The People's Rights
Winston S. Churchill
[1909]
The best way to make private property secure and respected is to
bring the processes by which it is gained into harmony with the
general interests of the public. We are often assured by sagacious
persons that the civilization of modern States is largely based upon
respect for the rights of private property. If that be true, it is
also true to say that respect cannot be secured, and ought not,
indeed, to be respected, unless property is associated in the minds
of the great mass of the people with ideas of justice and of reason.
It is, therefore, of the first importance to the country -to any
country -- that there should be vigilant and persistent efforts to
prevent abuses, to distribute the public burdens fairly among all
classes, and to establish good laws governing the methods by which
wealth may be acquired. The best way to make private property secure
and respected is to bring the processes by which it is gained into
harmony with the general interests of the public. When and where
Property is associated with the idea of reward for services
rendered, with the idea of reward for high gifts and special
aptitudes displayed or for faithful labour done, then property will
be honoured. When it is associated with processes which are
beneficial, or which at the worst are not actually injurious to the
commonwealth, then property will be unmolested; but when it is
associated with ideas of wrong and of unfairness, with processes of
restriction and monopoly, and other forms of injury to the
community, then I think that you will find that property will be
assailed and will be endangered.
Land differs from all other forms of property.
It is quite true that the land monopoly is not the only monopoly
which exists, but it is by far the greatest of monopolies -- 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 in all respects to the unearned
increment in land. 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?'
Misleading analogies.
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 the creative processes upon which the
material well-being of millions depends; and 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.
Unearned increment.
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. 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 at the
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 may 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!
Unearned increment reaped in exact proportion to the
dis-service done.
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 rise 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 ten times, or twenty times, or even fifty 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.
The drag on enterprise.
It is monopoly which is the keynote, and where monopoly prevails,
the greater the injury to society the greater the reward of the
monopolist will be. See how all 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 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
traveling public.
Every form of enterprise only undertaken after the land
monopolist has skimmed the cream off for himself.
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 who 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. 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.
The landowner absorbs a share of almost every public and
private benefit.
Some years ago in London there was a tollbar 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 on 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 sixpence 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 sixpence a week, or the amount of the toll
which had been remitted. And a friend of mine was telling me the
other day that in the parish of Southwark about L350 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.
The Manchester Ship Canal and unearned increments.
Now let the Manchester Ship Canal tell its tale about the land. It
has a story to tell which is just as simple and just as pregnant as
its story about Free Trade. When it was resolved to build the Canal,
the first thing that had to be done was to buy the land. Before the
resolution to build the Canal was taken, the land on which the Canal
flows -- or perhaps I should say 'stands' -- was, in the main,
agricultural land, paying rates on an assessment from 30s. to L2 an
acre. I am told that 4,495 acres of land purchased fell within that
description out of something under 5,000 purchased altogether.
Immediately after the decision, the 4,495 acres were sold for
L777,000 sterling -- or an average of L172 an acre -- that is to
say, five or six times the agricultural value of the land and the
value on which it had been rated for public purposes.
Now what had the landowner done for the community; what enterprise
had he shown; what service had he rendered; what capital had he
risked in order that he should gain this enormous multiplication of
the value of his property! I will tell you in one word what he had
done. Can you guess it! Nothing.
But it was not only the owners of the land that was needed for
making the Canal, who were automatically enriched. All the
surrounding land either having a frontage on the Canal or access to
it rose and rose rapidly, and splendidly, in value. By the stroke of
a fairy wand, without toil, without risk, without even a half-hour's
thought many landowners in Salford, Eccles, Stretford, Irlam,
Warrington Runcorn, etc., found themselves in possession of property
which had trebled, quadrupled, quintupled in value.
Apart from the high prices which were paid, there was a heavy bill
for compensation, severance, disturbance, and injurious affection
where no land was taken -- injurious affection, namely, raising the
land not taken many times in value -- all this was added to the
dead-weight cost of construction. All this was a burden on those
whose labour skill, and capital created this great public work. Much
of this land today is still rated at ordinary agricultural value,
and in order to make sure that no injustice is done, in order to
make quite certain that these landowners are not injured by our
system of government, half their rates are, under the Agricultural
Rates Act, paid back to them. The balance is made up by you. The
land is still rising in value, and with every day's work that every
man in this neighbourhood does and with every addition to the
prosperity of Manchester and improvement of this great city, the
land is further enhanced in vaIue.
The shareholders and the ratepayers.
I have told you what happened to the landowners. Let us see what
happened to the shareholders and the ratepayers who found the money.
The ordinary shareholders, who subscribed eight millions, have had
no dividend yet. The Corporation loan of five millions interest on
which is borne on the rates each year, had, until 1907, no return
upon its capital. A return has come at last, and no doubt the future
prospects are good; but there was a long interval -- even for the
corporation. These are the men who did the work. These are the men
who put up the money. I want to ask you a question. Do you think it
would be very unfair if the owners of all this automatically created
land value due to the growth of the city, to the enterprise of the
community, and to the sacrifices made by the shareholders -- do you
think it would have been very unfair, if they had been made to pay a
proportion, at any rate, of the unearned increment which they
secured, back to the city and the community?
The system to be attacked, not individuals.
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.
We do not go back on the past.
Look at our actual proposal. We do not go back on the past. We
accept as our basis the value as it stands today. The tax on the
increment of land begins by recognizing and franking the past
increment. We look only to the future, and for the future we say
only this, that the community shall be the partner in any further
increment above the present value after all the owner's improvements
have been deducted. We say that the State and the municipality
should jointly levy a toll upon the future unearned increment of the
land. The toll of what? Of the whole? No. Of a half? No. Of a
quarter! No. Of a fifth -- that is the proposal of the Budget, and
that is robbery, that is Plunder, that is communism and spoliation,
that is the social revolution at last, that is the overturn of
civilized society, that is the end of the world foretold in the
Apocalypse! Such is the increment tax about which so much chatter
and outcry are raised at the present time, and upon which I will say
that no more fair, considerate, or salutary proposal for taxation
has ever been made in the House of Commons.
Tax on capital value undeveloped land.
But there is another proposal concerning land values which is not
less important. I mean the tax on the capital value of undeveloped
urban or suburban land. The income derived from land and its
rateable value under the present law depend upon the use to which
the land is put, consequently income and rateable value are not
always true or complete measures of the value of the land. 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 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. 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 ten 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 he taxed at the
true selling value in the meanwhile.' And the Budget proposes a tax
of a halfpennv in the pound on the capital value of all such land;
that is to say, a tax which is a little less in equivalent than the
income tax would be upon the property if the property were fully
developed. That is the second main proposal of the Budget with
regard to the land, and its effects will be, first, to raise an
expanding revenue for the needs of the State; secondly, half the
proceeds of this tax, as well as of the other land taxes, will go to
the municipalities and local authorities generally to relieve rates;
thirdly, the effect will be, as we believe, to bring land into the
market, and thus somewhat cheapen the price at which land is
obtainable for every object, public and private, and by so doing we
shall liberate new springs of enterprise and industry, we shall
stimulate building, relieve overcrowding, and promote employment.
Nothing new in the principle of valuation for taxation.
These two taxes, both in themselves financially, economically and
socially sound, carry with them a further notable advantage. We
shall obtain a complete valuation of the whole of the land in the
United Kingdom. We shall procure an up-to-date Domesday Book showing
the capital value, apart from buildings and improvement, of every
piece of land. Now, there is nothing new in the principle of
valuation for taxation purposes. It was established fifteen years
ago in Lord Rosebery's Government by the Finance Act of 1894, and it
has been applied ever since without friction or inconvenience by
Conservative administrations. And if there is nothing new in the
principle of valuation, still less is there anything new or
unexpected in the general principles underlying: the land proposals
of the Budget. Why, Lord Rosebery declared himself in favour of
taxation of land values fifteen years ago. Lord Balfour has said a
very great many shrewd and sensible things on this subject which he
is, no doubt, very anxious to have overlooked at the present time.
The House of Commons has repeatedly affirmed the principle, not only
under Liberal Governments, but -- which is much more remarkable --
under a Conservative Government. Four times during the last
Parliament Sir Trevelyan's Bill for the taxation of land values was
brought before the House of Commons and fully discussed, and twice
it was read a second time during the last Parliament with its great
Conservative majority, the second time by a majority of no less than
ninety votes. The House of Lords, in adopting Lord Camperdown's
amendment to the Scottish Valuation Bill, has absolutely conceded
the principle of rating undeveloped land upon its selling value,
although it took very good care not to apply the principle; and all
the greatest municipal corporations in England and Scotland -- many
of them overwhelmingly Conservative in complexion -- have declared
themselves in favour of the taxation of land values, and, after at
least a generation of study, examination, and debate, the time has
come when we should take the first step to put these principles into
practical effect.
The exemption of agricultural land from taxation.
It is said that the land taxes fall too heavily upon the
agricultural landowner and the country gentleman. There could be no
grosser misrepresentation of the Budget. Few greater disservices can
be done to the agricultural landowner, whose property has in the
last thirty years in many cases declined in value, than to confuse
him with the ground landlord in a great city, who has netted
enormous sums through the growth and the needs of the population of
the city. None of the new land taxes touch agricultural land, while
it remains agricultural land. No cost of the system of valuation
which we are going to carry into effect will fall at all upon the
individual owner of landed property. He will not be burdened in any
way by these proposals. On the contrary, now that an amendment has
been accepted permitting death duties to be paid in land in certain
circumstances, the owner of a landed estate, instead of encumbering
his estate by raising the money to pay off the death duties, can cut
a portion from his estate; and this in many cases will be a sensible
relief.
The concession to agricultural landowners.
Secondly, we have given to agricultural landowners a substantial
concession in regard to the deductions which they are permitted to
make from income-tax assessment on account of the money which they
spend as good landlords upon the upkeep of their properties, and we
have raised the limit of deduction from twelve and a half per cent
to twenty-five per cent.
The maligned Development Bill.
Thirdly, there is the Development Act, which will help all the
countryside and all classes of agriculturists, and which will help
the landlord in the country among the rest. So much for that charge.
In 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.
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
neutralized, 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. In 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. 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 today 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 liberation of its commerce.