3 
 
 UNIVERSITY OF CALIFORNIA
 
 TAXATION OF LAND VALUES AND 
 THE SINGLE TAX.
 
 PUBLISHED BY 
 
 JAMES MACLEHOSE AND SONS, GLASGOW, 
 $)ttt>lislurs to the Slmberatig. 
 
 MACMILLAN AND CO., LONDON AND NEW YORK. 
 London, - - Simfiktn, Hamilton and Co, 
 Cambridge, - - Macmiilan and Bowes. 
 Edinburgh, - Douglas and Faults.
 
 Taxation of Land Values 
 
 ^iS A 
 
 f 
 
 and The Single Tax 
 
 By 
 
 WILLIAM SMART, LL. D. 
 
 Adam Smith Professor of Political Economy in the 
 University of Glasgow 
 
 Glasgow 
 James MacLehose and Sons 
 
 Publishers to the University 
 I9OO
 
 
 GLASGOW: PRINTED AT THE UNIVERSITY PRESS 
 BY ROBERT MACLBHOSE AND CO.
 
 STACK ANNEX 
 
 HD 
 
 /3/3 
 
 PREFACE. 
 
 t THE present volume does not profess to be a con- 
 eo 
 
 >_ tribution to economic science. It is simply an 
 
 tc. 
 
 ^ exposition of the recognised theory of taxation and 
 
 
 
 ^the application of it to two concrete proposals for 
 
 legislation. 
 
 It is written primarily for my fellow-citizens, 
 
 to aid them in judging of a measure which their 
 
 municipal representatives have pushed to the front. 
 
 <r If I sometimes elaborate the obvious and discuss 
 
 => at length arguments which are generally dismissed 
 
 j as not worth a reply, it is because I have made it 
 u* 
 
 business to ascertain what are the difficulties 
 
 of the people on this subject, and have had three 
 sources of ascertaining them my students, news- 
 paper correspondence, and personal discussion. 
 
 It is a standard reproach to the economist that 
 
 CD 
 
 = he " makes difficulties " and puts on the drag rather 
 ac than applies the spur. I submit that this is very 
 
 383587
 
 vi PREFACE 
 
 often the best service which the economist can 
 render, and that it is certainly so in the present 
 case. 
 
 I have to thank the Editor of the Glasgow Herald 
 for his courteous permission to use articles on the 
 Glasgow Bill contributed in the summer of 1899. 
 
 W. S. 
 
 UNIVERSITY OF GLASGOW, 
 January, 1900.
 
 CONTENTS. 
 
 I. 
 
 PAGE 
 
 THE THEORY OF TAXATION, i 
 
 II. 
 TAXATION OF LAND VALUES : 
 
 CHAP. I. INTRODUCTORY, 37 
 
 CHAP. II. THE LONDON COUNTY COUNCIL 
 
 RESOLUTIONS, 39 
 
 CHAP. III. THE GLASGOW BILL: ITS TERMS, 55 
 CHAP. IV. THE GLASGOW BILL : ITS PRINCIPLE 
 
 OF VALUATION, - - - 63 
 
 GHAP. V. THE GLASGOW BILL : ITS TAXATION 
 
 OF FEU-DUTIES, 79 
 
 CHAP. VI. THE GLASGOW BILL : ITS DOUBLE 
 
 TAXATION OF THE PROPRIETOR,- 84 
 
 CHAP. VII. THE GLASGOW BILL : ITS PURPOSE, 86 
 CHAP. VIII. CONCLUSIONS, - - 91 
 
 III. 
 THE SINGLE TAX, - - 99 
 
 INDEX, 123
 
 " Amid the clashing of divergent interests, and the endeavour of 
 each social class to roll off the burden of taxation on some other class, 
 we discern the slow and laborious growth of standards of justice in 
 taxation, and the attempt on the part of the community, as a whole, 
 to realize this justice. The history of finance, in other -words, shows 
 the evolution of the principle of faculty or ability in taxation the 
 principle that each individual should be held to help the State in 
 proportion to his ability to help himself." Seligman, Essays in 
 Taxation, p. 21.
 
 THE THEORY OF TAXATION 
 
 A MAN living in Great Britain, and found or sus- 
 pected to be in receipt of an income above 160 a 
 year, gets, first, an official letter asking him, not in 
 the politest terms, to send in a statement of what 
 his income is, and thereafter, whether he sends in a 
 statement or not, gets a second letter, in still less 
 polite terms, demanding payment of so many pounds 
 sterling on penalty of 20 and treble duty. 
 
 His consent is not asked. The tax is not a quid 
 pro quo for a vote ; minors and aliens have no vote. 
 He is born to taxes as the sparks fly upward, and 
 it is in vain to protest. He may be a Quaker and 
 object to the army and navy ; he may be a harmless 
 soul who never needs the attention of the police- 
 man, or a muscular one who can protect himself; 
 he may not want education, or much believe in 
 it for other people ; he may have neither kith 
 nor kin and think it hard that he has to support 
 other people's poor relations ; he may be a repub- 
 lican and object to the Civil List, or an anarchist 
 and object to all the machinery of government ; 
 he may deny the obligation of a national debt
 
 2 THE THEORY OF TAXATION 
 
 contracted a century ago. He has to pay. And he 
 will not easily find a place where he pays no taxes, 
 or a country where he will get as much for as little 
 as in Great Britain. 
 
 Suppose he asks, with pardonable heat, " Who 
 made this contract ? who asked the government to 
 do these things, and gave it authority to distrain 
 in penalty of non-payment?" He is told there 
 never was such a contract made. 
 
 Yet there is a contract, none the less binding that 
 it had no formal expression. The whole body of the 
 citizens have the power of breaking it, seeing that 
 the taxing authorities are under the control of their 
 representatives in Parliament. Instead of that, they 
 seldom raise the question. They are like men who 
 begin playing a game : they do not make the rules, 
 they do not even subscribe to them, they only begin 
 to play : in so doing they accept the conditions they 
 find ; but if a man begins to play and breaks the 
 rules, he is sent to Coventry, there to reflect on what 
 an unwritten contract means. 
 
 The freedom we enjoy and the burden we bear are 
 both the outcome of centuries of evolution. There 
 are anomalies and inequalities, no doubt, but we 
 accept the bad with the good ; that is, we accept the 
 services which government renders to us, and we pay 
 the price which the government charges, secure in 
 the comfortable knowledge that the laws exist for 
 the people, and that if we are not pleased well, 
 they are our own laws, and we can mend them. 
 
 This is the surface account of the matter ; that 
 the relation between the individual on the one hand 
 and, on the other, a government found to exist and
 
 THE THEORY OF THE STATE 3 
 
 accepted by a majority, is really an implicit contract, 
 and this is generally as deep as an Englishman cares 
 to go. But it has a philosophical foundation. Man 
 is by nature a political animal, as Aristotle said. 
 It was not good for man to be alone, so he got a 
 wife. It was not good for them to be alone, and 
 so they got children. It was not good for the family 
 to be alone, and so men began to work into each 
 other's hands, finding that there are certain things 
 which cannot be had within self-contained groups. 
 Thus the State, which has its germ wherever men 
 pursue a common good and divide their energies to 
 secure it, became explicit. 
 
 The ordinary man, of course, never realizes that 
 his independence is dependence. He does not see 
 that he relies on his fellow-men for his very bread 
 and butter, till, perhaps, some day the city holiday 
 falls on a Monday, and his wife tells him that all the 
 shops are shut, that she has forgotten to look ahead, 
 and that there is no dinner to-day. A few more 
 successive holidays would drive home the lesson that 
 the richest man left by himself will starve, because 
 he has cut himself off from being his own provider. 
 A few days of universal strike, and the civilized 
 inhabitants of the West-end would be breaking into 
 each other's houses in the search for food. 
 
 If it is easy to see that man depends on man even 
 for his physical existence, it is more evident still 
 that he depends on him for all those other things 
 that make life worth living as human life. Among 
 the fowls of the air and the beasts of the field there 
 was not found an help meet for Adam. Nor is man 
 himself always or from the first a help to man.
 
 4 THE THEORY OF TAXATION 
 
 There is that within him an unregenerate will 
 which, so far from recognizing mutual natural rights 
 to a quiet rational life, would make existence a 
 continual struggle to assert his " might " against 
 other similar wills. It is not till he has found that 
 the best in him cannot be realized without their 
 help, that he puts the worst within him in chains 
 and becomes free. It is not true, then, that the 
 original state of liberty is a war of all against all, 
 and that, in the formal State, men renounce their 
 individual rights and liberties because they are in- 
 compatible. The State is not even a compromise 
 where men pool their compatible rights and agree to 
 give up their incompatible ones. Just as a man 
 becomes " master of himself" by the renunciation of 
 those passions and pursuits which conflict with an 
 ordered and planned rational life and would end in 
 personal wreck, so do men in the State become free 
 and obtain rights from each other by renouncing 
 those aims and pursuits which are incompatible with 
 the realizing of a " good life " which is common to 
 each and to all. In each case men may be mis- 
 taken ; they may hold down and crush out what 
 requires only due subordination : but, in any case, 
 they buy their freedom only by imposing laws on 
 themselves. Thus, concludes political philosophy, 
 the State is not a collection of individuals, who 
 have merged their previous individual rights in the 
 State, to receive some of them back again from the 
 State ; the individual has no rights except such 
 as the State gives him : as it is the State which 
 gives him the very possibility of being a man, so it 
 is the State which alone gives him the conditions
 
 THE THEORY OF THE STATE 5 
 
 of following out those pursuits that are the end and 
 the crown of human life. 
 
 Thus, externally, the State takes the form of 
 organized force. In other times this force was so 
 prominent that many mistook it for the essential 
 thing 
 
 " Kings were by God appointed ; 
 
 And damned were they who did resist, or touch the 
 Lord's anointed." 
 
 But in our time it is not difficult to see that the 
 power behind the throne is the General Will. It 
 is the highest, though always the imperfect and 
 progressive expression of our best rational selves, 
 realizing our Freedom the essential quality of 
 man by putting ourselves under laws of our own 
 making. 
 
 We enforce that will against ourselves if we should 
 forget ourselves, and we enforce it against those who 
 do not acknowledge the general will and desire to 
 fight for their own hand. The government, in short, 
 is the force which we, of our own accord, put over 
 us, or, finding there, keep over us, to do our bidding. 
 It is a committee of ourselves, which we voluntarily 
 assume, to give us, first, the conditions of living, and, 
 second, to give us the conditions of a rational, ordered 
 life. As Aristotle said, " The State, coming into ex- 
 istence that men may live, continues in existence 
 that they may lead the good life." 
 
 The subject which I have to treat here is that part 
 of the implicit contract which deals with taxation, 
 and the first proposition I have to put forward is, 
 that the government renders us certain services 
 which we pay for with part of our income.
 
 6 THE THEORY OF TAXATION 
 
 Suppose that the defence and protection of the 
 nation were a private business like any other; as, for 
 instance, the great marine insurance companies might 
 fit out armed cruisers to accompany ships, or as our 
 ancestors used to hire the free companies. Suppose 
 that all education were a private profession as it 
 used to be, and that the post office and telegraphs 
 were in the hands of a great limited company, as the 
 telephone service is now, and as the tramway service 
 is still in most cities. 
 
 Suppose further that, in the towns, those citizens 
 who had not wells of their own bought their water 
 from a cart, as they did in Glasgow at the beginning 
 of the century; that we lit our houses with oil lamps; 
 that each group of houses had its own private watch- 
 man. With a little of the historical imagination, we 
 may conceive of the majority of what are now called 
 imperial and local government functions being under- 
 taken by private enterprise. 
 
 Then the position would visibly be that we were 
 buying these services, as we buy the services of 
 domestics ; we should, that is, spend part of our 
 income on them, and the price would appear among 
 our ordinary expenses. 
 
 As things are, the position is this. In the division 
 of labour great groups of men take up different 
 services. A, let us say, is the agricultural class ; B 
 is the manufacturing ; C, the merchant ; D, the pro- 
 fessional ; E, the domestic servant. A sells its 
 products to B, C, D, and E ; B sells its products to 
 A, C, D, and E ; C, its products to A, B, D, and E, 
 and so on, each group getting paid in money, and 
 spending the money on the products of other groups.
 
 WE BUY GOVERNMENT SERVICES 7 
 
 But beyond those services which A, B, C, D, and E 
 render to each other, and get paid for by the ser- 
 vices of each other industry being, of course, a great 
 co-operation of mutual service they set aside another 
 group of services to be rendered by F, and this they 
 call government services. These services are so 
 peculiar and so necessary that we do not, as a rule, 
 allow any competition in them : F is, as it were, our 
 picked class. But the point I want to bring out is, 
 that A, B, C, D, E, and F buy their services from 
 each other, and pay for them with their own services. 
 F is not a class outside ; it is neither a special pro- 
 vidence, nor a tyrannical power, nor the holder of 
 any Fortunatus purse. The government servants 
 buy their bread and butter from us, and we buy 
 justice, defence, education, etc., from them. We spend 
 so much of our income on food products ; so much 
 on manufactured goods ; so much on commission to 
 merchants ; so much for doctor's bills, legal fees, 
 sermons, music, etc. ; so much on our cooks and 
 housemaids ; and so much on soldiers, sailors, judges, 
 policemen, board school teachers, etc., etc. This 
 may now be put in a more concrete way. 
 
 There are two incomes which are not usually very 
 clearly related to each other; the National Income, by 
 which I mean the sum of all our individual incomes 
 and the Government Revenue, imperial and local. 
 The National Income is some 1,5 00,000,000 ; l 
 the Imperial Revenue is ,108,000,000 ; and the 
 Local Government Revenue the income of county 
 councils, parish councils, burghs, etc. is, say, 
 another .70,000,000. 
 
 1 See The Distribution of Income, Book i.
 
 THE THEORY OF TAXATION 
 
 The relation of the two is this that the Government 
 Revenue is contained in, and is part of, the National 
 Income, and is not an addition to it. The practical 
 proof of this lies ready to our hand. Our National 
 Income, as I say, on the calculation of Sir Robert 
 Giffen, is .1,500,000,000. What does this mean? 
 It means that the total sum of goods and services 
 produced and rendered by the various individuals of 
 the nation is sold by them for a money price of 
 1,500,000,000. Now among this 1,500,000,000 
 appear the salaries, among others, of government, 
 municipal, and other local servants, from the Lord 
 Chief Justice with his 8000 a year, to the blue- 
 coated defenders of our peace with their 295. 8d. 
 per week. 
 
 It is not the case that we working folk make 
 1,500,000,000 of income among us, and then 
 contribute, say, 2s. per of that to the government. 
 
 It is the case that we all, working together on our 
 land and with our capital, make up a total sum of 
 goods and services which adds up to 1,500,000,000 
 in money value. Among these are military, naval, 
 and police services, civil services, justice and educa- 
 tion, postal and telegraph services, service of the 
 poor, provision of gas, and water, and markets, etc. 
 And, just as we buy goods generally from each 
 other, so we buy government goods from the govern- 
 ment, and local authority goods from the local 
 authorities. 
 
 I repeat: the 1,500,000,000 is the price of 
 the whole of our real National Income, and some 
 180,000,000 of it is the price which we pay for a 
 particular portion of it called government services.
 
 TAXATION NOT AN EVIL 9 
 
 The obvious deduction from this is, that the 
 ordinary conception of taxation, which thinks of it 
 as an evil, is a mischievous fallacy. Of course, it is 
 an evil in the sense that we cannot get for nothing 
 all these good things that government renders us ; 
 just as it is an evil that we have to work for our 
 living, and do not find it hanging on trees. But 
 our ancestors did not regard it as an evil that they 
 had to pay a halfpenny a stoup for their water the 
 evil was that they could not get enough water even 
 by paying for it. 
 
 Probably the source of the fallacy is, that many 
 people think of taxation as mostly necessitated by 
 the maintenance of armaments. Well, if one likes 
 to say that it is an evil to have to wear a sword or 
 carry firearms, I agree in this sense, that it would 
 be much pleasanter not to have to think about de- 
 fending one's life or property. And then it follows, 
 that the taxation which pays for army and navy 
 those government services that allow us to dispense 
 with carrying arms because, in the division of labour, 
 the anus are carried for us by red-coated brigades 
 is an evil also. But, after all, there always have 
 been thieves at home and robbers abroad. The evil 
 is in having the thieves, not in being able to defend 
 one's-self against them ; and the taxation for protec- 
 tion is no more an evil than the having to pay for 
 food. Or it may be that we have not yet forgotten 
 the taxation of France before the revolution, when 
 the privileged classes had managed to roll the entire 
 taxation on to the peasants, and when that taxation 
 was spent, not so much for national purposes as on 
 class extravagances and in the pursuit of military
 
 io THE THEORY OF TAXATION 
 
 ambitions, in which the peasant had no share. There 
 taxation was an evil, and a great one. 
 
 It is difficult, indeed, not to be misled by the 
 historical incidents of taxation. The annals of every 
 State are filled with the attempts of various classes 
 to shift the taxes from one set of shoulders to 
 another. Sometimes it was the landowners who 
 managed to shift them on to the commercial classes, 
 sometimes the other way about ; and, all through, 
 there is the attempt of both to put them on 
 the broad backs of the working classes. When a 
 burden is thus shiftable, the people who ultimately 
 bear it get to think that the burden itself is an 
 intolerable evil, not seeing that the evil lies in the 
 fact that they alone have to bear it. 
 
 But in a democracy such as ours which is really 
 the nearest approach to a true republic the world 
 has ever seen taxation is an equivalent of benefit, 
 a price for value received. It is the payment we 
 make for services done to ourselves as individuals 
 by ourselves as a government ; and, moreover, it 
 is a payment regulated and determined by our- 
 selves. He who cheats the tax-gatherer cheats 
 himself, and would be rightly served if he were for 
 the time outlawed, and shown that the penalty 
 of not paying taxation falls on himself. Its best 
 type and example perhaps is a government industry 
 like the post office, or a municipal water supply, 
 where the government evidently provides a com- 
 modity which we buy and pay for with a part of 
 our income. In short, as I said, our National 
 Income is not 1,5 00,000,000 less income tax, but 
 1,500,000,000. Our individual income is not our
 
 AN UNAPPLIED TRUISM \\ 
 
 wages less rates and taxes, any more than it is our 
 wages less our butcher's bill ; the tax, like the 
 butcher's bill, is part of our annual expenditure. If 
 the Corporation of Glasgow takes over the butchers' 
 shops, and runs them as it does the tramways, our 
 taxes will be greater and our tradesmen's books less, 
 presumably, by the same amount. I repeat, then, 
 my first proposition, that the government renders us 
 certain services which we pay for with part of our 
 income. 
 
 Of course this is a mere truism. And, of course, 
 as in the case of most truisms, there are thousands 
 of people who live in entire ignorance or entire dis- 
 regard of it. If it is a truth so generally accepted 
 that the man who proves it is wasting his time, how 
 is it that a candidate for a seat on any local board 
 will always have a certain following if he promises to 
 cut down taxation? How is it that we hear so much 
 grumbling about the increase of local rates ? An 
 increase in rates presumably reflects an increase in 
 service done us : why should we quarrel with paying 
 for a thing if it is necessary and good ? I am afraid 
 we shall have to preach this truism a little longer 
 before we get it into the popular mind, and impress 
 on the popular conscience the moral obligation of 
 paying for what the government purveys. 
 
 On the other hand, when I look at a common 
 phenomenon of to-day I am inclined to think that, 
 with great sections of the community, it is really 
 a truism. Undoubtedly, a call is being made on 
 the government and on municipalities to do more. 
 The man who suggests a doubt whether manage-
 
 12 THE THEORY OF TAXATION 
 
 merit by a committee of councillors is an economic 
 management, is looked askance at as having no 
 proper pride in his city ; and I can say for Glasgow 
 at least that those who advocate the largest schemes 
 of municipal enterprise are not rejected at the polls. 
 Perhaps there is a reason for this. I am reminded 
 of that somewhat extensive proposal for old age 
 pensions. One may have no objection to the idea 
 of such pensions. It is, one might presume, a poor 
 man's scheme for insuring himself as soldiers are 
 insured. If poor men, as a class, go to the govern- 
 ment, and ask that arrangements be made for 
 securing them an old age provision which will cost, 
 say, ten millions per annum, they have every right 
 to do so. But when the question comes up of 
 how this provision is to be paid, and we hear from 
 every platform, " Let it be taken off rent, or profit, 
 or anything you like except wages," one begins to 
 ask questions. The last Trade Union Congress, for 
 instance, suggested that the necessary funds should 
 be provided by a graduated tax on all incomes above 
 .300. In this certainly there was no suggestion of 
 any mysterious Fortunatus purse belonging to the 
 State! Is it not possible that the present enthusiasm 
 for the extension of government functions arises, not 
 so much from the belief that some enterprises are 
 best conducted by governments and municipalities, 
 as from the idea that the burden of payment is thus 
 rolled off from those who benefit ? 
 
 Now there is no use protesting against a tendency 
 of human nature. We are all very willing to roll 
 our burdens on to other people's shoulders. When 
 the Chancellor announces that he needs more money,
 
 AN APPLIED TRUISM 13 
 
 the answer of the comfortable classes, as a rule, is 
 " By all means; put something more on spirits or 
 tobacco, but, whatever you do, don't increase the in- 
 come tax." Indeed, we are all, as a rule, willing to 
 take a collective burden on ourselves on the chance 
 of shifting it. You may show a manufacturer that 
 a general rise in prices will not benefit him or any- 
 body else ; he is always willing to risk it if he gets 
 his own prices up. And I fancy that a good deal 
 of the intermittent agitation for protection arises 
 from the idea that the foreigner can be got to pay 
 the bill in the shape of the duties. 
 
 I am reminded of a little conversation I had with 
 one of my colleagues while I was writing this paper. 
 He was complaining bitterly that he could not get 
 any money for apparatus from our governing body, 
 the University Court. But, I objected, the Court has 
 no money ; its balance is dangerously near the 
 wrong side as it is ; if you get your apparatus you 
 will find that all our salaries are curtailed. " Oh, 
 yes," he replied, " but, you see, I'll only have to pay 
 a fraction of that ! " 
 
 But perhaps a more honourable excuse is to be 
 found in want of knowledge. It is comparatively 
 easy to show any intelligent man that a tax is a 
 payment for service rendered to the community, and 
 not a burden. But it is difficult for even a very 
 intelligent man to understand why he should pay 
 just 8d. per on his income. We buy bread and 
 butter on an estimate that it is worth the money. 
 We buy stamps and pay car fares on a similar 
 estimate. But we are not allowed even to question 
 if general government services are worth the money.
 
 14 THE THEORY OF TAXATION 
 
 We simply get a blue paper telling us, in truculent 
 terms, that unless we pay our 8d. a by a certain 
 date, we shall be fined a sum of 20. And one 
 reason why everybody thinks that he pays too much, 
 or, at any rate, that his neighbours should pay more, 
 is that the least understood question in taxation is 
 just this Who should pay the taxes, and in what 
 proportion should they pay them ? It is this ques- 
 tion that we have now to try to answer. 
 
 The first thing to clear up is, that this is a much 
 more limited enquiry than at first sight appears. 
 Government services are paid for in several ways 
 and on several principles. Taxation is only one of 
 these ways, and its principle is quite peculiar. Let 
 us take the larger question first. 
 
 I pay income tax at 8d. per of income. I pay 
 poor rates at 4f^d. per of rental. I pay for gas 
 at 2s. 2d. per 1000 feet. I pay 8s. 6d. for the 
 upkeep of the path in front of my house. The pay- 
 ment of income tax is determined by the amount of 
 my income. The payment of poor rates is deter- 
 mined by the amount of my house rent. I buy my 
 gas as I buy my bread and butter. I pay for the 
 path just what it costs to lay down two carts of 
 engine ashes. 
 
 These payments, I think, may be put roughly 
 into two groups. Where the service rendered by 
 the government admits of being rendered direct to 
 the individual or class, and is capable of being 
 measured, the payment is according to benefit re- 
 ceived or cost expended. But where the service is 
 a general one, spread over the whole or a large body
 
 MEASURABLE SERVICES 15 
 
 of the citizens, and not rendered direct to the in- 
 dividual or class as an individual or class, the price 
 which the citizen pays is proportional to his income 
 or his rental. The former is the principle of govern- 
 ment industries, like the posts and telegraphs, and of 
 municipal industries, like tramways and gas, and it is 
 the principle of fees and of special assessments. The 
 latter is the principle of taxation properly so called, 
 whether in the form of imperial taxes or local rates 
 imperial taxes being assessed on income, local 
 rates on rental. 
 
 i . The former group does not seem to need much 
 explanation. We find its rationale in the payments 
 we make to private purveyors for ordinary goods. 
 Naturally so; for most of these government functions 
 have been gradually taken from private enterprise. If 
 a government or a municipality takes over a private 
 industry, it is generally because it can do it better, 
 or supposes it can do it better ; we should not, I 
 imagine, consent to it on any other terms. Now, in 
 every ordinary exchange, say between a manufac- 
 turer and his customers, there are two sides the 
 seller considers what it cost him to produce ; the 
 buyer considers the benefit he gets. According as 
 the buyer or the seller is the stronger economically, 
 will the cost or the benefit predominate. So with 
 government goods. They may be sold at cost, or 
 above cost, or below cost ; or they may have no 
 reference to cost, as in the case of licenses and the 
 like. But what the buyer, in all cases, thinks of is 
 the benefit he gets ; if he thinks he gets adequate 
 benefit, he buys. 
 
 Of course, in such government goods, there is a
 
 1 6 THE THEORY OF TAXATION 
 
 certain element of compulsion, but so there is in all 
 monopolies. If we use gas, we must pay the price 
 the municipality charges, or go without. But if we 
 buy thread, we must pay the price dictated by the 
 Coats monopoly. All monopolies are limited by the 
 possibility of substitutes ; the government monopoly 
 is limited as well by the fact that it exists for the 
 sake of the consumer. There need be no hesitation, 
 then, in saying that government charges of this sort 
 are Prices, and that the justification and the measure 
 of them is Benefit Received. 
 
 2. But the latter group does need a great deal of 
 explanation. The only very obvious thing about it 
 is that, while the benefit conferred on the citizens 
 generally is undeniable, the great bulk of government 
 services cannot be paid for on any measurement of 
 benefit to the individual taxpayer. 
 
 Take, for instance, the protection services. The 
 Army and Navy form the great shield under the 
 shelter of which we work secure from the interfer- 
 ence of foreign enemies for the world does not 
 love Britain as she deserves to be loved and this 
 shield protects the Briton even when he works in 
 foreign countries, and is subject generally to foreign 
 jurisdictions and customs. So with the Police 
 there are enemies at home as well as abroad ; 
 sometimes we are our own enemies, and Philip 
 drunk appeals to Philip sober. But as this double 
 shield covers us all : as it is the condition not 
 only of our personal safety, but of that great 
 divided and contractual industry on the quiet con- 
 duct of which we depend for a living, it is im- 
 possible to measure this benefit individually, and
 
 NON-MEASURABLE SERVICES 17 
 
 say you are protected so much, and you are 
 protected so much. 
 
 So with the School Rate. We in Glasgow this 
 year are paying 1 1 d. per of rental for school board 
 education. Many good people are indignant at this 
 compulsory payment, for, say they, some of us have 
 no children, and those of us who have do not send 
 them to board schools. True. But the children 
 now being educated in board schools are the people 
 on whom all of us have to depend in the future, to a 
 large extent, for the provision of those things which 
 make our life worth living. We all gain when the 
 new generation grows up better educated than the 
 last. We are manufacturing, as it were, the factors 
 of a larger national income, inasmuch as these 
 children, when they grow up, will be better pro- 
 ducers. It was not pure philanthropy that made the 
 millowners of last generation build schools for their 
 half-timers ; it had at least something to do with the 
 calculation that these children would in due time 
 become full-timers in the mill, and would be better 
 workers because of the education. All the same it 
 is as impossible to allocate the benefit as to confine 
 it to the board school children. What we can say is 
 that it is not those who pay the heaviest rates that 
 benefit most ; it is the people who pay small rates, 
 or no rates at all. 
 
 So also with the Poor Rate. It is the most 
 altruistic of all taxes. We have to think twice 
 before we can see how those who pay get any benefit 
 from it. Ricardo denounced it in the strongest 
 terms, saying that no scheme for its amendment 
 merited the least attention which had not its aboli-
 
 1 8 THE THEORY OF TAXATION 
 
 tion for ultimate object. And if we look on the 
 maintenance of aged parents as a moral duty, equally 
 incumbent on a man with the maintenance of his 
 young children, we may take T. H. Green's ground 
 and say that the relief of at least the aged poor is 
 perhaps one of those moral obligations, so necessary 
 to the existence of a society in which the moral end 
 can be realised, that it is better it should be done 
 from an unworthy motive than not done at all. 1 
 Perhaps the best that can be said is that it is the 
 recognition of our common humanity ; those who 
 benefit are our poor relations. 2 
 
 In all these cases we recognise the common 
 benefit to the nation, but we cannot measure the 
 individual benefit to the taxpayer. We know the 
 cost, indeed, but we cannot apportion it. The prob- 
 lem is very much the same as would be presented if 
 Lord Kelvin discovered some way of improving the 
 climate, and put the necessary appliances in the 
 hands of the government. We should all be dis- 
 tinctly happier, and some of us could measure the 
 benefit to ourselves by the extra rent we got for 
 seaside houses, or for early green peas. But most 
 of us would only be agreed in grumbling that we 
 had to pay anything at all. So we cut the knot in 
 a way that does, as I say, require a great deal of 
 explanation. We charge according to income or to 
 rental. 
 
 1 Works, Vol. II., p. 344. 
 
 2 " So far as destitution leads to crime, it is the interest of the self- 
 supporting inhabitants of any district to relieve the paupers, but this is 
 only a small part of the reason for treating the relief of indigence as a 
 public duty." Sir Robert Giffen, Memoranda presented to the Royal 
 Commission on Local Taxation, p. 106. .
 
 ABILITY TO PAY 19 
 
 From old times this principle of payment has 
 received a name. In rates and taxes, from the I4th 
 century downwards, we find the payment for common 
 benefits is allocated according to Ability or Sub- 
 stance -juxta facilitates. Adam Smith only put old 
 usage into a formula when he said that it was 
 reasonable that expenses " which are paid out for the 
 benefit of the whole society should be defrayed by 
 the general contribution of the whole society," and 
 laid down as his first maxim of taxation, "The sub- 
 jects of every State ought to contribute towards the 
 support of the government as nearly as possible in 
 proportion to their respective abilities." It is cer- 
 tainly not, then, a modern idea ; it is not the result 
 of the democratic vote. 
 
 It may be granted, however, that the expression 
 Ability to Pay is a little misleading. At first 
 statement it seems as unjust to the rich as taxation 
 is often assumed to be to the poor. If, when you 
 went into a shop to buy eggs, the shopman would 
 not render his account till he had ascertained how 
 much you were worth, and then charged you five 
 shillings a dozen if you were rich, half-a-crown if 
 you were well off, one shilling if you had ;i6o a 
 year, and nothing at all if you were in receipt of a 
 pound a week, your opinion of the propriety of this 
 would vary according to the class to which you 
 belonged. It seems to convey the idea that, because 
 a man has a good deal in his pocket, it is an excel- 
 lent reason why we should take a good deal out of it. 
 It reminds one of Robin Hood's code of morality 
 that he stole only from the rich. 
 
 If we replace the expression by Ability to Contri-
 
 20 THE THEORY OF TAXATION 
 
 bute, we begin to see reason in the principle. As 
 Seligman says, "It is the duty of the citizen to 
 support the government according to his capacity to 
 support himself." The State is a great family. But 
 the State is ourselves. We, therefore, contribute to 
 the national housekeeping in the measure of our own 
 housekeeping. We give our contribution freely, 
 because we give it to ourselves and for ourselves, 
 not to an external power which taxes us in propor- 
 tion as our pockets are able to stand the drain. The 
 expression " ability to pay," or " ability to contribute," 
 is objectionable only so long as we conceive of the 
 Government as an outside, and so far hostile, body, 
 which takes advantage of us, or lets us off easily, 
 instead of recognising it to be ourselves assessing our 
 own ability to keep the larger family in the best 
 possible condition. 
 
 The conception, however, was put on a more 
 satisfactory basis by Mill. " Government," he said, 
 " must be regarded as so pre-eminently a concern of 
 all, that to determine who are most interested in it 
 is of no real importance. If a person or class of 
 persons receive so small a share of the benefit as to 
 make it necessary to raise the question, there is 
 something else than taxation which is amiss, and the 
 thing to be done is to remedy the defect, instead of 
 recognising it and making it a ground for demanding 
 less taxes. As, in a case of voluntary subscription 
 for a purpose in which all are interested, all are 
 thought to have done their part fairly when each has 
 contributed according to his means that is, has 
 made an equal sacrifice for the common object ; in 
 like manner should this be the principle of compulsory
 
 THE CANON OF EQUAL SACRIFICE 21 
 
 contributions ; and it is superfluous to look for a 
 more ingenious or recondite ground to rest the 
 principle upon." x 
 
 Since Mill's time the accepted principle has been 
 that, as regards common benefit, every taxpayer 
 should be looked on as benefiting equally, and the 
 payment accordingly should be an equal one ; only 
 the equality is to be measured, not in money, but in 
 sacrifice. The government practically says : We 
 do not ask of any man how much our service is 
 worth to him ; indeed we take it out of his hand to 
 measure its worth ; it is worth really an infinite sum, 
 but we shall charge him a sum which corresponds 
 roughly with the same marginal sacrifice of utility to 
 him and to every taxpayer. It is not the truth that 
 the rich should be penalised because they are rich, 
 or the poor escape because they are poor. The 
 economic conception is that the rich should pay 
 much because it means little to them, and the poor 
 should pay little because a little means a great deal 
 to them. In short, the canon of general taxation is 
 Equality of Sacrifice. 
 
 The answer to my question, then, is that every 
 man should pay taxes because every man benefits, 
 and that every man should pay with a sum which 
 represents an equal sacrifice. 
 
 It may be granted to the full that the word 
 equality takes us too far for the practical world. 
 It is easy to demonstrate that there cannot be a 
 common measure of happiness, and that, accordingly, 
 there cannot be a common measure of sacrifice. Yet 
 
 1 Principles, Book V., II., 2.
 
 22 THE THEORY OF TAXATION 
 
 we do measure both the one and the other. Every 
 time we spend a sixpence, we measure benefit and 
 sacrifice against each other. Here is sixpence in my 
 pocket. I am lord of all the shops in the city to the 
 extent of my sixpence. I spend the coin on one 
 thing. In doing so I forego the enjoyment of all 
 the other things purchasable in the city. I calculate 
 implicitly that the benefit I am likely to get from 
 the sixpence-worth of goods I buy, outweighs the 
 benefit I might get by spending the sixpence in any 
 of the other ways. But putting this argument on 
 one side, there are two considerations which, I think, 
 may satisfy us that the canon of Equal Sacrifice is 
 sufficiently practical. 
 
 i. The first is, that no very accurate measurement 
 of sacrifice is required for our purpose. This purpose 
 is to raise a very large sum of money with a minimum 
 of burden to each. Now, we raise this sum from a 
 very large number of people; and the hardship, or 
 injustice if one likes to call it so, of a rough-and-ready 
 measurement of equality is minimised by the small- 
 ness of the sum required from each. 
 
 I deprecate the usual argument, that the reason 
 why there cannot be a common measure of sacrifice 
 in taxation is that we are taxing two classes, one 
 of which is in extreme poverty, the other in affluence. 
 Certainly, if you take a man on the verge of starva- 
 tion and deprive him of one square meal, you inflict 
 on him an amount of hardship which would outweigh 
 almost any amount you can think of as deducted 
 from the income of the millionaire unless indeed it 
 were a million sterling. But, as certainly, if the 
 community, as a whole, were on the verge of starva-
 
 THE MEASUREMENT OF SACRIFICE 23 
 
 tion, so that numbers were slipping over into the gulf 
 through no fault of their own, we should not have our 
 present problem, for it is scarcely conceivable that 
 anybody would be allowed to remain rich. We should 
 return to the economics of the short-provisioned 
 ship, or the besieged town, where all are put on an 
 equal diet. 
 
 But without stopping to prove that we are not in 
 this desperate position ; that a great deal of the so- 
 called poverty is relative to a steadily rising standard 
 of wage which includes a good many " conventional 
 necessaries " ; and that the poorest class of persons 
 willing to work could, in normal circumstances, spare 
 something without being dipped over the marginal line 
 of animal existence, I would point out that the sacrifice 
 demanded of the citizens, as payment for the services 
 of the government, need not, with us at any rate, 
 amount to a very serious privation. A man in receipt 
 of 2 os. a week will, on due occasion say, the open- 
 ing of a subscription-list for the families of reservists 
 or a self-denial week of the Salvation Army con- 
 tribute a coin of the value of a day's smoke. What 
 would be the corresponding sacrifice among the 
 richer classes ? The day's smoke occupies a certain 
 position in the standard of life of the poor man. 
 Ask what would represent the same place in the 
 rich man's standard of comfort ; it would probably 
 be measured by a very large sum in money. For, 
 observe, the day's smoke is perhaps the one luxury 
 of the poor man's day. If so, the corresponding 
 sacrifice in the case of the rich man would be all his 
 luxuries for one day a 365th part of the income 
 he spends on luxuries. If we suppose that the poor
 
 24 THE THEORY OF TAXATION 
 
 man's one luxury his smoke costs him 2cL, and 
 that the rich man's expenditure on luxuries of all 
 kinds is i a day, then, on the basis of equal 
 sacrifice, the rich man pays 120 times as much 
 as the poor. In short, an equal sacrifice over the 
 whole community, which takes a small sum out of 
 the poor man's pocket, will take a very large sum out 
 of the rich man's, and yet both will pay equally as 
 measured by sacrifice. 
 
 This is the first consideration I would advance in 
 saying that the canon of equal sacrifice is sufficiently 
 practical ; namely, that a rough-and-ready com- 
 parison of sacrifice is sufficient for our purposes. If 
 it is true that, behind any apportionment, lies the 
 great fact that taxation as a whole is payment for 
 services, then it seems to follow that every man 
 should assist in keeping up the framework of law 
 and government, which is the condition of his 
 rational life as a citizen. Poverty is no reason for 
 entire exemption. It is plausible to argue that 
 certain classes are so poor that they should not pay 
 anything, but it is no more logical than saying that 
 some men are so poor that they should not pay 
 for bread. For government, being the condition of 
 any endurable and rational existence, is a necessary 
 of life just as much as bread, and must be paid for 
 by some persons. Only to the extent that people 
 are so poor that the rest of us must let them have 
 bread and pay their bills that is, so far as they are 
 paupers is it expedient to exempt them from paying 
 taxes. 1 
 
 1 "The State belongs as much to the life of every civilised man as 
 his daily food or the air : without the State a civilised existence is
 
 SELF-ASSESSMENT 25 
 
 2. The second consideration is that the govern- 
 ment does not try to assess the poor man's sacrifice. 
 A person does not pay income tax unless his income 
 amounts to 160 a year. I fear this has given rise 
 to the idea that it is the duty or, shall we say, the 
 privilege? of the rich to pay for the poor. This is 
 certainly not the meaning of it. One reason belongs 
 to the practice of taxation ; namely, that the expense 
 of collecting the tax over a very large number of 
 small incomes would run away with too much of the 
 tax collected, and so violate Adam Smith's fourth 
 maxim, that a tax should take out of the pockets of 
 the people as little as possible over and above what 
 it brings into the public treasury. But the real 
 reason is that the poor man pays his taxes in 
 another way, and yet in a way that allows the 
 government to escape the responsibility of assessing 
 what his equal sacrifice is ; by letting him tax 
 himself. 
 
 This brings us to a third way of paying for 
 government services ; namely, the taxes on Commo- 
 dities, or, as it is usually called, Indirect Taxation. 
 The Imperial Budget showed last year a revenue of 
 21,000,000 from Customs, and .29,000,000 from 
 Excise, besides other 5,000,000 for local taxation 
 account. The meaning of this is, that we put heavy 
 duties on tobacco, liquors, and tea, and that every 
 time a man buys these he pays so much to the 
 government. Now, whatever be the artificial appetite 
 
 not thinkable. The minimum of every moral existence includes the 
 blessings of the State. It follows that the minimum of outlay for 
 existence must also include the necessary expenses of the State." Cohn, 
 Political Science Quarterly, iv. , p. 64.
 
 26 THE THEORY OF TAXATION 
 
 born of custom, it is evident that these are luxuries 
 necessary to no man's healthy life. If a poor man 
 requires all his income to live on, he will not pay 
 this taxation, for, presumably, he will not buy 
 luxuries. But if he does buy them, it shows 
 that he has a margin over necessaries. Though we 
 are the richest nation in the world, we have not 
 committed ourselves to the statement that the Briton 
 requires 160 a year merely to live on. A wage 
 much under this will buy a good deal of luxury, 
 and if the wage- earner is able to pay for luxuries, 
 why should he not pay for the necessary of life 
 called government services ? The only reason 
 adduced why the poor should escape is that they 
 cannot afford to pay for anything but necessaries, 
 and this gives no ground for saying that the 
 rich should pay for the poor man's tea, or whisky, 
 or tobacco. And there is a very good reason why 
 they should not. If one class pays all the taxation, 
 and another class, much more numerous, receives its 
 full share of the benefit, there is every inducement on 
 this larger class to insist on the government doing 
 more and more. If, further, a large majority gets to 
 voting supplies, while the minority have to pay with- 
 out benefiting, there is a distinct schism in the 
 conception of government. It is one thing for a 
 majority to dictate the services and the payments : 
 it is another to allocate the services to one class and 
 the payment to another. 1 
 
 1 The ^18,000,000 of income tax are often compared with the 
 .50,000,000 of indirect taxation as expressing the relative proportions 
 borne by rich and poor, and as proof that the poor pay far more than 
 their share. Such a comparison, made deliberately by an educated
 
 BENEFIT AND SACRIFICE 27 
 
 Here, then, are two strong arguments showing, I 
 think, that the principle of putting an equal burden 
 of sacrifice on all is not so difficult as it appears 
 first, that in any case the sacrifice is not a very great 
 one ; and, second, that instead of trying to assess the 
 poor at an equal sacrifice with the rich, we assess 
 the rich, but leave the poor to assess themselves. 
 
 The point at which we have arrived is this. The 
 rationale and justification of all payments to govern- 
 ment is Service Rendered by the government ; from 
 the economic point of view such payments are Prices. 
 In the case of general services, paid by Taxation 
 proper, the price is a sacrifice price, and must be 
 justified on the principle of equality of sacrifice. 
 In the case of all other government services, the 
 price must be not only justified, but measured, how- 
 ever roughly, by benefit received. 
 
 But having laid down these broad lines, I go on 
 to say that the spheres to which these principles 
 respectively apply are not quite clearly marked off 
 from one another. There seems a tendency in many 
 cases to widen the sphere where equal sacrifice rules, 
 and to narrow that of benefit, while, in one great 
 department at least, the principle of benefit seems to 
 be pushing out the principle of equal sacrifice. 
 
 i. The peculiar circumstances of cities, or per- 
 haps the strength of the working-man vote, seem to 
 throw more burden on the comfortable classes. In 
 
 person even if he is a candidate for parliament is distinctly dishonest. 
 In addition to the ^18,000,000 and the ^14,000,000 of death duties, 
 the rich, of course, are large consumers of tea, tobacco, and liquors, and 
 so pay a very large portion of the ^50,000,000.
 
 28 THE THEORY OF TAXATION 
 
 Glasgow, for instance, there is an agitation, which has 
 considerable support, for free ferries across the Clyde, 
 the reason alleged being that ferries are really 
 bridges. At present thousands of working men 
 cross the river several times a day, and pay a half- 
 penny per journey : they pay for ferries as they pay 
 for gas. But, if the ferries are made free, the work- 
 ing men who use the ferries will pay almost nothing, 
 and I and other working men who never cross the 
 ferry will pay, perhaps, a penny per pound on our 
 rental. Again, with a Socialist majority on the 
 Town Council, it is quite conceivable that, instead of 
 running at a halfpenny a stage, the cars might be 
 made free, and the expense charged on the ratepayer 
 according to his rental. If this seems too ridiculous 
 the idea has already been ventilated it is enough 
 to remember that the government might have built 
 schools all over the country and yet charged fees to 
 cover the expense. Instead of this, I pay i id. per 
 for the free education of other people's children. 
 
 2. Broadly speaking, imperial and local services 
 are two branches of the one system, and are paid on 
 the same general principles. We pay imperial taxes 
 for army and navy ; we pay municipal rates for 
 police. We pay 6d. for a telegram ; we pay a penny 
 for a car. It is really one taxation, divided, for con- 
 venience' sake, between two branches. But, in spite 
 of this, it is the case that local rates, modelled after 
 imperial taxes, admit considerations of benefit that 
 are not thought of in imperial taxes. At all events, 
 the question is at once asked about any increase of 
 a local rate, or the imposition of a new rate : Who 
 benefits by it, and how is the benefit allocated ?
 
 THE VISIBLE ABILITY 29 
 
 The reason for this is to be found in those prac- 
 tical considerations from which taxation never escapes. 
 If our country were a City-State like those of old 
 Greece or mediaeval Italy, or like the little republic 
 of San Marino, with its 11,000 inhabitants grouped 
 on an area of 36 square kilometres, all taxation 
 would have only one canon, that of ability to pay or 
 equal sacrifice. 
 
 But when, for practical purposes of collection 
 and administration, the general taxation is divided 
 into imperial and local, there emerge two distinct 
 tests of ability to pay. In the one case it is 
 income, in the other it is rental. If a man's 
 income is ^1000, and his house rent 100, it 
 will be all the same whether he is taxed 8d. per 
 on income, or 6s. 8d. on rental. Now, a man's 
 rental may be in proportion to his income, but it 
 may not. 
 
 In times when local rates arose, there was perhaps 
 a fair proportion between the two. Agriculture was 
 the great industry, and the rental which a farmer 
 paid for his house and land was a fair criterion of his 
 income; indeed, we admit this even now, in charging 
 him to income tax on one-third of his rent. But 
 as industry grew more complex and local taxation 
 more important, it was necessary to find a " visible 
 ability" on which to assess rates, and this visible 
 ability was found in rental. 
 
 Mr. Cannan, in his admirable account of the 
 evolution of the poor rate, 1 has shown most clearly 
 that the intention of legislation was always to tax 
 according to ability to pay, and that the test of 
 
 1 The History of Local Rates in England.
 
 30 THE THEORY OF TAXATION 
 
 income passed into the test of rental only on account 
 of practical exigencies. His argument is as follows. 
 The relief of the poor is a national service, which is 
 as impossible of individual measurement as that of 
 defence and administration. The poor rate accord- 
 ingly should, in theory, be assessed on the same 
 principle, namely, general ability, and the fact is that 
 it was so assessed in its beginnings. At first poor 
 relief took the form of alms. In Edward VI.'s time 
 this alms-giving was organised. It was enacted in 
 1551-2 that a register or book should be made up 
 containing the names of the inhabitants and house- 
 holders, as also the names of all such impotent, aged, 
 and needy persons as are not able to live of them- 
 selves nor with their own labour, and collectors 
 appointed, which collectors, once a year, " when the 
 people is at the church, shall gently ask and demand 
 of every man and woman what they, of their charity, 
 will be contented to give weekly towards the relief of 
 the poor, and the same to be written in the said 
 register or book." If any one obstinately or fro- 
 wardly refused to assist, he might be sent to the 
 bishop, who would, " according to his discretion, take 
 order for the reformation thereof." Naturally, this 
 voluntary system did not yield the desired results, 
 and in 1572 it was thrown over. The justices or 
 magistrates were instructed " by their own good dis- 
 cretions to tax and assess all and every the inhabi- 
 tants dwelling in every city, borough, town, village, 
 or hamlet, to such weekly charge as they and every 
 of them shall weekly contribute toward the relief of 
 the poor people." The obstinate and froward person 
 was to be brought before two justices of the peace,
 
 THE CANON OF ALMSGIVING 31 
 
 and if he refused to pay his contribution, he was 
 to be committed to the next jail, " there to remain 
 until he be contented with their said order and do 
 perform the same." 
 
 Although the words are not used, there is no 
 doubt that the canon of assessment here was the old 
 one of ability or substance, which ruled local rates 
 both statutory and non-statutory up till that time. 
 As Mr. Cannan pointedly says, " the canon of alms- 
 giving is ability." We are supposed even to-day to 
 give as God hath prospered us, and the widow's mite 
 is still counted equal to the gifts which rich men 
 throw into the treasury. When the contribution was 
 voluntary and unconstrained, as prescribed by the 
 early Act of 1535, it is obvious that public opinion 
 would regard it as fair that every man should con- 
 tribute according to his real ability. The parson, in 
 the exhortation ordered in the intermediate Act of 
 I 547, would naturally tell his flock to give according 
 to their means. The church wardens in their gentle 
 demands, and the bishop in taking order for the 
 reformation of obstinacy under the Act of 1551-2, 
 must, perforce, have been guided by the ability of 
 the contributor. In assessing, taxing, and limiting 
 upon the obstinate person who had refused to obey 
 the bishop under the later Act of I 562-3, the justices 
 could adopt no other criterion, and it is entirely 
 contrary to all we know of the ordinary course of 
 English legislation to suppose that, when in 1572 ' 
 the justices were directed " by their own good discre- 
 tions to tax and assess all and every the inhabitants," 
 they were expected to follow a different principle of 
 assessment from that which they were expected to
 
 32 THE THEORY OF TAXATION 
 
 follow in 1562-3, when they assessed, taxed, and 
 limited upon the obstinate person, " according to 
 their good discretions." In modern phrase, the poor 
 rate was intended to be a local income tax upon the 
 inhabitants of the parishes. 
 
 What, then, led to the change that the poor rate 
 was levied on local property? It was the impossi- 
 bility of levying a local income tax. The history of 
 the poor law shows a long struggle to adhere to the 
 old canon. In some places stock-in-trade was taken 
 as the test ; in others, an attempt was made to get 
 at salaries ; but, as this closely affected the lawyers, 
 there was a very good reason for it being unsuccessful. 
 In Scotland, Means and Substance was the test down 
 till well into this century, and ceased to be so in 
 Greenock only in 1880; but finally the visible test 
 of property conquered. If a man is to be assessed 
 for poor rates on his total ability, and if he lives in 
 Glasgow, and has his shop in Paisley, there seems no 
 way so appropriate to assess the total as to take his 
 house in one place and his shop in the other as 
 indicating his ability. " But," says Mr. Cannan, " it 
 took almost two and a-half centuries to make this 
 transition complete." 
 
 Thus we have the explanation why this great tax, 
 imperial in its nature, attached itself, when locally 
 administered, to rental instead of to income. 
 
 What followed ? This : that, as all local taxation 
 arose out of the poor rate and followed its lines, local 
 taxation as a whole became attached to rental. But 
 whenever this is the case, a phenomenon appears 
 which did not emerge in the case of the poor rate. 
 A man is not rendered better able to pay by an
 
 RENTAL VERSUS INCOME 33 
 
 increase in his poor rate or his education rate. But 
 almost all the other rates do directly or indirectly 
 increase the value of his property. Here benefit 
 becomes measurable, and the eye of the tax-gatherer 
 finds growing ability to pay in the increased value 
 of property. And so it comes that, " in practice, 
 the nearest possible approximation to local rating 
 according to ability, and the nearest possible ap- 
 proximation to rating according to benefit, are one 
 and the same thing, namely, the rating of persons 
 in respect of fixed property in the district." 1 
 But where the division of rates between owner 
 and occupier is such that the benefit falls to the 
 owner and the payment to the occupier, there arises 
 an anomaly. 
 
 To put it another way. Local rates, like imperial 
 taxes, should be paid, not according to measurable 
 benefit received by the ratepayer, but according to 
 his ability to pay. But when, from practical exi- 
 gencies, rental is made the test of ability, considera- 
 tions of benefit do have a place in one great group, 
 namely, the so-called " beneficial " or " remunerative " 
 rates. This is not the case as regards the " onerous " 
 rates. 2 The only difference between them and im- 
 perial taxes is that they are assessed on rental, not 
 
 1 Ibid., p. 132. 
 
 2 " By ' onerous rates' I mean taxation to defray expenditure of which 
 the benefit (if any) which accrues to the individual taxpayer is, gener- 
 ally speaking, so vague and indirect that the principle of proportioning 
 payment to benefit is inapplicable as we have seen it to be as regards 
 the greater part of national taxation. Poor relief, education, and police 
 are the most important items that come under this head in our local 
 system." Sir Robert GifTen, Memoranda presented to the Royal Com- 
 mission on Local Taxation, p. no. 
 
 C
 
 34 THE THEORY OF TAXATION 
 
 on income. 1 The Poor rate, for instance, might be 
 described as even more of an imperial tax in natura 
 than the payment for defence or justice, inasmuch as 
 the service in question is not rendered to those who 
 pay for it. It is in fact almost pure burden the 
 price we pay for our failures. The School rate, 
 indeed, cannot be called pure burden. It is a service 
 rendered to the numerical majority, although, as 
 benefiting the youth of the working classes, the 
 nation, in the next generation, will have better workers. 
 But it is paid principally by the section of society 
 which gets least direct advantage from it. The 
 Police rate again is partly national, partly local, in 
 its nature. We gain directly by the policing of 
 Glasgow, but the nation gains in that Glasgow is not 
 a centre of lawlessness. The national character of the 
 service, indeed, is recognised by the upkeep of the 
 prisons being charged on to the imperial government. 
 But it is different with the " beneficial " rates. 
 The services for which they pay approximate to the 
 first group of government services I spoke of, where 
 the service is rendered direct and is measurable. 
 Therefore, in this case we have the emergence of the 
 phenomenon that, while high onerous rates tend 
 to depress the value of property, much of local 
 expenditure actually raises the value of property. 
 
 1 Rental, of course, is in many cases an inadequate test of ability. A 
 shopkeeper in a fashionable locality may pay a rent as much out of 
 proportion to his income in one way as a merchant, doing a large 
 business from a two-roomed office on a top flat, in another. The latter 
 case might be met, in point of theory, by a municipal income tax or a 
 municipal death duty, although the one seems impossible and the 
 other has scarcely been discussed. But it is more difficult to find a 
 remedy for the former.
 
 BENEFIT VERSUS ABILITY 
 
 35 
 
 Thus it comes that here we find ourselves admitting 
 considerations of benefit judging of the propriety 
 or impropriety of new rates, or increased rates, by 
 the benefit conferred on the property, instead of by 
 ability to pay of the ratepayer. 
 
 Such, then, is the recognised theory of our taxa- 
 tion. It is easy to see that practical exigencies 
 make it difficult, if not impossible, to follow exactly 
 the lines of the theory. But, granting this, one 
 need have no hesitation in saying that our taxation 
 is not open to the charge of having neither theory 
 nor principle.
 
 "It is advisable that a new source of revenue should be obtained 
 by means of some direct charge upon owners of Site Values." The 
 London County Council: Royal Commission on Local Taxation. 
 Evidence, Vol. II., /. 323. 
 
 " Can you tell me what vieivs the Council of the City of Glasgow 
 hold!" "They held, four years ago, that they -would not support 
 such a doctrine at all, and I told them I would change their convictions 
 or their seats, and I have done it." "And they have changed their 
 convictions for the sake of keeping their seats?" "I am not bound 
 to know the reasons, hit, in point of fact, they run out or vote for 
 taxation of land values." Councillor John Ferguson : Royal Com- 
 mission on Local Taxation. Evidence, Vol. III., p. 87.
 
 THE TAXATION OF LAND VALUES 
 CHAPTER I. 
 
 INTRODUCTORY. 
 
 To most people taxation is a great mystery. To a 
 few it is the most fascinating of subjects. There 
 seems no middle course. Either a man has thought 
 so much about it that his utterances are unin- 
 telligible to the people, or he cannot discuss it 
 intelligently because he does not know its alphabet. 
 
 In this lies a great danger. We pay to the State, 
 in its two branches of imperial and local govern- 
 ment, considerably more than one-tenth of our 
 entire annual income. It is a huge proportion ; 
 in spite of the enormous increase of wealth, it is 
 an increasing proportion. The danger I refer to is 
 that the people, feeling the increased burden, and 
 conscious of their ignorance about the principles of 
 taxation, may leave the matter to experts, and mis- 
 take for experts those who tell them that there is 
 " a simpler, easier, and quieter way " of raising the 
 necessary millions than by taxation. 
 
 388587
 
 38 THE TAXATION OF LAND VALUES 
 
 Of late years we have heard much of a proposal 
 called the taxation of land values. It is a matter 
 on which both municipal and parliamentary elections 
 have been fought and won. I hope it is not imper- 
 tinent to say that these elections have not settled 
 the question. What " land values " are ; why taxes 
 should be levied on them ; how they are to be 
 levied on them well, I do not think that all the 
 election literature has left us much wiser. 
 
 Is the taxation of land values a mere election cry 
 of the baser sort an appeal to the cupidity of poor 
 men as against the arrogance and the unearned gain 
 of a powerful class ? Or is it the case that there has 
 been accumulating a fund of wealth which has not been 
 contributing its due proportion to the funds required 
 to carry on the great necessary organisation we call 
 the government? Or is it that the economic re- 
 sources of taxation have been exhausted, so that we 
 must now find some particularly helpless class to 
 tax ? Or is it that certain landed classes have been 
 benefiting in the past from taxation laid on others, 
 and that in the future they are likely to benefit 
 more ? Or, finally, is it a proposal to change the 
 whole time-honoured system of taxation, and place 
 the burden of supporting the government on one set 
 of shoulders, to the relief of all the others ? 
 
 It is proposed to seek for the answer by examin- 
 ing two definite proposals for such taxation the 
 one emanating from the London County Council, 
 the other from the no less famous Corporation of 
 Glasgow.
 
 CHAPTER II. 
 
 THE LONDON COUNTY COUNCIL RESOLUTIONS. 
 
 As is well known, the London County Council have 
 had this matter before them for some years. In 
 1898 they drew up a series of resolutions for pre- 
 sentation to the Royal Commission on Local 
 Taxation, now sitting, and instructed the extremely 
 able Chairman of the Local Government and Taxa- 
 tion Committee, Mr. B. F. C. Costelloe, to appear and 
 support them. The resolutions and the examination 
 appear in vol. ii. of the Evidence. 1 
 
 The London County Council are agreed that, in 
 the interests of the city, they are called on, not only 
 to keep up and improve their present services, but 
 to increase them. Greater efficiency and cost of 
 administration ; specific new services discharged by 
 public authority ; great structural improvements such 
 as streets, embankments, bridges, and drains : these 
 involve " continual increases of charge." 
 
 How are these services to be paid ? Taxation 
 being a payment for service rendered, if the people 
 
 1 It must be a matter of sincere regret to all interested in these 
 proposals that, since this was put in type, we have to record Mr. 
 Costelloe's death.
 
 40 THE TAXATION OF LAND VALUES 
 
 demand new services they must be prepared to pay 
 for them. But, as things are, the rates are levied on 
 the occupiers, and these rates amount to 6s. 8d. per 
 . They are already considered too high, and any 
 attempt to increase them meets with most deter- 
 mined opposition from the occupiers. It is quite 
 true that those who occupy houses are people who 
 get value for their money when they pay rates ; that 
 they are benefited by the services for which the 
 taxation pays by police protection, by sanitation, 
 by cleaning and lighting, etc. But they are not the 
 only people benefited. The ground-owners benefit 
 because, in London, they have let their land, not in 
 perpetuity as in Scotland, but on lease. On the 
 expiry of the lease they enter into possession of 
 ground which, partly owing to the improvements 
 effected by the municipality, has steadily risen in 
 value during the currency of the lease. Take, for 
 instance, the Thames Embankment. Here was an 
 improvement which added greatly to the value of 
 every building estate in the neighbourhood. But 
 the money to pay for it came out of the pockets of 
 the occupiers. Now, among the new demands made 
 on the municipality, the most urgent and the most 
 costly are " arterial improvements " of the same 
 nature : for example, the widening of the Strand, 
 new bridges, etc. Without, then, committing them- 
 selves to the statement that occupiers' rates will not 
 be increased, the London County Council think it 
 reasonable to throw some part at least of the new 
 burden on the other class which always benefits to 
 some extent from local taxation, and will, in this case, 
 benefit very substantially those who own the site,
 
 THE L.C.C. RESOLUTIONS 41 
 
 the ground value. The first proposal, then, is to find 
 the new source of taxation in this class, and to 
 impose a new rate, to be called Owners' Tax, of 6d. 
 per , on what is to be hereafter known as the Site 
 Value. 
 
 This site value is not to be based on any actual 
 rental received, nor is it to be found by division of 
 the rateable value. It is to be determined by a 
 separate valuation of the ground as apart from the 
 buildings or the use to which it may actually be put ; 
 it is defined as " the annual rent which at the time of 
 valuation may reasonably be expected for the land 
 as a cleared site if let for buildings by an owner in 
 fee " the value of the site, in fact, if the buildings 
 were burned down and the site was put up at 
 auction. 
 
 It is the case, however, that the owning of the site 
 in London is usually divided among several classes, 
 and the proposed tax is to be distributed among 
 the several owners in proportion to their beneficial 
 advantage. Take such a case as this. 1 A land- 
 owner leases his ground for ninety-nine years at 
 900 a year. He receives this ground-rent, not 
 from the owner of the buildings erected thereon, but 
 from a middleman who has taken the ground from 
 the original landowner, spent a very large sum on 
 the buildings, and leased the whole for a similar 
 period to a buildings-owner, charging for the improved 
 ground-rent 3000. This middleman, then, is also a 
 ground-owner at one remove. The buildings-owner 
 draws 26,000 of rent from the occupiers. If, in 
 the future, the amenity of the locality increases, he 
 J The case is taken from the evidence of Mr. R. Vigers, vol. ii., p. 135.
 
 42 THE TAXATION OF LAND VALUES 
 
 gets an extra rent which is due not to the increase 
 in value of the buildings but of the situation that 
 is, he also gets a benefit from the rise in value of the 
 site. Last come the occupiers. They pay the rent, 
 and all the rates and taxes. Mark that even they 
 may have a beneficial interest in the site if they have 
 a lease : they may have the advantage of a com- 
 paratively low rent compared with others. But it is 
 not proposed to touch these last beneficiaries, for the 
 reason, I suppose, that they seldom have a long lease, 
 and that any addition in value goes to the advantage 
 of the buildings-owner at the next letting time, when 
 the rent is raised. But, as rents rise, the burden 
 on the occupiers of course gets heavier and heavier, 
 and it is these occupiers who are considered unable 
 to bear any more. 
 
 To put it another way. The occupiers pay 
 26,000 of rental to the buildings-owner ; of this 
 the buildings-owner pays ^3000 to the middleman 
 as " improved ground-rent " ; and the middleman 
 pays ^900 to the ground-owner. It is these various 
 site-owners who are to supply the new fund. 
 
 The tax will be laid nominally on the occupiers, 
 but they, if at a rack-rent, are entitled, without any 
 power of contracting out, to deduct it wholly from 
 their rents. In turn the buildings-owner deducts a 
 proportion of the tax corresponding to what he pays 
 to the middleman ; and the middleman in turn 
 deducts a proportion of the tax according to what he 
 pays to the ground-owner. Thus, in our example, 
 suppose the site value is assessed at 4000. The 
 municipality gets at 6d. in the ;ioo from the 
 occupiers. But they deduct it from the ^26,000 they
 
 THE L.C.C. RESOLUTIONS 43 
 
 pay to the buildings-owner as house-rent. The 
 buildings-owner in turn deducts 7 $ from the .3000 
 he has contracted to pay the middleman, thus paying 
 ,25 of the tax. The middleman in turn deducts 
 ,22 i os. from the 900 he has contracted to pay 
 to the ground-owner, thus paying 52 zos. of the 
 tax. Finally, the ground-owner pays ^22 los. of 
 the tax. 
 
 Let us be quite clear, then, that this is a new price 
 for new bread and butter ; a new tax to be paid out 
 of new service. In other words, the new improve- 
 ments will put a new rental into the pockets of the 
 site-owners ; and, to tax them in this way, is to tax 
 either on the principle of ability to pay or on that of 
 benefit received, for in this case the two principles 
 come together the new benefit received creates a 
 new ability to pay. The object, be it remembered , 
 is " not to lessen the burden of the occupier, but to 
 prevent that burden from increasing." 
 
 The answer which will be given to all this is that 
 the site-owners are already paying their full share, 
 and that to tax them by themselves will be double 
 taxation. It is an old answer and a strong answer ; 
 but, as it is shown in almost every newspaper one 
 opens that it is not understood by the people, and is 
 slurred over by those to whom it is inconvenient, I 
 make no apology for making it as clear as I can. 
 
 Several years ago I bought a house in Glasgow, 
 and became liable for the feu-duty payable on the 
 site. A few years after, I was called on to pay two 
 years' feu-duty in one year a " duplication." I was 
 annoyed, and asked my lawyer what this meant.
 
 44 
 
 He said, " I told you this duplication every nineteenth 
 year was in the feu-charter : it is your own fault if 
 you did not calculate on it." Again, just this month, 
 I got a letter from a legal firm demanding 1 6s. 3d. 
 for teinds uncollected since 1885. Again I wrote 
 to my lawyer, using the terms, I am sorry to 
 say, " Is this swindle legal ? " Again comes the 
 answer, " Perfectly legal : it is in the feu-charter." 
 Then I went to him and asked how many more 
 liabilities were contained in that feu-charter, and 
 was told, " Only one ; if you die, your heirs will 
 have to pay another duplication. - But," he added, 
 " a contract is a contract, and moreover it is 
 a fair contract, inasmuch as you went into it with 
 your eyes open and for your own benefit. These 
 duplications are a part of the price : if it had not 
 been for them, the annual feu would have been 
 larger." It must be understood, however, that this 
 is merely an illustration to introduce the subject, 
 and must not be pressed beyond that. 
 
 The argument against the taxation of site-owners 
 has two expressions, an external and an underlying 
 one. Externally, it assumes this form : that the 
 proposed tax is an interference with contracts. Is it 
 not in the bond that the ground- owner pays no rates 
 and taxes ? A contract is a contract : it is one of 
 the best results of our political constitution that 
 contracts are sacred ; to interfere even for Parlia- 
 ment to interfere is a precedent which might lead 
 us far. 
 
 The underlying argument is that the contract was 
 a fair one ; that the rates and taxes were considered 
 in the price. The ground-owner does pay the rates,
 
 THE L.C.C. RESOLUTIONS 45 
 
 inasmuch as he has had to deduct from the annual 
 price received for the ground the anticipated value of 
 the rates. This was Mr. Goschen's argument in 
 1870, and he went the length of assuming that, 
 in ordinary circumstances, the ground-owner paid all 
 the rates. 
 
 To put it in the concrete. A ground-owner and 
 a builder are calculating the price to be paid for a 
 plot of ground. The ground-owner wants to get as 
 much as he can. The builder is calculating what he 
 is able to give. Suppose there are ten houses in the 
 terrace he proposes to build. Tenants will be pre- 
 pared, he calculates, to give ,100 in rent for each 
 house, knowing that they will have to pay another 
 ,33 in rates. The ;ioo of rent for each house will 
 enable the builder to get a profit on his capital and 
 labour and leave a balance of 10. This .10 per 
 house is the utmost he can pay in ground-rent. If 
 more is demanded he will not build. And the 
 tenants, he calculates, cannot pay more than -133 
 in rent and rates, or they will not take the houses. 
 If it were not for the rates the tenant could pay 
 133 in rent, which would leave 33 plus 10 
 = .43, as ground-rent. As, then, the ground-owner 
 gets only ,10 instead of 43, it is he who pays the 
 rates. He gets, as it were, ^43 and pays 33 in 
 rates. 1 
 
 1 It seems to me that there is a flaw in this argument as it stands, 
 which has not, I think, been noticed. It is the statement that the 
 ground-owner, if there were no rates, would get a price higher by the 
 full amount of the rates. But it is surely forgotten that the rates are 
 payment for valuable services rendered by the municipality : that a 
 house with roads, light, drainage, police, etc., is not the same as a 
 house without these things.
 
 46 THE TAXATION OF LAND VALUES 
 
 To take an analogy. Two houses in a terrace are 
 offered for sale at ^3000. I am willing to pay 
 3000 for such a house. But I am told that there 
 is a feu-duty on the one of 20, while the other is 
 freehold. I at once capitalise the feu-duty, say at 
 thirty years' purchase, and reduce my price for the 
 one to 2400. Who is it pays the feu-duty? Un- 
 doubtedly the seller of the house. 
 
 The argument, then, is that this was not only a 
 contract, but a fair contract : that the owner, while 
 contracting that the occupier should send an annual 
 cheque for the rates, did himself pay them in antici- 
 pation in the form of a reduced annual price. And 
 this is backed by no less an authority than Mr. 
 Goschen. 1 
 
 Suppose now we assume that, in the original 
 contract, it was understood, and intended, and 
 calculated on that the ground-owner should pay 
 all the rates. I may say that it is admitted in the 
 frankest way that it would be a fair contract that 
 the site-owner would really pay all the rates if the 
 rates were calculable. But, it is said, the buyer 
 never calculates on paying more than the average 
 rates of the time. If ground is being leased now for 
 ninety-nine years, the person who takes the lease 
 bases his calculation of ground-rent on the fact of 
 his having to pay six and eightpence per pound of 
 
 1 See also Sir Robert Giffen, Memoranda presented to the Royal 
 Commission on Local Taxation, p. 97 : " The idea of the separate 
 rating of ground values arises from a misunderstanding of the real 
 incidence of rates. As that burden falls ab initio upon the ground 
 landlord, diminishing the sum of capital or income he is able to 
 obtain for his property, there is really no separate ground value to be 
 assessed. "
 
 THE L.C.C. RESOLUTIONS 4? 
 
 rates : he cannot be expected to base his calculations 
 on rates increasing above that figure. At least if 
 one did, others would not. 
 
 The obvious answer to this is : Well, so much the 
 worse for the lessee ; he should have foreseen the 
 inevitable trend of local rates. 
 
 Mr. Costelloe's reply again is : It was impossible 
 that he could have foreseen the recent increase. It 
 is always and necessarily a " blind bargain " ; to use 
 his words, " The pull is always against the tenant" 
 This blind bargain argument will repay considera- 
 tion. 
 
 " A person who took a lease of any house in 
 London in 1869 contracted to pay rates and taxes. 
 At that time nobody understood or supposed in any 
 way that the State was going to take up the enor- 
 mous burden of the charge of national education. 
 When Parliament did so in 1870 it was then 
 commonly supposed that the charge would run to 
 a maximum of about 3d. in the >. Since then 
 we know that it has run to something much nearer 
 a shilling. Nobody every discussed the effect on 
 existing contracts. . . . The result is that you are 
 putting upon the tenant a burden which he never 
 contemplated in any way, and could not have fore- 
 seen." l 
 
 Surely, however, this is to put the argument on a 
 wrong foundation. The London County Council is 
 proposing to put a new tax on the site-owner^ on the 
 ground that he chiefly will benefit by the new im- 
 provements for which the tax pays. It is taxation 
 according to benefit. But the argument here 
 
 1 Question 20,084, v l- of Evidence.
 
 48 THE TAXATION OF LAND VALUES 
 
 suddenly shifts its ground and asks for the relief 
 of the occupier on the plea of unexpected burden. 
 Now, it is one thing to tax a man because he 
 benefits : it is another to tax him because another 
 man bears too much burden. It reminds one 
 absurdly of the justification urged for West-end 
 shopkeepers charging high prices : that many of 
 their customers do not pay their accounts ! 
 
 The argument was sound so long as the subject 
 was a new tax to pay for new arterial improvements 
 benefiting' the site-owner. But whejn the past and the 
 prospective increase of the education rate are used to 
 buttress up the argument, it must be pronounced 
 fallacious unless it can be shown that the benefit of 
 education is an " arterial improvement." The most 
 that can be said for it is that the benefit of this tax 
 has not, perhaps, gone exclusively to those who paid 
 it, the occupiers. Education is, in short, one of those 
 expenses which should not, in point of theory, be 
 allocated on ground of individual benefit, but on 
 grounds of equal burden, equal sacrifice. It is rather 
 difficult to see how this can be allocated equitably 
 on a local basis. But at any rate it gives no support 
 for a new tax which is specifically local, and is pre- 
 eminently fitted for allocation by benefit. 1 
 
 1 The education rate and the poor rate are generally disturbing 
 elements to theory. They are, in their nature, imperial taxes general 
 burdens which benefit the nation but cannot be allocated to individuals 
 in the measure of the benefit. But, for well-understood reasons, they 
 are locally administered and locally raised, and, being so, they are 
 assessed on the local basis of rental. And where the rental is not an 
 adequate expression of general ability there is an anomaly. But, as a 
 local income-tax has never been found possible, it is easier to state the 
 anomaly than to suggest a remedy. Cf. p. 33.
 
 THE L.C.C. RESOLUTIONS 49 
 
 But putting aside this argument drawn from the 
 education rate which is, after all, only a slip in 
 reasoning the contention is that, as improvements 
 are always being made and rates always increase, 
 the occupier is always paying something on which 
 he did not calculate ; the ground-owner is always 
 enjoying something on which he did not calculate ; 
 and the remedy is to tax this receiver of extra 
 benefit. 
 
 Beyond this there is another argument. What- 
 ever be the economic truth about the real incidence 
 of the rates, says Mr. Costelloe in substance, the 
 occupier always thinks that he pays them ; this 
 being so, he fights to the utmost against any 
 increase in them, and so improvements which should 
 be made cannot be made. Sanitation, police, educa- 
 tion, etc., must wait because the occupier pays the 
 rates in the first instance and thinks he pays them 
 in the end. Therefore, it is contended, it is ex- 
 pedient that the new rates at least should be put 
 obviously on another class who undoubtedly benefit. 
 If it be the case, he adds triumphantly, that the 
 occupiers do not pay the rates, why object to this 
 new rate being put honestly on the class on whom it 
 must fall, and so disarm the hostility of the rate- 
 payers ? But if it be true that the occupiers really 
 pay the rates and Mr. Costelloe believes that they 
 do then it is obvious that here is a new rate which 
 they should not pay. 
 
 It is right to say at this point that, in order to do 
 every justice to the London County Council pro- 
 posals, I have argued the case on the assumption 
 which is prominently put forward that the Owners'
 
 50 THE TAXATION OF LAND VALUES 
 
 Tax is a new tax for prospective improvements. Mr. 
 Costelloe, however, does not conceal that it might be 
 more than this ; namely, that some part of the tax 
 might be used to relieve occupiers of their present 
 burden : it might be a rearrangement, not an addi- 
 tion. Mr. Harper's calculation is that, roughly, 
 15,000,000 is the true site value of London. 
 Under the proposed scheme, the occupiers will con- 
 tinue to pay rates as now on the rateable value 
 (structural plus ground value determined on the old 
 system), which is 36,000,000. The new tax, at 
 6d. on 15,000,000, would .yield 375,000. 
 Considering that the rates paid in London now are 
 over 10,000,000, it may be granted that the 
 375. 000 might very well be spent in new arterial 
 improvements. But, if the tax rises to 2s., 1 and a 
 new revenue of 1,500,000 came into the local 
 treasury, there certainly would be a temptation to 
 apply some of it in reduction of occupiers' rates. 
 And while Mr. Costelloe says that " any such tax as 
 we propose would never do more than countervail 
 the increase of site values which will happen in 
 London within the same tract of time," it is ques- 
 tionable whether he is speaking of the 6d. or of 
 the 2s. 2 
 
 1 " Would you say how far you would go?" "I have said quite 
 frankly that we discussed, and I myself strongly favoured, in the 
 committee and in the council, the suggestion of an immediate limit of 
 as. I do not myself suppose that either we would desire to pass or that 
 any Parliament would allow us to pass some limit of that kind for very 
 many years to come." Mr. Costelloe, Question 20,202, vol. ii. of 
 Evidence. 
 
 2 When writing this, I asked Mr. Costelloe which figure he meant, 
 but illness prevented him replying.
 
 THE L.C.C. RESOLUTIONS 51 
 
 Such, then, is the contention of the London 
 County Council. I think it will be agreed that 
 reasons have been advanced which deserve serious 
 and respectful consideration. What I should empha- 
 sise is that the argument takes its stand on the 
 ground of benefit received by and measurable to the 
 payer of the new tax. It does not propose or 
 justify confiscation. It is not in the least a demand 
 for throwing all taxation on land values. While 
 the Council does not promise to limit the new tax 
 to 6d. or even to 2s. in the future, it is, says Mr. 
 Costelloe, " preposterous really to suggest, except for 
 the purposes of a joke, that any of us is proposing a 
 2os. in the , tax." 1 It is not even contended that 
 land values absorb all the benefit of local taxation. 
 All that is said is : Here is a new service which we 
 are going to render to the citizens ; this new service 
 will chiefly inure to the ground-owners ; and this 
 service accordingly should be paid for chiefly by 
 them. 
 
 The objections also are evident enough. 
 
 First. It is a taxation of capital. Suppose we 
 grant that the site-owners will benefit from the future 
 tax : it is their capital which will show this benefit, 
 not their income. Till the lease expires, or till the 
 interest is sold, the site-owner, whether the original, 
 the improved, or the buildings-owner, receives only 
 his contract revenue. The benefit is a deferred 
 one: why should not the taxation be deferred too? 
 
 Imperial taxation certainly takes no notice of 
 capital increment unrepresented in actual income. 
 A man may hold 1000 of stock in a gold mine 
 
 1 Question 20,200, vol. ii. of Evidence.
 
 52 THE TAXATION OF LAND VALUES 
 
 which has never paid a dividend, but has risen in 
 value from one pound per share to ten. His 1000 
 stock is then worth 10,000, but he pays nothing 
 in income-tax till he sells his stock or the mine 
 begins to pay dividends. 
 
 Mr. Costelloe here is as bold as when he said 
 that it was a " perfectly fallacious argument that 
 the tenant had contracted to pay all the rates and 
 taxes whatever they might be." 1 " I see no reason 
 myself," he declares, " why there should be a rigid 
 exclusion of capital values from taxation." 2 It 
 is, he thinks, a " financial superstition." In other 
 words : when it is argued that, the benefit being 
 deferred, why should not the taxation be deferred 
 too ? the answer is that taxes are not retrospective. 
 At the end of the lease the owner suddenly enters 
 into possession of a largely increased capital sum. 
 But the government does not then enter into pos- 
 session of a corresponding proportion. Meanwhile 
 the local authority has had to raise money, and it 
 has been raising it from the occupiers, who pre- 
 sumably receive small share of the benefit. 
 
 It might be argued, similarly, as regards imperial 
 taxation, that the country has been losing in not 
 taxing capital increment. Our mine-owner is gradu- 
 ally growing rich potentially ; but the revenues of 
 the country have to be raised every year, and they 
 are raised from the others who are not getting rich 
 potentially, but are getting a steady income annually : 
 their taxation is heavier because he escapes. 
 
 It is clear, then, why Mr. Costelloe argues for a 
 municipal death-duty. He says in effect : The 
 
 1 Question 20,084, vol. ii, of Evidence. 2 Question 19,988, ibid.
 
 THE L.C.C. RESOLUTIONS 53 
 
 imperial government does tax capital at the time 
 when it is most convenient to get payment. If 
 our mine-owner died, his heirs would pay duties 
 on .10,000 not on ;iooo. For the same reason, 
 the site-owner at death should pay a municipal 
 death-duty on capital. But as he does not, and as 
 there is little chance of the government agreeing to a 
 municipal death-duty, this Owners' Tax is another 
 way of arriving at the same result. 
 
 Second. It will be noticed that the site value on 
 which the owner is to be assessed is not the actual 
 realised value. It is the value which would be 
 realised if the site were put to its adequate use. It 
 is the "cleared value" the sum which might 
 " reasonably " be counted on if the buildings were 
 burnt down, and the bare site sold at Tokenhouse 
 Yard. In many cases, no doubt, this value is being 
 realised and rated on, and the " rateable value " 
 contains an adequate expression of the real site 
 value ; but in perhaps 30 per cent, of the cases it 
 does not. 1 
 
 It seems to me that there are enormous difficulties 
 in the way of such a valuation, and I shall deal with 
 them at length in another chapter; but it is only fair 
 to say that official and expert valuators told the 
 Royal Commission on Local Taxation that " there 
 is no material difficulty" at least no greater diffi- 
 culty than there is now in the case of the rateable 
 value and that the first cost would not be more 
 than ^4O,ooo. 2 One witness said, " I might get 
 out on the back wall of a garden of a house which 
 is one of twenty, and I could see at once that 
 
 1 Mr. C. J. Harper, vol. ii. of Evidence, p. 32. "*IbJd., p. 32.
 
 54 THE TAXATION OF LAND VALUES 
 
 the sites are practically the same in shape and 
 size ; and that one inspection will do for twenty 
 hereditaments as to site." 1 My contention is that it 
 is the one house which presents the difficulty. And 
 in innumerable cases it is clear that houses are not 
 in a row, but of all heights, depths, and frontages, 
 and so of different site advantages. 
 
 I have tried to show that these proposals are 
 worthy of respectful attention and scientific criticism, 
 inasmuch as, whether right or wrong, they are at any 
 rate based on an intelligible and recognised principle 
 benefit received. I turn now to proposals which 
 have not this justification. 
 
 1 Mr. C. J. Harper, vol. ii. of Evidence, p. 31.
 
 CHAPTER III. 
 
 THE GLASGOW BILL: ITS TERMS. 
 
 WHILE London modestly sends resolutions before 
 the Royal Commission to enquire if it could see 
 its way to back them up, Glasgow, determined to 
 keep in the forefront of municipalities, has tabled 
 a public bill. 
 
 It was brought in in the House of Commons on 
 /th March, 1899, by Sir Charles Cameron, and was 
 backed by Mr. Caldwell, Mr. John Wilson (Govan), 
 Mr. Provand, and Dr. Clark. It may be that the 
 bill is badly drafted, or, again, it may be that the 
 many persons whom I have consulted as to its mean- 
 ing are exceptionally stupid ; but I am afraid that, 
 to give the words of the bill as printed, would 
 convey little idea of its provisions and incidence 
 to the average citizen. I therefore propose to 
 begin by giving a statement of its terms in my own 
 way. 
 
 The bill provides for a new tax, called the Land 
 Value Assessment, to be laid on the " proprietor " (or 
 reputed proprietor) of any land or heritage in any 
 burgh in Scotland. Thus it is not a local bill, but
 
 56 THE TAXATION OF LAND VALUES 
 
 one expressly affecting " every Royal and Parlia- 
 mentary burgh within the meaning of the Burgh 
 Police (Scotland) Act, 1892." In the first instance, 
 the proprietor is asked to assess himself. He is 
 required, before 1 5th June of each year, to send in to 
 the burgh assessor a statement of the number of 
 square yards of which he is the proprietor, and to 
 declare what he considers their annual value. But 
 this " annual value " is to be arrived at by a special 
 calculation. It is not ( I ) what he may happen to be 
 getting from the ground in rent or hire ; nor yet (2) 
 what he has been offered for it; nor even (3) what he 
 considers he ought to get for it. He is asked to 
 " fix " the price thereof (what would generally be 
 called the capital value) " as between a willing seller 
 and a willing buyer." And, again, it is the price of 
 the ground simply and solely, " apart from the value 
 of any buildings, erections, fixed machinery, or other 
 heritable subjects on or connected with it." Four per 
 cent, on this capital value is considered to be the 
 " annual value," and this four per cent, is to be 
 entered in a special column on the Valuation Roll of 
 the burgh as the " land value." It is on this land 
 value that the tax is laid. 
 
 But although the proprietor is asked to assess 
 himself, the assessor is by no means bound to take 
 his valuation. He may enter on the Valuation Roll 
 either this sum or " such other amount as he shall 
 deem reasonable." In turn, the proprietor may 
 appeal against the assessor's valuation on the same 
 conditions under which similar appeals are made at 
 present. Once this is settled and the Roll made 
 up that is, at Whitsunday after the passing of
 
 THE GLASGOW BILL: ITS TERMS 57 
 
 the Act the Town Council is to levy an assess- 
 ment on this land value not exceeding 2s. in the 
 pound. 
 
 The destination of the proceeds of this tax is also 
 peculiar. It is not to be devoted to any one purpose, 
 but to be " allocated pro rata to the several accounts 
 in respect of which police and municipal assessments 
 are levied within the burgh " ; that is, so much of it 
 goes to police, so much to parks, so much to muni- 
 cipal buildings, etc. 
 
 Thus it is an additional tax, but it is not neces- 
 sarily additional taxation. It contributes an addi- 
 tional sum to the funds of the taxes already imposed, 
 but these taxes may be reduced by that amount. 
 It put 2s. per on one class, but it takes something 
 
 impossible to say how much off all classes who 
 pay police and municipal taxes, without even limiting 
 the relief to occupiers. But at this point there is a 
 remarkable omission from the bill. It has been held 
 out as an inducement indeed as a motive that 
 this was a measure in relief of taxation. For 
 instance, in a resolution passed by the Bradford City 
 Council on I2th January, 1899^ it was asserted that 
 
 is. per on the taxation of land values would pro- 
 duce a revenue of nearly 4d. in relief of the general 
 taxpayer. And Bailie Ferguson, asserting that the 
 land value of Glasgow is ^2,000,000 a year, which, 
 at 2s. per , would yield one-third of the ^600,000 
 we pay at present in municipal rates, makes no secret 
 of it that his ultimate object is to relieve capital and 
 labour absolutely of all taxation, both imperial and 
 local. But there is no pledge of such relief in the bill ; 
 only of allocating the return pro rata to the several
 
 58 THE TAXATION OF LAND VALUES 
 
 accounts. With a Corporation anxious to enter 
 on new fields of municipal activity and only deterred 
 by the expense, it may be suspected that the money 
 would be used, not in relief of present taxation, but 
 in lieu of imposing additional taxation. It will be 
 remembered that the professed object of the London 
 County Council, in suggesting an "Owners' Tax" on 
 site values, is to secure a "new source of revenue" for 
 the increasing expenditure. 
 
 The following exemptions are made : Police 
 stations, jails, and premises occupied in connection 
 therewith ; public infirmaries, hospitals, poorhouses, 
 public schools, places of religious worship, chapels, 
 drill halls, ragged schools, Sunday schools, scientific 
 and literary societies, burial grounds, or parks or open 
 spaces held and enjoyed by the public under any 
 Act of Parliament or under or by the permission of 
 any municipal or Local Authority. 
 
 This is the substance of the first part of the bill, 
 embracing sections 1-6. It was originally the whole 
 of the bill as drafted by a sub-committee of the 
 Parliamentary Bills Committee, and printed by the 
 Corporation in July of 1898. It seems to me 
 although I judge only by internal evidence that 
 at this time the idea of the bill was to " get at " 
 owners of land within burghs who were holding back 
 ground for higher prices, letting it meantime for 
 agricultural or temporary purposes, and that the full 
 effect and extension of the measure was not quite 
 realised. For the term " proprietor," of course, is 
 applicable, not only to the owner of vacant, agri- 
 cultural, or unfeued land, but to the person, or 
 successor of the person, who has taken ground on
 
 THE GLASGOW BILL: ITS TERMS 59 
 
 feu from a landowner (who then becomes his 
 " superior ") and built upon it. 
 
 The result would have been that the landowners 
 who had already feued their ground would have 
 escaped altogether. In an able letter to the news- 
 papers of 2Oth August, 1898, Mr. Peter Burt called 
 attention to the anomaly created by this. The new 
 tax, he said, would force landowners to throw their 
 ground on the market at a low rate ; feuing on the 
 reduced terms, builders would be able to let their 
 buildings at a lower rent ; this would bring down all 
 rents, and be " disastrous, and in many cases mean 
 ruin," to those who had taken feus at the old terms, 
 and would have to pay the heavy feu-duty in per- 
 petuity " a section of the property-owners which, I 
 think," wrote Mr. Burt, " is most entitled to our con- 
 sideration." In other words, the burden would have 
 fallen on those who had been the victims of what the 
 bill aimed at abolishing namely, the power of the 
 landowners to hold up their land till they could feu 
 it at a high price. 
 
 Whether as direct effect of this letter or not, 
 on i ith October an addition was recommended by 
 the sub-committee, and approved, along with the 
 rest of the bill, by the Corporation on 2Oth October, 
 1898. This addition now appears as section 7 
 of the present bill. Here we have provision for 
 transferring part or whole of the tax from the 
 " proprietors " to the superiors of the ground. The 
 proprietor is entitled to deduct from his " ground 
 burdens," as they are to be called (whether feu-duty, 
 ground annual, ground rent, lease, or tack duty 
 under a lease of more than 31 years' duration), "such
 
 60 THE TAXATION OF LAND VALUES 
 
 proportion of the land value assessment paid by him 
 in respect of the land as shall correspond to the 
 amount of the ground burdens payable by him on 
 the land as compared with the amount of the land 
 value of the land." This is not an easy sentence, 
 but it only means that he deducts the amount 
 which the superior would have to pay if the tax 
 were levied directly on the feu-duty he receives. It 
 may be understood most easily from a concrete 
 example. 
 
 If I have been paying 20 of feu-duty, and the 
 new " land value " of my ground appears in the 
 Valuation Roll at 20, I pay 2s. per on 20 to 
 the Corporation, and charge the superior with the 
 whole of the tax that is, I pay the tax of 2 and 
 deduct the whole 2 from the feu-duty. But if the 
 " land value " is fixed at 40, I pay 2s. per on 
 the 40 to the Corporation, and charge the superior 
 with 2s. on his 20 that is, I pay a tax of 4 and 
 deduct 2 only from my feu-duty. Thus if the 
 " land value " goes on rising, the increasing burden 
 is borne by the proprietor alone ; the owner of the 
 feu-duty pays no more than the assessment on the 
 amount of his feu-duty. 
 
 Following this are two provisions relating to the 
 case where there is more than one ground burden on 
 the same piece of land, and to the case of unallocated 
 ground burdens. Last comes the forbidding of con- 
 tracting-out, whatever engagements may have been 
 entered into for relieving the superior from bearing 
 his share in the taxation. 
 
 It remains to be noticed that there is one class of 
 proprietors who bear the whole burden without relief.
 
 THE GLASGOW BILL: ITS TERMS 61 
 
 It is the proprietors who have not taken ground on feu 
 but bought it outright, for here there is no superior. 
 Yet up till this time this kind of proprietor has been 
 supposed to occupy much the same position as the 
 proprietor who has taken his ground on feu. He has 
 paid a capitalised price instead of a perpetual annuity, 
 but a price based on the same calculation as the 
 annuity. And there is one class of landowners who 
 escape altogether those who have already sold their 
 ground outright; the unfortunate buyer stands, and 
 is taxed in their stead. 
 
 To sum up, the bill purposes to tax four classes : 
 
 (1) Owners of vacant land who have hitherto 
 paid no taxation or only nominal taxation. 
 
 (2) Proprietors of buildings who have bought 
 their ground outright and paid presumably a high 
 price for it. 
 
 (3) Proprietors of ground and buildings who pay 
 feu-duty. 
 
 (4) Receivers of feu-duties. 
 
 But (i) and (2) bear the full burden ; (3) and (4) 
 in most cases divide it between them. 
 
 It will now be seen why I ventured on some 
 details of the drafting of the bill which may have 
 seemed unnecessary. The bill has grown in the 
 drafting. First it was a measure to reduce rents by 
 forcing land into the market. But the reducing of 
 rents in the way proposed produced the anomaly of 
 penalising those who were unfortunate enough to 
 have entered into feu contracts before the passing of 
 the bill. To remedy this and perhaps to meet the 
 views of those who believed in the taxation of feu- 
 duties the tax was shifted as far as possible on to
 
 62 THE TAXATION OF LAND VALUES 
 
 the superiors. But where land has risen in value 
 since the feu was fixed, part of the tax rests on the 
 proprietors. Thus we have in its final issue a bill 
 which not only fulfils its intention, but taxes as well 
 a class of proprietors who do not seem to have been 
 aimed at at all.
 
 CHAPTER IV. 
 
 THE GLASGOW BILL : ITS PRINCIPLE 
 OF VALUATION. 
 
 I AM not sure that a bill is always to be condemned 
 unreservedly because it is badly drafted, or even 
 because it is impracticable. Some bills are not 
 intended to be passed. They are perhaps ballons 
 d'essai, or they are in fulfilment of pledges to 
 electors, or, more creditably, they are tentative 
 schemes meant to attract the notice and criticism 
 of the nation. The latter, I presume, is the inten- 
 tion of the present bill. As a fact it challenges 
 this reading, inasmuch as it is not a local bill, but 
 a bill which is to apply to all burghs in Scotland, 
 and it must have been intended that all burghs, 
 sufficiently interested in this serious change in their 
 local taxation, would have something to say before 
 they accepted the Corporation of Glasgow as their 
 mouthpiece. 1 Even, then, if one thinks that the 
 
 1 An objection at the very threshold is the limitation of its provisions 
 to Burghs. " It is not apparent why exemption should be granted to 
 the landowners of populous places not yet formed into burghs, such as 
 Broxburn, with a population, in 1891, of 5898, or those of suburban 
 districts in the neighbourhood of many of our larger towns beyond the
 
 64 THE TAXATION OF LAND VALUES 
 
 present bill presents so many difficulties and attacks 
 so many powerful interests that it has not a chance 
 of passing into law, criticism becomes a public duty. 
 
 The first difficulty which appeals to me I suppose 
 because economic science is built round the theory 
 of value is the basis of the proposed valuation. 
 The proprietor is asked to separate between the 
 capital value of his ground and that of his buildings ; 
 and, having done so, to "fix" the value of the former 
 according to a canon which, I venture to say, is a 
 new one alike in the theory of value and in the 
 practice of valuation namely, "the price as between 
 a willing seller and a willing buyer." The ratepayer, 
 so far as I know, has never been asked to do any- 
 thing like this before. In the case of the income 
 tax, we are asked to assess ourselves, but that is 
 because we have the necessary information, and we 
 alone have it. But here the ordinary ratepayer 
 who is not usually an economist is asked, not to 
 give figures which he can easily and honestly give, 
 but to make a calculation which would do credit, 
 as regards difficulty, to an examination paper for 
 honours in economic science. 
 
 If this seems an exaggeration, be it remembered 
 that in economic science we have been accustomed 
 to cost of production price, supply price, demand 
 price, equilibrium price, market price, normal price, 
 
 burgh boundaries. Again, if the owners of agricultural land in land- 
 ward parishes are not to be charged with this new assessment, it appears 
 to be unfair that the owners of similar land should be taxed in burghs, 
 like Renfrew and others that could be named, which contain within 
 their boundaries large tracts of agricultural land that are not likely to be 
 feued for many years to come perhaps not even within the next 
 century." Mr. James Reith, Burgh Assessor of Paisley.
 
 THE GLASGOW BILL: ITS VALUATION 65 
 
 price as determined between marginal seller and 
 marginal buyer. But under which of these categories 
 are we to put the " price as between a willing seller 
 and a willing buyer"? If the commodity in question 
 were a manufactured article, similar in quality and 
 produced in large amounts, and was being sold 
 constantly and frequently, we should have some idea 
 of its cost of production, of its market price, and of 
 what is known as its short and long period normal 
 price. But, as regards the commodity called land, 
 which is not manufactured, which has no supply price, 
 which varies in desirableness of situation from portion 
 to portion, which is sold rarely and in most cases by 
 private bargain, and which is then sold with and in- 
 separable from another commodity, namely, buildings 
 erected thereon, all such information is absent. I 
 repeat that the valuation is one which economic 
 science knows nothing of; it is to me as vague as 
 the " fair price " of the Middle Ages. 
 
 The bill applies to " proprietors or reputed pro- 
 prietors of any land or heritage in any burgh in 
 Scotland," and thus covers a very wide field of 
 differing circumstances. As personal cases, however, 
 are always more interesting than abstract ones, and 
 as the difficulty of the task may excuse a good deal 
 of simplification, let me instance first my own case. 
 I own and occupy a villa standing on about one-third 
 of an acre of ground, and I pay a feu-duty of 1 7 to 
 the Church of Scotland. The house was built some 
 fifty years ago, and I know nothing of what it cost. 
 The entire locality was built over about the same 
 time, and consequently I cannot find what would 
 now be the feuing price of similarly situated ground
 
 66 THE TAXATION OF LAND VALUES 
 
 round about me ; and, not being an inquisitive man, 
 I know nothing whatever of what my neighbours 
 pay for their feus. And now I am asked, in a blue 
 paper which carries all the impressiveness of a 
 summons, what price I would put on my ground 
 " as between a willing seller and a willing buyer." 
 
 The obvious answer is (i) that I have never been 
 " willing " to sell it, and that no one, so far as I am 
 aware, has ever been " willing " to buy it ; (2) that if 
 I were willing to sell and found another man willing 
 to buy, it would be the house and ground as a whole 
 that we should consider ; (3) that it is not likely that 
 my willing price and his willing price would be the 
 same without some considerable higgling. 
 
 In this difficulty, I suppose I should ask what 
 other people round about have been getting for their 
 property. Here again I find that very few houses 
 have been sold since I came to the locality, and, as 
 they have been sold privately, I must trust for in- 
 formation to hearsay. What I do know is that 
 several houses have been in the market more or less 
 for some years, but that the proprietors were never 
 willing to sell at what others were willing to give 
 them. But suppose I had the amplest information 
 on these points, I have still to do what these people 
 never thought of doing, namely, to separate the two 
 items of house and ground, and I am not much 
 nearer what I want than ever. 
 
 It may be replied that building is still going on 
 not three hundred yards away from my house, and 
 the feus there charged are ascertainable. Well, I am 
 tempted to reply that these after all are feus, not 
 " land values," and that no one who has read the
 
 THE GLASGOW BILL: ITS VALUATION 67 
 
 evidence before the Royal Commission would show 
 his ignorance by confusing a feu with a land value ! 
 Is a present feuing rate not the price obtainable by 
 a landowner who has been " keeping back " his land 
 till the necessities of the people make them give an 
 exorbitant price ? If so, I am not going to return 
 my land value at this " exorbitant " figure, especi- 
 ally when I am to be taxed on it. 
 
 But suppose that there is some resemblance be- 
 tween a feu and a land value, I should hesitate to 
 agree that the value of ground three hundred yards 
 away was an adequate indication of the value of 
 mine. On the one hand, the buildings being erected 
 are terraces for which a higher rental can be obtained 
 relative to the extent of ground covered, while I and 
 my successors are restrained by our covenants from 
 building anything but villas. On the other hand, I 
 am higher up the hill ; I am surrounded with other 
 people's gardens and trees ; I have an open view to 
 the setting sun ; in other words, the " amenity " of 
 my situation is greater. One has only to consider 
 the difference in rental between the north and south 
 side of any square to know that. 
 
 All the while there is one what I may call 
 baser motive in the background. If I return my 
 land value at the same as or less than my feu-duty, 
 I roll off the entire payment on the superior. Would 
 not every " average man " send in this as his return 
 to the assessor ? And, things being as they are 
 presumed to be by the reformers, would this not 
 mean a struggle between proprietor and assessor at 
 every valuation ? 
 
 Suppose, however, that I am in the position a
 
 68 THE TAXATION OF LAND VALUES 
 
 man may be in once in a lifetime or so, of being 
 willing to sell the house where he has spent the 
 happiest years of his life, the situation is no easier, 
 but is complicated by another group of interests. It 
 is that the valuation to which I consent will be a 
 strong factor in the sale. To get as good a price as 
 possible, I want to show that my ground is very 
 valuable, and I am disposed to return it at a high 
 figure. But if I rate it too high, I frighten the buyer 
 by the knowledge that he will have to pay a high 
 tax in my stead ; and, if I do not manage to sell, I 
 have taxed myself at the high rate. 
 
 Take, again, a case which is typical of a great 
 many. A neighbour of mine has about an acre of 
 garden and lawn round his house enough to build 
 another house or couple of houses on. That extra 
 ground would undoubtedly be very valuable for such 
 a purpose. Is he to assess himself according to its 
 building value? If so, the burden will be very 
 heavy, and will probably " force the land into the 
 market" to the great loss of those who enjoy the 
 sight of his trees and grass almost as much as he 
 does, and who think that a bit of open space in a 
 crowded district is a common and not a selfish 
 possession. But this, I suppose, is " vacant ground," 
 which the proposers of the bill had most in their 
 minds at least, no provision is made for exempting 
 any but " open spaces held and enjoyed by the 
 public." 
 
 In these circumstances, what could a man do but 
 leave the valuation to the assessor? And it is in- 
 teresting to observe that this is just what the Scottish 
 witnesses before the Commission proposed should be
 
 THE GLASGOW BILL: ITS VALUATION 69 
 
 done ; indeed, they never seemed to dream of any 
 man assessing himself. " I would leave that to the 
 assessor," is the ordinary answer when the witness 
 finds the problem too difficult. But if the valuation 
 is left to the assessor, it seems to me to defeat the 
 very canon laid down ; for the assessor knows 
 nothing of my willingness to sell any more than he 
 knows of other people's willingness to buy. All he 
 knows about is my willingness to accept his valua- 
 tion. I think it may safely be said that this would 
 certainly have the effect of putting the land valuation 
 pretty high, as comparatively few people have the 
 courage, or energy, or time, or information to appeal 
 particularly as an appeal involves that they are able 
 to advance reasons which I have just shown to be 
 exceedingly difficult to arrive at. 
 
 Turn now to the second group of cases, where the 
 proprietors and occupiers are different people. Here 
 the proprietor uses his buildings say tenements, 
 warehouses, or shops as capital, and rents them 
 out. The present basis of his taxation is simple 
 enough ; it is the rental obtained : and the proprietor 
 is not asked whether he thinks he gets too much 
 or too little. Now he is asked what is the 
 capital value of his ground as distinct from the 
 buildings, " as between a willing seller and a willing 
 buyer." 
 
 But capital value in such a case has no meaning 
 but capitalised value, and capitalised value means 
 simply a multiple of the income value, and the only 
 income value of which he knows anything is the 
 income he gets from the tenants who occupy the 
 buildings. He is asked, then, apparently, to divide
 
 70 THE TAXATION OF LAND VALUES 
 
 the rent he draws into two portions one credited to 
 the buildings, the other to the land, and to capitalise 
 the latter ; in other words, the basis of his valuation 
 is not capital value but income. Well, I do not see 
 how he can do this without instituting comparisons 
 with feus and sales of ground in the locality, and 
 here he meets all the difficulties already discussed, 
 intensified by this, that the rents in business quarters 
 for similar property will vary as much as 50 per 
 cent, or so within the one street and from side to 
 side of the street. 
 
 This, however, would be a - simple calculation 
 compared with what the witnesses before the Com- 
 mission declared was the intention of the bill. The 
 proprietor, it seems, is not to take his rental as the 
 sum divisible. The land value required is not 
 limited by the rental he receives minus the rental of 
 the buildings. It is the value which would be 
 obtained if the ground were fully utilised and, more- 
 over, were put to its best use. This is stated again 
 and again in the evidence. " Take the University of 
 Glasgow," said Lord Burleigh, " and the land round 
 it ; what would you do in that case ? Would you 
 assess the University upon all that value as building 
 land all the land which is laid out as ornamental 
 ground ?" "I think," replied the witness, " the 
 assessor would approach it in the very same way 
 as he would approach the land of any other owner, 
 and would take this land at its value if it were 
 utilised to the best advantage, and assess it upon 
 that." It may be supposed that I am prejudiced as 
 a professor in alarm about his salary, but the next 
 question and answer show that a still more august
 
 THE GLASGOW BILL: ITS VALUATION 71 
 
 body than the University has something to be alarmed 
 about. " Take the Queen's Park, Glasgow ; how would 
 you deal with it ? " " In the very same way." " Who 
 would pay the rates upon that ? " " The Corpora- 
 tion of Glasgow would pay them to themselves." It 
 is a fine thing to have a logical mind and the courage 
 to express it. 
 
 I confess that I am unable to conceive where such 
 a valuation would lead us. If this is the canon to 
 be applied, the assessor will be bound, in each case, 
 to consider the uses to which each piece of ground 
 might be put : to tax a man heavily when he owns a 
 two-storey building when he might have a five-storey 
 one on the same plot, or when he is conscientious 
 enough to let his shop for a grocery when he might 
 have made it into a public house. It is evident 
 that, in every city which has grown, there are 
 buildings which do not " fully utilise " their sites, 
 but which nevertheless would not repay the expense 
 of pulling down and rebuilding. We know a good 
 deal of the high pressure of modern life : what will it 
 be when a man is to be taxed out of his property 
 because he is unable or unwilling to put it to the 
 other use, which, the assessor may think, is a more 
 lucrative one ? 
 
 A third group of cases is that of the so-called 
 " vacant ground." Here we deal with an entirely 
 different class of proprietors from those already 
 discussed. They are to be taxed directly, instead of 
 through a third party ; they cannot shift the burden 
 on to any previous owner ; and, unlike superiors, 
 they have something to say on their valuation. It is 
 at the same time the class which has fewest friends ;
 
 72 THE TAXATION OF LAND VALUES 
 
 the best that is ever said for them is that sometimes 
 their interest has coincided with the public interest, 
 inasmuch as they have laid down feuing plans and 
 prevented property from being planted down higgledy- 
 piggledy. There is probably not a proprietor in the 
 West End but has cause to thank the late Mr. 
 . Montgomerie-Fleming for the amenity of Kelvinside 
 as a residential suburb. But, as Kelvinside is west 
 and not east, this does not carry much weight with 
 those who think mainly about the congestion of the 
 working-class districts, and the desirableness of 
 making the most of the limited area on which 
 working people must live. But even in the worst 
 case, that of persons who speculate in land and, by 
 restricting the supply, raise adjoining rents till the 
 value of their vacant ground rises to the figure at 
 which they are willing to feu, 1 the bill must lay down 
 canons of valuation which can be applied. Is the 
 willing seller and buyer canon any clearer in this 
 instance ? It seems a simpler case in this regard, 
 that it is not complicated with considerations of 
 actual buildings rental. But this does not go very 
 far ; for not only is the " willing seller," if I may say 
 so, unwilling to sell, but the willing buyer bases and 
 must base his offer on the rental he can get from 
 the buildings he proposes to erect. Thus it comes 
 back to calculations of buildings rental \after all. It 
 is interesting to note how circumstances here alter 
 
 1 "Is it the practice at the present time for land to be held for the 
 rise?" "I know people who do it." "Do you approve of that?" 
 ' ' People have to do what the circumstances demand of them. " ' ' Do 
 you think it is a proper thing? " "I am doing it myself." Mr. Peter 
 Burt, Royal Commission on Local Taxation, vol. iii. of Evidence, p. 64.
 
 THE GLASGOW BILL: ITS VALUATION 73 
 
 cases. When the compulsory purchase of such land 
 by a Corporation is in question, we hear a great deal 
 to the effect that the price given should be " prairie 
 value." But, when it is a question of the same 
 Corporation assessing similar land for taxation, it is 
 discovered that its value has no relation to prairie 
 value ! 
 
 The " agricultural value " of land within a city 
 can, indeed, be easily ascertained by advertising it 
 for grazing it is not usually fit for anything else 
 but is not this, in all probability, the value which 
 the owner has been getting ; the value which the 
 assessor will certainly be expected to disallow? The 
 feuing value can be ascertained, so far as I can see, 
 only by putting it up to auction, and this is com- 
 pulsory sale. If, however, the assessor puts a value 
 on the ground, and taxes the proprietor on this, it 
 will be awkward if the owner has finally to dispose 
 of it at a lower price, and will, one would think, 
 suggest claims of compensation. 
 
 The more it is studied the more, I imagine, shall 
 we find that the assessor's task here is just as diffi- 
 cult as in the other cases ; that he gets no assistance 
 from the canon of the willing seller and willing 
 buyer ; and that the lawyers will, in this as in the 
 other cases, find a new and lucrative department 
 added to their business in the framing and advocacy 
 of appeals. 
 
 It will be answered, I suppose, that in all this I am 
 making difficulties : I am assuming that the bill means 
 what it says, and that every proprietor is to be 
 asked to make these calculations, whereas every- 
 body understands that it is the assessor who will have
 
 74 THE TAXATION OF LAND VALUES 
 
 to make them. Well, I grant that, if it were an easy 
 matter for the assessor to make them, there would 
 be less objection. I imagine that the provision for 
 the proprietor assessing himself was put in because 
 of the enormous injustice that might arise from the 
 fiat of an incapable valuator : the person concerned 
 should at least be able to claim the initiative. 
 But I submit that the difficulties I have tried to 
 present are inherent in any valuation which departs 
 widely from actual return or income. 
 
 To anyone who has really grasped the difficulties, 
 it is nothing short of amazing to witness the airy- 
 way in which those who are determined to tax land 
 values dismiss the question. "It is done every day," 
 they say, and, when asked where it is done, they in- 
 stance the case of new railways, as if new railways 
 were continually being cut through our crowded 
 streets. One witness before the Commission, when 
 asked how he would revalue Buchanan Street, said : 
 " It is a very common occurrence for an insurance or 
 other company to purchase a block for the purpose 
 of taking down the old buildings and erecting a new 
 one ; they really purchase the ground at ground 
 value and no more, and that would be a very 
 good guide to the assessor in determining the 
 value in the neighbourhood of the block sold." 
 " You would agree with me," said Lord Burleigh, " I 
 suppose, that the land fronting Buchanan Street 
 would be much more valuable than that adjoining 
 it but not fronting it?" "Yes." "And there would 
 be gradations of value according to the distance it 
 was from the good street frontage ? " " Yes." 
 " Would that not introduce so many and so difficult
 
 THE GLASGOW BILL: ITS VALUATION 75 
 
 problems that it would be scarcely possible to arrive 
 at a decision that would be accepted?" " No, I do 
 not think it," replied the witness ! l 
 
 On the other hand, Mr. James Henry, the City 
 Assessor of Glasgow, said : " It is very difficult 
 indeed in cases where a railway scheme is being 
 promoted, and the railway company are taking 
 ground for the purpose of the railway they have 
 arbitration cases going on for days over the price of 
 a very small piece of ground in order to arrive at the 
 value." And again: "When you attempt to separate 
 the value of the land from the rental, from what the 
 subject as a whole is producing, it is altogether a 
 matter of opinion as to what the value of the 
 land is." 2 
 
 In short, Lord Farrer's words seem to me to be 
 absolutely true: "I doubt whether any such scheme 
 is practicable. In the first place the land and the 
 house have not, for purposes of valuation, any 
 separate existence. Valuers, no doubt, say they can 
 value them separately, and Mr. Chaplin's Agricultural 
 Rating Act may be quoted as a precedent, if, indeed, 
 that unfortunate Act can be quoted as a precedent 
 for anything. Valuers will, no doubt, put a valuation 
 on anything, whether they know anything about it 
 or not, but the question is what real basis they have 
 for their valuation. The only ultimate basis of a 
 valuer's knowledge is his experience of actual market 
 values ; and as the land and the houses upon it 
 are sold and let together, no such basis can exist 
 for a separate value of the two things. A valuer's 
 judgment is limited by his experience, and where 
 
 1 Vol. Hi. of Evidence, p. 19. "*Ibid., p. 38.
 
 76 THE TAXATION OF LAND VALUES 
 
 there is no experience his judgment is untrust- 
 worthy." 1 
 
 But surely a more fundamental difficulty remains. 
 Hitherto the statement has passed without question 
 that each site has a value independent of the 
 buildings, and that the difficulty is only in ascer- 
 taining it. But building land, after all, is subject to 
 the same economic determinations as other land ; 
 that is to say, the value of no piece of land is 
 inherent, but varies according to the price of what 
 is grown or built on it. The particular crop which 
 building land produces is buildings ; but we arc 
 expressly forbidden to accept the price of the pro- 
 duct the actual rental as a basis of valuation. 
 The only other way is to take it as determined 
 by the rack-rent of the building which most fully 
 utilises and makes the most of the site. This is 
 hypothetical enough, but even a hypothetical value 
 does not hang in the air ; it must, at least, be 
 determined by some actual value the income which 
 the best possible tenant earns. Thus our assessor 
 is asked to find out what some person he knows 
 not who could make of the ground in circumstances 
 
 1 Memoranda presented (o the Royal Commission on Local Taxation, 
 p. 82. Compare also Mr. G. H. Blunden : "If sales of sites, with 
 or without buildings, were sufficiently frequent and sufficiently dis- 
 tributed as to locality, to afford a good basis of fact in arriving at the 
 capital values of all sites at all times, there would be no need to object 
 to a selling value basis for the new tax. But I am bound to say that I 
 do not believe these conditions anywhere exist, and that they are 
 distinctly absent in London and other leasehold towns. The alternative 
 of hypothetical valuations by experts appears to me inadmissible, having 
 regard to the astounding disparities constantly revealed in evidence 
 of this class in the law courts and elsewhere, and in view of the 
 costliness of such a method." Ibid., p. 194.
 
 THE GLASGOW BILL: ITS VALUATION 77 
 
 at which he can only guess. In these difficulties we 
 may freely extend our sympathies to the assessor 
 who finds such calculations thrown upon him, has to 
 make a different set of calculations for almost every 
 case, and has to be prepared, on appeal, to defend 
 and give reasons for every calculation. 1 
 
 It will be observed that, up till this point, I have 
 expressed no opinion on the general principle of the 
 taxation of land values. Even if the taxing of land 
 values were a recognised economic heresy, we have 
 learned, in questions of taxation, to be tolerant of 
 many things inconsistent with strict economic theory. 
 Like most professional economists, I have been 
 anxiously watching if from the present agitation 
 would emerge any practical scheme of redressing the 
 anomalies which undoubtedly exist in our local taxa- 
 tion according to rental. But when a bill bearing 
 the great name of the Municipality of Glasgow 
 assumes the policy of taxing land values and lays 
 down a canon for ascertaining them, it affirms not 
 only that such taxation is theoretically sound, but 
 that it is practically workable. Now, while the 
 principle of taxing land is accredited by many hon- 
 oured names in the past, and the policy of taxing 
 
 1 ' ' To apply one's mind to the consideration of the many questions 
 involved in ascertaining the selling price of even one site in Argyle 
 Street, or any other of the leading business streets in Glasgow, would 
 require time and thought ; but when it is remembered that in Glasgow 
 this operation would have to be repeated many thousands of times, 
 it would appear that one hundredth part of the work could not be 
 overtaken in any single year together with the other duties that have 
 at present to be performed by the assessor. Indeed, life itself would 
 appear to be too short for a work of such magnitude." Mr. James 
 Reith, Burgh Assessor of Paisley.
 
 78 THE TAXATION OF LAND VALUES 
 
 land values has many influential advocates in the 
 present, this is the first scheme which has worked it 
 out in detail, and the Corporation of Glasgow is the 
 first body which has applied for powers to carry it 
 out. But in looking closely at the canon of valua- 
 tion laid down it seems to me to raise the greatest 
 possible difficulties. These difficulties cannot be 
 ignored, even if one is convinced as to the general 
 principle. To mix up redistribution of incidence 
 with increase of revenue and accredit it by the bribe 
 of reducing rents ; to tax one class in order to 
 repair anomalies created by taxing another ; to lay 
 down for individuals and assessors a new basis of 
 valuation in a hypothetical price unknown to econo- 
 mists, seems to me enough to discredit the best of 
 causes.
 
 CHAPTER V. 
 
 THE GLASGOW BILL : ITS TAXATION 
 OF FEU-DUTIES. 
 
 THE second difficulty in the Glasgow bill is the 
 taxation of feu-duties and ground annuals. 
 
 The most serious result, perhaps, would be to 
 change the character of the feu-duty as an invest- 
 ment. The owner of feu-duties who may be the 
 original superior, but more probably is a person who 
 has bought the right from the first superior, and, more 
 probably still, is a body of testamentary trustees, a 
 friendly society, or one of the large corporations, 
 insurance, charitable, educational, or religious, in the 
 safety and wellbeing of which millions are interested 
 is taxed, not by a new ad valorem tax on feu-duties, 
 but by an amount that varies with the particular feu. 
 And he has absolutely no say or representation in 
 the fixing of the rate a fact which surely offends 
 against the old canon that taxation must be accom- 
 panied by representation. 
 
 For instance, suppose I pay a feu-duty of 20 to 
 the Church of Scotland. Probably this means a 
 return of 3 per cent, on 666 of the Church funds.
 
 So THE TAXATION OF LAND VALUES 
 
 By the new Act I am taxed, perhaps, is. per on 
 4.0. This means that the Church now gets ig 
 instead of 20, and that the Church has had no 
 voice whatever in the determination of the rate of its 
 new burden. But next year the assessment is raised 
 to 2s. per , and another i comes off the Church. 
 It is evidently the same if feus are held in burghs 
 that impose different rates of assessment. But if the 
 ground feued falls outside the limits of any burghs, 
 there is no deduction. In short, the character of the 
 feu-duty is changed, from that of an investment 
 yielding a fixed annual interest (subject to the varying 
 rates of income-tax), to that of an investment the 
 return to which will vary from feu to feu and from 
 time to time. 
 
 But, apart from this, we have to consider that, in 
 Scotland, the " superior " is not the analogue of the 
 London ground-owner. In London ground is leased, 
 and, on the expiry of the lease, the landowner enters 
 into possession both of ground and buildings erected 
 thereon. But in Scotland the landowner sells his 
 land in perpetuity for a fixed and unchangeable annual 
 sum, without power of control or re-entry so long 
 as the sum is paid. He is now to be taxed 2s. on 
 what he receives in feu-duty. Why ? On which 
 of the recognised principles of taxation? 1 Does he 
 benefit by municipal improvements, or is he rendered 
 more able to pay by the service? Is not our superior 
 in an entirely different category from the English 
 ground-rent owner who, at the end of the lease, 
 enters again into full possession of his ground with 
 all its increased value ? During the currency of the 
 1 See p. 14.
 
 THE GLASGOW BILL:- FEU-DUTIES 8r 
 
 long lease the real value of the ground-rent is rising 
 annually. It is not right to say that this value is 
 merely potential. It is so only in the sense that the 
 value of a sown field is potential till it is reaped. 
 But the farmer sells his potatoes in the ground at 
 one price in January, at another price in March, at 
 another in July ; at any moment the owner of land 
 held on lease may sell it for a capital sum represent- 
 ing that increased value, and, if he is not taxed, he 
 escapes scot-free all the years of the lease. But to 
 tax the owner of a feu-duty is not to tax on 
 account of benefit received or of growing ability to 
 pay, for he never enters into any increased value: it 
 is simply to penalise a person who cannot escape. 
 
 Is there, then, anything to be said for taxing feu- 
 duties? 
 
 It has been suggested that a feu-duty gets more 
 secure as money is spent by a municipality in im- 
 provements which raise the value of house property, 
 and that this extra security deserves the recognition 
 of taxation. Is it not the case that feu-duties have 
 risen in price of late years ? 
 
 Yes, they have ; but the reason is simple. They 
 are already amply secured ; they do not rise in value 
 with additional security. It is undisputed, I think, 
 that the late rise in value was simply a concomitant 
 and expression of the falling rate of interest. Nay, 
 has there not been a fall in their value, from thirty- 
 five years' purchase to twenty-eight years' purchase, 
 during the last few months, just because the rate of 
 return to capital has been rising again ? 
 
 This contains also the answer to another possible 
 contention; namely, the blind bargain argument It 
 
 F
 
 82 THE TAXATION OF LAND VALUES 
 
 might be said that, when the ground-owner feued off 
 his land and the occupier took on himself the paying 
 of rates, no one could anticipate the new taxation 
 which has been imposed. Why should the superior 
 not bear a share of this added burden? The answer 
 is obvious. The reader will remember that the 
 London contention was that it should not all fall on 
 the occupier, but be divided at least with the site- 
 owners, because they benefited?- Well, here is one class 
 which does not benefit, the feu-owners. But there 
 are two classes which do benefit, the occupier and 
 the " proprietor " the man who pays the feu-duty. 
 With us, in short, it is not the superior the land- 
 owner proper who is in the same position as the 
 site-owner in London, but the proprietor. 
 
 One doubt, however, may remain. Take the case 
 of the many landowners round about old Glasgow 
 who feued off their land fifty years ago, and still 
 hold these feus. Fifty years ago the feus may have 
 been worth twenty years' purchase : now they are 
 worth half as much again. Ought not this unearned 
 increment to be taxed ? 
 
 Yes ; if we decide to tax all unearned increment, 
 but not otherwise: for this increase is a phenomenon 
 of the fall in interest, not of the rise in value of land. 
 Take any five per cent, stock of fifty years ago. If 
 it still pays five per cent, its capital value will have 
 almost doubled, because the interest rate has gone 
 down. Let the rate of interest again go up to five 
 per cent, and there will be no unearned increment 
 either in stocks or feu-duties. 
 
 But there is more than this. The unearned incre- 
 1 Pp. 49-51.
 
 THE GLASGOW BILL: FEU-DUTIES 83 
 
 ment of long holders is always dangled before us : 
 one would think that the typical landowner to-day 
 had kept his land in the family since the Conquest. 
 I suppose half the feu-duties on Scottish land are held 
 to-day in the family. What about the other half? 
 They have been sold over and over again. They 
 now belong to people who bought the feu-duties 
 at or above the price at which they sell to-day, and 
 who thus have no unearned increment. Why are 
 these people to be taxed ? But it is impossible to 
 separate the two classes, taxing the one and not the 
 other. To get at the holders of feu-duties, then, is 
 not always to get at the people who made the 
 bargain, even if it were a blind bargain for the buyer. 
 Many of them have escaped by sale and are out of 
 reach. To tax the people who have bought, is clearly 
 to tax people simply because they are landowners 
 not because they are people who have benefited and 
 because they hold an improved property. It is 
 justifiable only as a part of the confiscation of rent 1 
 
 1 " Supposing the man who has feued his land has done what some 
 of them do has sold the proceeds of his feu -duties for a certain number 
 of years' purchase, varying from 22^, which used to be about the price, 
 to 30 years, which is now the price sold it, we will say, to an insurance 
 company or building society, or a church, would you still take the 
 proceeds from the present holder?" "I am not anticipating that I 
 will be spared to take them from anybody, you know, but, as I have 
 said, proceeding as I do on the initial principle that these land values 
 belong to the community, I dare not acknowledge any difference 
 between one holder and another." Mr. Samuel Chisholm, Lord 
 Provost of Glasgow, vol. iii. of Evidence, p. 90.
 
 CHAPTER VI. 
 
 THE GLASGOW BILL : ITS DOUBLE TAXATION 
 OF THE PROPRIETOR. 
 
 I HAVE said that the analogue of the London site- 
 owner is the Scottish proprietor. 1 If it be right that 
 the London site-owner should be taxed because he 
 benefits, and if it be proved that he does benefit, then 
 it is right to tax the Scottish proprietor. So if the 
 promoters of the Glasgow bill consent to go on the 
 London lines, they will drop the deduction to be 
 made on feu-duties, and leave the whole tax on the 
 shoulders of the proprietor. For this, indeed, there 
 would be all the argument used by the London 
 County Council. 
 
 But those who imagine that the Glasgow bill 
 follows the same policy as the London resolutions 
 must be told that the Scots system differs from the 
 English in that we already tax the proprietor 
 already divide certain rates equally between occupier 
 and owner. The rates we divide in Glasgow are City 
 Improvements, Public Health, Sewage, Municipal 
 Buildings, Registration of Births, etc., Registration of 
 1 Pp. 80-82.
 
 THE GLASGOW BILL: DOUBLE TAXATION 85 
 
 Voters, Valuation of Lands, Prison Payments, Clyde 
 Embankments, General Purposes, Contagious Dis- 
 eases (Animals), Lunacy, Roads and Bridges (Main- 
 tenance), the Poor Rate, and the School Rate. The 
 occupier pays the whole of Police, Sanitary, Statute 
 Labour, Parks and Galleries, Juvenile Delinquency, 
 and the Domestic Water Rate. The owner pays the 
 Public Water Rate and the Road Debt. In all, of 
 Municipal Rates (1898-99) the occupier pays 2s. 
 4fVd- on rents of 10 and upward, and is gid. on 
 rents under 10: the owner pays 8^-d. Of Poor 
 Rates each pays 4fd., and of School Rates S^d. 1 
 
 Thus in Scotland we already do what London 
 asks permission to do. Without paying any regard 
 to this, the Glasgow bill proposes to lay 2s. per 
 more on the owner ; and, if the bill is amended by 
 taking out the provisions for taxing feu-duties, the 
 proprietor would pay the whole of this 2s. Surely 
 this entire disregard of the fact that the Scottish 
 proprietor already pays local taxes, evidences that 
 the promoters have in their mind something very 
 different from equal distribution of taxation. 
 
 a Of the .653,000 of total assessments imposed and collected by the 
 Police Department in 1898-99, 179,219 fell upon owners. The Public 
 Water Rate (owners) amounted to 18,480 against the 47,486 of 
 Domestic Water Rate (occupiers).
 
 CHAPTER VII. 
 
 THE GLASGOW BILL : ITS PURPOSE. 
 
 IF we ask, finally, how the bill in its working out 
 corresponds with the purposes meant to be served, 
 there is the peculiar difficulty that there is no entirely 
 authoritative statement of what the intentions of its 
 promoters were. 
 
 It is not simply a measure to " allocate the burden 
 more equitably" by shifting part of it to the superior. 
 In the report accepted by the Corporation on i/th 
 June, 1895, which report the present bill proposed 
 to carry out and embody, it was recommended 
 that the existing system, whereby proprietors are 
 taxed on the same valuation (buildings rental) as the 
 occupiers, should be replaced by a system where the 
 proprietor was taxed on a special valuation (the land 
 value), the occupier being taxed on rental as before. 
 This was ostensibly a proposal to " change the basis 
 of taxation " as regards proprietors from property 
 rental to land value, at the same time as it divided 
 the burden between proprietor and superior. But no 
 additional tax was spoken of; so far as appeared 
 from the terms, it was merely a measure to divide the
 
 THE GLASGOW BILL; ITS PURPOSE 87 
 
 existing amount of taxation between the two. In 
 other words, the gross amount at present paid by 
 the proprietors was to be taken, and a rate per 
 imposed on the new valuation which would produce 
 just the same amount. But, as the bill now stands, 
 proprietors are still to be taxed in the same way as 
 at present ; they are still to pay their 8^-d. per 
 of rental. But, as I have said, they are to pay 
 in addition a new tax on the new basis, getting 
 relief from the superior only if the land value is the 
 same as or less than the feu-duty. 
 
 In the letter already referred to, Mr. Burt has 
 given us a statement of " what is the object to be 
 attained by the bill." " The advocates of the taxa- 
 tion of land values," he says, "have always contended 
 that the most important effect of the reform would 
 be the breaking up of land monopoly and the forcing 
 of useful land into the market at a reasonable 
 price. This, again, in encouraging building, would 
 have the effect of reducing rents, and such a reduc- 
 tion of rents, it is admitted, would be a desirable 
 thing in the interests of the people." 
 
 I suppose a reduction in the price of anything is a 
 desirable thing in the interests of the people, and 
 even moderate men might go the length of saying 
 that the taxing of ground still unfeued is justifiable, 
 though not perhaps justified by the consequent re- 
 duction of rent. But the bill goes much further 
 than this. Unless the " land value " is the same as 
 or less than the feu-duty, it imposes a new tax on 
 proprietors and reduces the net return of their pro- 
 perty. This, indeed, of itself would not reduce rents 
 the fact that a proprietor gets less return is no
 
 88 THE TAXATION OF LAND VALUES 
 
 reason why he should still further reduce that return. 
 But if Mr. Burt be right in his contention that the 
 tax will reduce the price of new feus, and that this 
 will encourage building (both of which statements 
 have been energetically denied by writers of the 
 opposite side), the competition from the buildings 
 then being erected on the cheaper feus will force the 
 older proprietors to reduce. This, however, is better 
 described as reducing rents, not by " breaking up the 
 land monopoly," but by penalising the proprietor, 
 although the two things work into one another. 
 
 When, however, the purpose of a bill is ambiguous 
 from its terms, one naturally turns to its preamble to 
 see what it is all about ; what it seeks to remedy ; 
 why it proposes to make changes, particularly when 
 the changes are no less than revolutionary. But 
 there is no preamble. 
 
 As there is no preamble, I propose to provide 
 it with one. It would run something like this 
 allowing for my want of practice in drafting bills : 
 " Whereas private property in land is a robbery not 
 only in the past but in the present ; and whereas it 
 would be perfectly just, as well as legitimate and 
 expedient, to confiscate such land without compensa- 
 tion, and take it into possession of the government 
 as representing the whole people ; and whereas there 
 is a simpler, easier, and quieter way of doing the 
 same thing : Be it enacted by the Queen's Most 
 Excellent Majesty," etc., etc. 
 
 The words are those of Mr. Henry George, and I 
 say they would be an appropriate preamble just 
 because the bill is purely and undisguisedly the work 
 of the Single Taxers ; is, in fact, the first signal
 
 THE GLASGOW BILL; ITS PURPOSE 89 
 
 emergence of Georgism into the practical arena, and 
 professes to be a ten per cent, instalment of the 
 entire confiscation of land rent, on the lines laid 
 down in Progress and Poverty. 
 
 The 2s. is only a beginning, said its chief pro- 
 moter before the Royal Commission. " I hold that 
 nothing short of 2os. in the > will be a complete 
 settlement of the question." 1 " What is to be the 
 next step ? " was asked of another of its promoters. 
 " Increase the tax upon the value of the land," he 
 replied. " Until you take it all? " " Until you take 
 2 os. in the ." 2 
 
 My own feeling is that, when a bill is put forward 
 proposing a new " tax " which is openly said to be 
 not a tax but a method of fine, it puts itself beyond 
 the pale of serious discussion. A tax is the payment 
 for a service rendered by the government, and the 
 difficult question concerning it is the allocation of 
 the expense according to benefit received from the 
 service, or according to ability to pay for it. But 
 the Single Tax is not a payment for services 
 rendered to the owners of land : it is confiscation of 
 their property on the ground that private property 
 in land is robbery ; it is not a raising of revenue to 
 return that revenue in blessing to those from whom 
 it is taken, but a taking of revenue from one class in 
 order to spread relief from taxation over all other 
 classes. It is the proposal of men who are in 
 earnest about one thing, but perceive that it is 
 necessary to disguise it as if it were another thing. 
 There was once a Highlander who was arrested for 
 
 1 Bailie Ferguson, vol. iii. of Evidence, question 16,872. 
 
 2 Mr. Peter Burt, ibid., question 16,175-6.
 
 90 THE TAXATION OF LAND VALUES 
 
 stealing a cow, and was asked by a sympathising 
 brother why he had not bought it and forgotten to 
 pay for it ! It is well that the citizens of Glasgow 
 should understand that, in the expressed opinion of 
 its promoters before the Royal Commission, the 2s. 
 is merely a beginning. It is well they should know 
 that, in the opinion of their Treasurer, there is no 
 difference between ground values and feu-duties. 1 
 It is well they should know that, in the opinion of 
 their Lord Provost, it should make no difference 
 whether the person taxed out of his property is an 
 ancestral landowner who has had all the increment, 
 or the purchaser of yesterday who has had none. 2 
 
 But one fact must, in honesty, be recognised. 
 The bill passed the Corporation by 37 votes to 33. 
 All these 37 were not Single Taxers. To quote the 
 words of one of themselves : " It is an open secret 
 that many of those who cast their votes finally in 
 favour of the question did so very reluctantly and 
 under compulsion." And I have been told from 
 outside that the majority voted as they did, not 
 because they believed in the promoters, not because 
 they thought very much of the bill as it stood, but 
 because they were convinced that " there is some- 
 thing in the agitation for the taxation of land 
 values." It is for this reason that I have discussed 
 the bill as it stands not as a ten per cent, instalment 
 of confiscation, but as the provision for a 2s. per 
 tax on site values. 
 
 1 Councillor James Gray, vol. iii. of Evidence, question 17,242. 
 
 2 P. 83, note.
 
 CHAPTER VIII. 
 
 CONCLUSIONS. 
 
 WHAT may we gather, then, from the two schemes we 
 have considered as to the agitation for the taxation 
 of land values ? So far as I can see, the agitation 
 covers no less than five distinct, though more or less 
 vague, convictions. 
 
 First. It is partly the expression of people who 
 experience increased and increasing rates ; people 
 who have to reside in the localities where the rates 
 are high ; people who believe that they really pay 
 all the rates, and do not believe that the benefit they 
 receive corresponds with the price they pay. It is 
 probably the cry of people who do not particularly 
 want municipal improvements : they would be con- 
 tent with much less, but their opinion is not asked. 
 And I think we must do this class the justice of 
 pointing out that the standard of municipal service 
 is in many respects higher than the poorer ratepayers 
 care for. It is not from them that the demand comes 
 for sanitation, for police, for baths, art galleries, free 
 libraries, and the like. We, in our corporate wisdom, 
 say that the city must be made healthy and beautiful.
 
 92 THE TAXATION OF LAND VALUES 
 
 But the poor do not feel this as we do, and much of 
 our legislation must appear to them like compelling 
 people to take a bath only that we also compel 
 them to pay for it. To tell such people that rates 
 must rise is to evoke an agitation to put the burden 
 on some other shoulders. If this latter argument be 
 admitted, I submit that it leads to some form of 
 progressive local taxation, such as Mr. Costelloe 
 suggests in his municipal death-duty ; but I do not 
 see that it is, in itself, any argument for the taxation 
 of land values. 
 
 Second. It is partly the expression of those who 
 believe that the improvements which local taxation 
 pays for are largely " arterial," and that arterial 
 improvements add chiefly to the value of sites. This 
 is quite legitimate argument. The double question 
 that has to be answered here is whether the site- 
 owners are not already taxed to the full amount, 1 
 and whether the proprietors in Scotland are not 
 already paying perhaps more than their share when 
 they pay half the Poor Rate, half the School Rate, 
 and a third of the Municipal Rates. 2 
 
 Third. It is partly the expression of those who 
 think that there are many landowners keeping back 
 municipal progress, and raising the rents of the 
 congested districts, by holding up land. This is 
 a very specious argument. Land in a city is the 
 most notable instance of a necessary thing limited in 
 supply, with demand, to all appearance, constantly 
 increasing. I do not in the least wonder that many 
 people are so much impressed with the necessity of 
 such land for the living of the many, that they think 
 1 See p. 43. 2 See p. 84.
 
 CONCLUSIONS 93 
 
 public powers, in this respect, should be taken to 
 put a limit on private powers. It is, indeed, a 
 grievous thing when some landowner diverts the 
 natural course of a city's expansion, and spoils its 
 amenity by holding back ground which the wants of 
 the district really demand. 
 
 But it is eloquent of the difficulties of the subject 
 that, although this is mentioned by the London 
 County Council, it is not pushed as the other reso- 
 lutions are, and was not taken up in Mr. Costelloe's 
 evidence. It is not one of the " main resolutions " : 
 it is, says the statement, of a "subsidiary character." 1 
 
 As I have already hinted, 2 the taxation of vacant 
 building ground seems to stand on a different foot- 
 ing from the other. It has a justification which is 
 wanting in the case of ground leased or feued for 
 building. The latter, as we have seen, 3 is taxed in 
 anticipation. Vacant ground is not. All the time that 
 it is " held up," it pays nothing (or a nominal sum) 
 to imperial or local taxation. It may be the case 
 that the gains are not quite so great as many people 
 think, but this does not affect the fact that land, 
 which might be yielding a revenue to the govern- 
 ment, is yielding nothing, and that others have to 
 pay higher rates in consequence. There seems 
 accordingly a strong primd facie case for such tax- 
 ation. The Royal Commission on the Housing of 
 the Working Classes recommended it, although the 
 Select Committee on Town Holdings declared 
 against it. 
 
 The chief difficulties are : 
 
 (i) It may be possible to assess vacant land within 
 
 1 Evidence, vol. iii., p. 320. 2 P. 71. 3 P. 44.
 
 94 THE TAXATION OF LAND VALUES 
 
 a congested area without serious mistake, but, 
 outside the area already built on, it is impossible, 
 even within burghs, to predict when and to what 
 degree agricultural land will become building 
 ground. 1 
 
 (2) In Lord Salisbury's words : " There may 
 possibly be something to be said for a general 
 recourse to the American system of taxing capital 
 instead of income values ; but to adopt it in the 
 isolated case of vacant land in or about towns, would 
 not only lead to much evasion, but would have 
 injurious sanitary effects. It would operate as a 
 penalty on all open spaces except those belonging to 
 a public authority. Urban or suburban gardens 
 would especially suffer. On the other hand, when 
 any pecuniary advantage was to be gained by 
 keeping the land vacant, its capital value could be 
 easily reduced by collusive alienations of portions of 
 it By a colourable sale of the outside edge, the 
 capital value of an interior block could be, for the 
 time, to a great extent destroyed." 2 
 
 (3) The taxation of vacant ground by itself does 
 not seem practicable : it would be unreasonable to 
 
 1 " Take the Burgh of Renfrew, which contains a very large area of 
 land already occupied only for agricultural purposes. Some of it is a 
 mile and a half distant from the town proper, and not likely, perhaps, 
 to be feued within the next fifty years. The present selling price of 
 this land at its most distant part would not exceed ^50 an acre, but 
 land near the town has recently been feued at 20 an acre, equal to a 
 selling price of ^660. Now, how would the assessor of the Burgh of 
 Renfrew value the selling price of the whole of the land between these 
 extremes ? Where would the 660 land stop and the y> land 
 begin?" Mr. James Reith, Burgh Assessor of Paisley. 
 
 2 Memorandum to Royal Commission on Housing of the Working 
 Classes.
 
 CONCLUSIONS 95 
 
 tax it on a hypothetical value without taxing 
 occupied ground on a similar calculation, and this 
 brings in all the difficulties already raised. 
 
 (4) Whether it would "force land into the market" 
 for building may be doubted. It would, of course, 
 tend to force its sale ; but, as the sale would be at a 
 reduced price owing to the impending tax it might 
 force it only into the hands of other and wealthier 
 holders. 
 
 (5) It would prevent any well-considered feuing 
 plan, such as has prevented premature building and 
 preserved the amenity of our residential suburbs. 
 
 To my mind, what is wanted here is something 
 which has not yet been provided a careful statis- 
 tical investigation of where and what the land is 
 which is being held back when it might advan- 
 tageously be taken for building purposes. 1 It is not 
 enough, for instance, to point out that Mr. Parker 
 Smith has not feued his fine estate of Jordanhill. 
 The question is whether the feuing of Jordanhill for 
 workmen's houses would be in the interest of the 
 whole of the citizens. For the comfortable classes 
 also must be housed, and it is easy to see that, if 
 one-roomed houses are built in Great Western Road, 
 the comfortable classes are likely to be driven out of 
 the city altogether. It looks as if the ideal of some 
 people were that the city is meant for poor men, and 
 that every consideration must give wayto housing these 
 
 1 Those who hazard the statement that the supply of land in great 
 cities is always short relative to the housing demand, may be able to 
 explain the official statement of the City Assessor, that, against a total 
 of 151,208 occupied dwellings in Glasgow in 1898, there were no less 
 than 4,642 unoccupied, representing a rental of over ^50,000.
 
 96 THE TAXATION OF LAND VALUES 
 
 poor men. For myself, I do not think much of that 
 ideal. There is far too much segregation of classes 
 already. It is not a good thing that a city should 
 be a collection of five-storey one-roomed tenements, 
 and it is not inappropriate to ask where the revenues 
 of the city are to come from if the rich are driven 
 ten or twenty miles away Surely it is the stalls 
 which pay for the pit, as well as the pit which pays 
 for the stalls ! I hope to see the day when the 
 housing problem will be solved in a very different 
 way; as it has been in many cities of America 
 by electric trams running at fifteen miles an hour, 
 conveying the poor man to fresh air outside when 
 his city work is done. 
 
 Fourth. It is partly the popular cry against un- 
 earned increment. I do not think that the people 
 who use this term so glibly ever ask themselves what 
 is earned increment. But without a conception and 
 definition of earned increment, the adjective " un- 
 earned " is meaningless. Mr. John Burns once said 
 that nobody was "worth" more than 500 a year. 
 It would have been quite as logical to say ^50. If 
 a working man were to ask himself why it is that he 
 gets 355. a week, when his father, not less skilled, 
 not less hard-working, was glad to get 22s., he might 
 find an object lesson in earned and unearned incre- 
 ment. In short, the taxing of increment on the 
 ground that it is unearned, introduces canons of 
 remuneration known as yet only to Socialism. 
 
 There is only one reason that I can see for taxing 
 exclusively the increment of land value, namely, that 
 it is comparatively easy to do it. When land on 
 the border of a city jumps from 403. an acre to .40,
 
 CONCLUSIONS 97 
 
 the increment catches every eye ; and, because it 
 usually remains in the hands of one person, it seems 
 easy to " get at " him. But when the shares of a 
 successful business rise to seven or eight times their 
 par value, no one proposes to tax the holders for 
 the reason, I suppose, that the shares are in many 
 hands, and are bought and sold every day. Is the 
 possibility of " getting at " a person to be the new 
 canon of taxation ? Would it not be a caricature 
 of equity to tax a member of the Coats family on 
 any land he may hold in Paisley, and take no notice 
 of his shares in J. & P. Coats ? l 
 
 Fifth. It is partly the expression of a larger hope. 
 I am afraid that it is the response of the unthinking 
 majority to the bribe set before them by the personage 
 whom Adam Smith did not scruple to call " that in- 
 sidious and crafty animal vulgarly called a politician." 
 
 Suppose the London County Council gets its 
 way and imposes 6d. per on site values. This 
 will produce ^375,000, against total rates of over 
 ,10,000,000. Is it this drop in the bucket that 
 rouses all the enthusiasm ? I imagine not. I fear 
 that the taxation of land values has got into 
 the popular imagination as nothing less than 
 the confiscation of rent. It is the .2,000,000 of 
 land values in Glasgow that we aim at " appropri- 
 ating," says Bailie Ferguson. 2 Considering that the 
 
 1 See further p. 112. 
 
 2 " You do not think it is confiscation to take a shilling a year for 
 twenty years, so that at the end of twenty years you will get the whole 
 sovereign : but it would be confiscation to take the whole twenty 
 shillings at once?" "I did not say confiscation, but something like 
 confiscation." Question 16,846, vol. iii. of Evidence. 
 
 G
 
 98 THE TAXATION OF LAND VALUES 
 
 present rates come to only 600,000, and that an 
 eloquent tongue can suggest how many good things 
 may be got for the odd 1,400,000, one can under- 
 stand the power of such an election cry. It is, says 
 the Single Taxer, not the petty 375,000, but the 
 whole 15,000,000 of land values in London that 
 we aim at taking. Why stop at London ? Promise 
 the mob that you will confiscate " the whole 
 300,000,000 of British rents," and I think one can 
 understand how the resolution approving of the tax- 
 ation of land values is carried amid whirlwinds of 
 applause. 
 
 But this, I submit, is pure Henry Georgism.
 
 THE SINGLE TAX 
 
 " What I propose as the simple yet sovereign remedy which will raise 
 wages, increase the earnings of capital, extirpate pauperism, abolish 
 poverty, give remunerative employment to whoever wishes it, afford free 
 scope to human powers, lessen crime, elevate morals and taste and in- 
 telligence, purify government, and carry civilisation to yet nobler heights, 
 is to appropriate rent by taxation." Progress and Poverty, p. 288. 
 
 IN the preceding pages frequent reference has been 
 made to the doctrines of the late Mr. Henry George 
 on the subject of taxation. Some of us can re- 
 member the sensation which Progress and Poverty 
 made on its appearance in 1880. Whether or not it 
 is, as he claimed, "the most successful economic work 
 ever published," it is certain that very many were 
 for the moment carried off their feet by its earnest- 
 ness, its plausibility, and its headlong rhetoric, and 
 spoke of it as a new departure if not a new gospel. 
 A less well-satisfied man than Mr. George, however, 
 might have taken thought over what he called the 
 " contemptuous silence " of the economists towards 
 " a book circulating by thousands in the three great 
 English-speaking countries, and translated into all 
 the important modern languages." Unfortunately
 
 TOO THE SINGLE TAX 
 
 for himself, he put it down to jealousy, and, worse, 
 to dishonesty ; and restated his theories with the 
 same crudity, the same pretentiousness, and growing 
 violence. How right the economists were, any- 
 one may convince himself by a casual glance over 
 his posthumous Science of Political Economy, in which 
 he undertook to " reconstruct " the science, tracing 
 its rise and partial development a century ago, " its 
 gradual emasculation, and at last abandonment by 
 its professed teachers." 1 I should, then, have thought 
 that to write on the Single Tax was simply that 
 form of intellectual exercise known as " flogging a 
 dead horse," were it not that its advocates have joined 
 hands with the advocates of the quite distinct 
 Taxation of Land Values, and have, indeed, hailed 
 the Glasgow Bill as a recognition and instalment of 
 
 1 The following passage may suggest what amount of equipment Mr. 
 George had for his "reconstruction": "The science of Political 
 Economy, as founded by Adam Smith, and taught authoritatively in 
 1880, has now been utterly abandoned, its teachings being referred to 
 as teachings of the ' classical school ' of political economy, now obso- 
 lete. What has succeeded is usually denominated the Austrian school, 
 for no other reason that I can discover than that ' far kine have long 
 horns.' If it has any principles, I have been utterly unable to find 
 them. The inquirer is usually referred to the incomprehensible works 
 of Professor Alfred Marshall, of Cambridge, England ... or to a lot 
 of German works written by men he never heard of, and whose names 
 he cannot even pronounce. This pseudo-science gets its name from a 
 foreign language, and uses for its terms words adapted from the German 
 words which have no place and no meaning in an English work. 
 It is, indeed, admirably calculated to serve the purpose of those 
 powerful interests dominant in the colleges under our organisation, that 
 must fear a simple and understandable political economy, and who 
 vaguely wish to have the poor boys who are subjected to it by their 
 professors rendered incapable of thought on economic subjects." The 
 Science of Political Economy, p. 208.
 
 THE RECOGNISED THEORY 101 
 
 the revolution proposed by Mr. George. When a 
 majority of the most advanced Corporation in the 
 kingdom draft a public bill on his principles and 
 get it brought into Parliament, it seems time to 
 break silence. 
 
 To compare the proposals of the Single Tax with 
 our recognised system, it may be convenient to re- 
 capitulate shortly the principles on which our taxa- 
 tion is based. 1 
 
 There are certain commodities and services which 
 have been at one time or other purveyed by private 
 industry, but, in the development of civilisation, have 
 fallen to the government ; that is, to a committee of 
 ourselves which we instruct to render us these ser- 
 vices. 2 Certain of them are rendered direct to the 
 individual, and, being measurable either in cost or 
 benefit, are paid for exactly as ordinary commodities 
 and services are. 3 But the majority are common 
 services whose cost or benefit cannot be allocated to 
 the individual benefited. 4 Taxation is the payment 
 for these services, and the principle of payment is 
 equality of burden or sacrifice. 5 
 
 To get these common services (which, like all 
 government goods, are part of our National Income 
 of ^1,500,000,000) we have to give up a part 
 of our income, just as we give up another part to 
 buy bread and butter. But, whereas we say bluntly 
 that we pay a price for bread and butter, and enter 
 the price among our household expenses, we prefer 
 to say that we have to pay a " contribution " to the 
 government for our protection, justice, etc. ; and, in 
 
 l Seepassii, pp. 1-35. 2 See p. 6. 
 
 3 See p. 15. 4 Seep. 16. 5 See p. 21.
 
 102 THE SINGLE TAX 
 
 doing so, it may be that we have given rather a 
 misleading direction to popular ideas on the subject. 
 There are three reasons for using this term in our 
 systems of Public Finance. 
 
 First, Modern taxation is the historical survival of 
 times when the monarch asked his people for a 
 " contribution " towards expenses which were insuffi- 
 ciently provided by his own income or by that of 
 the Crown Lands, and very often levied the contri- 
 bution on principles of his own for purposes on 
 which their approval was not asked. And it may 
 be noticed, in passing, that the -fact of our taxation 
 being an evolution from times when the "force" which 
 imposed taxation was not the general will but a 
 power claiming divine right, sanction, and privilege, 
 is to blame for many anomalies which still disfigure 
 our system, and are emphasised by some as proof of 
 the cynical saying of Colbert, that the art of taxation 
 consists in so plucking the goose as to procure the 
 greatest quantity of feathers with the least possible 
 amount of hissing. 
 
 Second. The " idea " of " contribution " is in 
 harmony with that philosophical conception of the 
 State which looks on it as the larger family within 
 which men find their liberty and the possibility 
 of " being themselves " : men should contribute to 
 the larger household as they do to their own smaller 
 ones. It may, however, be confessed that the 
 ordinary Englishman, not being a metaphysician 
 by birth like my countrymen, is quite insensible 
 to the claim of the State as his " larger self," and 
 is, indeed, very ready to cheat his larger self out 
 of its due contribution.
 
 THE BENEFIT THEORY 103 
 
 Third, and chiefly, the element of compulsion, 
 and the method in which the total sum wanted 
 is distributed and assessed among the taxpayers, 
 seem to conflict with the very idea of price. 
 In direct taxation, we have to pay for govern- 
 ment commodities, not according to our estimate 
 of what they are worth to us, but according 
 to the government's estimate of what we are 
 worth. 
 
 This difficulty did not come into prominence so 
 long as economists held by the Benefit theory. 
 According to this theory, the payment which we 
 call taxation was just what the various classes 
 of citizens would pay without compulsion if they 
 were conscientious, if they realised that govern- 
 ment services were goods, and if they recognised 
 that the benefits conferred by these goods were 
 differential. Taxes, in short, were supposed to be 
 modelled on the type of a water-rate, where a rich 
 man pays much because he uses much water, and a 
 poor man little because he uses little " to whom 
 much is given, of them much shall be required." 
 This theory broke down, however, at three points 
 (i) that it was impossible to assess, even in the 
 roughest way, the benefit of much of our taxation to 
 the individual benefited the pauper, for instance, 
 benefiting most and paying nothing ; (2) that a 
 great many of those who benefited were not able 
 to pay in the measure of the benefit conferred ; 
 and (3) that, in modern communities, it is the 
 rich who set the standard of government and 
 municipal service, and demand many things, such 
 as clean and well-lit streets, rapid letter transit,
 
 104 THE SINGLE TAX 
 
 and the like, which the poor would neither of 
 themselves demand nor be willing to pay for. 1 
 
 This theory, I may say, had its origin in times 
 when the privileged classes had managed to roll the 
 bulk of the taxes on to the more helpless classes ; 
 when, accordingly, the insistence that those should 
 pay who benefited was used to compel attention to 
 the fact that those who benefited most were paying 
 little or nothing. It was applicable, again, in later 
 times when the duty of a government was supposed 
 to be limited to the protection of life and property, 
 and taxation could be regarded as a kind of insur- 
 ance premium. As to its still appropriate place in 
 respect of many government services such as fees 
 and municipal industries, and its subsidiary position 
 in local taxation, I have said enough in a previous 
 chapter, 2 But as regards the largest departments 
 of imperial taxation, this theory has long been 
 abandoned. 
 
 In the Equal Burden theory which took its place, 
 the political idea of taxes as contributions levied by 
 a government has very much put into the back- 
 ground the economic idea of taxes as prices paid 
 for goods. Certainly in this theory, especially when 
 stated in blunt terms as payment according to the 
 subject's " ability to pay," we have the entire aban- 
 donment of any suggestion that the payment for 
 government goods which we call taxation is deter- 
 mined like a competitive price. It is considered 
 that, in these common benefits, the citizens benefit 
 equally, and therefore should pay equally. Yet the 
 price demanded of the citizens is not an equal 
 1 See p. 91. 2 Pp. 15-28.
 
 THE CANON OF EQUAL SACRIFICE 105 
 
 money price. I submit that we are too much under 
 the influence of modern phenomena when we limit 
 our idea of price to competitive money price the 
 figure at which a free demand and a free supply 
 come into equilibrium. The root idea of price is 
 surely that of a quid pro quo in exchange, and covers 
 such things as monopoly price, customary price, the 
 mediaeval fair price, the price paid by us to our 
 medical man, the price charged an Englishman in a 
 Continental shop or in an Eastern bazaar, and, 
 perhaps I might add, the collective bargaining price. 
 In short, the theory of our taxation is that we pay 
 a price for government services, that we all pay a 
 price, and that we all pay the same price ; only it is 
 not a competitive price, but an equal sacrifice price. 
 How this equal sacrifice may be represented by the 
 rich man paying pounds and the poor man paying 
 pence, I have already shown. 1 
 
 The fundamental principle of our taxation, then, is 
 
 1 P. 23. Of course, it is the easiest thing in the world to bring forward 
 individual cases which seem to conflict with this theory. Political and 
 practical exigencies occasionally play wild work with it. All the same, 
 there is, and for a long time has been, an economic theory of taxation. If 
 we are still far from completely adapting our practice to that theory, we 
 are at least far ahead of all the world in this respect. The fundamental 
 truth, then, that taxation is a price for value received by every citizen 
 should not be concealed by the expression "compulsory contribution." 
 In matters of taxation, it seems to me, we cannot be too careful to keep 
 it clearly before the citizens that taxation is not a tribute, not even a 
 burden any more than is the paying for other forms of bread and butter, 
 not something to be dodged, not something to be shifted on to other 
 people's shoulders, but something charged on a clear principle of quid 
 pro quo, something to be honourably paid to the government in exchange 
 for necessaries of life. We are not penalised because we are rich ; we 
 do not escape because we are poor. We all pay an equal price in 
 sacrifice.
 
 io6 THE SINGLE TAX 
 
 that it is an equal sacrifice payment by every citizen 
 for general services rendered him. What, now, is 
 the Single Tax? 
 
 As its name indicates, the Single Tax is intended 
 to take the place of all other taxes, Imperial and local. 
 There is a fund which God, says Mr. George, has 
 provided for taxation, just as " God has intended the 
 milk of the mother for the nourishment of the babe." 
 It is land rent ; for rent, by its very definition, is a 
 surplus, something that remains when capital has got 
 its interest, the employer his profit, and the workman 
 his wage. It is, indeed, something that does not 
 enter into the cost of production of commodities. 
 Therefore its abolition or its appropriation would not 
 affect prices. It is, besides, a fund which steadily 
 increases, and that without labour or credit to any- 
 one, simply by the increase of man and the improve- 
 ments in the arts. Unfortunately, this fund is now 
 in private hands. Land is by law as much private 
 property as any product of industry. But it never 
 should have been private property, and the law which 
 has made it so can disestablish and diseridow the 
 owners, just as it did the Irish Church. Once the 
 modern State has resumed what the historical State 
 had no right to part with, we have a fund large 
 enough to pay all our imperial and local taxation 
 say 300,000,000 a year and all capital and 
 labour are relieved. 
 
 This, I think, is a perfectly fair statement of the 
 Single Tax doctrine ; and, undoubtedly, there is a 
 simplicity about it which compares very delightfully 
 with ours. It conceives of the government having,
 
 NOT A RIVAL SYSTEM TO OURS 107 
 
 or desiring to have, a private estate, the land of the 
 nation, the produce of which goes to defray the 
 expenses of government ; whereas our present system 
 makes the government dependent year by year on 
 the taxpayers for the funds which it is to ad- 
 minister. 
 
 But, whenever thus stated, it becomes clear that 
 these two are not rival systems of taxation at all. 
 The impot unique of the Physiocrats, which has a 
 superficial likeness to the Single Tax, was a rival 
 system. All taxes, they said, must ultimately rest 
 on land ; it is the only thing on which they can rest. 
 Instead, then, of a round-about system of laying 
 them first on this and that, and having them shifted 
 in the end, let us take the more economical way of 
 placing the taxation direct on land. In either case 
 it is the same shoulders which bear it ; what we 
 shall save is friction and expense. But Henry 
 George's doctrine was not a theory of taxation, but 
 a deduction from his theory of the cause of poverty. 
 He has, indeed, many hard things and true things 
 to say of American taxation, particularly of taxation 
 by Protection, and in what he condemns we are all 
 on this side, I imagine, agreed with him. But he 
 was not led to his theory by consideration of the 
 evils of the present system of taxation and by 
 the search for a better. His problem was the 
 association of poverty with progress. He asserts 
 which is untrue that the rich are growing richer 
 and the poor poorer, " as though an immense wedge 
 were being forced through society, elevating those 
 above and crushing down those below." " The cause 
 which determines which part of the produce will go
 
 io8 THE SINGLE TAX 
 
 to the landowner," he says, " necessarily determines 
 what part of the produce shall be left for labour and 
 capital." Now, there are two things always with us 
 the increase of population and improvement in the 
 arts. Either of these by itself would, and both 
 of them together do, increase the proportion of the 
 aggregate produce which is taken in rent, and wages 
 and interest fall together. But as land is the one 
 thing which does not increase in amount, and as it 
 is at once the great reservoir, corn-field, building 
 ground, and walking ground of humanity, those who 
 own it command their own terms from those who 
 use it. Thus, as society grows in numbers and 
 wealth, rent takes everything but subsistence wages 
 and subsistence interest. 
 
 It may be granted that, when a man once con- 
 vinces himself of this, the rest is easy. It is right 
 for an outraged community to confiscate the land, 
 and that without any compensation to the holders. 
 It cannot be unjust to do so, for rent is itself the 
 great injustice. "It is not merely a robbery in the 
 past ; it is a robbery in the present," and it cannot, 
 of course, be unjust for the State to confiscate stolen 
 property. " Why should we hesitate about making 
 short work of such a system?" "We must make 
 land common property." One way of doing it 
 would be to " formally confiscate all the land and 
 formally let it out to the highest bidders " ; but as a 
 " simpler, easier, and quieter way of doing the same 
 thing " " avoiding a needless shock to present 
 customs and habit of thought " and a " needless 
 extension of governmental machinery " he proposed 
 to " confiscate rent " ; that is, to " appropriate rent
 
 A METHOD OF CONFISCATION 109 
 
 by taxation." 1 If rent was appropriated, then, of 
 course, the State would have funds enough and to 
 spare for all purposes, and would not require a 
 revenue, and so our present taxation would come to 
 an end. 
 
 It is clear, then, that, to put forward the Single 
 Tax as a tax, is to draw away attention from the 
 real nature of the proposal. The essence of our 
 present system is that, in the division of labour, we 
 set aside a class of ourselves to provide for us 
 certain services which are necessaries for our very 
 life. Our problem is how equitably to apportion the 
 payment on a principle which is intelligible and will 
 command the respect of the taxpayers. And our 
 taxation is, I claim, an honest attempt to charge us 
 individually an equal sacrifice price for the services 
 rendered to us collectively. Mr. George proposes 
 that the same services should be rendered, but they 
 are not to be paid for by the people who benefit. 
 One class, the landowners of the country, are 
 arraigned before him, and pronounced guilty of 
 having in their possession something which they 
 should not have ; and he proposes to pay for the 
 government services as courts of justice might con- 
 ceivably pay their judges and officers by fines. 
 The Single Tax, in short, is a proposal to kill three 
 birds with one stone to abolish private property 
 in land, to lay violent hands on the revenues of one 
 class without compensation, and to make taxation 
 unnecessary by using these revenues. It is not a 
 system of taxation, but a method of confiscation. 
 Once this is seen, all the advantages adduced for 
 
 1 Progress and Poverty, Book viii. , Chap. 2.
 
 no THE SINGLE TAX 
 
 the Single Tax I do not care how great they are or 
 seem to be are seen to be nothing more than bribes. 1 
 
 Like all professional economists, I should have 
 thought that to show that this scheme is not a rival 
 system of taxation, but undisguised 2 confiscation, 
 was enough ; and this, among other reasons, is the 
 explanation of the " contemptuous silence " on the 
 part of the economists 3 which Mr. George so bitterly 
 
 1 It will now be seen more clearly how completely the Single Taxers 
 have misled those who voted for the Glasgow Bill under the 
 impression that they were giving their _ adhesion merely to "the 
 principle of taxing land values." On p. 61 I showed that the bill 
 provided for the common taxation of four classes who did not seem to 
 have much in common owners of vacant ground in congested areas, 
 owners of land built upon, owners of feu-duties, and owners of land 
 and property subject to feu-duties. It is evident now why these classes 
 are to be taxed. It is not that they have been escaping taxation ; it is 
 not that they have been getting an extra advantage which makes them 
 better able to pay taxation. This may be the case or it may not ; the 
 one reason they are to be taxed is that this bill is a ten per cent, in- 
 stalment of the complete confiscation of rent, and rent is to be taxed this 
 ten per cent, wherever it is found : whether the source of it has come 
 by lines of inheritance since the Conquest or by purchase yesterday ; 
 whether it is held by individuals, or by friendly societies and trade 
 unions ; even, indeed, when it is in the hands of municipalities them- 
 selves. It is useless to point out that this violates all previous canons 
 of taxation, and hits both those who have sinned and those who have 
 been sinned against under our land system. The one answer is : If 
 you are drawing rent you are in possession of stolen property, and you 
 may be thankful that you are fined only ten per cent. meantime. 
 
 2 I say "undisguised," for, in Glasgow at least, it is now definitely 
 confessed that " it is not a tax." 
 
 "To prevent any misunderstanding, I ought perhaps to state 
 explicitly that I regard the proposal to confiscate the property of 
 landowners without compensation as unworthy of serious discussion.' 
 Sidgwick, The Elements of Politics, p. 141.
 
 VIOLATES PRESCRIPTIVE RIGHT in 
 
 resented. But late discussions with the Single Tax 
 advocates have convinced me that the bribe offered 
 has so far debased public opinion among a large 
 section (who have power to express their opinions 
 through their representatives on local and imperial 
 bodies) that, with them, the word " confiscation " no 
 longer carries its own condemnation. If this idea 
 spreads much further among the masses we shall 
 have to expound the first principles of public morals 
 on political platforms. In short, from various ex- 
 pressions in my own city, I am a little afraid that 
 the land question, in this its most recent form, is 
 likely to be the new battle-ground of poor against 
 rich, the economists in this case being regarded, 
 thanks to Mr. George, as holding briefs for the 
 oppressors. It is for this reason that I think it 
 advisable to treat the Single Tax so far seriously 
 as to put down briefly some of the more evident 
 objections to it. 
 
 (i.) Confiscation of any property to which the 
 holder has had an ex facie valid title for forty years 
 is, of course, barred by prescription, the principle by 
 which unquestioned possession for that length of 
 time gives a title-in-law to the holder. The rationale 
 of the principle is twofold : (a) that, after forty 
 years, it is as impossible to prove the honest aquisi- 
 tion of anything as to prove the reverse ; so that, 
 without such a provision, no property would be safe 
 from those powerful enough to raise an action. And 
 it should be noted that the disciples of Mr. George 
 who are strongest for this particular confiscation, are 
 quite as strong against the confiscation of capital ; 
 (<) that, in the course of forty years, all sorts of
 
 112 THE SINGLE TAX 
 
 calculations, contracts, obligations, plans, etc., have 
 been based on the possession and expectation of 
 property ; so that the disturbance consequent on 
 confiscation would spread far beyond the persons 
 primarily concerned, and affect numbers of wholly 
 innocent people. It would, then, be a notable pre- 
 cedent for further aggressions on private property, if 
 the first form of wealth confiscated was one safe- 
 guarded, not only by prescriptive right, but by the 
 strongest titles which law could devise. And it 
 would be attended by a disturbance to the whole 
 organic industrial life of the community of which, I 
 venture to say, none of its advocates has formed the 
 very faintest conception. 
 
 (ii.) The confiscation of rent is defended on the 
 ground that it is, at worst, the taking of " unearned 
 increment " something due, either to growing hard- 
 ship as increasing numbers demand increasing food 
 and building ground, or to improvements made by 
 public money. 1 
 
 1 Mill is responsible for the expression "unearned increment." But, 
 as he is often credited with the confiscatory doctrines which he expressly 
 called "unjust," it may be well to call attention to the fact that his base 
 line, above which the State might, he thought, "without any violation 
 of the principles on which private property is grounded," tax any incre- 
 ment, was the present market price of land. His words are these : 
 " The only admissible mode of proceeding would be by a general 
 measure. The first step should be a valuation of all the land in the 
 country. The present value of all land should be exempt from the tax ; 
 but after an interval had elapsed, during which society had increased in 
 population and capital, a rough estimate might be made of the spon- 
 taneous increase which had accrued to rent since the valuation was 
 made. Of this the average price of produce would be some criterion 
 if that had risen, it would be certain that rent had increased, and 
 (as already shown) even in a greater ratio than the rise in price. On
 
 UNEARNED INCREMENT 113 
 
 Objection may be taken in limine to begging of 
 the question by the unhesitating condemnation of 
 "unearned" without any definition of "earned," and 
 without any consideration of " unearned decrement " ; 
 and to the fining of land increment while passing by 
 other notorious forms of increment, quite as " un- 
 earned," such as money, monopolies, etc. It may be 
 questioned whether the mere increase of wealth does 
 not give an increment to all participants in the 
 increasing National Income, irrespective of any "de- 
 serving" such as might be supposed to accrue to 
 increased work or sacrifice. 1 And, again, it may be 
 asked whether the " public money," which made the 
 improvements, was subscribed by those who are 
 to get it in reduction of rent and in " relief of 
 taxation." 
 
 But, independently of this, the serious objection is 
 that the measure would not reach great numbers of 
 those who have enjoyed the increment, but would 
 fall on those who have bought from them at prices 
 which included the increment. The class aimed at 
 is the " aristocracy," the assertion being that, in 
 
 this and other data, an approximate estimate might be made, how much 
 value had been added to the land of the country by natural causes ; and 
 in laying on a general land-tax, which for fear of miscalculation should 
 be considerably within the amount thus indicated, there would be an 
 assurance of not touching any increase of income which might be the 
 result of capital expended or industry exerted by the proprietor. . . . 
 From the present date or any subseqent time at which the legislature 
 may think fit to assert the principle, I see no objection to declaring that 
 the future increment of rent should be liable to special taxation ; in 
 doing which all injustice to the landlords would be obviated, if the 
 present market price of their land were secured to them ; since that in- 
 cludes the present value of all future expectations." Principles, v. ii. 5. 
 J Cf. p. 96. 
 H
 
 u 4 THE SINGLE TAX 
 
 hereditary succession, they have been robbing the 
 people for eight centuries ; the class hit would 
 be very largely not only the comfortable but the 
 poorer classes, whether directly, or through the great 
 corporations in which they are deeply interested, 
 such as churches, charities, insurance offices, friendly 
 societies, trade unions, co-operative societies, etc. If 
 it be impossible to gain a hearing on grounds of 
 "justice" from people who have persuaded them- 
 selves that justice always works against the rich, it 
 may be possible by showing that the punishment 
 would fall very largely perhaps chiefly not on the 
 presumed evil-doers, but on themselves. 
 
 (iii.) Suppose the Single Tax established, it would 
 end that connection between taxation and parlia- 
 mentary institutions which began at Runnymede, 
 and has made us the freeest people in the world. It 
 would put an income into the hands of the govern- 
 ment, while removing the constant check of coming 
 to the people for supply. And as the present vote 
 is based on taxation, it would, I suppose, bring in 
 manhood suffrage : that is, it would give this For- 
 tunatus Purse into the control of the masses, while 
 removing from them the salutary necessity of first 
 filling it. It would, in short, be an overturn of the 
 present British constitution. 
 
 It is generally assumed that the new income from 
 the confiscated rents would be much greater than 
 what we at present require. If Bailie Ferguson's 
 figure of 300,000,000 is correct, this would be so ; 
 and one may guess what would be the temptation 
 to corruption and pauperising expenditure. If, 
 however, it should turn out to be smaller, it would
 
 RELIEVES CAPITALISTS 115 
 
 be necessary, as rent is a " natural " surplus, to 
 have recourse to the old system to make up the 
 balance, after we had abandoned or disorganised the 
 machinery for collecting it or find another class of 
 income to confiscate. 
 
 (iv.) It would relieve from taxation those whom 
 we have considered most obviously bound to pay 
 taxes, and who paid them with least murmur, the 
 comfortable and capitalist classes. Socialists, in 
 fact, when they are not kept quiet by the consider- 
 ation that it is a long step in their direction, may 
 well denounce the Single Tax as a measure which 
 relieves their favourite enemies. It is a measure 
 strongly advocated as a relief of industry, 1 the 
 "relief" spoken of being the relief of employers 
 not from rent, for the State steps into the place of 
 the private landowner, but from taxes, with its 
 assumed results of lower prices, increased demand for 
 goods, increased demand for labour, and increased 
 wages. It might as well be added " increased pro- 
 fits." Thus it is a confiscation of the income of one 
 set of capitalists the landed class in aid of the 
 incomes of another set of capitalists. The question 
 might very well be put : " Where, in all this shower 
 of blessing, does the working man come in ?" 
 
 I have heard it argued, indeed, that the working 
 man is taxed, not only in his tea, tobacco, and liquor, 
 but in every commodity he buys, inasmuch as no one 
 
 1 It would be a pity if so great a confiscation did not have some good 
 effects, but it may be as well to remember that this is not .300,000,000 
 added to the National Income, but ^300,000,000 transferred from a class 
 of the community to the whole body of tax and ratepayers. More than 
 one nation, in historical times, has found that the confiscation of the 
 church lands did not mean the abolition of poverty.
 
 Ii6 THE SINGLE TAX 
 
 can manufacture anything without first paying for 
 the privilege in the shape of rent. But, of course, 
 this is to deny the Ricardian proposition that rent 
 does not enter into price, while the whole doctrine 
 of the Single Tax is founded on the Ricardian 
 law from which this is the direct and unquestioned 
 deduction. 1 
 
 The same answer applies to the contention that 
 industry in towns is restricted by high rents. As 
 rent does not enter into price, it is evident that high 
 rents must be the equivalent of some differential 
 advantage : otherwise town manufacturers could not 
 compete with rivals on the outskirts. The assertion, 
 indeed, is commonly made, about certain London 
 industries, that the reason why they contrive to 
 remain in congested districts and yet pay high rents, 
 is because of cheap women's labour too often 
 subsidised. If so, perhaps this is the differential 
 advantage, and it is not one that should be further 
 encouraged. 
 
 (v.) It would, as the Single Tax, put an end to 
 the taxation of commodities, and it is, indeed, but- 
 tressed up by the contention that indirect taxation is 
 a means of putting burdens on the poor without 
 their being aware of it. As usual, it is ignored that 
 the rich, in addition to their income taxes and death 
 duties, also pay indirect taxes, 2 and that there is a 
 
 1 To suggest, as is sometimes done, that manufacturers include their 
 taxes in the price of their goods, and thus make the consumer pay them, 
 is as worthy of serious argument as would be the contention that manu- 
 facturers contrive to charge up their butcher's bill to the consumer. 
 See p. 10. 
 
 2 Cf. page 26, note.
 
 THE APPEAL TO JUSTICE 117 
 
 good deal to be said for it as tending to Professor 
 Sidgwick's ideal of making taxation proportional 
 to superfluous consumption, and so equalising sacri- 
 fices more nearly than by the rule of proportioning 
 taxation to total income. 1 But, apart from this, 
 as the great bulk of our indirect taxation is raised 
 from liquors, this would put an end to at least 
 one moral purpose served by our system, the raising 
 the price of liquors. There are those, no doubt, who 
 think that " free trade in drink " would tend to pro- 
 mote temperance. Perhaps it is enough to recall the 
 chapter in Mr. Lecky's History of England in the 
 Eighteenth Century, where he narrates what happened 
 in the early part of that century when the Excise 
 taxes were removed, and the expression, " drunk for 
 a penny, dead drunk for twopence, and straw into 
 the bargain," was not a joke, but a common wording 
 of the signboards above the gin shops. 2 
 
 All these objections, I am aware, fall on deaf ears 
 once people have embraced the faith that private 
 owning of land is an " injustice." Ever since the 
 world began men have responded to the appeal 
 for justice, and ever since the world began has 
 justice been found the last and most disputed 
 question of all philosophies. The same objections, 
 they say, were urged against the abolition of 
 slavery, and, although slavery was an institution 
 sanctioned by the State, it was swept away once the 
 
 1 The Principles of Political Economy ', 2nd edit., p. 567 ; also 
 Memoranda presented to the Royal Commission on Local Taxation, 
 p. 101. 
 
 8 Vol. i.,479-
 
 ii8 THE SINGLE TAX 
 
 national conscience recognised the rights of man. 
 And this, we are told by their leader, is a far more 
 serious question than slavery. 
 
 To put landowning in the same category with 
 slave-owning, is, of course, to prejudge the case ; to 
 say that the arguments were wrong in the one case 
 is not in the least to prove that they are wrong 
 in the other. I quite admit that there are peculiarities 
 in land which make the private possession of it 
 peculiarly open to abuse, and would justify a State 
 in attaching to it peculiar responsibilities. But I sub- 
 mit that a fierce light beats upon the owners of land. 
 Their gains are blazoned by every reformer : their 
 losses are hidden and frankly disbelieved. The iron 
 of their " trespassers beware " has entered our soul : 
 we expect them to be arrogant and supercilious, and 
 it would be a wonder if we did not find them so : if 
 they show the old virtues of English landlordism, we 
 call them at best benevolent despots. In short, I 
 seem to see that the indignation generated by the 
 action of a few selfish autocrats straining their rights, 
 is out of all proportion to the injury done to the 
 people by it. And that the evils complained of are 
 such as to justify anything like confiscation, or even 
 fine, I entirely deny. 
 
 Among people who amuse themselves with "natural 
 theology," it is easy to point out that land is eter- 
 nally limited while population is not, and to deduce 
 the conclusion that, as the Creator is responsible for 
 both facts, He could never have meant the possession 
 of land to be entailed on one set of owners. Mr. 
 George tells us that the Almighty has forbidden 
 private property in land " by a decree written upon
 
 APPEAL TO NATURAL THEOLOGY 119 
 
 the constitution of things," just in the same way as 
 Aristotle said that slavery was written " in the 
 constitution of the universe " ; just in the same way 
 as devout Socialists tell us that nothing satisfies the 
 Christian idea but equality of possessions. One gets 
 a little tired of home-made theology; but it may be 
 granted at once that, if landowners were free to 
 exercise their powers, and liked to exercise them, 
 they could make things exceedingly uncomfortable 
 for the rest of us. But, happily, landowners are not 
 men who are removed from ordinary economic con- 
 siderations. They are, as a rule, just as anxious to 
 draw an income from their land as we are to make 
 an income by the use of it. Although they are few 
 compared with the whole population, they do compete 
 with each other to hire or sell their land, and, in 
 times when our little island is so closely connected 
 with millions of acres of virgin soil in other countries, 
 it is absurd to say that the monopoly is an " iron " 
 one. 
 
 The Royal Commission on Agricultural Depres- 
 sion (1897), on calculations made by Sir Alfred 
 Milner and Sir Robert Giffen, reported that the capital 
 value of rural land, as compared with other forms 
 of property, had enormously altered within the 
 previous twenty or thirty years, and put down the 
 fall at no less than ; 1,000,000,000, or 50 per 
 cent; adding that " over a very considerable part of 
 this country, true rent has entirely vanished, since 
 the owners are not receiving the ordinary interest 
 upon the sum which it would cost to erect buildings, 
 fences, etc., as good as those now existing." One 
 may well doubt the value of Royal Commissions, to
 
 120 THE SINGLE TAX 
 
 the citizens at least, if a few striking figures of land 
 increment are held to contradict all the calculations 
 of our most careful statisticians. 
 
 As regards urban land, it probably, on the 
 whole, tends to rise, although even here there 
 are long periods when it falls back. When 
 the City Improvement Trust in Glasgow took com- 
 pulsory powers and bought up large tracts in the 
 most congested districts, it was found a very bad 
 investment, from a pecuniary point of view, for many 
 a year afterwards, and the citizens were not sparing 
 in their criticism. Even to-day there are great dis- 
 tricts now being feued at the same price as was 
 offered the owners twenty years ago. How is it 
 possible to reconcile the catch phrase, that " all im- 
 provements register themselves in land," with such a 
 fact as this ? Does anyone deny that wealth, steadily 
 and greatly increasing year by year, "registers itself" 
 in cheap goods, improved environment, and, gene- 
 rally, in higher wages ? Does anyone believe that 
 the petty 35,000 annual increase in the ground 
 rent of Glasgow " registers " the growth of wealth 
 in that city? 
 
 It is, of course, regrettable that Glasgow, like 
 other cities, once parted with lands of its own for a 
 small sum, and had to buy them back for public 
 purposes at a very high figure. But on the general 
 question of municipalities owning land, I would 
 call attention to Professor Marshall's suggestive cal- 
 culation. " The discounted value of a very distant rise 
 in the value of land is much less than is commonly 
 supposed. For instance, if we take interest only at 
 five per cent, (and, of course, a much higher rate pre-
 
 APPEAL TO POLITICAL PHILOSOPHY 121 
 
 vailed during the Middle Ages), i invested at com- 
 pound interest would amount to about 130 in 100 
 years, 17,000 in 200 years, and 40,000,000,000 
 in 500 years. Therefore an expenditure by the 
 State of i in securing to itself the reversion of a 
 rise in the value of land which came into operation 
 now for the first time, would have been a bad invest- 
 ment unless the value of that rise now exceeded 
 130, if the payment was made 100 years ago: if 
 200 years ago, the gain ought now to amount to 
 17,000 ; if 500 years ago, to 4O,ooo,ooo,ooo." 1 
 
 In any case, I should deny that this is a fit 
 subject on which to assert the last right of revolution. 
 I should disbelieve in a millennium brought about by 
 the violent confiscation of that which law and order 
 have pronounced peculiarly sacred. I should say that, 
 in the interests of a people rising so rapidly into the 
 possession of wealth and capital, it is expedient 
 rather to confirm the traditions of property than to 
 overthrow them. 
 
 As things are, the land of the nation has for 
 eight centuries been regarded as private property, 
 and has passed from hand to hand in sale, gift, 
 and bequest, under the weightiest sanctions and 
 safeguards which legislation can give. For the 
 State, then, to confiscate this land without com- 
 pensation, is to go back on its history for all these 
 centuries; to declare that there is a power above the 
 State which made this legal right a moral wrong ; 
 and this is to appeal from the highest court we know 
 to a philosophical conception. 
 
 I should be the last to say that there is not, in 
 
 1 Principles of Economics, 4th edit., p. 718, note.
 
 122 THE SINGLE TAX 
 
 the ultimate resort, such an appeal an appeal from 
 the will of the majority to the General Will ; but 
 we must be very sure that it is the General Will, 
 and not the will of a majority which may turn 
 into a minority at the next turn of the political 
 wheel.
 
 INDEX. 
 
 Ability, to pay, 19, 29 ; to con- 
 tribute, 19 ; visible, 34. 
 Agricultural value, 73. 
 Almsgiving, canon of, 31. 
 Aristotle, 3, 5, 119. 
 Arterial improvements, 40, 48, 92. 
 Assessor's valuation, 56, 68, 73, 76. 
 
 Beneficial rates, 33. 
 Benefit, 15 ; sphere of, 28. 
 Benefit theory, breaks down, 103 ; 
 origin, 104; where applicable, 104. 
 Blind bargain, 47, 8l. 
 Blunden, G. H., 76. 
 Bradford Council, 57. 
 Burt, Peter, 59, 72, 87, 89. 
 
 Cannan, Edwin, 29. 
 
 Capital, taxation of, 51, 94. 
 
 Chisholm, Samuel, 83, 90. 
 
 City Improvement Trust, 120. 
 
 Compulsion, 16, 103. 
 
 Confiscation, 83, 89, 97 ; justified, 
 1 08 ; two ways of, 108 ; by instal- 
 ments, no; barred by prescrip- 
 tion, III. 
 
 Contract, of taxation, 2 ; interfer- 
 ence with, 44 ; fair, 44. 
 
 Contribution versus price, IOI. 
 
 Cost, 115. 
 
 Costelloe, B. F. C., 39, 47, 49, 5, 
 51, 52, 92,93. 
 
 Death duties, 27 ; municipal, 34, 
 
 53. 92- 
 Double taxation, 43. 
 
 Education rate, 47 ; used falla- 
 ciously, 47, 48. 
 
 Equal sacrifice, 21, 48; practical, 
 22 ; not assessed, 25, 101. 
 
 Farrer, Lord, 75. 
 
 Feu-duties, 43 ; taxed, 59, 61 ; 
 
 why tax? 81 ; as investments, 79 ; 
 
 nature of, 80 ; not secured by 
 
 improvements, 81 ; held in family, 
 
 83 ; sold, 83. 
 
 Ferguson, John, 36, 57, 87, 114. 
 Freedom, 5. 
 Free trade in drink, 117. 
 
 General will, 5 ; appeal to, 122. 
 
 George, Henry, 88, 99-122. 
 
 Giffen, Sir Robert, 8, 18,33,46, 119. 
 
 Glasgow Bill, terms of, 55 ; as first 
 drafted, 58 ; exemptions, 58 ; 
 as added to, 59 ; taxes feu-duties, 
 59 ; taxes four classes, 61 ; prin- 
 ciple of valuation, 63 ; limited to 
 burghs, 63 ; double taxation, 84 ; 
 purpose, 86 ; as reducing rent, 
 87 5 suggested preamble, 88 ; 
 work of single taxers, 88, 100 ; 
 confiscation by, no. 
 
 Goschen, Mr., 45, 46. 
 
 Government services, 5, 15; how 
 paid, 14. 
 
 Green, T. H., 18. 
 
 Ground owners, 39 ; already pay 
 rates, 43 ; but only calculable 
 ones, 47 ; not like superiors, 8l. 
 
 Ground rent, how calculated, 45. 
 123
 
 124 
 
 INDEX 
 
 Harper, C J., 50, 53, 54. 
 Henry, James, 75, 90. 
 Holding up land, 72, 92. 
 
 Imp6t unique, 107. 
 
 Income tax, 26 ; local, 32. 
 
 Income, national, 7 ; government, 7 5 
 their relation, 8. 
 
 Indirect taxation, 25, 26, III, 115 ; 
 ended by single tax, 116. 
 
 Industry a co-operation, ^ ; re- 
 stricted by rent, 1 1 6. 
 
 Jordanhill, 96. 
 Justice, 117. 
 
 Kelvin, Lord, 18. 
 
 Land, held up, 72, 92 ; fall in, 1 19. 
 Landowners, pilloried, 1 18 ; do 
 
 compete, 119. 
 Land value assessment, 55 ; laid on 
 
 proprietors, 55 ; destination, 57 ; 
 
 not a relief, 57 ; transferred to 
 
 superior, 59 ; who escape it, 60 ; 
 
 personal illustrations, 60, 65, 79 ; 
 
 not based on rateable value, 70 ; 
 
 on vacant ground, 68 ; determined 
 
 by best use, 70. 
 Lecky, W. E. H., 117. 
 Local rates, evolution of, 29. 
 London County Council resolutions, 
 
 39- 
 Luxuries, 26. 
 
 Marshall, Prof., 120. 
 Means and substance, 32. 
 Mill, J. S., 20, 112. 
 Milner, Sir Alfred, 119. 
 Municipal death duty, 53, 92. 
 Municipal landowning, 120. 
 
 National income, 7. 
 Natural theology, 118. 
 Necessaries, 26. 
 
 Occupiers, 40 ; think they pay 
 
 rates, 49. 
 
 Old age pensions, 12. 
 Onerous rates, 34. 
 Owners' rates in Glasgow, 84. 
 
 Owners' tax, 41 ; countervails in- 
 creased site values, 50 ; may re- 
 lieve occupiers, 50 ; not confisca- 
 tion, 51 ; a taxation of capital, 51. 
 
 Paupers, 24. 
 
 Physiocrats, 107. 
 
 Police rate, 34. 
 
 Poor rate, 17 ; evolution of, 29, 34. 
 
 Prairie value, 73- 
 
 Prescription, in. 
 
 Price, tax as, 16 ; versus contri- 
 bution, 103 ; a quid pro quo, 105 ; 
 not necessarily competitive, 105. 
 
 Protection services, 16. 
 
 Progi-ess and Poverty, 99 ; its prob- 
 lem, 107. 
 
 Proprietors, assess themselves, 56 ; 
 analogue of ground owners, 80, 
 82 ; double taxation of, 84 ; 
 already pay rates, 84. 
 
 Rates, 28 ; school and poor, 17 ; 
 levied on property, 32 ; beneficial, 
 33 ; onerous, 33 ; must increase, 
 40 ; considered in price of land, 
 45 ; unforeseen, 47 ; add value, 
 49; whether paid by occupiers, 49. 
 
 Reith, James, 64, 77, 94. 
 
 Relief of taxation, 115. 
 
 Rent, a fund for taxation, 106 ; does 
 not enter into price, 116; in- 
 dustry restricted by, 116. 
 
 Rental, rates attached to, 32 ; as 
 visible ability, 34. 
 
 Representation and taxation, 114. 
 
 Revenue, government, 7 ; part of 
 national income, 8. 
 
 Revolution, right of, 121. 
 
 Ricardo, 17, 116. 
 
 Right of revolution, 121. 
 
 Rights, derived from State, 4. 
 
 Royal Commission, on Local Taxa- 
 tion, 18, 33, 36, 39, 41, 46, 47, 
 So, 5 r 52, 53. 72, 75. 76, 83, 89, 
 90, 92, 93. 94. 97, "7; or. 
 Agricultural Depression, 119. 
 
 Sacrifice, equal, 21 ; sphere of, 27. 
 Salisbury, Lord, 94. 
 School rate, 17, 33.
 
 INDEX 
 
 125 
 
 Seligman, Prof., 20. 
 
 Services of government, 5, 27 ; as a 
 group, 7 ; protection, 16. 
 
 Shifting the burden, 12. 
 
 Sidgwick, Prof., 116, 117. 
 
 Single tax, 99 ; statement of, 106 ; 
 not a tax, 89, 107 ; a bribe, I IO ; 
 five arguments against, m-ii6; 
 does not reach unearned incre- 
 ment, 113; a relief of taxation, 
 115; relieves capitalists, 115 ; 
 ends indirect taxation, 116. 
 
 Site value, 40 ; its probable yield, 
 50 ; cleared, 53 ; difficulty of 
 determining, 76 ; determined by 
 rental, 76 ; confiscation of, 83. 
 
 Slavery, 117. 
 
 Smith, Adam, 19, 25, 97. 
 
 State, theory of, 3 ; as fountain of 
 rights, 4 ; as force, 5 ; as general 
 will, 5 ; as family, 20. 
 
 Substance, 19. 
 
 Superior, not like ground owner, 81. 
 
 Taxation, theory of, I -35 ; of land 
 values, 37-98 ; a contract, 2 ; 
 
 not an evil, 9 ; equivalent of 
 benefit, 10; proper, 15, 27; as 
 prices, 16 ; by benefit, 16 ; by 
 income or rental, 18; payable by 
 every man, 21 ; indirect, 25 ; 
 double, 43; of capital, 51, 94; 
 of feu-duties, 79 ; of vacant 
 ground, 93 ; theory of, recapitu- 
 lated, 101. 
 Truisms, II. 
 
 Unearned increment, 82, 96, 1 12; 
 Mill on, 1 12 ; not reached by 
 single tax, 113. 
 
 Vacant ground, 68, 71, 93 ; difficulty 
 
 of taxing, 93, 94, 95. 
 Valuation of sites, difficulty of, 53, 77. 
 Value, agricultural, 73 ; prairie, 73. 
 Vigers, R., 41. 
 Visible ability test, 34. 
 
 Wealth registers itself in land, 1 20. 
 Will, general, 5 ; unregenerate, 4. 
 Willing buyer and seller, 56, 64, 66. 
 
 GLASGOW : PRINTED AT THE UNIVERSITY PRESS BY ROBERT MACLF.HOSE AND CO.
 
 BY THE SAME A UTHOR 
 
 Ex. Post 8vo. $s. net. 
 THE DISTRIBUTION OF INCOME 
 
 MACMILLAN AND Co., 1899
 
 
 235
 
 University of California 
 
 SOUTHERN REGIONAL LIBRARY FACILITY 
 
 405 Hilgard Avenue, Los Angeles, CA 90024-1388 
 
 Return this material to the library 
 
 from which it was borrowed. 
 
 SiXX of 
 
 AT
 
 HD 
 
 1313 
 
 S63t