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Cornell University Libral'^ 
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 The land & yourself .... 
 
 3 1924 013 950 831 
 
ONE SHILLING, Net 
 
 The Land is the mother of all wealth 
 
 THE LAND 
 
 AND YOURSELF 
 
 ,4 
 
 popular discussion of the Land Question and of the 
 proposals advanced for its solution 
 
 / '3 
 
 HORACE B. SAMUEL M.A., Barrister-at-Law 
 Author of "The Insurance Act and Yourself" 
 
 With Preface by J. I. MACPHERSON, M.P, 
 
 )ncise History of the Land Question 
 
 atlineof Land Policy in Ireland, Germany and Australasia 
 
 nalysis of Suggested Land Reforms 
 
 xposure of the Unfairness of the Single Tax 
 
 xposition of the present practice of Rating 
 
 apter on Small Holdings 
 
 )NDON: THOMAS MURBY & CO., 6, BOUVERIE STREET, E.G. 
 
A MOST USEiOIL BOOK AT THE PRESENT TIME. 
 
 Ready end of April. 
 2nd Edition, Cloth 2/- net; Postage 2d. 
 
 Germany to the Present 
 Day: 
 
 A Short History 
 
 BY 
 
 A. W. HOLLAND 
 
 With Foreword by NORMAN ANGELL 
 
 This book is not a History of Germany in the ordinary 
 sense. It does indeed give briefly a sketch of the develop- 
 ment of that country, being fuller in dealing with the 
 important events of the nineteenth century and especially 
 in outlining its remarkable growth since 1871. This sketch 
 and also a short accouut of the constitution of Modern 
 Germany are necessary to the book which aims at showing 
 the many links between Great Britain and Germany ; their 
 alliances in time of war, the close relationships between their 
 ruling families, their influence on each other in science, art 
 and literature, and their similarities in language, tastes and 
 ideas. Stress is laid upon the fact that, like ourselves, the 
 Germans are a commercial people, and that this is a factor 
 making very strongly for peace between them. The book 
 concludes with a list of readable books on German life, 
 history, literature and modern conditions. 
 
 THOMAS MURBY & Ca., 6. BOUVERIE ST.. LONDON. E.C. 
 
THE LAND AND YOURSELF 
 
The original of tliis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013950831 
 
PREFACE 
 
 I WAS much attracted by the publication in this 
 series of a very careful and lucid exposition of the 
 Insurance Act from the pen of Mr. Samuel, and I 
 was consequently all the more gratified when he 
 gave me the opportunity of reading this book on the 
 Land Question before its issue to the public. It is 
 common knowledge that of all political topics the 
 Land Problem is the only one that has perennial 
 freshness. Every aspect of it interests; and any- 
 one who has spoken on current politics in any part 
 of the country knows that the discussion of it never 
 fails to arouse attention. The reason for this is 
 simple. Land is the commodity which is at the 
 root of life and controls it, socially, politically and 
 industrially. It is unique in its limitation ; it was 
 in existence at the foundation or beginning of any 
 State; it was, for State purposes, the first-known 
 "property" always limited and always constant, 
 the possession of which carried with it, directly or 
 indirectly, burden as well as privilege. It follows 
 that every political party in the State must have in 
 its programme — ^and this is especially true when the 
 number of citizens increases, as well as their indus- 
 try, while the area of land remains the same — some 
 solution of the Land Problem. That solution takes 
 many forms — a re-adjustment of burdens by rat- 
 ing and taxing; a breaking up of monopoly, 
 
vi PREFACE 
 
 control of and ownership by the State; a nniore 
 varied and extensive division of it among the 
 citizens. And the course of political events in 
 recent years has forced public opinion to demand a 
 solution of the problem in one or other of these 
 ways. It must become more free to meet the 
 demands of life and industry; its use must be en- 
 couraged, its abuse penalised; and every party in 
 the State, whatever its antecedents may have been, 
 has come to the conclusion, more or less willingly, 
 that its existence depends on attacking the problem 
 along the lines of making the land more of a 
 " common heritage." 
 
 I know of no book except this one which deals 
 with the general problem within so small a com- 
 pass. It is true that Mr. Samuel approaches it with 
 avowed Liberal sympathies, and no one can com- 
 plain, as that seems to be the spirit in which all 
 parties, except on questions of method and detail, 
 would fain approach it. He deals briefly and effec- 
 tively with the use and meaning of rates and taxes 
 as applied to land, pointing out, with the aid of an 
 illuminating chapter dealing with the problem of 
 the Australasian dominions, their effect from the 
 revenue and the policy point of view. There is a 
 penetrating chapter on the " Single Tax " — that tax 
 which is a boon or a bogey according to one's line 
 of approach or sympathy. From an economic and 
 practical standpoint, he condemns it in forcible 
 language as being but the stupid fallacy of an illo- 
 gical doctrinaire. There are those who defend it, 
 however, and defend it vehemently, and Mr. Samuel 
 will, very probably, have to take up the cudgels to 
 
PREFACE vii 
 
 defend himself and his unsparing attitude at the call 
 of those whom he, somewhat audaciously, I think, 
 incites by name and quotation. 
 
 Mr. Samuel does not categorically assert what line 
 of solution his study of the problem suggests to 
 him ; but he inclines to the view that, so far as the 
 rural side of the problem is concerned, its solution 
 will He in the direction of better housing for labourers, 
 together with an economic foothold for bargain- 
 ing, and a division of land into the tenancy system 
 of small holdings which has worked so well and 
 effectively in Scotland, to adjust the balance 
 between the agricultural and industrial elements in 
 the country. As to the urban side, his view is not 
 so precisely formulated; but his analysis of the 
 various policies advocated will well repay a careful 
 perusal. 
 
 Whether he agrees with the views expressed or 
 no, anyone who is interested in the current political 
 life cannot fail to find this book a useful and a 
 profitable one to read. 
 
 J. I. MACPHERSON. 
 
 House of Commons, 
 S.W. 
 
CONTENTS 
 
 Chap. Page 
 I THE PROBLEM OF THE LAND i 
 
 Unique Character of Land — Prime Essential of 
 Human Life — Centre of Other Economic Problems — 
 Land and the Problem of Poverty — ^A Ready-made 
 Utopia — Policy and Revenue Taxes — Inability to Feel 
 — ^Agricultural and Industrial Interests Equally 
 Afiected — Problem of Rack Rent — Land Purchase — 
 Security of Tenure — Holding up Land — Increased 
 Housing Accommodation and Decreased Rents. 
 
 II THE HISTORY OF LAND TENURE AND LAND 
 
 TAXATION i6 
 
 The Feudal Principle — The Monarch and the Land 
 — Security of Tenure — Rack Rent and Civilisation — 
 Long and Short Leases — The Enclosures — Existing 
 Lajid Taxation — Origin of Rates — Complexities of the 
 Leasehold System. 
 
 Ill THE AGRICULTURAL PROBLEM 26 
 
 Problem of the Holding — Large or Small — State 
 Purchase and the Three F.'s — ^Landowners Constitu- 
 tional Antipathy to Small Holdings — Sporting Versus 
 Commercial Interest — Social Value of Land — ^The 
 Tenant's Politics — The Land Agent — Small Holdings 
 Act of 1892 — Substantial Fkilure — Small Holdings 
 Act of 1907 — Compulsory Purchase and Compulsory 
 Hiring— The Two Parties— Working Capital the Vital 
 Question — Irish Land Reforms — Judicially Assessed 
 Rent — The Landlord and Bonus — Scotland — Solving 
 the Problem of Rack Rent. 
 ix 
 
X CONTENTS 
 
 Chap. Page 
 
 IV THE BUDGET OF 1909 AND ITS SIGNIFICANCE 43 
 
 The Cash and the Principle — Taxation of Windfalls 
 — Exploitation of Unworked Mines — Tax on Unearned 
 Increment — Tax on Undeveloped Building Land — 
 Leasehold Reversion Tax — The Two Values of Land 
 — Deliberate Holding up of Building Land — More 
 Building Land for the Market — The Present Owner's 
 Unearned Increment — German Examples — Carica- 
 tured in the Single Tax. 
 
 V THE SINGLE TAX S4 
 
 A Ready-made Millennium — Basis of Collectivism 
 — Theory of Retrospective Title — No Compensation 
 for Confiscation — "All Rent is Unearned Incre- 
 ment" — Draws the Line Nowhere — Mortgagees and 
 their Security — ^Would the Single Tax be a Single 
 Tax? — Land Nationalisation. 
 
 VI THE RATING PROBLEM 67 
 
 The Occupier Chooses — Use-value and Commercial 
 Value — Bonus on the Hoarding of Land— Rating Un- 
 used Land — Lowering the Rate of the Rate — More 
 Houses and Lower Rate — Town and Country — ^The 
 Farmer and the Agricultural Labourer — Stimulus to 
 Building — Land Tax and Building Tax rolled into 
 One — ^VVTio Pays the Rates? — Shifting the Incidence — 
 Existing Contracts — Present Rates a Hostile Tariff to 
 Building — ^Advent of the Sky-scraper — More Accom- 
 modation and Lower Rents — ^More Building — Rural 
 Districts — Penalised Improvements — Practical 
 Di£ScuIties. 
 
 VII LAND TAXES IN AUSTRALASIA 92 
 
 Policy Taxes — Fines on Improvements turned into 
 Premiums — New Zealand — Graduation — Absentee 
 Landlords — Qualified Success — ^Rating on Unim- 
 proved Values— Stimulating the Building Trade- 
 Lowering the Rate— New South Wales— South 
 Australia — Western Australia — Differentiation 
 between Developed and Undeveloped Land- 
 Tasmania — Federal Tax. 
 
CONTENTS xi 
 
 Chap. Page 
 VIII THE PROBLEM OF THE FUTURE 103 
 
 Trisection of Land Reform — ^The Three Depart- 
 ments — Nationalisation — Small Holdings — Purchase 
 and Leasing — Land Value Taxation — Rating Reform 
 — Urban and Agricultural Districts — Imperial Taxa- 
 tion — Bisecting the Land Monopoly— Bisecting the 
 Land Values Scheme — Imperial Taixation — Present 
 Exemption of Undeveloped Agricultural Land — The 
 Fairest Opening — ^Agricultural Labourers and Higher 
 Wages — Necessity and Luxury — The Practical 
 Interest of the Industrial Labourer — The General 
 Taxpayer — Land Value Taxation Pure and Simple — 
 The Ricochet of a Commodity Tax — Tax on Land no 
 such Ricochet — Cannot be Passed on — Necessity for 
 Caution — Decreased Rents. 
 
CHAPTER I 
 
 THE PROBLEM OF THE LAND 
 
 Unique Character of Land — Prime Essential of Human Life — 
 Centre of Other Economic Problems — Land and the Problem of 
 Poverty — ^A Ready-made Utopia — Policy and Revenue Taxes — 
 Inability to Feel — Agricultural and Industrial Interests 
 Equally Afiected — Problem of Rack Rent — Land Purchase — 
 Security of Tenure — Holding up Land — Increased Housing 
 Accommodation and Decreased Rents. 
 
 "Land is the Mother and Labour the Father 
 of all wealth." This maxim from a distinguisiied 
 economist succinctly emphasises the universal 
 importance of the Land Question. For the 
 Land Question, technical though it may be in 
 some of its aspects, is no mere subject for 
 the abstract theorising of political economy. 
 Its more scientific study may no doubt lead 
 one into the mysterious realms of the higher 
 mathematics, but its practical bearing affects 
 directly or indirectly every man, woman and child 
 in the whole community, from the great landowner 
 to the man in the street, from the agricultural 
 labourer to the industrial artisan, and from the most 
 eminent professor of ethics to the most unredeemed 
 scallywag that ever adorned or escaped the criminal 
 dock. 
 
 It is an economic platitude that of all forms of 
 wealth land is the most permanent, the most con- 
 stant, the most limited. The productions of 
 manufacture may be consumed and perish, but 
 land endures for ever with an eternal life proof 
 
 X I 
 
2 THE LAND AND YOURSELF 
 
 against the very caprices of Nature herself. The 
 quantity of a commodity may vary according to the 
 supply and the demand, but the quantity of land in 
 existence is, has been, and always will be, practic- 
 ally the same from the far-off days of the protoplasm 
 to the equally far-ofif days of the superman. We 
 may, perhaps, indeed, give sharper point to our 
 platitude by taking the fantastic illustration of that 
 practically negligible, but none the less theoretic- 
 ally certain period, when the automatic increase in 
 the population has so packed the earth with its 
 teeming trillions that there will, literally speaking, 
 be no more room for humanity. 
 
 It is also equally obvious that, until science has 
 devised some means by which human beings can 
 live either in the sea or in the air, land is one of the 
 prime essentials of human life, inasmuch as every 
 human being other than an aviator, a swimmer or 
 a voyager by water, is using some land, either 
 by his own right or the permission of some other 
 person, every single minute of his whole life. Self- 
 evident, again, is the fact that the use of land is one 
 of the necessary conditions of economic production, 
 whether agricultural or industrial, since crops can 
 only be grown on fields, and even factories would 
 find it impossible to exist if there were no land for 
 them to occupy. 
 
 It thus follows that the system and conditions 
 under which land is held, used, sold, and taxed 
 stand in the closest relation to the whole economy 
 of society. The feudal system, for instance, by 
 which all the land was held from a hierarchy of 
 overlords, starting with the king and finishing in 
 the lord of the manor, in return for various services 
 
THE LAND PROBLEM 3 
 
 in money, men or labour, is an obvious concrete 
 example of the land system forming the very texture 
 of the whole fabric of society. Even in our modern 
 England to-day the ghost of the feudal system still 
 survives in the aristocratic and squirearchal system 
 by which the landowner frequently obtains from his 
 tenant both the financial service of rent and the 
 moral service of social and political allegiance. 
 Touch land and you touch at the same time the most 
 basic elements of the whole social and economic 
 world. Alter for good or for evil the character of 
 the land system and you alter at the same time for 
 good or for evil the whole character of the social and 
 economic system. Solve finally and successfully 
 the problem of the land and you will at the same 
 time have squared the economic circle and settled 
 the social problem. For the essence of the land 
 problem lies in the fact that it is not an isolated 
 problem in itself, but a great central point from 
 which there radiate nearly all the other economic 
 problems. 
 
 Let us take instances. The most general form 
 in which the social question expresses itseK whether 
 in the mouths of agitators or statesmen, cranks or 
 economists, is the problem of poverty, or the 
 economic discomfort occasioned to vast masses of 
 the population by the unequal distribution of 
 wealth. The picturesque figure of the wicked 
 capitalist bloated with the life-blood of hundreds of 
 thousands of honest workmen may no doubt be 
 drawn too crudely to carry universal conviction 
 further than Hyde Park, yet when ;^930,ooo,ooo of 
 the national income is enjoyed by five and a half 
 million persons, while ';<S^9 11,000,000 is divided 
 
4 THE LAND AND YOURSELF 
 
 among the remaining thirty-nine millions of the 
 population, even the most callous observer pauses 
 seriously to reflect. And nowhere does this in- 
 equality, at any rate so far as England is concerned, 
 glare more luridly than in the distribution of the 
 land. When indeed it is remembered that a few 
 thousand individuals own more than a half of the 
 territory of England and Wales, while eight per 
 cent, of the population live in houses with only one 
 bedroom, the economic paradox strikes home with 
 a particular sharp point, and a particularly grim 
 humour. 
 
 It is consequently not surprising that extremists 
 should lose their heads while they find the millen- 
 nium, and vie with each other in their anxiety to give 
 the community a ready-made Utopia while it waits, 
 by the simple device of expropriating all the owners 
 of landed property. And even those cooler brains 
 who cannot bring themselves to believe that 
 Society can, as it were, right itself by a single 
 shake, will not yet be averse at any rate to consider- 
 ing some system of taxation which should act as a 
 gentle stimulus to the quicker circulation and an in- 
 ducement to the less erratic distribution of that land 
 which is, after all, the life-blood of the economic 
 community. 
 
 We may, perhaps, take this opportunity of allud- 
 ing parenthetically to the fact, which we shall sub- 
 sequently deal with at greater detail, that any tax 
 on land can be regarded from two distinct stand- 
 points, viz., the standpoint of a policy tax, or a tax 
 intended to promote the greater freedom and use of 
 land, and the standpoint of a revenue tax, viz., a tax 
 intended to produce a revenue. It is, of course. 
 
THE LAND PROBLEM 5 
 
 obvious that a tax which is overwhelmingly suc- 
 cessful from the point of view of its policy would be 
 correspondingly unsuccessful from the point of 
 view of revenue-raising, and that, conversely, a tax 
 which was overwhelmingly successful from the 
 point of view of revenue-raising, would be corres- 
 pondingly unsuccessful from the point of view of its 
 policy. A protective duty on foreign motor-cars, 
 for instance, would only exclude all foreign motor- 
 cars at the cost of raising no revenue at all, and 
 could, conversely, only raise the maximum of 
 revenue on the assumption that the maximum of 
 foreign motor-cars successfully scaled the tariff 
 wall. 
 
 It will consequently be relevant, when discussing 
 in greater detail the question, of the land taxes, to 
 consider how far they will operate as a policy tax, 
 and how far as a revenue tax. 
 
 So far, however, as the problem of taxation is 
 concerned, the Land Question is again of pressing 
 import. Inasmuch as a certain sum of money has to 
 be raised every year by taxation to defray the vari- 
 ous national necessities and luxuries from Dread- 
 noughts to lunatic asylums, and from soldiers to the 
 recipients of income under the Civil List, it is 
 obvious that each class of the community is 
 financially interested in paying as little as possible 
 and in shifting as much as possible of the burden 
 on to broader or, at any rate, more docile shoulders. 
 The principle which economic statesmanship has 
 professed to employ up to the present time is the 
 classic canon of ^'ability to fay." In practice, 
 however, the maxim of taxing a citizen in accord- 
 ance with his wealth is frequently entangled with 
 
6 THE LAND AND YOURSELF 
 
 the maxim that an indirect tax raises far less opposi- 
 tion than a direct tax of a similar amount, for the 
 obvious reason that it is less acutely felt and that its 
 operation is less visible, so that, according to the 
 phrase of Pitt, it is possible to tax the last rag on a 
 man's back without his feeling it. Let us take a 
 childishly simple instance. If the total exemption 
 from income tax enjoyed by all persons earning an 
 income of less than ;^i6o per year were abolished, 
 and a small income tax were levied on such persons, 
 estimated to bring in the average amount which 
 such persons now pay by way of indirect taxation 
 on such necessities and luxuries of life as beer, 
 tobacco, tea, cocoa and sugar, while the taxes on 
 such articles were abolished, not only the Radical, 
 but even the Tory party would be seriously 
 shocked. For human nature being what it is, the 
 ordinary man feels a less acute sense of oppression 
 in paying ;^2 a year to the State by way of indirect 
 taxation, and, as it were, with scarcely any con- 
 sciousness of paying any tax at all, than he would 
 experience in paying ;C^ per year in visible cash at 
 one fell minute. Thus at present, to give approx- 
 imate figures, ;^ 1 3, 000 ,000 per year is raised by 
 the taxation of beer, no less than ;£'i7,ooo,ooo is 
 raised by the taxation of tobacco, and no less than 
 ;^9,5oo,ooo is raised by the taxation of the articles 
 of the breakfast table. 
 
 We may mention parenthetically that the maxim 
 of "ability to pay" is somewhat brutally violated 
 by the fact that the taxes on the commodities we 
 have mentioned are not graduated according to 
 quality. Thus the workman pays on his tankard 
 of " half-an-half " or his ounce of shag as much, if 
 
THE LAND PROBLEM 7 
 
 not indeed more, tax proportionately than the 
 viveur on his bottle of champagne and his 
 Havana cigar. 
 
 Consequently, when Land Reformers hold out 
 the prospect, if not of a Free Public-House, at any 
 rate of a Free Breakfast Table, and suggest that it 
 will be feasible to remit the taxes raised at present 
 on tobacco, tea, cocoa and sugar, and to make up 
 the amount by a new system of land taxation, it is 
 obvious that, prima facie, the big landowner will be 
 immediately hostile to paying a greater sum by way 
 of taxation than he pays at present, and will think 
 the proposal wicked,- and that, prima- facie, the 
 ordinary labourer will be keenly favourable to a 
 system by which he will pay a less sum of taxation 
 than he pays at present, and will think the reform 
 highly moral. The actual feasibility and economic 
 validity of the suggestion we will consider subse- 
 quently. The point which we would at present 
 emphasise is this : Assuming that taxation is sim- 
 ply imposed to meet the present necessary expendi- 
 ture, and that the cost of collection is not increased, 
 every new tax on land means at the same time 
 a tax off something else. 
 
 Leaving now the purely fiscal aspect of the 
 problem, the problem of the land stands in the 
 closest relation to the problem of agriculture. It is 
 indeed notorious that the decay of agriculture has 
 been one of the most marked features of nineteenth 
 century civilisation in this country. The towns, no 
 doubt, have flourished and flourished monstrously, 
 but only by sucking into their gigantic maws all the 
 stamina and virility of the exhausted countryside. 
 The Small Holdings Acts, to which we shall 
 
8 THE LAND AND YOURSELF 
 
 allude subsequently in greater detail, may to some 
 slight extent have mitigated the evil, yet, taken all 
 round, they have served to benefit rather the retired 
 tradesman than that agricultural labourer for whose 
 benefit they were primarily designed. The signi- 
 ficant fact remains that at the end of the twenty 
 years ending in 1901 the agricultural population 
 had diminished by 300,000, and that the general 
 tendency of the situation is now, to quote the signi- 
 ficant words of Mr. Asquith, " a process of deple- 
 tion at one end and congestion at the other by 
 which every year fresh additions of recruits are 
 being made to the ranks of the casual and 
 unemployed." 
 
 Now, what are the causes of this transformation 
 from an agricultural into an industrial community ? 
 " The accursed monopoly in land," cry some of our 
 enthusiasts, putting their case, in our view, some- 
 what too high. Some consideration, however, will 
 show at once that the causes are more complex. 
 Irrespective of the land system altogether, the 
 whole trend of European civilization has moved 
 away from agriculture and towards industrialism. 
 In France, for instance, where four-fifths of the soil 
 is owned by its occupiers, the tentacles of the great 
 towns have sucked in the agricultural labourer 
 almost if not quite as voraciously as they have in 
 England. Indeed, it stands to reason that the 
 wider range thrown open both to ambition and to 
 pleasure by a big city will automatically attract 
 from the country the most vital bodies and the most 
 energetic brains. Further, so far as the United 
 Kingdom is concerned, the comparatively small 
 scale on which agriculture is conducted has, at any 
 
THE LAND PROBLEM 9 
 
 rate so far as regards some articles of produce, 
 suffered by the rivalry of the new countries of 
 Australasia, America and Canada, which, operat- 
 ing a more virgin soil on a considerably larger 
 scale, have in many cases been able to compete suc- 
 cessfully with the Old Country. Yet even making 
 allowance for these causes, the fact remains that the 
 encouragement until recently given by the legisla- 
 ture to the concentration of large quantities of idle 
 land in a comparatively few hands is responsible for 
 no small amount of agricultural depression and 
 agricultural unemployment. It is notorious that 
 large areas of land which might with advantage be 
 farmed by desirable tenants willing to pay a fair 
 market rent are kept back by owners, who either 
 sit on the property in the hope of being eventually 
 able to hatch a higher price, or preserve it for the 
 purposes of game or ornament for reasons of social 
 prestige or sheer sporting instinct. The extent of 
 this retention of land is conclusively evidenced by 
 the numerous applications that flow in for every 
 farm that is thrown upon the market, and by the 
 frequent abortive endeavours by actual or would-be 
 small farmers to obtain at current market rate new 
 or additional land for agricultural purposes. The 
 evils of this state of affairs are manifest. Not only 
 are many persons thus deprived of the employment 
 which otherwise they would be enjoying, but this 
 swelling of the ranks of the unemployed, some of 
 whom remain in the countryside and some of whom 
 gravitate to the towns, automatically tends to 
 decrease wages and, so far at any rate as agriculture 
 is concerned, to increase prices. Consequently, if 
 a system of land taxation would, as is claimed by its 
 
10 THE LAND AND YOURSELF 
 
 supporters, have the effect of acting as a stimulus 
 to the throwing of held-up land on to the market 
 and to its utilization for agricultural purposes, it 
 follows at once that agricultural employment would 
 be increased, that the pressure on the great towns 
 would be relieved, and that consequently there 
 would ensue both in rural and industrial districts a 
 rise in wages. Every person anxious to be a 
 farmer, but prevented or hampered by existing con- 
 ditions, every agricultural labourer, and every 
 industrial labourer, has thus a direct personal 
 interest in the passing of any measure which would 
 bring about the great ambition of Sir Henry 
 Campbell-Bannerman to make the land of the 
 country ' ' less of a pleasure ground for the rich and 
 more of a treasure house for the nation." 
 
 Apart, moreover, from the problem of the reten- 
 tion of land is the problem of the rack rent. 
 Inasmuch as the ordinary owner of land naturally 
 tends to let it out on business, rather than on 
 philanthropic principles, it follows that he fre- 
 quently requires from his tenant the maximum rent 
 which that tenant can afford to pay. But since the 
 more profit a tenant makes out of a farm, the higher 
 rent he can afford to pay, successful industry in 
 cultivation tends to produce the economic result of 
 a corresponding increase in the rent. The landlord 
 is thus apt in practice to reap in rent a substantial 
 portion of the reward of the tenant's efficiency. It is 
 thus as much economically to the landlord's interest 
 to let his land on a short lease, as it is economically 
 to the tenant's interest to take his land on a long 
 lease. We thus see how important to the agricul- 
 tural problem are the questions of security of tenure 
 
THE LAND PROBLEM ii 
 
 and of fair rent in contradistinction to economic 
 rent. 
 
 We have already seen how the rural problem re- 
 acts on the urban problem, owing to the invasion of 
 the overfed town by the exiles from the starved 
 countryside. Yet apart from this factor altogether 
 the land question in the big cities is in itself acute, 
 and constitutes in itself a serious problem. Large 
 masses of the population are huddled together amid 
 conditions of congested squalor, which unfortu- 
 nately justify only too well the most lurid descrip- 
 tion of picturesque philanthropy. Now, at any 
 rate, one of the causes of this evil is the perfectly 
 logical desire of landlords to extract from their 
 property the maximum of financial gain. In 
 obedience to this desire they frequently hold up 
 land which could be sold or let at a moderate profit, 
 with the perfectly sensible intention of selling or 
 letting it subsequently at a considerably higher 
 profit. The result obviously is that the supply of 
 housing accommodation is diminished, and that the 
 rent of houses is increased. The extent of this 
 practice may conceivably be exaggerated by some 
 Land Reform enthusiasts anxious, as a matter of 
 conscientious partisanship, to emphasise their case. 
 Yet the close relation between the holding up of 
 Land and the Housing Problem is well attested by 
 the Report of the Royal Commission of 1884 on the 
 Housing of the Working Classes, which recom- 
 mended the taxation of site values. We would 
 mention in particular the following passage : — 
 " Landowners can thus afford to keep their land out 
 of the market and to part with only small quantities 
 so as to raise the price beyond the natural monopoly 
 
12 THE LAND AND YOURSELF 
 
 price which the land would command by its 
 position." 
 
 It is thus apparent that if a system could be car- 
 ried into effect by which landowners could not 
 afford to keep their land out of the market, and to 
 part with it only in small quantities there would at 
 once be an increase in housing accommodation and 
 a decrease in rents. 
 
 Closely connected with both the Housing 
 Problem and the Agricultural Problem comes the 
 Rating Problem which directly affects every land- 
 owner, and indirectly every tenant and every lodger 
 throughout the kingdom. The rating problem is 
 technical and so highly complicated that it is quite 
 impracticable to discuss it in any way adequately in 
 this preliminary chapter. The broad principles 
 which we would at present emphasise are that, inas- 
 much as rates are levied not on the market value of 
 land but on the occupied value of land in its actual 
 condition, utilised land is subject to rates, and un- 
 utilised land, even though potentially of the same 
 value as the utilised land, is exempt from rates. 
 Secondly, inasmuch as all improvements send up 
 the occupied value of any property, it follows that 
 so far at any rate as the rates are concerned, the 
 present system encourages the keeping of property 
 in an unimproved condition, and conversely dis- 
 courages raising it to an improved condition. We 
 do not say for a minute that the highly intricate 
 problem of rating can be regarded as clinched by 
 these two considerations. We do suggest that, 
 prima facie, every householder, every farmholder 
 and every builder, throughout the kingdom, should 
 view with sympathy and with interest any readjust- 
 
THE LAND PROBLEM 13 
 
 ment of the present system which aims at lessening 
 or abolishing the bur3en of that part of the rate 
 which falls upon houses or the improved value of 
 property, and at increasing the burden (in some 
 cases nil or next to nil) which falls upon land or the 
 unimproved value of property. When it is remem- 
 bered that such widely different thinkers and 
 speakers as Mr. F. E. Smith and Mr. Outhwaite, 
 Mr. Arthur Balfour and Mr. Hemmerde are all in 
 favour of some reform in the rating system, it will 
 be readily realized that rating reform of some kind 
 or other is essentially in the sphere of practical 
 politics. 
 
 We have thus seen how the broad aspect of the 
 Land Problem is intimately connected with the vital 
 problems of Poverty, Taxation, Agriculture, Un- 
 employment, Housing and Rating. While, how- 
 ever, most persons are unanimous in acknowledg- 
 ing the existence and multifariousness of the 
 problem, the widest disagreement prevails as to the 
 appropriate remedies, a disagreement due hot only 
 to the divergent opinions, but in some cases to the 
 divergent interests of the parties concerned. 
 
 It is the aim of this book to explain the various 
 remedies suggested, to analyse their respective 
 merits and demerits, and to investigate what classes 
 of the community they are likely to benefit, and 
 what classes, if any, they are likely to prejudice. It 
 must, of course, be borne in mind that the various 
 reforms whose adoption is being urged, or which 
 have already been tried, differ largely in their scope. 
 The Single Tax, for instance, or the expropriation 
 of personal ownership of land without compensa- 
 tion, purports to solve the whole economic problem. 
 
14 THE LAND AND YOURSELF 
 
 and when in full operation to provide a ready made 
 Utopia. So, though possibly in a lesser degree, 
 does Land Nationalisation, or the expropriation of 
 personal ownership of land with compensation. 
 The system of land reform exemplified by the Small 
 Holdings Act of 1892 with its machinery for land 
 purchase represents the attempt of the Unionist 
 Party to cope with that agricultural problem, which, 
 as we have already seen, reacts indirectly on the 
 housing piroblem and the unemployment problem. 
 In direct competition with the Tory principle of- land 
 purchase comes the Liberal principle of security of 
 tenure, best exemplified by the Scotch Crofters 
 Acts with their abolition of rack rent and their 
 highly efficient courts for the assessment of rent. 
 Again, the celebrated Budget of Mr. Lloyd George, 
 with its taxation of unearned increment and un- 
 developed land for imperial purposes, endeavours, 
 in a manner which is necessarily tentative and ex- 
 perimental, to lay down the lines on which taxation 
 should be adjusted, with a view both to parti- 
 tioning the fiscal burden on what is thought to 
 be a more equitable basis, and to stimulating the 
 increased use of land both in rural and industrial 
 districts in such a way as to assist the solution of 
 both the agricultural problem and the industrial 
 problem. The present agitation for Rating 
 Reform has the same objects in view. It will, how- 
 ever, be found more practical to keep entirely 
 distinct the ordinary taxation of land for imperial 
 purposes, and that highly special taxation of land 
 for local purposes which is known by the name of 
 rating. In order, moreover, to get the proper focus 
 for inquiry we propose to give a short historical 
 
THE LAND PROBLEM 15 
 
 summary of the land system in this country, and 
 also to make some slight investigation of the results 
 in other countries of that new system of Land Taxa- 
 tion and Land Rating, whose suggested adoption 
 in the United Kingdom is already arousing such 
 vast hopes and such violent panics. We would say 
 finally that while we do not pretend to the ideal 
 aloofness of the professional economist, we hold out 
 this work to the public not so much as a political 
 pamphlet, but rather as a general survey of an ex- 
 tremely complicated problem, written with as much 
 impartiality as is humanly consistent with avowed 
 Liberal sympathies. 
 
CHAPTER II 
 
 THE HISTORY OF LAND TENURE AND LAND TAXATION 
 
 The Feudal Principle — The Monarch and the Land-^Security 
 of Tenure — Rack Rent and Civilisation — ^Long and Short Leases 
 — The Enclosures — Existing Land Taxation — Origin of Rates — 
 Complexities of the Leasehold System. 
 
 The most hide-bound Conservative and the most 
 rabid Reformer are both equally emphatic in their 
 appeal to history to support their respective conten- 
 tions. The former will, for instance, asseverate 
 that any remodelling of existing conditions will 
 play the most unjust and the most vjolent havoc 
 with a system sanctioned by use, and inflict the 
 most outrageous violation on the sacred traditions 
 of the past. The rabid Reformer, again, will assert 
 with equal vehemence that, not only is land subject 
 to a hereditary burden which somehow or other it 
 has managed to shelve, but that all the land in the 
 kingdom is and always has been in law the property 
 of the State. 
 
 It consequently becomes relevant to make some 
 short survey both of the history of land tenure 
 and the history of land taxation. 
 
 The existing system of land tenure dates back 
 to the Norman Conquest and the feudal system. 
 The feudal system, based no doubt on the 
 theory of the ownership of the whole territory 
 by the monarch, consisted in the granting of vari- 
 
 i6 
 
HISTORY OF LAND TENURE 17 
 
 ous parcels of territory by the monarch to the great 
 noblemen, and by the great noblemen to their sub- 
 sidiary hierarchy of dependants in return for 
 various military and other physical services, the 
 amount and scale of the service to be rendered 
 depending on the quality and quantity of the land 
 occupied. It may thus be said with rough 
 accuracy that taxes were for the most part originally 
 paid rather in men than in money, and that land 
 was the main original basis of national taxation. 
 With the progress of time, however, the various 
 physical services were in many cases commuted for 
 money payments, a procedure known by the term 
 scutage. 
 
 But the real origin of the present system of taxa- 
 tion is to be found in the Saladin tithe first started 
 in 1 184, a property tax varying from one-tenth to 
 one-fourth, and charged on the land and on 
 personal property in every parish. 
 
 We may, perhaps, pause a moment in our survey 
 to comment on the theory of many of the Single 
 Taxers that inasmuch as the king was the legal 
 owner of all land at the time of the feudal system, 
 he is so at the present day, and that consequently a 
 policy of wholesale land expropriation would be 
 quite in accordance with the most time-honoured 
 principles of historical equity. The fallacy of this 
 attempt on the part of ultra-modern reformers to 
 take shelter behind the decrepit walls of a bastard 
 feudalism is apparent on the slightest inspection. 
 
 It is obvious that the essence of ownership 
 depends on a right either immediate or eventual to 
 possession. Such a right was never in any of the 
 monarchs of the feudal system for a single minute 
 
i8 THE LAND AND YOURSELF 
 
 (apart, of course, from any cases of a forfeiture or 
 confiscation whicH could be applied with equal 
 facility to any other form of property). The tenure 
 of a feudal landowner was a perpetual tenure, and 
 in practice the King owned the land of the country 
 just as much and just as little as he owned the 
 cattle, the houses, the clothes and the money of his 
 subjects. Certain land, it is true, was never 
 granted by the Crown on any feudal tenure, and was 
 consequently its private property until eventually 
 granted or otherwise disposed of. With, how- 
 ever the sale of its Crown Domain by the 
 Commonwealth in 1663 for the inglorious sum of 
 ';^ioo,ooo, there went with a few exceptions any 
 claim by the Crown to own in its official capacity 
 one inch of territory in the United Kingdom. 
 
 Let us revert now to the original condition of that 
 class of agricultural yeomanry, who, until the 
 United Kingdom became transformed from an 
 agricultural into an industrial community, con- 
 stituted the substantial staple of the nation's 
 manhood. Until the beginning of the fifteenth 
 century, when the rigidity of the feudal system 
 was already beginning to be loosened, the small 
 landowner held land on a system known as socage, 
 paying his rent not in money, but in kind, and by 
 the rendering to his landlord of various services. 
 The most interesting and characteristic feature, 
 however, of this system was security of tenure. 
 For the amount of rent paid, not necessarily in 
 cash, but in kind and in service, was fixed, and so 
 long as the tenant fulfilled his obligations he was 
 immune from expulsion. 
 
 The fifteenth century, however, brought with it 
 
HISTORY OF LAND TENURE 19 
 
 for good or for evil a more elaborate civilisation, 
 and one of the fruits of this elaborate civilisation 
 was rack rent. Rack rent, of course, is rent fixed 
 by bargaining between the parties, and tends in 
 practice to rise in proportion to the energy with 
 which the tenant cultivates his holding and the im- 
 provements which he makes on it. If carefully 
 exacted it is obvious that by raising his rent to just 
 that amount, the payment of which will leave the 
 tenant a bare living profit, the landlord can, with- 
 out any wrongful appropriation, none the less 
 legally enjoy the bulk of the commercial fruits of 
 his tenant's labours. 
 
 We may mention parenthetically in this connec- 
 tion the obvious truths that the shorter the lease the 
 greater the opportunity for rack-renting on the part 
 of a landlord blessed with a sense of financial enter- 
 prise, and that conversely the longer the lease the 
 greater the tenant's chance of reaping the full fruits 
 of his laborious days. This explains why land- 
 lords even now are so willing and tenants are so 
 reluctant to enter into short leases, and conversely 
 why tenants are so willing and landlords are so 
 reluctant to enter into long leases. 
 
 But though the original feudal fixity of 
 tenure had gone, so far as the smallholder was 
 concerned, at the beginning of the fifteenth century 
 there was one important respect in which he 
 differed materially from the modern smallholder. 
 This was the right of pasture on his lord's land, a 
 right which, though apparently devoid of any 
 actual legal basis, had yet behind it all the sanctity 
 of centuries of established usage. 
 
 The sixteenth and eighteenth centuries, however, 
 
20 THE LAND AND YOURSELF 
 
 are marked by the scale and frequency of that 
 system of enclosure, which is one of the most 
 important factors in the agricultural history of the 
 country. The land on which all the yeomen of the 
 village had Seen accustomed to pasture their cattle 
 became appropriated by the landlords to their own 
 purposes. There is, however, a marked difference 
 in principle between the enclosure under the Tudors 
 in the sixteenth century, and the enclosure under 
 the Hanoverians in the eighteenth century. The 
 enclosures under the Tudors were for the purpose of 
 substituting the pasture of the landlord's cattle for 
 the pasture of the tenant's cattle. The enclosures 
 of the eighteenth century on the other hand were 
 associated with a pronounced extension of agricul- 
 tural enterprise on the part of the landlord. Yet in 
 either case the result was the aggrandisement of the 
 landowner and the decay of the small yeoman. 
 Between 1785 and 1802, it is true, there was some 
 increase in the numbers of yeomen, but in 1802 
 the pendulum again began to swing backwards, 
 and continued in that direction throughout the 
 nineteenth century. 
 
 Let us now, leaving the question of tenure, come 
 back to the question of taxation. The Saladin 
 tithe, as we have seen, represented a capital tax 
 both on land and on personal property. This 
 principle was continued throughout the " sub- 
 sidies" of the Tudors and the Stuarts, which were 
 levied both on land and on goods, and is still seen 
 in operation in the celebrated tax of William III in 
 1689, levied for the purpose of carrying on the war 
 against France. Now it is interesting to observe 
 that, though this tax is frequently referred to as a 
 
HISTORY OF LAND TAXATION 21 
 
 land tax, it was in fact by no means exclusively a 
 land tax, but was levied impartially on lands and 
 houses, stipends, salaries, and incomes from move- 
 ables at a rate equivalent to six per cent, of the 
 capital value of the land. Inasmuch, however, as 
 land is by its nature incapable of being concealed, 
 the result of the tax in practice was that it tended to 
 press more and more heavily on land, and more 
 and more lightly on personal property. 
 
 With the important Commutation Act of Pitt, 
 however, in 1798, an important change was intro- 
 duced into the whole system of taxation. The tax 
 payable on land was converted into a perpetual rent 
 charge on the basis of the parish assessment of that 
 particular year, while provision was made for its 
 final redemption by the payment of a lump sum 
 down. During the nineteenth century conse- 
 quently taxation on land played no longer an 
 integral part in the national finance, and was super- 
 seded by the Income Tax, which, while no doubt 
 charging a duty on inhabited houses, and taxing 
 any cash income derived from land, whether in the 
 form of rent, mineral royalties, or agricultural 
 profits, yet confers complete immunity on that 
 income from land which might be but is not derived 
 by reason of the personal caprice or commercial 
 policy of its owner. 
 
 These, then, are the circumstances which afford 
 an eminent economist justification for the statement 
 that " down to our own times on the whole for 
 national purposes, land and agriculture were taxed 
 less in proportion than other forms of property and 
 other industries." 
 
 Let us now turn for a moment from the history of 
 
22 THE LAND AND YOURSELF 
 
 taxes proper or national taxes to the history of those 
 local taxes for local purposes which are known as 
 rates, leaving for the time being the more special 
 complications with which we shall subsequently 
 deal. 
 
 Rates, though in fact they have now acquired 
 the anomalous peculiarity of falling solely on 
 occupied land and of leaving immune unoccu- 
 pied land however valuable, were originally simply 
 a general property tax levied on all kinds of pro- 
 perty, moveable or immoveable. Passing over the 
 raediasval period when the local expenses of cor- 
 porations were defrayed by assessments made on 
 the citizens themselves, we first come to a statutory 
 rate in the reign of Elizabeth which provided for the 
 levying of a poor rate by the taxation of "every 
 inhabitant and occupier of lands according to his 
 ability and substance." Rates were thus in pur- 
 pose a local income tax or general property tax, 
 and even so recently as the eighteenth century were 
 levied not merely on occupied lands and houses, 
 but on goods, commodities, stock-in-trade, moneys 
 and securities. As, however, real property, e.g., 
 lands and buildings, were by far the most tangible 
 and convenient objects of taxation, rates gradually 
 lost their character of a general local tax on all pro- 
 perty, and became exclusively concentrated on 
 occupied land and on occupied houses. 
 
 But though at first sight it would thus appear that 
 an undue proportion of local taxation was unjustly 
 shifted from other forms of property on to occupied 
 land and buildings, an important counter-balanc- 
 ing factor deserves serious consideration. Until 
 comparatively recently not only citizens. But even 
 
HISTORY OF LAND TAXATION 23 
 
 economists, laboured under the delusion that taxes 
 fell not on persons, but on things. It was conse- 
 quently held unjust to tax the same thing twice 
 over, even though the tax would in point of fact fall 
 on two distinct persons. Thus, if land is let by an 
 owner at a ground rent, and is exploited by a tenant 
 at a profit, the same land represents two distinct 
 sources of wealth to the tenant and the landlord 
 respectively. If, consequently, rates were still 
 imposed in accordance with the original theory of 
 their character as local income tax for local pur- 
 poses, the logical procedure would be to tax both 
 the ground rent of the owner and the profit of the 
 tenant. Though, however, this consideration is 
 valid when the incidence of the rate falls either 
 wholly on the tenant, as the Single Taxers so con- 
 fidently assert, or wholly on the owner, as the 
 landlords asseverate with equal vehemence, its 
 significance becomes less acute when, as not infre- 
 quently happens, its incidence is distributed over 
 all parties concerned. In considering, however, 
 the question of whether land does or does not bear 
 its proportionate part of the burden of taxation, it 
 becomes relevant to mention the Agricultural Rates 
 Act of 1896. This Act exempts all agricultural 
 land from one half of the rate otherwise payable, 
 making up the deficiency by a yearly grant from 
 the Imperial Exchequer. We do not propose at 
 this juncture to discuss the merits or demerits of 
 this measure. We merely wish to point out that in 
 essence it represents in the form of what is prac- 
 tically a State subsidy to agriculture, a virtual 
 resuscitation of that very protection which was 
 abolished with the repeal of the Corn Laws. 
 
24 THE LAND AND YOURSELF 
 
 In concluding our survey of the past and present 
 conditions of land tenure and taxation there is one 
 important set of circumstances on which it is neces- 
 sary to lay some stress. That is the complexity of 
 the existing leasehold system . A considerable por- 
 tion, for instance, of the land of the country is let on 
 what is known as the Lancashire system, viz., a 
 lease of 999 years. It is obvious that in such a case 
 the lessee, though technically a tenant, is none the 
 less, from a practical commercial standpoint, in the 
 position of a freeholder. A far greater portion 
 again of the land is let on what is known as the 
 London system of the 99 years' lease. In this case 
 the lessee, from the practical commercial stand- 
 point, occupies the dual role of both owner and 
 tenant, the r61e of owner being more prominent 
 when the falling in of the reversion is distant, and 
 the role of tenant conversely being more prominent 
 as the falling in of the reversion grows more 
 imminent. 
 
 Again, in considering the practical question of 
 the actual development of land, it is important to 
 remember that it frequently happens that a building 
 speculator leases the land from the freeholder or 
 quasi-freeholder, that this building speculator will 
 in many cases lease out blocks of the houses he has 
 built to a speculator or investor in house property, 
 who will, too, sub-let individual houses to another 
 tenant, who, too, may sublet in turn. 
 
 It thus becomes apparent how numerous are the 
 persons interested in any readjustment of the exist- 
 ing system of land taxation and rating. As, more- 
 over, we shall see, when we come subsequently to 
 discuss the problems of the National Taxation of 
 
THE LEASEHOLD SYSTEM 25 
 
 Land, and of Rating Reform, that for the practical 
 working of any scheme, it will be necessary not 
 merely to differentiate between the legal owner and 
 the legal tenant, but also to ascertain the far more 
 complicated questions as to what persons, irrespec- 
 tive of their mere legal labels, have a specific com- 
 mercial interest in the actual value of the land. 
 
CHAPTER III 
 
 THE AGRICULTURAL PROBLEM 
 
 Problem of the Holding— Large or Small — State Purchase and 
 the Three F.'s— Landowners Constitutional Antipathy to Small 
 Holdings — Sporting Versus Commercial Interest — Social Value 
 of Land— The Tenant's Politics— The Land Agent— Small Hold- 
 ings Act of 1892— Substantial Failure — Small Holdings Act of 
 1907 — Compulsory Purchase and Compulsory Hiring — The Two 
 Parties — ^Working Capital the Vital Question — Irish Land 
 Reforms — ^Judicially Assessed Rent — The Landlord and Bonus — 
 Scotland — Solving the Problem of Rack Rent. 
 
 We have already seen from our preceding chapters 
 that one of the cardinal economic facts of the last 
 century was the decay of England as an agricultural 
 community and the disproportionate, and to some 
 extent unhealthy, growth of England as an in- 
 dustrial community. It is the aim of this chapter 
 to deal primarily with the agricultural problem, 
 and the remedies which have been suggested for its 
 solution. And it is obvious that any solution of 
 the agricultural problem will, in so far as it in- 
 creases the facilities and attractions of agriculture, 
 and either brings men back to the land, or, at any 
 rate, prevents them from leaving it, tend at the 
 same time, if not to solve the industrial problem, 
 at least to alleviate something of its pressure. 
 We do not, of course, suggest that it is desirable for 
 the United Kingdom to change back from the in- 
 dustrial to the agricultural age. We rather 
 suggest the land as an outlet, not for the 
 normal economic population of the great towns, 
 
 26 
 
THE AGRICULTURAL PROBLEM 27 
 
 but for that excessive population, which decreases 
 wages and increases unemployment. 
 
 One of the chief remedies advocated at the pre- 
 sent time by both of the great political parties is 
 the Small Holding. It consequently becomes rele- 
 vant to inquire what is the nature and history of the 
 Small Holding. Is it a purely artificial device, a 
 mere dole of land whose well-meaning charity goes 
 directly counter to economic law? Or does, in 
 point of fact and subject to certain exceptions, the 
 Small Holding constitute a more profitable unit of 
 agriculture than the Large Holding? Further, 
 assuming that the Small Holding is a more desir- 
 able economic unit than the Large Holding, why is 
 it that its growth has been so limited ? Is it through 
 lack of a demand on the part of persons anxious to 
 be Small Holders, or is it due to a deliberate policy 
 on the part of landowners to discourage the Small 
 Holding and to encourage the Large Holding ? 
 
 Further, assuming that the principle of the Small 
 Holding is admitted, which is the more desirable 
 method of the application of the principle ? Is the 
 land to be purchased by the State or local authority, 
 and then sold on the easy payment system to the 
 new body of peasants whom it is proposed to 
 create? For such is the method of Agricultural 
 Reform now placed on the official programme of 
 the Conservative party. Or are reluctant landlords 
 to be compelled to lease to tenants at a rent fixed 
 by the State, and subject to compensations to out- 
 going tenants, that land, the free right of whose dis- 
 posal and utilisation, they not unnaturally regard 
 as one of the essential elements of the constitution ? 
 This, on the other hand, is the agricultural policy 
 
28 THE LAND AND YOURSELF 
 
 favoured by the Liberal party, and symbolised by 
 the pregnant catch-phrase of the three " F.s," viz., 
 Fair Rent, Fixity of Tenure, and Freedom of 
 Sale. 
 
 We shall, perhaps, view the position with 
 greater clearness if we take a brief glance at the 
 recent history of the Large Holding and the Small 
 Holding. The present disproportionate pre- 
 dominance of the Large Holding over the Small 
 Holding dates back (if we omit the enclosures of the 
 sixteenth century, to which we have already re- 
 ferred) to the great enclosures of the second half of 
 the eighteenth and the beginning of the nine- 
 teenth century. Now these large enclosures, or 
 engrossments, were due to the boom in corn grow- 
 ing, which, with the scientific development of 
 agriculture, became more and more lucrative. The 
 bad harvests and the Napoleonic wars, moreover, 
 accentuated the demand for corn, and increased the 
 profits of the landlords. Tempted, moreover, by 
 the prospects of increased fortune, many of the 
 yeomen became tenant farmers and started grow- 
 ing corn. It should be observed, however, that it 
 was the large farmer, not the small farmer, who 
 tended to make the big profits, for while the small 
 holding is more economically suited to successful 
 live stock farming and market gardening, it is on 
 the large farm that corn is farmed with the best 
 result. Any way, the smallholder, handicapped 
 by having no, or at any rate insufficient, capital, 
 tended to decay, and in some cases to be eliminated, 
 while the large holder waxed apace, and was able 
 to pay the increased rent which corn-growing land 
 now began to create. 
 
THE AGRICULTURAL PROBLEM 29 
 
 The agricultural problem, consequently, so far 
 as the smallholder and labourer were concerned, 
 became acute. It is significant that Arbuthnot 
 already made use of the phrase " monopolising 
 landlords," and that Sir John Sinclair, the Presi- 
 dent of the Board of Agriculture, offered a prize for 
 the best scheme for rendering the allotment system 
 general. But for substantial practical purposes 
 the Small Holding Movement of the period proved 
 abortive. It is true that in 1819 an Act was passed 
 "empowering overseers to buy or rent land for the 
 purpose of letting it out again to any poor and 
 industrious inhabitant of the parish," which was 
 followed in 1832 by an Act recommending that a 
 certain proportion of all newly enclosed land 
 should be let in allotments. The fact remained 
 that the Large Holding flourished while the Small 
 Holding dwindled. 
 
 As we have already indicated, English agricul- 
 ture falls into two economic halves. One is 
 the growing of corn, the other the growing of 
 market garden produce and the breeding of live 
 stock. The tendency, consequently, of English 
 agriculture during the Corn Law period was to 
 foster beneath the artificial protection of a corn 
 import duty one half of the agriculture of the 
 country at the expense of the other half of agricul- 
 ture (to say nothing of the whole community of 
 consumers who found themselves taxed on the chief 
 necessary of life for the benefit of a specific section 
 of their farming compatriots). 
 
 It is interesting to observe that the really palmy 
 days of English agriculture were not the Corn Law 
 period, but the twenty-five years immediately 
 
30 THE LAND AND YOURSELF 
 
 following their repeal. For the general rise in 
 wages consequent on Free Trade, coupled with the 
 progressive development of agricultural science, 
 more than compensated for the abolition of the 
 duty. 
 
 So far, however, as the present condition of 
 agriculture is concerned, it is important to realise 
 that while England finds it more and more difficult 
 to compete successfully in corn with the great corn 
 growing countries, such as Russia, South and 
 North America, and Canada, the profitable nature 
 of the other half of English agriculture, viz., 
 pasture and market gardening is becoming every 
 year more apparent. And since, as we have 
 already remarked, the Small Holding is economic- 
 ally a more desirable unit than the Large Holding 
 for pasture and market gardening, it follows that 
 independently of any State action a demand has 
 sprung into existence for Small Holdings for these 
 purposes. There is also no doubt a certain 
 demand for Small Holdings for corn growing, but 
 we prefer to lay stress on the other phase of the 
 demand, as being economically the more desirable. 
 
 Anyway, the existence of the demand is clearly 
 proved from the fact of the numerous applications 
 for every small farm that comes into the market. 
 This demand, however, remains starved because 
 small farms come rarely into the market, and 
 large estates are rarely broken up. It is, in fact, 
 fair to say that the Small Holding qua Small 
 Holding, provokes the constitutional antipathy of 
 the average large landowner. This state of affairs, 
 at any rate so far as those Small Holdings are con- 
 cerned which are required for pasture and market 
 
THE AGRICULTURAL PROBLEM 31 
 
 gardening, obviously prevents the land being put 
 to its best economic use. The reasons, conse- 
 quently, call for some examination, which will 
 show how the purely economic aspect of the case, 
 is complicated by social and other extraneous 
 considerations. 
 
 Now, one reason why the ordinary landlord is 
 averse to letting out his land in Small Holdings is 
 that the Small Holding is bad for partridge shoot- 
 ing. It is then fair to state that one of the reasons 
 for the present land famine is the triumph among 
 the landowners of the sporting instinct over the 
 commercial instinct. Another reason lies in the 
 existence of a value in land which we have hitherto 
 not mentioned. That land can have an agricul- 
 tural value is obvious. That land can have a 
 building value is equally obvious. What is not so 
 obvious, but none the less almost equally impor- 
 tant, is that land can have a social value. The 
 possession of a large estate tends ipso facto to 
 create social prestige, and is consequently not only 
 clung to by the old nobility of birth, but sought 
 after with considerable gusto by the new nobility of 
 wealth in the perfectly natural course of the suc- 
 cessful consolidation of their social position. 
 And since a new landed owner naturally desires to 
 savour the pride of ownership to the fullest extent, 
 he will naturally be averse to buying a property 
 studded with Small Holdings whose tenants or 
 proprietors he is powerless to evict. An old land- 
 owner, on the other hand, will, if rich, be averse to 
 having the uninterrupted beauty of his park 
 desecrated by its being split up into pasture fields 
 or dotted with houses and buildings, and, if 
 
32 THE LAND AND YOURSELF 
 
 poor, will be equally averse to any state of affairs, 
 which, by breaking up the estate as a large unit, 
 may tend to diminish its selling value. 
 
 We may remark, in passing, that, though this 
 value of land is real even from the point of view of 
 the vendor, it only possesses a pseudo-economic 
 validity, inasmuch as land, which is the subject of 
 this prestige value, produces nothing to the com- 
 munity. Further, it is a well-known law of 
 political philosophy that the possessors of large 
 areas of land tend to be or become Conservative. 
 Inasmuch as the keen holder of any set of political 
 views will, if a normal partisan, tend to be 
 ruffled in his equanimity by the growth around 
 him of a body of men who hold opposite and, con- 
 sequently, heretical opinions, he will naturally be 
 reluctant to let his land to any man whom, rightly 
 or wrongly, he suspects of being a potential heretic. 
 And this fact will obtain even greater credence, 
 when it is remembered that it is not the mere 
 utterance of a humanitarian reformer leading a 
 popular crusade against the ducal enemy, but is the 
 considered utterance of the great German econo- 
 mist. Dr. Herman Levy, who has written the best 
 book on the agricultural question that has yet been 
 given to the public, and expresses himself in these 
 cogent words: "Again, many conservatively- 
 minded landlords are doubtful whether the new 
 race of small farmers, mostly raised from the ranks 
 of the raw labourers, will represent the political 
 views of their squire as well as the good true-blue 
 large farmers, and whether the creation of these 
 new holdings may not create a crowd of revolu- 
 tionary land reformers on their own preserves." 
 
THE AGRICULTURAL PROBLEM 33 
 
 One other consideration which explains the re- 
 luctance of landowners to give Small Holdings is 
 that the ordinary landowner delegates the adminis- 
 tration of his estate to his land agent. Now it is a 
 well-known fact of agricultural economy that the 
 management of an area split up into numerous 
 Small Holdings is a far more complicated and 
 troublesome matter than the management of the 
 same area when comprised in a single holding. 
 The sensible land agent accordingly, unless he 
 happens to love trouble for its own sake, will have 
 an instinctive, and by no means illogical, aversion 
 to the multiplication of Small Holdings. 
 
 We thus see why, in spite of the economic fact 
 that the Small Holding is the ideal economic unit 
 for pasture and for market gardening, it is none the 
 less kept out of the market owing to the clash of 
 interests which we have just described between the 
 would-be smallholder on the one side and the 
 landlord and land agent on the other. 
 
 Let us now glance at the legislative stimuli which 
 have been put into force, in order to induce land- 
 owners to part with their land. The origin of the 
 Small Holding Movement is primarily associated 
 with the names of Mr. Joseph Chamberlain and 
 Mr. Jesse Collings, who, in the ante-diluvian days 
 of the 'eighties, represented the contemporary 
 equivalents to JVIr. Outhwaite and Mr. Hemmerde. 
 This agitation, aimed at the State purchase of Small 
 Holdings, found its catchword in the now banal 
 phrase of " Three Acres and a Cow," and obtained 
 its legislative fulfilment in the Small Holdings 
 Act of 1892. This Act gave the local County 
 Councils power to receive petitions for Small Hold- 
 
 3 
 
34 THE LAND AND YOURSELF 
 
 ings, and in the exercise of their discretion to 
 acquire land for that purpose in the open market, 
 the purchase money being provided out of the local 
 rates. 
 
 But, however well-intentioned, this Act proved 
 for all practical purposes absolutely abortive. The 
 local Councils gave full representation to the big 
 landowners, the big farmers, and the land agents, 
 who, as we have already seen, were already averse 
 to Small Holdings and who did not become less so 
 when they, qud ratepayers, might become liable to 
 contribute to the expense of a measure which was 
 already sufficiently distasteful. Consequently, 
 though the scissors were placed in their hands, they 
 not unnaturally felt instinctive scruples about 
 cutting the linings of their own pockets. In ten 
 years the negligible area of 652 acres was acquired 
 under the Act, and in 349 cases petitions for Small 
 Holdings were refused, not because land could not 
 have been made available, but because the Councils 
 felt reluctant to burden the ratepayer. 
 
 The Small Holdings Act of 1908 sought to 
 remedy this state of affairs. It provided machinery 
 by which the Board of Agriculture could in cases, 
 where it was desirable, compel a County Council 
 to acquire land. An even more important prin- 
 ciple embodied in this Act was that it empowered 
 the County Councils not only to buy land compul- 
 sorily from the landowner, but also to hire it 
 compulsorily . 
 
 Now, in this connection it is instructive to 
 observe that the Conservative party opposed com- 
 pulsory purchase with comparative mildness, but 
 compulsory hiring with superlative ferocity. It 
 
THE AGRICULTURAL PROBLEM 35 
 
 consequently becomes relevant to consider the rela- 
 tive advantages and disadvantages of the purchase 
 of Small Holdings, and the hiring of Small Hold- 
 ings; firstly, from the point of view of the small- 
 holder himself; and, secondly, from the point of 
 view of the landowner from whom the land is 
 acquired, remembering that the Liberal party is 
 officially wedded to the policy of leasing, and that 
 the Conservative party is officially wedded to the 
 policy of purchase. 
 
 Now the practical difference of the two policies 
 from the point of view of the holder is this : 
 Under the system of purchase he pays for the price 
 of the holding by a series of payments by instal- 
 ments spread over a period of fifty years, after the 
 expiration of which period he becomes the free- 
 holder. Under the system of hiring, on the other 
 hand, he takes a lease of not less than fourteen or 
 more than thirty-five years at a rent which is 
 officially fixed, with a right to compensation from 
 the landlord for all his improvements when he goes 
 out of possession at the expiration of the lease. 
 But the key to the real understanding of the Small 
 Holding problem lies in this fact. The funda- 
 mental question is working capital. So vital is 
 this consideration that we might even go the length 
 of saying that a tenant paying an unreasonably 
 high rent, but yet possessed of a reasonable amount 
 of working capital, is in a far more favourable posi- 
 tion than a tenant paying an unreasonably low 
 rent, but at the same time possessed of no working 
 capital. But, inasmuch as the ordinary small- 
 holder has little, if any, working capital, it follows 
 that the greater the annual charge on the holding. 
 
36 THE LAND AND YOURSELF 
 
 whether by way of rent, or purchase instalment, the 
 less is the capital at his disposal with which to work 
 the farm, and the less, consequently, his chance of 
 working it successfully. Now, since the annual 
 instalment of the purchase price is more than the 
 annual rent, it follows automatically that the hiring 
 system gives a greater, and the purchase system a 
 less chance of the profitable working of the hold- 
 ing. And it is significant to observe that while the 
 landlord prefers to sell rather than to rent, the 
 smallholder, on the other hand, prefers to hire 
 rather than to purchase. Thus, of the 569 acres 
 acquired by the County Councils during the years 
 1892 to 1902 under the 1892 Act, while only 162 
 were sold to the occupiers, as many as 373 were 
 leased. 
 
 It is also relevant to consider that, when in point 
 of fact there does exist a large body of small 
 peasant proprietors, the tendency is for them to 
 mortgage the land, and thus sink to an ambiguous 
 position, which has all the disadvantages of tenancy 
 and none of its advantages. In Denmark, for in- 
 stance, one of the countries most frequently cited as 
 the beau ideal of the Small Holding, the bulk of 
 the smallholders have mortgaged their property to 
 German banks. In Scotland, on the other hand, 
 under the beneficent regime of the Crofters Acts, 
 we find the Small Holding system working at its 
 best. The three cardinal points of the Crofters 
 Acts were fair rent, fixity of tenure, and compensa- 
 tion for improvements. A fair rent is ensured by 
 the setting up a specially constituted and impartial 
 tribunal — a Land Court or Commission — to fix the 
 rent after hearing evidence by both landlord and 
 
THE AGRICULTURAL PROBLEM 37 
 
 tenant. Secondly, while this fair rent is paid— and 
 experience has shown that a rent so fixed is never in 
 arrear — the tenant has that security of tenure with- 
 out which no tenant has the inclination to make the 
 best use of his land. The third factor— compensa- 
 tion for all reasonable improvements — encourages 
 the tenant to improve his holding, inasmuch as his 
 rent will not be thereby increased, and he will re- 
 ceive, when he quits his holding, reasonable com- 
 pensation, fixed by the impartial tribunal, for such 
 improvements. 
 
 But why, on the other hand, are Conservatives so 
 violently averse to compulsory leasing ? One rea- 
 son may be the sociological law that, allowing for 
 numerous exceptions, the freeholder qua free- 
 holder tends to be a Conservative, and the lease- 
 holder qua leaseholder tends to be a Liberal. To 
 quote the late Marquess of Salisbury, " a small 
 proprietary constitutes the strongest bulwark 
 against revolutionary change." 
 
 But it is probable that financial considerations 
 are more cogent than political. Now, from the 
 financial standpoint, it is not unreasonable to 
 assume that the landlords are right in claiming that 
 they will be better off under a system of purchase, 
 than under a system of leasehold. Indeed, if we 
 may take the Irish Land Acts with all their baits 
 and bonuses as an analogy, we see at once that 
 land purchase on anything like a large scale tends 
 ipso facto to send up the value of the land, and 
 enables the owner to obtain a higher price than he 
 would have been able to get had the land been 
 placed on the market without any scheme of land 
 purchase at all. In leasing, on the other hand. 
 
38 THE LAND AND YOURSELF 
 
 even assuming that possibly a slightly higher rent 
 might be fetched, owing to the increased State 
 demands, there would be nothing like the same rise 
 that ensues in cases of State purchase. The fact 
 that when the reversion falls in the landlord would 
 be liable to pay to the out-going tenant compensa- 
 tion for his improvements detracts still further 
 from his financial profit. This, then, being the 
 disposition of the affected interests, it is not sur- 
 prising that even after the Small Holdings Act of 
 igo8 the movement should still be hampered by 
 the perfectly natural indifference, if not indeed 
 enmity of the County Councils, and that, in spite of 
 the fact that the ordinary smallholder prefers to 
 lease rather than to buy, the local bodies should 
 prefer to exercise their powers of compulsory pur- 
 chase, rather than their powers of compulsory 
 leasing. 
 
 Further, though the imputation may, no doubt, 
 provoke an automatic denial, it has been suggested, 
 and not without plausibility, that the Board of 
 Agriculture, many of whose permanent officials are 
 drawn from the landed classes, are not unduly 
 drastic in the administration of a measure which 
 they may conscientiously believe to be prejudicial 
 to the vested interests of their own body. 
 
 In completing our survey of the agricultural 
 problem it is not irrelevant to glance briefly at the 
 land reforms of both Ireland and Scotland, which 
 broadly (and at any rate so far as the more recent 
 reforms are concerned) typify respectively the two 
 principles of purchase and leasing. 
 
 Irish Land Reform dates from 1870, when the 
 economic problem had become particularly acute 
 
THE AGRICULTURAL PROBLEM 39 
 
 owing to arbitrary evictions and drastic rack renting. 
 By the Land Act of 1870 the tenant was allowed 
 compensations both for any improvements he 
 might have made, and also for the disturbance to 
 his comfort involved in being evicted. This was 
 followed by the Arrears Act of 188 1, which not 
 only introduced certain provisions of indulgence 
 with regard to arrears, but set up a Court of Land 
 Commission by which rents were judicially fixed as 
 between tenant and landlord at regular intervals of 
 fifteen years. As illustrating the scale on which 
 the Act has worked one may mention that up to 
 within a few years ago about 350,000 rents had 
 been so fixed, and that half the rents of the twenty 
 million acres of the country had been assessed by 
 the machinery set up by the Act. The land 
 reforms, however, with which at any rate in more 
 recent time Ireland has been more specifically 
 associated, are the Land Purchase Acts. 
 
 The first of these Acts was the measure known as 
 the Ashbourne Act, which was followed by other 
 Acts on the same lines in 1887, 1891 and 1896. These 
 Acts provided facilities for the State purchasing 
 estates from the landlords at a valuation computed 
 on the basis of the judicially assessed rent. By 
 these Acts the landlord was paid the total price 
 down in Government scrip, while the tenant pur- 
 chaser would pay to the Government one-fifth of 
 the purchase price, working off the debt by instal- 
 ment payments spread over a period of forty-nine 
 years. It has been calculated that upwards of 
 ;^20,ooo,ooo has been expended in this way under 
 the Ashbourne Acts. 
 
 More drastic measures were introduced by the 
 
40 THE LAND AND YOURSELF 
 
 Wyndham Act of 1903, which provided for the 
 furnishing of ;^ 100,000,000 for the purposes of 
 land purchase. The feature of the Wyndham 
 policy was the purchasing not of sporadic isolated 
 holdings here and there, but of large blocks of con- 
 tiguous holdings. In order, moreover, to induce 
 the landlords to sell, a bonus of twelve -per cent, on 
 the purchase price was offered them, while to render 
 the scheme still more attractive to the tenants the 
 payment of the purchase price was spread by 
 smaller instalments over a period of 68^ years. 
 
 The Purchase Acts are, no doubt, particularly 
 popular with the Irish peasantry, a fact which will 
 be readily understood when it is remembered that 
 the annual purchase instalments paid under these 
 provisions come to a less sum than the rent which 
 they would otherwise have been paying, even 
 though judicially assessed. 
 
 While, moreover, the judicial assessment of the 
 rent proved disadvantageous to the landlord, inas- 
 much as rents were thereby reduced about twenty- 
 eight per cent., the State purchase of land proved 
 advantageous, for even apart from the twelve per 
 cent, bonus, to which we have already alluded, the 
 large demand for land sent up the price of land, 
 which was, in some cases, held back. 
 
 It is instructive in this respect to quote from the 
 report of the Estates Land Commissioners. " The 
 average rate per acre paid during the five years 
 immediately preceding the passing of the Act (i.e., 
 the Land Act, 1903) for holdings sold by landlords 
 direct to tenants was £8 9s. (stock) when no bonus 
 was payable, as against £13 4s. (cash) paid under 
 the Act of 1903, exclusive of bonus, which, with the 
 bonus, would realise for the landlord ;^i5 per acre. 
 
THE AGRICULTURAL PROBLEM 41 
 
 This figure, compared with the prices previously 
 paid, shows an increase in the price per acre 
 received by landlords of 68.5 per cent." 
 
 To sum up then, it is fair to say that the chief 
 feature of the recent Irish Land Acts has been a 
 dole by Great Britain for the joint benefit of the 
 Irish tenant and the Irish landlord. 
 
 In Scotland, on the other hand, equally, if not 
 more, advantageous results were secured over the 
 districts comprised in the Crofters Acts of 1886 to 
 1908. These Acts, which were limited in their 
 application to the Highlands, dealt with holdings 
 comprising not more than thirty acres, and letting 
 at not more than ^^30 a year. Their governing 
 factors, as we saw, were fair rent, fixity of tenure, 
 and compensation for improvements from the 
 landlord. 
 
 Thus the problem of rack renting was effectively 
 solved once and for all, by the judicial assessment 
 of the rent at intervals of seven years by an official 
 tribunal. So long as the crofter paid this rent he 
 was secure against eviction, while indulgent pro- 
 visions were introduced to meet the question of 
 arrears. The crofter, on the other hand, had 
 always the right of determining the tenancy and of 
 claiming compensation in such cases for all im- 
 provements affected by him during the tenancy. 
 The Crofters Acts have proved a signal success, 
 and the prosperity in the districts concerned has 
 gone up by leaps and bounds. So far as we 
 know there has not been any instance of tenants 
 deliberately neglecting to develop their property 
 when on the eve of a judicial assessment, with the 
 fraudulent object of thus securing an unduly low 
 
42 THE LAND AND YOURSELF 
 
 rent, a feature which unfortunately has been by no 
 means uncommon in Ireland. 
 
 So great in fact was the success of the Crofters 
 Acts that the principle received a wide extension 
 in the Small Landholders (Scotland) Act of 191 1. 
 By this Act, which had application not merely to 
 the Highlands, but to the whole of Scotland, the 
 chief essentials of the Crofters Acts were extended 
 to all holdings of not more than 50 acres, and of an 
 annual value of not more than ;^5o. Provision, 
 moreover, was also made for the compulsory leas- 
 ing of new holdings. 
 
 The Land Court is retained to deal with existing 
 holdings in the matter of fixing fair rents, giving 
 security of tenure and fixing compensation ; but a 
 new body — the Board of Agriculture — is authorised 
 to consider demands for new holdings and exten- 
 sions, and, if negotiation fails, to acquire land com- 
 pulsorily. The rent for this land is fixed by the 
 Land Court. It is the duty of the Board to ascer- 
 tain what land is falling or about to fall out of lease, 
 when the present tenant does not offer it, prefer- 
 ably to select such land, making compensation for 
 any loss sustained. There is a fund at the disposal 
 of the Board, amounting to ;^200,ooo annually, for 
 dividing, fencing, or otherwise preparing or im- 
 proving, the land let out. 
 
 We would add finally in connection with the 
 general question of the Small Holding that it is 
 claimed by the advocates of land taxation, with 
 what justification we shall see later, that a tax on 
 land, and especially a tax graduated according to 
 area, would tend to bring land into the market, and 
 thus increase the number of Small Holdings. 
 
CHAPTER IV 
 
 THE BUDGET OF 1909 AND ITS SIGNIFICANCE 
 
 The Cash and the Principle — ^Taxation of Windfalls — Ex- 
 ploitation of Unworked Mines — ^Tax on Unearned Increment — 
 Tax on Undeveloped Building Land — Leasehold Reversion Tax 
 — The Two Values of Land — Deliberate Holding up of Build- 
 ing Land — More Building Land for the Market — The Pre- 
 sent Owner's Unearned Increment — German Examples — Carica- 
 tured in the Single Tax. 
 
 The Land Taxes in Mr. Lloyd George's Budget of 
 1909 constitute an important land mark in the his- 
 tory of British Fiscal Legislation. Inasmuch, 
 however, as the total yield under these new taxes 
 has fallen, and was, in fact, estimated to fall, short 
 of ;^5oo,ooo, it will be seen at once that their signi- 
 ficance lies rather in the new principles which they 
 exemplified, than in the actual amount which they 
 levied. It was, in fact, by reason of their prin- 
 ciples that they were so strenuously opposed by the 
 Conservative Party with a concentrated ferocity, 
 which, whether unjust or merited, was certainly 
 disproportionate to the actual amount of cash 
 which it was proposed to sweep into the Imperial 
 Exchequer. It was because they saw in the 
 Budget not so much an intrinsic engine of oppres- 
 sion, as the thin end of a potentially gigantic wedge, 
 that the representatives of the landed interests com- 
 bated the measure with an energy and a sincerity, 
 which, while in result abortive, are none the less 
 
 43 
 
44 THE LAND AND YOURSELF 
 
 highly significant of the seriousness with which 
 they took the situation. 
 
 The Budget of 1909 consequently offers a con- 
 venient starting point from which to survey briefly 
 some of the chief lines of feasible Land Taxation 
 for Imperial purposes. And in this survey it will 
 be important to distinguish between those taxes 
 which are primarily revenue taxes, those taxes 
 which are primarily policy taxes, and those taxes 
 which combine the functions of a policy tax and a 
 revenue tax. 
 
 Now, from the point of view of amount, the most 
 important new tax initiated by the Budget was the 
 five per cent, duty on the mineral royalties which 
 the owners of the land in which mines were sunk 
 received from the concerns which worked the 
 mines ; a duty which reaches between ;^30o,ooo and 
 ;£'900,ooo in the year. This tax is purely a revenue 
 and not a policy tax. From the fiscal standpoint, 
 however, it exemplifies the same principle of the 
 taxation of gifts of nature and of windfalls, which 
 are also to be found in operation in those Increment 
 Taxes which we shall subsequently consider. For 
 the essence of a royalty is that it is the profit which 
 the owner of land makes out of the minerals which 
 are in it, and the characteristic of those minerals is 
 that they are there as a sheer fluke of providence, 
 quite independently of the volition of their owner. 
 
 It is interesting to remember that in Australia 
 the tax on income derived from property is twice 
 the tax on income earned by the mental or physical 
 labour of the taxpayer. 
 
 More palpably a policy tax is the duty of a half- 
 penny in the pound on the capital value of un- 
 
THE BUDGET OF 1909 45 
 
 worked minerals. For, indeed, it is obvious that 
 this duty, constituting as it does a practical fine on 
 those owners of mineral-bearing land who neither 
 work it themselves, nor let it out to others to be 
 worked, must act as a direct financial stimulus to 
 the exploitation of those mines which have hitherto 
 been unworked. In so far, moreover, as the ex- 
 ploitation of new mines produces automatically an 
 increased demand for mining labour, it follows that 
 in so far as the tax fulfils the object for which it was 
 imposed, it tends to increase mining employment 
 and to raise mining wages. 
 
 But from the point of view of general policy and 
 of the new principles of land taxation, the most im- 
 portant Budget taxes are the twenty per cent, 
 increment tax, the halfpenny in the pound tax on 
 undeveloped building land, and the ten per cent, 
 tax on leasehold reversions. The governing prin- 
 ciples of these three duties are the same, and it will 
 consequently be convenient to look at the economic 
 conditions with which they were intended to deal. 
 
 Now, the most important factor to remember in 
 appreciating the real principle, either of the Budget 
 taxes or of those new land taxes which are 
 now being placed before the public, is that 
 any piece of real or landed property is divided 
 economically into two halves — the site value and 
 the improved value. Of these two values, the site 
 value represents the amount which the actual soil is 
 worth, and the improved value represents the value 
 of those buildings and other improvements which 
 have been placed upon the soil. For building pur- 
 poses the site value depends less on the intrinsic 
 geological properties of the soil than on its actual 
 
46 THE LAND AND YOURSELF 
 
 position. Thus the most superficial consideration 
 shows at once that, irrespective of what one may call 
 its intrinsic physical value, as a soil site, land has 
 an extrinsic economical value by reason of its posi- 
 tion. For instance, the Piccadilly Hotel, if built 
 on exactly the same area of land of equal physical 
 suitability, but situated at, say Ealing or White- 
 chapel, would obviously be worth considerably less 
 than it is on its present West End site. 
 
 It is, though a platitude, none the less an 
 important economic fact, that land in the central dis- 
 tricts of a town is worth more than land of similar 
 geological quality in the suburban districts of the 
 town, and that land in suburban districts is worth 
 more than similar land in the rural districts. 
 Now, this high value of land in certain favoured 
 situations is a phenomenon of gradual, if certain, 
 growth. As a town grows the demand for land 
 naturally increases, and the land in the centre, 
 being more sought after than land in the outskirts, 
 tends correspondingly to appreciate in price. But 
 the growth of a town is caused by the energy of the 
 community by which it is populated, and by the 
 wealth which this energy creates. By such im- 
 provements and facilities, for instance, as good 
 drainage, good roads, and improved means of com- 
 munication, the community attracts not only a 
 greater population, but, by providing a home 
 of greater attractiveness to all such persons as live 
 in the particular town, ipso facto enhances the 
 value of the land within its precincts. The land, 
 however, which the community thus raises to a 
 higher value, is the property, not of the community, 
 but of some private individual. This appreciation 
 
THE BUDGET OF 1909 47 
 
 in the value of private land owned by private in- 
 dividuals is known by the celebrated phrase 
 "unearned increment." 
 
 The improved value, on the other hand, such as 
 the value of a house, is the creation not of the com- 
 munity, but of the owner or occupier himself. And 
 while, as we have seen, the site value frequently 
 tends to increase in value, the improved value, on 
 the other hand, will tend to decrease, and will 
 necessarily require outlay upon repairs to keep it 
 up to the original figure. 
 
 The logical result, however, of that economic 
 system which ensures that the general development 
 of a town confers an automatic profit on the owners 
 of the lands on which the town is situated, is land 
 speculation . It is not necessary for this purpose to 
 discuss whether land speculation generally is a 
 good thing or a bad thing. But that feature of 
 land speculation which we suggest is, at any rate, 
 economically inconvenient, is the deliberate hold- 
 ing up of land suitable for building with a view 
 to obtaining a still higher price in the future, and 
 possibly of increasing the value of the remaining 
 land, which (the supply of land being thus less than 
 the demand) will now possess a monopoly value. 
 We do not dispute that this holding up of land is, 
 from the business aspect, sound and practicable 
 from the point of view of the owner, who is thus 
 speculating for a rise. Indeed, the example of the 
 De Beers Company, who deliberately limit the out- 
 put of diamonds so as to maintain the price, is an 
 excellent illustration of how profitable it may be 
 to limit the supply of a given commodity. 
 
 But, in the case of land, the economic interests of 
 
48 THE LAND AND YOURSELF 
 
 the owner come into direct collision with the 
 economic interests of the community. For the 
 supply of land being limited, high rents and bad 
 housing in overcrowded districts naturally ensue. 
 
 The prejudicial importance indeed of the holding 
 up of land was one of the chief features emphasised 
 by the report of the Royal Commission on the 
 Housing of the Working Classes of 1884, a report 
 which possesses a certain historic interest in that it 
 was signed by the late King, who, as Prince of 
 Wales, was a member of the Commission, and to 
 which we have already referred on page 1 1 . 
 
 The real importance consequently of the half- 
 penny in the pound tax on undeveloped building 
 land is that it is primarily a policy tax whose natural 
 tendency is to bring more building land into the 
 market, thus at once relieving the congestion of the 
 central districts of the big towns, and creating 
 increased building employment. 
 
 In order not to create any hardship when land is 
 suitable both for agriculture and building, the tax 
 is only levied on the margin by which the site 
 value exceeds the value of the land for agricultural 
 purposes. No duty, moreover, under any circum- 
 stances can be levied on any Small Holding not 
 exceeding in value ;^500. When, again, land is 
 occupied by a dwelling house the adjacent grounds 
 are allowed to be undeveloped to the extent of five 
 acres without any liability to the Undeveloped Tax. 
 
 We may, perhaps, mention that the actual 
 amount realised by this tax for the year 191 1 to 
 1912 was ;£'io,ooo. The comparative smallness 
 of the amount is to be explained either by the 
 hypothesis that the small yield qua revenue tax 
 
THE BUDGET OF 1909 49 
 
 implies a correspondingly large effect qua policy 
 tax in stimulating the sale of building land which 
 is ripe for building, or simply by reason of the fact 
 that the new valuation of all the land of the king- 
 dom, which was one of the outstanding features of 
 the Budget, has not yet been completed, and that, 
 consequently, it is impossible to levy the full 
 taxes. 
 
 More in the nature of a revenue tax is the ten per 
 cent, tax on leasehold reversions. This duty is, in 
 fact, simply an application of that theory of the 
 unearned increment, which we have already dis- 
 cussed. Under the system of long leaseholds, 
 which is peculiar to this country, the owner of the 
 freehold obtains, on the falling in of the lease, a 
 property which has substantially increased in value 
 by reason of the general growth of the community, 
 and independently of any expenditure of labour or 
 enterprise on the part of the owner. Now, this 
 duty of ten per cent, falls not, of course, on the 
 whole value of the property, but simply on the 
 margin by which the leasehold has appreciated 
 since it was last granted. The leasehold reversion 
 duty, which, it is interesting to remember, realised 
 ;^22,ooo in the year 191 1 to 1912, is thus a typical 
 exemplification of the taxation of windfalls. 
 Note, moreover, that all agricultural leases are 
 exempt from this duty, as are all leases made 
 within twenty-one years before the coming into 
 operation of the Finance Act (1909). 
 
 Founded on the same principle is the actual 
 Increment Duty itself. This tax is a duty of 
 twenty per cent, levied at death, on transfer, or at 
 intervals of fifteen years (about the average 
 
50 THE LAND AND YOURSELF 
 
 period at which all land in the United Kingdom, 
 through one cause or another, changes hands) on 
 the increase in the site value. In order, moreover, 
 to obviate any hardship owing to any recent down- 
 ward fluctuation of land below the true level, the 
 owner is entitled to substitute for the present value 
 a site value founded on the last purchase price in 
 the cases of land leased or sold within the twenty 
 years prior to the Act. This tax was the subject of 
 more ferocious criticism than, perhaps, any other 
 proviso in the Budget, even stray Liberal Members 
 professing to find it unjust that land should be 
 singled out of all other unearned increment for this 
 special form of taxation. In this connection it is 
 interesting to quote from Mr. Asquith's Sheffield 
 speech : " Of land and of nothing else but land you 
 can fairly say that it is constantly receiving an 
 automatic addition of value, to which the owner 
 contributes nothing by any expenditure, labour or 
 enterprise of his own," 
 
 To regard the recipient of unearned increment as 
 a sinister villain, and to be anxious to " tax the 
 landlords into bankruptcy," if we may quote a 
 phrase of Mr. Outhwaite's, is, of course, nothing 
 but the flippant effervescence of abortive phil- 
 anthropy. To recognise, on the other hand, that 
 the burden of taxation should fall more heavily on 
 unearned than on earned income is to adopt what 
 is, we suggest, a sound principle of fiscal policy. 
 Such a policy, moreover, will naturally be thought 
 unjust by those whom it affects adversely, and 
 whether the Budget was in fact sound or unsound, 
 the Conservative opposition to its land clauses 
 would seem, in essence, to have been in opposition 
 
THE BUDGET OF. 1909 51 
 
 of a similar character to that which dictated their 
 strenuous resistance to the repeal of the Corn 
 Laws. 
 
 An interesting question, moreover, arises in con- 
 nection with the incidence of the tax. If, for in- 
 stance, land is sold, who pays the increment tax, 
 the new owner or the present owner ? Will not the 
 new purchaser discount his potential profit by 
 twenty per cent., and will not, consequently, the 
 present owner be mulcted to that amount out of the 
 present value of the land? Now, while we think 
 that in practice the theory of diffusion will apply, 
 and that the tax will fall both on the present and on 
 the future landowner, it seems relevant to remark 
 that if a purchaser of land buys for a rise in the 
 value, and bases his present price on the future rise 
 which he anticipates, it follows that he pays more 
 than the land would be worth on its immediate 
 economic merits. In other words, the present 
 owner is getting in hard cash, on the occasion of 
 the sale, a specific share in the unearned increment. 
 Consequently, if we assume the principle that un- 
 earned increment is the proper subject of special 
 taxation, no injustice is effected by taxing that 
 unearned increment of the future which, as we have 
 seen, the landlord enjoys in the present. Inas- 
 much as the actual amount raised in the year 191 1 
 to 1912 by this particular tax was only ;^6,ooo, 
 these elaborate refinements may, at the present 
 juncture, seem somewhat unnecessary. 
 
 But by far the most important feature in the 
 Budget was that provision for a universal valuation 
 of all the land in the country to which we have 
 already alluded. For all Land Taxes are neces- 
 
52 THE LAND AND YOURSELF 
 
 sarily abortive and ineffective unless they have 
 some valuation on vi^hich they can be based. The 
 existence, however, of an efficient system of valua- 
 tion, under which the site values and the total 
 values are all separately assessed, not only enables 
 the actual Budget Taxes to be efficiently collected, 
 but enables the whole problem and circumstance of 
 land taxation to be envisaged with far greater ful- 
 ness and detail than is feasible at present. 
 
 It is interesting to observe that the principle of 
 the Increment Tax on real property has been 
 applied, and applied with success, in many of the 
 big cities of Germany, such as Frankfort, Hamburg, 
 Cologne, Dresden. The details, of course, vary 
 according to the particular municipality. It 
 should be noticed, however, that the principle of 
 graduation is very common, the tax rising in per- 
 centage according to the amount of the profit. 
 Thus in Frankfort, so far as property is concerned, 
 when less than twenty years has elapsed since a 
 previous change of ownership, the tax starts at two 
 per cent on a fifteen per cent to twenty per cent 
 increase, and reaches ten per cent on a 55 per cent 
 to 60 per cent increase in value. What possibly 
 strikes the English mind as a strange feature is 
 that prima facie the rate of increment duty is calcu- 
 lated by the number of years that have elapsed 
 since the last change of ownership. As illustrat- 
 ing the success of the tax one may mention that in 
 Frankfort the increment duty for one year (1906) 
 produced over ;^55,ooo. 
 
 To sum up so far as they are revenue taxes, the 
 land taxes of the Budget (irrespective of the 
 mineral taxes which, as we have seen, fall into a 
 
THE BUDGET OF 1909 53 
 
 special category) proceed on the theory of the taxa- 
 tion of windfalls, or those increases of value which 
 accrue independently of any enterprise or cor- 
 responding outlay of capital on behalf of the owner. 
 It is the halfpenny in the pound capital duty on 
 undeveloped building land which, to our mind, 
 constitutes the most novel departure of the Budget 
 of 1909. For though this duty produced only 
 ;^io,2i8 in the last fiscal year, it is in essence a 
 policy tax intended to prevent the holding up of 
 land and to lower rent, to alleviate congestion and 
 to stimulate building. This duty and the un- 
 earned increment duty represent, moreover, up to 
 the present, the first specific application to English 
 fiscal legislation of that policy of the Taxation of 
 Land Values which is so successfully caricatured 
 in the Single Tax. 
 
CHAPTER V 
 
 THE SINGLE TAX 
 
 A Ready-made Millennium— Basis of Collectivism — Theory of 
 Retrospective Title — No Compensation for Confiscation — "All 
 Rent is Unearned Increment " — Draws the Line Nowhere — 
 Mortgagees and their Security — ^Would the Single Tax be a 
 Single Tax? — Land Nationalisation. 
 
 Of all the remedies suggested for dealing not only 
 with the Land Question, but with the whole social 
 question of an impoverished humanity, the most 
 drastic, the most sensational, and from a superficial 
 aspect, the most attractive is the policy known as 
 the Single Tax, and identified with the late Mr. 
 Henry George and his living disciples, Mr. 
 Hemmerde and Mr. Outhwaite. 
 
 For this policy, which is half religious and half 
 economic, and which finds its principal sanction in 
 its founder's interpretations of the respective laws 
 of Ricardo and the Deity, holds out the prospect of 
 a ready-made millennium in which litigation, the 
 desire for riches, crime and public debts will 
 immediately disappear, and is believed in by its 
 supporters with all the faith of a divine revelation. 
 The magical device which is to bring about this 
 desirable state of affairs is the Single Tax, 
 or the State confiscation of economic rent 
 (economic rent meaning the rent paid for the 
 physical land in contradistinction to the rent paid 
 for the improvements upon the land). In other 
 
 54 
 
THE SINGLE TAX 55 
 
 words, the Single Tax is a modified form of that 
 theory of collectivism which has been most ably 
 expounded by such writers as Marx and Schaffle. 
 While, however, the orthodox Collectivist advo- 
 cates the nationalisation of all the means of produc- 
 tion, the Single Taxer confines himself to advocat- 
 ing the nationalisation of land, finding in land the 
 root of all evil, and, in its confiscation by the State, 
 the universal panacea for the diseases of society. 
 
 But though every Single Taxer is ipso facto in 
 favour of the Taxation of Land Values, the advo- 
 cate of the Taxation of Land Values is not neces- 
 sarily a Single Taxer. Thus, while the more 
 extreme members of the Land Values Committee 
 of the House of Commons are identified with the 
 Single Tax, their actual policy has none the less 
 been disavowed, not to say repudiated, both by 
 Mr. Lloyd George and by Mr. Asquith. For, 
 while the Single Taxer looks upon any Taxation of 
 Land Values as simply a preliminary stage to its 
 complete confiscation, so that the word "tax" 
 becomes simply a clumsy euphemism for State 
 appropriation, the simple taxer of land values, as 
 we shall see later, is merely anxious to readjust the 
 system of taxation on a more equitable basis, and 
 at the same time to impose a duty, which, in its 
 character of policy tax, will stimulate land into 
 greater circulation, and prevent the economic dis- 
 advantages which ensue from the undue retention 
 of land which could be advantageously utilised. 
 
 It is important to realise this distinction, inas- 
 much as the official Single Tax literature, apart 
 from Progress and Poverty is, and sensibly enough, 
 inclined to lay rather less stress on its basis of 
 
56 THE LAND AND YOURSELF 
 
 collectivism (which is the principle which differ- 
 entiates it from the Liberal programme of reform) 
 than on those principles of " unearned increment " 
 and "site value," which are adopted, though with 
 entirely different motives by both the Single Taxer 
 and the Anti-Single-Tax Land Value Taxer. 
 
 Let us then glance briefly at the historical 
 and ethical justifications put forward on be- 
 half of the Single Tax, and at the general 
 question of its practical adoption. The his- 
 torical argument is simplicity itself. Trac- 
 ing back the origin of land, Mr. Henry George 
 professes to find that its titles are originally based 
 "on murder and on robbery, on blood and on 
 rapine," and that, therefore, " private property in 
 land is a bold, bad, enormous wrong like that of 
 chattel slavery." And, applying conversely, this 
 startling theory of retrospective title, which deter- 
 mines the claim pf the present proprietor by going 
 back to the first link in the chain of property, Mr. 
 George is equally of opinion, that the right, on the 
 other hand, to an article of human production is 
 valid because the original producer had a good title. 
 It is outside the scope of this book to go into the 
 fine shades of moral philosophy as applied to 
 economics. We content ourselves with observing 
 that on Mr. George's logic, apparently, an inheritor 
 of stolen land who had, on the eve of the Single 
 Tax legislation, exchanged with prophetic sagacity, 
 his land for money or for personal property, would 
 be left unchallenged in his possession, and that, 
 conversely, an honest man who invested in 
 the purchase of land money properly earned by 
 the production of articles, would be liable to have 
 
THE SINGLE TAX 57 
 
 his entire property confiscated in so far as it con- 
 sisted of land. It would appear, in fact, that 
 Mr. George is so impressed by the alleged wrongs 
 committed in bygone centuries, that he is unable to 
 appreciate that the whole fabric of our present 
 civilisation rests on the prescriptive right to pro- 
 perty on the part of those who have been left 
 undisturbed in its possession for some length of 
 time. The vast cleavage which separates the logic 
 of Mr. George from the ordinary practice of 
 civilisation, is apparent from the fact that while in 
 this country, at any rate, the ordinary legal period 
 of limitation is, so far as real property is concerned, 
 twelve years, Mr. George would rake up the 
 hoary titles of centuries and centuries of unchal- 
 lenged possession. So deep, in fact, is Mr. 
 George's indignation at the intrinsic sinfulness of 
 land proprietorship, that he scornfully rejects the 
 idea of paying any compensation to those landlords 
 whose property is to be confiscated. 
 
 It is also pertinent to remark that, according, at 
 any rate, to so eminent an economist as M. Paul 
 Leroy Beaulieu, society has gradually evolved from 
 the collective state in which the land was the pro- 
 perty of the tribe or community to the present state 
 which is based on the principle of individual pro- 
 prietorship, and that the growth of civilisation has 
 been in direct proportion to the growth of the 
 conception of property. 
 
 From the more purely economic aspect the 
 Single Tax theory is based (i) on that Ricardian 
 theory of rent, whose truth, according to Professor 
 Marshall, has to be accepted with so many reserva- 
 tions and modifications as to be practically in- 
 
58 THE LAND AND YOURSELF 
 
 applicable to existing conditions; (2) on the 
 identification of rent with unearned increment. 
 
 The Ricardian theory of rent, which primarily 
 has reference to an agricultural community in a 
 new country, where there is at first an abundant 
 supply of land of the best quality is this : So long 
 as there is enough land of the first quality to go 
 round among those who wish to use it there will be 
 no rent. When, however, the " first quality" land 
 is filled up and individuals begin to cultivate land 
 of the second quality on which they pay no rent, the 
 land of the first quality acquires a value. And this 
 value will be the difference between the value of the 
 produce between the two lands; e.g., If field A 
 yields produce equal to £30 per annum, and field B, 
 which is to be had for nothing, yields produce of 
 ;^20 per annum, a person cultivating field A will be 
 prepared to pay ;;^io per annum, and when in 
 course of time the second class land is filled up, and 
 the third class land is utilised, the rent of the first 
 class land becomes the difference between the value 
 of its produce and the value of the third class land, 
 while the rent of the second class land becomes the 
 difference between the value of its produce and the 
 value of the produce of the third class. 
 
 And so the notional process goes on till that land 
 is reached which it does not pay to cultivate at all, 
 and the formulation is arrived at of the complete 
 Ricardian law, that rent is the excess of the produce 
 of any given land over the least productive where 
 there is no rent. As we have already remarked 
 the amount of rent is fixed by so many and so com- 
 plex considerations in our present age of interna- 
 tional markets, that scarcely any economists take 
 
THE SINGLE TAX 59 
 
 the Ricardian theory as capable of serious practical 
 application in the twentieth century. It is none 
 the less interesting to follow the chief application 
 by the Single Taxers of the Ricardian theory. 
 Inasmuch, they say, as the rate of rent depends 
 not on the human labour of the individual (for by 
 "rent" they profess to exclude the added value 
 which land possesses, owing to improvements made 
 upon it), but on the demand for land, it is wrong for 
 it to be the subject of exclusive possession, "for 
 there can rightfully be no exclusive possession and 
 enjoyment of anything not the product of labour." 
 We have, however, already dealt with this point, 
 and indicated how arbitrary in practice are those 
 antiquarian researches into origins, amid condi- 
 tions of affairs where land and other property are so 
 freely interchangeable. 
 
 Perhaps, however, we can do fuller justice to the 
 Single Tax position if we quote the dictum of 
 Mr. Henry George to the effect that " rent is a 
 value created by the whole community." In other 
 words the whole of economic rent (viz., the rent of 
 the actual land apart from the improvements) is 
 unearned increment. If, consequently, we divide 
 any price of land into (a) its improved value (viz., 
 the extra value arising from the buildings erected 
 on it, or the improvements made in the physical 
 condition and suitability of the ground itself); (b) 
 its site value (viz., the extra value arising from the 
 particular situation of the land) ; and (c) the value of 
 the natural physical resources of the land itself, the 
 Single Taxers would claim not only that (b) the 
 situation is created by the community ; but that (c) 
 the natural physical quality of the ground itself 
 
6o THE LAND AND YOURSELF 
 
 also possesses no value except that conferred on it 
 by the growth of the community. We suggest 
 that this proposition is, on the face of it, illogical. 
 Some shadow of theoretical justification could con- 
 ceivably be given to it by going back to some 
 notional prehistoric age when all land was no man's 
 land, and where even the physical productiveness 
 of the soil would be useless until the population 
 had sufficiently increased to create a demand for its 
 products; but to suggest that in a country like 
 England, where for centuries and centuries good 
 agricultural land has possessed value simply by 
 reason of its suitability for agriculture, this 
 physical value is solely due to the efforts of the 
 community, strikes us as absolutely devoid of any 
 sound basis. Those, however, who are interested 
 in the theory of Collectivism will find it far more 
 soberly and scientifically stated in Schaffle's 
 Quintessence of Socialism than in Henry George's 
 Progress and Poverty. 
 
 Put shortly, the official Collectivist position 
 would appear to be this. All workers are primd 
 facie entitled to the value of the articles they pro- 
 duce. Where, however, the employer sells for a 
 price which, after paying the worker his wages and 
 allowing to the employer the market rate of interest 
 on the capital employed, yet leaves a surplus profit 
 to be enjoyed by the employer, such surplus profit 
 constitutes a moral robbery by the employer of the 
 worker. The employer is enabled to make this 
 surplus profit by reason of his ownership of the 
 means of production, viz., land, plant and capital. 
 The answer which immediately suggests itself is 
 that this surplus value is the reward not only for the 
 
THE SINGLE TAX 6i 
 
 highly trained organisation of the concern by the 
 employer and for his enterprise in starting it, but 
 also for the risk which he underwent in starting a 
 concern, which, though in fact profitable, might 
 quite conceivably have ended in a loss. At any 
 rate the point which we wish at present to 
 emphasise is that the thorough-going Collectivist 
 does not, like Mr. George, differentiate land from 
 the other means of production, but, on the con- 
 trary, finds in Capital the arch-enemy. 
 
 If, then, we may venture to summarise our con- 
 ception of the Single Tax position, we would say it 
 contends that, with the exception of the improved 
 value, both the natural physical value of the soil 
 and the site value represent unearned increment. 
 Single Taxers, moreover, are only prepared to 
 exempt the improved value for a certain num- 
 ber of years. While, moreover, the Budget Taxa- 
 tion of unearned increment drew the line, as we 
 have seen, at the last purchase price within the last 
 twenty years, the Single Tax draws the line no- 
 where, goes straight back to the prehistoric ages of 
 the Ricardian theory, recognises no statute of 
 limitations, and visits its destructive blessing on 
 the head of the present possessor of land values. 
 
 In method, apparently, the confiscation would be 
 none the less drastic, because it came in the respect- 
 able form of a tax. This tax would take the 
 shape of a duty of twenty shillings in the 
 pound, or one hundred per cent, on the economic 
 rent (economic rent meaning the rent which is 
 notionally appropriated to the bare soil apart 
 from the improvements). This is the meaning 
 of the great dictum of the Single Taxers that 
 
62 THE LAND AND YOURSELF 
 
 they do not wish to confiscate land, but only to 
 confiscate rent. It is diiScult to see in practice 
 what would be the effect of this ironic distinc- 
 tion. For if a man has to pay in taxes, what- 
 ever may be the economic rent of the land he owns, 
 land qud land ceases to possess the slightest com- 
 mercial value, or the faintest economic interest. 
 If, moreover, it did not happen to be let, it would 
 not only be useless, but even dangerous to the 
 owner, who would have to pay away in taxes not 
 only what the land had in fact brought in, but what 
 it had not, but ought to have, brought in. In effect 
 the ownership of the theoretical owner would be a 
 grotesque farce, and the real practical owner would 
 be the Statej, to whom the landowner would remit 
 every penny of rent paid to him by the tenant. 
 One may also mention as a parenthetical detail that 
 under the Single Tax every single mortgagee 
 would be ipso facto deprived of his security, except 
 in so far as that security consisted of recent 
 improvements. 
 
 The advantages of this sensational departure in 
 fiscal policy are painted by its advocates in vivid 
 colours. It is claimed, for instance, in the first 
 place that its imposition would do away with the 
 levying of every other tax in the whole Exchequer. 
 It follows, however, on their own showing, that 
 even admitting this hypothesis to be true, while 
 every member of the State, whether a smallholder 
 or a ducal landowner, who was, under the present 
 system, paying more in taxation than he received 
 in economic rent, would be pro tanto the gainer by 
 the Single Tax; every member of the State xvho 
 was, under the present system, paying less in taxa- 
 
THE SINGLE TAX 63 
 
 tioii than he received by way of economic rent 
 would be pro tanto the loser by the innovation. 
 
 It is questionable, however, whether the funda- 
 mental hypothesis of the policy, viz., the Single- 
 ness of the Tax, is in itself tenable. According, 
 indeed, to Mr. Chiozza Money, while the annual 
 expenditure of the United Kingdom is about 
 ;^200,ooo,ooo, the total economic rent of the United 
 Kingdom is only about ;^ 100, 000, 000, which would 
 leave a deficiency of ;^ 100,000,000. 
 
 It is only fair to state that the Single Tax 
 estimate is very different, and that Mr. Chiozza 
 Money is opposed not only to the Single Taxers, 
 but also to the Taxation policy of the Land Values 
 group in the House of Commons. The Single 
 Tax estimate, in fact^ is that of ;^25o,ooo,ooo. 
 This estimate, however, would appear to have been 
 constructed on an entirely different basis to that of 
 Mr. Money. It reckons in, for instance, on a line 
 of reasoning, which we are unable quite to follow, 
 in addition to the ordinary rents, but as none the 
 less integral essentials of economic rent, a number 
 of items, such as 50 per cent, of the net receipts of 
 tramways, 60 per cent, of the local rates and of the 
 Income Tax collected under Schedules A and D. 
 Whether, moreover, Mr. Money is right or wrong 
 in his economic views, he is certainly a responsible 
 and conscientious statistician, and pending the 
 publication of the valuations under the Budget, we 
 feel justified in placing reliance on his estimate, 
 and on the basis on which he arrived at it. 
 
 It is also claimed by its advocates that the Single 
 Tax would operate effectively as a policy tax, .and 
 that, inasmuch as land qua land would cease to 
 
64 THE LAND AND YOURSELF 
 
 possess the faintest commercial interest for its 
 owner, who would be in precisely the same position 
 whether he possessed land with an economic rent of 
 50,000 pence or 50,000 pounds, land would cease to 
 be held up, would be freely circulated, sold and let, 
 and would thus be put to its best use. 
 
 That the measure, if passed either now or in ten 
 thousand years' time, would promote the accessi- 
 bility of land is, we think, obvious. It is also 
 likely that there would be a marked fall in the rate 
 of economic rent, owing to the increased land 
 which would be thrown on the market, and presum- 
 ably this rent would be fixed by the State, inasmuch 
 as under the new regime the stolid indifference of 
 the landlord on the subject of his rent would only 
 be equalled by his present intelligent zeal. 
 
 While, however, we are ready to admit that the 
 spoliation of a large class of the community would, 
 at any rate, produce these results (which so far as 
 they go are prima facie desirable) we are unable 
 to agree with many of the Single Taxers who 
 apparently hold that the one objective of Social 
 Reform is to reconvert England from an industrial 
 to an agricultural community. For, inasmuch as 
 greater wealth is produced to the country by the 
 industrial labourer than by the agricultural 
 labourer (a fact of which ■prima facie proof is 
 afforded by the marked difference between indus- 
 trial and agricultural wages), it follows that English 
 agricultural development, though, of course, to be 
 energetically pursued, is only desirable up to 
 the point that it relieves the congestion of the 
 towns and only leaves in the towns those labourers 
 
THE SINGLE TAX 65 
 
 who are capable of finding employment at a fair 
 wage. For, admitting that at present the towns 
 are unduly swollen at the expense of a depleted 
 country-side, the aim of sound Land Reform 
 should be not to turn the tables, but to redress the 
 balance. It seems doubtful whether, with the 
 freest use of all the land available in Great Britain, 
 more than three million additional labourers 
 could be advantageously employed, a number 
 which would be many times less than the number 
 engaged in industrial pursuits. From this it 
 follows that, vital though the agricultural problem 
 may be in itself, and important as might be the re- 
 sult of agricultural development in draining from 
 the towns the surplus of labour, the main future of 
 this country lies rather in industrialism than in 
 agriculture. It seems doubtful also whether the 
 Single Taxers are justified in ascribing to rent, as 
 opposed to other forms of interest on capital, the 
 whole responsibility for low wages. It is conse- 
 quently equally doubtful whether, even on the 
 supposition that rents dropped to nothing or nex-t 
 to nothing, there would ensue that condition of 
 high wages that makes the perfect social State. 
 
 In concluding our survey of the Single Tax it is, 
 perhaps, relevant to mention the theory of Land 
 Nationalisation, of which Dr. Russel Wallace is 
 the chief champion in this country. Land 
 nationalisation differs from the Single Tax in this : 
 it advocates the taking over of all the land by the 
 State, but with that compensation to the landlord 
 which the orthodox Single Taxer regards as a 
 monstrous heresy. As a practical policy, however, 
 
 5 
 
66 THE LAND AND YOURSELF 
 
 wholesale Land Nationalisation is not before the 
 public. It stands identified with no prominent 
 politician, and forms the programme of no 
 political party, though the actual principle of Land 
 Nationalisation is no doubt involved in any 
 measure by which, in given cases, land is enabled to 
 be compulsorily purchased or compulsorily hired. 
 
CHAPTER VI 
 
 THE RATING PROBLEM 
 
 The Occupier Chooses — Use-value and Commercial Value — 
 Bonus on the Hoarding oiE Land — Rating Unused Land — 
 Lowering the Rate of the Rate — More Houses and Lower Rate — 
 Town and Country — The Farmer and the Agricultural Labourer 
 — Stimulus to Building — Land Tax and Building Tax rolled into 
 One — ^Who Pays the Rates? — Shifting the Incidence — Existing 
 Contracts — Present Rates a Hostile Tariff to Building — Advent 
 of the Sky-scraper — More Accommodation and Lower Rents — 
 More Building — Rural Districts — Penalised Improvements — 
 Practical Difficulties. 
 
 We have already seen that the rate, originally an 
 income tax on both real and personal property, for 
 local purposes, became in course of time a 
 municipal tax solely limited in its incidence to land 
 and buildings. Though municipal land taxes are 
 prima facie regulated by many of the same prin- 
 ciples that would apply to national land taxes, the 
 intricacies of the subject are so manifold that it will 
 be found convenient to treat the Rating Question 
 separately. 
 
 So difficult and technical is the subject that to 
 present a full-fledged scheme of Rating Reform 
 within the space at our disposal would be impractic- 
 able. It should, however, be feasible to explain 
 briefly the actual features of the existing system, 
 the new features whose introduction has been most 
 seriously suggested, and the ways in which these 
 innovations would affect landowners, occupiers, 
 and the community at large. 
 
 67 
 
68 THE LAND AND YOURSELF 
 
 Put very shortly, the present rate is a tax 
 levied by the municipality or local union, on the 
 occupier of any piece of real property. This tax 
 is levied, not in proportion to the highest annual 
 value which such property might have, but in pro- 
 portion to the annual value which such property 
 possesses, for that particular purpose for which 
 its occupier chooses to employ it. In assess- 
 ing the value of what we may, perhaps, call 
 composite property, no differentiation is made 
 between the improved value, viz., the value of a 
 house, and the site value, viz., the value of the land 
 on which the building is situated ; but the two items, 
 though frequently separated in the figures of the 
 valuation, together make up one indivisible unit of 
 rating. 
 
 Let us first consider the economic phenomena, 
 which result from the principle of only rating 
 land on the value for which it is, in fact, being 
 used. The immediate and obvious result of this 
 principle is that while the cheapest land, so long as 
 it is used, is liable to a rate levied in accordance 
 with the amount which the land in question could 
 reasonably be expected to bring in, the dearest 
 land, so long as it is out of use, escapes scot free 
 from all payment of rates. Thus the shop of the 
 tradesmen will be rated because it is used, while the 
 ornamental grounds and parks of a landed pro- 
 prietor will be largely immune from rates simply 
 because they are ^mused. A glaring, if hack- 
 neyed, instance of this violent antithesis is to be 
 found in the well-known case of "The Medijeval 
 Castle and the Tailor's Shop." In close juxtaposi- 
 tion in the city of Cardiff stand a tailor's shop 
 
THE RATING PROBLEM 69 
 
 occupying 970 square yards, and a Castle and 
 grounds occupying 508,200 square yards. While, 
 however, the owner of the shop pays the local quota 
 of the rates on an annual value of £9']T, the owner 
 of the Castle and grounds pays his rates on an 
 estimated annual value of £g2^. This sensational 
 disparity is accounted for by the fact that the 
 grounds, being purely ornamental, and not being 
 used for any practical purpose (except in so far as 
 some portion may be used for agricultural pur- 
 poses, and is to that extent rated not on the whole, 
 but on about one half of the annual agricultural 
 value) are exempt from rating altogether (except in 
 so far as they are involved in the annual value of 
 the house). If, however, the grounds of this 
 particular property were to be let for building pur- 
 poses, they would have an annual value of several 
 thousands of pounds. It is thus apparent that 
 there is a vast difference between the " actual-use " 
 value and the practical commercial value of the 
 same land. 
 
 In other cases, again, land which might earn 
 money is kept by its owner from earning money, 
 not as presumably in this particular case simply 
 to preserve the esthetic beauty of the estate, but 
 with a view to the obtaining of still greater profits, 
 when, owing to the growth of the population and 
 the development of municipal iny)rovements (paid 
 for, be it noticed, by the rates on used land), the 
 land in question will have sustained an automatic 
 increase in its value. The result, moreover, of an 
 owner thus sitting on his land, nursing it for a rise, 
 and waiting complacently for it to ripen, is that by 
 thus restricting the supply of land, he produces in 
 
70 THE LAND AND YOURSELF 
 
 those districts in which land is in demand some- 
 thing in the nature of a corner. And this sends up 
 the rent, and thus increases his eventual profit, 
 when he ultimately sells or lets. 
 
 Now this exemption of unused land from those 
 rates to which, if used, it would be liable (we are 
 assuming that that proportion of a rate which can 
 be notionally appropriated to land falls wholly or in 
 part upon the landlord) has the practical effect of a 
 bonus on the hoarding of land. 
 
 So far, consequently, as its policy is concerned, 
 the present system of rating with regard to unused 
 land is the diametrical antithesis to that Un- 
 developed Land Duty, which was one of the most 
 interesting features of the Budget of 1909. For 
 while the Undeveloped Land Tax is a policy tax, 
 imposed with the specific object of stimulating land 
 into greater circulation, the exemption of unoccu- 
 pied land from rates operates conversely as a bounty 
 to any landowner who chooses to wait for the 
 beneficent accretion of the unearned increment. 
 The same principle applies, though of course to 
 a slightly lesser extent, with regard to land which, 
 though suitable for building, is none the less em- 
 ployed for agriculture. It follows that some reform 
 of the system of the rating, or rather of the non- 
 rating, of unoccupied land, is one of the conse- 
 quences which follow with automatic logic Mr. 
 Lloyd George's Budget. 
 
 It is interesting, moreover, to remember that the 
 demand for the removal of this particular fiscal 
 privilege on the part of that land which is either un- 
 occupied or occupied with less immediate financial 
 return than is reasonably possible, so far from 
 
THE RATING PROBLEM ^l 
 
 being the bran new war cry of the latest revolu- 
 tionaries, is a reform that has been recommended 
 and agitated for decades. Not only, in fact, did 
 the Royal Commission of 1884 on the Housing of 
 the Working Classes attribute bad housing to 
 this anomalous fiscal immunity, and advocate a rate 
 of four per cent, on the selling value on all land in 
 urban districts suitable for building, but the 
 Minority Report of the Royal Commission on 
 Local Taxation of 1901 also recommended a rate on 
 the site value of unoccupied land. 
 
 A rate on unoccupied land based on the value 
 which that land could reasonably be expected to 
 have, can be considered from two points of view : (a) 
 the point of view of a tax pure and simple; (h) the 
 point of view of a policy tax. 
 
 From standpoint (a), the imposition of such 
 a rate would clearly have the effect of broadening 
 the basis of taxation, and of redistributing the 
 burden more equally and more equitably. For, 
 inasmuch as a new source of rating revenue would 
 be tapped, the drain on the existing sources of rat- 
 ing supply would be pro tanto diminished. In 
 other words, the present rated property would be 
 released from the obligation of paying the burden 
 properly belonging to those lands, which ought to 
 be, but are not yet, the subject of rating. Conse- 
 quently it seems logical to assume that, though the 
 aggregate rating revenue would be the same or 
 increased, the actual rate of the rate would neces- 
 sarily fall. 
 
 Let us now consider what would be the 
 practical results of a rate on unused land from 
 the point of view of a policy tax. On this 
 
72 THE LAND AND YOURSELF 
 
 point there is practically a consensus of opinion 
 that so far as the towns were concerned the 
 direct result of the reform would be to stimulate the 
 building of more houses. For, when the financial 
 amenities at present attendant on keeping land idle 
 were removed, it would follow as a matter of self- 
 evident logic that owners able to get a financial 
 return from their land by letting or selling, and 
 rated on the basis of that ability, would in practice 
 get that return by putting their land to the best 
 immediate commercial use of which it was capable, 
 viz., letting or selling it for building purposes. 
 The building trade would thus tend to prosper 
 automatically from the rating of that unused urban 
 land, which is commercially capable of being built 
 on. But it would also follow that this increase in 
 the supply of houses would, so far as it went, lower 
 the price of houses. Rents, in fact, would fall, 
 congestion would be relieved, and the gravity of the 
 housing problem would be sensibly alleviated. 
 (We shall see shortly how analogous results would 
 lend to follow from an increased rate on the site 
 value of used properties.) Similar results, so far as 
 rent was concerned, would follow if vacant houses 
 were deprived of their immunity and also rated. 
 
 Let us now see how a rate on unused land would 
 operate qua a policy tax if extended to the rural 
 districts. In the first place it is interesting to 
 remember that the housing problem, so far from 
 bring limited to the towns, exhibits in many cases 
 its most gross and monstrous manifestations in the 
 agricultural districts. And this is due, not only to 
 the disinclination of landlords to keep cottages in 
 good repair, but even more to their reluctance to 
 
THE RATING PROBLEM 73 
 
 have new -cottages built at all, a reluctance which 
 necessarily tends to produce the strange paradox of 
 congested rural housing in the very midst of rural 
 depopulation. In this connection it is instructive to 
 remember that official confirmation is given to this 
 statement, by the report of the Select Committee on 
 The Housing of the Working Classes Act Amend- 
 ment Bill, 1906, which, in dealing with the diffi- 
 culty of obtaining land for labourers' cottages 
 specifically refers "to the disinclination existing on 
 the part of many landowners to sell, lease or part 
 with their land in any way for such purposes." 
 But in the same way that in the towns a rate on un- 
 used land suitable for building houses would 
 promote the building of houses, so in the country a 
 rate on land suitable for building cottages, would 
 tend to promote the erection of cottages. And the 
 building of more cottages would tend not only to 
 increase the accommodation for agricultural 
 labourers, but also, in so far as it increased the 
 supply of cottages, to send down their rent. It 
 follows that every agricultural labourer and every 
 small country tradesman interested in lowering the 
 rents, and in obtaining increased accommodation, 
 is ipso facto interested in the rating of unused land. 
 It might, of course, prove desirable to exempt 
 gardens up to a certain area. 
 
 Now let us consider the effect of a rate on that 
 land which might be used for agriculture, but is 
 not, and, under the present system, enjoys the 
 privilege of immunity. In this case it seems again 
 logical to argue that, if the financial inducement to 
 keeping idle land which might advantageously be 
 used for agricultural purposes were removed, land- 
 
74 THE LAND AND YOURSELF 
 
 owners would have more financial stimulus than 
 they have at present, to let their land. If, however, 
 agricultural land were let with greater freedom, the 
 bringing of more land into the market would tend 
 to lower the rents, and that demand for farms and 
 agricultural land, which, as we have seen, is at pre- 
 sent far in excess of the supply, would have a far 
 better chance of satisfying itself. Consequently, 
 not only every rural inhabitant anxious for better 
 housing accommodation, but also every farmer, 
 would-be farmer and agricultural labourer has a 
 direct personal interest in the rating of unused 
 agricultural land. 
 
 Let us now turn to the far more intricate ques- 
 tion of the rating of those composite properties, 
 which consist of a piece of land, and of a building 
 standing upon that piece of land. So far as this 
 class of property is concerned, the essence of the 
 present system lies in, the levying of, the rate both 
 on the land and on the improvements and build- 
 ings upon the land, the rate being, in the first in- 
 stance, paid by the occupier. The rate thus 
 operates as a land tax and a building tax rolled into 
 one. The self-evident consequence is that the occu- 
 pier is financially discouraged from making im- 
 provements in his house, since the making of 
 improvements sends up automatically the rateable 
 value of the house, and consequently the rates in 
 respect of such rateable value, which the occupier 
 is liable to pay. It is, therefore, not surprising 
 that one of the best known rating reforms now 
 before the public, is that reform which advocates 
 the lifting of all, or part of, the rate from the house 
 on to the site value of the land. This reform, 
 
THE RATING PROBLEM 75 
 
 moreover, is supported not only because it would 
 free houses and improvements from this tax on 
 their construction, but also because it is alleged, 
 that under the present system the occupier pays all 
 the rates, and the landlord pays none of them. It 
 is therefore argued that this reform would re- 
 arrange the burden in a more equitable manner, if it 
 succeeded in rating the landlord on the site value of 
 his property. The landlord, on the other hand, is 
 apt to carry the war into the enemy's country by 
 asseverating with equal cocksureness, that it is he 
 and not the occupier who pays the rates. The 
 question, therefore, who pays the rates is one of 
 primary importance in any consideration of Rating 
 Reform. In our view, however, the truth lies mid- 
 way between the two opposing views. 
 
 The theory that the occupier pays the rates 
 is based, of course, on the by no means unim- 
 portant fact that it is his hand which opens the 
 demand note, and his hand which signs and sends 
 the fatal cheque. The landlord, on the other hand, 
 takes up this attitude: " You, the tenant, are able 
 to pay the sum made up by rent plus the rates be- 
 cause, in fact, you do so. If there were no rates, I 
 should be in a position to obtain the amount of the 
 rates by way of rent. I am so much rent out of 
 pocket by reason of the rates. Therefore, I pay 
 the rates," There may, no doubt, be a certain 
 element of truth in this contention, in so far as the 
 prospective tenant, in considering whether or not 
 to take a house, and how much rent he can afford 
 to pay, will in practice take into account the 
 amount of the rates. When, moreover, the tenant 
 can rent an equally good property at an equal rent 
 
76 THE LAND AND YOURSELF 
 
 in a district where the rates are lower, it is obvious 
 that he has a lever for bargaining with his landlord 
 in the district where the rates are higher, by which 
 means he can obtain a reduction of the rent, this 
 reduction being in commercial substance equiva- 
 lent to a payment by the landlords of some portion 
 of the rates. If, on the other hand, a tenant is 
 paying at any given time for any given property 
 the full economic rent which it is commercially 
 possible for him to pay, it is obvious that on any 
 rise in the rates he can only continue to be a tenant 
 if his landlord, by reducing his rent pro tanto, 
 thereby takes a course practically equivalent to a 
 payment of the addition to the rate. But it is also 
 obvious that in that vast majority of cases, in which 
 the payment of slightly additional rent will not 
 drive the occupier to either the bankruptcy court or 
 the workhouse, however oppressive it may in fact 
 be, and certainly in all those cases where the leases 
 are for a term of years, any addition to the rates 
 beyond that horizon, which was visible at the time 
 of the bargain, necessarily falls upon the occupier. 
 So far, again, as those improvements are concerned 
 which the occupier makes of his own initiative 
 (in those cases when he is not deterred by 
 the prospect of the rateable value of his house 
 being sent up thereby automatically) it is obvious 
 that it is the occupier who pays the increased 
 rate, to which the property will thereupon be- 
 come liable. When, on the other hand, the 
 tenant is paying the maximum rent which it is 
 possible for him to pay, it is obvious that the rate 
 falls upon the landlord. This principle, however, 
 can, perhaps, be seen most clearly if we take those 
 
THE RATING PROBLEM 77 
 
 cases where the rates are compounded for. If, for 
 instance, the maximum amount which the tenant is 
 capable of paying is seven shillings per week, and 
 the landlord would be in a position to obtain that 
 sum from him, rates or no rates, it is obvious that 
 the imposition of the rate falls upon the landlord, 
 inasmuch as the maximum point of rent having 
 been already reached the landlord Cannot recover 
 from the tenant the additional increase necessitated 
 by the rate. If, on the other hand, one assumes 
 that if there were no rates the tenant would be pay- 
 ing six shillings per week, it follows that up to the 
 point of an extra shilling per week the landlord 
 could shift the tax on to the tenant, but that beyond 
 that he would be compelled to bear it himself. 
 
 In those cases consequently where without the 
 rates the tenant is not paying quite the full rack rent 
 (and it is fair to assume that these are the majority 
 of cases) the landlord has, at any rate, the oppor- 
 tunity of shifting the tax on to the tenant. In view, 
 then, of these various considerations, it seems safer 
 to say that the incidence of rating is governed by 
 the principle of diffusion. 
 
 In this connection it is interesting to quote from 
 the Majority Report of the Royal Commission on 
 Local Taxation, 1901. 
 
 " The real as opposed to the apparent incidence 
 of local taxation in towns falls partly upon the 
 owner of the land, partly upon the house owner, 
 and partly upon the occupier. The proportions in 
 which the burden is distributed are difficult to 
 determine, and depend upon a variety of circum- 
 stances, among which the demand for the supply of 
 houses is the most important." 
 
78 THE LAND AND YOURSELF 
 
 But, perhaps, one of the most serious arguments 
 in favour of a readjustment of the present system 
 of rating is this. While under the present system 
 the rate falls equally on the value of the house and 
 on the value of the land, it ought in equity to fall 
 less heavily on the house which is the product of 
 personal enterprise, and tends, if left to itself, to 
 depreciate, than on the value of the land which is 
 made by the communal enterprise, and tends, if 
 left to itself, to appreciate- These considerations 
 apply with peculiar force when the rates are chiefly 
 directed to public improvements, and where there 
 is a direct tenure on a short lease between the 
 owner and the tenant. The case may be shortly 
 put in this way. Disregarding all question of 
 tenant's improvements, and assuming that the in- 
 cidence of the rate is equally diffused between the 
 landlord and the tenant, it would appear that inas- 
 much as the landlord's interest in the land is far 
 more substantial and permanent than that of the 
 tenant, and that the substantial result of the rate is 
 to improve the value of the land, the tenant is 
 paying a tax of which the owner of the land value 
 reaps the substantial benefit. It follows from 
 this consideration that one of the objects of some of 
 the champions of Rating Reform (apart altogether 
 from those important results from a rate on site 
 values qud a policy tax which we shall subse- 
 quently consider) is to shift the incidence of the 
 rate not merely from thing to thing, but from per- 
 son to person, viz,, not merely from building to 
 land, but from occupier to owner of land value. 
 
 That such a consummation would necessarily 
 follow even from a complete lifting of the rates 
 
THE RATING PROBLEM 79 
 
 from "building value" on to "land value," 
 one hesitates to affirm with certainty. Even on the 
 extreme hypothesis that the present rates were 
 superseded by a special site value rate payable in 
 part by means of deduction from rent on the Income 
 Tax methods of collecting the inhabited House Duty 
 there would still remain the possibility of some of 
 this new burden being shifted by the lessor on to 
 the occupier. In so far, however, as every tax, 
 though no doubt usually diffused to a certain ex- 
 tent, always shows some tendency to stick where 
 it was first put, it seems logical to suggest that it 
 would, at any rate, transfer some of the burden from 
 the occupier to the owner, that portion falling on 
 the owner which was proportionate to his interest 
 in the site value, though, of course, the owner 
 might endeavour to get back the deduction by 
 increasing the rent. 
 
 But the most palpable result of the rating of site 
 values would be the shifting of rates, not so much 
 from the occupier to the owner of any particular 
 property, but rather from the owner and the occu- 
 pier of a property with a land value less than the 
 improved value on to the owner and occupier of a 
 property, with a land value greater than the im- 
 proved value, while those properties where the 
 structural value and the site value equally balanced 
 would be unaffected by the change. Under the 
 present system, to borrow an example from the 
 Minority Report, three properties of which the site 
 value, plus the structural value, are altogether equal 
 to ^100 per year, would, if a sum of £3 had to be 
 raised, each contribute the equal amount of £1, 
 however much the proportions of these values 
 
8o THE LAND AND YOURSELF 
 
 varied. If, however, site value alone superseded 
 site value plus structural value, as the basis of 
 valuation, a property where the site value was £2$, 
 and the structural value was £7$, would contribute 
 only ten shillings; and conversely, a property 
 where the site value was £75, and the structural 
 value was £25, would contribute £1 los. 
 
 It follows that all lessors and all occu- 
 piers of property, where the site value is less 
 than the structural value, would find their rate bur- 
 den dimished by the rating of site values. Con- 
 versely, all lessors and all occupiers of property, 
 where the structural value is less than the site value, 
 would find their burden increased by the rating of 
 site values. 
 
 But, however sound these arguments may be, it 
 is wise to be on guard against those enthusiastic 
 reformers who, labouring under the two-fold 
 delusion that the ground landlord has never pre- 
 viously been taxed at all for rating purposes, and 
 that the beneficial interest in the site value is in- 
 variably concentrated in the ground landlord, 
 would tend to turn the rate into a tax on the site 
 value raised from the landlord, and from him alone. 
 For, in our view, the chief difficulty in Rating 
 Reform is not so much the question, should a 
 special and additional rate be levied on the site 
 value and from the site owner? as the questions 
 "m whom is the site value?" and " how shall the 
 rate be levied?" Indeed,- it is almost childishly 
 obvious that ground landlord and owner of site 
 vahie are by no means interchangeable terms. 
 When, for instance, a ground landlord lets a pro- 
 perty on a long lease, and, owing to increased 
 
THE RATING PROBLEM 8i 
 
 population and local improvements, the property 
 appreciates in value, it is obvious that the benefit 
 of this rise (so far, of course, as not already allowed 
 for by a previously increased price in the original 
 bargain between the landlord and the lessee) accrues 
 to the lessee, and only reaches the landlord on the 
 falling in of the reversion. 
 
 Frequently, moreover, uncovered land is let at a 
 ground rent by the freeholder to a builder. The 
 builder having first built blocks of houses on the 
 land will frequently let it to a speculator, who in 
 turn lets it to the ultimate occupier. In such cases 
 all these persons from the freeholder to the specu- 
 lator (and possibly in certain cases and circum- 
 stances even the occtipier, as in cases where the 
 value of shops is increased through the general 
 development of a district), will have a specific 
 interest in the increase of the land value. It will 
 consequently be appreciated how difficult it may 
 prove successfully to demarcate the particular pro- 
 portions of site value owned by the various parties. 
 But, though teeming with complexity, the assess- 
 ment of site values and their apportionment among 
 the proper parties is perfectly feasible, and was, in 
 fact, found so by both the Majority and Minority 
 Reports of the Royal Commission on Local Taxa- 
 tion, though with varying degrees of enthusiasm .* 
 In fact, the complexity of the valuation, though 
 
 *A scheme was in fact submitted by Mr. Harper, now the chief 
 valuer of the L.C.C., which provided for the rate being levied in 
 the first instance on the occupier with rules for deduction by the 
 occupier, of the proper proportion from his lessor, and so on aJong 
 the chain of tenure. This scheme was very favourably com- 
 mented on by the Minority Report of the Royal Commission on 
 Local Taxation, though it was not thought sufficiently perfect to 
 justify adoption in its existing form. 
 
82 THE LAND AND YOURSELF 
 
 it may render somewhat intricate the machinery of 
 the reform fails to affect its essential principles. 
 
 Apart from the question of "who owns 
 the site value?" the Rate Reformer is also 
 confronted with the problem of "how shall exist- 
 ing contracts be treated?" If, for instance, the 
 total or greater part of the rate is levied on the site 
 value from lessors and sub-lessors who (except in 
 those cases in which they have compounded with 
 their tenants for their rates) pay their share of the 
 rates not directly in cash, but indirectly in the 
 negative way of decreased receipts of rent, such 
 persons would obviously be in a worse position 
 with regard to existing leases than that in which 
 they would find themselves with regard to leases 
 which had not been entered into. For while in the 
 negotiation of new leases they would, at any rate, 
 have a chance of shifting back on their lessees and 
 sub-lessees a certain proportion of that tax or rate 
 (which, so far as immediate incidence is concerned, 
 was being taken off the shoulders of the occupier, 
 and put on to the shoulders of the owner of the land 
 value), they would find themselves, so far asi exist- 
 ing contracts were concerned, subject to a higher 
 burden, and their lessees would find themselves 
 subject to a less burden than that which had origin- 
 ally been the basis of the contract between them. 
 It thus follows that in any remodelling of the rat- 
 ing system, provision must be made that the new 
 arrangement should not press too heavily on exist- 
 ing contracts, though it must be borne in mind 
 that the imposition of every new tax is in itself an 
 encroachment on existing conditions and in itself 
 an interference with vested interests. 
 
THE RATING PROBLEM 83 
 
 With regard therefore to the question of in- 
 cidence, the effect of following the recommendation 
 of the Minority Report of the Royal Commission 
 on Local Taxation would be to make the persons, 
 whether landlords or lessees, who derived the most 
 benefit from that site value, which was built up not 
 only by the natural growth of the population, but 
 by the specific improvements effected by the 
 municipality, pay more for that benefit than those 
 persons who derived less benefit. As between 
 landlord and occupier, on the other hand, it would 
 have some tendency to shift the burden off the 
 occupier and on to the landlord. 
 
 But perhaps the most convincing arguments in 
 favour of a rate on site values are the economic 
 results that would ensue from such a rate viewed 
 in its capacity of a policy tax. For, under the pre- 
 sent system, a rate which stalks like an increasing 
 shadow behind any improvement in any building 
 must necessarily act as a hostile tariff to the build- 
 ing industry. In this connection it is particularly 
 relevant to quote the following concentrated 
 passage from the Report of the Minority of the 
 Royal Commission. — Col. 4,750, p. 27. 
 
 " In the first place there is a strong argument for 
 rating site values on the ground of public policy, 
 regard being had to the effect of taxation on in- 
 dustry and development. Our present rates indis- 
 putably hamper building. Buildings are a 
 necessary of life, and a necessary of business of 
 every kind. Now the tendency of our present rates 
 must be generally to discourage building — to make 
 houses fewer, worse and dearer. As Mr. Fletcher 
 Moulton says : ' A tax upon buildings propor- 
 
84 THE LAND AND YOURSELF 
 
 tionate to their value necessitates that the rent of 
 buildings should represent a high rate per cent, on 
 their cost. In other words it drives people to take 
 (and therefore drives builders to build) poorer 
 houses. Taxation on the land has no such 
 effect.' " 
 
 Let us study more specifically the effect on 
 urban districts of the special rating of site 
 values. So far as the central districts are concerned 
 where, speaking generally, the site value bulks 
 largest, it has been calculated that the effect would 
 be to promote an increased building activity. For, 
 with the tax taken off building, every landlord has 
 a direct pecuniary inducement to utilise the build- 
 ing capacities of his land to the fullest extent. It 
 is thus reasonably likely that many buildings 
 would be demolished, and that larger and more 
 commodious structures would be erected in their 
 place. In fact, the situation of land built on 
 to less than its full capacity is, in principle, 
 analogous to that of unoccupied land, in so far as 
 it is fair to say that a plot of land capable of sup- 
 porting an eight storey building, but in point of 
 fact only supporting a four storey building, is 
 really unoccupied with regard to four storeys. And 
 in the same way in which we have seen that in land 
 unoccupied altogether a rate on site values would 
 stimulate building, so it is logical to assume that 
 a rate on the site value of land unoccupied as to one 
 half of its building capacity would correspond- 
 ingly stimulate building, and would tend to 
 bring about, at any rate in the central districts, the 
 advent of the sky-scraper. It would follow from 
 these considerations that the supply of hous- 
 ing accommodation would be increased, from which 
 
THE RATING PROBLEM 85 
 
 one is justified in inferring that the rent of hous- 
 ing accommodation would be decreased. We 
 have already observed that except in those cases 
 where the tenant was paying independently of the 
 rating the full maximum or economic rack rent, the 
 burden of the rate would fall in whole or in part 
 upon the rent. Under a scheme which exempted 
 houses from taxation, however, it would follow 
 that a supply of housing accommodation could be 
 brought into existence without any corresponding 
 liability for rating being brought into existence, as 
 is the case under the present system. Housing 
 accommodation would be brought into existence 
 minus one of the causes which tend to keep up 
 rent, that is to say, housing accommodation could 
 be let at a lower rent than that hitherto subsisting. 
 So far, therefore, as the central districts are 
 concerned, the rating of site values would bring 
 about more accomviodation and lower rents. It is 
 thought in some quarters that it might be still 
 necessary to have some precautionary measures in 
 order to preserve a certain minimum of amount of 
 open spaces, and prevent any undue congestion of 
 the population. Yet it would seem that the appre- 
 hension of further congestion is to some extent ill 
 founded, for while there might be more people to 
 the square yard of " site space," there would be less 
 people to the square yard of "house space." 
 Of course, it might be necessary, in the interests of 
 health, to make provision for gardens and squares 
 being subject to a small or purely nominal site rate, 
 to prevent the building over of many of those loop- 
 holes of fresh air which are so essential to the well- 
 being of any big city. 
 
86 THE LAND AND YOURSELF 
 
 Leaving now the central districts, we come to the 
 intermediate parts of a big town. These parts are 
 already well built over, but do not offer such in- 
 ducements to additional building as is the case in 
 the more central districts, where the high value of 
 the site would be likely to render profitable 
 any extension of the premises. So far, how- 
 ever, as there is any opportunity either for 
 new building, or for demolition, followed by the 
 erection of a larger and more commodious structure, 
 building even in the intermediate districts would be 
 naturally stimulated. And, as we have already 
 seen, the more the housing accommodation the 
 lower the rents. 
 
 Passing now from the intermediate districts or 
 middle rings, we come to the outskirts. And here 
 the effect of a site value rate, qua. a policy tax, would 
 be as pronounced as, if not indeed more pro- 
 nounced than, in the central districts. For it is in 
 the outskirts that there is to be found the largest 
 area of land already ripe, or, at any rate, ripening 
 for building. With the effect of a site value rate 
 on unused land we have already dealt on pages 
 72 to 74, when we saw how potent a stimulus 
 it would provide for increased building, and, conse- 
 quently, for decreased rents. But, while the rating 
 of an unused site supplies, as it were, a penal or 
 negative stimulus for using the same, the exemp- 
 tion of building from rates supplies what we may 
 call a beneficial or positive stimulus, for not only 
 building, but building up to the maximum struc- 
 tural capacity. And this stimulus lies in the fact 
 that the rate being the same, whatever the 
 nature or size of the building, the builder being 
 
THE RATING PROBLEM 87 
 
 able to build without any corresponding liability 
 for rates will be able to make a greater profit than 
 he can make under the present system from 
 the same expenditure of money. The result would 
 be, not only that the number of buildings would 
 increase, but (which is quite as important econo- 
 mically) the accommodation of the individual 
 buildings would be increased, and, as we have 
 alfeady observed, an increase in housing accom- 
 modation, and the exemption of houses, qud 
 houses, from liability to rates means at the same 
 time a decrease in rents. 
 
 In the rural districts the question of rating " used 
 property " is, no doubt, considerably more com- 
 plicated. Let us first consider those parts of a 
 rating union in a rural district which are of an 
 urban or quasi-urban character. In these the effect 
 of rating on the basis suggested, would no doubt 
 be, as in the urban districts proper, to produce in- 
 creased building accommodation, and to lower 
 rents. 
 
 Analogous considerations would apply to farm- 
 ing land. Under the present rating system, for 
 instance, all farming land, when used, is rated on 
 its total annual value, irrespective of how far that 
 value consists of the natural physical quality of the 
 land, plus its position in respect of market and rail- 
 ways, and how far of artificial improvements. It 
 is clear that the more vigorously a farmer improves 
 his farm, the higher he increases his rates. It 
 consequently follows that if the natural value of the 
 land were the basis for the rating, improvements 
 would cease to be penalised, and a new impetus 
 would be given to agriculture. 
 
88 THE LAND AND YOURSELF 
 
 So far, of course, as incidence was concerned, the 
 result would be to shift the burden of rates off the 
 tenant and owner of land where the natural value 
 plus site value, was less than the improved value, 
 and on to the tenant and owner of land where the 
 unimproved value was more than the improved 
 value. As between the tenants and owners of land, 
 where the unimproved value exceeded the improved 
 value, the rate would fall with greater or less inten- 
 sity, according to the greater or less margin of 
 the unimproved over the improved value. 
 
 But the essential difficulty in the reform of rating 
 in rural districts lies in the fact that dwelling land 
 and farm land overlap in the same union, 
 frequently, indeed, in the same parish. 
 
 Now if the ratio of the improved value to the un- 
 improved value of dwelling property were roughly 
 the same as the ratio of the improved value to the 
 unimproved value of agricultural property, it 
 would be impossible for the burden to be shifted off 
 one class of property and transferred to another. 
 All that would happen would be that the basis of 
 the calculation would be altered, while the actual 
 amount paid would remain the same. If, how- 
 ever, there is any ground for the assertion that the 
 improved value of rural dwelling property bulks 
 far more largely in proportion to the unimproved 
 value than does the improved value of farm land to 
 the unimproved value of farm land, it follows that 
 the result of adopting a land value basis of rating 
 in rural districts would be to transfer the burden, 
 borne at present by the urban or quasi-urban parts 
 of the union (inclusive, of course, of the burden 
 borne by isolated dwelling houses), to those parts of 
 
THE RATING PROBLEM 89 
 
 the union which consisted of agricultural land. 
 This, of course, would be inexpedient and 
 impracticable. 
 
 It may, of course, prove feasible to devise some 
 scheme by which a union would be bisected into two 
 classes of rateable property, viz. : agricultural and 
 dwelling, a calculation made of the respective pro- 
 portions of the rates paid by these two classes to the 
 total, and each class were then left to raise 
 separately its proper proportion. Or, again, it 
 might prove practicable to increase the rebate at 
 present enjoyed by agricultural property under the 
 Agricultural Rates Act of 1896, so as to cover any 
 additional burden that would be shifted under the 
 new system from dwelling property on to agricul- 
 tural property. In the meanwhile, though the 
 rating of the unimproved value of rural districts is 
 as fascinating in theory as is land value rating in 
 urban districts, the practical difficulties at present 
 are far more formidable. They are not, however, 
 necessarily insuperable, and the completion of the 
 Budget Valuation may supply the data for an 
 efficient working scheme. 
 
 The complications, of course, attending the rat- 
 ing of used and developed property in rural dis- 
 tricts, would not in any way affect the question of 
 rating unused and undeveloped properties in rural 
 districts, a procedure which would have the effect 
 of lessening the burden on the part of all those 
 who at present pay rates on used and developed 
 property within the union, whether agricultural 
 property or dwellers' property. 
 
 In concluding this survey of perhaps the most 
 difficult part of the whole land question, it is only 
 
90 THE LAND AND YOURSELF 
 
 fair to state that, for the sake of reaching the main 
 principles at issue, we have used somewhat 
 freely the words "rating reform" and " rating of 
 sites values " without adopting unreservedly any 
 specific scheme. It is, of course, obvious, that the 
 results which we have outlined as logically follow- 
 ing on Rating Reform would vary in degree, 
 according to the particular machinery of the new 
 system. The stimulus to the building trade, for 
 instance, with its consequent lowering of the rents, 
 would operate with greater or less effectiveness, 
 according to whether the tax were entirely lifted 
 from the house on to the land, as is advocated by 
 the more advanced reforms, or whether, on the other 
 hand, as the Minority Report of the Royal Com- 
 mission on Local Taxation recommended, the 
 valuation of all properties were bisected into struc- 
 tural values and site values and a special additional 
 rate charged on the site value. Similarly, the in- 
 cidence of any new system of rates as between 
 occupier and landlord would, allowing, of course, 
 for the natural principle of diffusion, depend on 
 whether or not the new rate was (a) levied directly 
 on the landlord, leaving it for the landlord to shift 
 the incidence on to the tenant, (b) levied directly on 
 the tenant, leaving it for the tenant to shift the 
 incidence on to the landlord, or (c) levied equally 
 on the tenant and the landlord. 
 
 So far, however, as incidence is concerned, the 
 main effect of Rating Reform would be, as we have 
 already pointed out, not so much to shift the in- 
 cidence of the rate from the occupier, qud occupier, 
 on to the landlord, qud landlord (though, under 
 certain circumstances, that might well be one of the 
 
THE RATING PROBLEM 91 
 
 results), but to relieve the occupiers and owners of 
 property, where the structural value exceeds the site 
 value, by transferring part of the burden on to the 
 occupiers and owners of those properties where the 
 site value either exceeds the structural value, or, as 
 in the case of the uncovered or undeveloped land, 
 constitutes the whole value. 
 
 But desirable though Rating Reform may be, 
 from the point of view of incidence, it is sounder 
 still when considered as a proposal for a policy tax. 
 For, as we have seen, its natural tendency would 
 be to stimulate both building and agriculture, to 
 encourage improvements, to multiply housing 
 accommodation, and to diminish rents. 
 
CHAPTER VII 
 
 LAND TAXES IN AUSTRALASIA 
 
 Policy Taxes — Fines on Improvements turned into Premiums 
 — New Zealand — Graduation — ^Absentee Landlords — Qualified 
 Success — Rating on Unimproved Values — Stimulating the 
 Building Trade — Lowering the Rate — New South Wales — 
 South Australia — ^Western Australia — Differentiation between 
 Developed and Undeveloped Land — Tasmania — Federal Tax. 
 
 It will naturally be open to question how far the 
 results which we have indicated as likely to accrue 
 from the taxation of land values are simply a matter 
 of theoretical speculation, and how far, on the other 
 hand, they are a matter of concrete experience. It 
 will, consequently, be of advantage to glance 
 briefly at the Land Taxes of the Australasian 
 Colonies, all (with the exception to some extent of 
 New South Wales) policy taxes, and imposed with 
 the specific object of changing the concentration of 
 large quantities of land in a few hands into a more 
 equal and multifarious distribution. How press- 
 ing, indeed, the land monopoly question was once 
 in Australasia may be gauged from the fact that 
 twenty years ago in the four colonies of New South 
 Wales, New Zealand, Victoria and South Australia 
 2,100 persons held forty-three million acres. Side 
 by side with the actual land taxes goes that 
 system of land rating and rating on the unim- 
 proved value of property, which, like an ordinary 
 land tax, tends to stimulate the circulation of 
 land, but has the even more important effect of 
 
 92 
 
LAND TAXES IN AUSTRALASIA 93 
 
 turning a fine on improvements into what is 
 virtually a premium. 
 
 It is in New Zealand that land taxation is to be 
 seen in its most advanced form, for it was in New 
 Zealand in 1891 that the system of land monopoly 
 (we use the term with no sinister innuendo, but 
 merely to denote the holding of disproportionately 
 large areas of land by disproportionately few pro- 
 prietors) had reached so acute a stage that 585 per- 
 sons owned one-third of the occupied territory, and 
 the inhabitants were already emigrating from the 
 underpopulated country. 
 
 It was to meet this condition of economic incon- 
 venience, that there was passed the Land Income 
 and Assessment Act of 1891 and its succeeding and 
 amending Acts. By this Act a flat tax of one 
 penny on the capital value of the land was imposed. 
 Inasmuch as the object of the Act was to burst up 
 the Large Holding rather than to tax the Small 
 Holding, it is noteworthy that all holdings up to a 
 capital value of £$^0 were exempt. (One may 
 remark that the orthodox Single Taxer in the 
 person of Mr. Outhwaite, views this exemption with 
 apparent pain and disapproval.) And on the same 
 principle, not only the amount, but also the propor- 
 tionate rate of the tax increased with the value, 
 rising on a scheduled scheme of graduation by 
 steps of one-eighth of a penny, till it reached two- 
 pence in the pound on properties of a capital value 
 of ;^5>ooo. Note also that an additional tax of 50 
 per cent, was levied on absentee landlords. 
 
 The Land Income and Assessment Act was 
 followed by the Rating and Unimproved Value 
 Act of 1896. This measure conferred on local 
 
94 THE LAND AND YOURSELF 
 
 bodies the option of substituting a rating basis 
 on the site of unimproved value of property for the 
 previously existing basis of the total value (viz., 
 improved value, plus unimproved value), and was 
 adopted by Wellington and Christchurch, the two 
 principal towns in the Colony. 
 
 How far have the Land Taxes achieved the 
 object for which they have been imposed, viz., 
 the breaking up of the big holdings? To 
 an extent, it would appear, which shows a suc- 
 cess, qualified, no doubt, but none the less real. 
 The result has been marked, but neither sensational 
 nor drastic. Mr. Outhwaite is, no doubt, per- 
 fectly warranted in saying that during the period 
 1 889- 1 906 there was a decrease of nearly three 
 million acres in holdings of 10,000 acres and up- 
 wards, but, as Mr. Pember Reeves has wisely 
 pointed out, one of the features of the economic 
 era, immediately subsequent to the imposition of 
 the tax, has been the increase in the number to the 
 middle estates, viz., estates of from 1,000 to 10,000 
 acres. For instance, while in the period 1892 to 
 1902 the decrease in the holders of 50,000 acres and 
 over was only from thirty to twenty-three, in 
 holders of between 29,000 and 50,000 acres only 
 from 84 to 70, and in holders of between 10,000 to 
 20,000 acres only from 148 to 123, holders of 
 between 5,000 and 10,000 acres increased from 208 
 to 260, and holders of between 1,000 and 5,000 
 increased from 1,558 to 2,144. 
 
 Looking at the matter broadly, and taking into 
 account the increase in the smallholders, which 
 was, of course, the most marked (the holders of 
 between 5 and 100 acres increased from 19,369 to 
 
LAND TAXES IN AUSTRALASIA 95 
 
 20,799, and the holders of between lOO and i,ooo 
 acres increased from 17,538 to 20,316), the total of 
 freeholders in the Colony increased in the same 
 period from 91,501 to 115,713, and from 115,713 to 
 approximately 150,000 in the period 1902 to 1906. 
 It must, however, be borne in mind that part of this 
 increase was due to the Government policy of land 
 purchase, and that during the nine years prior to 
 the inauguration of the new system the number of 
 the freeholders had increased from 91,501 to 
 1 15,713. One may, in fact, say that though the tax 
 did work, it tended to do so sluggishly, and that a 
 further turn of the screw was needed in order to 
 quicken the manifestation. Thus the scheme of 
 graduation was adopted, and rose in shorter sub- 
 divisions (by one-sixteenths) and at shorter inter- 
 vals, while an extra tax of £2 per cent. (50 per cent, 
 of the annual value), in addition to the ordinary tax, 
 was imposed on properties worth ;^20o,ooo or more 
 as recently as 1907. 
 
 It is interesting also to notice that the land tax 
 was imposed, not only on land, but also on mort- 
 gages of land. 
 
 Let us now turn to the effect on building, and on 
 rents, and on the general economic prosperity of 
 that exemption from taxation of all improvements, 
 which was not only part of the policy of the Land 
 and Income Assessment Acts, but, as we have seen, 
 was the whole essence of the Rating on Un- 
 improved Value Act of 1896. On this point the 
 figures quoted by Mr. Heyes, the New Zealand 
 Commissioner of Taxes, speak very convincingly. 
 During the twelve years following 1893, over 
 ;^30,ooo,ooo was expended on improvements, of 
 
96 THE LAND AND YOURSELF 
 
 which ;^ 1 5, 000, 000 is allocated to the years 1902 to 
 1905, the proportionate rate of increase being 
 twenty per cent, during 1893 to 1902, and thirty 
 per cent, during 1902 to 1905. 
 
 So far as the results of the lifting of the rates are 
 concerned, the report of Mr. Heyes describes with 
 such precision the phenomena which we indicated 
 in our preceding chapter as liicely to arise from the 
 rating of site values, as to merit quotation at some 
 length. 
 
 Building Trade. The effect has certainly been 
 to greatly stimulate the building trade. The object 
 and tendency of this system of taxation is to compel 
 land being put to its best use, so that the greatest 
 amount of income may be derived from it, thus ren- 
 dering it unprofitable to hold land for prospective in- 
 crement in value. It has been the direct cause of 
 much valuable suburban land being cut up and placed 
 on the market, and thus rendered more easily avail- 
 able for residential purposes, and of the sub-division 
 of large estates in the country, resulting in closer 
 settlement. 
 
 The effect on urban and suburban land has been 
 very marked. It has compelled owners of these to 
 build, or sell to those who would ; it has thus caused a 
 great impetus to the building trade. An owner of 
 land occupied by buildings of little value, finding that 
 he has to pay the same rates and taxes as an owner 
 having his land occupied by a valuable block of build- 
 ings, must see that his interests lie in putting his 
 land to its best use. The rebuilding of this City 
 (Wellington), which, for some years past, has been 
 rapidly going on, is largely attributable to the taxa- 
 tion and rating on land values, so that the supply of 
 building materials could not at times keep pace with 
 the demand. 
 
 Rent. The tendency of this system of taxation 
 is not to increase rent, but, on the contrary, as the 
 tax becomes heavier, it tends to bring into beneficial 
 
LAND TAXES IN AUSTRALASIA 97 
 
 occupation land not put to its best use, and so re- 
 duces rent, the improvements being entirely free 
 from all rates and taxes. In some cases, where land 
 suitable for building sites is limited, high rents have 
 been maintained, notwithstanding the tendency of 
 the system. 
 
 Vacant Sites. The effect has been to cause 
 vacant sites being put to their best use by expendi- 
 ture on improvements. On vacant sites the rates 
 and taxes are increased, and continue to increase as 
 the adjacent sites which have been improved increase 
 in value. It thus becomes unprofitable to continue 
 to hold land unimproved. 
 
 Incidence of Taxation. The taxation on build- 
 ing property, where the improvements exceed the un- 
 improved value, is decreased ; where the unimproved 
 value exceeds the improvements, the taxation is 
 increased. 
 
 Land Speculation. The tendency is to discour- 
 age speculation, as the tax partially or wholly dis- 
 counts the rise in value, but land speculation has not 
 ceased in some districts where the system has been 
 adopted, because : — 
 
 (i) The tax has not been sufficient to render 
 speculation unprofitable in the large cities, 
 though- it has been a factor to be reckoned 
 with. 
 (2) The rapid increase in values has caused 
 speculation in spite of the tax. 
 
 Let us now turn from New Zealand, where we 
 have seen Land Taxation in its most advanced 
 stage, to New South Wales, where, at any rate, so 
 far as concerns the bursting up of the large pro- 
 perties, the Land Taxation has been, comparatively 
 speaking, a failure. In that Colony the basis of the 
 system was a flat non-graduated land tax of one 
 penny in the pound on the capital value, with an 
 exemption, however, on all land up to a capital 
 value of ;^240. It is only fair to state that this 
 
 7 
 
98 THE LAND AND YOURSELF 
 
 was a revenue rather than a policy tax, realising in 
 fact as much as ;^330,ooo in the year 1 909-1910. It 
 is, consequently, not surprising that the tax, 
 speaking generally, should not have produced any 
 violently drastic results, although so far as the 
 country was concerned the actual tax, coupled with 
 the fear of its increase, would appear to have pro- 
 duced the sub-dividing of some of the cumbersome 
 estates in the country. Yet none the less in the 
 cautious report which they furnished to the Colonial 
 Office in 1906, Mr. Spiller, the First Commissiorier 
 of Taxation, and Mr. Hall, the Acting Statistician, 
 find that at any rate to some extent the land tax 
 tended to encourage the building trade, to lower 
 rents, and discourage the locking up of land for 
 speculative purposes. In 1905 and 1906, however, 
 a new development was introduced by the passing 
 of the Shires Act and the Local Government Exten- 
 sion Act. These Acts produced a drastic transfor- 
 mation in the rating system. For it was specifically 
 enjoined that a general rate of one penny in the 
 pound should be levied by local bodies on the capital 
 unimproved or site value of the property, while 
 local bodies were given an option of raising addi- 
 tional rates in excess of the general rate, also on the 
 unimproved value of the property, an option which 
 was, in point of fact, usually exercised. At the same 
 time the national land tax of one penny in the 
 pound was remitted. 
 
 The principal effect of the Shire Act has been the 
 removal of a great part of the incidence of the rate 
 from those properties where the site value was 
 less than the structural value, to those properties 
 where the site value was more than the structural 
 
LAND TAXES IN AUSTRALASIA 99 
 
 value. It would appear, moreover (anH is, indeed, 
 intrinsically probable), that the site value bulked 
 larger in proportion to the structural value in the 
 residences of wealthy individuals; and smaller in 
 proportion to the structural value, in the cottages of 
 the poor and the dwellings of the middle class. So 
 far, consequently, as incidence is concerned the 
 rates have been lifted off the owners and occupiers 
 of the poorer and more moderate class of dwelling, 
 and shifted on to the owners of the richer and more 
 elaborate class of dwelling. It would also appear 
 likely that there is truth in the allegation that, apart 
 from incidence altogether, the result has been to 
 stimulate the building trade and to decrease the 
 price of land and rents. Yet, so far as bursting up 
 is concerned, the influence of land taxation would 
 appear to have been, comparatively speaking, 
 slight, and as comparatively recently as 1910 we 
 have it on the authority of Mr. Hughes, the 
 Attorney General for the Colony, that one-four 
 hundred and fiftieth of the population still owned 
 three-eighths of the land. 
 
 South Australia, again, has adopted in the Taxa- 
 tion Act of 1884 a system of taxation for national 
 purposes on the unimproved value of the land at 
 the rate of an all round halfpenny in the pound. 
 Up to 1885 the economic effects were insignificant. 
 By the Taxation Act Amendment Act, however, of 
 1894, the principle of graduation was introduced by 
 the tax being raised to one penny in the case of 
 values over ;^5,ooo, and an additional twenty per 
 cent, being imposed on the taxes payable by 
 absentees (the flat rate being increased to three 
 farthings in 1904), and sincfe 1894 the results of the 
 
100 THE LAND AND YOURSELF 
 
 Act have been more perceptible. One should be on 
 one's guard, of course, against exaggerating the 
 effects of the land tax, which, on the high authority 
 of Mr. Pember Reeves, have been small, yet it is 
 interesting to quote an important passage from the 
 report of Mr. Arthur Searcey, Deputy Commis- 
 sioner of Taxes for the Colony: " It became dis- 
 tinctly noticeable that large holders of land were 
 realising and disposing of their land as opportunity 
 offered, and especially so with regard to absentee 
 owners where they could sell, and were untram- 
 melled by any trust restrictions. Considerable 
 areas of suburban land, formerly the property of 
 large owners, have been sub-divided, and many per- 
 sons have purchased a plot of land for residential 
 purposes and built thereon. For years past there 
 has been a gradual closing up of all vacant land 
 around the City, a great deal of which may be attri- 
 buted to the land tax, more particularly since the 
 application of additional and absentee land taxes in 
 conjunction with the increased rates of income tax 
 imposed at the same time, but much of this 
 would have occurred, irrespective of taxation, 
 with the gradual growth and advancement of the 
 State. . . . The effect on the building trade has 
 been beneficial owing to the sub-division of 
 suburban lands and the building of residences as 
 previously mentioned." 
 
 So far, however, as country land was concerned, 
 the imposition of the tax by no means prevented that 
 rise in the value of rural areas, resultant upon the 
 introduction into the State of the improved methods 
 of agricultural science. 
 
 Land Taxation on similar principles is also to be 
 
LAND TAXES IN AUSTRALASIA loi 
 
 found in Victoria, Western Australia, and Tas- 
 mania. In Victoria the tax is li per cent, on the 
 capital land value, with a 50 per cent, increase on 
 absentees. 
 
 The system of Western Australia, again, is in- 
 teresting as showing the important principle 
 of differentiation between developed and un- 
 developed land. Thus, while there is a tax of a 
 halfpenny in the pound on the capital value of land 
 when improved, the tax on the value of land when 
 left in its natural unimproved condition is one penny 
 in the pound. In Western Australia also the tax 
 on absentee landlords is increased by 50 per cent. 
 
 In Tasmania the tax is one penny in the pound 
 on the land of unimproved value, the principle of 
 graduation being introduced on properties worth 
 ;^5,ooo or more, with the result that the tax rises as 
 high as £2 los. per cent, on estates of ;^20o,ooo or 
 over. Perhaps the most convincing proof 
 that, however beneficial they may have been 
 in other respects, all the land taxes have failed to 
 effect a bursting up of the large properties on any- 
 thing like so large a scale as had been originally 
 anticipated, is the new Federal Land Tax levied by 
 the Commonwealth of Australia, quite irrespective 
 of the State taxes. 
 
 This Federal Tax, which only affects properties 
 of a capital value of ;£'5,ooo or upwards, starts at a 
 penny, and is graduated, rising as high as sixpence 
 in the pound on the capital value, or 12s. 6d. in the 
 pound on the rental value (taking the rent at four 
 per cent.) on all properties of a capital value of 
 ;^75,ooo or upwards, while an additional tax is 
 levied on all absentee landlords. It is, perhaps, 
 
I02 THE LAND AND YOURSELF 
 
 early to speak with any definiteness, but it would 
 appear that the additional pressure exercised by this 
 new tax, coupled with the pre-existing imposts 
 under all previous Acts, is at length beginning to 
 work. 
 
 If, then, we may summarise the conclusions aris- 
 ing out of this brief survey of Australasian taxa- 
 tion, it would appear that from the point of view of 
 bursting up, the taxation of land does work, but 
 works slowly, and frequently needs increasing to 
 obtain drastic results. The fact also that sales 
 only take place on a comparatively moderate scale 
 is prima facie a proof that land is able to bear a 
 slight tax with comparative ease. There would 
 also seem to be ample official confirmation of the 
 theory that the taxation of land values does tend to 
 increase building and to decrease rents. In view, 
 also, of the fact that one of the stock objections to 
 any form of taxation of land values is the 
 suggested impracticability of valuing the site 
 value separately from the improved value, it is in- 
 teresting to note that in the opinion of so high an 
 authority as Mr. Pember Reeves, no difficulty was 
 occasioned by the question of distinguishing 
 between the two values. 
 
CHAPTER VIII 
 
 THE PROBLEM OF THE FUTURE 
 
 Trisection of Land Reform — The Three Departments — 
 Nationalisation — Small Holdings — Purchase and Leasing — 
 Land Value Taxation — Rating Reform — Urban and Agricultural 
 Districts — Imperial Taxation — Bisecting the Land Monopoly — 
 Bisecting the Land Values Scheme — Imperial Taxation — Present 
 Exemption of Undeveloped Agricultural Land — The Fairest 
 Opening — ^Agricultural Labourers and Higher Wages — Necessity 
 and Luxury — The Practical Interest of the Industrial Labourer 
 — The General Taxpayer — Land Value Taxation Pure and 
 Simple — The Ricochet of a Commodity Tax — Tax on Land no 
 such Ricochet — Cannot be Passed on — Necessity for Caution — 
 Decreased Rents. 
 
 It remains now to recapitulate the results at which 
 we have arrived, and by getting into perspective 
 the various measures of Land Reform, see with 
 what particular department of the problem they 
 deal, what particular classes they affect, the extent 
 to which they react upon the other departments of 
 the same problem, and those particular lines on 
 which future development can most advantage- 
 ously progress. 
 
 It is, perhaps, convenient to trisect schemes of 
 Land Reform into three departments of Nationali- 
 sation, Small Holdings Policy, and Taxation, 
 though, of course, there may be considerable inter- 
 action between the various pririciples and effects of 
 these three departments. 
 
 The most sensational form of Nationalisation is 
 that policy of the Single Tax which we have 
 
 103 
 
104 THE LAND AND YOURSELF 
 
 already examined, and which is, moreover, con- 
 demned by such eminent economists as Bastable 
 and Seligman, while we are unaware of any 
 economist of standing who has pledged himself un- 
 reservedly to its principles. Its nationalisation 
 prides itself on being effected without compensa- 
 tion, and by the confiscation by the State of 
 economic rent, viz., the annual value of land qua, 
 land. It purports to be a lock-stock-and-barrel ex- 
 propriation of one class of proprietors, by means of 
 which it is hoped to raise sufficient revenue to bring 
 about an fdeal social State. As we have already 
 pointed out, however, it is based upon a valuation 
 of its own, and is an incomplete and bastard form 
 of Collectivism, though logically it cannot claim 
 any attention except as part of a general Collec- 
 tivist scheme. 
 
 With regard again to Nationalisation with 
 compensation the immediate purchase by the 
 State of all the land in the United Kingdom 
 strikes us as impracticable, and unnecessary, inas- 
 much as only a comparatively small portion of the 
 land would be required by the State for an imme- 
 diate use, from which it is at present withheld, and 
 the colossal cost would be incommensurate with the 
 resulting benefits. Note, moreover, that this type 
 of Nationalisation has, unlike the Single Tax, 
 nothing to do with taxation or adjusting the in- 
 cidence of taxation, but is simply put forward as a 
 means of adjusting the disproportion between the 
 agricultural and industrial populations. 
 
 The principle of Nationalisation is, no doubt, 
 evident, and indeed to a certain extent at actual 
 work in all schemes of Land Purchase, compul- 
 
THE PROBLEM OF THE FUTURE 105 
 
 sory or otherwise, and of Land Hiring with 
 security of tenure and judicially assessed rent. 
 The aim of both these latter schools of Land Policy 
 is to increase the agricultural population and to 
 diminish the overcrowding of the big industrial 
 towns, and thus dam the flood of emigration from a 
 country when nearly one half of the total area is not 
 cultivated. As between these two competing 
 methods of Small Holdings, viz., Small Holdings 
 by Compulsory Purchase, and Small Holdings by 
 Compulsory Leasing, we have already seen that 
 the Conservative party and the landowners are in 
 favour of the policy of purchase (which sends up 
 the value of the land, while it leaves the tenant with 
 a burden in the shape of purchase money that 
 would be, under normal circumstances, quite as 
 heavy as would be the other burden in the shape of 
 rent), while the Liberal party and the bulk of the 
 tenants and would-be tenants of Small Holdings 
 are in favour of that policy of Compulsory Leas- 
 ing, which, without any expenditure of public 
 money, achieves none the less the same beneficial 
 results. 
 
 We now come to Land Value Taxation, which 
 is, as we have seen, an elastic term capable of 
 meaning anything, from a policy tax on un- 
 developed land to a flat rate on the capital value of 
 every rood of ground within the United Kingdom, 
 and which falls into the important sub-divisions of 
 rating and imperial taxation. 
 
 So far as rating is concerned the two principles 
 of reform likely to be before the public are (a) the 
 abolition of the exemption from payment of the full 
 rate at present enjoyed by unused or semi-unused 
 
io6 THE LAND AND YOURSELF 
 
 land; (h) the lifting to a greater or less extent of 
 the rate from structural and improved value on to 
 site value. Both these reforms are "policy" re- 
 forms, viz., reforms sought to be imposed not for 
 the purpose of raising additional money, but for 
 the promotion of what are conceived to be more 
 healthy economic conditions. The rating, for in- 
 stance, of unused building land would tend to 
 stimulate building, increase housing accommoda- 
 tion, and lower rents, while the rating of unused 
 agricultural land would, by rendering it less 
 financially attractive to keep it out of use, tend to 
 promote agricultural employment, and diminish 
 the rent of farms. 
 
 With regard to the lifting of the rates from 
 improved value on to site value, we have 
 seen that in urban and in residential rural dis- 
 tricts the result would be to increase housing 
 accommodation, stimulate building, and decrease 
 rents. So far as incidence is concerned the effect 
 would be to shift some of the burden from those 
 persons interested iij property where the structural 
 value exceeded the site value, on to those persons 
 interested in property where the site value exceeded 
 the structural value. 
 
 So far as agricultural land is concerned the ques- 
 tion, as we have seen, is far more complicated, not 
 only by reason of the character and conditions of 
 agricultural land being different from that of urban 
 land, but also by reason of the juxtaposition, both 
 of urban and agricultural land, not merely in the 
 same union, but also in the same parish. And 
 though, no doubt, it is not only inviting, but also 
 theoretically sound, to rate agricultural land (as 
 
THE PROBLEM OF THE FUTURE 107 
 
 well as urban) on the unimproved value, by reason 
 of the increased stimulus that would be thereby 
 afforded to both urban and agricultural improve- 
 ments, we think it more prudent to wait until some 
 scheme is definitely worked out and considered, 
 before finally identifying ourselves with any specific 
 practical application of this exceedingly fascinat- 
 ing theory. 
 
 We now come to Land Value Taxation proper, 
 viz., the taxation of land values as part of a new 
 scheme of Imperial Taxation. In considering 
 this subject, nothing, in our view, is more essential 
 than to keep distinct a tax imposed with the specific 
 object of bursting the land monopoly , to quote a 
 pregnant phrase of the Chancellor of the 
 Exchequer, and a tax imposed on all land indis- 
 criminately, used or unused, as part of the normal 
 machinery of raising the revenue. 
 
 This distinction would appear to be all the more 
 necessary, because, in many cases, the imposition of 
 a flat tax on the capital value of land, whether 
 used or unused, is justified by reasoning solely 
 applicable to taxing such land as is, in fact, un- 
 used, but is none the less capable of being used. 
 In our view the imposition of a land tax on used 
 land, though, no doubt, having no small basis of 
 economic logic, falls under an entirely different 
 category to that of the imposition of a tax on unused 
 land. If, then, bisecting the Land Values scheme 
 into the taxation of unused land and the taxation 
 of used land, we deal first with the question of 
 unused or undeveloped land, the Land Values 
 case, in our view, seems unanswerable. 
 
 At present no doubt there is a Budget Tax on 
 
io8 THE LAND AND YOURSELF 
 
 undeveloped land, but only so far as that un- 
 developed land is capable of being developed by 
 building. Land capable of being developed 
 agriculturally, but not so developed, went entirely 
 untaxed by the Budget of 1909. It is such a land 
 which, in our view, offers the fairest opening for a 
 new and drastic system of taxation. For such a 
 tax would be justifiable both from the point of view 
 of a policy tax, and incidentally from the point of 
 view of a revenue tax. For the imposition on un- 
 used agricultural land of a tax which would be 
 lifted as soon as the land was in point of fact used 
 and developed, would be a specific inducement 
 (whose potency would be in proportion to its scale) 
 to allow the land to be the subject of agricultural 
 development. 
 
 If, moreover, the tax were graduated on the 
 Australian model so as to rise not merely in 
 amount, but also in proportion, according to the 
 area of the estate, it would have an additional 
 efficiency in busting the monopoly of vast areas 
 concentrated in few hands, and in tending 
 by degrees to bring about a slightly less unequal 
 distribution of landed property. It should be 
 noted that the unlocking in this way of locked up 
 agricultural land would not merely provide farms 
 for the numerous would-be farmers who are clam- 
 ouring for land, and the numerous active farmers 
 who are so anxious to extend their holding, but 
 would also produce a lowering all round of agricul- 
 tural rent, which is kept up to a prejudically high 
 level, owing to the withholding from agricultural 
 use of about 30 million acres, or about half the 
 agricultural land in the country. 
 
THE PROBLEM OF THE FUTURE 109 
 
 It is, of course, by no means unlikely that while a 
 policy of land taxation on these lines would appeal 
 strongly both to the actual and would-be tenant 
 farmer, and also to the agricultural labourer, for 
 whom a wider scope of employment would 
 naturally spell higher wages, it will be viewed as 
 maliciously unfair by the big landowners who 
 find themselves prejudicially affected. It seems 
 however, perfectly reasonable to say, without 
 the slightest ^rhetorical flourish, that while the 
 land he has not got is to the would-be tenant 
 farmer a necessity, the land he has got is to the big 
 landowner a luxury, preserved and used, not for 
 commercial gain, but for social prestige, political 
 power, or picturesque effect. And if this is so, such 
 land is by the very nature of things as constitu- 
 tionally fitted for special taxation as armorial 
 bearings, a man servant, or a royal cockade. 
 A special tax, consequently, on undeveloped 
 agricultural land would be in essence a sumptuary 
 tax, which, if paid, would provide contributions to 
 the revenue from those who could afford to pay, 
 and, if evaded, by letting the land be agriculturally 
 developed, would succeed in bringing the surviv- 
 ing anachronisms of a feudal state of society into a 
 more practical line with modern political economy. 
 
 As we have already pointed out, the in- 
 creased demand for agricultural labour that would 
 result from the policy of the tax being successful, 
 would ipso facto alleviate the congestion in 
 the industrial labour market. Consequently every 
 industrial labourer has an indirect, but none the 
 less practical interest in the taxation of undeveloped 
 agricultural land values. So far, on the other 
 
no THE LAND AND YOURSELF 
 
 hand, as the tax was unsuccessful from the point of 
 view of policy, it would be correspondingly suc- 
 cessful from the point of view of revenue by 
 tapping a new source of taxation, which would 
 otherwise be borne by the rest of the community. 
 It follows that every person not an owner of large 
 areas of undeveloped agricultural land, would find 
 his own burden of taxation alleviated by the im- 
 position of what, as we have already seen, would be 
 simply a tax on a luxury. Such a tax, moreover, 
 would possess no horrors, reasonable or unreason- 
 able, for mortgagees, panic-stricken lest their 
 security should be depreciated, inasmuch as, 
 speaking generally, mortgages are only to be found 
 on property which, so far from being ornamentally 
 inactive, produces enough to pay the mortgage 
 interest. 
 
 Let us turn now to the Unearned Increment Tax. 
 The essence of this tax was, as we remember, from 
 the point of view of revenue to tax windfalls, and 
 from the point of view of policy to discourage the 
 hoarding of any land which is capable of present 
 use. While in our view this tax is both sound in 
 principle and desirable in practice, it seems, per- 
 haps, necessary to give a warning against those 
 enthusiasts who are so much in love with the 
 theory, that they would work it to excess and 
 increase the unearned increment duty to half 
 or more than half of its amount. For it 
 must be remembered that in many cases the 
 unearned increment is a bait, in some cases 
 illusory, if in other cases, substantial, which in- 
 duces the speculator and capitalist to disgorge their 
 money in building and improving. In many cases 
 
THE PROBLEM OF THE FUTURE in 
 
 the adventurous enterprise of an individual, a 
 syndicate or company will, by a judicious all-round 
 campaign of building, advertising and improving, 
 practically make a district, a town or a watering 
 place. In such cases the speculator, whether a 
 company or an individual, will fulfil the double 
 role of the owner of land, which has increased 
 owing to the enterprise of the community, and of 
 that active member of the community whose enter- 
 prise has to some extent tended to increase its 
 value, so that the unearned increment is up to a 
 certain point earned increment. Consequently it 
 would be undesirable to raise the unearned incre- 
 ment tax beyond the particular point, at which it 
 can be reasonably estimated that it will not scare off 
 that speculator or capitalist, who, in spite of the 
 obloquy which it is orthodox to lavish on him, 
 subserves none the less important economic 
 functions. 
 
 Let us now consider Land Values Taxation 
 irrespective of all questions of unearned increment, 
 and of land being withheld from its best economic 
 use. That is to say, what reasons are there for 
 imposing a tax not merely on unearned increment, 
 and not merely on undeveloped urban or agricul- 
 tural land, but on land qua land, however fully 
 developed either by building or agriculture ? The 
 answer to this question is not that land ownership 
 is sinful, as your fully-fledged Single Taxer will 
 assert, and not that land ownership is barely 
 respectable, as your rabid Land Value Taxer will be 
 inclined to hint, but simply this : All taxation is 
 oppressive, and, so far as it goes, unjust and pro- 
 ductive of all manner of kinds of economic incon- 
 
112 THE LAND AND YOURSELF 
 
 venience, but the taxation of the unimproved value 
 of land is, in its essence, productive of far less 
 economic inconvenience than the taxation of other 
 commodities. For the taxation of commodities 
 produces considerably more far-reaching economic 
 effects, than the mere cash payments on the part of 
 those who buy or sell the commodity in question. 
 The principle being of great importance, let us take 
 an instance. A tax on motor-cars made in the 
 United Kingdom not only extracts money from the 
 man who purchases the motor-car, but must neces- 
 sarily scare off that man for whom the natural 
 price, plus the tax, is just more than he can afford. 
 It is also logical to assume that even a man, who 
 had bought a motor-car under such circumstances 
 that he had expended on it both the natural price, 
 and the tax, would, if by the abolition of the tax 
 he had the same amount at his disposal, in many 
 cases expend the total amount in buying a more 
 elaborate and expensive motor-car. It thus follows 
 that the effect of a tax on motor-cars is to diminish 
 the number and quality of motor-cars manufac- 
 tured, and, consequently, to diminish both the 
 number and the wages of the workmen engaged in 
 the motor-car industry. Nor is this economic re- 
 sult solely limited to the case of an inland com- 
 modity. Take, for instance, some other com- 
 modity, a foreign motor-car or even foreign sugar. 
 Now it is an elementary economic principle that 
 imports are purchased by exports and vice versa. 
 An artificial restriction of one pro tanto diminishes 
 the other. Consequently a tax on an import, in so 
 far as it diminishes the amount imported, pro tanto 
 diminishes the amount of that corresponding export 
 
THE PROBLEM OF THE FUTURE 113 
 
 by which the import is economically balanced. 
 A tax on any commodity has, therefore, inde- 
 pendently of the actual persons whom it imme- 
 diately hits, a ricochet among the community at 
 large. A tax on land, on the other hand, can have 
 no such ricochet among the community at large. 
 This follows from the fact that the quantity of land 
 is fixed, definite and constant, and that an impost 
 on land value sticks with leech-like tenacity to 
 those quarters where it is put. For, while the 
 quantity of sugar imported, or the quantity of 
 motor-cars manufactured, may depend on the 
 ultimate price to the consumer of sugar and motor- 
 cars, the quantity of natural land in existence 
 depends, not on economic, but on geological con- 
 siderations. If, moreover, all land, whether used 
 unused, were taxed, and a fortiori if the land used 
 were taxed less highly than the land unused, 
 it is, on the face of it, obvious that the owner 
 would be unable to pass the tax on. For, while the 
 grocer, for instance, will not buy the sugar and 
 pay the tax to his seller unless he has already a 
 customer to whom he can pass on both sugar and 
 tax, and in the absence of a customer willing to pay 
 the tax, will himself refuse to purchase the sugar, 
 the landlord would be liable to the tax whether he 
 let the land to a tenant or not. The existence of 
 the tax would thus cease to be operative as a 
 bargaining factor. Consequently no ordinary 
 urban tenant and no agricultural tenant need be 
 under the slightest fear that on (the hypothesis of) a 
 general scheme of Land Value Taxation ever com- 
 ing into operation it could possibly have the 
 slightest effect in increasing his rent. On the con- 
 
 8 
 
114 THE LAND AND YOURSELF 
 
 trary so far as such a taxation did produce any 
 effect, it would be to decrease rent, and promote the 
 sale of land and the leasing of land, in so far as it 
 decreased its value and rendered it less unprofitable 
 to let it than to hold it. 
 
 The primary argument in favour of taxing the 
 unimproved value of used land is simply one of 
 general economic convenience, and it can scarcely 
 be said to be so urgently needed qua a policy tax 
 as the tax on undeveloped land, to which we have 
 already referred, while it would burst with some 
 sharpness on those people who happened to be 
 landowners. Such a policy would, therefore, 
 have to be exercised with the most conservative 
 caution, and introduced at first on a most moderate 
 scale. Even apart from its immediate effect on the 
 actual landowners too sudden and too drastic a tax 
 would tend to upset mortgagees, who, by calling in 
 their charges, would create still further inconveni- 
 ence. It might therefore prove advantageous to 
 introduce the principle of graduation, to exempt all 
 land values up to a certain amount, and to increase 
 the scale of the tax in proportion to the amount of 
 the value, a policy which, as we have seen in our 
 Australasian references, has, at any rate, some 
 tendency to burst up large holdings and produce 
 sub-divisions. 
 
 It might also possibly be desirable to make some 
 special provision in favour of building societies 
 where the members are for the most part poor or 
 semi-poor individuals and a considerable portion of 
 whose property is invested in land. 
 
 It should, of course, be borne in mind that even 
 if any scheme of land value taxation of used land 
 
THE PROBLEM OF THE FUTURE 115 
 
 were introduced, the burden would by no means 
 necessarily fall upon the freeholder. We have 
 seen, indeed, in our chapter on Rating how the 
 peculiar ramifications of English land tenure pro- 
 duce complications not present elsewhere. Thus, 
 the leaseholder approximates to a purchaser in pro- 
 portion to the length of the lease, and in many 
 cases a whole chain of persons are to be found all 
 more or less interested in the site value. It follows 
 in the case of the taxation of land values, as 
 much as it followed in the case of the rating of land 
 values, that the success of any reform on the basis 
 of the taxation of the site value would be the suc- 
 cessful allocation of the site value among the 
 various parties concerned. 
 
 We would say finally that the gradual solution 
 of the Land Question, both in town and in country, 
 which is at one and the same time an agricultural, 
 an industrial, a housing, and fiscal question, can 
 best be effected by an extension of the Small Hold- 
 ings System of Compulsory Hiring (which, as we 
 have seen, has worked so efficaciously in Scotland), 
 coupled with a careful reform in our rating system , 
 our housing system, and our taxation system. We 
 appreciate the manifold difficulties involved in the 
 working out of many of the proposals we have dis- 
 cussed, though a tax, for instance, on undeveloped 
 agricultural land would, when the Budget Valua- 
 tion is completed, be comparatively simple. The 
 principle, however, is the main thing. Once given 
 the principle it should be possible to proceed 
 prudently, experimentally and tentatively, till a liv- 
 ing scheme is in working order where theory and 
 practice successfully coincided. 
 
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