So it has ever been, and thus it is and ever will be. These daring, progressive souls risk their past, their present, their future and the future of their families, upon gigantic propositions, the consummation of which makes the appellation, “I am an American,” the proudest boast of man.
CHAPTER XIX
UNEARNED INCREMENT
Originally the government permitted each to enjoy the natural advance in the value of his holdings—the unearned increment. In recent years it has discriminated and in certain classes of investments has sought to limit rewards to the equivalent of reasonable interest rates.
The first piece of land I ever owned was a half interest in one hundred and sixty acres. My law partner and I got four hundred and eighty dollars together and we bought one hundred and sixty acres at three dollars per acre. We put part of it under plow, rented it and within a few years, sold it. That land is no more productive today than when we sold it, but the rascal who owns it has watered the capitalization until when I buy a pound of butter or a dozen eggs I am helping to pay him a dividend on two hundred and fifty dollars per acre. We watered it a little, ourselves. We sold it, I remember, for twelve dollars and fifty cents an acre. That was the first dollar I had ever received that I had not earned in the hardest way. It was the first dollar of unearned increment that ever came my way. It was the first water, so to speak, I had ever tasted. I liked it.
I remember when John Trumm purchased that land of us. If he had said to me: “The country is new, population sparse, commerce limited; if these conditions change and the land advances in value, to whom will belong the unearned increment?” Very promptly I should have told him it would belong to him. There was not only a competency but a speculation in the purchase of that land.
But suppose he had said to me: “If I do not buy this land, I shall put my money into the Chicago, Milwaukee & St. Paul Railroad that is now building through the county. The country is new, the population sparse and commerce limited. If these conditions change and the railroad advances in value, to whom will belong the unearned increment?” In my innocence, I should have told him it would belong to him. I might have warned him that if it resulted like the first three attempts to build a railroad across Iowa, he would lose every dollar he invested, but if the time had then arrived, and if the road was built economically and operated efficiently, and did prove a success, it doubtless would advance in value and the unearned increment would belong to those who had shown great vision, taken great risk and exercised great skill.
SOME CONCRETE CASES
I recall a man who purchased in an early day large bodies of Iowa land at from three to five dollars per acre. His rentals must have equalled twenty percent per annum on his investment. Then he watered the capitalization and sold these lands at seventy-five dollars per acre. They are now worth over two hundred dollars per acre. But, even at seventy-five dollars, they made him a millionaire, financially. Then he assailed the railroads for watering their capitalization, though money invested in a railroad never yielded a quarter as large returns as his land investments netted. His opposition to railroads, however, made him a millionaire, politically.
Some years ago a man asked me to join him and some friends in promoting a railroad to the coal fields of Alaska. I asked him who owned the coal and was told that anyone could have all he cared to buy at a nominal price. I called attention to a statute that forbade the same men owning both the railroad and the coal. Then I proposed that I take the coal and let him and his friends build the railroad. If they succeeded, I would then go to the Interstate Commerce Commission and get a rate that would give them six percent on their investment and I would take all the profit. I reminded him that the public thought six percent was enough for money invested in railroads. The road has never been built.