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Progress and Poverty

By Henry George

Condensed By James L. Busey,
Professor Emeritus, University Of ColoradoFrom

 

The Editor's Foreward

 

The first appearance of Progress and Poverty in January of 1880, created a tremendous commotion. Journals throughout the world were thrown into a furor of praise and criticism. The name of Henry George, stirring writer from San Francisco, became a byword in the discussion of economic and social problems and particularly of the problem of poverty in the midst of plenty.

In the latter half of the twentieth century, distitution amidst abundance should long ago have passed into history. It is a tragic, perverse phenomenon that should have taken its place with other barbaric practices, such as slavery and piracy.

An understanding of the proposals of Henry George can reveal whether or not they might be useful for alleviating poverty and increasing the returns of labor an capital. . . .

To provide a readable and constructive introduction to and under-standing of Henry George, I have produced this little supercondensed version of Progress and Poverty. The words are exclusively his. The phrases are presented in the same order that he wrote them. Of course, expressions have been thrown together which in the original volume were separate by many pages or chapters. For this rather drastic abridgement, I alone am responsible.

James L. Busey, editor
Colorado Springs, 1968

Progress And Poverty

- Condensed -
The Problem

 

The present century has been marked by a prodigious increase in
wealth-producing power. . . .

At the beginning of this marvelous era it was natural to expect, and it was expected, that laborsaving inventions would lighten the toil and improve the conditions of the laborer; that the enormous increase in
the power of producing wealth would make real poverty a thing of the past. . . .

Now, however, we are coming into collision with facts which there can be no mistaking. . . .

In the United States it is clear that squalor and misery, and the vices and crimes that spring from them, everywhere increase as the village grows to the city, and the march of development brings the advantages of the improved methods of production and exchange. . . .

This association of poverty with progress is the great enigma of
our times. It is the central fact from which spring industrial, social,
and political difficulties that perplex the world, and with which
statesmanship and philanthropy and education grapple in vain. . . .
It is the riddle which the Sphinx of Fate puts to our civilization and
which not to answer is to be destroyed. . . .

The Laws Of Distribution

 

Land, labor, and capital are the factors of production. The term
land includes all natural opportunities or forces; the term labor,
all human exertion; and the term capital, all wealth used to pro-
duce more wealth. In returns to these three factors is the whole
produce distributed. That part which goes to landowners is called
rent; that part which constitutes the reward of human exertion is
cal!ed wages; and the part which constitutes the return for the use
of capital is called interest. These terms mutually exclude each
other. The income of any individual may be made up from any
one, two, or all three of those sources; but in the effort to discover
the laws of distribution we must keep them separate. . . .
The law, or relation, which . . . . determines what rent or price
can be got by the owner, is styled the law of rent. . . . This
accepted law of rent . . . is sometimes styled “Ricardo’s law of
rent." . . . It is:

The rent of land is determined by the excess of its produce over
that which the same application can secure from the least productive
land in use.


This law. . . of course applies to land used for other purposes
than agriculture . . . in truth, manufactures and exchange yield the
highest rents, as is evinced by the greater value of land in manu-
facturing and commercial cities. . . .

The increase of rent which goes on in progressive countries is
at once seen to be the key which explains why wages and interest
fail to increase with increase of productive power. For the wealth
produced in every community is divided into two parts by what
may be called the rent line, which is fixed by the margin of cultivation,
or the return which labor and capital could obtain from such natural opportunities as are free to them without the payment of rent.
From the part of the produce below this line wages and interest
must be paid. All that is above goes to the owners of land. Thus,
where the value of land is low, there may be a small production of wealth, and yet a high rate of wages and interest, as we see in new countries. And, where the value of land is high, here may be a very large production of wealth, and yet a low rate of wages and interest,
as we see in old countries. . . .

The increase of rent explains why wages and interest do not increase. The cause which gives to the landholder is the cause which denies
to the laborer and capitalist. Hence, the rate of wages and interest
is everywhere fixed, not so much by the productiveness of labor as
by the value of land. Wherever the value of land is relatively low,
wages and interest are relatively high; wherever land is relatively
high, wages and interest are relatively low. . . . And hence, that the increase of productive power does not increase wages, is because it does increase the value of land. Rent swallows up the whole gain and pauperism accompanies progress. . . .

To see human beings in the most abject, the most helpless and
hopeless condition, you must go, not to the unfenced prairies and
the log cabins of new clearings in the backwoods, where man single-
handed is commencing the struggle with nature, and land is yet
worth nothing, but to the great cities, where the ownership of a
little patch of ground is a fortune. . . .


Effect Of Material Progress
Upon The Distribution Of Wealth

 

Wealth in all its forms being the product of labor applied to land
or the products of land, any increase in the power of labor, the
demand for wealth being unsatisfied, will be utilized in procuring
more wealth, and thus increase the demand for land. . . .


And as we can assign no limits to the progress of invention, neither
can we assign any limits to the increase of rent, short of the whole
produce. For, if laborsaving inventions went on until perfection
was attained, and the necessity of labor in the production of wealth
was entirely done away with, then everything that the earth could
yield could be obtained without labor. And no matter how small population might be, if anybody but the landowners continued to
exist, it would be at the whim or by the mercy of the landowners—
they would be maintained either for the amusement of the
landowners, or, as paupers, by their bounty. This point, of the
absolute perfection of laborsaving inventions, may seem very
remote, if not impossible of attainment; but it is a point toward which
the march of invention is every day more strongly tending.

. . . in the improvements which advance rent are not only to
be included the improvements which directly increase productive
power, but also such improvements in government, manners, and
morals as indirectly increase it. Considered as material forces, the
effect of all these is to increase productive power, and like improve-
ments in the productive arts, their benefit is ultimately monopo-
lized by the possessors of the land. . . . And if the corrupt
governments of our great Amcrican cities were to be made models
of purity and economy, the effect would simply be to increase the
value of land, not to raise either wages or interest. . . .

The Problem Solved

 

The reason why, in spite of the increase of productive power, wages
constantly tend to a minimum which will give but a bare living, is
that with increase in productive power, rent tends to even greater
increase, thus producing a constant tendency to the forcing down
of wages. . . .


The mere laborer has thus no more interest in the general advance
of productive power than the Cuban slave has in advance of the
price of sugar. . . .

The simple theory which I have outlined . . . explains this conjunction of poverty with wealth, of low wages with high productive power. . . .
It explains why interest and wages are higher in new than in older communities, though the average, as well as the aggregate, production of wealth is less. It explains why improvements which increase the productive power of labor and capital increase the reward of neither.
It explains what is commonly called the conflict between labor and capital, while proving the real harmony of interest between them. . . .

Is it not a notorious fact, known to the most ignorant, that new
countries, where the aggregate wealth is small, but where land is
cheap, are always better countries for the laboring classes than the
rich countries, where land is dear? Wherever you find land relatively
low, will you not find wages relatively high? And wherever land is
high, will you not find wages low? As land increases in value, poverty
deepens and pauperism appears. In the new settlements, where land
is cheap, you will find no beggars, and the inequalities in condition
are very slight. In the great cities, where land is so valuable that it
is measured by the foot, you will find the extremes of poverty and
of luxury. And this disparity in condition between the two extremes
of the social scale may always be measured by the price of land.
Land in New York is more valuable than in San Francisco; and in
New York, the San Franciscan may see squalor and misery that will
make him stand aghast. Land is more valuable in London than in
New York; and in London, there is squalor and destitution worse
than that of New York. . . .

For land is the habitation of man, the storehouse upon which he
must draw for all his needs. . . . Material progress cannot rid us of
our dependence upon land; it can but add to the power of producing
wealth from land; and hence, when land is monopolized, it might go
on to infinity without increasing wages or improving the condition
of those who have but their labor. It can but add to the value of land
and the power which its possession gives. Everywhere, in all times, among all peoples, the possession of land is the base of aristocracy, the foundation of great fortunes, the source of power. As said the Brahmins, ages ago—

“To whomsoever the soil at any time belongs, to him belong the
fruits of it. White parasols and elephants mad with pride are the
flowers of a grant of land.” . . .

 

The Remedy

 

The equal right of all men to the use of land is as clear as their equal
right to breathe the air—it is a right proclaimed by the fact of their
existence. For we cannot suppose that some men have a right to be
in this world and others no right. . .
. . . any one human being, could he concentrate in himself the
individual rights to the land of any country, could expel therefrom
all the rest of its inhabitants; and could he thus concentrate the
individual rights to the whole surface of the globe, he alone of all
the teeming population of the earth would have the right to live.
And what upon this supposition would occur is, upon a smaller
scale, realized in actual fact. . . . The comparative handful of pro-
prietors who own the surface of the British Islands would be doing
only what English law gives them full power to do, and what many
of them have done on a smaller scale already, were they to exclude
the millions of British people from their native islands. And such
an exclusion . . . would not be a whit more repugnant to natural
right than the spectacle now presented, of the vast body of the
British people being compelled to pay such enormous sums to a
few of their number for the privilege of being permitted to live upon
and use the land which they so fondly call their own; which is
endeared to them by memories so tender and so glorious, and for
which they are held in duty bound, if need be, to spill their blood
and lay down their lives. . . .

Place one hundred men on an island from which there is no escape, and whether you make one of these men the absolute owner of the other ninety-nine, or the absolute owner of the soil of the island, will make no difference either to him or to them. It was not nobility that
gave land, but the possession of land that gave nobility. . . .

What I . . . propose, as the simple yet sovereign remedy, which will
raise wages, increase the earnings of capital . . . give remunerative employment to whoever wishes it . . . is —to appropriate rent by taxation.

Now, insomuch as the taxation of rent, or land values, must neces-
sarily be increased just as we abolish other taxes, we may put the
proposition into practical form by proposing—

To abolish all taxation save that upon land values. . . .

Taxation which lessens the reward of the producer necessarily
lessens the incentive to production. . . . Thus taxation which dimin-
ishes the earnings of the laborer or the returns of the capitalist
tends to render the one less industrious and intelligent, the other
less disposed to save and invest. Taxation which falls upon the
processes of production interposes an artificial obstacle to the
creation of wealth. . . .

Tax manufactures, and the effect is to check manufacturing; tax
improvements, and the effect is to lessen improvement; tax com-
merce, and the effect is to prevent exchange; tax capital, and the
effect is to drive it away. But the whole value of land may be taken
in taxation, and the only effect will be to stimulate industry, to
open new opportunities to capital, and to increase the production
of wealth. . . .

The tax on land values . . . may be assessed and collected with
a definiteness that partakes of the immovable and unconcealable
character of the land itself. . . . Were all taxes placed upon land
values, irrespective of improvements, the scheme of taxation would
be so simple and clear, and public attention would be so directed
to it, that the valuation of taxation could and would be made with
the same certainty that a real estate agent can determine the price
a seller can get for a lot. . . .

The tax upon land values . . . falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion
to the benefit they receive. It is the taking by the community, for the
use of the community, of that value which is the creation of the community. . . . When all rent is taken by taxation for the needs
of the community . . . no citizen will have an advantage over any
other citizen save as is given by his industry, skill, and intelligence;
and each will obtain what he fairly earns. Then, but not till then,
will labor get its full reward, and capital its natural return. . . .

 

Effects Of The Remedy

 

The advantages which would be gained by substituting for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important
the more they are considered. . . . With all the burdens removed which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamed of. . . .

Consider the effect upon the production of wealth.

To abolish the taxation which, acting and reacting, now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. . . . The present method of taxation . . . operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities. . . .
If a man build a ship we make him pay for his temerity, as though
he had done an injury to the state; if a railroad be opened, down
comes the tax collector upon it, as though it were a public nuisance;
if a manufactory be erected we levy upon it an annual sum which
would go far toward making a handsome profit. We say we want
capital, but if any one accumulate it, or bring it among us, we
charge him for it as though we were giving him a privilege. We
punish with a tax the man who covers barren fields with ripening
grain, we fine him who puts up machinery, and him who drains
a swamp. . . .

To abolish these taxes would be to lift the whole enormous weight
of taxation from productive industry. . . .

And to shift the burden of taxation from production and exchange
to the value or rent of land would not merely be to give new stimulus
to the production of wealth; it would be to open new opportunities.
For under this system no one would care to hold land unless to use
it, and land now withheld from use would everywhere be thrown
open to improvement.

The selling price of land would fall; land speculation would receive
its death blow; land monopolization would no longer pay. . . .

And it must be remembered that this would apply, not merely to
agricultural land, but to all land. . . . Everywhere that land had
attained a value, taxation, instead of operating, as now, as a fine
upon improvement, would operate to force improvement. Whoever
planted an orchard, or sowed a field, or built a house, or built a
manufactory, no matter how costly, would have no more to pay
in taxes than if he kept so much land idle. The monopolist of
agricultural land would be taxed as much as though his land were
covered with houses and barns, with crops and with stock. The
owner of a vacant city lot would have to pay as much for the privilege
of keeping other people off of it until he wanted to use it, as his neighbor who has a fine house upon his lot. It would cost as much
to keep a row of tumble-down shanties upon valuable land
as though it were covered with a grand hotel or a pile of great
warehouses filled with costly goods. . . .

Consider the effect of such a change upon the labor market.
Competition would no longer be one-sided, as now. Instead of
laborers competing with each other for employment, and in their
competition cutting down wages to the point of bare subsistence,
employers would everywhere be competing for laborers, and wages
would rise to the fair earnings of labor. . . . The employers of labor
would not have merely to bid against other employers, all feeling
the stimulus of greater trade and increased profits, but against the
ability of laborers to become their own employers upon the natural
opportunities freely opened to them by the tax which prevented
monopolization. . . .

It is manifest, of course, that the change I propose will greatly
benefit all those who live by wages, whether of hand or of head
and it is likewise manifest that it will increase the incomes of
those whose incomes are drawn from the earnings of capital, or
from investments other than in lands. . . .

And so with the farmer. I speak not now of the farmers who never
touch the handles of a plow . . . but of the working farmers who constitute such a large class in the United States. . . . Paradoxical
as it may appear to these men until they understand the full
bearings of the proposition, of all classes above that of the mere
laborer they have most to gain by placing all taxes upon the value
of land. . . . The fact is that taxation, as now levied, falls on them
with peculiar severity. They are taxed on all their improvements—
houses, barns, fences, crops, stock. The personal property which
they have cannot be as readily concealed or undervalued as can the
more valuable kinds which are concentrated in the cities. They
are not only taxed on personal property and improvements, which
the owners of unused land escape, but their land is generally taxed
at a higher rate than land held on speculation, simply because it is
improved. But further than this, all taxes imposed on commodities
fall on the farmer without mitigation. . . . The farmer would be a gainer by the substitution of a single tax upon the value of land for all these taxes, for the taxation of land values would fall with greatest weight,
not upon the agricultural districts, where land values are comparatively small, but upon the towns and cities where land values are high; whereas taxes upon personal property and improvements fall as
heavily in the country as in the city. . . . The result would be that speculative values would be kept down, and that cultivated and improved farms would have no taxes to pay until the country around them had been well settled. In fact, paradoxical as it may at first seem
to them, the effect of putting all taxation upon the value of land would
be to relieve the harder working farmers of all taxation. . . .

Wealth would not only be enormously increased; it would be equally distributed. I do not mean that each individual would get the same amount of wealth. That would not be equal distribution, so long as different individuals have different powers and different desires.
But I mean that wealth would be distributed in accordance with the degree in which the industry, skill, knowledge, or prudence of each contributed to the common stock. . . . The non-producer would no longer roll in luxury while the producer got but the barest necessities
of animal existence. . . .

All fear of great fortunes might be dismissed, for when every one
gets what he fairly earns, no one can get more than he fairly earns.
How many men are there who fairly earn a million dollars? . . .

 

The Law Of Human Progress

 

Civilization is co-operation. Union and liberty are its factors. . . .

What has destroyed every previous civilization has been the
tendency to the unequal distribution of wealth and power. This
same tendency, operating with increasing force, is observable
in our civilization today. . . .

As corruption becomes chronic; as public spirit is lost; as traditions
of honor, virtue, and patriotism: are weakened; as law is brought
into contempt and reforms become hopeless; then in the festering
mass will be generated volcanic forces, which shatter and rend when seeming accident gives them vent. Strong, unscrupulous men,
rising up upon occasion, will become the exponents of blind popular desires or fierce popular passions, and dash aside forms that have
lost their vitality. The sword will again be mightier than the pen, and in carnivals of destruction brute force and wild frenzy will alternate with
the lethargy of a declining civilization. . . .

Whence shall come the new barbarians? Go through the squalid
quarters of great cities, and you may see, even now, their gathering
hordes! How shall learning perish? Men will cease to read, and
books will kindle fires and be turned into cartridges! . . .

. . . in the decline of civilization, communities do not go down by
the same paths that they came up. For instance, the decline of
civilization as manifested in government would not take us back
from republicanism to constitutional monarchy, and thence to the
feudal system; it would take us to imperatorship and anarchy. . . .

Where Liberty rises, there virtue grows, wealth increases, knowledge expands, invention multiplies human powers, and in strength and
spirit the freer nation rises among her neighbors. . . Where Liberty sinks, there virtue fades, wealth diminishes, knowledge is forgotten, invention ceases, and empires once mighty in arms and arts become
a helpless prey to freer barbarians!

Only in broken gleams and partial light has the sun of Liberty
yet beamed among men, but all progress hath she called forth. . . .

Shall we not trust her?

In our time, as in times before, creep on the insidious forces that,
producing inequality, destroy Liberty. On the horizon the clouds
begin to lower. Liberty calls to us again. . . . It is not enough that
men should vote; it is not enough that they should be theoretically
equal before the law. They must have liberty to avail themselves
of the opportunities and means of life; they must stand on equal
terms with reference to the bounty of nature. . . This is the universal
law. This is the lesson of the centuries. Unless its foundations be
laid in justice the social structure cannot stand. . . .

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04/27/06<