[1206] Mill points out that the answer to this objection is that the right of selling the land at a price which depends upon two contrary conditions (gain or loss) establishes a kind of equilibrium. The State would not lose anything by this, for a fall in value in one place, unless it be accompanied by a general want of prosperity, implies a corresponding increase somewhere else, of which the State will get the benefit. (Dissertations and Discussions, vol. iv.)
[1207] M. Einaudi, however, in his excellent Studi sugli effetti delle imposte, p. 125 (Turin, 1902), remarks that this principle of indemnifying losses leads directly to a State guarantee of values—the expediency of which is at least problematic. He makes the further observation that the compensation would often be paid to a person other than the one who paid the tax when it was levied—the property in the meantime having changed hands.
[1208] For the distinction between the legality of movable and immovable property see Mill, Principles, Book II, chap. 2, § 1, and Henry George, Progress and Poverty, Book VII, chap. 1. “The institution of private property,” says Mill in the above passage, “when limited to its essential elements, consists in the recognition, in each person, of a right to the exclusive disposal of what he or she have produced by their own efforts, or received either by gift or by fair agreement without force or fraud from those who produced it.” Such a definition at least implies that landed property is illegal. A house is distinguished from the land upon which it is built; whereas the former is legally held the latter is not.
[1209] Mill, Dissertations and Discussions, vol. iv, p. 298.
[1210] Especially in England, where various schemes have been propounded and investigated by Royal Commissions in the course of the last ten years. Such schemes are discussed in a very thorough fashion in Einaudi’s book already mentioned, and in an article entitled Recent Schemes for Rating Urban Land Values contributed by Edgeworth to the Economic Journal in 1906.
[1211] Article 30 of the Act of September 16, 1807, runs as follows: “If as the result of the improvements already mentioned in this Act—through the making of new roads or the laying out of new squares, through the construction of quays or other public works—any private property acquires a notable increase in value, such property shall be made to pay an indemnity which may be equal to half the value of the advantage which has thus accrued to it.” The principle was rarely applied, however. M. Berthélemy (Traité élémentaire de Droit administratif, 1908, p. 624) states that he can only find twenty occasions on which the law was brought into operation in the whole course of the nineteenth century.
[1212] Professor Seligman (Essays in Taxation, 5th ed., p. 341) quotes an English law of 1672 relating to the widening of certain streets in Westminster in which the principle is neatly stated. But when it was proposed to apply it to certain public works undertaken in London in 1890 it was energetically opposed. It was admitted afresh in the Tower Bridge Act of 1895. A similar system is frequently adopted in America under the name of “special assessment” or “betterment.”
[1213] No notice whatever was taken of it then, and even in the second edition of the great Handwörterbuch der Staatswissenschaften, published in 1900, no mention is made of Gossen’s name, although the third edition of that work has made ample reparation. The book was reprinted in 1889. On the relation between the ideas of Gossen and those of Jevons and Walras see Walras’s interesting article, Un Économiste inconnu, Hermann Henri Gossen, published in the Journal des Économistes in 1885 and reproduced in his Études d’Économie sociale, pp. 351 et seq.
[1214] Entwickelung der Gesetze, p. 250.
[1215] Gossen sees other advantages that would follow such reform. He enumerates them thus: (1) The confiscation of rent would reduce the possibility of living without working, and this would increase the industrial activity of the class under consideration. (2) The legal transference of property would be greatly simplified. (3) Producers would be exempted from buying land and from keeping capital for this purpose. (4) Rent would take the place of taxation to a very considerable extent, and would free the collection of it from every trace of vexation or injustice. (Ibid., p. 273.)