Housing and Land

Hiram B. Loomis

[Reprinted from the Henry George News, June 1948]

There are two fundamental social relations: the relation of man to man and the relation of man to the earth. The ideal relations arc those of equality of rights and of opportunity. And, so far as written law can achieve these objectives, we have today equal civil, political and religious rights. But we do not have an equal right to life, because we do not have equal right of access to the earth, the only source of food, clothing and shelter. Our housing situation is a symptom of the unhealthy relation of man to the earth.

The more specific theses of this article are: that cheap land will solve the housing problem, not simply for the underprivileged, but for all; that the way to get cheap land is to tax the value out of it; that this is a just tax, based on the ethics of property (property of the community as distinguished from property of the individual) ; and that the ethics of property is at the heart of the difference between the ideology of communistic Russia and that of the individualistic West.

Present housing proposals provide for the public purchase of land in the slums of cities, the erection of decent houses, and their rental at a rate lower than private enterprise can afford. This involves public subsidy. On page 190 of Breaking through the Building Blockade (University of Chicago Press, 1946), Robert Lasch summarizes the previous experience of the Federal Public Housing Authority. The total cost per unit per month was $36.31; this was met as follows: the tenant paid $20.38, 58 per cent; the local community contributed in the remission of taxes $6.68, 18 per cent; the F.P.H.A. contributed $8.38, 23 per cent; other income was $0.35. This means an average gift of $180.72 per year to each family that occupied these houses.

On pages 206-7 Mr. Lasch uses a survey made at the request of F.P.H.A. to illustrate a proposed method of selecting the families. He imagines a typical city of 100,000. In it are 25,000 houses, 7,000 of which are definitely substandard. Of the 7,000 families living in them, 1260 can afford to pay $27 or more per month for rent; these are eliminated from the potential market for public housing. Another 5,040 can afford to pay from $9 to $27, and are candidates for consideration. Nine dollars a month was the lowest rent possible with the contributions received. "But," says the author, "there are 700 extremely low-income families who cannot pay that much. They are also, unfortunately but necessarily, eliminated from the potential market."

To remove the haze caused by long, fine-sounding words, let us tell these people, as kindly as we can, in words of one syllable just where they stand. Something like this. We shall clean out these slums and build good homes. You can't pay the rent and will have to go. Do the best you can somewhere else.

They will go, but not out of the city. The city will still have slums, but worst of all, in every purchase they make they will be paying taxes and contributing their mite to the fund from which the annual subsidies of $180.72 are paid.

To get the solution of the housing problem, suppose we look at the initial costs. What do we need? We need a few square feet of land on which to build. We need lumber, bricks, mortar, hardware, etc., also carpenters, masons, and plumbers. In other words, we need land and labor. On page 194 Mr. Lasch gives us this information: in cities of over 500,000, for all low-rent projects built up to 1942 the total cost per unit was $5,282; of which $1,500, or 28 per cent, was for the site.

It is probable that these projects were built in the cheaper parts of blighted areas. Mr. Lasch, himself, gives two quotations that are much higher. Mayor LaGuardia estimated the cost for land alone in New York City at $6,000 to $7,000 per unit (page 71). And the Real Estate Board of Baltimore gave $2.19 per square foot as the average for the blighted areas of Baltimore. The Chicago Sun (July 19, 1947) in an editorial on a bond issue considered the proposition to spend $25,700,000 for land acquisition in slum areas, enough to clear about two-thirds of a square mile. This is at the rate of $60,000 an acre.

Much of Chicago is subdivided into 8 blocks north and south and 16 blocks east and west. This gives 5 acres to a block, and makes the average price per front foot S250. Compare this with the price I was paid for my residence a year ago when my grandchildren went to California and left me alone. I sold two lots on one of which was the house in which I had lived for some 30 years -- the modest residence of the retired principal of a Chicago high school. At $250 per front foot the land alone was worth over $4,000 more than I received for the whole place at a time when houses were in great demand. Land is valuable, in the slum areas of large cities.

The value of land in Chicago, as in other cities, is pure place value. It has nothing to do with fertility of the soil or mineral or oil deposits. Chicago is a great commercial center, a railroad center and a shipping center. Every Podunk within hundreds of miles that buys from Chicago's wholesale houses, paying with checks which pass through its clearing house, adds to the value of the great market place. the late geographer, Professor Goode, considered everything within 500 miles of Chicago as "Chicagoland." It is this great community which makes the land in Chicago's slums worth $250 a front foot. Yet the city, the state and the nation, are all asked to contribute in order to buy from present title-holders a value which is due entirely to the presence of the community.

As for the legal rights of these title-holders, I shall quote conflicting dicta by two of the best known justices of the Supreme Court of the United States. Dicta are not decisions. They are merely incidental remarks which are likely to reflect the real belief of the justices. In Providence Bank vs. Billings, Chief Justice John Marshall said:

"Land for … [ readable] all, the States been granted [unreadable] … the adoption of the Constitution. This grant is a contract, the object of which is that the profits issuing from it shall inure to the benefit of the grantee. Yet the power of taxation may be carried so far as to absorb these profits. Does this impair the obligation of the contract? The idea is rejected by all."

The idea was evidently rejected by Justice Oliver Wendell Holmes. His dictum in Panhandle vs. United States, "the power to tax is not the power to destroy while this court sits," is much more frequently quoted.

The objective of the "Single Tax" is nothing more nor less than "to absorb these profits" by taxation. This will make land cheap. As ground rent is taken by taxation, the selling value of land will drop. If a man wants a home it will make a difference to him if he can get the site for $200 instead of $2,000. If a man wants to farm it will make a difference to him if he can get a farm for $20 an acre instead of $200. If a man wants a site for a store, a factory, or an office, cheap land will reduce his initial investment.

Turn where we will, we meet the land question. We meet it in our cities and in our rural districts. We meet it too, in Greece, Italy, China, Japan, and the Dutch East Indies. Moreover it involves one of the two great differences between the ideology of Russia and that of the West.

We in the West emphasize individual initiative and object to governmental interference. Russia, on the other hand, emphasizes governmental control, and tells the individual what to do. A superficial logic says that freedom and restriction are contrary to each other and cannot exist together. There is, however, a third possibility: freedom in one domain and restriction in a different domain. It is possible that restriction in one domain may open up domains for freedom, otherwise unattainable. An illustration will make this clear. Every one of us is bound hand and foot by conventions learned at his mother's knee. Every word we speak is a convention, and we took it just as it was given to us. Practically nothing is individualistic about the mother tongue. We want to talk to our neighbors and our neighbors want to talk to us. We naturally use the language the crowd uses. There are fields in which it is best to be bound by the conventions of the group. Language is one of them, best even from the standpoint of freedom. Were it not for written language, we would not be, as we are, the heirs of all the ages. We would not have the geometry of Euclid, the science of Archimedes, of Galileo, and Faraday, the medical discoveries of Harvey and Pasteur. Without written language we would have no automobile, no radio, no electric light, no, not even a tallow candle. Through written language we have left behind the freedom of the jungle and achieved the freedom of civilization.

This is the philosophy back of the Law of Human Progress as stated by Henry George in Progress and Poverty:

"Thus association in equality is the law of progress. Association frees mental power for expenditure in improvement, and equality, or justice or freedom, for the terms here signify the same thing, the recognition of moral law -- prevents the dissipation of this power in fruitless struggle."

It is also the philosophy back of the great oration of Daniel Webster, ending in the words, "Liberty and Union, Now and Forever, One and Inseparable."

We are dealing here with one phase of the relation between the community and the individual, the question of property. Are there things that are ethically the property of the community as distinguished from the individual? If so, what are they? Are there other things ethically the property of the individual as distinguished from the community? If so, what are they? Consider the four limiting philosophies, of property rights:

1. Both land and labor products belong to the individual. (This is essentially the philosophy in the West.)
   
2. Both land and labor products belong to the community. (This is essentially the ] of Russia; and with slight modifications, of socialists.)
   
3. Land belongs to the community; but labor products belong primarily to the laborer. (This is the position taken by advocates of land value taxation.)
   
4. Land belongs to the individual; but labor products belong ot the community. (No one seems to hold this position.)
   

The fundamental issue in the land question is ethical - not economical. Ground rent will go to the owner of the land. The question is, who is the rightful owner - the individual or the community? The other question is also in the field of ethics. Who is the rightful owner of the products of labor?

The first clear statement on this issue that I know of is in John Locke's Civil Government, Book II, Chapter V:

"Though the earth and all inferior creatures be common to all men, yet every man has a property in his own person. This nobody has any right to but himself. The labor of his body and the work of his hands we may say are properly his."

I believe Tom Paine, the great pamphleteer of the American Revolution, was the first to use the term, ground rent. In Agrarian Justice, he wrote:

"If our inquiry into the cause which makes low wages and pauperism the accompaniments of material progress has led to a correct conclusion, it will bear translation from the terms of political economy into the terms of ethics, and as the source of social evil show a wrong. If it will not do this, it is disproved. If it will do this it is proved by the final decision."

These final questions also are in the field of ethics:

To whom rightfully belongs the labor of thy body and the work of thy hands? To whom rightfully belongs the land, which the Lord, thy God, giveth to all the children of men?