Chapter IV—
Prof. Ely Answers Our Charges—The Insufficiency of His Answer
from False Education by Emil O. Jorgensen, 1925

It is November, 1924. In the October issue of his paper-the “Institute News”—Prof. Ely writes a lengthy editorial which he signs himself and which he captions “An Open Letter.”

In this editorial he attempts to refute the charges made in this series of articles—namely, that the Institute of which he is the head in Wisconsin University is not an unbiased research organization whose purpose is to discover the true solution of our land and tax problems, but an organization financed by certain selfish individuals and groups and whose intent is to uproot for all time what increasing numbers of men believe to be the true solution of these problems—to wit, the taxation of land values proposed by Henry George.

Notwithstanding his editorial, Professor Ely’s refutation of these charges is not convincing. He has a good deal to say about how, when and where his Institute was formed, the “integrity” and “honesty” of its purpose and the absolute “impartiality” with which it intends to conduct its investigations, but no reference is made to the real issue. What the attitude of his Institute is, and has been from the very day it was founded, towards the land value tax doctrine of Henry George—that subject is carefully avoided.

Prof. Ely also tells us in his reply something about the “very peculiar nature” of economic research, how it “deals with social facts in a laboratory consisting of a world of human beings whose interests and desires clash;” and how the facts must first be “gathered, analyzed and interpreted.” But the reader who examines with care the three basic books written by Prof. Ely for the instruction of his Institute—three books upon which forty-seven other books are to be founded—cannot fail to be struck by the fact that while scores of references are given in these three books to authors who are known to be hostile to the taxation of land values, not a single reference is made anywhere to the works of Henry George himself, or to the multitude of great writers who have followed him. How Professor Ely expects his Institute to gather all the facts of land and tax economics by this method is beyond understanding. We are also informed by Prof. Ely in his editorial just how economic research work should be conducted. First he says the “facts must be gathered, analyzed and interpreted;” then a “principle is discovered,” and last of all the “conclusions are reached.” He is right; this is the proper way that research work of any kind should be conducted. But this is not the method he has pursued. In his fifty-volume project to “find” the solution of our land and tax problems, Professor Ely has laid down his conclusions before he has gathered his facts. His prescription has preceded his diagnosis. Instead of submitting his recommendations in the very last of the Institute’s proposed fifty books, they have been submitted in the very first of these books. And curiously enough too, these conclusions and recommendations harmonize precisely with the views of the particular corporations and organizations who are paying the expenses of the Institute.

Of course, this is something that Professor Ely flatly denies. He insists that any prospective subscribers who expect “research work” which would “fit their particular notions or help their private interests” are “not wanted.” But how, may we ask, does it happen that the funds to support his Institute come entirely—or almost entirely—from those individuals and groups who have most to lose by the taxation of land values, while practically nothing comes from those individuals and groups who have most to gain from such taxation?

Among the supporters of Prof. Ely’s Institute, as we have seen, is the National Association of Real Estate Boards—an association whose leading members traffic so largely in the unearned increment of the land values of the nation. While of course, the financial support of this Association might be given to Professor Ely purely for patriotic or philanthropic reasons, yet there is certainly considerable ground for doubt in the matter when the Secretary of the Association, in sending that organization’s first check to the Institute, not only assured Prof. Ely of its “future support,” but congratulated him most heartily on the “splendid work” he was doing “for the benefit of our profession in particular.”

Another contributor to Prof. Ely’s Institute is the Carnegie Corporation of New York—an educational foundation. Here surely, it may be thought, is a contribution given for the sake of science only and regardless of whether the “research Corporation work” would “fit their particular notions.” But the words of Prof. Ely himself, in this connection, are very suggestive. Re says (“Outlines of Land Economics,” Vol. II, p. 142):

“Directly and indirectly our educational and philanthropic Institution rest to no inconsiderable extent upon the ownership of land and the rents which it yields. Our educational and benevolent institutions are growing in wealth by leaps and bounds, and many universities have now an annual income which a generation ago would have been considered a large endowment.”

While therefore it might be true that the donations given by the directors of the Carnegie Corporation to Professor Ely might not be because the Institute’s “research work” would “fit their particular notions or help their private interests,” yet because of the nature of the bulk of the Corporation’s income and in view also of the growing sentiment in favor of the taxation of land values, is there not at least room for a faint suspicion to the contrary?

On Professor Ely’s list of contributors, moreover, are land and colonization companies. It may be of course that the purse strings of these contributors have been loosened purely out of love for economic truth and not because the Institute’s “research work” would “help their private interests;” nevertheless, the statement of Professor Ely (“Outlines of Land Economies,” Vol. III, p. 29) that “because a colonization company must operate with a large area of land, a high land tax may hamper or ruin such a company,” is not without some significance.

So with certain large railroads owning lands, terminal sites and rights-of-way of enormous value—there might conceivably be no connection between their contributions and the particular brand of “research work” that Professor Ely’s Institute is putting out, but the ordinary person, who has observed the opposition of these railroads to any ‘proposition to tax land values to a larger extent, cannot avoid the conclusion that there is.

Similarly with the public utilities which Prof. Ely admits form the Institute’s second largest contributors. The public utilities might also be furnishing funds to the Institute from a pure love of science only, but that they are furnishing these funds because they expect the Institute’s “research work” to “fit their particular notions,” is much more likely. One of the first tasks, for instance, undertaken by Professor Ely immediately after the formation of his Institute, was to attack the Ralston-Nolan land value tax bill in Congress—an attack, which more than any other led to the bill’s defeat in 1921. In this attack, which was broadcast throughout the nation by the National Association of Real Estate Boards, Prof. B. H. Hibbard of the Institute gives the following warning:

“Few public utilities will escape taxation under the Ralston-Nolan bill. While some of these do not own large quantities of land, the land has a very high value, often representing up to 30 per cent or the total value of some of these corporations.”

These are merely a few of the reasons why Professor Ely’s statement that the financial supporters of his Institute do not expect “research work” that would “help their private interests” cannot be accepted at full value.

Yet, says Professor Ely in his editorial:

“A classification of the contributors to our fund reveals a wide variety of sources. The largest contributor is the Carnegie Corporation of New York which is also supporting the Institute of Economics, Washington, D. C. The Laurta Spelman Rockefeller Memorial Foundation has also made a large contribution for the specific purpose of studying farm tenancy and rural land ownership. The public utility companies are the next largest contributors. Railways, building and loan associations, land companies, lumbermen, farmers, bankers, lawyers, insurance men, business men, government employees, men in educational institutions and libraries represent our principal contributors.”

Professor Ely should have shown in the above the specific amount that each donator was giving. There would then have been no doubt as to just who the “principal contributors” are, but as the explanation now stands there is room for a great deal of misunderstanding. It is very questionable if farmers, lawyers, insurance men, government employees, libraries, and so on, really belong on the side of the “principal contributors.”

Just how much the total annual contributions to the Institute now amount to we have no way of knowing. It may be $75,000 or it may be $100,000 a year. We do know however that in January of 1924—five months before the contribution statement from the Laura Spelman Roekefeller Memorial Foundation was received, and before various other donations were secured—that the Institute, in the words of Professor Ely himself, was “spending between $40,000 and $50,000 a year.” Just where and from whom, since none of it was given by the University, did this total sum come from? How much came from farmers, government employees, and libraries, and how much from the National Association of Real Estate Boards, the Carnegie Corporation, railways, land companies, public utilities and other organizations whose incomes are drawn so largely from the landed privileges and monopolies of the nation? Until a satisfactory answer to this question is given, we must assume, in all frankness, that Professor Ely’s explanation in regard to his finances is not correct.

But let this pass. The most conclusive evidence of the spuriousness of Prof. Ely’s “Institute for Research in Land Economics” is not to be found in the sources from which he obtains his funds, nor in his extraordinary procedure of submitting his recommendations before he has made his investigations, nor in the frequency with which he refers his readers to books that are hostile to the taxation of land values, while not once referring them to books that advocate such taxation—we repeat, the most conclusive evidence of the spuriousness of his Institute is not to be found in this; it is to be seen in the colossal economic fallacies he has set forth, the misleading statements he has made, and the intellectual gymnastics and twistings he has gone through in his effort to mold public opinion away from the proposal to transfer all taxes from industry to land values and towards the proposal to transfer more taxes from land values to industry.

Let us see what some of these economic fallacies, misleading statements, etc., are.