Testimony Given to the United States Senate
[Henry George testified as part of the investigation
conducted in 1883 by the Senate Committee Upon the Relations Between
Labor and Capital. For this portion of the testimony, George is
questioned by Senator Willkinson Call of Florida (1834-1910)]
Senator Call You have been engaged for some years, I
believe, in looking into the labor question, the condition of the
laboring population, and the relations of labor and capital, have you
Henry GeorgeFor some time, with a great deal of attention.
Senator Call We should be glad to have a statement from you
in your own way of any facts that may be within your knowledge in
regard to the condition of labor in its relations to capital, and any
suggestions of remedies which you think would bring about an improved
condition of things.
Henry George As for specific facts I presume you could get
them with much more advantage from other persons, from those who are
familiar with each locality and the particular facts relating to it.
The general fact, however, is that there exists among the laboring
classes of the United States a great and growing feeling of
dissatisfaction and discontent. As to whether the condition of the
laboring classes in the United States is getting any worse, that is a
difficult and complex question. I am inclined to think that it is; but
whether it is or not, the feeling of dissatisfaction is evidently
increasing. It is certainly becoming more and more difficult for a man
in any particular occupation to become his own employer. The tendency
of business of all kinds, both in production and in exchange, is
concentration, to the massing of large capital, and to the massing of
men. The inventions and improvements of all kinds that have done so
much to change all the aspects of production, and which are still
going on, tend to require a greater and greater division of labor, the
employment of more and more capital, and in make it more and more
difficult for a man who has nothing but his labor to become his own
employer, or to rise to a position of independence in his craft or
Senator Call Can you state any economic reasons why that is
Henry George I do not believe that there is any conflict of
interest between labor and capital, using those terms in their large
sense. I believe the conflict is really between labor and monopoly.
Capital is the instrument and tool of labor, and under conditions of
freedom there would be as much competition for the employment of
capital as for the employment of labor. `When men speak of the
aggressions of capital and of the conflict between labor and capital
I think they generally have in mind aggregated capital, and aggregated
capital which is in some way or other a monopoly more or less close.
The earnings of capital, purely as capital, are always measured by the
rate of interest. The return to capital for its employment, risk being
as nearly as possible eliminated, is interest, and interest has
certainly, for some time past, been falling, until now it is lower
than it ever has been in this country before. The large businesses
which yield great returns have in them always, I think, some element
of monopoly. Do you wish me to go right on and give my views
generally, or do you desire me to limit myself to answers to your
Senator Call I wish you would first give us the economic
reasons why there are such aggregations of capital. I would like also
to have you explain the sense in which you use the term "monopoly"
when you speak of these aggregations of capital.
Henry George I use the term "monopoly" in the
sense of a peculiar privilege or power of doing certain things which
other persons have not. There are various kinds of monopolies. As, for
instance, the monopolies given by the patent laws which give to the
inventor or to his assigns the exclusive right to use a particular
invention or process. There are certain businesses that are in their
nature monopolies. For instance, in a little village if one puts up a
hotel which is sufficient to accommodate all the travel there, he will
have a virtual monopoly of that business, for the reason that no one
else will put up another to compete with him, knowing that it would
result in the loss of money; and for that reason our common law
recognizes a peculiar obligation on the part of the innkeeper; he is
not allowed to discriminate as between those who come to him for
lodging or food. Again, a railroad is in its nature a monopoly. Where
one line of road can do the business, no one else is going to build
another alongside of it, and, as we see in our railroad system, the
competition of railroad companies is only between what they call "competing
points" where two or three roads come together, and as to these
the tendency is to do away with competition by contract or pooling.
The telegraph business is in its nature a monopoly; and so with
various others. Then again, there is a certain power of monopoly that
comes with the aggregation of large capital in a business. A man who
controls a very large amount of capital can succeed by underselling
and by other methods, in driving out his smaller competitors and very
often in concentrating the business in his own hands.
Senator Call You see the term in a broader sense then, than
that of a monopoly created by law. You include in it any exclusive
right, whether created by facts and circumstances or by law?
Henry George Yes. As I have said, there are businesses which
are in their very nature monopolies. The two most striking examples of
that are the railroad and the telegraph.
Senator Call In your opinion, what are the economic reasons
why business tends to become concentrated and why all industries have
a tendency to aggregation in the hands of a few?
Henry George I think that is the universal tendency of all
progress. It is because larger and larger capitals are required and
because labor becomes more and more divided.
For instance, when boots and shoes are made by hand the only capital
required is a lap-ston e and a little kit of tools, and any man who
has learned the trade and can get a piece of leather can sit down and
make a pair of shoes. He can do it in his own house and can finish his
product there and sell it. But when a machine is invented to be used
in that business, the shoemaker requires capital enough to purchase
that machine, and, as more and more machines are invented, more and
more capital is needed, while the skill required becomes less and
less. I believe you have it in testimony here that in the process of
shoemaking now there are sixty-four different branches, thereby
requiring that number of costly machines and differentiating the trade
into that number of subdivisions...
Machinery, m my opinion, ought to be an advantage to labor. Its
primary effect is simply to increase the product of labor, to add to
the power of labor, and enable it to produce more. One would suppose,
and in fact it was supposed at the beginning of the era of modern
inventions, that the effect of the introduction of machiucry would be
to very greatly improve the condition of the laboring classes and
largely to raise wages. I think it quite certain that its effect has
not been that; that, while very many articles have been greatly
cheapened iu cost and in price, wherever there has been an increase in
the wages of labor it can he traced to something else; generally to
the efforts of the laborers themselves, by the formation of trades
unions and organizations which have wrested from their employers a
higher rate of wages, or to improvements in government, or
improvements in intelligence, or improvement in morals. I think that
whoever will thoroughly examine the facts will come to the conclusion
that John Stuart Mill is right when he says that "all the
labor-saving machinery that has hitherto be en invented has not
lessened the toil of a single human being."
While, on the other hand, by permitting and requiring this great
subdivision of labor and dispensing to a great extent with skill on
the part of the laborer, it has reduced him to a far more dependent
condition than that which he occupied before. That is illustrated by
the case we were speaking of a while ago. The old-fashioned shoemaker,
having learned his trade and purchased his kit of tools, was his own
master. If he did not find work in one place he could find it in
another place. He had the means of earning a livelihood wherever he
could find people who wanted shoes. But now the shoemaker must find a
great factory and an employer with a large amount of capital. Without
sueh an employer he is utterly helpless: he cannot make a shoe; he can
only make one tenth or one sixty-fourth part of a shoe, or whatever
the proportion may be. It is the same way with all other trades into
which machinery has largely entered. The effect of the introduction of
machinery in any trade is to dispense with skill and to make the
laborer more helpless. I think you all understand that effect of
Senator Call Your idea is that the introduction of machinery
in the trades tends to prevent a man from mastering the whole of his
trade -- that he learns a part of the trade instead of the whole
Henry George Yes. That in itself might not be a
disadvantage: but it is a disadvantage under present conditions; those
conditions being that the laborers are driven by competition with each
other to seek employment on any terms. They must find it; they cannot
wait. Ultimately, I believe the whok trouble to come from the fact
that the natural field of employment, the primary source of wealth,
the land, has been monopolized and labor is shut off from it.
Wages in all occupations have a certain relation to each other: fixed
by various circumstances. such as the desirability of the employment;
the continuity of the work: the ease or difficulty of learning it; the
scarcity of the peculiar powers reqirired, and so on; but in a large
sense they must all depend upon the wages in the widest occupation.
That occupation in this country is agriculture, and everywhere
throughout the world the largest occupations are those which concern
themselves directly and primarily with the soil. Where there is free
access to the soil, wages in any employment cannot sink lower than
that which, upon an average, a man can make by applying himself to the
soil -- to those natural opportunities of labor which it affords. When
the soil is monopolized and free access to it ceases, then wages may
be driven to the lowest point on which the laborer can live.
The fact that in new countries wages, generally speaking, are higher
than they are in old countries, is simply because in those new
countries. as we call them. the soil has not yet passed fully into
private hands. As access to the land is closed, the competition
between laborers for employment from a master becomes more intense,
and wages arc steadily forced down to the lowest amount on which the
laborer can live.
In a state of freedom the introduction of machinery could but add to
wages. It would increase the productive power of labor, and the
competition with each other of those having such machinery and
desiring to employ labor would suffice to give the laborer his full
share of the improvemeut. Where natural opportunities are closed up,
however, the advantages resulting from the use of machinery, minus
that part retained by monopolies arising from its use, must ultimately
go to the owners of land, either in higher rents or higher prices. You
can see that very readily if you consider a community in which one
person or a small number of persons had full possession of the land.
In such a case no one could work upon the land or live upon it save
upon their terms. Those who had no land, having no means of
employment. would have to compete witth each other for the privilege
of working for those who had the land. and wages would, of course,
steadily sink to the point at which a man could barely live.
Now, if you imagine a labor-saving invention introduced there, no
matter how much it might add to the productiveness of labor, the
landlord could necessarily claim the whole advantage, just as he could
claim any advantage arising from increared fertility of the soil. lf
invention were carried to the farthest imaginable point, so that labor
could be entirely dispensed with in the production of wealth, the raw
material must still be obtained from the land, and therefore the
landowners would have all the wealth that could be produced, and would
be absolutely independent of labor. There would be no use for anybody
else, save as their servants or as pensioners on their bounty. This
point is of course unattainable, but towards it labor-saving
inventions tend, and their general effect is to raise the price of
land. This is illustrated in the effect of railroads. Railroads very
much reduce the cost of transportation, but that does not add anywhere
to the wages of labor, nor yet, generally, to the profits of capital.
It simply adds to the value of land. Where a railroad comes wages do
not increase; interest does not rise; but land goes up in value.
All human production in the last analysis is the union of labor with
land; the combination, trausportation. or modification of materials
furnished by nature so as to adapt them for the use of man. Therefore
where land is monopolized labor becomes helpless. Where one man owns
the land he must necessarily be the master of all the other men that
live upon it. Where one class own the land they must necessarily be
the ruling class. Those who have not land must work for those who have
it. In a ruder state of society, such as that which existed in Poland
and in many other countries of the world, the system of serfdom
resulted simply from the ownership of the land. The laborer was a serf
because be must get his living out of the land which another man
owned. In a state of society like ours, where the land is very largely
divided up, you do not see this so clearly; but you can see it, on one
side, in the large sums which the owners of land are enabled to obtain
without doing anything themselves, and on the other, in the conditions
which exist among the lowest class of laborers.
Part Five: The testimony concludes. What was achieved? As a
result of the committee's hearings, a smal bill restricting contracts
with immigrant laborers was passed -- obviously not supported by Henry
George. And one other outcome -- the Bureau of Labor Statistics was
first established. That Bureau has compiled and provided valuable
information for over 100 years.
Henry George is continuing to be patient with Senator Henry W. Blair
of New Hampshire (1834-1920), a conservative Republican.
Senator Blair But it is the power to combine that land with
human labor and with wood, with brick, with mortar, with various other
things, which in combination constitute a building that renders it
Henry George The power to erect a house on it?
Senator Blair Thc power to have a house erected upon it; the
power to convert it to an available purpose.
Henry George Not [at] all. If you had a piece of land in the
interior of Africa you could erect a house on it?
Senator Blair You would not have the power of utilization in
that case; you would have only the power of waste. Land has no value
until von can utilize it.
Henry George But you can utilize it. You will find in small
towns large edifices as good as many in Paris or New York. but you do
not find the erection of those edifices gives equal value to the land
underneath. What gives value to the lot is that its owner has the
power to command a large revenue from it. No matter how rich land may
be, no matter how well situated it may be, or how available it may be,
it is worth absolutely nothing until somebody is willing to pay a
premium for its use. That constitutes the value of land. Now the value
of a horse, or of clothes, or of anything else comes from the human
labor expended in producing it, in creating it, to speak
metaphorically; but no human labor created the land. It existed before
we came into the world and it will exist after we are gone. It is the
field of our exertion. That is the difference between land and other
kinds of property....
Senator Blair I do not understand how you make your
distinction between the land itself as property and the superstructure
which is upon it, or between the land and the implements that are
essential in order to carry on production for the supply of human
wants. In other words, I think that in claiming that land should be
owned in common you substantiallv claim that all property which
supplies human wants should be held in common.
Henry George Not at all. As a matter of right, or as a
matter of expediency, whichever way you take it, there is a very clear
and broad distinction. That distinction is that this property which is
the result of labor is properly the reward of labor. You rightfully
own your coat; I rightfully own mine, because I have got it from the
man who made it and have paid him for it. Nobody can show me a title
of that kind to land. So far as the question of expediency goes, to
make property which is the result of labor common would be to destroy
the incentive to production. If I had to divide whatever I produced
with everybody I would have very little or almost no inducement to
produce anything. To take from a man that which is the result of his
own labor, his own exertion, is to check his desire to labor. But, no
matter bow much you might make the value of land common, you could not
check the production of land; you could not make land any less
valuable. It would still have all the properties that it had before.
Our present system of taxation, for instance, is a
discouragement to the production of wealth. We tax a man according to
what he has done, according to what he has added to the wealth of the
community. Now, it is really a good thing to add to the wealth of the
community. No matter how selfish a man may be be cannot keep it all to
himself. The more there is, the more, other things being equal, we can
all get; and it ought to be the effort of everybody to stimulate
production as far as possible. But instead of that we tax men for
producing; we tax a man for getting rich; we tax a man for his
economy. What we ought to do is to tax man according to the natural
opportunities which they have and do not use. Take that building over
there. According to my notion that building is an ornament and a
convenience to the city. It does not injure anybody. It is better that
there should be a building there than an unsightly vacant lot;
therefore I would not tax the man one cent for putting up that
building, but I would tax him upon the value of the land upon which
the building stands. Under such a system of taxation the man who has
that fine building upon his lot would not pay any more taxes than the
man who has this vacant lot with the ugly fence around it, and the
effect would be to stimulate building, and to induce the holders of
the land to take a lower price for it or to let it to somebody who
would use it.
Senator Blair You would still tax upon the value of the
land, you say. Upon its value at what time? Upon the value in a state
of nature, or upon the value with all the surrounding improvements?
Henry George Upon the value at the time the taxation was
imposed. For instance, I would tax it in 1883 according to the value
of the land in 1883 if the particular building upon it were swept away
Senator Blair Then all the land, occupied or unoccupied,
would be taxed upon that primary valuation?
Henry George Certainly. Here you have an enormous population
crowded onto one-half of this island. The population is denser in
these downtown districts around us here than anywhere else in the
Senator Call chimes in Except in the Eastern countries.
Henry George They do not build in our way in the Eastern
countries. They build low there. Notwithstanding this crowding, if you
take a ride up on the Sixth Avenue Railroad you will find any quantity
of land in a state of nature, hut if you want to build a house upon it
you will be met by the owner who will demand $5,000 or S10,000 or
S25,000 for a lot. You pay that and put up your house, and then along
comes the tax gatherer who taxes you for the house, for the
improvement you have made, for the increased accommodation you have
furnished for the people of this city as well as for yourself, and in
all probability he taxes you more on the value of the house or on the
value of the land on which the house stands than he taxes the other
land beside it which is lying vacant. I think that is the general rule
all over the United States, that the occupied land, especially where
it is in the hands of small owners, is taxed even on its value as
land, higher than that which is lying beside it unused. We ought, on
the contrary, to discouage the dog-in-the-manger business, these
people who are doing nothing themselves to improve the land and are
preventing others from doing anything.
Senator Blair I was going to ask you whether you would
confine taxation of occupied land to the value of the land before it
Henry George Not at all. I would tax it whether it was occupied
or not so long as it had a value.
Senator Blair Would you tax any other forms of property?
Henry George I would not. I do not think it would be
necessary. I would say to the people, "Produce all you can. The
more everybody produces the more there will be to divide, and the more
each can get for his share."
Senator James George of Mississippi In your theory you
disconnect the improvements entirely from the land?
Henry George Certainly.
Senator Blair And you would make the land common property?
Henry George That would be in substance making it common,
but I would not in form make it common. I would let the present
holders call it their land, just as they do now.