The Mother of all Monopolies
Winston S. Churchill
[From a Speech Delivered at King's Theatre in
Edinburgh on 17 July 1909]
It is quite true that land monopoly is not the only monopoly which
exists, but it is by far the greatest of monopolies - it is a
perpetual monopoly, and it is the mother of all other forms of
monopoly. It is quite true that unearned increments in land are not
the only form of unearned or undeserved profit which individuals are
able to secure; but it is the principal form of unearned increment
which is derived from processes which are not merely not beneficial,
but which are positively detrimental to the general public.
Land, which is a necessity of human existence, which is the original
source of all wealth, which is strictly limited in extent, which is
fixed in geographical position. Land, I say, differs from all other
forms of property in these primary and fundamental conditions.
Nothing is more amusing than to watch the efforts of our monopolist
opponents to prove that other forms of property and increment are
exactly the same and are similar hl all respects to the unearned
increment in land.
Misleading and False Analogies
They talk to us of the increased profits of a doctor or a lawyer from
the growth of population in the towns in which they live. They talk to
us of the profits of a railway through a greater degree of wealth and
activity in the districts through which it runs. They tell us of the
profits which are derived from a rise in stocks and shares, and even
of those which are sometimes derived from the sale of pictures and
works of art, and they ask us - as if it were the only complaint: "Ought
not all these other forms to be taxed, too?"
But see how misleading and false all these analogies are. The
windfalls which people with artistic gifts are able from time to time
to derive from the sale of a picture - from a Vandyke or a Holbein -
may here and there be very considerable. But pictures do not get in
anybody's way. They do not lay a toll on anybody's labour; they do not
touch enterprise and production at any point; they do not affect any
of those creative processes upon which the material well-being of
millions depends.
Rewards for Service
If a rise in stocks and shares confers profits on the fortunate
holders far beyond what they expected or indeed deserved, nevertheless
that profit has not been reaped by withholding from the community the
land which it needs, but, on the contrary, apart from mere gambling,
it has been reaped by supplying industry with the capital without
which it could not be carried on.
If the railway makes greater profits, it is usually because it
carries more goods and more passengers. If a doctor or a lawyer enjoys
a better practice, it is because the doctor attends more patients and
more exacting patients, and because the lawyer pleads more suits in
the courts and more important suits.
At every stage the doctor or the lawyer is giving service in return
for his fees, and if the service is too poor or the fees are too high
other doctors and other lawyers can come freely into competition.
There is constant service, there is constant competition; there is no
monopoly, there is no injury to the public interest, there is no
impediment to the general progress.
Fancy comparing these healthy processes with the enrichment which
comes to the landlord who happens to own a plot of land on the
outskirts or at the centre of one of our great cities, who watches the
busy population around him making the city larger, richer, more
convenient, more famous every day, and all the while sits still and
does nothing.
Enrichment Without Service
Roads are made, streets are made, railway services are improved,
electric light turns night into day, electric trams glide swiftly to
and fro, water is brought from reservoirs a hundred miles off in the
mountains - and all the while the landlord sits still. Every one of
those improvements is effected by the labour and cost of other people.
Many of the most important are effected at the cost of the
municipality and of the ratepayers. To not one of those improvements
does the land monopolist, as a land monopolist, contribute, and yet by
every one of them the value of his land is sensibly enhanced. He
renders no service to the community, he contributes nothing to the
general welfare; he contributes nothing even to the process from which
his own enrichment is derived.
If the land were occupied by shops or by dwellings, the municipality
at least would secure the rates upon them in aid of the general fund,
but the land may be unoccupied, undeveloped, it may be what is called
"ripening" - ripening at the expense of the whole city, of
the whole country for the unearned increment of its owner. Roads
perhaps have to be diverted to avoid this forbidden area. The merchant
going to his office, the artisan going to his work, have to make a
detour or pay a tram fare to avoid it. The citizens are losing their
chance of developing the land, the city is losing its rates, the State
is losing its taxes which would have accrued if the natural
development had taken place, and that share has to be replaced at the
expense of the other ratepayers and taxpayers; and the nation as a
whole is losing in the competition of the world - the hard and growing
competition of the world - both in time and money.
And all the while the land monopolist has only to sit still and watch
complacently his property multiplying in value, sometimes manifold,
without either effort or contribution on his part. And that is
justice!
Monopoly is the Keynote
But let us follow the process a little further. The population of the
city grows, and grows still larger year by year, the congestion in the
poorer quarters becomes acute, rents and rates rises hand in hand, and
thousands of families are crowded into one-roomed tenements. There are
120,000 persons living in one-roomed tenements in Glasgow alone at the
present time. At last the land becomes ripe for sale -that means that
the price is too tempting to be resisted any longer. And then, and not
till then, it is sold by the yard or by the inch at 10 times, or 20
times, or even 50 times its agricultural value, on which alone
hitherto it has been rated for the public service.
The greater the population around the land, the greater the injury
which they have sustained by its protracted denial, the more
inconvenience which has been caused to everybody, the more serious the
loss in economic strength and activity, the larger will be the profit
of the landlord when the sale is finally accomplished. In fact, you
may say that the unearned increment on the land is on all fours with
the profit gathered by one of those American speculators who engineer
a corner in corn, or meat, or cotton, or some other vital commodity,
and that the unearned increment in land is reaped by the land
monopolist in exact proportion, not to the service, but to the
disservice done. It is monopoly which is the keynote, and where
monopoly prevails the greater the injury to society the greater the
reward to the monopolist will be.
Land Monopoly Hampers Industry
See how this evil process strikes at every form of industrial
activity. The municipality, wishing for broader streets, better
houses, more healthy, decent, scientifically planned towns, is made to
pay, and is made to pay in exact proportion, or to a very great extent
in proportion, as it has exerted itself in the past to make
improvements. The more it has improved the town the more it has
increased the land value, and the more it will have to pay for any
land it may wish to acquire.
The manufacturer proposing to start a new industry, proposing to
erect a great factory offering employment to thousands of hands, is
made to pay such a price for his land that the purchase price hangs
round the neck of his whole business, hampering his competitive power
in every market, clogging him far more than any foreign tariff in his
export competition, and the land values strike down through the
profits of the manufacturer on to the wages of the workman. The
railway company wishing to build a new line finds that the price of
land which yesterday was only rated at its agricultural value has
risen to a prohibitive figure the moment it was known that the new
line was projected, and either the railway is not built, or, if it is,
is built only on terms which largely transfer to the landowner the
profits which are due to the shareholders and the advantages which
should have accrued to the travelling public.
It does not matter where you look or what examples you select, you
will see that every form of enterprise, every step in material
progress, is only undertaken after the land monopolist has skimmed the
cream off for himself. And everywhere today the man or the public body
that wishes to put land to its highest use is forced to pay a
preliminary fine in land values to the man who is putting it to an
inferior use, and in some cases to no use at all. All comes back to
the land value, and its owner for the time being is able to levy his
toll upon all other forms of wealth and upon every form of industry.
The Error of Public Tollways
A portion, in some cases the whole, of every benefit which is
laboriously acquired by the community is represented in the land
value, and finds its way automatically into the landlord's pocket. If
there is a rise in wages, rents are able to move forward, because the
workers can afford to pay a little more. If the opening of a new
railway or a new tramway, or the institution of an improved service of
workmen's trains, or a lowering of fares, or a new invention, or any
other public convenience affords a benefit to the workers in any
particular district, it becomes easier for them to live, and therefore
the landlord and the ground landlord, one on top of the other, are
able to charge them more for the privilege of living there.
Some years ago in London there was a toll-bar on a bridge across the
Thames, and all the working people who lived on the south side of the
river had to pay a daily toll of one penny for going and returning
from their work. The spectacle of these poor people thus mulcted of so
large a proportion of their earnings appealed to the public
conscience; an agitation was set on foot, municipal authorities were
roused, and at the cost of the ratepayers the bridge was freed and the
toll removed. All those people who used the bridge were saved 6d. a
week. Within a very short period from that time the rents on the south
side of the river were found to have advanced by about 6d. a week, or
the amount of the toll which had been remitted.
Neutralising Philanthropy
And a friend of mine was telling me the other day that, in the parish
of Southwark, about 350 pounds a year, roughly speaking, was given
away in doles of bread by charitable people in connection with one of
the churches, and, as a consequence of this, the competition for small
houses, but more particularly for single-roomed tenements, is, we are
told, so great that rents are considerably higher than in the
neighbouring district.
All goes back to the land, and the landowner, who, in many cases, in
most cases, is a worthy person utterly unconscious of the character of
the methods by which he is enriched, is enabled with resistless
strength to absorb to himself a share of almost every public and every
private benefit however important or however pitiful those benefits
may be.
Let Us Alter the Law
I hope you will understand that, when I speak of the land monopolist,
I am dealing more with the process than with the individual landowner.
I have no wish to hold any class up to public disapprobation. I do not
think that the man who makes money by unearned increment in land is
morally a worse man than anyone else who gathers his profit where he
finds it in this hard world under the law and according to common
usage. It is not the individual I attack, it is the system. It is not
the man who is bad, it is the law which is bad. It is not the man who
is blameworthy for doing what the law allows and what other men do, it
is the State which would be blameworthy were it not to endeavour to
reform the law and correct the practice. We do not want to punish the
landlord. We want to alter the law.
Take the case to which I have already referred, of the man who keeps
a large plot in or near a growing town idle for years, while it is "ripening"
- that is to say, while it is rising in price through the exertions of
the surrounding community and the need of that community for more room
to live. Take that case. I daresay you have formed your own opinion
upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party
generally, think that that is an admirable arrangement. They speak of
the profits of the land monopolist, as if they were the fruits of
thrift and industry and a pleasing example for the poorer classes to
imitate.
The Dog in the Manger
We do not take that view of the process. We think it is a
dog-in-the-manger game. We see the evil, we see the imposture upon the
public, and we see the consequences in crowded slums, in hampered
commerce, in distorted or restricted development, and in congested
centres of population, and we say here and now to the land monopolist
who is holding up his land - and the pity is it was not said before -
you shall judge for yourselves whether it is a fair offer or not-we
say to the land monopolist - "This property of yours might be put
to immediate use with general advantage. It is at this minute saleable
in the market at 10 times the value at which it is rated. If you
choose to keep it idle in the expectation of still further unearned
increment then at least you shall be taxed at the true selling value
in the meanwhile."
Free Trade - Free Land!
Every nation in the world has its own way of doing things, its own
successes and its own failures. All over Europe we see systems of land
tenure which economically socially, and politically are far superior
to ours; but the benefits that those countries derive from their
improved land systems are largely swept away, or at any rate
neutralised, by grinding tariffs on the necessaries of life and the
materials of manufacture.
In this country we have long enjoyed the blessings of Free Trade and
of untaxed bread and meat, but against these inestimable benefits we
have the evils of an unreformed and vicious land system. ln no great
country in the new world or the old have the working people yet
secured the double advantage of Free Trade and Free Land together, by
which I mean a commercial system and a land system from which, so far
as possible, all forms of monopoly have been rigorously excluded.
An Hour of Tremendous Opportunity
Sixty years ago our system of national taxation was effectively
reformed, and immense and undisputed advantages accrued therefrom to
all classes, the richest as well as the poorest. The system of local
taxation to-day is just as vicious and wasteful, just as great an
impediment to enterprise and progress, just as harsh a burden upon the
poor, as the thousand taxes and Corn Law sliding scales of the "hungry
forties."
We are met in an hour of tremendous opportunity.
"You who shall liberate the land," said Mr. Cobden, "will
do more for your country than we have done in the the liberation of
its commerce."
|