What the Ricardian theory really proves is the accumulative nature of the benefits accruing from the possession of land. This spontaneous, automatic character of rent makes it unique: to no other form of revenue does it belong. The extension of cultivation, the increase of population, the growing demand for commodities, means an indefinite progression in the value of land. The interest, initiative, and intelligence of the proprietor are of no account. Everything depends upon the development of the social environment. This value which is created by the community should also belong to it. Just as the landed proprietors in times past filched the land, so they to-day absorb this income. But why allow this injustice to continue?
“Suppose,” says Stuart Mill, “that there is a kind of income which constantly tends to increase without any exertion or sacrifice on the part of the owners, these owners constituting a class in the community whom the natural course of things progressively enriches consistently with complete passiveness on their own part. In such a case it would be no violation of the principles on which private property is founded if the State should appropriate this increase of wealth, or part of it, as it arises. This would not properly be taking anything from anybody; it would merely be applying an accession of wealth created by circumstances to the benefit of society, instead of allowing it to become an unearned appendage to the riches of a particular class. Now this is actually the case with rent.”[1193] The argument seems quite decisive. At any rate, Ricardo’s book was hardly out of the press before the demand for confiscation was renewed.
His friend James Mill, writing in 1821, claimed that the State could legitimately appropriate to itself not only the present rent of land, but also all future increments of the same, with a view to compensating for public expenditure.[1194] The Saint-Simonians, a little later, expressed a similar view.[1195] But it was James Mill’s son, John Stuart Mill, who showed the warmest attachment to this idea. The Principles contains a general outline of his reform plan, which took a still more definite shape in the programme of the Land Tenure Reform Association, founded in 1870, and in the discussions and explanations which accompanied it.[1196]
The following are the essential points: (1) The State will only appropriate for its own use the future rents of land; that is, the rents paid after the proposed reform has been accomplished. (2) A practical beginning will be made by valuing the whole of the land, and a periodical revaluation will be made with a view to determining the increase in its value, and whether such increase is or is not the result of communal activity. A general tax would transfer this benefit to the State.[1197] (3) Should any proprietor consider himself unfairly treated the State would give him the option of paying the new tax or of buying back the property at the price obtainable for it had he determined to sell just when the reform was being brought in.
Mill was opposed to immediate nationalisation. Not that he thought it unjust; on the contrary, he was fully convinced of its equity. But our experience of State administration and of the work of municipal bodies did not seem to him to warrant any great faith in the utility of any such measure. He was afraid that “many years would elapse before the revenue realised for the State would be sufficient to pay the indemnity which would be justly claimed by the dispossessed proprietors.”[1198]
Nor did he attempt to disguise the fact that the financial results would in his opinion be somewhat insignificant and the scope of the reform naturally somewhat limited. A few years only were to elapse before another writer proposed a much more radical measure which was to effect a veritable social revolution. It was a project to abolish poverty and to secure distributive justice that Henry George now launched on the strength of his belief in the doctrine of rent.
Henry George (1839-1897) was not a professional economist. He was a self-made, self-taught man who followed a variety of occupations before he finally blossomed forth as a publicist. At the age of sixteen he went to sea, and led a roving life until 1861, when he settled down at San Francisco as a compositor, finally becoming editor of a daily paper in that city. He witnessed the rapid expansion of San Francisco and the development of the surrounding districts as the result of the great influx of gold-diggers. He also saw something of the agricultural exploitation of the western States. The enormous increase in the value of land and the fever of speculation which resulted from this naturally left a lasting impression upon him. Progress and Poverty (1879), the book which established his fame, is wholly inspired by these ideas.[1199]
The book aroused the greatest enthusiasm. It has all the liveliness of journalism and the eloquence of oratory, but has neither the precision nor the finality of a work of science. Its economic heresies, though obvious enough, detracted nothing from its powerful appeal, and the wonderful setting in which the whole problem of poverty was placed has not been without its effect even upon economists;[1200] nor is the powerful agitation to which the book gave rise by any means extinct.
It seemed to Henry George that landed proprietors, in virtue of the monopoly which they possess, absorb not merely a part but almost the whole of the benefits which accrue from the increase of population and the perfection of machinery. The progress of civilisation seems helpless to narrow the breach separating the rich from the poor. While rents go up interest goes down and wages fall to a minimum. Every country presents the same phenomena—extreme poverty at one end of the scale accompanied by extravagant luxury at the other.