I venture to say the same thing of the capital expended in [p348] forming the road. The operation is more circuitous, but the result is the same.
In point of fact, the proprietor has contributed to the public expenditure in proportion to the value of his field. For many years he contributed to works of general utility executed in more remote parts of the country, and at length a road has been made in a direction which is profitable to him. The gross amount of taxes which he has paid may be compared to shares taken in a Government enterprise, and the annual augmentation of rent which he derives from the formation of this new road may be compared to dividends upon these shares.
Will it be said that a proprietor may pay taxes for ever, without receiving anything in return? . . . . But this just comes back to the case we have already put. The amelioration, although effected by the complex and somewhat questionable process of taxation, may be considered as made by the proprietor at his own cost, in proportion to the partial advantage he derives from it.
I have put the case of a road. I might have cited any other instance of Government intervention. Security, for example, contributes to give value to land, like capital, or labour. But who pays for this security? The proprietor, the capitalist, the labourer.
If the State expends its revenue judiciously, the value expended will reappear and be replaced, in some form or other, in the hands of the proprietor, the capitalist, or the labourer. In the case of the proprietor, it must take the form of an increase in the value of his land. If, on the other hand, the State expends its revenue injudiciously, it is a misfortune. The tax is lost; and that is the taxpayer’s look-out. In that case, there is no augmentation of the value of the land, but that is no fault of the proprietor.
But for the produce of the soil thus augmented in value, by the action of Government and by individual industry, do the consumers of the neighbouring town pay an enhanced price? In other words, does the interest of the £100 become a charge on each quarter of wheat which the field produces? If we paid formerly £15 for it, shall we now be obliged to pay more than £15? That is an interesting question, seeing that justice and the universal harmony of interests depend on its solution.
I answer boldly, No.
No doubt the proprietor will now get £5 more (I assume the rate of interest to be 5 per cent.); but he gets this addition at the expense of nobody. On the contrary, the purchaser will derive a still greater profit. [p349]
The field we have supposed having been formerly at a distance from the market, was made to produce little, and on account of the difficulty of transit what was sent to market sold at a high price. Now, production is stimulated, and transport made cheaper, a greater quantity of wheat comes to market, and comes there at less cost, and is sold cheaper. Whilst yielding the proprietor a total profit of £5, its purchaser, as we have already said, may realize a still greater profit.
In short, an economy of power has been realized. For whose benefit? For the benefit of both of the contracting parties. According to what law is this gain distributed? According to the law which we have described in the case of capital, seeing that this augmentation of value is itself capital.