The Mother of all Monopolies
Roy Douglas
[Reprinted from Land & Liberty,
September-October, 1983]
"Land monopoly is not the only monopoly.
but it is by far the greatest of monopolies -- it is perpetual
monopoly. and it is the mother of all other forms of monopoly.
Unearned increments in land are not the only
form of unearned or undeserved profit but they are the principal form
of unearned increment and they are derived from processes which are
not merely not beneficial. but positively detrimental to the general
public.
I have made speeches by the yard on the subject of land value
taxation. and you know what a supporter of that policy."
[Winston Churchill]
Consistency, declared Winston Churchill on one occasion, is the
bugbear of little minds.
In one sense, that aphorism summarises his career. He changed party
twice, and often caused considerable embarrassment in whatever ranks
he chose to join. And his attitude both to Hitler and to Stalin
underwent dramatic and swift changes.
And yet, in another sense, Churchill was a good deal more consistent
than many politicians. His patriotism was never in doubt. He was
always fundamentally a Free Trader, although he was often prepared to
make compromises which infuriated purists. And he was a keen land
reformer: again, not the sort of man to nail his colours to one mast
and go down with his ship rather than abandon those colours, but a
consistent believer in the importance and necessity of land reform in
the spirit of Henry George.
Churchill's belief in land value taxation went back a long way. At
Caernarvon, in October 1904 -- as an Opposition backbencher - he
declared that it would be necessary to give effect to the almost
unanimous demand for the taxation of land values".[1]
This expression, "almost unanimous", was something of an
exaggeration, but not as much as it may seem. Well over 500 local
authorities -- Conservative as well as Liberal -- had petitioned for
the right to levy rates on the basis of site values, and in the
overwhelmingly-Conservative House of Commons of the day, a Bill in
favour of site value rating had not long passed its second reading,
winning substantial support from Ministerial supporters.[2]
As a junior minister in Campbell-Bannerman's Liberal Government,
Churchill did not resile from the views he had expressed in
opposition.
· At Glasgow, in October 1906, he spoke of the "determination...
to intercept all future unearned increment which may arise from the
increase in the speculative value of the land".
· In his first major speech on the land question, delivered at
the Drury Lane Theatre in April 1907, he called for "a
universal valuation of the land, rural and urban" on the basis of
"fair market value of the land, apart from the buildings and
improvements of all kinds".
Churchill contended that "the present
land system hampers, hobbles and restricts industry... a reform of our
rating system and our system of land tenure would be followed by an
upward movement in the material welfare of the nation."
He made an important point which is often missed by proponents of
land reform. The injurious effect of a bad land system does not lie
just in the fact that some people become richer and others become
poorer than would otherwise be the case. This imbalance is only
preserved by "vexatious obstruction of
social and economic progress far more injurious and wasteful than
could be measured by their own inordinate gains".
Churchill, however, had a disposition to introduce quasi-moral
judgments into his dialectic.
"There are only two ways in which people
can acquire wealth", he once declared. "There
is production and there is plunder. Production is always beneficial.
Plunder is always pernicious
"
The inference seemed to be that beneficiaries under the existing land
system were "plunderers". When
we read the speech carefully, we see that he disavowed that inference;
but people do not always read politicians' speeches carefully, and
unnecessary animosity was aroused.
Such speeches from Churchill, and others, served to explain why Lloyd
George's celebrated Budget of 1909 sparked off such a furious
controversy: a controversy which would hardly have been anticipated
after the relatively uncontentious character of the site value rating
proposals in the previous Parliament.
Churchill -- by now a member of the Cabinet -- jumped in with both
feet. His speech in Edinburgh on 17 July 1909 is a model of lucid
argument, largely free of surplus and counter-productive polemic.
"Land", he declared, "which
is a necessity of human existence, which is the original source of all
wealth . . . is strictly limited in extent . . is fixed in
geographical position (and) . . . differs from all other forms of
property in these primary and fundamental conditions."
No doubt, he went on to argue, there are examples of people making
inordinate profits from things other than land: the sale of a picture,
for example. "But pictures do not get in
anybody's way." Speculators in stocks may
receive "profits . . . 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".
By contrast, the owner of land who holds it out of use in speculation
on rising land values does much harm. "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 other ratepayers and taxpayers, and
the nation as a whole is losing in the competition of the world - -
both in time and money".
This Edinburgh speech is typical of others which Churchill delivered
about that time; it must be read in full to savour its penetrating
logic.
Yet there was the usual confusion in the public mind between attack
on a system and attack on individuals who benefit from that system.
Churchill's opponents returned the attack in full measure. A few weeks
later, the bloodthirsty Duke of Beaufort proclaimed his wish "to
see Winston Churchill and Lloyd George in the middle of twenty couple
of dog hounds".
What happened, in the end, to Churchill's land taxing enthusiasm?
This is not an easy question to answer. In 1917, he accepted office
in Lloyd George's Coalition, after a period out of government. As the
law then stood, he was required to submit to a by-election in his
Dundee constituency.
Questioned on land taxing, he replied: "I have made speeches to
you by the yard on the subject of land value taxation, and you know
what a strong supporter I have always been of that policy."[3]
And yet, three years later, that same Lloyd George Coalition, with
Churchill still an important member, abolished the very land taxes
which had been the matter of such intense controversy in 1909-10.
Lloyd George's defence of his own apparent volte-face would
doubtless have been echoed by Churchill: that the yield of those taxes
was so trifling that it did not justify their continuance. In a sense,
that was correct; but it misses the most salient argument advanced at
the time of the Budget debate.
Lloyd George had not introduced those taxes in the first place for
their own sake but because they seemed to offer a device for slipping
through a general system of land valuation, on which it might later
prove possible to apply land taxation.
That valuation had not been completed by 1914, and there was not the
remotest chance of persuading the Parliament which sat in 1920 to
resume it. So why preserve futile taxes whose object had been to
facilitate a now-impossible valuation?
In 1922 the Lloyd George Coalition fell, and Churchill suddenly found
himself "without an office, without a seat, and without an
appendix".
In the following year, Prime Minister Baldwin called a General
Election on the Protection-versus-Free Trade issue, and Churchill
unsuccessfully sought election as a Liberal.
At the beginning of 1924, the first Labour Government took office,
and Churchill rapidly moved towards the Conservatives. In October
there was another General Election, and he was returned as a "Constitutionalist".
To everybody's astonishment, and not least his own, Churchill became
Chancellor of the Exchequer in the new Government which resulted, and
over which Baldwin again presided.
Within that Government he had his work cut out to preserve the
essential fabric of Free Trade against great Protectionist pressures
some of his colleagues: indeed, many Free Traders criticised him for
serving in an administration of such complexion at all.
What was absolutely clear was that no faint chance existed of making
any sort of useful fight for land taxing as well as Free Trade.
Challenged in Parliament in December 1924, Churchill adroitly
side-stepped the question: "I took
occasion to inform my constituents in the Epping Division during the
recent election that I was not seeking a mandate from them for the
taxation of land values during the present Parliament."
That Parliament lasted until 1929, and from time to time, land taxing
enthusiasts in the Labour and Liberal parties sought to draw Churchill
into either avowal or repudiation of his prewar position on the
subject always without success.
Cast into opposition in 1929, Churchill soon found himself at
loggerheads with his erstwhile Conservative colleagues on the future
of India. Eventually, in 1931, the National Government was formed, and
as the decade advanced the voice of Winston Churchill was raised
increasingly on international rather than domestic causes. What
appears to have been his last public observation on land taxing came
some time after the Second World War. I have sought without success to
discover the reference (perhaps a reader can he]p me there?) but there
seems to have been a Parliamentary exchange with one of the leading
Labour personalities who taunted Churchill with having once sung the
'Land Song". The retort was to the effect, ".
. . and I shall sing it again".
So what do we make of Churchill as a land taxer?
He was firmly convinced that land value taxation was desirable,
although he probably never shared the most sanguine and enthusiastic
forecasts as to the benefits which would supervene from its
introduction. There is no reason to think that his opinion on the
matter ever changed. Yet he was a politician who believed politics to
be the "art of the practical". He was willing to fight in
that cause as in others, where he judged that positive results could
be produced by so doing; but he was not prepared to die in the last
ditch for one cause when he had a chance of living and continuing to
fight in defence of some other causes in which he also believed.
The world needs both the idealists who willingly suffer martyrdom,
and the realists who fight only where they think they have a good
chance of winning. Neither group has any right to sneer at the other.
REFERENCES
- This quotation, like others in the article, is from Land
Values, predecessor of Land and Liberty.
- See list in Liberal Magazine, 1904, pp.161-2.
- Dundee Advertiser, 28 July, 1917.
|