A Chapter of Henry George

Henry J. Chase

Reprinted from The Bulletin of the National Single Tax League, Vol.3, No.1, January

I hope, although I don't feel altogether confident, that Mr. Charles M. Schwab will not skip Chapter XVI of "Social Problems," one of the books sent him by Mr. Otto Cullman. Lately I have re-read that chapter several times myself, and each time have wondered what Henry George, were he alive, would have to say today with regard to "public debts and indirect taxation." Here's what he said in 1883:

"Both of these devices by which tyrannies are maintained, governments corrupted, and the common people plundered, spring historically from the monopolization of land, and both directly ignore the natural rights of men. Under the feudal system the greater part of public expenses was defrayed from the rent of land, and the landowners had to do the fighting or bear its cost. Had this system been continued, England, for instance, would to-day have had no public debt."

But England's public debt was then, and for thirty years afterwards, something less than four billion dollars, a sum hardly worth mentioning nowadays. To be sure, a good part of it had been running ever since the close of the Napoleonic wars, and the aggregate of the interest charges must have been several times the principal; but the "statesmen" didn't seem to be worried. Perhaps, like our wonderful Daniel Webster, any one of them stood ready at any time to pay the whole thing out of his own pocket rather than there should be any "fuss" over the matter.

But if the present war were to end to-day, Great Britain's indebtedness would be at least forty billion. It is possible that the British statesmen don't feel absolutely sure that the policy hitherto followed will continue to be feasible for an indefinite time to come. An annual interest charge of a billion, or more ,on top of current public expense, is a little different from one that probably was less than a hundred million.

The advantages of public debts as an opportunity for "investment" are offset, somewhat, by the fact that the income of the investment has to be obtained by taxation; and that means that the greater the number of the investors the more likely that some of them, even the smaller ones, may have to find, as taxpayers, more or less of the money that will be paid them as bondholders.

Whoever will read (or re-read) the chapter quoted from will be likely to get the impression that it was George's notion that ground rental value is sufficient for current civil expenses, and that, therefore there is no necessity for governments levying in time of peace on anything but land, or for their running in debt. But George could not have believed that ground rental value can be depended on to meet, in addition to civil expenses, the cost of war. His idea seems to have been, however, if war occurred, not to borrow, but to take by taxation, and by direct, not indirect taxation, whatever may be necessary to carry on the war. Has this war been financed thus far, very much in accordance with this idea?

It certainly has not, but there's no help for that now. The thing to be considered now (and it's none too early) is, the best way out of the fix we shall be in when the war is over. George doesn't seem to think that we took the very best way after the Civil War, but we came out of that with a national debt of less than three billion. It wasn't quite a billion when we entered the present war. By the time this misunderstanding is straightened out, our indebtedness may have assumed proportions that would deter even a Daniel Webster from "trying to be funny."

It is possible that, taking the country as a whole, State and local taxation is not absorbing more than a fourth of ground rental value. Uncle Sam isn't making any levy upon it at all. Anyway, enough of it is being left in private hands to keep the land speculation game going.

Now, whether Uncle Sam took the other three-fourths or some part thereof, and the State and local governments the remainder, it would lighten industry's load by several billions per annum; also, which is of much greater importance, it would release industry from the stranglehold of land monopoly. It would permit of the full and steady employment of all our labor and capital to the best advantage—that is, upon the land yielding the largest return to a given expenditure of either. The resulting increase of the total of production might enable us to take care of the interest charges on all of our public indebtedness and, sooner or later, pay off the principals.

If there is any alternative between the policy proposed and ultimate repudiation, it would be interesting to have any of the "statesmen" expound. Meantime, read (or read <?nce more) Chapter XVI of "Social Problems." The foregoing is only a hint of its purport.