which would speedily 
 become free land if it were made unprofitable to with- 
 hold land from use entirely, or from the use to which it 
 was approximately best adapted. So, also, if the forces 
 of government were so applied in America, that the sec- 
 ond of the three tracts of land referred to in the illus- 
 tration — the tract ten miles from market on which effort 
 produced $15 per day — were brought within the class of 
 the least productive lands in use, the net rewards of 
 effort upon such lands would be doubled. If this were 
 done, then most of the agricultural labor of the country 
 would be concentrated upon lands not less| productive, 
 and the margin of free land in the community in which 
 
176 THE PROBLEM OF THE UNEMPLOYED. XIL 
 
 these tracts were situated would thus be drawn from 
 thirty miles to within ten miles of the market. In other 
 words, the distances between free land and the centers 
 of population would be reduced, and hence the net re- 
 wards of effort on free land would be increased and wages 
 on all lands and in every line of industry would be ad- 
 vanced accordingly. This would not only be the case 
 as to wages in America, but if immigration were not re- 
 stricted, it would to some extent increase wages in other 
 countries also. Hence the rule already stated that the 
 greater the rewards of labor on the least productive land 
 in use, the greater will be its reward on all lands. 
 
CHAPTER XIII. 
 
 THE DISTRIBUTION OF WEALTH, CONTINUED. 
 
 Causes Affecting the Division of Wealth Be- 
 tween Capitalists and Laborers, and 
 Between Employers and Employees. 
 
 As progress is made in the arts and sciences, the un- 
 necessary is eliminated. The movement is from the 
 complex to the simple. The rotary, applying steam 
 directly to the shaft to be revolved, takes the place of 
 the reciprocating engine with its complicated attach- 
 ments. In the same way, the real science of political 
 economy, eliminating needless terminology, wastes no 
 energy tracing distinctions between capital, for instance, 
 and "fixed capital," "circulating capital," "productive 
 capital," "consumptive capital," "capital goods," and 
 "economic goods;" or between employer and "entre- 
 peneur" or "enterpriser," between rent and "rent bear- 
 ers," or between production and "inherent productivity," 
 "diminishing productivity," "uniform productivity," 
 "absolute productivity," "effective productivity," etc.* 
 
 Beginning with a few clear and comprehensive defi- 
 nitions, and insisting that wealth can only include things 
 produced by human toil, it assumes that the objeci of 
 
 *See "The Distribution of Wealth." by John B. Olarke, Pro- 
 fessor of Political Economy at Columbia University. 
 
 12 177 
 
178 THE PROBLEM OF THE UNEMPLOYED. XIII 
 
 political economy is to determine the natural laws which 
 control the distribution of these things, and the effect 
 on such distribution of man-made laws; that since cap- 
 ital is stored-up labor, wealth is the product only of the 
 factor labor applied to the factor land ; that this product 
 is naturally divided between these two factors only — 
 rent to land and wages to labor, interest being but the 
 wages of storedrup labor; that rent is tribute extorted 
 by privilege, while wages is reward bestowed upon effort ; 
 that under present conditions, all advancement in the 
 arts and sciences, in labor-saving processes, in good gov- 
 ernment, in public and private morality, increases the 
 tribute extorted by privilege without increasing in a 
 corresponding degree, if at all in the long run, the reward 
 bestowed upon effort;* that the portion of the reward 
 of effort which goes to labor as wages, is divided between 
 employer and employee, and that this is so, even when 
 the worker is his own employer. Showing the causes in 
 the first place which affect the division of wealth be- 
 tween land owners on one hand and capitalists and labor- 
 ers on the other hand, it next in natural sequence treats 
 of the causes affecting the division between the latter 
 of the portion going to capital and labor, and then be- 
 tween employer and employee of the portion going to 
 labor alone. 
 
 But little now remains to be added to what has already 
 been said upon the subject to which this chapter relates. 
 
 Capital is something which in itself is dead and inert. 
 The capitalist is simply the owner of capital just as the 
 landlord is the owner of land; the former receives inter- 
 est for the use of capital just as the latter receives rent 
 for the use of land. Supply and demand regulate both 
 
 *In other words, it makes land more valuable without increa.s-' 
 ing rates of interest or the wages of employers and employees. 
 
THE DISTRIBUTION OF WEALTH. 179 
 
 interest and rent. With increase of population and im- 
 provement in the arts, the demand for capital increases, 
 but there is no increase in rates of interest, because the 
 supply of capital increases as fast if not faster than the 
 demand for it. Every additional emigrant coming to this 
 country, as well as every child born here, has two hands 
 with which to produce capital, and all inventions and 
 improvements which make it easier to produce wealth 
 tend to increase the amount of capital. Not so, how- 
 ever, as to land; the demand for it is constantly increas- 
 ing, but the earth's surface cannot be increased to the 
 extent of a single acre; therefore, although rates of in- 
 terest may fall, rent must inevitably rise. While there 
 is a natural monopoly of land which becomes more in- 
 tense as population increases, there can be no natural 
 monopoly of capital; since, with free access to unused 
 land, labor speedily creates and accumulates its own cap- 
 ital. 
 
 In new countries two things combine to make interest 
 rates higher than in old and thickly settled ones; the 
 the scarcity of capital and the attractive opportunities 
 for its investment resulting from the cheapness of land. 
 While high rates of interest attract capital from one local- 
 ity to another, the real or supposed insecurity of its invest- 
 ment in new countries, where the demand for it is great- 
 est, retards its flow to such countries, and delays the es- 
 tablishment of a common level of interest between 
 countries or communities in which land is cheap and 
 those in which it is dear. But the rapidity with which 
 wealth is produced, when labor has comparatively easy 
 access to the bounties of nature, brings about a rapid 
 increase in the volume of capital in countries where this 
 is the case, and reduction in rates of interest quickly fol- 
 lows. Thus, in the United States to-day, while labor 
 
180 THE PROBLEM OF THE UNEMPLOYED. XIII 
 
 is better paid, and the rewards of effort on the least pro- 
 ductive lands in use are greater than in England, the 
 government borrows money for 3% and less, and rates 
 of interest generally are little if any higher than in the 
 latter country, when the security is equally as satisfac- 
 tory.* A comparison of rates of interest and wages in 
 New Zealand with those in England leads to the same 
 conclusion. While it is true that the high price of land, 
 and especially of unused land, tends to reduce rates of 
 interest, because of its paralyzing effect upon industry, 
 nevertheless the removal of the obstacles to employment 
 to which attention has been called, would ultimately, 
 as already shown, so enormously increase the wage fund 
 of the world that rates of interest, with increase of 
 wealth, would inevitably decline. Therefore, if rent 
 were appropriated by taxation and equitably distributed 
 in defraying the expenses of government, labor-saving 
 machinery and improvements of every character would 
 result in directly increasing the portion of the product 
 going to labor, including the wages of employees as well 
 as those of employers. 
 
 Employers who are mainly interested as laborers and 
 capitalists (using their own or borrowed capital) must 
 be considered apart from those who derive important 
 advantages from rent, or special privileges or combina- 
 tions in restraint of trade. The price of the product at 
 the hands of the employers of the latter class is fixed 
 by monopoly, and where this is the case, fluctuations 
 in wages have little to do with the price demanded. 
 Thus, while the mine-owning employer gets more for 
 coal now than he did twenty years ago, he pays his em- 
 ployees no higher wages ; in fact, as a rule, miners prob- 
 
 *Money on call has averaged two per cent interest in New 
 York City during the past seven years. 
 
THE DISTRIBUTION OF WEALTH. 181 
 
 ably earn less now than formerly. A general increase 
 in wages, however, is often used as an excuse by monop- 
 lists for advancing prices, and any argument in favor 
 of destroying monopoly, or regulating its charges, is 
 frequently met with the assertion that a reduction in 
 prices would cause a reduction in wages; nevertheless, 
 there is no real connection between wages and the prices 
 of articles controlled by monopolies, or the charges made 
 for services rendered by them. A reduction in the wages 
 of employees of a gas company is never caused by a re- 
 duction in the price of gas. The employer, whether a 
 monopolist or not, pays as little as he can, and a gas 
 company reduces the wages of its employees whenever 
 it can, whether forced to reduce the price of gas or not. 
 The wages of an employee depends, not on what his 
 employer can afford to pay, but on what he is compelled 
 to pay. This is the natural relation of employer to em- 
 ployee, though it is often tempered by kindness and 
 sympathy. 
 
 A tariff-sustained trust may enable an employer to 
 sell steel rails at double the cost of manufacture, and to 
 accumtdate an individual fortune of hundreds of millions ; 
 but the laborer who assists in manufacturing protected 
 rails receives no higher wages than his fellow-laborer 
 across the way who assists in making unprotected brick. 
 If, for instance, the tariff of 75 cents per ton on anthracite 
 coal were removed, so that the coal of Novia Scotia could 
 compete with that of Pennsylvania, coal would be 
 cheaper ; but the wages of miners would not fall on this 
 account. A reduction in the price of coal would simply 
 reduce the profits of monopoly, including the incomes 
 of those who own the coal beds; but, since a reduction 
 in the price would be followed by an increase in the 
 consumption of coal, the demand for the l^bor of miners 
 
182 THE PROBLEM OF THE UNEMPLOYED. XIII 
 
 woiild. be increased, and this would have a tendency to 
 enhance rather than reduce the wages of miners. When 
 the quinine monopoly was destroyed by the removal of 
 the tariff some years ago, there was no reduction in 
 wages. On the contrary, the reduction in the price of 
 quinine from several dollars an ounce to but seventy- 
 five cents, stimulated its consumption, and more than 
 doubled the number of laborers employed in this country 
 in its manufacture. It is absurd to suppose that the 
 putting of typewriters, for instance, on the free list would 
 affect the scale of wages paid by the typewriter trust. 
 In fact, if the trust sold typewriters in this country for 
 $65, the price at which it sells them abroad, a greater 
 number of typewriters wotild be used, and the demand 
 for labor employed in manufacturing them would be in- 
 creased ; and this would also tend to enhance rather than 
 depress wages. If street car companies in great cities 
 were allowed to charge but three cents where they now 
 charge five, the effect would simply be to render the 
 franchises of these companies less valuable. Stockhold- 
 ers coxild not recoup themselves by reducing the wages 
 of employees. On the contrary, a reduction in the price 
 of the service would tend to increase wages, since the in- 
 creased amount of business brought about by the reduced 
 rates would increase the demand for street car employees. 
 In the same way, if vesting the Interstate Commerce 
 Commission with power to fix rates would have the ulti- 
 mate effect of reducing freight and passenger charges 
 on railroads, the business of railroads would be to some 
 extent increased. This would necessitate the use of 
 additional railroad employees; hence, while such reduc- 
 tion in rates might make railroad companies less able to 
 pay prevailing wages, the necessity of employing more 
 
THE DISTRIBUTION OP WEALTH. 183 
 
 laborers would increase rather than decrease the diffi- 
 culty of reducing wages.* 
 
 And so, as could be shown by numberless other illus- 
 trations, in every enterprise in which the price of the pro- 
 duct or the price of the service rendered is not fixed by 
 free competition, a reduction in price can in no way 
 affect wages; it can only lessen the margin of profit to 
 the land owner and the monopolist. This is the case, 
 because, while the price of the product is arbitrarily 
 fixed by a monopoly, the wages of employees are fixed, 
 not by the demand for labor on the part of a few em- 
 ployers, but by the demand on the part of all employers, 
 and the few must accommodate themselves to the scale 
 of wages established by the general demand, whether 
 they feel that they can afford to do so or not. 
 
 Considering now the employer as an employer only, 
 or, in other words, as a laborer who employs other labor- 
 ers and who uses his own or borowed capital, and it will 
 be found that his wages (popularly called profits) are 
 not in the long run lessened by a general rise, nor are 
 they increased by a general fall in the scale of wages of 
 employees. In this connection, reference is of course 
 made to the portion of the employer's income attribut- 
 able only to interest and to labor; it does not include 
 the portion which may be derived from rent, or from 
 special privileges, or from combinations in restraint of 
 trade. When the wages of carpenters, plumbers and 
 painters, for instance, are either increased or decreased, 
 employers regulate their bids accordingly, and the con- 
 tractor's profits or wages are unaffected. And this is 
 so as to merchants and manufacturers and employers in 
 
 ♦The great reduction in railroad rates in Texas, brought about 
 in the last ten years by a fearless railroad commission, has not 
 lessened the wages of railroad employees in that State, 
 
184 THE PROBLEM OF THE UNEMPLOYED. XIII 
 
 all enterprises in which the price of the product is reg- 
 ulated by the cost of the labor employed in producing 
 it. In fact, as a general rule, the profits or wages of 
 such employers are highest in countries where the wages 
 of employees are highest. Thus, employers of this class 
 make greater profits, or higher wages, in America than 
 in Europe, although employees are paid more here than 
 there. 
 
 The employer of the class last referred to is forced 
 by competition to reduce the price of his products to the 
 lowest point which will admit his remaining in business. 
 And vast numbers of such employers, after losing more 
 or less capital, are being constantly forced out of bus- 
 iness altogether. It is impossible for employers of this 
 class to pay more than current wages; and when one 
 competitor succeeds in reducing wages, all are compelled 
 do likewise; for, however well disposed an employer 
 may be, he cannot avoid the effects of the law of rent 
 and the law of wages. If he attempted to do so his 
 competitors would quickly force him out of business. 
 
 The wages of employers, as such, when the losses of 
 the unsuccessful are taken into account, are not excessive. 
 The average income of a business man, if it includes only 
 interest on the capital used and payment for services 
 rendered, is no more burdensome to employees than in- 
 terest paid for the use of labor-saving machinery. The 
 law of supply and demand fixes the wages of the skilled 
 manual laborer at considerably more than that of the 
 unskilled laborer; yet it doubtless gives to each approx- 
 imately the correct proportion of the wealth which he 
 produces, reference being had not to the amount of 
 wealth to which each may be entitled, but to the propor- 
 tion in which it is divided between them. And so, 
 as between the employed laborer and the employing 
 
THE DISTRIBUTION OF WEALTH, 185 
 
 laborer, the same law of supply and demand probably 
 fixes the compensation of each, near the point which 
 gives to each the proper proportion of the wealth pro- 
 dticed by each respectively. If the scale of wages gen- 
 erally were raised in the manner suggested in this work, 
 the wages of those who employ as well as of those who 
 are employed would be raised; but, on account of the 
 general improvement in morals, education and intelli- 
 gence which wotild then follow, the same law of supply 
 and demand would, in the end, decrease the difference 
 between the wages of skilled and unskilled and em- 
 ployed and employing labor. This would come about 
 because the proportion of laborers qualified for the high- 
 est character of service, and to whom capitalists could 
 safely intrust the use and management of capital, would 
 be increased. 
 
 When Friday landed on Robinson Crusoe's island, the 
 latter, we will say, owned every foot of it except the 
 highways, together with exclusive piscatory rights, in- 
 cluding the oysters and clams on the seashore. Crusoe, 
 on account of his superior mental and physical powers, 
 might have made a chattel slave of Friday, but there 
 was no necessity for it. Crusoe's ownership of all the 
 land gave him all the advantage of the slaveholder, 
 with none of the slaveholder's responsibilities or qualms 
 of conscience. In kindness of heart, therefore, Crusoe 
 arranged to give Friday work, and in order that he 
 might be abundantly supplied with this blessing, he fixed 
 his wages at the equivalent of a dollar a day for twelve 
 hours of it, which was just sufficient to keep Friday in 
 good working order, provided he put in six days' work 
 in every week. Crusoe then told Friday that it was a 
 free country, and that he, Friday, was a free man. and 
 as such could work for a dollar a day or not, just as it 
 
1^6 THE PROBLEM OP THE UNEMPLOYED. XIIl 
 
 suited him. Since Crusoe owned all the land, Friday 
 had the free man's right to starve on the highway or 
 work on Crusoe's terms, and so he went to work. When 
 labor-saving machinery was introduced, which more than 
 quadrupled the wealth which Friday produced, who, 
 except Crusoe, by any natural law, could get any ad- 
 vantage from it? Crusoe could still pay the current 
 wage of a dollar a day and pocket four times as much 
 wealth produced by Friday. Friday, however, would 
 begin after awhile to vaguely feel that there was some- 
 thing wrong in the system which gave Crusoe all this in- 
 creased wealth produced by labor-saving machinery, 
 while he, Friday, had to work just as hard as ever; and, 
 having learned to read and write and do a trifling amount 
 of thinking, Friday would get sulky and form a labor 
 union and go on a strike. This woiild make it uncom- 
 fortable for Crusoe, although he could hold out and starve 
 Friday into abject submission if he chose to do so. But 
 rather than go to this extremity, and provoke the riot- 
 ing and bloodshed which would surely follow, he would 
 make a compromise of it, and so probably reduce Fri- 
 day's hours of labor a trifle and perhaps raise his wages a 
 little. But trouble between the employer and the em- 
 ployee would not end with this. Friday would always 
 be sulking and demanding more, because he would be 
 becoming more intelligent, although for a long time the 
 real cause of the failure of his wages to advance with the 
 increasing amount of wealth produced would not dawn 
 upon him. Friday's discontent and restlessness, brought 
 about to some extent by "agitators," would, from time 
 to time, secure small advances in wages and slight re- 
 ductions in hours of labor. This wotdd not be accom- 
 plished naturally, but arbitrarily, as the result of con- 
 stant warfare and bickering, accompanied by immense 
 
THE DISTRIBUTION OF WEALTH. 187 
 
 losses from strikes and lockouts, causing bitter feelings 
 between the employer and the employee. 
 
 Now, suppose the land on this island had been owned 
 by a thousand Robinson Crusoes instead of but one, 
 and that there had been ten thousand Fridays instead 
 of but one Friday, and that the conditions there were 
 the same as in the world to-day with respect to some 
 of the Fridays being out of work all the time and at all 
 times ready and anxious to get the places of those who 
 had work. Why would not competition alone, among 
 those who must have jobs, when there were not jobs 
 enough for all, reduce wages and keep wages at the 
 point at which the common laborers could barely sub- 
 sist, no matter what might be the increased amount of 
 wealth produced with the aid of improvements in labor- 
 saving appliances? Would not this inevitably be the 
 case even in the absence of any formal combination or 
 agreement on the part of employers fixing rates of wages ? 
 And this being so, there would then be practically thous- 
 ands of slaves and hundreds of slave-owners, instead of 
 one slave and one slave-owner. How could such slave- 
 like conditions be ameliorated except by combinations 
 of laborers? Combinations which, of course, many sin- 
 cere and liberty-loving people would denounce and en- 
 deavor to suppress by law. 
 
 Let the thoughtful reader ask himself in what respects 
 the situation above described differs from that which ex- 
 ists in the industrial world to-day. As already shown, 
 employers are divided into two general classes; the em- 
 ployer of the one class being little more than a laborer 
 himself, who has nothing to gain by the lowering of the 
 scale of wages; the employer of the other class, however, 
 has everything to gain by it, because his interests, as 
 the owner of valuable land, or the recipient of special 
 
188 THE PROBLEM OF THE UNEMPLOYED. XIII 
 
 privileges, exceed his interests as a laborer and a cap- 
 italist. Employers of the former class, nevertheless, 
 being unable to see beyond the first effects of a reduction 
 of wages, and having no knowledge of the underlying 
 cause which tends to grind themselves down as well as 
 their employees, and in fact being powerless to do other- 
 wise, join hands with employers of the latter class in 
 efforts to prevent an increase or to effect a decrease in 
 wages. In this, they are assisted by the natural tend- 
 ency of wages to fall with increase of population, coupled 
 with an artificial scarcity of land. 
 
 We are always hearing of the struggle between capital 
 and labor, when in point of fact it is never between 
 capital and labor, but always between those who are 
 principally interested as the owners of valuable land 
 and as the recipients of special privileges on the one side, 
 and those who own capital and those who perform labor 
 on the other side. The real interest of capital and labor 
 are, in the very nature of things, harmonious, but always, 
 in point of fact, antagonistic to landlordism and mon- 
 opoly. 
 
 Under present conditions, the tendency of wages of 
 employees to fall can only be resisted by trade unions, 
 and by public sentiment, which favors the paying of a 
 living wage. These powers of resistance have so far, 
 to some extent, prevailed as to skilled manual labor, 
 which can more easily protect itself by combinations, 
 and in many instances hours of labor have been lessened 
 and wages of employees increased. But the struggle 
 against advancing population and an artificial scarcity 
 of land must finally prove a hopeless one. Labor unions, 
 strikes, boycotts, riots, and bloodshed even, can accom- 
 plish little in the end against the irresistible law of rent. 
 From the very nature of rent, as heretofore shown and 
 
THE DISTRIBUTION OF WEALTH. 189 
 
 illustrated, it follows with mathematical certainty that 
 the wages of a large and constantly increasing class of 
 laborers must ultimately fall, even in this country, to the 
 starvation point, and the tendency in this direction, 
 under existing conditions, will become more and more 
 marked as the price of unused land increases. 
 
CHAPTER XIV. 
 
 THE ULTIMATE REMEDY 
 
 And Why it Should be Considered by the 
 Political Economist. 
 
 FROM what has so far been shown it is evident that 
 the failure of labor-saving machinery to bring about 
 a vast change for the better in the condition of labor is 
 due to the fact that such improvements naturally in- 
 crease rent without increasing wages. It is also equally 
 clear that one of the reasons, if not the reason, why 
 men willing to work are so often out of work, is because 
 individuals can profitably withhold valuable land from 
 use entirely, as well as from the use to which it is best 
 adapted. Having ascertained the cause, the remedy is 
 obvious. It consists in a simple change in the applica- 
 tion of the taxing powers of the government. The 
 question to be first determined, in this connection, how- 
 ever, is not whether such change could be justly made, 
 but whether it would have the effect intended Should 
 this be decided in the affirmative, it will then be in order 
 to show, if possible, how all who own land and who, as 
 is often the case, have invested the fruits of honest toil 
 in its purchase, can be suitably compensated for the loss 
 of the privileges which its ownership now confers. But 
 whether this be found to be practicable or not, the dis- 
 cussion of the remedy which must ultimately be adopted 
 
 191 
 
192 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 will, in any event, bring out more clearly the underlying 
 cause which accounts for low wages and involuntary 
 idleness. 
 
 When industrial conditions shall have been regulated 
 in harmony with the natural laws, everything which in- 
 increases the ability of man to produce wealth will neces- 
 sarily increase the wages of the laborer. Mechanical in- 
 ventions will then naturally lighten the toil of the work- 
 ing man and add directly to his happiness and independ- 
 ence. He will no longer look upon them with doubt and 
 trembling, for his wages will keep pace with the increase 
 in the wealth-producing power which labor-saving pro- 
 cesses confer. Nor will he dread the competition of his 
 fellow laborers, for no obstacle will then prevent the use 
 of the unused natural opportunities for employment 
 abounding on every hand. Until such conditions as 
 these prevail, labor will never be satisfied, for neither 
 the moral nor the natural law can be fulfilled so long as 
 progress in the arts and sciences fail to benefit directly 
 all who toil. 
 
 Socialists insist that the only way in which the laborer 
 can retain the wealth which he produces is through 
 the control by the government of all the factors of pro- 
 duction, including capital and labor as well as land. 
 Failing to realize that liberty is the dearest of human 
 possessions, the socialist dreams of substituting the ben- 
 evolent tyranny of a government bureaucracy for the 
 selfish tyranny of individual employers. Failing to ap- 
 preciate the fundamental distinction between ownership 
 of land and the ownership of things produced by human 
 labor, or between the values created by the individual 
 and those created by the community, he assumes that 
 all property belongs jointly to all mankind, and that 
 
THE ULTIMATE REMEDY. 193 
 
 justice will only be reached when all shall share alike in 
 its advantages. 
 
 The teachings of the political economists of the new 
 school, however, differing from those of the socialists, 
 may be summed up as follows: 
 
 First. Every individual can, without injury to oth- 
 ers, and in harmony with the natural law, appropriate 
 to himself all the wealth which he produces, be it ten 
 times or a hundred times greater than that produced by 
 another. 
 
 Second. The natural law demands equality, not in 
 the enjoyment of the rewards of effort, but in the oppor- 
 tunities for applying effort, it being the concern of the 
 State, as Ida M. Tarbell says, to see that men have equal 
 opportunities to carry on enterprises rather than to 
 conduct enterprises for them. 
 
 Third. Land — the earth — is in effect, a great store- 
 house, filled to overflowing with treasures provided by 
 nature for the equal use and enjoyment of all mankind, 
 and human laws which permit some men to extort tribute 
 from other men, for the privilege of access to these treas- 
 ures, violate the natural law; hence the confusion, waste 
 and distress which at present characterize industrial 
 conditions. 
 
 Fourth. Obedience to the natural law, and equality 
 of opportunity with respect to the bounties of nature, 
 can be secured by requiring all who enjoy the privilege 
 of the exclusive possession of any portion of the earth 
 to pay, in the form of a tax for the support of govern- 
 ment, approximately what such privilege is worth. 
 
 Political freedom does not in itself prevent industrial 
 slavery. Whatever the form of government, material 
 progress under present conditions only increases the 
 dependency of the employee upon the employer, while 
 with the spread of intelligence the former becomes more 
 and more discontented with the slave-like conditions un- 
 der which he ;s compelled to toil. To escape the tyranny 
 13 
 
194 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 of the employer, the employee submits to the tyranny of 
 the labor union. The struggle for freedom, however, will 
 not down. From the turmoil and suffering in which the 
 labor situation is now enveloped, peace must finally be 
 evolved ; that it will be the peace of freedom, and not of 
 slavery, is the conviction of all who believe in the ulti- 
 mate triumph of righteousness. 
 
 Let us, therefore, postponing consideration of the 
 method of its accomplishment, which perhaps cannot be 
 predicted with any degree of certainty, imagine condi- 
 tions which will prevail when the inalienable right of 
 every man to participate, on equal terms with every 
 other man, in the use of the gifts of nature, including land 
 as well as air and water, is at least recognized by law and 
 custom. Land will then in effect be nationalized, but 
 individuals will continue to own it. The people, while 
 enjoying the benefits of government ownership, will es- 
 cape the evil connected with such ownership. There 
 will then be no such thing as taxation. The words 
 "tax" and "taxation" will remain, but taxes and the 
 burden of taxation will in reality have been abolished. 
 The rent which individuals now appropriate will then be 
 appropriated by the government, and collected in the 
 form of a direct tax on land alone, according to its value, 
 regardless of improvements. Rent, or in other words 
 privilege, only will be taxed. The revenues thus derived 
 from the rent of land will be sufficient to enable the 
 government to dispense with every species of taxation as 
 now practiced. All who then pay taxes will in effect 
 simply pay the government rent for the land on which 
 the taxes are levied. While individuals will continue to 
 hold the legal title to land, the beneficial ownership will 
 be in the people at largp The values created by the 
 community will then|go to the community; now, indi- 
 
THE ULTIMATE REMEDY. 195 
 
 viduals appropriate these values which others create. 
 No change in the machinery in use at the present time 
 for collecting direct taxes will be necessary. The tax 
 will be so adjusted as to take neither more nor less, ap- 
 proximately, than the economic rent of land; therefore, 
 there will be no profit in the mere ownership of land. 
 As land increases in value the tax will increase, and the 
 unearned increment will go to the government — ^now it 
 goes individuals ; hence unused land will be free land, 
 and there will then be no profit in owning land without 
 devoting it, by means of appropriate improvements, to 
 the use to which it is best adapted. Improved land will 
 continue to be bought and sold, and it will descend to 
 heirs and devisees just as it does at present; but the sell- 
 ing price will not exceed, approximately, the value of 
 the mprovements on it. Private property in things pro- 
 duced by human toil will be even better safeguarded 
 than at present, for no man will be permitted to take a 
 portion of another man's earnings for merely assenting 
 to the latter's employment.* Equality with respect to 
 the use of the bounties of nature will thus be attained. 
 For those who enjoy the privilege of the exclusive pos- 
 session of any portion of the earth will then pay in the 
 form of a tax what the privilege is worth, while those 
 who do not enjoy such privileges will pay no taxes ; hence 
 the burden of taxation will no longer fall upon industry 
 and enterprise. 
 
 An illustration of what is stated above is seen in the 
 case of the section of school land formerly l3elonging to 
 the State of Illinois, on which a portion of the City of 
 Chicago is now located. The small remnant of this 
 land still owned by the State has for many years been 
 leased to private parties on terms providing for perpet- 
 
 ♦See Chapter IV, on The Nature of Rent, 
 
196 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 ual renewals and with no restrictions against subleasing. 
 The lessee is required to pay as rent six per cent of the 
 value of the land, exclusive of improvements on it, the 
 land being re-appraised every five years. As the land 
 increases in value the rent increases, and the ground 
 rent collected by the government in this way amounts 
 approximately to the economic rent of the land, accord- 
 ing to the definition of economic rent as heretofore given. 
 The lease being perpetual, the lessee is as secure in the 
 ownership and enjoyment of the improvements on the 
 land as he would be if he owned the latter in fee simple. 
 The government as a landlord takes approxiraately the 
 entire economic rent and uses it for the support of the 
 public schools. The situation is the same, however, as 
 would have been the case, had the State in the first in- 
 stance deeded the land outright to the original lessees, 
 reserving as a condition to its continuous enjoyment 
 the payment of an annual tax of six per cent on its 
 value as unimproved land. 
 
 The lot occupied by the Chicago Tribune Building is 
 a part of this school section, and until recently was leased 
 in the manner explained above to the Chicago Tribune 
 Publishing Company. When last appraised, it was 
 valued at $789,600. Six per cent of this amount, or 
 $47,000, would have been the annual ground rental under 
 such appraisement for the ensuing five years, had not 
 the tenure been changed. The building on the land is 
 worth a million dollars, and its owners would thus have 
 paid the State $47,000 a year for the privilege of the ex- 
 clusive possession of the land which the building occu- 
 pied. It would not have occurred to them, however, 
 that they were paying any tax in this connection, since 
 they were receiving the use of land worth $780,000, 
 which the people of the State of Illinois owned. But 
 
THE ULTIMATE REMEDY. 197 
 
 had the land been granted by the State to the Tribune 
 Company, and its successors and assigns forever, with a 
 reservation to the effect that it should be perpetually 
 subject to the payment of a direct tax sufficient to ab- 
 sorb the entire economic rent, the same thing would 
 have been accomplished. The use of the word "tax" 
 instead of the word "rent," and ihe omission of all ref- 
 erence to leasing, would have made no difference. No 
 one holding land under such a grant would have a right 
 to feel that he was paying anything more than rent when 
 he paid in the form of a tax the equivalent of rent. 
 And so it will be when all are permitted to use the boun- 
 ties of nature on equal terms. 
 
 As already shown, when the values produced by so- 
 ciety at large are thus appropriated for governmental 
 purposes, land, exclusive of improvements, will have no 
 selling value. The value of the ground itself will add 
 nothing to the purchase price of real estate. Since land 
 will have cost its owner nothing, the so-called tax which 
 he will pay for the privilege of its exclusive possession, 
 will, in point of fact, be no tax at all; it will simply be 
 rent collected as taxes are now collected. It will be a 
 tax in name only. 
 
 Had all of the 640 acre school section been conveyed 
 gratuitously to private owners in the first instance, on 
 terms requiring the payment of the economic rent to the 
 State in the form of a tax, the people of Illinois would 
 now be enjoying an income from it of over $15,000,000 
 a year. The improvements on this section of land would 
 have not been any less extensive or less valuable, nor 
 would the city have grown less rapidly. The buildings 
 on the remnant of the land held under leases of the char- 
 acter above described are fully up to average of those 
 in the game neighborhood on privately owned land, 
 
198 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 The Chicago Savings Bank, recently completed at a cost 
 of $650,000, stands on school land thus leased in this 
 way to that institution. The success of the Fair- 
 hope Single Tax Colony on Mobile Bay, after ten 
 years' experience, also shows that the appropriation of 
 the entire economic rent by the government would have 
 no tendency to prevent a town from increasing in popula- 
 tion or to discourage the use and improvement of land. 
 In the very nature of things it could have no such effect. 
 The State now collects as taxes a portion of the economic 
 rent, why should the possession of land be less secure if 
 the State collected all of it ? And if improvements were 
 not taxed, why would not men be even more inclined to 
 improve land, especially since no capital would then be 
 sunk in its purchase? 
 
 Under the present system, if the owner of land fails to 
 pay the taxes levied against it, he loses his improve- 
 ments as well as his land; this would not be the case, 
 however, under the system which must ultimately pre- 
 vail. When ground rent only is taxed, it will be prac- 
 ticable to provide for fully compensating the previous 
 owner for all improvements on land sold for taxes. And 
 not only so, but an automatic check will always guard 
 against the levy of taxes in excess of economic rent. 
 All of this is clearly explained in "Natural Taxation" 
 by the late Thomas G. Sherman, in the following para- 
 graphs which are quoted in full: 
 
 "When taxation is levied exclusively upon ground 
 rent every man will have ior the first time in human 
 history, an absolute and indefeasible title to all of his 
 property which is the production of human skill and 
 industry, subject only to the right of the State to take it, 
 upon making full compensation for its value. Such 
 compensation would enable the owner to replace the 
 property thus taken with other property of the same de- 
 
THE ULTIMATE REMEDY. 199 
 
 scription and value. This general right of the State is 
 practically no limitation upon the absolute right to in- 
 dividual property. 
 
 "It is perfectly plain that no one has any such right 
 at present, and that no one can have it, under any ex- 
 isting system of taxation. For, so long as the State as- 
 sumes the right to tax anything besides rent, it is impos- 
 sible for any man to retain the entire fruits of his own 
 industry. Every year the State will deduct something 
 from those fruits, under the name of taxation; and no 
 one can ever foresee precisely how much will be taken in 
 this manner. The fluctuations, both in the amounts and 
 methods of such taxes, are so great and incalculable, that 
 no one can have any reasonable certainty as to the ex- 
 tent to which his earnings will be secure against the de- 
 mands of the State. 
 
 "But if taxes were once confined strictly to ground 
 rent, all this would be changed. Chattels of every de- 
 scription would of course be absolutely secure ; since the 
 only remedy which would be allowed to the State for the 
 collection of taxes would be the sale of some exclusive 
 privilege on land. But buildings and all other improve- 
 ments on land would be equally secure against all taking 
 without compensation. This is not at first sight so 
 clear; and it needs, therefore, fuller explanation. 
 
 "The exclusive tax upon ground rent would lose its 
 entire character if the State were allowed, under any 
 pretense, to collect it from personal property or im- 
 provements. It is a fundamental condition of such a 
 tax that it be collected only out of rent. It must, there- 
 fore, when payment is refused, be collected only by selling 
 the control of the taxed land to some person who will 
 not only pay the tax, but will also pay the land holder, 
 thus sold out, the full value of all of his improvements. 
 If no one will pay the tax, subject to those conditions, 
 that is conclusive proof that the tax is too high, and that 
 it is in reality based upon an assessment including other 
 values than the mere value of the land. The purchaser 
 in such case would, of course, take the land, subject to 
 the annual liability for taxes; but he would also acquire 
 the same absolute title to improvements which the pre- 
 
200 THE PROBLEM OF THE UNEMPLOYED. XTV 
 
 vious possessor had; so that he, in turn, could not be 
 sold out for taxes without full compensation for improve- 
 ments. Thus no one would ever pay taxes upon the 
 value of any other property than the bare land. 
 
 "Universal experience has demonstrated that there 
 would not be the slightest difficulty in carrying such a 
 system into practical operation. This system has long 
 been in operation, upon a great scale, both in public 
 and private affairs. Wherever ferry franchises belong to 
 a municipality, as in the city of New York, such franchises 
 are sold at auction, at intervals of five or ten years, 
 always subject to two conditions: first, the payment of 
 rent to the municipality; and second, the payment of 
 full compensation to the former holder of the franchises, 
 for boats, piers, houses, and all other structures and 
 materials used in operating the ferry. Street railroad 
 franchises are sold in the same manner, for terms of years, 
 by every honest municipal body having control of the 
 subject.* So landlords constantly lease their land for 
 terms of years, to men who erect expensive buildings 
 thereon; the landlords covenanting to pay the value 
 of such improvements upon the expiration of the lease. 
 There is no more difficulty in providing for an annual 
 sale of land, if necessary, subject to these conditions, 
 than there is in providing for a sale in every five, ten or 
 twenty years. A ferry franchise is just as much a title 
 to "land," within the meaning of the law, science and 
 common sense, as is any other land title whatever.! 
 
 "Of course the valuation of improvements would be 
 made upon a common sense basis. The land-owner, upon 
 making default in taxes, would be entitled to just as 
 much compensation for his buildings as those buildings 
 really added to the market value of the land on which 
 they were built, but not more. If, as often happens, 
 an expensive building had been put up in a district where 
 
 *"The conception of a really incorruptible city council will 
 seem, to most American readers, too wildly improbable for the 
 basis of even a theory. But effete Europe is so far behind us 
 in the grand march of civilization, that such Utopian bodies are 
 quite common there; and the method of the text is cornmoij also." 
 
 tBenson v.>.New York, 10 Barbour, 3g3, 233, 
 
THE ULTIMATE REMEDY. 201 
 
 it could never be of any use, nothing should be allowed 
 for it beyond the value of its materials, after it had been 
 pulled down. But for any really useful building, com- 
 pensation would be allowed, sufficient to enable the owner 
 to put up a similar building, in similar condition, upon 
 an adjoining tract of land. In short, whatever loss the 
 owner of the building incurred, by reason of his own 
 mistakes or extravagance, he would be left to bear; but 
 whatever value belonged to the building, exclusive of 
 the land underneath it, he would invariably be allowed 
 to retain." 
 
 No difficulty will be experienced in so fixing the 
 amount of the tax as to take approximately the whole of 
 the economic rent of any tract of land. A few illustra- 
 tions will make this plain : My next door neighbor owns 
 a single lot, which, with the dwelling house improve- 
 ments on it, rents for $400 a year. The improvements 
 are appropriate to the location, and are worth $3,000. 
 The prevailing rate of interest in this community, when 
 the security is ample, is 5%. Allowing 5% interest on 
 the value of the improvements, and say, $125 a year to 
 cover insurance, repairs, renewals and the expense of 
 collecting rents from tenants, etc., and the economic 
 rent of this lot is, approximately, $125 a year. The tax 
 on it therefore would be fixed at about this sum. Ad- 
 joining these premises there are four lots on which there 
 are dwelling house improvements also of the value of 
 $3,000. These lots and improvements belong to another 
 neighbor who can afford the luxury of spacious grounds, 
 but each lot being equally as valuable as the one first 
 mentioned, his taxes would be four times as much, or 
 $500 a year. As when a man goes to the theatre, if he 
 chooses to appropriate four seats instead of one, he must 
 pay accordingly, whether he uses all of them or not. 
 
 Again, the building in which I have an office brings 
 
202 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 its owner a total net rental of, say $13,000 a year, after 
 all deductions for insurance, renewals, cost of collecting 
 rents, etc., have been made. It can be duplicated for 
 $100,000, interest on which is 15,000 a year, hence the 
 economic rent of the land which it occupies is approxi- 
 mately the difference between 113,000 and $5,000, or 
 $8,000, which would be about the amount of the tax 
 levied against the land if the rent were appropriated by 
 the government. On one of the opposite corners is a 
 building worth $40,000, which brings its owner a net rent 
 of $10,000 a year Making the calculation as shown above 
 and it is found that the economic rent of the lot on which 
 it stands is also $8,000. But on another corner is a 
 tumble-down one story building which rents for only 
 $6,000. The lot on which it rests is not less valuable 
 than those on the other corners, and if appropriately 
 improved it would yield the same amount of rent; 
 hence the tax assessed against it would be the same. 
 In other words, the owner of the legal title to this lot last 
 mentioned would pay the State the same amount of rent, 
 whether he properly improved it or not. 
 
 Sales of improved real estate will also furnish the tax 
 assessor data from which the economic rent of land can 
 be ascertained. Just as the thermometer tells whether 
 the temperature is above or below normal, so will the 
 price paid for improved landed property tell whether the 
 taxes assessed against it are too high or too low. Thus, 
 if real estate in any locality sells for decidedly more than 
 the value of the improvements — if people are willing to 
 pay much more for a tract of land than the improvements 
 on it are worth — this will be a certain indication that the 
 tax levied against it should be raised. If, on the con- 
 trary, real estate is sold for taxes, under the provision 
 heretofore explained which will require the purchaser 
 
THE ULTIMATE REMEDY. 203 
 
 to fully compensate the previous owner for the value of 
 the improvements, this will usually indicate that the 
 taxes should be lowered. 
 
 It is not claimed that taxes will ever be assessed with 
 mathematical accuracy, or that it is desirable even for 
 the government to take literally all of the theoretical 
 economic rent of land. Those who occupy land will 
 directly or indirectly pay the tax, but those who own the 
 land will often act as tax gatherers, and for this service 
 compensation will be provided by the laws of supply and 
 demand. Thus, a man having $20,000 contemplates 
 erecting, say, ten dwellings costing $2,000 each. To 
 make the investment profitable it will be necessary to 
 collect from his tenants, in addition to interest, a suffi- 
 cient amount to cover the tax paid on the land occupied, 
 as well as the cost of insurance, repairs and renewals. 
 He must, therefore, become in effect a tax collector for 
 the government, and not only so, but to a certain ex- 
 tent a guarantor of the payment of the tax. And so 
 when any one puts improvements on land, either for a 
 home for himself or for any other purpose, there is al- 
 ways an element of risk in connection with the invest- 
 ment which the renter does not incur. Increase or de- 
 crease of population, as well as other circumstances, 
 may render the improvements unsuitable to changed 
 conditions, and impair if not destroy the value of them 
 altogether. Men will not make investments involving 
 such risks and often requiring them to act as tax collect- 
 ors unless paid for it. Therefore, it is not likely that the 
 government can ever collect more than eighty or ninety 
 per cent of the theoretical economic rent. The remain- 
 der of it will be retained by land owners to cover the risk 
 involved in improving land and the labor involved in 
 collecting from those who actually use land what the 
 
204 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 use of it is worth. But competition, which will then be 
 free with respect to land, will always so fix the amount 
 of the tax as to give land owners no more, approximately, 
 than they will be equitably entitled to for such service. 
 
 In connection with what has just been stated it may 
 be asked, why will not landlords be able to retain more 
 than ten or twenty per cent of the economic rent of land 
 which tenants occupy? The answer is, that rents are 
 regulated wholly by supply and demand, the desire of 
 landlords having little to do with the matter. If the 
 demand for houses in any locality exceeds the supply, 
 rents (using the word in its popular sense) will rise ; if the 
 supply exceeds the demand, rents will fall. With no tax 
 on buildings, and land owners being no longer fined for 
 putting improvements on land, a demand for houses then 
 will be more easily supplied than under present condi- 
 tions; it will, therefore, be impossible, except tempo- 
 rarily, to charge more for the use of real estate than the 
 economic rent of land and interest on the value of the 
 improvements, together with the allowances referred to 
 for insurance, repairs, etc. 
 
 The question just asked, however, when put in the con- 
 crete answers itself. Thus, why could not that next door 
 neighbor of mine, by raising the price charged for the 
 use of his house and lot to $500 a year, obtain a gross 
 income of $375 from the property, instead of $275, after 
 payment of the tax of $125? Were he thus to increase 
 the charge, and the tenant, finding it impossible to do 
 better elsewhere, should submit to the advance, this 
 would be conclusive proof that the economic rent of the 
 land was more than $125 a year. It would show that 
 the tax ought to be $225, or thereabouts, instead of $125, 
 and so the tax assessor would soon raise taxes in the same 
 proportion on all lands in that immediate vicinity, 
 
THE ULTIMATE REMEDY. 205 
 
 Hence the government, and not the landlords, would 
 ultimately get the benefit of any crowding up of rents.. 
 
 But this suggests another question: If landlords had 
 nothing to gain by it, why would rents advance at all? 
 And why would not the people at large be deprived of 
 much of the benefit which ought to accrue to them from 
 increase in the value of the use of land? The answer is, 
 that competition among tenants, and the fact that a 
 landlord here and there could always secure a temporary 
 advantage by advancing rents, would cause rents to in- 
 crease generally as the value of land increased. Land- 
 lords would simply be compelled to collect all the ground 
 rent possible. Whenever, for instance, on account of 
 increase in the demand for dwelling house improve- 
 ments, tenants in any locality could be forced to pay 
 more, some vigilant landlord would require his own ten- 
 ants to do so, for it would always be to his individual 
 interest to increase the gross income of his property. 
 His example would soon be followed by others, and then 
 by all, and thus a higher level of economic rent in that 
 vicinity would be established, and taxes would be ad- 
 vanced accordingly. 
 
 Tax assessors, however, would not be compelled to 
 rely wholly upon data obtained from rented property in 
 ascertaining the economic rent of land. Improved real 
 estate then, as now, would be constantly changing hands, 
 and the prices paid for it, as already shown, would furn- 
 ish indisputable evidence of true economic rental values. 
 
 The economy and absolute impartiality with which 
 public revenues could then be collected, as compared 
 with the present wasteful and demoralizing methods, 
 also present a strong reason for favoring the system 
 referred to. 
 
 All who are familiar with the subject must admit 
 
206 THE PROBLEM OF THE UNEMPLOYED. XIV 
 
 that if land were in effect nationalized, and the right of 
 the people to its beneficial ownership established by law, 
 no practical difficulty would stand in the way of the 
 State appropriating economic rent with the present ma- 
 chinery of taxation. The question, however, which al- 
 ways tends to divert attention in this connection, is, 
 how can land be in effect nationalized ? What reasonable 
 hope can the political economist have that land owners 
 will ever consent to relinquish the privileges which the 
 mere ownership of land confers, or that any method by 
 which the government can condemn land and buy out 
 the landlords will ever meet with popular approval? 
 But this is a question which the political economist 
 should not be required to answer. For, as already re- 
 marked, his functions do not include those of the states- 
 man. As a philosopher he points out the conflict be- 
 tween the human law and the natural law, and shows 
 what change in the former is necessary to make it con- 
 form to the latter; while the statesman, as a politician, 
 considers how the change can be accomplished. If the 
 political economist has diagnosed the disease correctly, 
 and prescribed the proper remedy, some time, and in 
 some way, statesmen will finally secure its adoption. 
 
CHAPTER XV. 
 IMMEDIATE NATIONALIZATION OF LAND, 
 With Compensation to Land Owners.* 
 
 POLITICAL economists are asked to tell why it is that 
 inventions do not naturally increase wages, and why 
 men want for work in the midst of abundant unused 
 natural opportunities for work. Those of the new school 
 say it is simply because individuals instead of the govern- 
 ment appropriate rent. If this answer is true, it follows 
 that if the government alone appropriated rent and dis- 
 tributed it among the people by relieving every one of 
 the burden of taxation, all unused land would be free 
 land, involuntary idleness would disappear, and labor- 
 saving inventions would natu.rally increase wages. If 
 it can be shown that such in fact would be the case, then 
 a simple cause which accounts for the economic evils 
 referred to has been discovered, and a correct answer to 
 
 *It is not to be inferred from what is contained in this and 
 the following chapters that the writer either favors or disfavors 
 compensation to land owners. The subject of compensation, as 
 well as that of natural taxation, is discussed for the purpose only 
 of showing more clearly, if possible, the underlying cause of in- 
 voluntary idleness, and the failure of wages to keep pace with 
 the wealth-producing power of the wage-earner. Nothing else 
 is germane to the purpose of this work, as stated on its title page. 
 The details of a plan in accordance with which land owners can 
 be compensated is suggested tentatively, only, and not as neces- 
 sarily the easiest or the best method of bringing about condi- 
 tions with respect to land tenures which must ultimately pre- 
 vail, 
 
 207 
 
208 THE PROBLEM OP THE UNEMPLOYED. XIV 
 
 the question asked has been given, whether it be prac- 
 ticable to induce the people to adopt the remedy or not. 
 Hence, for the purpose alone of testing the truth of the 
 answer, the effect of nationalizing land and collecting 
 rent by taxation is worthy of consideration, no matter 
 how remote the prospect of its being put into actual 
 operation. 
 
 But, is the prospect of applying the remedy referred 
 to necessarily so remote ? Land can in effect be nation- 
 alized gradually by removing one tax after another now 
 levied on commerce and the products of industry, and 
 slowly concentrating all taxation on land values. If a 
 generation or two were consumed in the process, individ- 
 ual losses would be minimized and largely distributed 
 among all. This method is already fairly under way in 
 New Zealand, where personal property and improve- 
 ments on land are largely exempt from taxation. 
 
 It is also conceivable, though hardly probable, that a 
 highly intelligent and extraordinarily progressive people 
 like the Japanese may, within the near future, even 
 nationalize land. Once convinced of its expediency, 
 they are capable of doing it with a single stroke of legis- 
 lation. The hardships of the economic situation in 
 Japan are more acute and in some respects more pressing 
 than anywhere else in the world. Its liberty-loving 
 people have been disappointed, as well as astonished 
 and bewildered, by the results of occidental civilization. 
 They did not anticipate that labor-saving processes would 
 bring about industrial slavery. 
 
 "Large fortunes (comparatively speaking) are being 
 accumulated at one end of the social scale, while degrad- 
 ing poverty is appearing at the other, and, as yet, no 
 effective means have been devised to alleviate or prevent 
 it. The increased strain, worry and anxiety, even among 
 the well-to-do classes, make not a few of the older gener- 
 
IMMEDIATE NATIONALIZATION OF LAND. 209 
 
 ation look back with regret on the conditions which ex- 
 isted in the days of their youth. * * * * There 
 can be no doubt that the problem of the 'submerged 
 tenth' is becoming as acute in Japan as in other coun- 
 tries. * * * * The economic position of the agri- 
 cultural classes does not seem to have improved to any 
 great extent. * * * Modern industrial conditions 
 threaten to take away the joy of young life in Japan, 
 and undermine the national health by the employment 
 of women and children in factories of all kinds, in which 
 the hours are long and the conditions of employment 
 unsanitary. * * * * The problems of the relations 
 of capital and labor are, in Japan, as in other industrial 
 countries, the problems which are certain to attract most 
 attention."* 
 
 The Japanese, fortunately, will bring to bear upon 
 these problems ideals as yet untarnished by commercial- 
 ism, and also a patriotism which considers no sacrifice 
 of private interests too goo great for the public good. 
 In the terms of the peace just concluded civilization 
 finds its noblest example of magnanimity and far sighted 
 statesmanship. The people of Nippon have introduced 
 new improvements in the art of war — it is possible for 
 them to teach the world new lessons in the art of gov- 
 ernment. 
 
 In the United States, as everywhere else, land will 
 ultimately be in effect nationalized, but it is by no 
 means certain that the forebodings of Macaulay will not 
 in the meantime have proven well-founded. For the 
 forces of want, corruption and brutality engendered 
 by an acate artificial scarcity of land are incompatible 
 with democratic institutions, t Equality with respect 
 to the use of the bounties of nature may, however, be 
 
 *Mr. Henry Dyer's "Dei Nippon." 
 
 tin 1857 Lord Macaulay wrote in the famous letter to H. S. 
 Randall, the autobiographer of Jefferson — a letter which Presi- 
 14 
 
210 THE PROBLEM OP THE UNEMPLOYED. XV 
 
 established without an intervening period of bloodshed 
 
 and tyranny by the process already partially inaugurated 
 
 dent Garfield said startled him ''like an alarm bell at night" — 
 as follows : "I have long been convinced that institutions purely 
 democratic must sooner or later destroy liberty or civilization, 
 or both. You may think that your country enjoys an exemp- 
 tion from these evils. I will frankly own to you that I am of 
 a very different opinion. Your fate I believe to be settled, tho 
 it is deferred by a physical cause. As long as you have a bound- 
 less extent of fertile and unoccupied land, your laboring popu- 
 lation will be far more at ease than the laboring population of 
 the old world, and while that is the case the Jefferson politics 
 may continue to exist without any fatal calamity. But the 
 time will come * * * when wages will be as low and will 
 fluctuate as much with you as with us. You will have your 
 Manchesters and Birminghams, and in these Manchesters and 
 Birminghams hundreds of thousands of artisans will assuredly 
 some time be out of work. Then your inst tutions will be 
 brought to the test. Distress everywhere makes the laborer 
 mutinous and discontented and inclines him to listen to agita- 
 tors, who tell him that it is a monstrous iniquity that one man 
 should have a million while another cannot get a full meal. * * * 
 
 "I have seen England pass three or four times thro such crit- 
 ical seasons as I have described; thro such seasons the United 
 States will have to pass in the course of the next century, if not 
 of this. How will you pass through them? I heartily wish 
 you a good deliverance. But my reason and my wishes are at 
 war, and I cannot help foreboding the worst. * * * * 
 
 "The day will come when, in the State of New York, a multi- 
 tude of people, none of whom has more than half a breakfast and 
 expects to have more than one-half a dinner, will choose a leg- 
 islature. Is it possible to doubt what sort of legislature will be 
 chosen? On one side is a statesman teaching patience, respect 
 for vested rights, strict observance of public faith. On the other 
 is a demagogue ranting at the tyranny of capitalists and usur- 
 ists. and asking why anybody should be permitted to drink 
 champagne and ride in a carriage while thousands of honest 
 folks are in want of necessaries. Which of these candidates is 
 likely to be preferred by a working-man who hears his children 
 cry for more bread? 
 
 "I seriously apprehend that you will, in some such season of 
 adversity as I have described, do things which will prevent pros- 
 perity from returning. There will be, I fear, spoliation. The 
 spoliation will increase the distress. The distress will produce 
 fresh spoliation. There is nothing to stop you. Your consti- 
 tution IS all sail and no anchor. 
 
 "As I said before, when a society has entered on this down- 
 ward progress, either civilization or liberty must perish. Either 
 some Caesar or Napoleon will seize the reins of government with 
 a strong hand, or your republic will be as fearfully plundered and 
 
IMMEDIATE NATIONALIZATION OP LAND. 211 
 
 in New Zealand. This method, known as the single 
 tax, will be referred to in a subsequent chapter. For 
 the purpose so often mentioned, however, let it be first 
 assumed that the nationalization of land will be accom- 
 plished in the United States suddenly, and in the direct 
 and straightforward manner in which reforms are adopted 
 in Japan. This assumption is, of course, an absurdly 
 violent one, but it may nevertheless aid in showing that 
 the questions mentioned in the first chapter of this work 
 have been correctly answered. 
 
 If the Constitution were appropriately amended, the 
 Federal Government could issue three per cent bonds, 
 interest payable annually in gold, and use them in com- 
 pensating land and franchise owners for the loss of the 
 taxing privileges which they now enjoy. These bonds 
 could be made exchangeable at any time for legal tender 
 currency, and the latter could be made re-exchangeable 
 for bonds of large denomination, such bonds to be ex- 
 changeable again for currency and so on, the principal 
 of the bonds being payable in gold at the will of the 
 government. Reflection will satisfy one that there could 
 be no undue expansion or contraction of a currency thus 
 based on interchangeable gold interest bearing bonds. 
 For the volume of the currency woiild expand and con- 
 tract automatically in accordance with the laws of supply 
 and demand. The bonds would doubtless be worth par 
 in gold, but whether this would be the case at first or 
 not such bonds at par would surely provide reasonable 
 compensation for those who are now depriving their 
 
 laid waste by the barbarians in the twentieth century as the 
 Roman Empire was in the fifth, with the difference that the 
 Huns and Vandals who ravaged the Roman Empire came from 
 without, and that your Huns and Vandals will have been en- 
 gendered within your own country by your own institutions. 
 
 "Thinking thus, of course, I cannot reckon Jefferson among 
 the benefactors of mankind." 
 
212 THE PROBLEM OF THE UNEMPLOYED. XV 
 
 fellow men of the heritage so clearly intended for the 
 equal use and enjoyment of all. 
 
 Taking the census of 1900 as the basis of the calcu- 
 lation, both as regards wealth and population, and it 
 will be found that the government at that time in thus 
 nationalizing land would have incurred an indebtedness 
 of about forty billion dollars had land and franchise 
 owners been fully and liberally compensated. This 
 would have meant compensation to them in full for the 
 loss of all taxing privileges connected with the mere 
 ownership of land. In this estimate seven billion dollars 
 are allowed for the land and franchise values alone of 
 railroads and all public utility corporations. It would 
 have required a revenue of nearly $2,600,000,000 a year 
 to meet interest charges and all expenses of government, 
 including national, state and municipal, or $34 per capita, 
 had the nationalization of land taken effect in the year 
 1900.* But taxation amounting to only $34 a year per 
 capita could not be a serious burden in this country if all 
 unused land were free land, if all economic rent col- 
 lectible by taxation went to the government instead of to 
 individuals, and if transportation and public utility 
 charges were limited to reasonable returns upon improve- 
 ment and equipment valuations only. It would in fact 
 be a mere bagatelle in comparison with the enormous 
 increase in real land values, in wealth and population 
 which would quickly follow. A large part of it, probably 
 a third or more, would from the start consist of economic 
 rent paid for the use of land which was in effect owned 
 
 *The people of the United States spent for the support of gov- 
 ernment in 1900, including pension and interest on all public 
 indebtedness, $1,441,000,000, or about S19 per capita. The net 
 expenditures of the Federal government were $495,000,000, the 
 remainder having been spent by States, counties, cities and 
 towns and school districts. 
 
IMMEDIATE NATIONALIZATION OP LAND. 213 
 
 by the government. It would only have been necessary 
 to have raised by real taxation about $5.25 more per 
 capita than was, in' fact, raised in 1900, or an increase 
 from $19 per capita to $24 per capita.* And thereafter, 
 as ground rent taxation increased, real taxation would 
 have decreased. 
 
 In a rich nation like the United States, the collection 
 of a revenue of $34 per capita would be easy enough if 
 so large a part of it were in effect rent received for the 
 use of property in effect owned by the government and 
 not revenue derived from real taxation. In many of the 
 countries of Europe, the burden of taxation is far heavier, 
 when the ability of the people to carry it is considered. 
 Italy collects wholly by real taxation $13.50 per capita, 
 France $18.50, England $15.50, Germany $12.50. New 
 Zealand, the most prosperous and probably the richest 
 country in the world in proportion to population, has a 
 revenue of $36 per capita, only $11 of which comes 
 from her government-owned railroads, leaving about 
 $25 per capita raised by real taxation. 
 
 It is true that much of the nearby unused opportun- 
 ities for employment now held for speculation and mere 
 investment purposes, whose owners would have received 
 immense sums in the process of nationalization would 
 yield no revenue at first. But just as people rushed to the 
 
 *The American people are now spending $15 per capita an- 
 nually for alcoholic liquors. They surely could stand a^itional 
 taxation to the extent of $5.25 per annum per capita in order 
 to accomplish the nationalization of land. Had land owners 
 been paid forty billion dollars in 3% gold interest-bearing bonds 
 in 1900, and had the government realized as much as eight hun- 
 dred and sixty-six millions per annum from ground rent taxa- 
 tion to begin with (a very moderate estimate), it would have 
 been necessary to have raised only four hundred millions per 
 annum more, by real taxation, than was in fact raised that year, 
 in order to have provided for the interest on the forty bJlUon 
 bond issue. 
 
214 THE PROBLEM OF THE UNEMPLOYED. XV 
 
 wilderness of Oklahoma for free land, so would capital 
 and labor rush for the valuable vacant lots and lands 
 and unused coal beds and mineral deposits to be found 
 at present on every hand. Within two or three years, 
 probably, all valuable land of this character, most of 
 which is now situated in and near cities and towns, and 
 in well settled farming communities, would be used and 
 occupied. This increasing use of valuable lands now 
 vinused woidd rapidly swell the public revenues. The 
 income from ground rent taxation would shortly equal 
 and then vastly exceed the interest on the bonds issued 
 to land owners. Capital could only be invested then in 
 wealth-producing enterprises — enterprises which would 
 give employment to labor and add to the world's stock 
 of wealth. None of it could be invested in the unused 
 bounties of nature for the purpose of blackmailing effort. 
 All the obstacles to employment and to the most effective 
 use of land, to which attention has been called, would be 
 swept away. An era of business prosperity never before 
 paralleled would be inaugurated, nor could it be checked 
 and throttled by a panic-breeding increase in the price 
 of unused land Population would multiply, and wealth 
 would accumulate with unprecedented rapidity. While 
 interest on the public debt would remain a fixed charge, 
 the revenues of the government would constantly in- 
 crease with the increase in the value of land. Is it not 
 reasonable to suppose, under free land conditions which 
 would then prevail, that in ten or fifteen, or at most 
 twenty years, the indebtedness incurred in depriving land 
 and franchise owners of the right of extorting tribute 
 from their fellow men would have been paid, and the 
 heritage of the people relieved from all encumbrances? 
 By free land conditions, as used above, is meant con- 
 ditions imder which individuals would hold land on pay- 
 
IMMEDIATE NATIONALIZATION OF LAND. 215 
 
 ment to the government of the economic rent of it and 
 nothing more or less. Unused land would then be free 
 land, as heretofore shown, and no land could be profitably 
 withheld from the use to which it was best adapted. To 
 attain such conditions, it would be necessary to abolish 
 taxation of personal property and improvements on lands 
 since such taxes obstruct the free use of land — the source 
 of all employment — and are in effect fines upon industry 
 and enterprise. While all real taxation inevitably has 
 this effect in greater or less degree, and the burden of it 
 in the end is borne by consumers, nevertheless the ex- 
 emptions referred to would minimize the tendency of 
 such taxation to obstruct enterprise and discourage the 
 employment of labor. 
 
 The question as to how it would have been possible to 
 have obtained a revenue of $2, 600,000,000 in 1900, and 
 especially so if at the same time improvements on land 
 and personal property (from which sources about $500,- 
 000,000 were then obtained) were exempted from tax- 
 ation, and the land value tax limited to economic rent 
 only, has been considered. The required revenue could 
 have been easily raised by a budget made up somewhat 
 as follows: 
 
 Ground rent taxation, not in excess of economic 
 
 rent $866,000,000 
 
 Tariff so levied as to produce a revenue with- 
 out reference to protection 400,000,000 
 
 Internal revenue taxes on liquors and tobacco 
 
 (which would include all license taxes now 
 
 • , levied by states and municipalities) 525,000,000 
 
 A general stamp tax '. 100,000,000 
 
 An ad valorem tax on railroad freight and pas- 
 senger rates, collected by stamps applied to 
 
 tickets and bills of lading 500^000,000 
 
 An inheritance tax 75,000,000 
 
 From an increase in postal rates 34,000,000 
 
 From miscellaneous sources 100,000,000 
 
 Total $2,600,000,000 
 
216 THE PROBLEM OF THE UNEMPLOYED. XV 
 
 Taxes levied as above could be collected by a single 
 set of Federal tax gatherers at less expense and with 
 less partiality than is possible under the present compli- 
 cated and cumberous system. After deducting the 
 amount needed for the general government, the re- 
 mainder could be apportioned among the several states, 
 according to some equitable method of distribution. 
 Each state government would then, after making a sim- 
 ilar deduction, distribute what was left among its coun- 
 ties, cities and towns according to population or other- 
 wise. The principal of local self-government would not 
 be impaired. Every political subdivision would retain 
 the right to spend as it saw fit the portion of the public 
 revenue to which it was entitled. The ultimate end 
 being the abolition of all taxation, it would be consistent 
 and probably expedient for the general government to 
 collect the revenue from the ground rent tax, since the 
 people collectively create the values which such a tax 
 appropriates. People living in New York, for instance, 
 do little more to produce its land values than people 
 living in Iowa, whose products may be exchanged in 
 that city for the products of people living in Maine. 
 
 In the estimate given above, it is assumed that the 
 land value tax on improved lands in and near cities and 
 towns, on mines, railroads and public utilities, which 
 ought in no case to exceed the economic rent, would 
 yield at first only $886,000,000, or less than one-third 
 of the amount necessary to pay interest on the bonds 
 issued to land owners. It is assumed in this connection 
 that the economic rent of all improved lands would fall 
 at least 50%; also, that land whose owners would have 
 received 110,000,000,000, or one-fourth of the $40,000,- 
 000,000 of bonds issued, would yield at first no economic 
 rent to the government, most of the unimproved land 
 
IMMEDIATE NATIONALIZATION OP LAND. 217 
 
 and much of the land in cultivation being embraced in 
 this class. So, also, as to the 192,556 miles of railroads 
 in the United States in 1900, the par value of the stocks 
 and bonds of which was $11,500,000,000, an average of 
 $61,490 per mile, it is assumed that half of this sum 
 was represented by the value of land and franchises, and 
 the other half by improvement values. The total gross 
 receipts of railroads in 1900 were $1,500,000,000, of which 
 $960,000,000 went for operating expenses, leaving $525,- 
 000,000 as the total net income of the railroad proper- 
 ties. Estimating the amount of bonds received by rail- 
 roads for relinquishing land and franchise values at 
 $5,500,000,000, (a most liberal allowance) and allowing 
 6% as interest on the remaining $6,000,000,000 of rail- 
 road improvements and equipment values, (no deduc- 
 tions being made for watered stocks and bonds) and it 
 follows that the elimination of the factor of land and 
 franchise values in fixing reasonable railroad rates would 
 in 1900, have reduced transportation charges from $1,- 
 500,000,000 to $1,335,000,000, a saving of $165,000,- 
 000; hence a stamp tax of 40% ad valorem paid by 
 shippers and passengers on railroad charges as thus re- 
 duced, would then have amounted only to a 22% in- 
 crease in the freight and passenger rates charged at that 
 time, and would have added $500,000,000 to the reve- 
 nues of the government. The burden of the $1,800,- 
 000,000 of real taxation as thus distributed would 
 have been collected at a minimum of expense and 
 borne by all consumers in proportion to the amount 
 consumed by each.* 
 
 *At first the income of the government from ground rent tax- 
 ation would be abnormally low, owing to the immense amount 
 of near-at-hand unused land which would become at once avail- 
 able to capital and labor; but within a very short period these 
 lands would all be occupied, and then the ground rent fund 
 
218 THE PROBLEM OF THE UNEMPLOYED. XV 
 
 An important factor to be taken into account in con- 
 sidering the feasibility of compensating land owners in 
 full is the difference between the government rate of 
 3% interest and the rate of 4% to 8% now paid by in- 
 dividuals and corporations. Thus, the land which furn- 
 ishes the site for the office building mentioned in the 
 preceding chapter is worth $160,000, the economic rent 
 of it being $8,000 per year, or 5% of its value. The gov- 
 ernment, however, would have obtained the land owner's 
 taxing privilege pertaining to this lot for $160,000, pay- 
 ing for it in 3% gold interest bearing bonds, the interest 
 on which would amount to only $4,800 annually. There- 
 after the full economic rent as determined by the rate of 
 interest prevailing among individuals in that locality 
 would be paid the government in the form of a tax 
 on this tract of land. It might soon amount to $6,000 
 or $8,000 a year; hence, in many instances the revenues 
 from valuable and highly improved lands would soon 
 from this cause alone more than equal the interest on 
 the bonds given in exchange for them. This would 
 quickly offset the shrinkage in economic rent resulting 
 at first from the opening up to capital and, labor of all 
 nearby valuable unused land. It would perhaps enable, 
 the government to retire the bonds referred to without 
 perceptible increase of the burden of real taxation. 
 
 Again, the fact of these gold interest bearing bonds 
 being exchangeable for currency (the latter being also 
 re-exchangeable for gold interest bearing bonds of large 
 denominations) would produce an artificial stimulation 
 of business like an inflation of the currency, which 
 would also aid in tiding over the first few years of pos- 
 
 would rise to normal figures. Hence no harm would result if 
 during this period of transition it became necessary for the gov- 
 ernment to issue additional bonds to provide for deficits. 
 
IMMEDIATE NATIONALIZATION OF LAND. 219 
 
 sibly increased taxation. But this could produce no 
 disastrous inflation of values. The price of land and of 
 stocks, bonds and securities based on lands and fran- 
 chises could not be advanced, since all increase in these 
 values would be appropriated by the government; a 
 rising real estate market, therefore, the cause as well as 
 the premonitory sign of every panic in the past, would 
 be lacking. The stimulus to business could show itself 
 only in an enormous demand for labor to be applied to 
 the development of valuable near at hand unused build- 
 ing lots and farming lands, coal beds and mineral de- 
 posits, the use of which would then be secured without 
 encountering the obstacle which the purchase price of 
 land at present always interposes. 
 
 The effect of the nationalization of land on wages and 
 on the demand for labor will be further considered in 
 the following chapter. 
 
 At this point, however, a question of morals again 
 arises. Thus, if land belongs by natural right to all, 
 if the value which attaches to it is the product of the 
 common energy and enterprise of all, what right has the 
 government to compel the people to pay for what they 
 already own? If compensation is to be awarded at all, 
 why should it not be given to those who have been de- 
 prived of the heritage rather than to those who have 
 enjoyed its exclusive use and possession ? Herbert Spen- 
 cer's famous argument, in which he attempts to show 
 the injustice of compensating land owners in connection 
 with the nationalization of land will be found in full in 
 the Appendix. In point of fact, however, the political 
 economist, for reasons already given, has nothing to do 
 with the question thus suggested. He sees that the nat- 
 ural law demands equality with respect to the use of the 
 bounties of nature; that the violation of this law pro- 
 
220 THE PROBLEM OF THE UMEMPLOYED. XV 
 
 duces confusion and waste, and that harmony with it 
 can only be effected by requiring those who possess land 
 to pay, for the benefit of all, what the use of it is worth. 
 In other words, that harmony with the natural law can 
 be reached only by what is in effect the nationalization 
 of land. When, in this connection, it is proposed to 
 compensate land owners, the political economist must 
 test the matter, not by trying to determine whether it 
 would be right or wrong, but by considering how it would 
 affect the demand for labor and the distribution of 
 wealth. Applying this test, the conclusion is reached 
 that, whether it would be just to do so or not, the govern- 
 ment could well afford to pay the owners of land in 
 full for all the privileges which its nationalization would 
 force them to relinquish. For it is evident that the pay- 
 ment of the fixed amount of indebtedness incurred in 
 doing so would be less burdensome upon capital and 
 labor than the continuance of the present system of con- 
 stantly increasing exactions on the part of land and f ran - 
 chise owners. And especially so, if free land conditions 
 from the very start could thus be obtained. 
 
CHAPTER XVI. 
 THE NATIONALIZATION OF LAND, CONTINUED. 
 
 Speculations in Regard to Effects which would 
 Flow from it, Including its Effect on 
 Labor Unions, Trusts and 
 Socialism. 
 
 WHILE the nationalization of land, brought about at 
 once, and without hardship or excessive loss to any 
 individual, is doubtless but an "iridescent dream," fur- 
 ther speculation in regard to it and to the effects which 
 would flow from it are nevertheless interesting and in- 
 structive. For in this way the maladjustment of the 
 forces of government in the particulars to which atten- 
 tion has been called can be made even more clearly ap- 
 parent. The fact that the subject is without practical 
 interest to politicians and statesmen does not render 
 it of less importance to the political economist. Nor is 
 interest in the matter from his point of view diminished 
 because people at present have neither the intelligence 
 nor the patriotism which the remedy calls for. As a 
 scientist, he considers the subject simply for the purpose 
 of ascertaining whether the cause of increasing poverty 
 in the midst of increasing wealth has been discovered, 
 and if so, whether the ultimate remedy is to be found 
 in socialism or in individualism, in tyranny or in free- 
 dom. 
 
 221 
 
222 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 Let us then try to imagine what would have happened 
 had the landlords of the United States been compelled, 
 on the terms ?tated in the preceding chapter, to relin- 
 quish, in 1900, in favor of the government, all the taxing 
 privileges previously enjoyed by them as mere owners 
 of land. The land value tax for the first year on every 
 tract of land would of course have equaled the interest 
 on the bonds awarded its owner. If, for instance, a 
 farmer's tax was sixty dollars, he would have received 
 two thousand dollars in bonds, on which the interest in 
 gold would have been sixty dollars. With this he could 
 pay all his direct taxes, for there would then be no tax 
 on personality or improvements on land. The year be- 
 fore, this farmer would have paid the tax on his farm and 
 personal property out of money which he earned; the 
 year after the change was made, he would pay it with 
 money furnished by the government in the form of inter- 
 est on the bonds awarded him ; yet he would be in no way 
 deprived of the use and enjoyment of his farm. This 
 would be the case at first as to every land owner. All 
 would still have the exclusive use of the land owned by 
 them, and all would at first in effect be relieved entirely 
 of the burden of taxation in connection with it. For 
 the money with which to pay the taxes assessed against 
 land would, for the first year at least, as stated above, 
 be furnished by the government. Taxes levied against 
 owners of improved real estate, therefore, on the start 
 would be decreased, and the burden of direct taxation 
 as to them would at first be lessened. This condition, 
 however, as to all highly valuable lands, would only be 
 temporary, but as to cheap lands it would be more or 
 less permanent, and would continue for many years fol- 
 lowing the change. Probably half or more of the land- 
 owning farmers of this country would pay no direct taxes 
 
THE NATIONALIZATION OP LAND. 223 
 
 on the lands used by them, because such lands would 
 not, for many years after the new system went into effect, 
 have any real economic value. 
 
 Since improvements existing at the time the national- 
 ization of land became effective would stand as security 
 for the payment of taxes, it would be to the interest of 
 all owning fairly well improved lands, to pay the tax 
 assessed against them rather than permit such lands to 
 be sold for non-payment.* As to unimproved lands, 
 however, the case would be different. Unless the owner 
 of an unimproved tract intended to utilize it himself 
 without delay, there would be no inducement for him 
 to pay taxes on it. If, therefore, he could not sell his 
 title for a small premium to one who wished to use the 
 land at once, he would let it revert to the government. 
 Thus, suppose A owned a vacant lot formerly valued at a 
 thousand dollars, on which he had received a thousand 
 dollars in 3% gold interest bearing bonds, and that he 
 was unable or unwilling to improve this property himself. 
 He wotild have nothing to gain by paying the $30 which 
 it would cost to hold the land in idleness the first year. 
 Suppose he paid the tax, however, with the intention of 
 making some one, some time, give him a premium of a 
 hundred or two hundred dollars or more for the land. It 
 would be impossible for him to succeed in such a 
 scheme unless others with unused tracts of land in 
 the same locality also held on to them for the same pur- 
 pose. If this were done, it would be conclusive evidence 
 that the economic rent of the land was more than $30 a 
 year; hence the tax would be raised, and it would cost, 
 
 *The plan proposed by Mr. Shearman, p. 274, under which 
 land owners would be saved the loss of improvements in case of 
 tax sales, could not be applied until sufficient time had elapsed 
 for a complete readjustment of rental values. 
 
224 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 say $40 or $ 50 to hold the land in idleness the next year. 
 And so the tax would be increased year by year if need 
 be, 'and the government, and not the individual, would 
 appropriate the unearned increment. The knowledge 
 that the government possessed this power, and that it 
 would be its duty to advance the tax on vacant as well 
 as improved lands until all economic rent collectible was 
 appropriated by taxation for the benefit of the people at 
 large, would effectually deter any one from acting "the 
 dog in the manger" by trying to hold land in idleness for 
 investment or speculative purposes. 
 
 It follows then, from what has been shown, that every 
 vacant city lot, all the millions of acres in the aggregate 
 of unimproved lands within the zones surrounding cities, 
 towns and villages, to which attention has been called, 
 and the hundreds of millions of acres of unused farming 
 lands in the midst of well settled farming communities, 
 as well as the tens of thousands of acres of unused coal 
 beds and mineral deposits within convenient distances 
 of great centers of population, and unused land every- 
 where, would be thrown open to use and settlement on 
 terms requiring practically no investment of purchase 
 money. The fact that here and there an owner might be 
 able to exact a small premium for the mere privilege of 
 immediate possession would not affect the general rule 
 that capital could no longer be sunk in buying land. 
 
 A few illustrations will bring home to the reader the 
 momentous effects of the change outlined above. Thus, 
 the clerk of mechanic, for instance, who formerly would 
 have been compelled to bury $1,000 of capital in buying a 
 conveniently located vacant lot, on which to build his 
 home, would now obtain a secure title to it with an initial 
 outlay of but the first year's tax of $30. The five acre 
 tract of unimproved land in the suburbs of a city, really 
 
THE NATIONALIZATION OF LAND. 225 
 
 useful only for market garden purposes, which would 
 formerly have cost 15,000, the gardener would now get 
 with an initial investment of but $150, and this assess- 
 ment might settle to even lower figures within a year or 
 two. So, also, the tenement farmer and the sons of 
 small land-owning farmers would obtain conveniently 
 sized farms on similar terms, not in remote wildernesses, 
 but on the unused or but partially used lands to be found 
 in the very neighborhoods in which they were living. 
 They would thus have the advantages at once of schools, 
 churches, good roads, and nearby markets, and all the 
 comforts and interests in life which highly civilized so- 
 ciety affords. As already shown, a given amount of ef- 
 fort applied to such lands will often produce quadruple 
 the wealth which it can bring forth on cheaper lands at 
 greater distances from centers of population. 
 
 Again, the manufacturer looking for a site for a new 
 factory, would no longer be forced to pass by an unim- 
 proved block in the heart of the manufacturing district 
 of the city, convenient to railroad and wharf, to schools 
 and comfortable sanitary dwellings for employees, and 
 locate his enterprise in a distant suburb, remote from 
 such advantages. No "dog in the manger," by demand- 
 ing a more or less exorbitant price, could prevent the 
 employer from taking up the unused land most suitable 
 for his purpose. He would always, therefore, be able to 
 select the tract of unused or but partially used land on 
 which the greatest amount of wealth could be produced 
 with the least expenditure of labor. 
 
 Nor would the employer be compelled to take the 
 chances of a land speculator in connection with a labor- 
 employing enterprise. If his ground rent tax increased, 
 it would be because his land was becoming more valuable, 
 15 
 
226 THE PROBLEM OP THE UNEMPLOYED. XVI 
 
 and, he could therefore afford to pay the additional rate ; 
 if the land decreased in value, his tax would decrease 
 accordingly; for, under no circumstances, after the sys- 
 tem was fairly inaugurated, would a land owner ever be 
 required to pay as taxes more than the economic rent of 
 the land which he owned. And so it would be as to all 
 farmers, merchants, miners, and homeseekers; nowhere 
 would the purchase price of land, the greatest of all ob- 
 stacles to employment, stand in the path of progress. 
 
 Nor wotild, for instance, appeals to philanthropy be 
 necessary then to secure the construction of commodious 
 and sanitary tenement houses in the slums of great cities. 
 All improvement on land being exempt from taxation, 
 and land owners being no longer fined by an increase of 
 taxation for improving land, and sites for such tenements 
 being obtainable on easy terms, self-interest alone would 
 quickly bring about the employment of labor in the 
 tearing down of unsanitary rookeries, and in the construc- 
 tion of comfortable dwellings in place of them. As it is 
 now, before the capitalist can build a model tenement 
 house, he must pay some one for a suitable site from 25% 
 to 100% more than its present economic value. He is 
 compelled to do this because of the anticipated increase 
 in value always to be discounted and added to the real 
 value in fixing the purchase price of land. This renders 
 the investment a more or less doubtful one. In a city 
 like New York, the land alone on which to erect a com- 
 fortable tenement costs far more than the building it- 
 self ; hence, error of judgment with respect to this spec- 
 ulative value may result in disastrous loss instead of 
 sure and moderate gain. "Business," instead of 
 sweeping towards the proposed site and doubling and 
 trebling its value, as its owner confidently expects will 
 
THE NATIONALIZATION OF LAND. 227 
 
 be the case, may go in another direction. Under present 
 conditions, such an investment at best partakes in large 
 part of the nature of a lottery. It is more of a land 
 speculating scheme than a wealth-producing and labor- 
 employing enterprise. For every dollar invested in it 
 in the payment of the products of labor, several times as 
 much more must often be invested in the purchase of 
 privilege. Under the conditions which would then pre- 
 vail, however, not only would the land speculator's risk 
 be eliminated, but this particular form of investment, as 
 well as all others calling for the employment of labor, 
 could be made with a much smaller amount of capital 
 than is now possible. This of itself would largely facili- 
 tate the employment of labor, and increase the demand 
 for laborers. 
 
 So also as to the settlement of land in cities and towns 
 generally. Vacant lots, to be found everywhere at pres- 
 ent in the midst of improved premises, would soon dis- 
 appear. Population, in obedience to natural law, would 
 be attracted to the unused sites for homes and business 
 purposes nearest at hand rather than to those to be found 
 among wildernesses of vacant lots in the suburbs. Noth- 
 ing would then interfere with the natural tendency to 
 use all land for some purpose, and to devote each partic- 
 ular parcel of it to the purpose for which it was best 
 adapted, be it for a business block, a factory, a dwelling 
 house, a farm, a sheep walk, or a cattle ranch. Hence 
 unnecessary congestion of poptdation in the slums of 
 cities, and its unnecessary diffusion in the suburbs and 
 rural districts, would be avoided. Highly improved 
 roads, sidewalks and sewers, electric light, heat and pow- 
 er service, and all public utilities now impossible of en- 
 joyment except in a limited degree by a limited number, 
 
228 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 would then be possible of enjoyment in the highest de- 
 gree by the greatest number; and the expense would be 
 trifling in comparison with what so wide a diffusion of 
 these public utility privileges would cost under present 
 conditions. This would be the case because of the nat- 
 ural and common sense manner of using land which the 
 appropriation of economic rent by taxation would induce. 
 The plan pursued in regulating the use of coal beds 
 and mineral deposits would be slightly different. In the 
 case of coal, the method for many years practiced by the 
 City of New York in disposing of its wharf privileges 
 would doubtless be followed. Coal beds would be leased 
 for terms not exceeding, say, ten years, in lots to suit, to 
 the bidders offering the government the greatest royalty 
 per ton of coal produced. Forfeiture of the privileges 
 granted would be the penalty for failing to mine in any one 
 year a stipulated minimum number of tons, the number 
 being in proportion to the magnitude of the bed leased. On 
 the expiration of a lease, whether from forfeiture or leaps 
 of time , so much of the coal bed as then remained would be 
 leased for another term to the best bidder, the new leases 
 being required to pay his predecessor the actual value of 
 the improvements. A miner, therefore, on finding out 
 that his bid was too high — that he could not continue to 
 pay the royalty agreed upon and compete with other 
 operators — could safely submit to a forfeiture and take 
 the chance of leasing the land on better terms, since, if 
 any one bid over him, he would still recover the value of 
 his improvements. The purpose of the government 
 would be, not to obtain the greatest possible income from 
 royalties, as in the case of private ownership, but to bring 
 about conditions under which consumers would be furn- 
 ished with coal at as near the cost of production as pos- 
 
THE NATIONALIZATION OF LAND. 229 
 
 sible. This would be accomplished in the manner de- 
 scribed, since no one would then be able to derive profit 
 from holding coal lands in idleness, unused coal beds 
 being practically free to whoever chose to operate them. 
 It would, therefore, take little capital to become a coal 
 mine operator; hence the number of coal mine employ- 
 ers woiild be increased to the advantage of employees as 
 well as consumers. 
 
 Under conditions described above, only coal beds most 
 conveniently located and most easily worked would be 
 operated at first — ^beds from which the greatest amount 
 of coal could be produced with the least amount of effort 
 — but the royalties paid would nevertheless be small, on 
 account of proximity to vast quantities of unused and 
 practically free coal lands. It follows, therefore, that 
 prices to consumers would be but little above the cost of 
 production, provided railroad rates were alike to all and 
 were limited to reasonable profits on improvement and 
 equipment values. In this connection it may be re- 
 marked that a people with sufficient virtue and intelli- 
 gence to accomplish the practical nationalization of land 
 would not submit to unjust discrimination, or extortion- 
 ate charges on the part of public service corporations.* 
 Assuming that this would be the case, and it can be 
 
 *No difficulty will be experienced in preventing rebates, and 
 in securing uniform and reasonable rates, when it is fully realized 
 that railroads and all public utility corporations are mere serv- 
 ants of the people, and as such entitled only to the chance of mak- 
 ing reasonable profits, say, not exceeding six or eight per cent on 
 the actual capital invested. The problem will be simplified 
 rather than rendered more complex by mergers and combina- 
 tions carried no matter to what extent. Effective publicity 
 alone will secure the observance of law on the part of such corpor- 
 ations, and render it easy to obtain all reasonable reductions in 
 rates, either by the aid of commissions or otherwise. But the 
 publicity must be effective, and it cannot be made so unless the 
 books of public utility companies are kept under the supervision 
 
230 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 easily shown that 6% interest on all capital invested in 
 mining, transporting and selling coal could be allowed, 
 the wages of miners, railroad employees, and all engaged 
 in handling it could be doubled, and yet the price of 
 anthracite coal in New York City, under the conditions 
 described, would he reduced perhaps one-third. As it is 
 now, on an average the consumer pays, say, $5.00 a ton 
 for coal, of which labor gets approximately SI. 25, capital 
 75 cents, and land and railroad franchises $3.00. Under 
 the free land conditions described, the consumer would 
 pay $3.50 per ton for coal, of which labor would get ap- 
 proximately $2.50, capital 75 cents, and land 'z5 cents.* 
 
 Let the reader consider for a moment what a reduction 
 of 33 1-3 %in the price of coal, resulting not from lower 
 wages, but from the abolition of monopoly, would signify. 
 It would bring needed warmth and comfort to hundreds 
 of thousands of dreary homes. It would stimulate man- 
 ufacturing enterprises, and reduce the cost of producing 
 and transporting every article which contributes to the 
 comfort and happiness of mankind. An enormous in- 
 crease in the demand for coal would produce an enorm- 
 ous increase in the demand for labor employed in mining 
 it, and from this would follow an increase in the wages of 
 the miner. 
 
 And so in all departments of industry everywhere, 
 in like manner and from like causes, the exactions of 
 
 of government experts and in accordance with uniform methods 
 prescribed by them. It is now a penitentiary offence to make a 
 false entry in the books of a national bank. Why should the 
 penalty be less in the case of a franchise enjoying corporation? 
 
 *The figures used above are intended merely as illustrative of 
 how free land conditions with respect to coal would reduce the 
 price and change the ratio of the division of the product between 
 the factprs of land and laber: 
 
THE NATIONALIZATION OF LAND. 231 
 
 monopoly would melt away and the rewards of effort 
 would increase proportionately. 
 
 Under conditions which would then prevail, what 
 would the man of means do with his wealth as it accumu- 
 lated? He could no longer invest it in land, and, snap- 
 ping his fingers in the face of labor, buy with it the priv- 
 ilege of taxing his fellow men. All such avenues for in- 
 creasing one's wealth would be closed. As a general 
 rule, no income could be realized from wealth unless it 
 was so invested as to give employment to labor, while 
 the obstacles to such investment which the price of land 
 now interposes would have vanished. Everywhere on 
 the borders of compactly settled communities, where all 
 the advantages of a highly developed civilization could be 
 enjoyed, would be found land practically free and open to 
 all who cared to use it for wealth-producing purposes. 
 Is it not evident that the position of capital and labor 
 would then be reversed, and that capitalists would beg 
 for laborers, even as laborers now beg for employment? 
 This being so, walking delegates, strikes and boycotts 
 would be unheard of. 
 
 If economic rent were appropriated by taxation, there 
 would be no occasion for trade unions, and working men 
 would no longer be required in self-defense to submit to 
 the tyranny of labor organizations. No grinding down 
 of wages could then result from individual freedom of 
 contract between employer and employee. If one labor- 
 er worked fifteen hours in a day instead of eight hours, 
 and if another did twice as much work in a given time as 
 the average of his class, none would object. For addi- 
 tional wages would then inevitably be the reward of ad- 
 ditional effort: therefore, the pace set by the extra effi- 
 cient workmen could not result in the reduction of the 
 
232 THE PROBLEM OF THE UNEMPLOYED. XVl 
 
 wages of the less efficient ones. At present, however, 
 extra efficiency on the part of a few tends to reduce the 
 wages of all; hence the necessity of trade union regula- 
 tions compelling all to conform to a dull average of medi- 
 ocrity. This not only destroys individuality and les- 
 sens the interest of the working man in his task, but 
 it also largely decreases the amount of wealth which 
 would otherwise be produced; yet, but for such regu- 
 lations, wages under present unnatural conditions 
 would inevitably sink to the very starvation point.* 
 
 The truth of what is stated in the preceding paragraph, 
 to the effect that labor unions would then be unneces- 
 sary, can also be proven by the law of rent and its corol- 
 
 *The effect on wages generally at present of some workmen 
 trying to excel other workmen in the same line of employment is 
 shown by the following extract from "The Story of a Russian 
 Workman," recently published in The Outlook: 
 
 "Some years ago, my boss said to me, 'For every bolt you make 
 we pay three copecks. Now, you are a fast man. Why don't 
 you make more money? You can make more than all the other 
 men.' So I worked faster. In a few weeks I was making one 
 hundred and fifty bolts a day — four and a half ($2.25) rubles a 
 day. Then the gentlemen who directed the factory said, 'Oh, 
 this is too much for so simple a fellow.' So they decided to pay 
 a lower price for each bolt. They did. But the baby had come, 
 and I worked still faster. The other men had to keep as close 
 behind me as they could, and so they all worked faster. Then 
 again I got up to $2.25 a day. Again they said. 'Oh, this is too 
 much for so simple a fellow.' They decided to lower the price 
 again on each bolt. * * * In a few years this clever boss, 
 who gets a commission, he has made us work faster and faster, 
 while our wages stayed the same. Only a few of us are making 
 more money — a little more, perhaps fifteen per cent. But even 
 for us it is bad to have so many others working cheaper. Some 
 of them may any day do our work for still lower wages. Now, 
 what are you going to do about this? Is it right to keep always 
 working faster? I want no more of the old slow factories; they 
 are all over Russia and are very bad for this country. But look 
 here — when I keep working faster, I want to get paid more and 
 more. And how can this be if the employers keep lowering the 
 price for each bolt I make? And who wants to stop them from 
 lowering the price? Only the workmen. If we don't stop them, 
 no one else will. So we must have more and more labor unoins.". 
 
THE NATIONALIZATION OP LAND. 233 
 
 lary, the law of wages. The reasoning in this connec- 
 tion, though somewhat technical and calling for close at- 
 tention on the part of the student, is unanswerable. 
 Briefly recapitulated, it is as follows : Wages never natur- 
 ally rise above, but always naturally tend to fall to the 
 level fixed by what labor can earn on free land, since, as 
 heretofore shown, all which a given amount of effort can 
 produce on any land in excess of what it can produce on 
 the least productive land in use, or on free land, goes in 
 the long run to land owners, either in the form of rent or 
 increase in the value of land.* Free land, or the least 
 productive land in use, is now so remote from centers of 
 poptilation, or so lacking in fertility, that wages made 
 upon it are little more than barely sufficient for the labor- 
 er's maintenance, hence wages in general naturally tend 
 to fallf This natural tendency can be resisted at present 
 only by artificial methods. It therefore follows that 
 trade union combinations are necessary under existing 
 conditions, and that, but for them, wages would ulti- 
 mately decline to the very starvation point. Under free 
 land conditions, however, it would be different. Now, 
 the agricultural laborer on free land, which can only be 
 found remote from markets, and where he is denied the 
 co-operative advantages of a highly developed civiliza- 
 tion, can earn, say, but a dollar a day; then free land 
 being always close at hand and adjoining thicklv settled 
 communities, he eould earn upon it, say two or three dol- 
 lars a day, since, as heretofore shown, on unused land of 
 
 *The law of wages, as already stated, is to the effect that the 
 higher wages are on free land, or on the least productive land in 
 use, the higher wages will be on all lands; the converse of this is 
 also of course implied. 
 
 ■j-This is the cause of the so-called iron war of wages announced 
 by Ricardo. 
 
234 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 this character much more wealth can be produced with 
 the same amount of effort. This increase in the wages 
 of the agricultural laborer would cause a proportionate 
 increase in the wages of all laborers, and such increase 
 would come naturally, without the aid of trade union 
 combinations, and notwithstanding perfect individual 
 freedom of contract between employer and employee. 
 For it is evident if comparatively unskilled labor could 
 always make two or three dollars a day on free land, 
 laborers of the same grade in other lines of employment 
 would never work for less on any land ; and if the wages 
 of this class of labor were thus by natural methods 
 doubled and trebled, the wages of all classes of labor 
 would be increased in something like the same proportion 
 without artificial aids of any character. 
 
 Again, since under prevailing conditions improve- 
 ments in labor-saving processes do not naturally increase 
 wages, the working man can reap no benefit from the in- 
 creased amount of wealth which they enable him to pro- 
 duce, without resort to the artificial aid of trade union 
 combinations. This is the case at present, because such 
 inventions naturally increase rent and the value of land 
 without increasing wages or rates of interest. In other 
 words, in the division of the product among land, capital 
 and labor the additional amount of wealth produced by 
 such improvements goes to land owners in the form of 
 increase in rent and increase in the value of land, and 
 not to laborers and capitalists in the form of increase in 
 wages or increase in rates of interest. Under free land 
 conditions, however, none of this increase would go to 
 land owners as such ; hence all of it would go to capital- 
 ists and laborers, and since, as already shown, rates of 
 interest would not advance, all of the increase in the pro- 
 
THE NATIONALIZATION OF LAND. 235 
 
 duct resulting from improvements in labor-saving pro- 
 cesses would go to labor in the form of increased wages, 
 including the wages of both employer and employee. 
 But the employee, owing to the small amount of capital 
 which would then be required to enable any one to profit- 
 ably employ himself upon near-by free land would, as 
 heretofore shown, be so independent of the employer that 
 he could command and receive as wages approximately 
 all the wealth which he produced. The wages of employ- 
 ees as well as those of employers would therefore natur- 
 ally increase with every invention which increased the 
 laborer's wealth-producing powers; and thus, with the 
 removal of the cause which rendered them necessary, 
 trade union combinations would disappear. 
 
 Not only wotild the cause which produces the labor 
 union be removed, as shown above, but such would be 
 the case also, to a great extent at least, as to causes which 
 bring abovit trasts and combinations in restraint of trade. 
 For no one would then contend that a tariff was needed 
 for the protection of the American working man. It 
 would then be clearly seen that the sole cause of the high 
 wages which he enjoyed was the abundance of practi- 
 cally free land to be found everywhere close at hand. 
 Wages in the early part of the 19th century, for instance, 
 before a protective tariff was inaugurated, were higher 
 in America than in any of the countries of Europe, the 
 advantage in favor of the American working man being 
 then even greater comparatively than at present. This 
 was so because land was cheaper here than there; or 
 in other words, because the rewards of effort on the 
 least productive lands in use were greater here than there. 
 And for this reason wages have always been higher in 
 the United States than in England, If a protective tar- 
 
236 THE PROBLEM OP THE UNEMPLOYED. XVl 
 
 iff has a tendency to raise wages, why are not wages 
 higher in high-protective-tariff Germany than in com- 
 paratively free-trade England? Yet the English work- 
 ing man never emigrates to Germany to secure higher 
 wages, but Germans in large numbers do immigrate to 
 free-trade England for this purpose. If a protective tar- 
 iff has anything to do with wages, why have times been 
 better and wages higher for the last ten years in tariff- 
 for-revenue-only New Zealand than in high-protective- 
 tariff South Australia? 
 
 Without a protective tariff — so well described by Mr. 
 Havemeyer as the "mother of trusts" — with no dis- 
 crimination in railway charges, with railway rates based 
 solely on the improvement and equipment valuations of 
 railroads, with free land conditions in respect to coal 
 beds and mineral deposits, the very life would be taken 
 from every trust which now defies the laws of competition 
 and prevents the exercise of individual initiative. 
 
 Again, with increase of wages to employees as well as 
 to employers, would come a general increase of intelli- 
 gence, and voluntary co-operative associations would 
 doubtless assume proportions undreamed of at present. 
 Consumers of all classes would thus be guarded against 
 the rapacity of merchants and middlemen, as is already 
 largely the case in England.* 
 
 Nor is it clear (theories of doctrinaires notwithstand- 
 ing) that any line would then be drawn, putting an ar- 
 bitrary limit to the functions of government at the fran- 
 chise or anywhere else. Man ever strives to bring about 
 the greatest results with the least amount of work, and 
 it is difficult to see how the natural law can be violated 
 
 *In 1903, the sales of the 1481 co-operative societies in Eng- 
 land, with a membership of 1,987,768, amounted in the aggregate 
 to $287,500,000. 
 
THE NATIONALIZATION OF LAND. 237 
 
 by allowing the government to do anything which ex- 
 perience shows it can do with less expenditure of human 
 labor than would be the case if it were done by private 
 citizens. The only questions to be then considered in 
 deciding whether any certain enterprise ought to be un- 
 dertaken by the government or not, would perhaps be, 
 which will perform the service cheaper, the gov- 
 ernment or the individual? In any event, with unlim- 
 ited opportunities for profitable private employment pro- 
 duced by free land conditions, little attention will then 
 be paid to the specious plea that it is unfair for the gov- 
 ernment to compete with private interests in any field of 
 enterprise in which it can serve the people cheaper and 
 better than they are being served by individuals and 
 corporations. 
 
 It is said that the City of Boston sells coal to its school 
 board and eleemosynary institutions; if so, what real ob- 
 jection can there be to its selling coal to private individ- 
 nals, should experience prove that coal can thus be dis 
 tributed among consumers generally in that city at a 
 saving of cost and labor ? What better or simpler meth- 
 od could be devised for rendering ineffective an agree- 
 ment among coal dealers to charge unreasonable prices ? 
 
 Some years ago, the steamship companies engaged in 
 carrying the twelve million dollars' worth of refrigerated 
 meats annually exported from New Zealand to England, 
 formed a pool and raised freight rates. They were noti- 
 fied by the Prime Minister of New Zealand that unless 
 the old rates were restored, the government would put on 
 its own line of steamers. This threat was effective, and 
 rates were at once reduced to the former level. 
 
 The manufacturers of twine used in harvesting small 
 grains not long since formed a tariff protected trust, and 
 
238 THE PROBLEM OP THE UNEMPLOYED. XVI 
 
 doubled the price of this article. Minnesota and Iowa 
 then began the manufacture of binding twine with con- 
 vict labor, and the price of it soon fell 50% in those States. 
 
 Who shall say that methods of the character noted 
 above would not prove to be the best which could be 
 adopted for the protection of the people against the ex- 
 actions of such trusts, if any, as might survive the abo- 
 lition of every form of special privilege? The expe- 
 rience of New Zealand shows that methods of this kind 
 would be effective at least. The government there not 
 only operates all public utilities, but it also competes 
 with individuals in the business of banking, of loaning 
 money on real estate, of insuring lives and property, of 
 mining coal, and event to some extent of carrying on ordi- 
 nary manufacturing establishments. There are no trusts, 
 as we use the term, in that country, nor is it probable 
 that they could thrive and prosper under conditions ex- 
 isting there. 
 
 Whenever, in the manufacture or distribution of pro- 
 ducts, in the insuring of lives or property, or in the per- 
 formance of any character of service, unreasonable 
 charges are extorted by means of oppressive combina- 
 tions, the real remedy for the evil may be found in the 
 readiness of the government, either national, state or 
 municipal, as the case may require, to become an active 
 competitor in the business thus monopolized. The fear 
 of arousing competition from such a source would doubt- 
 less in most instances be sufficient in itself, as in New 
 Zealand, to prevent the formation of any combination 
 in restraint of trade. 
 
 We may smile at the idea, but should the State of 
 Kansas, by means of the great oil refinery which she pro- 
 poses to build, be able to demonstrate the fact that ilium- 
 
THE NATIONALIZATION OF LAND. 239 
 
 inating oil can be produced and sold by State govern- 
 ments at prices greatly below those now charged by the 
 Standard Oil monopoly, would it not be foolish to allow 
 the mere spectre of State socialism to deter us from ex- 
 tending the experiment into other fields and into other 
 lines of enterprise? What is there in the dream of the 
 most ultra socialist to terrorize one who believes in the 
 fullest measure of individual liberty? Is it likely, when 
 special privileges and the private appropriation of rent 
 shall have become things of the past, and all shall have 
 tasted the fruits of industrial freedom, that the people 
 will then consent to be shackled by a socialistic bureau- 
 cracy ? 
 
 Suppose the vision of Bellamy in respect to the carry- 
 ing on by the government of immense factories, shops, 
 stores, and hostelries, banking and insurance enter- 
 prises, were realized, and most of the waste of energy 
 now resulting from competition were thus avoided ; thin 
 would only signify that experience had shown that in 
 many instances and under certain circumstances the gov- 
 ernment could obtain the same or better results with less 
 expenditure of human effort than the individual, but it 
 would not prove that it could do so in all cases and under 
 all circumstances. "With a telephone and an electric 
 motor on every farm and in every home, and a trolly line 
 or its equivalent at almost every door, numberless arti- 
 cles of comfort and luxury could doubtless then be made 
 to greater advantage in small shops, and at the very 
 homes of the workmen, than in great factories; and espe- 
 cially so when the craftsman's individuality of design or 
 finish was desired. Again, it is wholly impossible to 
 conceive of any saving of labor by the government's en- 
 gaging, for instance, in the cultivation of the soil. In 
 
240 THE PROBLEM OF THE UNEMPLOYED. XVI 
 
 this, the most important of all pursuits, as well as in all 
 others in which energy is not largely dissipated by com- 
 petition, labor would be wasted rather than saved were 
 the State to attempt the role of employer. 
 
 It therefore follows, since man always seeks to accom- 
 plish as much as possible with as little work as possible, 
 that no matter how rapid the drift in this direction may 
 seem, the socialistic commonwealth can never be attained, 
 nor need the fear of it lead the individualist to dread any 
 extension of the functions of government which imply 
 either a saving of labor or relief from monopoly. 
 
CHAPTER XVn 
 NATURAL TAXATION 
 
 THE nationalization of land can be brought about 
 gradually, as already stated, by dropping one after 
 the other taxes levied on industry and the products of in- 
 dustry, and concentrating all taxation on the rental 
 value of land. In other words, it can be accomplished 
 by a single tax on land values. Since this method of tax- 
 ation is in harmony with the natural law, and violates 
 none of its canons, it is rightly called Natural Taxation. 
 
 It is obvious that no tax should be levied which cannot 
 be collected economically and without invidious distinc- 
 tions between individuals ; neither should a tax directly 
 discourage the production of wealth, nor should it be so 
 adjusted as to bear with unnecesssary weight upon the 
 very poor. These are self-evident truths, and any scheme 
 of taxation which fails to harmonize with them is un- 
 sound, and must ultimately be discarded. 
 
 It is sometimes thoughtlessly remarked that since a cer- 
 tain amount of money must be raised for the support of 
 government, the manner of obtaining it is of small im- 
 portance. As well might it be said that since a horsemust 
 haul a certain amount of freight, it is immaterial whether 
 the cart be fastened to his tail or to his shoulders. An 
 improper adjustment of the burden of taxation will not 
 only lessen the amount of wealth which would otherwise 
 be produced, but it may result in the total destruction of 
 16 241 
 
242 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 the wealth attempted to be taxed. Thus, the Egyptian 
 government many years ago increased the tax on olive 
 trees to such an extent that owners cut them down in self- 
 defence, and thousands of acres of olive groves, some of 
 which had been producing wealth for centuries, were de- 
 stroyed, being literally taxed to death. 
 
 Nothing is more conducive to health, contentment and 
 energy than plenty of windows for light and ventilation 
 in the homes in which human beings must rest and eat 
 and sleep, yet in some of the countries of Europe, even to 
 this day, windows are taxed; hence in such countries as 
 few windows as possible are placed in houses occupied 
 by working men, and huts in which tens of thousands of 
 peasants are living have no windows at all. It is evident 
 that such a tax reduces the wealth-producing power of 
 those by whom it must be directly or indirectly paid. 
 
 Again, farmers for instance cannot produce wealth 
 with which to pay taxes without teams, cattle, agricul- 
 tural implements and household furniture. Yet in huJi- 
 dreds of thousands of instances the Russian tax gatherer 
 on his annual rounds ruthlessly strips the peasant of 
 these tools of his trade, and in this way whole commun- 
 ities are often pauperized. The goose which lays the 
 golden egg is thus destroyed by taxation. 
 
 Everywhere, even in this country, people are crowded 
 into ugly, inconvenient and unsanitary buildings. Every- 
 where the man who, risking loss of capital in doing so, 
 erects upon his land a dwelling, a bam, a storehouse, or a 
 factory, or opens up a farm, or makes any other kind of 
 improvement, is a public benefactor. Yet we punish 
 him for thus employing labor on land previously unused, 
 by increasing his taxes. We fine him for making his land 
 useful to mankind, Before he improves the land, he 
 
NATURAL TAXATION. 243 
 
 pays the government in the form of a tax a certain sum 
 of money for its exclusive possession ; as soon as he ceases 
 to be a dog in the manger and does something with it 
 of benefit to the public, something which gives additional 
 value to all the land in the neighborhood, we reward him 
 for his enterprise by doubling his taxes. 
 
 A hard working farmer moves into a sparsely settled 
 region, buys 100 acres of vacant land from some specu- 
 lator owning perhaps thousands of acres of adjoining 
 imused land, and opens up a farm. The new comer re- 
 ceives a hearty welcome from those who have settled 
 there in advance of him. All of them are eagerly looking 
 forward to the time when, with increase of population, 
 will come better roads, schools, transportation facil- 
 ities and the thousand and one economic and social ad- 
 vantages of a compactly built community, but the spec- 
 ulator's consent must first be obtained. Such consent 
 having been secured, at the cost perhaps of half or more 
 of the settler's meagre capital, the government then steps 
 in, and by taxing his improvements, compels him to pay 
 three or four timeS' as much every year for using the land 
 as the speculator paid for holding it in idleness. 
 
 Ask the owner of any vacant lot surrounded by hand- 
 some buildings in a city, why he allows such valuable 
 land to remain idle, and his reply will probably be that 
 in his judgment non-use of it pays better than use. As 
 it is now he can afford to let it lie idle, since the energy of 
 those who improve adjoining lands will, year by year, add 
 to its value without risk or exertion on his part. Would 
 this so often be the case if improvements were untaxed 
 and the deficit made up by an increase in the land value 
 tax? 
 
 It can thus b^ shown by numberless illustrations that 
 
244 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 a tax on improvements on land discourages industry and 
 enterprise, and encourages idleness and stagnation. And 
 this is also the case as to taxes levied upon chattels com- 
 ing within the definition of personal property. If it 
 were not so, why do enlightened communities some- 
 times, for instance, exempt from taxation fine stock used 
 for breeding purposes? Such an exemption is merely a 
 remission of the fine which would otherwise be imposed 
 on the owner for importing the stock. The fine is remit- 
 ted on the theory that the community is benefitted by 
 having the stock brought in. But would not the com- 
 munity be benefitted also by an increase in the stocks of 
 goods of its merchants, by an increase in the capital of its 
 banks, by an increase in the labor-saving machinery used 
 by its farmers, by an increase in the number of looms 
 and spindles in the factories? Why not then remit the 
 fine imposed by taxation upon these things also, and in 
 fact upon everything produced by labor which is useful 
 in the production of wealth? 
 
 A tax on improvements, or on personal property, not 
 only violates the canons of natural taxation, by dis- 
 couraging the production of wealth, and by placing un- 
 necessary burdens upon enterprise, but it does so also 
 because it is a tax which can not be collected impartially 
 or with any degree of fairness between individuals. This 
 is especially true as regards all attempts to tax credits, 
 whether evidenced by bonds or promissory notes or other- 
 wise.* On this point Mr. Shearman, in Natural Tax- 
 ation, wrote as follows: 
 
 "If anything in human experience as applied to meth- 
 ods of taxation is settled, it certainly is the fact that 
 
 *"It makes liars and perjurers of all who are subject to its 
 operations, as shown in the following illustrations : Some years 
 ago a returned missionary took up his abode in a town of about 
 
NATURAL TAXATION. 245 
 
 taxation upon personal property never can be made a 
 success. Taxes can be raised from personal property 
 no doubt; for large sums of money are thus raised; but 
 that they cannot be levied with any reasonable approach 
 to accuracy or equality is demonstrated, not only by 
 conclusive reasoning, but by the more conclusive fact 
 that they have never been thus levied. It is not for 
 want of earnest and long sustained effort that the failure 
 of this system of taxation has come to pass. For centu- 
 ries the effort has been made ; and for at least six centu- 
 ries it was backed by all the power of a government which 
 commanded the whole civilized world, and which armed 
 its tax-gatherers, not with the paltry weapons of oaths 
 and penalties, but with the more substantial powers of 
 indiscriminate search, the lash, the rack, the thumb- 
 screw, the gridiron, and the cross. The Roman empire 
 
 10.000 inhabitants in Ohio. His entire fortune, amounting to 
 the munificent sum of $3,000, was loaned at 5% interest. When 
 the time for preparing the assessment rolls came around, he was 
 , furnished by the tax assessor with the usual blanks to be filled 
 out and sworn to, in which he was required to list and appraise, 
 among other things, his household furniture and library, and 
 also all money loaned on mortgage or otherwise. He was an 
 honest and truthful man. His furniture and library had cost 
 about $1,800, which he, with some qualms of conscience, how- 
 ever, appraised at $500, on the theory that while it was really 
 worth more, it would not bring more at forced sale. He also 
 made affidavit to the simple fact that he had $3,000 loaned on 
 mortgage security, and that this credit was worth $3,000. How 
 could he, with the fear of God in his heart, do otherwise? Now 
 while there were in this town one or two millionaires, and num- 
 bers of people worth more than a hundred thousand dollars each, 
 and scores of residences in which the books and furniture were 
 worth from five to ten thousand dollars, yet the assessment rolls 
 that year showed that this poor missionary was living in the 
 most expensively furnished house in the place, and that he was 
 one of the largest lenders of money which it afforded. The tax 
 rate was 2i%, hence the missionary was able to net 2J% interest 
 on his loan. He had the poor satisfaction of knowing, however, 
 that of all the people in that town who had filled out and sworn 
 to an assessment blank, he was the only one who had not delib- 
 erately committed perjury. It is safe to say that instances like 
 this can be duplicated in every community in the United States 
 where a single honest rendition of personal property for taxes 
 can be found, even if this story js not literally true in all re-^ 
 gpects, 
 
246 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 fell to pieces under the pressure of this vain effort to reach 
 personal property by taxation. ***** 
 
 "Gibbon mentions, quite as a matter of course, that fath- 
 ers murdered their children on a large scale, principally as 
 a result of fear of tax-gatherers ; that racks and scourges 
 were freely used; that the approach of the tax-gatherer 
 'was announced by the tears and terrors of the citizens;' 
 and that false returns were punished with horrid deaths, 
 as being both 'treason and sacrilege' (History Chapter 
 XIV. and XVII.). 
 
 "That which all the tremendous power of Rome in 
 its grandest days failed to accomplish, that which the 
 infernal tortures of Spain could not accomplish, when it 
 beheaded hundreds, burned thousands, and massacred 
 tens of thousands, letting loose a brutal soldiery in a 
 vain struggle to tax the Netherlands, American farmers 
 are still apparently convinced that they can accomplish 
 by distributing blank forms, administering long oaths, 
 and threatening penalties of fifty per cent. How far 
 they have succeeded, governors, assessors, and tax com- 
 missions in New York, Ohio, Maryland, West Virginia, 
 and many other States, have set forth again and again, 
 lamenting the utter failure of the system. Their com- 
 plaints have become monotonous in their uniformity. * 
 
 "The result of the widespread maintenance of these 
 taxes is to fill the land with liars and perjurers. In 
 some States the business of perjury is mostly confined 
 to the assessors ; who regularly make returns which they 
 know to be false, but cannot make true. In others, 
 such as Ohio, Vermont, Connecticut, all the Southern 
 States and most of the Wetsern States, perjury is the 
 business of the tax-payers. Their scrupulous consciences 
 in many cases find a way of escape by omitting in fact 
 to take the oath which they sign ; and they are innocent 
 of everything except lying. The delicately conscien- 
 tious get some one to sign for them; and where an oath 
 is absolutely required a considerate notary certifies to 
 the oath before it is taken; after which, of course, it is 
 not taken at all. On surveying the whole field, how- 
 
' NATURAL TAXATION. 247 
 
 ever, one's faith in American truthfulness is cheered, and 
 we entertain large hope for the future of humanity. For 
 it appears that where blanks are diligently circulated 
 and oaths insisted upon, the average man will return ten, 
 if not fifteen per cent, of his personal property; whereas, 
 in the absence of this appeal to piety, he will return 
 nothing at all. -1: * * * jn one town (in New 
 York) the proceeds of a single auction sale of cattle, be- 
 longing to one resident, amounted to $360,000; while the 
 whole assessment of personal property in that town was 
 $28,850; 'a sum very much less than that obtained for 
 one cow.' 
 
 "The assessors say: 'A large percentage of all the per- 
 sonal property assessed is found entered on the rolls to 
 women, minor heirs, lunatics, who cannot watch with the 
 eagle eye of business men, or to trustees or guardians.' 
 In some towns these classes held more than one-half of 
 all the personal property on the assessment roll. Two 
 women, residing in the village of Batavia, were assessed 
 for more personal property than all the individuals in the 
 neighboring city of Rochester, with a population of 70 - 
 000. In one town a girl, mentioned in the asessment as 
 a lunatic, was assessed $5,000 for personal property, 
 which the assessor stated was the full amount of her per- 
 sonal estate. All over the State 'the amount of the as- 
 sessment depends more on the will, craft, conscience (or 
 want of conscience) of the party assessed than upon the 
 law or its enforcement.' 
 
 "The state of affairs has grown worse with each suc- 
 ceeding year. In 1892 a ridiculous law was passed, much 
 lauded by the governor, requiring applicants for reduc- 
 tion of assessment to make oath that they had not in- 
 curred debts in the purchase of non-taxable property, 
 or for the purpose of avoiding taxation. It ought to have 
 been entitled: 'An act to punish truthfulness and to re- 
 ward perjury.' 
 
 "Experienced assessors in every State say that the 
 most honest returns of property are always made by the 
 poorer classes, and the most inadequate returns by mil- 
 lionaires ; while widows who have no experience in bus- 
 
248 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 iness, and trustees who represent widows and orphans, 
 are taxed upon every dollar that they own, 
 
 "The experience of California furnishes perhaps the 
 latest example of the utter failure of all schemes for tax- 
 ing personal property to work out anything like an ap- 
 proximation to justice. 
 
 "In 1879 a new constitution was adopted. * * * 
 Under this constitution and these laws, not only were 
 bonds, money, and credits made taxable, without any 
 deduction on' account of debts, except from credits, and 
 then only such debts as are due to residents of the State 
 of California; but holders of stock in corporations were 
 avowedly and intentionally subjected to double taxation: 
 first, upon the corporate property, and again upon the 
 capital stock, which is merely their evidence of title to 
 that property. It was supposed, alike by the friends and 
 enemies of the new constitution, that under its operation 
 personal property of every description would be thor- 
 oughly reached, and at any rate, that whatever was by 
 chance overlooked would be more than made up by 
 double taxation upon that which was found. The actual 
 result has been to falsify all the predictions of both the 
 friends and enemies of the constitution; for it has done 
 almost none of the good or evil which was anticipated; 
 for the reason that the capacity of the patriotic taxpayer 
 to commit perjury has been altogether underestimated. 
 Some of the results are positively ludicrous. 
 
 "If the assessment returns are to be believed, in nine 
 tenths of California there is not a pound of butter; in 
 four-fifths of the State the sheep do not produce any 
 wool ; fifty counties have quantities of beehives, but only 
 fpur have any honey; personal property is vanishing 
 from San Francisco; loans of money are becoming un- 
 known in the rest of the State; municipal bonds of all 
 kinds are not held within the State to an amount equal 
 to one-tenth of those outstanding; and finally, money 
 has been smitten by a pestilence, two-thirds of all that 
 was there before the adoption of the constitution having 
 already taken to itself wings, and showing no signs of 
 returning. ******** 
 
 "The general result has been that the proportion of 
 
NATURAL TAXATION. 249 
 
 personal property to the whole assessed value of property 
 has steadily fallen from 50 per cent in 1861, to 34 
 per cent in 1874, 26 per cent in 1880, and 13J per 
 cent in 1894. * * * * While improvements upon 
 land in San Francisco increased about one-third in six 
 years, money fell off more than two-thirds, and other 
 personal property nearly one-third. In the rest of the 
 State, which is mainly agricultural, the ^^alue of improve- 
 ments increased nearly one-half ; personal property, other 
 than money, increased nearly one-sixth; while the loss 
 of money among the farmers, though severe, did not com- 
 pare with the affliction which befell the capitalists of San 
 Francisco. The general result was to reduce the share of 
 San Francisco in the State tax from 40 per cent to 30 per 
 cent. In other words the City paid 25 per cent LESS, 
 and the farmers 16 2-3 per cent MORE. This result ha<= 
 continued ever since. * * * 
 
 "According to unanimous testimony, the city of Bos- 
 ton is so fortunate as to possess a board of assessors in 
 whose honesty and ability every one has confidence, 
 and who are fanatical believers in the taxation of personal 
 property. These assessors are armed by law with al- 
 most despotic powers of search and with absolutely des- 
 potic powers of valuation. They can ransack every 
 man's books; they can disregard all the evidence, when 
 they have finished. After exhausting a-1 their powers of 
 inquiry, they are allowed to meet in secret, to go through 
 a process of arbitrary assessment, fitly known by the 
 name of 'dooming.' Their return of details for the year 
 1889 showed that the whole amount of taxable property, 
 which they were actually able to discover, was $39,000,- 
 000, exclusive of bank stock. Being dissatisfied with 
 this estimate, which was all that was justified by any 
 facts which they could state, they proceeded to multiply 
 it four and a half times by a mere guess. In their doom- 
 ing chamber they guessed that personal property, other 
 than bank stock, ought to be valued at §186,000,000; 
 and the citizens of Boston were compelled to pay taxes 
 upon that amount. Could anything be more monstrous 
 or more absurd than a system of taxation which, even 
 when administered by phenomenally honest and cQm> 
 
250 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 petent men, produces such results? * * * * ^\. 
 most the whole of the things visible to Boston assessors 
 consisted of merchadise and machinery. Taxes upon 
 these, of course, if equally distributed, simply increased 
 the cost of goods to consumers, just as excise duties on 
 whisky increases the cost of whisky to drinkers. But it 
 is manifest, from the arbitrary increase made by the as- 
 sessors, that these taxes were not equally distributed, and 
 therefore one large section of taxpayers was robbed for 
 the benefit of the other section. For unequal taxation 
 upon producers makes it impossible for those who are 
 taxed beyond their just share to recover such excess 
 from their customers ; while those who are taxed below 
 their share recover all which they have paid under 
 strictly equal taxation. It follows that those who are 
 taxed most are simply plundered, under forms of law, 
 for the profit of their competitors who are taxed least. 
 If Havemeyer and Spreckles were the only refiners of 
 sugar, and both were taxed equally upon their produc- 
 tion, both would recover the tax from their customers. 
 But if Havemeyer should be taxed, while Spreckels went 
 free, Spreckles could undersell Havemeyer, who would 
 be practically robbed for Spreckles' benefit. * * * * 
 "In Illinois an even more drastic method prevails. A 
 Board of Equalization, if of the opinion that the valuation 
 of any county is too low, increases everybody's taxes 
 fourfold, on the assumption that all have made false re- 
 turns dlike. Thus the conscientious taxpayer is made to 
 feel that virtue must indeed be its own reward." 
 
 The poorer classes, including the small farmer and the 
 modest home owner in town or city, are those who suffer 
 most from any maladjustment of the powers of govern- 
 ment. For not only are the rich better able to stand the 
 losses resulting from it, but it is easier for them to evade 
 or ward off the ill effects of legislation which violates the 
 natural law. This is nowhere more manifest than in 
 matters of taxation. Thus, the buildings and improve- 
 ments of small farmers and home owners in moderate cir- 
 
NATURAL TAXATION. 251 
 
 cumstances everywhere approach a certain degree of uni- 
 formity, and the approximate value of improvements of 
 this class is a matter of common knowledge. It is, there- 
 fore, difficult to under-appraise them for taxation. Not 
 so, however, as regards the palaces of the rich and the im- 
 mensely valuable improvements in the cities. Again, 
 in the country, every one has more or less knowledge of 
 his neighbor's business, of the livestock which he owns 
 and the amotmt of money which he may have loaned out, 
 etc. This is not the case in cities and towns ; hence tax 
 assessors in small places are more likely to list a greater 
 percentage of personal propert}"^ than in larger com- 
 munities. In point of fact experience shows that this is 
 always so, and the burden of this species of taxation falls 
 with greater weight upon the country than upon the town, 
 \ipon the man of small means than upon the man of 
 large means. Not only so, but the man in moderate cir- 
 cumstances cannot afford, like the millionaire, to spend 
 time and money, legitimately or otherwise, on tax asses- 
 sors and boards of appraisement for the purpose of secur- 
 ing a small rendition and low assessment of his property. 
 And so in every State in the Union, notwithstanding all 
 kinds of legislation to prevent it, the greater a man's 
 possessions in stocks and bonds and personal property 
 generally, as well as in improvements on land, the less 
 in proportion are the taxes which he pays on property of 
 this kind, compared with the man of moderate means. 
 While the tax collector is sometimes able to list thirty 
 or forty per cent of the poor man's wealth in personal 
 property and improvements, he is compelled to let the 
 rich man off on far better terms. 
 
 As shown in previous chapters, a tax on rent, or in 
 other words, a tax on land alone, according to its value 
 
252 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 without reference to improvements, is a tax on privilege. 
 It is merely the taking by the government of a por- 
 tion of the tribute paid for the privilege of employment, 
 which would otherwise go to the individuals; while 
 a tax on the products of industry is, in effect, 
 the levying of a fine on enterprise. Sinee in probably 
 nine cases out of ten, a greater percentage of the wealth of 
 rich men consists in the ownership of privilege — of valu- 
 able land, or of stocks and bonds based on land,* than 
 in the ownership of buildings and improvements on land 
 and personal property, any scheme of taxation which 
 tends to lessen the tax on privilege works, as a general 
 rule, directly in the interest of large property owners, and 
 directly against the interest of small ones. On the aver- 
 age the more valuable the land, the less valuable in pro- 
 portion are the improvements which rest upon it. Thus 
 in a small place a mechanic puts up a thousand or fifteen 
 hundred dollar house on a five hundred dollar lot, while 
 in the best residence portions of a city, the ground on 
 which a handsome dwelling is built usually costs as much 
 if not more than the building itself, and in the business 
 districts, this is almost invariably the case. In New 
 York, for instance, as already mentioned, land values on 
 Manhattan Island, exclusive of improvements, are as- 
 sessed at twenty -eight hundred million dollars, while im- 
 provement values are assessed at only eighteen hundred 
 millions and in that city there are comparatively few 
 buildings which are as valuable as the land on which they 
 stand. As to the farmer, the less valuable the land which 
 he cultivates, the more valuable in proportion are the 
 improvements and personal property upon it, including 
 the value of the work done in reducing the land to culti- 
 
 *This statement is conclusively proven by Mr. Shearman in 
 "Natural Taxation," 
 
NATURAL TAXATION. 253 
 
 vation. This is always the rule when land in actual cul- 
 tivation only is considered, but it cannot apply when 
 much of the farmer's land is unimproved, and when he is 
 in fact more of a land speculator than a farmer. 
 
 It is thus evident that every one, the value of whose 
 personal property and improvements exceeds the value of 
 his land, will be directly benefitted by the transfer of 
 taxes from the products of labor to land alone, or, in other 
 words, by the remission of fines upon industry, and the 
 consequent increase of taxes on privilege. That this 
 would result in the reduction of the direct taxes of an 
 overwhelming majority of the land owners of this coun- 
 try, including the farmers, is clearly shown in the work 
 on Natural Taxation already referred to.* 
 
 Indirect taxes, such as those raised by means of a 
 tariff on imported goods, and those levied through the 
 internal revenue department of this country, are col- 
 lected impartially from all consumers, rich and poor 
 alike; but such taxes involve enormous waste, and bear 
 with crushing weight upon the small property owner as 
 well as upon the poor who have no property at all. The 
 merchants who sell goods which have been taxed by this 
 method, must collect from the consumer not only the 
 amount originally paid the government on the article 
 taxed, but enough more to provide a profit for himself 
 and for all who have previously handled it, on the addi- 
 tional outlay of capital thus required. This, in connec- 
 tion with attempts to tax wealth generally, has the effect 
 of reducing the purchasing power of wages in this country 
 
 *The subject of this chapter is so thoroughly and interestingly 
 covered in Shearman's "Natural Taxation." that nothing 
 more than a mere outline of the single tax will be attempted in 
 this work. 
 
254 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 15% or more.* In other words, if we could abolish in- 
 direct taxation and all taxes levied upon the products of 
 industry, without in any way shifting the burden upon 
 consumers, the income of all workers would in effect be 
 increased at least 15% from this cause alone. 
 
 Our present method of raising public revenues is well 
 characterized by Mr. Shearman as "crooked taxation." 
 It is crooked, because, while based in some instances on 
 the theory apparently of making those who have the 
 most pay the most, in practical operation it compels 
 every citizen, whether a property owner or not, to con- 
 tribute to the support of the government, not according 
 to his ability to pay, nor according to benefits received, 
 but according to the number of mouths he must feed and 
 the number of backs he must clothe. For the effect of all 
 attempts to tax wealth is to increase the prices of things 
 taxed, or the amount paid for the use of them. In the 
 long run, and on the average, the consumer or the user 
 reimburses the property owner for all taxes paid by the 
 latter on the things which the former uses or consumes. 
 The tax on a building, for instance, is taken into account 
 in fixing the rent of the tenant, as much so as the cost of 
 insurance, repairs and janitor service. As a general rule, 
 an additional tenement will not be put up in any locality 
 until the demand is strong enough to enable the owner to 
 collect sufficient rent to cover taxes on the building as 
 well as interest on the cost of it. Hence tenants pay the 
 taxes assessed against tenement-house improvements. 
 So also, if it were possible to tax credits with any degree 
 of uniformity, rates of interest would rise, and users of 
 capital borrowed would in effect pay the taxes levied 
 against lenders. 
 
 *S?e Natural TftKWion, Chapter U, 
 
NATURAL TAXATION. 255 
 
 Not only is the present system of taxation crooked, in 
 that it enables those who in the first instance pay taxes 
 on wealth to largely shift the burden upon those who 
 must use or buy the articles taxed, but, in the very nature 
 of things, such taxation falls with crushing effect upon 
 the poor, as compared with its effect upon the rich. This 
 is so because taxes must always be paid out of the tax- 
 payer's possible savings. The average working man in 
 the United States, taking into account the time lost in 
 involuntary idleness, earns but about $300 a year.* Of 
 this amount, he uses, say, $295 for support of himself 
 and family (little enough, surely), leaving possibly $5 a 
 year to lay by for old age! If no taxes were levied on 
 the products of industry, i. e., on wealth, and if taxes 
 were so levied that the burden could not be shifted, the 
 laborer's income, and all incomes derived from labor, 
 would, as shown by Mr. Shearman, be advanced 15% or 
 more. In other words, the average working man could 
 live just as comfortably then on $255 a year as he can now 
 on $295. He could just as easily save $45 year then as 
 he can save $5 a year now. His possible savings would 
 be increased ninefold. He could save money nine times 
 as fast. The burden of taxation at present, therefore, 
 is so adjusted as to take nine-tenths or more of the pos- 
 sible savings of the average workingman, or perhaps one- 
 sixth of his entire income. 
 
 When we think of the taxpayers of a community, we 
 usually leave out of consideration the heaviest tax-pay- 
 ers of all, the people who own no taxable property. We 
 lose sight of the truth in this connection because of our 
 crooked system of taxation; it is unwittingly, yet skil- 
 fully, arranged to increase the burdens of the poor to the 
 
 *See "Natural Taxation;" also Carrojl D. Wright's "Practical 
 Socjology,'! 
 
256 THE PROBLEM OP THE UNEMPLOYED. XVII 
 
 benefit of the rich, without either rich or poor suspecting 
 that such is in fact the case. 
 
 Take another illustration : The direct taxes of a farmer 
 worth ten thousand dollars, who has an income of a thous- 
 and dollars, are, say, $100 a year. He can live comfort- 
 ably on $800. His possible savings, therefore, amotmt 
 to $200 annually, one-half of which is consumed in the 
 payment of direct taxes; hence his net savings amount 
 to $100 a year. He has a neighbor worth twice as much, 
 or twenty thousand dollars, whose direct taxes are there- 
 fore twice as great, or $200. Suppose this neighbor's in- 
 come to be twice as great also, or $2,000 a year. The 
 neighbor can also live comfortably on $800 a year; his 
 possible savings, therefore, are $1,200, of which $200, or 
 only one-sixth, is consumed in the payment of direct 
 taxes, and his net savings amount to $1,000 a year. The 
 burden of direct taxation upon the farmer worth ten 
 thousand dollars is therefore ten times as heavy as upon 
 the farmer worth twenty thousand dollars. The latter, 
 although worth but twice as much, can live as well as the 
 former and yet save ten times as much. As has been 
 well said, "The poverty of the poor is their destruction." 
 
 If comparisons along the lines indicated above be ex- 
 tended so as to include incomes of a million dollars and 
 upwards, it will be seen that the burden of taxation 
 often bears upon the man with a small income a thousand 
 and sometimes ten thousand times heavier than upon 
 millionaires and multi-millionaires. The result of this 
 crookedness is to render it more difficult for the poor, 
 and less difficult for the rich, to accumulate savings than 
 would otherwise be the case. This to some extent ex- 
 plains the fact that while the number of those who have 
 large fortunes is rapidly increasing in America, the per- 
 
NATURAL TAXATION. 257 
 
 centage of the total population who^have no taxable 
 property at all is increasing much faster. 
 
 It may be said in reply to what is stated above, that 
 an overwhelming majority of workingmen would con- 
 tinue to spend all they made as fast as made, no matter to 
 what extent wages were advanced; but even so, a per- 
 manent increase in the purchasing power of wages would 
 nevertheless make it easier for the thrifty workingman 
 to save. More therefore would save. The number of 
 property owners wotdd be increased and the foimdations 
 on which good government must rest would be broadened. 
 At present extraordinary strength of character is neces- 
 sary to enable one to support himself and family, and 
 save anything on $300 a year. The few who are thus 
 endowed usually rise above their fellows and become em- 
 ployers and managers themselves. The causes of in- 
 creasing discontent in the ranks, however, cannot be 
 safely ignored simply because privates who deserve pro- 
 motion have the chance of attaining it. 
 
 Should the present ratio of increase of tenants on 
 farms and in the cities and towns be maintained for a 
 few decades longer, less than one per cent of the families 
 of America will soon own the land on which the other 
 ninety-nine per cent must live. It is evident that the 
 mildly restraining powers of a free government will be 
 uterly incapable of coping with the forces of discontent 
 which the house of want will then marshal against the 
 house of have. And unfortunately this kind of discontent 
 is intensified rather than alleviated by common schools 
 and the spread of intelligence generally. Hence, just in 
 proportion as we approach the conditions referred to, 
 government by injunction, martial law and methods of 
 like character will become more and more frequently 
 17 
 
258 THE PROBLEM OF THE UMEMPLOYED. XVII 
 
 necessary. A "strong government" must in the end ap- 
 pear, which will habitually ignore all constitutional guar- 
 antees of individual freedom. Was not something of 
 this kind recently seen in Colorado? 
 
 It is evident that methods for raising the public rev- 
 enue, which waste so much in the collecting, which put a 
 premium upon fraud and perjury, which impose fines 
 upon industry, which shift the burden from the rich to 
 the poor, and tend to steadily lessen the size of the prop- 
 erty-owning class, cannot conform to the natural law. 
 But it is claimed in some quarters that there is no natural 
 law pertaining to taxation; that nature has given no 
 intimation of any plan by which means for satisfying the 
 increasing social or governmental wants of mankind can 
 be obtained without waste, confusion and injustice. Can 
 this be so when all human progress is the result of the 
 effort of man to ascertain the natural law, be it moral or 
 physical, and conform his actions to it? In no other way 
 does he conquer nature ; in no other way can he conquer 
 himself. 
 
 Man's relation to his fellow-men, and to the land on 
 which all must live, are such that government is neces- 
 sary. It is necessary not only to prevent the strong 
 from imposing upon the weak, but to enable man to rise 
 above the tyranny of physical environment and most ef- 
 fectively subject to his use the forces of the universe. 
 Government, for instance, enables him to lay out and 
 improve highways, without which he could never have 
 risen from the savage state. It enables him to dot the 
 seacoast with lighthouses and life-saving crews, to warn 
 the mariner and the farmer of approaching storms, to 
 conserve life and health by public sanitary measures, 
 and at a minimum of effort to provide means of educa- 
 
NATURAL TAXATION, 259 
 
 tion through pubHc schools and means of communication 
 through public mails. Government is necessarily some- 
 thing more than the big policeman, whose duties, it is 
 claimed by the laissez /aire school of economists, should 
 end with the preservation of order. Government is in 
 effect a great co-operative organization, actively engaged 
 even now in assisting men in the production of wealth. 
 And it is more than probable that, with increase of in- 
 telligence and improvements in morals, the functions of 
 government will be largely extended, and an immense 
 saving of human energy thus effected which would other- 
 wise be wasted in misapplied efforts and senseless com- 
 petition 
 
 To enable government to best serve the people in the 
 constantly extending sphere of its activities, a constantly 
 increasing revenue is necessary. Since this revenue is to 
 be used for the benefit collectively of all the people, 
 would not the ideal fund from which it should be drawn 
 by taxation be a fund produced collectively by all the 
 people? If there is such a fund, if taxes can be so ad- 
 justed as to be drawn entirely from it, would it not seem 
 as though this fund had been created for this very pur- 
 pose? Wovild not the natural law clearly indicate that 
 this fund, produced by the common energy- and enter- 
 prise of all, ought first to be used by the government for 
 the benefit of all, before drawing from funds produced by 
 individual effort ? 
 
 In land values, we have in all respects a fund of the 
 character above indicated. 
 
 The value which a certain tract of land has, exclusive 
 of all improvements on it, depends not on what its owner 
 does, but upon what the people collectively do. If they 
 settle around it and improve adjoining lands, they col- 
 lectively create and bestow upon this particular tract 
 
260 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 additional values; if they move away from it, if the pop- 
 iilation of the neighborhood decreases, the value of the 
 land decreases also. And when public revenues are ex- 
 pended in its vicinity in the improvement of streets and 
 highways and in the maintenance of good schools and 
 good government generally, the land is thereby directly 
 enhanced in value. And as population and the needs of 
 government increase in any community, the land value 
 fund of that commimity automatically increases in like 
 proportion in accordance with an apparently precon- 
 ceived plan to supply in this way a fund with which to 
 meet the growing wants of government. 
 
 If nature has decreed that the values attaching to land 
 shall ultimately be appropriated by taxation for the com- 
 mon benefit of the people who in common create them, 
 then none of the evils connected with attempts to tax 
 wealth* which have been pointed out should flow from 
 the taxation of land values. In point of fact a tax on 
 land alone according to its value, and not in excess of 
 economic rent, can never give rise to such evils. For 
 such a tax is merely the appropriation by the government 
 of tribute money which would otherwise be appropriated 
 by individuals, t But let us test the matter in the con- 
 crete. 
 
 The first step to be taken in carrying out the single tax 
 program is to secure the passage of a law authorizing 
 any city or town or other political subdivision of a State, 
 on the vote of a majority of its inhabitants, to exempt 
 from taxation for local purposes personal property and 
 improvements on land, the deficit resulting from such 
 
 ♦The meaning of wealth as used in this chapter and elsewhere 
 in this work must not be confused with the broader popular 
 definition of the word. For its economic definition, see page 11. 
 
 •fSee Chapter IV on the Nature of Rent. 
 
NATURA,L TAXATION. 261 
 
 exemptions to be made tip by an increase in the tax on 
 land values.* This method of taxation can be clearly 
 illustrated in the case of the City of Houston, Texas, in 
 which land values and improvement values are already 
 separately assessed. In one column of the assessment 
 rolls of that city is placed the value of each tract of land, 
 and on the same line and in the next column is shown the 
 value of the improvements, if any, on it. In 1904, the 
 total land values amounted to $19,797,076, the improve- 
 ment values to $7,891,750, and the personal property 
 values to $6,720,835, real estate being assessed at about 
 60% of its market value. The tax levy was 2%. If no 
 taxes had been laid on personal property and improve- 
 ments on land, then, in order to have raised a revenue for 
 the city government of $686,593, the amount obtained 
 in 1904, it would have been necessary to have levied a tax 
 of 3J% on land values alone, provided the absurd custom 
 of assessing property for less than its market value had 
 been continued. 
 
 Let us see how the change described above would have 
 worked in Houston. The well-to-do merchant or pro- 
 fessional man in that city lives in a dwelling house ap- 
 praised on the tax rolls say, at $5,000, the appraised 
 value of the lots on which it stands being $6,000. At 
 present the tax on both land and improvements is 2% of 
 $11,000, or $220 a year; had the change proposed been 
 made in 1904, the tax on this property would have been 
 3i% on $6,000, the land value alone, or $210 a year. 
 This merchant's tax on his home would therefore have 
 remained practically unchanged. He owns, however, 
 vacant lots which are also appraised at $5,000 and on 
 
 *Laws of this character have been adopted in New Zealand 
 and New South Wales, and in many cities and towns in these 
 colonies, no tax is levied on personal property or improvements 
 on land. 
 
262 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 which the tax at present is $100 a year; under the new 
 system, however, it would be 3i% of $5,000, or $175, an 
 increase of 75%. The taxes on unused land would there- 
 fore have been nearly doubled. 
 
 Again, take the case of a mechanic struggling to pay 
 for a $2000 home. On an average, in cases of this kind, 
 it will be found that such a home consists of a dwelling 
 house worth two or three times as much as the land on 
 which it stands; for the man with a small income who 
 tries to become a home owner in a city is usually forced 
 into a comparatively remote suburb where he can obtain 
 a cheap lot.* Say his house is worth $1,333 and the lot 
 $666. At present his tax is $40; if land values alone 
 were taxed it would be but $24 a year. 
 
 Next, visit the business portions of the city and con- 
 sider the seven consecutive blocks embracing seventy 
 lots 50x100 feet each, fronting on Main Street between 
 Commerce and Rusk Here is the most valuable strip 
 of land in the city. All the banks, the largest hotel and 
 the largest retail stores are located upon it. In 1904 the 
 land values of these seventy lots were appraised on the 
 assessment rolls at $2,426,670 and the improvement 
 values at $620,050. The assessed value of the land was 
 thus four times greater than the assessed value of the im- 
 provements on it. The taxes assessed against this prop- 
 perty amounted in 1904 to $60,934; under the change 
 suggested, it would have been 3i%on $2,426,670, the 
 land valuation alone, or $84,930, an advance of $23,079. 
 The taxes on this land, on which the most expensive im- 
 provements in the city are found, would therefore have 
 been increased 40% if all improvements and all personal 
 
 *In small villages the dwelling house improvement is often 
 tenfold and over more valuable than the lot which it occupies. 
 
NATURAL TAXATION- 263 
 
 property had been exempt from taxation.* In very large 
 cities the difference between the land value of business 
 lots and the value of the improvements on them is even 
 more marked, the rule being, the more valuable the land 
 in any locality, the less valuable in proportion are the 
 improvements on it. On Wall Street land has sold at 
 the rate of fifteen naillion dollars an acre. It is hardly 
 possible to conceive of a building costing fifteen million 
 dollars erected on a lot two hundred and ten feet square. 
 It is thus apparent that the effect of levying taxes for 
 local purposes on land values only in the City of Houston 
 would be to increase the taxes of the rich and lessen the 
 taxes of the poor ; since the rich are always the owners of 
 the most valuable real estate. The poor do not own bus- 
 iness lots in cities. "j" As in the City of Houston so every- 
 where else, the exemption from taxation of improve- 
 ments on land and of personal property would mean, in 
 nine cases out of ten, if not ninety-nine out of a hundred, 
 an increase in the taxes of those who own valuable real 
 estate, and a decrease in the taxes of those who own real 
 estate of little value. Under a system of natural taxation 
 four-fifths or more of the public revenues would undoubt- 
 edly come from land in cities and towns used for business 
 purposes and as sites for expensive residences, and from 
 enormously valuable lands used by railroads and public 
 utility corporations under franchises granted by the gov- 
 ernment. 
 
 *The data used in this connection relating to the City of 
 Houston and to Harris County, Texas, are from the official 
 records. 
 
 tit is not claimed by the political economist, as a reason for 
 abolishing all taxes on wealth and the concentration of taxation 
 on land values, that it would be to the interest of the poor. It 
 is simply claimed that such would be the effect of it, regardless 
 of any question of justice or expediency. 
 
264 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 What is stated next above is even more strikingly 
 seen when comparison is made between real estate own- 
 ing farmers and real estate owners in cities and towns. 
 Harris County, for instance, in which the City of Houston 
 is situated, has an area of 1,300,265 acres, of which less 
 than 100,000 acres are in actual cultivation, the remain- 
 ing 1,200,265 acres, held for speculative and investment 
 purposes, being used only as grazing land. It is safe to 
 say that 10% or less of the families of Harris County own 
 90% or more of the wealth of that county, and that they 
 also own 90% or more of the real estate in the county on 
 on which taxes would be increased by exempting wealth 
 from taxation. Thus, about 2,500 persons own the 100,- 
 000 acres of land in cultivation in the county. This land, 
 exclusive of improvements, is worth, if valued like ad- 
 joining wild lands, about twelve dollars per acre, or 11,- 
 200,000. The average value of it as shown on the assess- 
 ment rolls, inclusive of improvements, is about nine dol- 
 lars per acre.* Twenty-seven individuals, including two 
 or three estates, however, own eighteen and a half of the 
 first twenty business lots, 50x100 feet each, on Main 
 Street, to which reference has been made, counting con- 
 secutively from Commerce towards Rusk, the remaining 
 one and one-half lots being owned by two banking corpor- 
 ations These twenty lots, embracing in the aggregate 
 less than three acres of land, are worth $60,000 apiece, 
 exclusive of improvements, or $1,200,000 in all, — as 
 much as the 100,000 acres owned by the 2,500 farmers. 
 Less than one and a half per cent of the total number of 
 owners of the 100,000 acres in cultivation and the owners 
 
 *Most of this land is appraised for taxation at three dollars 
 
 ger acre, and it is estimated that the one-tenth of it nearest 
 [ouston is worth as much as' the remaining nine-tenths more 
 remote from the city. 
 
NATURAL TAXATION. 265 
 
 of the three acres of business lots above referred to, own 
 as much of this land, when the value of it is considered, as 
 the remaining 98i%. Under a land value tax 1^% of 
 these land owners would pay more than the other 982%. 
 The direct taxes of the 98 J % would be reduced about 
 50%, while the taxes of the other 1 J% would be increased 
 40%. If the land value tax were so increased as to en- 
 able the government to appropriate all economic rent col- 
 lectible by taxation, not one in twenty of the 2,500 farm- 
 ers referred to would pay any direct taxes at all. And 
 besides this, all of them would be relieved from every 
 species of indirect taxation. 
 
 Not only so, but in Harris County there would be 
 1,200,000 acres of absolutely free land. This free land 
 would begin within a half dozen miles of the center of 
 the City of Houston, since under natural conditions 
 niney-nine hundredths of the population of the county 
 would be concentrated in and around the city, within an 
 area not exceeding twelve miles square. Such concen- 
 tration of population would mean for every farmer 
 greatly improved sanitary conditions, no mosqiiitoes, 
 thorough drainage, splendidly macadamized roads, tele- 
 phones and electric light and power service, a trolley line, 
 or its equivalent, within less than half a mile from every 
 home, first class schools and churches, and a high degree 
 of educational and social advantages. This would mean 
 a vast increase in comfort and happiness and opportun- 
 ities for enjoyment and improvement on the part of the 
 2,500 farmers and their wives and children, for man is an 
 animal with social instincts. It would also mean a vast 
 increase in the amount of wealth which they could pro- 
 duce. All the energy now wasted in hauling crops and 
 fertilizing materials unnecessary distances and over poor 
 roads would be avoided, and in many other ways labor 
 
266 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 on these lands within the very boundaries of a large 
 center of population would be much more effective in the 
 production of wealth. 
 
 In thus considering in the concrete the effects which 
 would result from levying all direct taxes on land values 
 alone in the city and county named above, we find that 
 none of the objections which necessarily flow from all 
 attempts to tax wealth would apply. In the first place 
 as seen from the illustrations given, such a system of tax- 
 ation would constantly tend to lessen instead of constant- 
 ly tending to increase the burden of small property own- 
 ers ; it would tend to distribute wealth among the many 
 rather than to concentrate it among the few. 
 
 Again, no taxpayer would have the slighest inclination 
 to commit perjury. It would beimpossible for him to con- 
 ceal his land, and it would be useless for him to place any 
 value upon it. The improvements on any particular 
 tract of land not being considered in determining its 
 value, tax assessors and boards of appraisers would fix 
 the values of all lands by reference to maps showing the 
 location of the property, and without regard to the own- 
 ership of it. In fact, no other course would be possible, 
 since excuses could not be trumped up for placing differ- 
 ent values upon tracts in the same neighborhood having 
 in fact the same value. Every property owner would be 
 able to compare the valuation placed upon his own land 
 with that placed upon his neighbor's, unembarrassed by 
 questions relating to the value of improvements ; hence 
 almost absolute uniformity of taxation would be secured, 
 and this, too, at a minimum of expense, since vast hordes 
 of tax-gatherers and tax officials could be dispensed 
 with.* 
 
 *As bad as the present crooked system of taxation is, it is 
 often made worse by intentionally unfair discriminations in favor 
 
NATURAL TAXATION. 267 
 
 Another objection to the present system of taxation, 
 which can not be urged against the single tax, is, that laws 
 passed for the purpose of enforcing the payment of taxes 
 on wealth can always be used in individual cases by un- 
 scrupulous officials for blackmailing purposes and as in- 
 struments of oppression. This is so as to every law which 
 for any reason can not be enforced according to its letter. 
 Scandalous illustrations of this truth are constantly com- 
 ing to light in connection with spasmodic attempts to 
 regulate the liquor traffic and suppress gambling and the 
 social evil. Thus, the law provides in plain language 
 that all property, including credits, stocks of goods, 
 money on hand or in bank, owned on the first day of Jan- 
 uary, shall be appraised at its full value, and in Houston 
 the total tax for State, county and city purposes amounts 
 to 2|% on thg assessed valuation. The law also provides 
 for an assessment sheet on which the property owner is 
 required to list his property and answer numerous ques- 
 tions relating to his private affairs; this sheet to be 
 filled out, signed and sworn to by him under penalty of 
 fine and imprisonment in case of refusal to do so. In 
 point of fact, no tax assessor in the City of Hou.ston or 
 Harris County would dare to insist on every taxpayer 
 making this affidavit or answering all of these questions 
 
 of large taxpayers. Assessors and boards of appraisers, in many 
 places, habitually permit large tracts of land, not platted into 
 lots and blocks, in and near cities and towns, to be assessed by 
 the acre and appraised often at one-tenth or less in proportion to 
 the appraisement of improved lots of the same valtie and in the 
 same neighborhood. In some states laws have actually been 
 passed requiring unplatted lands, though worth thousands of 
 dollars per acre, to be assessed as ordinary farming lands. Such 
 legislation, like nearly all legislation relating to taxation, is os- 
 tensibly passed in the interest of farmers, as though men who 
 grow wheat on lands worth fifty dollars per acre had landed 
 interests in common with those who grow city lots on land worth 
 sometimes tens of thousands of dollars per acre. 
 
268 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 So the actual making of affidavit is almost invariably 
 waived ; yet the officer has the right to insist on its being 
 made. He can do so with impunity in individual cases, 
 and use the power which the law confers upon him to 
 annoy and blackmail the taxpayer. 
 
 As regards stocks of goods owned by merchants, ma- 
 chinery owned by manufacturers, credits and accounts 
 owned by business men and banks, and as regards money 
 on hand in local banks, or loaned by resident taxpayers 
 on local real estate mortgages, it would be possible for 
 laws of the character referred to in the preceding para- 
 graph to be enforced with a considerable degree of ef- 
 ficiency and impartiality. With the assistance of a reas- 
 onable number of spies, informers and accountants, the 
 books of local banks and business men could be exam- 
 ined, and also the county mortgage records ; the truth of 
 renditions could thus be verified and perjury committed 
 in swearing to assessment sheets could often be easily 
 detected. 
 
 If laws providing for the listing and taxing of personal 
 property and credits are proper, why are they not en- 
 forced? Why do not grand juries indict tax-assessors 
 for accepting renditions of property on assessment sheets 
 which have not been actually sworn to? Why are not 
 prominent business men indicted for even signing assess- 
 ment sheets in which they deny having money on hand 
 or on deposit on the first day of the preceding January, 
 or of owning on that day accounts or credits of any 
 character whatever? The fact is, no tax official who 
 should earnestly attempt to enforce the law and secure 
 the punishment of those who seek to evade its provisions 
 by subterfuge and perjury would ever be re-elected to 
 his office, shotild he live to be a candidate for it again. 
 
NATURAL TAXATION. 269 
 
 Indeed, if it were even remotely suspected in Houston 
 to-day that a serious attempt to enforce the law would 
 be made, millions of dollars would be permanently 
 withdrawn from the banks of the city before the 
 first day of next January, millions of dollars in 
 loans would be peremptorily called in by bankers and 
 others, business in the city would be paralyzed, and utter 
 ruin would overtake most of its business men. To en- 
 force the law as well as it could be enforced would mean 
 that in Houston the banks and trust companies were com- 
 pelled to pay from $20,000 to $50,000 apiece per annxim 
 for the privilege of doing business in that place and loan- 
 ing money to its citizens. It would mean that the whole- 
 sale dealers of Houston were required to pay from one 
 to five thousand dollars a year or more for the privilege of 
 carrying on wholesale mercantile enterprises and selling 
 goods on credit, and it would mean that manufacturers 
 were also fined in the same manner and to the same ex- 
 tent. 
 
 As already stated, not one of the evils necessarily ac- 
 companying all attempts to tax wealth to which attention 
 has been called in the preceding pages can be urged 
 against the system of natural taxation referred to in this 
 chapter. Not only would taxpayers be relieved from all 
 attempts on the part of dishonest tax officials to extort 
 blackmail, not only would unfair discriminations between 
 individuals be rendered practically impossible, but no one 
 would then be deterred by fear of increase of taxation 
 from employing labor in putting improvements on land. 
 
 Neither would there be any shifting of the burden of 
 taxation; consumers would reap the entire benefit in 
 the reduction of prices, and tenants in the reduction of 
 rents. For instance, it costs less than 25 cents a gallbn 
 to manufacture whisky, yet the article sells at wholesale 
 
270 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 for $1.75 a gallon and upwards. This difference between 
 the cost of production and the price paid by the whole- 
 sale dealer results from the fact that whisky is taxed by 
 the Federal Government 90 cents a gallon. The con- 
 sumer therefore pays this tax, together with the addi- 
 tional profit received by middlemen on account of the 
 additional capital required by reason of the tax, to handle 
 the thing taxed. Can anyone doubt but that if the tax 
 were removed, consumers would buy whisky for less than 
 30 cents a gallon, instead of paying f 1.75 and upwards? 
 It is thus evident that consumers, and not manufactur- 
 ers and dealers, would reap the benefit of the exemption 
 from taxation of personal property. 
 
 It is equally clear that the renter, and not the land- 
 owning landlord, would also in the long run obtain all the 
 advantages resulting from exempting buildings and im- 
 provements on land from taxation. Take even the mod- 
 ern office building as an illustration, which occasionally, 
 though very rarely in large cities, exceeds in value the 
 land which it occupies. At first thought one might con- 
 clude that owners of properties of this kind would reap 
 the benefit, and not the tenants who occvr^py them. For 
 the first year or two such might be the case, but the own- 
 ers of equally valuable unimproved or but partially im- 
 proved lots in the same neighborhood, could not afford 
 to have their taxes doubled, without any increase of in- 
 come from the property taxed, as would be the case if 
 no taxes were levied on improvements and personal prop- 
 erty. They would, therefore, be compelled to put up 
 improvements themselves of a character suitable to the 
 locality. There being no taxes on buildings, it costing 
 no more to hold a tract of land with a suitable improve- 
 on it than to hold it in partial or absolute idleness, land 
 owners would respond more quickly than under present 
 
NATURAL TAXATION. 271 
 
 conditions to an increased demand for tenements. Com- 
 petition among landlords for tenants would therefore re- 
 duce rents. This phase of the subject has already been 
 referred to at some length.* 
 
 Reflection will satisfy the reader that a tax on land 
 valties can not be shifted, so long as it does not exceed 
 the economic rent of the land ; that it is always a straight 
 tax, and never a crooked one; that it must always be 
 paid by the land owner in the end, and never by any one 
 else. This is so, because it is an appropriation by the 
 government of a portion of the economic rent, or a por- 
 tion of the increase in the value of land, which would 
 otherwise be appropriated by the land owner. A 
 tax on buildings increases the amount which must 
 be paid for the use of them; a tax on money or 
 on credits (if it could be collected) would increase rates 
 of interest; a tax on food, clothing, or any other article 
 of consumption, increases its cost to the consumer; but 
 a tax on land values has just the opposite effect, it 
 simply makes land cheaper. It increases the difficulty 
 of holding land in idleness ; and if the tax were gradually 
 increased this difficulty would be gradually increased 
 also, until the time would finally come when all idle 
 land would be free land; and hence the paradox that 
 the wealthy would be the least benefited by abolishing 
 taxes on wealth. 
 
 If the revenue needed for local purposes were raised in 
 Houston under a system of natural taxation, no one 
 would for this reason abandon or give away valuable un- 
 used land, even though taxes on vacant lots were at once 
 doubled. The influx of capital to Houston and the in- 
 crease of population and prosperity which such a change 
 wotdd bring about would create a greater demand for 
 
 ♦See pages 804 and 805, 
 
272 THE PROBLEM OF THE UNEMPLOYED. XVII 
 
 land for actual use. The resultant increase of land 
 values would at first offset the effects on the price of land 
 of increased land taxation. Suppose the City of Houston 
 for instance could advertise to the world that within 
 her gates manufacturing, homestead, dwelling-house and 
 business improvements and goods of merchants, banking 
 and insurance capital, and all those things which are 
 wanted in every prosperous community, were exempt 
 from taxation ; that no one in Houston would be fined for 
 employing labor, by having his taxes increased, and that 
 the merchant or business man in that city without a polit- 
 ical pull could not be blackmailed by tax gatherers, or 
 placed by them at a disadvantage with respect to his com- 
 petitors, would not the employing capitalist be attracted 
 by such conditions, and, other things being equal, would 
 he not prefer to locate and do business in such a place? 
 It can thus be seen, if the single tax were applied grad- 
 ually, that losses otherwise resulting from it in individual 
 cases would be largely diffused among all. But as to the 
 very few (less than 10% of all land owners)* whom the 
 single tax would at first render somewhat less wealthy, 
 even they would be richly recompensed, for they and their 
 children would become participants in the privileges of a 
 civilization, the security and splendor of which can never 
 be approached so long as some men are allowed to extort 
 
 *This statement is not exaggerated. Let the reader consider 
 the real pecuniary interests of fanners, home owners and land 
 owners generally within his observation. In nine cases out of 
 ten the trifling amount of economic rent enjoyed by them is 
 nothing compared with the benefits which they would obtain 
 from the doubling and quadrupling of wages, and especially is 
 this so when the interests of children are taken into account-^ 
 wages being used in this connection of course in the economic 
 sense of the word. 
 
Natural taxation. 273 
 
 tribute from other men for merely consenting to the use 
 of a bounty of nature.* 
 
 *Mr. Shearman in "Natiiral Taxation" has shown conclusively 
 that the revenue which would be derived from the appropria- 
 tion of ground rent by taxation would be amply sufficient to 
 satisfy ^ the needs of government. The reader is referred to 
 that work for further information upon the subject of this 
 chapter. 
 
 18 
 
APPENDIX. 
 THE RIGHT TO THE USE OF THE EARTH. 
 
 THE following is from Mr. Herbert Spencer's "Social 
 Statics," Chapter IX, on "The Right to the Use 
 of the Earth:" 
 
 "1. Given a race of beings having like claims to pur- 
 sue the objects of their desires — given a world adapted 
 to the gratification of those desires — a world into which 
 such beings are similiarly born, and it unavoidably fol- 
 lows that they have equal rights to the use of this world. 
 For if each of them 'has freedom to do all that he wills 
 provided he infringes not the equal freedom of any other,' 
 then each of them is free to use the earth for the satis- 
 faction of his wants, provided he allows all others the 
 same liberty. And conversely, it is manifest that no 
 one, or part of them, may use the earth in such a way as 
 to prevent the rest from similarly using it; seeing that 
 to do this is to assume greater freedom than the rest, 
 and consequently to break the law. 
 
 "2. Equity, therefore, does not permit property in 
 land. For if one portion of the earth's surface may 
 justly become the possession of an individual, and may 
 be held by him for his sole use and benefit, as a thing to 
 which he has an exclusive right, then other portions of 
 the earth's surface may be so held; and eventually the 
 tvhole of the earth's surface may be so held; and our 
 planet may thus lapse altogether into private hands. 
 Observe now the dilemma to which this leads. Suppos- 
 ing the entire habitable globe to be so enclosed, it fol- 
 lows that if the land owners have a valid right to its sur- 
 face, all who are not land owners have no right at all to its 
 
 276 
 
276 APPENDIX. 
 
 surface. Hence, such can exist on the earth by suffer- 
 ance only. They are all trespassers. Save by the per- 
 mission of the lords of the soil, they can have no room 
 for the soles of their feet. Nay, should the others think 
 fit to deny them a resting place, these landless men 
 might equitably be expelled from the earth altogether. 
 If, then, the assumption that land can be held as prop- 
 erty, involves that the whole globe may become the priv- 
 ate domain of a part of its inhabitants; and if. by conse- 
 quence, the rest of its inhabitants can then exercise their 
 faculties — can then exist even — only by consent of the 
 land owners ; it is manifest, that an exclusive possession 
 of the soil necessitates an infringement of the law of equal 
 freedom. For men who cannot 'live and move and have 
 their being' without the leave of others, cannot be equally 
 free with those others. 
 
 "3. Passing from the consideration of the possible to 
 that of the actual, we find yet further reason to deny 
 the rectitude of property in land. It can never be pre- 
 tended that the existing titles to such property are legit- 
 imate. Should any one think so, let him look in the 
 chronicles. Violence, fraud the prerogative of force, the 
 claims of superior cunning — these are the sources to 
 which those titles may be traced. The original deeds 
 were written with the sword, rather than with the pen ; 
 not lawyers, but soldiers, were the conveyancers; blows 
 were the current coin given in payment; and for seals, 
 blood was used in preference to wax. Could valid claim 
 be thus constituted? Hardly. And if not, what be- 
 comes of the pretentions of all subsequent holders of 
 estates so obtained? Does sale or bequest generate a 
 right where it did not previously exist ? Would the orig- 
 inal claimants be nonsuited at the bar of reason, because 
 the thing stolen from them had changed hands? Cer- 
 tainly not. And if one act of transfer can give no title, 
 can many ? No : though nothing be multiplied forever, 
 it will not produce one. Even the law recognizes this 
 principle. An existing holder must, if called upon, sub- 
 stantiate the claims of those from whom he purchased 
 Or inherited his property; and any flaw in the original 
 
APPENDiX. 277 
 
 parchment, even though the property should have had a 
 score of intermediate owners, quashes his right. 
 
 " 'But Time,' say some, 'is a great legahzer. Imme- 
 morial possession must be taken to constitute a legal 
 claim. That which has been held from age to age as 
 private property, and has been bought and sold as such 
 must now be cosidered as irrevocably belonging to in- 
 dividuals,' To which proposition a willing assent shall 
 be given when its propounders can assign it a definite 
 meaning. To do this, however, they must find satisfac- 
 tory answers to such questions as, How long does it take 
 for what was originally a wrong to grow into a right? 
 At what rate per annum do invalid claims become valid ? 
 If a title gets perfect in a thousand years, how much 
 more than perfect will it be in two thousand years ? — and 
 so forth. For the solution of which they will require a 
 new calculus. 
 
 "Whether it may be expedient to admit claims of a 
 certain standing, is not the point. We have here nothing 
 to do with the considerations of conventional privilege 
 or leg;islative convenience. We have simply to inquire 
 what is the verdict given by pure equity in the matter. 
 And this verdict enjoins a protest against every ex- 
 isting pretension to the individual possession of the 
 soil; and dictates the assertion, that the right of man- 
 kind at large to the earth's surface is still valid; all 
 deeds, customs, and laws notwithstanding. * * * 
 
 "9. No doubt great difficulties must attend the re- 
 sumption, by mankind at large, of their rights to the 
 soil. The question of compensation to existing pro- 
 prietors is a complicated one — one that perhaps cannot 
 be settled in a strictly equitable manner. Had we to 
 deal with the parties who originally robbed the human 
 race of its heritage, we might make short work of the 
 matter. But, unfortunately, most of our present land- 
 owners are men who have, either mediately or immedi- 
 ately — either by their own acts, or by the acts of their 
 ancestors — given for their estates, equivalents of honestly 
 earned wealth, believing that they were investing their 
 savings in a legitimate manner: To justly estimate and 
 
278 APPENDIX. 
 
 liquidate the claims of such, is one of the most intricate 
 problems society will one day have to solve. But with 
 this perplexity and our extrication from it, abstract 
 morality has no concern. Men having got themselves 
 into the dilemma by disobedience to the law, must get 
 O'jt of it as well as they can; and with as little injury to 
 the landed class as may be. 
 
 "Meanwhile, we shall do well to recollect, that there 
 are others beside the landed class to be considered. In 
 our tender regard for the vested interest of the few, let 
 us not forget that the rights of the many are in abeyance; 
 and must remain so, as long as the earth is monopolized 
 by individuals. Let us remember, too, that the injustice 
 thus inflicted on the mass of mankind is rnn injustice of 
 the gravest nature. The fact that it is not so regarded 
 proves nothing. In early phases of civilization even 
 homicide is thought lightly of. The suttees of India, to- 
 gether with the practice elsewhere followed of sacrificing 
 a hecatomb of human victims at the burial of a chief, 
 shows this ; and probably cannibals consider the slaugh- 
 ter of those whom 'the fortune of war' has made their 
 prisoners, perfectly justifiable. It was once also uni- 
 versally supposed that slavery was a natural and quite 
 legitimate institution — a condition into which some were 
 born, and to which they ought to submit as to a Divine 
 ordination; nay, indeed, a great proportion of mankind 
 hold this opinion still. A higher social development, 
 however, has generated in us a better faith, and we now, 
 to a considerable extent, recognize the claims of hu- 
 manity. But our civilization is only partial. It may 
 by-and-by be perceived, that Equity utters dictates to 
 which we have not yet listened; and men may then 
 learn, that to deprive others of their rights to the use of 
 the earth, is to commit a crime inferior only in wicked- 
 ness to the crime of taking away their lives or personal 
 liberties. 
 
 "10. Briefly reviewing tne .argument, we see that the 
 right of each man to the use of the earth, limited only 
 by the like rights of his fellow-men, is immediately de- 
 ducible from the law of equal freedom. We see that the 
 
APPfiNDIX. 279 
 
 maintenance of this right necessarily forbids private 
 property in land. On examination all existing titles to 
 such property turn out to be invalid; those founded on 
 reclamation inclusive. It appears that not even an equal 
 apportionment of the earth amongst its inhabitants could 
 generate a legitimate proprietorship. We find that if 
 pushed to its ultimate consequences, a claim to exclusive 
 possession of the soil involves a land-owning despotism. 
 We further find that such a claim is constantly denied by 
 the enactments of our legislature. And we find lastly, 
 that the theory of the co-heirship of all men to the soil, 
 is consistent with the highest civilization ; and that, how- 
 ever difficult it may be to embody that theory in fact. 
 Equity sternly commands it to be done." 
 
 Commenting on the above, Mr. Henry George in "A 
 Perplexed Philosopher," a remarkably interesting and 
 amusing book, says: 
 
 "Briefly stated, the argument of this chapter is — 
 
 "1. The equal right of all men to the use of land 
 springs from the fact of their existence in a world adapted 
 to their needs, and uito which they are similarly born. 
 
 "2. Equity, therfore, does not permit private prop- 
 erty in land, since that would involve the right of some 
 to deny to others the use of land. 
 
 "3. Private property in land, as at present existing, 
 can show no original title valid ir justice, and such 
 validity cannot be gained either by sale or bequest, or 
 by peaceable possession during any length of time; 
 
 "4. Nor is there any mode by which land can justly 
 become private property. Cultivation and improve- 
 ment can give title only to their results, not to the land 
 itself. 
 
 "5. Nor coiild any equitable division of land with 
 the consent of all, even if it were not impossible that 
 such a division could be made, give valid title to private 
 property in land. For the equal right to the use of land 
 would attach to all those thereafter bom, irrespective of 
 any agreement made by their predecessors. 
 
 "6. There can be no modification of this dictate of 
 
280 APPEirlt)i5t. 
 
 equity. Either all men have equal rights to the use of 
 the land, or some men have the just right to enslave 
 others and deprive them of life. 
 
 "7. As a matter of fact, nobody does really believe 
 in private property in land. An Act of Parliament, even 
 now, supersedes title-deeds. That is to say, the right of 
 private ownership in land only exists by general consent ; 
 that being withdrawn, it ceases. 
 
 "8. But the doctrine that all men are equally entitled 
 to the use of land does not involve communism or social- 
 ism, and need cause no serious change in existing arrange- 
 ments. It is not necessary that the State should manage 
 land; it is only necessary that rent, instead of going, as 
 now, to individuals, should be taken by society for com- 
 mon purposes. 
 
 "9. There may be difficulty in justly liquidating the 
 claims of existing land-owners, but men having got 
 themselves into a dilemma must get out of it as well as 
 they can. The landed class are not alone to be consid- 
 ered. So long as the treatment of land as private prop- 
 erty continues, the masses suffer from an injustice only 
 inferior in wickedness to depriving them of life or personal 
 liberty. 
 
 "10. However difficult it may be to embody in fact 
 the theory of the co-heirship of ali men to the soil, equity 
 sterniy demands it to be done." 
 
CORNELL UNIVERSITY LIBRARY 
 
 3 1924 055 818 870 
 
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 DATE DUE 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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