Just Basis of Taxation.
By Frederick Verinder
General Secretary of
the English Land Restoration League
Taxation may create monopolies, or it may prevent them; it may diffuse wealth, or it may concentrate it; it may promote liberty and equality of rights, or it may tend to the establishment of tyranny and despotism; it may be used to bring about reforms, or it may be so laid as to aggravate existing grievances and foster hatred and dissension among classes; taxation may be so controlled by the skilful hand as to give free scope to every opportunity for the creation of wealth or for the advancement of all true interests of States and cities, or it may be so shaped by ignoramuses as to place a dead weight on a community in the race for industrial supremacy. —
Prof. Ely, “Taxation in American States and Cities,” p. 55.
THE interest in questions of taxation, now so generally apparent, is no new thing. For more than five centuries—from the march of the Kentish men on London under Wat Tyler to protest against an obnoxious poll tax, to the march of the East End match girls on Westminster to protest against Mr. Lowe’s proposed tax on matches—there has never been wanting either the disposition or the occasion to criticise the methods by which funds have been raised to meet the nation’s expenses. A question of taxation led to the civil war which cost an English king his head; another question of taxation lost to Britain her American colonies. One of the greatest and most costly agitations of the present century had for its object the repeal of the Corn Laws—again a question of taxation. In our own generation, the taxation of land values has assumed an importance which even the most exciting happenings in foreign politics have been unable to over-shadow. In Parliament and at by-elections, in the correspondence columns of the newspapers and in the halls of working men’s clubs, in the lecture-rooms of economic learning and at street corners, the relations of taxation to land and labour, its bearings upon the housing and health of the people, upon poverty and monopoly, are topics of never diminishing interest. It is no longer the equity of this or that particular tax which is called into question. The movement to which Henry George’s “Progress and Poverty” gave, in the early eighties, a new and world-wide impetus is rapidly developing into a general assault upon the whole of our present methods of taxation, national and local. It is not, of course, pretended that the hundreds of local authorities who, in their desire for “new sources of revenue,” are petitioning Parliament for power to rate land values, or the thousands of Liberal, Radical, and Progressive candidates who declare on election platforms their sympathy with the demand for the taxation of land values are subscribers to the full programme of the English Land Restoration League, or are consciously helping towards its realisation. But it is never heless true that the arguments which they are compelled to use lead logically and inevitably to the demand for a new, simple, and just basis of taxation in substitution for the existing chaos of methods of taxation—always complicated and usually unjust. The present Government and their immediate predecessors in office have, each in their own way, contributed to give point to the discussion, for the questions raised by Sir William Harcourt’s Budget of 1894, and by the Agricultural Eating Act of 1896, go down to the very roots of the theory of taxation.
A Parliamentary Return issued just before the Constitutional Reform of 1832 showed that, at that period (1829), duties of Customs and Excise to the amount of more than six millions sterling a year were levied upon raw materials of manufacture. Manufactured articles of all kinds were burdened with protective duties, which ringed from 20 to 75 per cent on their value. Agriculture was “protected,” for the benefit of rural landlords, by heavy duties upon bacon, butter, cheese, hay, hops, hemp and hempseed, lard, linseed and rape oils, mules and asses, peas, potatoes, seeds, tallow, ares, wheat and all other kinds of grain, flour, and meal; as well as by the prohibition of the importation of meat and of living animals for food. Tea, sugar, coffee, &c., were very heavily taxed on a differential scale intended to favour colonial production.
So many of these imposts have been abolished or reduced since the first Reformed Parliament met in 1833 that we are often tempted to overlook the fact that our methods of taxation are still so complicated that it is impossible for a citizen to find out when, and how, and how much he is contributing towards the national expense.
John Smith is taxed upon his income if he is fortunate enough to earn more than about £3 a week and honest enough to make a correct return. As soon as he begins to spend it, he is taxed again. In the prices which he pays for his tea, coffee, chicory, cocoa, chocolate, plums, prunes, raisins, currants, and figs are included various taxes, levied indirectly by way of Customs or Excise. Unless he is a teetotaler and non-smoker he is taxed even more heavily upon his beer, wine, spirits, liqueurs, cordials, tobacco, snuff, and cigars. He pays a stamp duty on the agreement or lease when ho takes a house, and as soon as he occupies it he becomes liable for inhabited house duty, assessed upon the gross annual value o: the house and its site, and for local rates assessed upon their net annual value. If he takes up the profession of a barrister, or solicitor, or physician, or officer in army or navy, he must pay a stamp duty on admission, and, in the case of a solicitor, must, in addition, take out an annual certificate. If he goes into business as an auctioneer, banker, house agent, game dealer, game-keeper, hawker, pawnbroker, pedlar, dealer in plate or in patent medicines, or vinegar maker, he must pay every year for a licence. He cannot import, produce, or sell, without an annual licence, beer, wine, spirits, cider, perry, tobacco, snuff, or cigars. If, abominating all these things, he opens a drunkards’ retreat, he must pay an annual tax of 10s. per inmate, with a minimum of £5 a year. In his business he pays stamp duties of varying amounts on his cheques, receipts, bills of exchange, charter-parties, bonds, contract notes, stock and share certificates, transfers, &c., &c. If he uses collodion, ether, chloroform, naphtha, iodide of ethyl, chloral hydrate, spirit varnish, perfumed spirits, or transparent soap containing spirit, he is taxed on each one of them. In his leisure hours he plays a game of whist with a taxed pack of cards, takes the air in a taxed carriage or motor car, or walks out with his taxed dog, carrying a gun licence in his pocket. If he indulges in the luxury of keeping a man-servant, or of using armorial bearings, he is taxed; but he is also taxed on his insurance policy, and, if he is very saving, he but leaves the more to be taxed after his death.
The difficulty of finding out how much he really does pay towards the expenses of the State is increased by the fact that the taxes on his spendings are, in many cases, levied in an indirect manner, and are increased, before he pays them, by the profits of the traders through whose hands the taxed commodities reach him; that he is often quite unconscious that he pays this indirect taxation at all; and that in respect of some of the taxation, mainly local, of the burden of which he complains most loudly, experts assure him that, as a matter of fact and in spite of appearances, he does not pay it at all.
With regard to some of these taxes, there is no doubt that statesmen have contrived and continued them for the express purpose of facilitating the collection of a large revenue by concealing from the multitude a great part of the fiscal burden which they are made to bear.
To levy a direct tax of 7 per cent is a dangerous experiment in a free country and may excite revolt; but there is a method by which you can tax the last rag from the back and the last bite from the mouth without causing a murmur against high taxes, and that is, to tax a great many articles of daily use and necessity so indirectly that the people will pay them and not know it. Their grumbling will then be of hard times, but they will not know that the hard times are caused by taxation.
Such is the theory of indirect taxation attributed to William Pitt. It was stated more briefly and with brutal frankness by the French statesman who defined indirect taxation as “a scheme for so plucking geese as to give the most feathers with the least squawking.” Dr. Johnson probably had something of this kind in his mind when he wrote his famous definition, “Excise—a hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid;” and it was nothing less than a stroke of etymological genius which derived the name “tariff,” applied to a system of indirect taxation, from Tarifa, the headquarters of the pirates who used to levy toll on the trade of the Mediterranean shippers.
Apart from a small land tax—part of which has been redeemed, and part of which is still paid on a valuation over 200 years old—the great bulk of our national revenue is raised, as we have seen, by taxes based upon (1) earnings, or rather income; (2) spendings; (3) savings or accumulations; (4) processes of production; (5) transactions of business. This arrangement is open to the criticism that no one of these things, nor all of them together, afford a just basis for calculating what a citizen should pay as his proportion of the national expenses; and that, because the existing bases of taxation are not just, the practical working of our existing system is not fair as between man and man and between class and class. The effect of our present methods is to restrict consumption by increasing the cost of commodities; to hamper distribition; to discourage production; to foster monopoly; to penalise improvement and thrift; and to oppress the mass of the people for the benefit of favoured classes, and of one class in particular.
If this indictment can be maintained, the frequent appearance of articles on taxation in this “Annual‚” and the growing interest of Co-operators in the subject is easily explained, for the members of Co-operative Societies unite within themselves the functions of consumer, distributor, and producer, and the natural development of Co-operation is hindered at every turn by the workings of an unjust fiscal system.
One of the classical principles of taxation laid down by Adam Smith is the basis of a just fiscal system ran thus:—
Every tax ought to be so contrived as both to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the State.
This obviously fair maxim is grossly violated by every one of the existing “indirect taxes.” Take, for instance, the duty upon tea. The importation of tea will appear, at least to every tea- drinker, as a meritorious public service, worthy of encouragement. But the Government behaves as if it thought otherwise. Every pound of tea which arrives in this country is liable to be seized and in prisoned—held “in bond‚”—until the importer releases it by paying a fine of fourpence. In the case of the cheapest kinds of tea this fine or duty doubles or more than doubles the cost. The traders who handle the tea naturally charge their profits upon what the tea actually costs them, i.e., upon the sum made up of the cost of the tea plus the amount of the tax. The very poor, who buy tea in small quantities from retail shops, pay a larger number of middlemen’s profits, not only upon the first cost of the tea, but also on the original amount of the tax. The injustice is increased by the fact that the same sum per lb. is levied upon all kinds of tea. Tea which sells retail at 1s. 4d. per lb., or less, is taxed 4d.; and so is the very rare and choice tea which is sometimes sold by auction at 30 or 35 guineas a pound. I am informed that the first cost of the teas usually handled by the Co-operative Wholesale Society varies from 5|d. to 2s. 54d. per lb., with an average of 10d. The percentage of taxation, therefore, varies from 72-7 to 13’6, with an average of 40-0. But there is plenty of tea which costs less or more than the prices just quoted, and on the very cheapest the tax may be as high as 140 per cent on first cost. No one but an expert in the tea trade could say how much per cent the tax amounted to on any particular pound of tea, for when teas of various prices are “blended‚” the various rates of taxation are blended also. But it is quite certain that, in order that the Exchequer may receive its fourpence, every consumer of tea has to pay more than fourpence, and that the excess is generally greater in proportion to the poverty of the person who pays. The poor washerwoman who buys cheap tea by the ounce, and who has very few shillings to spend on her one luxury, gets far less tea and pays far more taxation for every shilling than the rich man who buys a better quality by the chest. It is true that the intermediate profits may be intercepted by Co-operation, but even Co-operation cannot avoid the injustice of the original tax upon what has become an almost universal necessity of life. Moreover, all consumers have to pay for the cost of the interference with the operations of trade caused by Customs regulations made for the protection of the revenue.
The tax per pound upon coffee, cocoa, chicory, and dried fruits is smaller than that upon tea, while the duties upon alcoholic drinks and tobacco are far heavier, amounting in some cases to hundreds per cent upon first cost. But be the duty large or small, it always takes from the consumer, who finally pays a sum larger than that which is levied by the Custom House officer. In the case of brewing and distilling, the cost of the products is also very largely increased by the vexatious and complicated restrictions which it has been thought necessary, in the interests of the revenue, to impose upon the processes of production*; and the trade is further burdened with the profits of a giant monopoly, also created in the interests of the revenue, which has become the despair of modern reformers. Nor can the friends of temperance conso e themselves with the reflection that this load of taxation (amounting in 1898-99 to nearly £37,000,000 in Customs, Excise, and Licences) has any appreciable effect in lessening the consumption of alcoholic liquors. There is good reason to believe that all this indirect taxation has the effect of causing a good deal of adulteration. In the case of tobacco, at any rate, we have on this point the frequent testimony of Chancellors of the Exchequer who have more than once reduced the duty on this very account.
* * *
Not only are these indirect taxes, which roll down from the Custom House to the consumer like a snowball, gathering volume as they go, unjust to the individuals who pay them; they are far less profitable to the Exchequer than most direct taxes would be, for they are exceedingly expensive to collect. All over the country, and especially at all the large ports, a large army of men has to be maintained for the purpose of fining the manufacturers and importers of dutiable articles and of exercising a vexatious interferences with production and trade. Moreover, in order to prevent that unauthorised form of free trade which is called “smuggling‚” every part of the coast where a cargo could possibly be landed from a small boat has to be continually watched in order to prevent the importation of goods upon which no fine has been paid. For several years the “Financial Reform Almanac‚” published, under the title of “Curiosities of the Customs‚” a summary of a Return for 1874 issued on the motion of Sir John Lubbock in 1876. At ten ports, where nothing was collected, fifty-three able-bodied servants of the Clown, costing the country £7,200, wrote 18,297 official letters and forms. At eight other ports, fifty Customs officers collected in the year a total of £56—about a halfpenny a head per day—at a cost of £6,607 and of 24,480 sheets of official paper. At seven ports, where the collection amounted to £2,611, the fifty-six officers cost 17,471, and sent up 25,387 letters and forms. At a dozen other ports it cost £7,777 to collect £15,305, and forty-six men were kept employed in making 25,625 official returns and collecting under £1 a day each. Of course, the larger ports do far better than this, but the general collection has to bear the cost of all this appalling waste of labour and money. But it is certain that even the published accounts of the cost of collecting the Customs are far from representing the whole cost of collection. An unknown amount must, for instance, be added for the cost of that portion of the navy which is engaged wholly or partially on preventative service.
The taxes upon business transactions, mostly by way of stamp duty or licence duty, often very small in amount, constitute on the whole a considerable burden in time and trouble as well as in money. (The stamp duties produced in 1897-98 a sum of about 7½ millions.) There is no reason why the payment of one’s just debts, or the making of an agreement, should be the subject of a tax. If A. agrees to sell goods to, or to do work for, B. to the value of £2, and if B. pays by cheque and requires a receipt, it costs B. £2. 0s. 1d. in order to pay A. a net sum of £1. 19s. 11d. B. is already paying his banker, directly or indirectly, for taking care of his money, yet he cannot use the smallest part of it, once paid into the bank, without being fined a penny. If the two men make an agreement, the sixpenny stamp adds no validity to it. It represents pure blackmail, levied by the Government on a presumably honest transaction, and enforced by the threat of a very heavy penalty before the agreement can be produced in evidence if its subject-matter should ever come under inquiry in a court of law.
As regards the income tax, which stood in 1878 at 3d. in the £ and is now 8d., an attempt has been made in recent years to meet some of the criticisms directed against this always unpopular impost by a system of exemptions and deductions which, up to £500, give an approach to graduation. The tax is free from the worst objections which lie against indirect taxation. But it is open to the objection that it operates, in very many cases, as a fine upon industry. As long as John Jones earns no more than £160 a year he is free of income tax. If, by working harder, he increases his earnings beyond £160, the State takes 3½ per cent of the increase; or, if he is industrious enough to earn more than £400 a year, an even larger proportion.
The existing system is sometimes defended on Adam Smith’s ground that “the subjects of every State ought to contribute to the support of the Government as nearly as possible in proportion to their respective abilities.” Smith apparently believed that ability to pay taxation could be measured by “the revenue which they respectively enjoy under the protection of the State.” As “revenue‚” under £160 a year is exempt from income tax, it is necessary that taxes should be levied on articles of general consumption in order that the working man may enjoy the privilege of contributing towards the expenses of the State. But, even so, there is no necessary relation between either income or expenditure and the ability to pay taxes. It has already been shown that the taxes on food and drink fall with the most crushing weight upon the very poorest. The middle-class man with a small income, not greatly exceeding £160, and a large family, pays as much in income tax, and perhaps more in taxes on commodities, than a bachelor on the same income, and may be impoverished by taxation which the bachelor could pay with ease. A doctor or clergyman may be poor on an income double as great as that upon which an artisan, who is not compelled to keep a carriage or pay a curate, could live in comfort and yet pay no income tax. A miser who hoarded his wealth and lived on bread and water in a garret might escape nearly all taxation except the death duties, and might escape even these if he gave away his money just before he died.
How can a tax be deemed just which falls alike upon the income of the urban landlords who, as John Stuart Mill says, “grov richer, as it were, in their sleep without working, risking, atomising,” and upon the earnings of the professional man who has qualified himself by a long course of study to work hard for every guinea be earns? It is sometimes argued that there is no real injustice in indirect taxes, because any man may avoid them abstaining from the use of the taxed articles. I have often wondered what the death rate would have been in the early years of this century if this suggestion had then been generally acted on, for, at that time, as has been well said, “everything that was useful or good, or beautiful in nature or art; everything that was sweet to the palate, wholesome for the body, needful for raiment, grateful to the eye, or pleasant to the taste or smell was taxed.” It is no argument in favour of taxes upon expenditure that their injustice may be avoided by abstaining from the innocent enjoyment of things desirable and desired; and the very fact that such abstention is possible proves that expenditure upon dutiable commodities is no just measure of the “ability‚” to pay taxes.
The fact is that “ability to pay‚” must be abandoned by anyone in search of a really just basis for taxation. The theory has never been logically carried out except by certain despotic Governments (mostly Oriental). Isaac of York and other medieval Jews probably heard all that was to be said in favour of it. Robin Hood and Captain Kidd certainly acted upon it. The mere fact that one man has more wealth than another does not justify the State taking away part of his property, provided he came by it honestly, save in those cases of supreme need in which the State admittedly has the right to call upon its members to
Spare neither land nor gold,
Nor son nor wife, nor limb nor life,
for the common salvation.
Adam Smith’s maxim that citizens should pay taxation “in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State,” appears to imply, not only that ability to pay taxation bears some fixed relation to income, but also that income bears a fixed relation to the protection afforded by the State. This is certainly not true of earned incomes, which are proportioned to different degrees of ability and industry rather than to different degrees of State protection. But the form of his reference to the State’s welcome, for it suggests that taxation is, in some sense, a return from the individual to the State for services received or benefits enjoyed. If it is possible to find an accurate measure for the benefits which each citizen receives from the community in which he lives it will not be necessary to go farther in the search for just basis of taxation. This inquiry will also conveniently carry us over from the subject of national to that of local taxation.
On March 6th, 1899, Mr. John Hepper, F.S.I., F.A.I., read before the Leeds and Yorkshire Architectural Society a paper on “the business, peculiarities, progress, and possibilities‚” of Leeds, confining himself “to such matters as combine to make or affect stability and value.”
It is instructive to notice what, from a purely professional point of view, are the “matters which make or affect value.” Briefly summarising Mr. Hepper’s comprehensive and lucid statement, this is what we learn about Leeds:—
Population in 1899 about 420,000 (more than doubled since 1851). The people are industrious, skilled, receptive, intelligent, of a careful, saving character, capable of adapting themselves to altering circumstances and of turning to any kind of manufacture.
Position and Communications.—About midway between London and Edinburgh, and between the eastern and western seaboards. “Seated at the convergence of systems of road, rail, and waterways of unsurpassed centrality, Leeds is found to be one of the most convenient distributing centres in the kingdom.” The level character of its manufacturing areas reduces the cost of cartage to a minimum, while its residential districts are on rising ground fairly free from the smoke. Lovely country resorts lie within easy reach of the city.
Mineral Resources.—Leeds has within its limits or near its borders supplies of coal, brick clay, fireclay, ironstone, and building stone.
Industries.—Mr. Hepper specifies a large number and variety of manufacturing industries carried on in Leeds.
Municipal Advantages.—Besides the Town Hall and Municipal Buildings, the Corporation owns three Markets (Corn, Cattle, and General), a Free Library, a Fine Art Gallery, eighteen Parks and Recreation Grounds (total, 645 acres), and two groups of allotments. To these are being added five sets of Baths. The mileage of paved and macadamised roads has nearly doubled since 1866. The wide and excellent roads and the Municipal Tramways (all soon to be electric) afford easy means of communication between all parts of the city and suburbs. Municipal Gas Works supply gas of good quality at a cheap rate, and the Municipal Water Works furnish an abundance of soft water. The electric lighting has been recently taken over by the town. At least a million sterling has been spent in the making of roads and sewers and sewerage works and in street improvements. Four refuse destructors have been provided, and a large sanitary depot. There are Municipal Hospitals for fever, smallpox, &c., and three Municipal Burial Grounds.
Local Taxation.—The rates levied by the Council for the year ended March 25th, 1899, were as follow: City Rate (including 1s. 3d. in the £ for School Board purposes), 2s. 2d.; Consolidated Rate, 2s. 11d.; Highway Rate, 9d. Adding Poor Rate, 1s. 4d., we reach, for the last completed year, a total rate of 7s. 2d. in the £, which appears to be about the average, on a ratable value of £1,522,092. The net debt of the city is £5,215,214 (= £12. 10s. 3d. per head of population).
Mr. Hepper gives from his own professional experience a few instances, taken from the central part of the city, of the effect of all this upon the growth of land values. Park Row, where, not more than twenty-five to thirty years ago, dwelling-houses were being converted into offices, now contains the Royal Exchange, all the great banks, and some of the leading insurance offices. East Parade is further west, and in 1869 its westerly side was still largely occupied with dwelling-houses. Some of the sales included the exiting buildings with the land, but, as the houses were intended to be pulled down, the increase of value plainly attaches to the land as building land. I have thrown Mr. Hepper’s figures into tabular form for convenience of comparison:—
The figures given represent prices paid per square yard. Properties marked (*) obviously include building values, as above stated.
The plot marked K in the above table “formed part of the site of the old Court House. When the Town Hall was built and the Borough Courts were transferred thereto, about 1858, the Corporation sold the Court House and the open yard on the south, which, at that time, could not be built upon, for £6,000 to the Post Office authorities. Four or five years ago the Corporation bought the property back again for £20,000, with the restrictions upon the aforesaid yard removed, so that the whole could be built upon. After devoting about 600 square yards to widening the adjoining streets and improving City Square, the remainder sold for £49,500.”
Mr. Hepper says he could quote similar instances of appreciation of land values “all over the commercial centre of the city.” Indeed, in another pamphlet he showed instances of land values in Boar Lane which increased between 1869 and 1895 at rates of 92, 98, 130, and 158 per cent, and in the same street an offer was refused of £135 per square yard for land which in 1867 cost Sir John Barran £27 (exactly one-fifth of the amount offered); “the present rentals made it more profitable for the owners to keep it.”
I have drawn somewhat freely on Mr. Hepper’s papers because their author is an expert of undoubted authority and unrivalled local knowledge, dealing with an important centre of population from a purely professional point of view. He does not profess to discuss theories, but to state facts. Yet the theory of the origin and growth of land values springs directly out of the facts which he records, for it is plain on the face of his statement that land is of great and increasing value in Leeds because the natural advantages of the position of the town and the abundance of mineral wealth which underlies it and its neighbourhood have attracted a large population; because that population is energetic and thrifty; because the Government, national and local, has done much to improve upon the natural advantages of Leeds, and to add to its attractions as a place for residence, for manufacture, and for commerce. The value of land in Leeds would be less than it is, in spite of its coal and ironstone, if its population were small; or if the national Government did not extend to it the protection of the national law; or if its people were idle and thriftless; or if Parliament had refused authority for the making of the railways and canals that serve it, or had insisted upon their construction along some other route; or if the City Council had spent the rates less wisely and generously in providing municipal services and effecting town improvements. In a word, land values are created by the presence, the industry, and the expenditure of population.
It is clear that Mr. Hepper’s professional experience does not lead him to attribute the increase of land values to the activities of those who receive them. In one of his pamphlets he makes no reference to the landholders save this: “The expansion of the city is not trammelled and hindered by great landlords who will only sell or lease on their own terms.” This can only be imputed to the landlords for righteousness on the principle which led the schoolboy to say that pins had saved the lives of a great many people—”by not swallowing them!”
In the other pamphlet, already referred to, Mr. Hepper plainly states that—
As communities grow in number and wealth they enlarge their borders and enhance the value of the land around them, while, probably, the owners of the land may he contributing nothing towards the increased value.
Mr. Hepper dwells at some length upon two other facts; (1) the tenure of land in the city is almost entirely freehold; (2) the rate of interest is low, with a tendency to fall lower. The first affects the division of land values among owners rather than their origin; the second is almost certainly due to the industry and thrift of the workers of Leeds causing money to be plentiful.
What is true of Leeds is more or less true of every civilised community. The relation of population to land values is, of course, more readily seen in cases where the growth of population has been exceptionally rapid. In such instances as Johannesburg and Dawson City the influx of population has, within the last few years converted barren wastes, vast tracts of which could be bought for next to nothing, into crowded cities, where sites are sold by the square foot. In many a colonial city the price of a site for a single block of offices exceeds the amount which the Government originally received for the whole area upon winch the city now stand. The State Bureau of Labour Statistics for Illinois recently gave a most interesting table showing the yearly growth of value in the case of a quarter-acre plot in the business centre of the city. In 1830, when the population of Chicago was 50, this “quarter-acre of raw prairie land at the mouth of the Chicago River‚” was twenty dollars. In 1894 the population was 1,500,000 and the value of the quarter-acre had risen to 1,250,000 dollars.
The story of Leeds and of Chicago is repeated, on a still larger scale in London. The rise of land values in the metropolis has not been so rapid as in the case of Johannesburg, and its stages are not so fully recorded as in the case of Chicago, but the causes are exactly the same. Early in 1897 the Valuer to the London County Council prepared an estimate of the land values of the metropolis. He excluded exactly all parks and open spaces, and (by an average calculation) the areas occupied by streets. He says:—
I think I should point out that my aim has been to arrive at the present value of the land in each area, subject to existing conditions. I have not taken into consideration the possibility of enhancement of value owing to the formation of or widening of streets; nor the better utilisation of land at present encumbered by existing buildings; nor the dormant element of building land now used for agricultural purposes. In outlying districts land which is ripening for building is taken practically at agricultural value; while building land not developed to its fullest extent is not valued according to its fullest capacity, but according to the use now made of it.
Readers of Mr. Billson’s paper in last year’s “Annual‚” (since republished as a penny pamphlet by the Liberal Publication Department, Parliament Street, Westminster) will readily understand the importance of these reservations, the effect of which is that London land values are considerably understated in the Valuers Report. Yet, even so, his total comes out at the enormous figure of £15,096,620—an annual value equal to about 6s. 6d. per week from every family in the metropolis.
Considerations of space forbid a detailed inquiry into the causes which have helped to build up this value—to convert land which once a forest-girt marsh sloping to the lower reaches of the Thames into sites which sometimes sell at the rate of nearly two and a half million pounds per acre. An attempt to work out the history of London land values in some detail was made a few years ago in a series of articles in a London evening paper.
Briefly, London land bears an enormous value, mainly (1) because its position on a convenient tidal river marked it out as a natural centre for the trade of a seafaring people, and so attracted to it a large commercial population; (2) because the national Government established its legislative, administrative, naval, military, and judicial headquarters there; (3) because its municipal authorities have spent millions of public money, and have incurred a large debt, in draining its site, improving its highways, providing parks, &c.; (4) because the political and commercial capital naturally became the railway and market centre also. In the pamphlet just referred to, facts and figures are quoted which prove that the advantages conferred upon London by the expenditure of the rates in forming new streets, embanking the Thames, building new* bridges and freeing old ones, making tunnels under the river, opening new “lungs,” constructing a costly system of main drainage, providing Board Schools in every district, and public libraries, baths, and washhouses in many, have expressed themselves in terms of increased land value. The South London tramway system was municipalised on New Year’s Day, 1899, and some improvements, including an all-night service, have been introduced by the London County Council. Already the advantages thus conferred upon the population south of the Thames have been heavily discounted, if not entirely absorbed, by an increase of rents in the working-class districts.
We are now in a position to understand what Adam Smith meant when he said that “ground rents, so far as they exceed the ordinary rent of land, are altogether due to the good Government of the Sovereign.” Of course, the word “Government‚” must here be taken in its widest sense, to include all those developments of local self-government which have been such a marked feature of our history since Adam Smith’s time. Indeed, so great has been the increase of land values in the great self-governing towns during the past few generations that we are in danger of overlooking the share which the “Government of the Sovereign” has had in that increase, and are often tempted to regard it as almost entirely the work of the municipalities.
In the case of some towns the increase of land value, and, in some cases, the very existence of the town itself, is obviously due, in the main, to the action of the Central Government. The growth of places like Chatham, Portsmouth, and Plymouth is due to the establishment of great works by the Admiralty. Enfield and Woolwich owe their increase of population and of land value largely to the establishment of Government Arsenals there; Deptford to its Naval Victualling Yard; Westminster, and West London generally, to the removal of Parliament and the Court from Winchester to the banks of the Thames.
The discovery of a new public utility in the land of Salisbury immediately led to a large increase in its value, as evidenced by the price which the Government had to pay for that part of the Plain which they purchased for a manoeuvring ground, and by the demand of Sir Edmund Antrobus for £125,000 for his adjacent Stonehenge estate. There is no doubt that the concentration of soldiers and the influx of visitors during the manoeuvres will add to the value of the neighbouring land exactly as the summer rush of visitors to the seaside increases the value of land at every popular watering place.
The Thames-side village of Woolwich grew into a great and busy town because of the establishment of the Government Arsenal and Dockyard. The population attracted by these State-created opportunities for employment has caused almost every available yard of space to be built over, and is rapidly covering the adjacent marshes of Plumstead with houses. The result has been, of course, an enormous increase in the value of land in and around Woolwich. The expenditure of the local rates by the Local Board of Health on the improvement of the town has maintained and accelerated this increase. The establishment by the London County Council of a free ferry across the Thames from South to Woolwich, and the acquisition of Bostall Wood, close by, as public park, have had the same effect.
The ground landlords of Woolwich, therefore, owe their increased incomes largely to the action of the State and of the municipality—those great co-operative organisations through which the people act, always imperfectly, often unconsciously, for the common wealth. The result, viz., that the profits go to the landholders, is just the same when the State or municipality delegate some of their co-operative functions to smaller corporations, such as railway or tramway companies. While the older means of communication still remain “the Queen’s Highway‚”—made, maintained, and controlled by public authority—the newer high roads, the railways, have been made and are, at present, maintained, and operated by private corporations, under the sanction and control of the State. London and some other still allow the supply of water and gas to be undertaken for them by joint-stock companies. But, whether the community does its own work or “puts it out‚” the result is just the same. The land agent who wishes to sell land quotes the abundant supply of pure soft water, the excellent railway service, just as he quotes the good roads, perfect drainage, excellent schools, &c., as reasons why the landlord should get a high price for the land.
Nor, when co-operation is limited, definite, and conscious, are the results different, if the benefit be definite and general. The success of the local trade unions in getting an increase of wages resulted, both at Woolwich and Deptford, in a general increase of rents; for the benefit was fairly general, owing to the fact that so large a proportion of the workers were in Government employment.
A general economy in expenditure operates in the same way as a general increase of earnings. Mr. Ben Jones, of the London Branch of the Co-operative Wholesale Society, has placed it on record that the successful work of the Royal Arsenal Co-operative Society “made the property around much more valuable, and it was the only cause of that property being made much more valuable;” and we have the testimony of a Woolwich clergyman that “rents are higher within a distance that a man can walk home to his dinner from the Arsenal.” He gets his mid-day meal cheaper, but he has to share the saving with the landlord. The competition for houses near the Arsenal or the Store translates the advantage of living in the better positions into land value, and ultimately into ground rent.
It will be noted once more that the landlord, as such, does not appear as a prominent or active agent in the creation of land values. His function is rather to receive them. So far as he is concerned, the successive increments of value of which his rent has been made up are “unearned.” In no other sense can we speak of “unearned increment;” for every penny of it is earned—by the public. Thirty years ago Prof. J. E. Thorold Rogers defined the position of the landlord in an often-quoted paragraph:—
Every permanent improvement of the soil, every railway and road, every bettering of the general condition of society, every facility given for production, every stimulus supplied to consumption, raises rent. The landowner sleeps, but thrives. He alone, among all the recipients in the distribution of products, owes everything to the labour of others, contributes nothing of his own. He inherits part of the fruits of present industry, and has appropriated the lions share of accumulated intelligence.
Many years earlier Patrick Edward Dove had suggested the same idea in a single forcible sentence:—
If, in the heart of London, a space of twenty acres had been enclosed by a high wall at the time of the Norman Conquest, and if no man had ever touched that portion of soil, or even seen it from that time to this, it would, if let by auction, produce an enormously high rent.
So complete and so complicated is the interdependence of one member upon another in that great co-operative institution, the modern State, that it is practically impossible to define accurately the share which any one class or locality has in the creation of local land value. It is quite certain, for instance, that the people of London are not entitled to the sole credit of London land values. London land is made valuable by the presence of the Government headquarters and because of the concentration of commerce within the area of the metropolis, as well as by the activity of the County Council. But the whole country contributes to the cost of maintaining the Government and its offices, and the customers upon whom the London shipper and merchant depend are to be found in every town and village in the kingdom. The presence of the High Courts of Justice in the Strand gives a special value to sites in the Temple and other neighbouring quarters where lawyers most do congregate, but the laws which are there administered run to the remotest hamlet.
The taxpayers all over the kingdom who help to maintain the “Royal Parks‚” in London are also helping to keep up the extra cost of sites in Park Lane, where the South African millionaire delights to build his palace. Although the British Museum is most easily accessible to Londoners, and has its special effect upon the rent of lodgings in Bloomsbury, the benefits of its reading-room are placed, by the printing press, within the reach of every student and newspaper reader in the kingdom. Portsmouth, Plymouth, Woolwich are specially affected, as to their land values by the immediate presence of great works of naval defence, but the land values of Hastings and Brighton also own something to the presence of the Channel Squadron. The agricultural labourer in a remote country village may never have travelled beyond the bounds of his own parish; but, as he goes about his farm work, or spends his earnings in the village shop, or smokes his pipe after toil, he is contributing something by his labour, his expenditure, and his taxpaying towards the causes which make London land a thousand times more valuable than the most fertile of his native fields. The value of land in a country market town depends upon the labours of the agricultural population in the surrounding villages, and every village grocer is a link in the chain which connects the agricultural labourer with Mincing Lane, and helps to make land valuable in the neighbourhood of the London Docks. It would be as idle to credit the whole of the increase of land values to the activities and expenditure of those who live in London as to claim for the Co-operators of Manchester, Glasgow, and Newcastle the whole of the profits of Co-operators of Manchester, London, Glasgow, and Newcastle the whole of the profits of Co-operative wholesale trading because the chief offices happen to be situated in those cities; for it is in the widest sense of the words that land values are created by the people. The material results of all our national and local co-operation inevitably express themselves in terms of land value. A house facing a public park will command a higher rent than a house of exactly similar build in a back street. A shop with a frontage to a main road lets for more than a similar shop in a less busy thoroughfare. A four-roomed cottage in a busy town commands a rent many times greater than that of as good a cottage in a rural district, where opportunities for labour are small and municipal conveniences almost non-existent. In all these cases the difference of value attaches to the site and not to the building. Thus, the man who pays the higher rent is already paying for the advantages which the “Government of the Sovereign‚” places within his reach, and is paying in proportion to his share in those advantages. He is paying for them in exactly the same wav as the tenant of a fifth-floor in a large block of offices pays for the convenience of the common lift, viz., in an increase of rent proportionate to the convenience which the use of the lift offers him. But, unfortunately, he is paying his rent, not to the “Government‚” which has rendered him the service, but to the landlord.
The extraordinary fact emerges from our inquiry that there is in full operation here and now a system of taxation which accurately measures the value of the benefits which each locality and individual receives from the State, and that this tax (usually called “economic rent‚” or “land value‚”), instead of going to the State, is treated as the private property of a favoured section of the community. It is only necessary to convert this private tax into a public one, and to abolish the present public taxes, in order to arrive at a system of taxation based upon justice. The community should itself collect the price paid for the benefits which itself confers. This is what is meant by the taxation of land values: “The abolition of all taxes upon labour, and the products of labour, and the earnings of labour, and the increase of taxation upon land values until the whole annual value of land is taken in taxation for public purposes;” or, in other words, the adoption of land values as the basis upon which both taxes and rates shall be levied.
The enormous growth of municipal expenditure during late years has given to the vexed question of the incidence of local taxation a great and increasing importance. It is a question upon which popular opinion is directly at variance with the opinion of most experts, and upon which experts differ among themselves.
The view almost universally adopted by occupiers of houses, and by Progressive candidates who appeal to their suffrages at elections, is that the rates are a burden upon the occupiers of buildings in addition to the full rent, and that the “landlord‚” who receives the rent, pays none, or practically none, of the rates. From this point of view the taxation of land values is advocated as a measure for directly affording “relief to the occupying rate-payer.
On the other hand, many economists, nearly all surveyors, valuers, and estate agents, men of vast practical experience in questions of value, assessment, and rating, like the Statistical Officer and the Valuer and Assistant Valuer to the London County Council, maintain that rates really come out of “rent,” i.e., out of land value. “The economic value of premises is not rent only, but rent plus rates, from which it follows that the owners of rent pays all rates.”
It is only necessary to consider the two extreme theories. (1) If it be true that the occupier pays the full annual value of land and house, and, in addition, the whole of the rates, the injustice of the present system stands naked and unashamed, for no one would now seriously defend a proposal that the occupier shold pay the full value of the site which he occupies, and at the same time bear the whole expense of making and keeping that site valuable, while the landlord pays nothing at all. If this theory could be proved to be in accord with the facts, the argument for the taxation of land values would be simple and irresistible. But we know (2) that there is a large body of economic and professional opinion which favours the view that the rates really fall, or at least have a strong tendency to fall, on land value. There is so much to be said for this view that it at least calls for a careful analysis. It must be premised, however, that no one alleges that the rates come out of the sum which the landlord receives as ground rent. The argument is that the incoming tenant takes into account the amount of rates which he will have to pay, and offers a smaller rent in consequence. This, as it were, throws the burden of the rates back upon the builder of the house; but he has already taken the rates into account in fixing the amount of the ground rent which he is willing to pay to the freeholder, upon whom the burden thus ultimately falls. If all the municipal services went on as usual, and there were no rates, he would get a ground rent just so much the greater.
Consider the case of a new house in a London suburb. The ground rent (which may be supposed to represent very nearly the present net annual value to the freeholder) is £7. The house is worth £30 a year, apart from the value of its site. The occupier pays £37 in “rent,” and is assessed at £30, upon which he pays rates at 6s. 8d. in the £, i.e., a total of £10 in rates. According to the popular theory the full value of the land is £7 a year, which the occupier pays, in addition to the value of the house (made up of interest on cost of building and of annual cost of insurance and repairs) and the whole of the rates. But, according to the theory which is now under discussion, the true annual value of the land is £17, and if the landlord undertook to pay the rates he would get £17 for it in ground rent. As the building agreement provided that the builder (or his tenant) should pay the rates, and it was foreseen that there would be a demand for £10 a year in rates as soon as the house was occupied, the freeholder could only get £7 net. Whichever theory be correct, there is no disputing the fact that the occupier pays a total sum of £47 a year for permission to occupy the premises, and it is difficult to resist the conclusion that competition would compel him to pay £47 a year even if [other things being equal) the landlord paid the rates directly.
There is reason to believe that the practical truth lies between the two economic extremes. There is an undoubted tendency for the rates to fall upon the value of the “property,” and ultimately upon the value of the site. If the rates were assessed upon land value, that tendency would probably be made effective, even if the rates were collected, as now, from the occupier. As it is, the economic tendency is disguised, especially in London and some towns, by the working of the leasehold system; hindered by the fact that “ratable value,” and not land value, is the basis of rating; and frustrated, in the case of those properties, urban as well as rural, which come within the operation of the Agricultural Rating Act, by the transfer of half the burden of the rates to the Imperial Exchequer.
If, as has been shown, the benefits conferred by Government are measured by land value, it becomes clear that ratable value is not a just basis of local taxation, for ratable value consists of land value plus the value of buildings and other improvements, minus certain deductions allowed by statute. Moreover, unoccupied property, no matter how valuable, is usually discharged from assessment and pays no rates. Ratable value is calculated from “gross value,” which is defined, in the case of London, as meaning—
The 3 annual rent which a tenant might reasonably be expected, taking one year with another, to pay for an hereditament, if the tenant undertook to pay all usual tenant’s rates and taxes, and if the landlord undertook to bear the cost of repairs and insurance and other expenses, if any, necessary to maintain the hereditament in a state to command that rent. (Metropolis Valuation Act, 1869, p. 4.)
A maximum deduction of one-fourth is permitted where the annual value does not exceed £20; of one-fifth up to a gross of £40; of one-sixth where the gross value exceeds £40. Thus a house for which a tenant might reasonably be expected to pay £10 a year is assessed at £15; £35 a year at £28; and so on. The reductions here mentioned, although generally adopted, are minimum deductions allowed by the Act, and are supposed to represent the average annual cost of repairs and insurance. In every case where the land value bears a large proportion to the total value of the property these deductions are excessive, and give an unfair advantage to the owner or occupier; for the land is not wasting property and entails no charge for repairs, but is, on the contrary, usually being increased in value by the growth, industry, expenditure of the surrounding population.
Moreover, when land suitable for building within an urban district is still used for agricultural purposes it is assessed, not upon “the annual rent which a tenant might reasonably be expected to pay‚” for building purposes, i.e., upon the value which the Community has conferred upon it, but upon the rent at which it is letting for agricultural uses.
The inclusion of building values with land values as the basis of assessment to the local rates destroys all relation between the amounts paid for the benefits of local government and the standard by which alone those benefits can be measured. The following table is based upon actual cases in London, recently quoted before the Royal Commission on Local Taxation by the Assistant Valuer to the London County Council; the figures, for convenience of comparison, being reduced to terms of £100 worth of “gross annual value”:—-
Note.—Column “A” gives net land value. The full economic value of the land according to the theory under discussion, i.e. ground rent (net land value) rates, is the sum of cols. “A” and “E.” Column “B” gives net building value, i.e. letting value of house (not including ground rent) minus cost of insurance and repairs. Column “D” corresponds to “gross value” (as defined by the Valuation Act), which includes cost of repairs and does not include rates. “Ratable value” — col. “A” + col. “B” or col. “D” – col. “C,” and may be taken in each case as £84, odd shillings being neglected in practice.
The advantages of position, i.e., the respective shares in the benefits of government conferred by the occupancy of each site, are represented by the land value, i.e., by the greatly varying figures in col. A; or (on the theory that land value = ground rent + rates) by the greatly varying figures made up by adding col. A to col. E; but the ratable value is the same in all the cases, and the rates although they vary within narrow limits (owing partly to differences between the rates in different parishes, and partly to the exemption of “the City” from certain county rates), bear no proportion whatever to the variations of site value. If the rate in the £ could be completely “equalised” for all London parishes the figures in col. E would become uniform, but the burden of the rates would not thereby be equalised in any true sense, for it is not an “equal” arrangement to be compelled to pay the same amount of money for widely differing values of service. The true method of “equalising” the rates is to make them equally proportional to land value.
When we pass from occupied premises to unoccupied land, the injustice of our present system becomes very plain. Keeping well within actual London figures, let us take an acre of land in one of the growing outer suburbs. The land is at present unbuilt upon, although there is a great demand for houses in the locality, because the landowner is awaiting till he can get from some builder a price, or a ground rent, at which he thinks it would pay him to sell or let the land. The land may be absolutely unused, and in this case it will, in many parishes, be excused from rating altogether, on the ground that there is no “beneficial occupation;” or it may be used for grazing purposes and assessed at, probably, £3 or £5; or as a market garden with a somewhat higher assessment. On the assessment the “owner” pays six shillings in the £ as rates. Although the landlord’s contribution to the rates is very small and may be nothing at all, the benefits which he derives from the expenditure of the rates are very large, for the provision in conveniences— sewers, public lighting, Board Schools, baths, and so on—is converting his agricultural land into building land, with a large selling value which is increasing every week, and which he can realise any day by putting his land on the market.
The benefit is none the less real because he derives only a small present income from the land. If he chooses to let the benefit accumulate in the land as in a savings bank, he is nevertheless receiving it all the time. By and by he finds a builder who is to take his acre of land on a building lease at a ground rent. The builder cuts up the acre into twenty plots, paying a ground at least £5 per plot, and spends, say, £300 each on building houses, which he lets finally at £29 per house (= £5 rent + £18 interest on £300, spent in building, at 6 per cent, +£6 for insurance and repairs). The local authority assesses each house at, say, £24, and levies rates, say, at six shillings in the £ (= £7.4s.).
Now, on the theory that rates are a deduction from land value, the builder, who pays £5 a plot, would, if the landlord paid the rates directly, have been willing to pay £12 a plot, and have been able to do it without trenching upon his own trade profit—the land is worth £12 a plot, or £240 per acre per annum
The next acre to it is not yet built upon, because the continued demand for houses has encouraged the freeholder to stand out “for the rise.” But it is equally worth £240 gross, or £100 net, because benefits which it derives from the expenditure of the rates, and, if let on lease for building, would yield its owner at least £100 net in ground rent.
Let us compare the two acres, each equally benefited by “the good government of the Sovereign.”
There is no question upon which greater unanimity of opinion exists in London than upon the desirability of increasing the provision of houses for the people; yet here we have the conversion of an acre of bare land into an acre of houses penalised, owing to the present unjust basis of local taxation, by an increase of rating from £1.10s. to £140 a year!
Suppose, on the other hand, that laud values were substituted for ratable values as the basis of local taxation. We can estimate the effect of this by assuming, first, that all the present rates are abolished. The true value of the land already built over will then plainly appear as £240, at which it will then be assessed. But the neighbouring acre is, ex hypothesi, of the same value. If, then, the new rates, based upon land values, are imposed, each of the estates would be assessed upon its value £240, and would yield an equal amount to the rates. But the “owner‚” of the acre of bare land, who has been holding it back from the building market till he can “get his price‚” having no income out of which to pay his rates, would be forced either to build on the land or to let or sell it to someone else for building purposes; and, when built upon, there would be no increase of rates in respect of the buildings. The ring fence which our present rating system draws round a growing town would be broken through, and the terrible housing problem would be placed in the way of solution. Moreover, the bringing into the market of a virtually new supply of building land would, by competition, bring down the cost of land both to builders and occupiers, and tend to cause a reduction of rents all round. Some such idea was evidently present in the minds of the Royal Commission on the Housing of the Working Classes when they reported in favour of assessing vacant land “at, say, 4 per cent on its selling value.”
The adoption of land value as the basis of taxation and rating would mean much more than a mere fiscal reform. The enthusiasm with which it is advocated is inspired by the belief that it gives the master key to most of the social reforms for which thoughtful citizens are agitating. It would do justice to the whole community by taking for public purposes those values which the public creates. It would get rid of the social injustices which our present system of taxation inflicts upon poor men, poor classes, and poor neighbourhoods. There could be no more complaint of the over-taxation of Ireland, or of the rural districts, or of the east ends of our towns if taxation were proportioned to land values. As all citizens help to create land values, all citizens would share in their benefits if they were taken in taxation for the common benefit. It would then be possible to afford real relief to the agricultural rate-payers without throwing the burden of rural rates on a national Exchequer largely replenished by the oppressive methods of indirect taxation; for, while taxation would be small in rural districts where land values are low, the rural population would benefit by the tapping of the immense land values of the towns, which they help to create. The towns would benefit by the opening up of vacant land to the builder, and the country by the opening up of idle land to the farmer and labourer, under the pressure of a tax levied on the value of the land according to the best use to which it can be put. Thus a great step would be taken towards the breaking down of land monopoly, and of the monopolies dependent upon it, and towards the solution of the housing and unemployment problems. Production and commerce would be stimulated by the removal of the fines now laid upon those who add to the national wealth.
By none should the adoption of a just basis of taxation be more ardently desired and worked for than by Co-operators, for, as consumers they would benefit more than the average by the abolition of indirect taxes upon many of the commodities in which they trade; as distributors they would share in the increased demand for goods; and the great hindrance to productive Co-operation be removed by the reform of a fiscal system which allows and even encourages the land monopolist to levy blackmail upon those who desire to put land to productive use, and which penalises, by heavy taxation, the erection of a store or factory, or a block of workmen’s dwellings.
376 and 377, Strand, London, W.C.,
 As if the existing complications were not enough, suggestions for new taxes are continually made. The lessons of recent political and economic history have obviously been wasted upon the people, including, in some cases, even Chancellors of the Exchequer, who, within the last few years, have suggested taxation upon such oddly various subjects as cycles, mural advertisements, matches, vans and wheels, cats, theatre tickets, agricultural horses, bachelors, and nobiliary titles. Even more hopeless appears to be the case of the few enthusiasts who, evidently unacquainted with the complete breakdown of a similar experiment in America, have recently put forward a proposal for the taxation of “all property‚” upon its capital value.
 See “The Land Tax” (English Laud Restoration League’s Tract, No. 5. 376 and 377, Strand, London, W.C. One penny).
 “Wealth of Nations,” Book V., ch. ii.
 This was worked out with great elaboration of detail by Charles Tennant in his “People’s Blue Book,” of which a fourth edition was published in 1872. ‘ It is much to be wished that the facts and arguments of this valuable book could he brought down to date and reissued in a cheap form.
 The revelation of waste from which the above is quoted proved so damaging that the Government has ever since refused to issue any further reports of the sort. It is quite safe to assume that the condition of things is at least as bad at the present time.
 “Leeds: from a Surveyor’s Point of View.” (Leeds: Alf. Cooke. 1899.)
 “Movements of Values in Freehold Urban Districts, with Special Reference to Leeds.” Paper read before the Yorkshire Branch of the Surveyors’ Institute on October 7th, 1895. (Leeds: Alfred Cooke, 1895.) See pp. 14, 15.
 Eighth Biennial Report (1894). Second Edition (1896), p. 277.
 Cooperative News, June 13th, 1896.
 Since reprinted as a penny pamphlet. Echo Extras, No. 1. “The Great Problem of our Great Towns.” 19, St. Bride Street, Strand, London, E.C.
 The conquest of Cuba by the United States has already had the effect of increasing land value (Daily Chronicle, March 29, 1899), because the introduction of a more settled form of government makes possible the increase of population, the extension of industry, and the accumulation of wealth.
 In buying eleven acres of land at Woolwich for an open space the value was increased by £3,000 because a free ferry had been established at the ratepayers’ expense.—The late William Saunders, M.P., L.C.C., “The Land Struggle in London.” (1891), p. 13.
 Replying to a demand for higher wages for the labourers in Deptford Victualling Yard, Mr. Goschen (House of Commons, April 14th, 1899) said “that if it were consistent with proper administrative principles to make an advance of the wages of these labourers he would cheerfully do so. But there was a larger question than that of the amount involved, which was infinitesimal. If the position of the labourers at Woolwich and Deptford was as described, it was rather due to sweating landlords than to the rate of wages. The wages had been raised 20 per cent in the last ten years, and the house rents 50 per cent. It was constantly the case in those districts that the increase of wages only led to a larger sum going into the pockets of the landlords, and he was even told that some of the men who were locally the loudest in the cry for justice to the labourers were owners of cottage property, who would benefit if the wages were raised.”—Standard, April 15th.
 Select Committee on Town Holdings,—July 5th, 1887.
 “Political Economy,” Chap. XII. Prof. Rogers here gives a hint of some considerations which have, perhaps, not yet been sufficiently worked out by economists. It is pretty clearly understood that a general improvement of efficiency in production crystallises into land value, and that a material “bettering of the general condition of society,” by the raising of wages (trade unionism,) or by an economy in expenditure (distributive Co-operation), does the same thing. But we are not yet in a position accurately to estimate the effect of mental and moral “betterings‚” on land values, although they undoubtedly lead to material improvement. The work of the Educational Committee of a Co-operative Society, or of a School Board, would obviously be covered by the quotation from Thorold Rogers.
 Report by Statistical Officer of London County Council on “New Sources of Revenue, 1897.” Sidney Webb (Town Holdings Committee, 1890, quest. 3. ff.) holds that, according to economic theory, “in a state of perfect competition, where there is no economic friction, and in the long run, all imposts levied in proportion to the rent of natural advantages, unimproved land, fall upon the owner,” and that “the rate on buildings falls in the same way as the rate on land, that is, upon the owner, or would conditionally on the absence of economic friction,” but that “the economic friction, in the opinion of economists, eats away the theory‚” and that “it really does not in actual life do anything of the kind in either case.” John Stuart Mill (“Political Economy,” 8th edit.. Book V. ch. iii.) held that “a tax on rent [land value] falls ‘wholly on the landlord.” But “the rent of a house consists of two parts, the ground rent and the building rent.
A tax of so much per cent on the gross rent falls on both these portions alike. … As much of it as is a tax on building rent falls on the consumer, in other words, the occupier … As taxes on rent, properly so called, fall on the landlord, a tax on ground rent, one would suppose, must fall on the ground landlord, at least after the expiration of the lease, but not “unless with the tax on ground rent there is combined an equivalent tax on agricultural rent.” That is to say, on the whole and in the long run, a tax levied on all land, according to its value, falls on the landlord and a tax on the value of houses, apart from land, on the occupier. Professor Seligman (“On the Shifting and Incidence of Taxation‚”) believes that “When the local real estate tax is levied according to rental value and assessed on the first instance on the occupier, as is the case in England, the main burden of the tax will rest ultimately on the occupier, not the owner of the premises.”
 First Report (1885) p. 42. The following Commissioners dissented from the proposal: Lord Salisbury, Mr. Goschen, and Sir R. A. Cross.