“In the meantime it began to be discovered that the owners of improved lots had lost all the money they had invested in them. A certain person who had bought a lot on Nicollet ave., for $40,000 and erected a building on it at a cost of $40,000 more, did not for two or three years discover any great difference in his tax, because although it was transferred from the building to the lot the whole amount was nearly the same. But after the tax assessment reached six per cent, the building was burned down just after the expiration of the insurance policy. The gentleman thought he had lost half of his property by neglecting the insurance, but in reality, he had lost it about all. He could not mortgage the lot for enough to build a house, nor even for enough to pay one year’s tax. Nor could he sell it for one-tenth of what he gave. It was his only on condition that he continued to pay a full rent for it and this he could not do unless he could rebuild. Even if he rebuilt, his net income would be only the interest on the cost of the building, he would get no return for the lot, or at best, but little. Thus the owner found himself no better off than a lease holder. He simply had the first right to pay the rent for his lot in the way of tax. And so it came about that if an owner could not immediately build something on his lot that he could rent to advantage, he simply defaulted on his taxes. The selling of vacant property for taxes became impossible except those lots wanted for immediate improvement, and not even those if several years’ taxes were in arrears. So the collection of back taxes became impossible on all vacant property.
“The effect of the single tax on farming land was much the same. Not over seven-tenths of the arable land in the state was under actual cultivation. Large tracts were held by nonresident speculators. When the increased tax came to be levied, these lands were all thrown on the market. The depreciation in prices of these lands at first brought a considerable access of population, but this soon became checked, because the farmers found that on account of the loss of taxes on these lands, the rates had to be increased and the additional burden fell on the resident farmers. These in almost all cases owned considerable land they did not cultivate, but were saving for speculation or for their children. Often a farmer owing 160 acres, cultivated, but 40. As the burdens fell heavier on this class, they commenced throwing up the uncultivated parts of their farms, so that from these various causes in a few years almost three-fourths of the arable land was without claimants, and of course yielded no taxes. The farmers, then found themselves greatly reduced in wealth, the lands they had counted on as belonging to them, now being thrown out as commons; and even for the acres they cultivated they paid more in the way of taxes than would have been considered a fair rent in Wisconsin or Iowa. Their net wealth was in fact reduced to their buildings, live stock, and tools.
“The lands themselves, they could neither sell nor mortgage. It was not practicable under these conditions to compete with the farmers in adjoining states, and so in a few years, the markets of Minneapolis and St. Paul came to be supplied chiefly from adjoining states. Many of the farmers ruined and disgusted, gathered up what they could and left the state. Others moved into the cities, which were booming, and went into other business.
“There now began to come into the rural districts of the state, two classes of settlers or rather occupants of a different character. The first of these were drovers with herds of cattle from adjoining states. They drove their cattle about from place to place, over the abandoned lands, but never settled anywhere and as cattle were not taxable, and they claimed no land, they paid no taxes. They also escaped taxes at their legitimate homes in other states, because their cattle were conveniently away at assessing time.
“The other class of new occupants that came in, were poor squatters. These brought little or no capital, and no enterprise or ambition beyond enough to supply the essentials of existence. A family of this kind would alight on an unoccupied spot, construct a cabin or a dug-out, cultivate four or five acres of grain and potatoes, and eke out the rest of a living with a few cows and pigs. Little or no tax could be collected from them, and of course little or no public improvements, such as schools, bridges, roads etc., were accomplished where they squatted in any considerable force. In short, it gradually came about that the inhabitants of the rural districts did but little more than sustain themselves. And the state ceased almost entirely to be an exporter of agricultural products. The cities however suffered nothing on this account. They got their supplies largely from the neighboring states, and they became large producers and exporters of manufactured articles, competing in that respect with some of the famous manufacturing towns of Europe; and they became enormously wealthy.
“The question of taxation was however always a difficult one. The lands near the centers of the towns of course were the most valuable. But lands were never sold—only the buildings—and any given lot came to be valued by the kind of building and the amount of business on it. So assessments finally had to be fixed by an arbitrary rule—the rates decreasing at a fixed ratio according to distance from the center of greatest business activity. The rule had a tendency to verify itself by compelling the most valuable business to be done in the places subject to the highest rates, since the less valuable could not afford it. By this rule the rates in the suburbs were low, and since the buildings paid no tax, it often happened that a millionaire living in a $100,000 house paid little, if any more than a laborer living in a $300 shanty. But in the course of time it came to pass that notwithstanding the general prosperity, there were many who were wretchedly poor, made so by bad management, extravagance, indolence, ill health, dissipated habits, disappointment and ill luck. These became squatters in the vacant lands around the outskirts of the cities. They paid no rent and no taxes. It was found that it was useless to evict them as nobody could be found with money who could gain anything by paying their taxes, as long as there was plenty of unoccupied land. There also came to be a positive sentiment against eviction of the poor and so this non tax-paying class constantly increased and finally included many who were able to pay, but who shirked out, satisfying their consciences by the plea that the government had no right to discriminate, and exempt some and not others. These ideas expanded and finally crystallized into a political creed to the effect that a poor man ought not to be taxed for a spot on which to exist and bring up his family. Thus it came about that neither the very poor; nor the very rich whose property was chiefly in fine buildings, stocks, bonds and other personal effects, paid any considerable amount of the taxes.
“The taxes were paid by such of the farmers as had still too valuable improvements to justify their abandonment, and by the mechanics and merchants whose business and whose residences were packed in tall buildings on small areas of ground in the cities.
“The great stimulation of the growth of the Minnesota cities, and their apparently great prosperity, attracted the attention of the whole world and aroused the spirit of emulation in the cities of the United States and of the northern states in particular. In most of the northern states, the city populations controlled the politics of the states, and there developed a violent mania for following the example of Minnesota. There was much opposition from the conservative classes, and the people were warned that a policy that might benefit a small section of the nation, was not necessarily good for all. But it was held by many to be simply a measure of self defense for cities to compel their states to adopt the single tax, since those where this was done, not merely flourished, but flourished at the expense of those who remained under the old method. For they attracted from them, their manufacturing establishments and this was naturally followed by their wholesale trade. The result was that in a few years, all the northern states and several of the southern states adopted the single tax. The effect was not so marked in those that came into the plan among the last; but the first experienced much the same stimulation and rapid growth that distinguished the Minnesota towns, so that in a few years the majority of the population had crowded into the cities. This effect was brought about by the action of two causes. The first cause was the superior attractions of the cities as places for profitable employment and as places for the enjoyment of life. The cities rapidly became socialistic in their policy, and constantly extended the scope of the functions of the government. The municipality soon acquired the ownership of the lighting plants, the water works and street car lines. These were run at first as speculative enterprises, the cities selling light and water to private individuals, but the people soon demanded that these things should be free as the public libraries, schools, university and parks, were in your day. And this was gradually brought about, the cities furnishing at first so much water and so much light and so many street car rides free to each person, and at last taking off all limits, only making the citizen responsible for unreasonable waste. Then the populace demanded free amusements and entertainments and these were provided in the form of the concert, lecture, theater, circus etc. All these things cost money and the tax rates kept getting higher and higher. These were paid in the form of rents on the land, the buildings stood on and of course at once transferred to the rents paid by tenants for rooms, flats, shops, stores etc. Rents soon became higher than they had ever been known before the adoption of the single tax. To lighten these rents in the cities, it was now proposed to increase the rents of lands in the country.”