Few methods of extorting wealth have equaled this. In some cases bribery of public officials has added an item of expense to be collected later from the public. When the various forms of public service or protected industry were first projected there was risk involved. It was necessary to offer inducements to capital to engage in them. It was desirable to have railroads, gas, water, express service. But as the factor of risk has been eliminated, the public tires of paying double prices, and a "fair" return must be estimated on the basis of actual rather than fictitious capital. The public has come to have a clear idea as to the morality of such practices as have been employed in letting contracts for public buildings at prices far above market value. The New York City courthouse and Pennsylvania capitol offer familiar examples. Does it differ materially from such practices when a company charges the public an excessive price for transportation or lighting, and when State or municipal authorities authorize by franchise or monopoly such excessive charges? Probably the conscience of the next century, if not of the next generation, will fail to see the superior moral quality of the latter procedure.
3. The "Unearned Increment."—This term is applied most frequently to the increase in land value or franchise value which is due, not to the owner, but to the growth of the community. A tract of land is bought at a price fixed by its value as farm land. A city grows up. The owner of the land may have been active in the building up of industry, but he may not. An increase of values follows, which is due to the growth of the community. Shall the owner have it all, or shall the community have it all, or shall there be a division? The growth in value of a franchise for gas, electric lighting, transportation, presents the same problem. It is not usually recognized, however, that the same principle is found in every increase of value due to increasing demand. The logical basis for distinction would seem to be that in some cases increase of demand calls out competition, and the price is lowered; the public thus receives its share in lower cost. In other cases, notably those first mentioned, there can be no competition, the price is therefore not often lowered unless by legislative action, and the whole benefit goes to the owner of land or franchise. As regards land, the case is much stronger in Europe, for land titles were originally gained there largely by seizure, whereas in America private titles have been largely through purchase.
Individualism, according as it argues from the platform of natural rights or from that of social welfare, would claim either that individuals should have all the increase because they have a right to all they can get under a system of free contracts, or that it is for the social welfare to allow them all they can get since private property is public wealth. From the standpoint of natural rights the reply would seem to be unanswerable: the community gives the increased value; it belongs to the community. From the standpoint of social welfare the answer is not so simple. It might, for example, be socially desirable to encourage the owners of farming land by leaving to them the increase in value due to the growth of the country, whereas city land-owners might need no such inducement. Investors in a new form of public service corporation might need greater inducements than would be fair to those in enterprises well established. But, although details are complex, the social conscience is working toward this general principle: the community should share in the values which it produces. If it cannot do this by cheaper goods and better service, it must by graded taxation, by ownership, or by some other means. The British government has already considered a measure for ascertaining the land values in Scotland as a preliminary step toward adjustment of this question.
APPENDIX TO CHAPTER XXV
PROFESSOR SEAGER'S PROGRAMME OF SOCIAL LEGISLATION
WITH SPECIAL REFERENCE TO WAGE-EARNERS
In the conviction that in the field of social legislation the United States is behind the more progressive countries of Europe, Professor Henry R. Seager, of Columbia University, presented the following Outline for discussion at a meeting of the American Association for Labor Legislation, December 30, 1907. It is reproduced with his consent as giving concrete expression to several of the principles advocated in the foregoing chapters.
The ends to be aimed at in any programme of social legislation are:
I. To protect wage-earners in the continued enjoyment of standards of living to which they are already accustomed.