CHAPTER VI.
Confiscation of Lands.
“The former owners of these lands had now been practically dispossessed. Many of them had gone to the cities and engaged in more profitable business than farming. Many who were mortgaged had been sold out, bankrupted and ruined, and had settled down into the condition of peasants. The lands were now regarded as the property of the state. This process of the transfer of the lands to the state went further in Minnesota than the other states, because she was the first to adopt the new plan of taxation. After the other states adopted it, the advantage their farmers had over those of Minnesota was lost. Rents under the name of taxes were levied, farming rendered unprofitable and the uncultivated portions of the land abandoned by their owners. The few southern states that did not go into this new plan could not reap much advantage from their position, because their products were different from those of the northern states and could not replace those whose cultivation was repressed.
“Agricultural products fell off to such an extent, that in a few years the United States ceased to be an exporter of them. The cities having gained control of the states, it came to be a political theory that each state was a community, and that the lands abandoned or forfeited for taxes belonged to the Community and therefore came indirectly under the control of the cities. From this position it was an easy step to the idea that the taxes—or rents as they were designated—of the “people’s lands” might be spent where most beneficial to the majority, that is, in the cities. It was attempted to be pointed out by the more conservative that this was class legislation. But the radical progressives replied that it was in line with the theory of the single tax which was class legislation if anything could be. And they asserted that the adoption of the single tax carried with it an endorsement of the principle of class legislation when demanded by the interests of the majority. Whether their reasoning was sound or not they carried the day, and a great stride was taken toward the centralization of power and population. It now happened that when more money was wanted it was raised, not by increasing the rents of city lots, but those of farming lands, and after a time the principle revenues came to be derived from them. Although the exportation of grain, flour, beef etc., had practically ceased, still the people had to eat and their food had to be raised on the land. The business of farming gradually took on entirely new features. Large operators took large tracts on lease from the state at prices determined periodically by appraisement fixed in proportion to the needs of the state. Lands taken on these terms were guaranteed to be kept free from the competition of squatters, so that the lands remaining vacant were cleared of squatters, or else the latter were restricted to a mere garden patch. Thus the country was no longer occupied by farmers residing on the lands with their families as in former times. The agricultural districts were inhabited only by a poor and thriftless class of peasants and during the summers by the employes of the large contract farmers who made their headquarters and resided with their families in the cities. In the winter, only such hands as were required to care for the stock remained in the country, the rest all flocking to the towns.
“One result of the increased rentals charged for the agricultural lands appears not to have been anticipated. That was the great rise in the cost of food. Of course the rents of the lands were simply added to the cost of the production of grain and other foods, and finally were paid by the consumer. It came to be seen after a time that the public revenues raised out of the agricultural lands were finally paid by all the people in proportion—not to their wealth or ability, but to their appetites and the amount they consumed—so that a laboring man with a vigorous appetite paid more to support the state than a dyspeptic millionaire. And a poor man’s family of six or eight ravenous offspring contributed many times as much as the scanty and sickly progeny of the exclusive aristocrat. It speedily became a cause of great dissatisfaction and disappointment when the poor and the working classes found out that the fine promises of the single tax had so far failed that instead of lightening their burdens it had increased them. And that the confiscation of the lands of the farmers instead of adding to the prosperity of the common people had increased the already plethoric wealth of the rich. A school of politicians now arose who declared that the taxation of land was the taxation of the poor man’s bread and butter and was all wrong. Instead of farming land paying the bulk of the taxes they said it ought not to pay any. Every facility and encouragement ought to be given for the production of cheap food. People ought not to be taxed on what they consume, but on what they save. Neither labor nor the laborer should be taxed, they should be made as free and unhampered as possible for the production of wealth. But when wealth was once produced then it should be taxed wherever found and a necessary portion of it taken as the revenue of the state. The laboring classes were in a mood to listen to this logic whether sound or not. The lands having passed out of private hands, however, there was no disposition to allow them to pass back to them again. And the new party advocated state superintendence of the lands and free occupancy by private individuals of such amounts as each could actually cultivate to advantage. As the population and demand for land increased, the amounts allotted to individuals was to be cut down proportionally, and a grade or standard of cultivation and quantity of production was to be exacted, and the state was to fix the prices at which the products were to be sold. Eventually it was proposed that the state should be the purchaser and distributor of these products so that speculation in them should be prevented. The advantage possessed by some on account of their nearness to market would be equalized by the state paying a less rate for their products than for those further away.
“Taxes for revenue were then to be levied upon every piece of personal property that could be found of every sort whatever including buildings. In the cities a graded rent for lots was to be assessed according to locality, beginning at zero in the vacant suburbs and increasing toward the center of greatest activity and demand. A thoroughness in assessment and the employment of methods that were called by their critics, “odiously inquisitorial,” were to be adopted, but the fact was the mass of the people were drifting rapidly toward socialism in their ideas, and they asserted that the “inquisitorial methods” were alright. They said, it was high time to know how much wealth people had and how they came by it, and that reluctance to tell on the part of the possessors of it indicated that either they had acquired it by questionable methods, or wished to avoid the fair responsibility, that its ownership entailed. They went further and declared it was high time that more scientific processes were discovered and put into practice for the equitable distribution of wealth. A thousand men contribute to the production of $1,000,000 of wealth, all of which is gobbled up in a few weeks or months by the scheming of a single “financier.” The board of directors of a railroad, a mining company or a manufacturing company, may issue to themselves certificates of watered stock for which they pay not a cent, and which represent wealth having no existence, but which they are in a position to compel the public to make good. A gang of speculators may get up a corner on wheat or cotton or stocks of some sort and artificially raise the price while they unload at the advanced rate thereby securing wealth they never earned. Combinations and trusts in oil or sugar, screws, nails, coal, whisky, gas-pipes or binding twine, arbitrarily advance the price of the articles whenever they want more money, and thus take as many thousands or millions from that patient ass, the public, as they see fit without a pretense of returning an equivalent. All these things the politicians of the new school declared must be stopped. They said people should not be allowed to secure wealth without in some way earning it, and if they had managed to secure it without rendering an equivalent for it, it would be no more than right to confiscate it for the benefit of the public at whose expense it must have been acquired. The party advocating these ideas rapidly came into power and proceeded to put their views into practice. It was found after much discussion and some experimenting that people would not work and do their best unless they were paid better for their best than for their worst. The experiment of making the state the buyer and wholesale seller of all articles that could be made the subjects of combines and trusts was found to work well. The state did not at first undertake to manufacture or produce anything, but monopolized its transfer from producer to consumer. For example the producers of anthracite coal were required to sell their product to the government, and it was unlawful for them to sell to anyone else. The price of mining, handling and transportation and the selling rate were each fixed by a board of arbitration and remained fixed till the conditions changed. There was no such thing as striking among the hands, for if they were dissatisfied all they could do was to leave and allow others to take their places. If no others were willing to do the work it was an indication that the rate was too low and the board of arbitration raised it. It had been settled before this that the mine owner had no royalty rights. These were regarded as the property of the state. So if the mine owners attempted to combine to raise the price to the state or from perverseness refused to furnish the amount required their properties were placed by the state in the hands of receivers to be worked till such time as the matters in dispute were regulated.
“Other mining industries, and the production of coal-oil, sugar and other articles capable of control by trusts, were regulated and handled in similar manner by the state. As to railroad, telegraph and express properties, they all passed into direct government ownership before the middle of the twentieth century.”
The Professor pausing here for a moment to shift his profile, I ventured to say that I had in my day anticipated this move on the part of the government, but many people had been unable to see how it could be carried into effect without simple confiscation, because they said it would bankrupt the country to buy the roads etc., and pay their value for them.
“There was no difficulty at all in the matter,” the Professor continued, “the owners of the roads received for them all they were worth, and yet they did not cost the country a dollar. First the government had the roads appraised on a capitalized basis, in which account was taken of the actual value in cash of the property as it stood regardless of the amount of stock and bonds outstanding against it. Next, account was taken of its power to earn money.
“The government now provided for the issue of consolidated railway bonds guaranteed by the government. These all bore the same rate of interest, three per cent payable annually. They were in five series, due in 20, 40, 60, 80 and 100 years respectively, an equal amount of each. They were in denominations of $20.00, $50.00, $100.00, and $1,000, with coupons for the interest attached, the lower denominations payable at the earlier dates.
“These bonds were issued in exchange for the railway securities on the following terms. Bonds at their face value were allotted to each road to the amount of its estimated cash value, plus its net earnings for that one year next preceding the passage of the act of purchase. Many roads earned only enough to pay their running expenses, and these received only the amount of their appraised valuation. For the purpose of the distribution of the allotment of the purchase bonds to the holders of the railway securities in any given case, account was taken of the market quotations of the several sorts of stocks and bonds at a date one year previous to the act of purchase, and the value of each person’s holding thus ascertained. Then the purchase bonds were distributed to the individuals pro rata to these values. When seven-tenths in interest of the proprietors of any road accepted the terms of the government purchase the other three-tenths were obliged to accede or lose their interests.