A NEW MANURE FOR THE LAND. T HE brief debate which
took place in the House of Commons on Tuesday on the subject of the taxa- tion of land values would have been more interesting if the Chancellor of the Exchequer had found an oppor- tunity for speaking. Possibly he was not sorry that the length of the earlier speeches made it impossible for him to intervene in the debate, for be would have found it dis- tinctly embarrassing to say anything which could possibly satisfy the stalwart land-taxers below the Gangway with. tinctly embarrassing to say anything which could possibly satisfy the stalwart land-taxers below the Gangway with. out giving away Budget secrets. On the whole, however, the debate has done good by bringing the Labour Party out into the open on this question. Hitherto the out-and-out Socialist has rather sniffed at the taxation of land values. It has appeared to him in the nature of a capitalist device, and he has argued, quite unanswerably, that there is no more reason for plundering the owners of laud than the owners of other forms of capital. But the Labour Party in the House of Commons is opportunist in its Socialism, and evidently hopes that by joiniug forces with the Radical land-taxers it can succeed in creating a useful precedent which can afterwards be employed against the greater enemy, the capitalist.
Apart from this interesting tactical development, the debate followed the usual lines. Mr. O'Grady was indeed careful to say that be repudiated Mr. Henry George's theory of a single tax, and that the Labour Party had no desire to relieve other rich men by taxing laud values. He accepted, however, as the words of his Motion showed, the whole Henry Georgeite theory that the development of agriculture and industry can be assisted by time taxation of land. The Henry Georgeites appear to imagine, as was said in the course of the debate, that taxation is a kind of manure which, if spread thickly enough upon land, will produce a plentiful crop of factories, or potatoes, or workmen's dwellings, tte the case may be. In this respect their position is very closely akin to that of the Tariff Reformers. The latter always assume that by taxing goods we can increase employment ; the land-taxers put forward the same proposition, substituting only the word "land" for the word "goods." Both sections forget that taxation is a purely negative process. It adds nothing to the sum total of national wealth ; it merely takes wealth from some individuals either for the benefit of the whole community or for the benefit of other individuals. To this general argument the lend-taxers reply by alleging that land is habitually kept out of use in order to gratify the private greed of the landowner. How the landowner can gratify his private greed by abstaining from letting or selling his land in return for a valuable consideration is not generally explained. The assumption usually made is that the landowners of the kingdom are in a gigantic conspiracy to hold back their laud in order to secure higher prices at some future date. This assumption is so flagrantly at variance with well-known facts that it is difficult to understand how any serious person can put it forward. There are, of course, some cases where a landowner deliberately refuses a good offer for his land in the hope of getting a better one, but that refusal does not mean that the nation is necessarily injured. When one landowner holds back, other land- owners have the opportunity of coming forward, and the factory or house which would have been built on one site is built instead on another site.
What land-taxers have to prove to justify their case is the existence of a " ring " among all the landowners of the kingdom. Not only is there no such ring, but it is incon- ceivable that it could ever exist. A very interesting state- ment was published in the Times of March 23rd giving some spf the materials available for forming an estimate as to the actual number of freeholders in Great 13ritaiu at the present time. The ordinary Socialist or land-taxer is so impressed with the spectacle of the few great landed estates in this country that he forgets to notice the enormous number of little properties which exist side by side.. The only serious attempt to ascertain the actual number of 'freeholders was made in a Return of the Local Government Board published in 1876. According to this Return, there *ere at that time in Great Britain, exchi- . . sive of London, no fewer ' than eight hundred and sixteen thousand owners of less than one acre. Even then the number of owners of land in London under one acre must have been very considerable. Since that date it is notorious that the number of freeholders all over the country has greatly increased. Large estates have been cut up for building purposes, and though in some cases the land has been let on long building leases, in other cases it has been sold in freehold plots. In one estate in London alone in ten or fifteen years no fewer than four httndred additional freeholds have been created. Simultaneously the number of persons who have a freehold interestin land has been increased quite beyond the power of calculation by the creation of freehold ground- rents, which are a favourite form of investment with Friendly Societies and insurance companies. When it is realised that the Friendly Societies of the United Kingdom alone have a membership of fourteen million persons, one gets some conception of the number of persons possessing a freehold interest in land. As to the actual number of separate freeholders, apart from this form of investment, it is impossible to get any precise estimate, for the cost of collecting the information is almost prohibitive. It may, however, safely be assumed that the number of freehcilders in Great Britain is far in excess of a million, and may be even as much as three millions. The idea that all these persons could ever plot together to shut out the rest of the community from acaeas to the land is too grotesque for a moment's serious consideration.. ' • Nor has the common assumption of the ' Henry Georgeites that access to the land is the one thing needed for national salvation any basis of truth upon which to rest. -Land is useless without capital to work it, 'or to build upon it,.and any one who is familiar with the actual ures of farming or of building knows that cheap capital is more important than cheap land.' A case was quoted in the course of the debate by Mr. Harold Cox which is well worth reproduction. A building estate in the suburbs of London cost £400 an acre, and, taking capital at 6 per cent., the whole costof each house, ineluding build ing, road-making, and sewerage, worked out to the equivalent of £17 7s. per annum. If the land had been obtained for nothing, this figure would have been reduced by 3s. 6d. On the other hand, if capital could have been obtained at 4 per cAStit. instead of 6 per cent., the saving on each house would have been £3 9s. 4d:, so that in round figures the economy obtainable by a reduction of oily 1 per cent, in' the rate of interest would. have been three times as' great as the economy which could have been secured if the land had bee* acquired absolutely for nothing. This, as already stated, is a suburban illustration, and it needs no argu- ment to prove that in the case of building in rural districts the contrast would be even greater, for the price of laud is there relatively less important.
It is only in the centre of each large town that the price • of land becomes a really important factor, as com- pared with the' price of capital. Such cases, however, would be in no way affected by a transference . of kcal taxation from the fabric to the site, for in these cases where land is a partial monopoly the whole cost of local taxation already falls upon the landowner. A group of capitalists Want to erect a block of offices on a vacant site in the CpIltre of London. They make an estimate of the rents which they can hope to, obtain from the offices. Against that, which is their only source of revenue, they have to put the cost of building, the cost of insurance, 'and the cost of local ratee and Inhabited House Duty. Consequently, the price, which they can afford to pay for the land is necessarily diminished by the rates which the building will have to bear, and therefore it is strictly accitrate to say that the rates upon the building come 'out of the pocket of the 'owner of the soil. In the cased' these central sites, nothing whatever is to be gained .by shifting taxation from the fabric on to the site. In the case of suburban- and rural districts, as we' have already' shown, the cheapness of capital is industrially far more iniportant than the cheapness of land.
The cheapness of capital, which is from every point of view of tremendous importance to the country, ie greatly promoted by the present system of exempting ground-rent; from local taxation. What every cautious investor wishee to obtain is an investment which will yield him a fixed income, and this he can obtain by purchasing ground-rents. A builder, as soon as he has got his building up, or even before it is completed, will create a ground-rent, secured upon the land and building, which he will sell for a capital sum. He thus obtains his capital at a low rate of interest, and the building is consequently produced at a lower cost. This convenient system, which has sprung up spontaneously to meet the needs of the community, would be absolutely destroyed by the Henry Georgeite fanatics, who imagine that 'social salvation can be secured by taxing a particular form of property.