What the Great Scotsman [Adam Smith] Saw

P. J. O'Regan

[Originally published in the Auckland, New Zealand Liberator.
Reprinted from Land and Freedom, March-April 1930]

The great Adam Smith, who may properly be styled a precursor of Henry George, points out in his monumental book, usually styled The Wealth of Nations, that the one great defect in the land tax which had been enacted in England in 1693, is "the constancy of the valuation." Accordingly he maintains that an Act ordaining the valuation of land, the landlord being indemnified for his expenditure, should be "a perpetual and unalterable regulation or fundamental law of the commonwealth."

Clearly what the great Scotsman meant was the separate valuation of land and improvements and the exemption of the latter from taxation. True, he does not appear to have realized that what he terms "the ordinary rent of land" when referring to country land, is one and the same thing with what he terms "the ground-rent of houses" when he refers to urban land. Bearing in mind that he was the first in the field of political economy, however, we must realize that Smith missed very little, inasmuch as he maintains that no tax could be more just or equitable than a tax upon ground-rent.

Readers may think that I have a lawyer's liking for precedents, but in my opinion one of the most effective arguments in support of our cause may be drawn from the armory of history, and accordingly it seems to me that we do not make sufficient use of the historical fact that a land tax was imposed in England as long ago as 1693, that it was intended to placate the popular disaffection aroused by the abolition of the so-called feudal burdens in 1645, and that the principle of taxing the rent of land, excluding improvements, was advocated by Adam Smith, the founder of political economy, who demanded also that a statute providing for the separate valuation of land and improvements should be a fundamental law. As Henry George once said, "truth is never new," and it will be remembered that he knew the value of history, and so fortified his argument by a chapter in Progress and Poverty entitled "Private Property in Land Historically Considered."