If Henry George Were Writing Today
by Harold S. Buttenheim
[A reply by Walter Fairchild, Secretary of the
American Association for Scientific Taxation, with acknowledgment to
Robert Clancy for research support, to the article by Harold S.
Buttenheim entitled "If Henry George Were Writing Today."
Originally published with the title "Another Perplexed
Philosopher" in Land and Freedom, March-April, 1935. Mr.
Buttenheim's response, reprinted from the May-June issue of Land
and Freedom is also included below]
The thoughtful article, which appeared in the Journal of Land
and Public Utility Economics, February, 1935, is highly
interesting, because it presents the viewpoint of one who has
approached the subject of land value taxation from the direction of
city planning, zoning and housing, rather than by the route of a study
of the writings of Henry George.
Mr. Buttenheim is editor of The American City. His experience
is perhaps as broad as that of anyone in this country as to the
subjects in which he is particularly interested. It is gratifying to
find in his article complete endorsement of the major premise of Henry
George, which is that all value of land is the product of community
development and governmental services and should be taken by the
community for the support of government.
A student of the writings of Henry George, however, may be pardoned,
upon reading Mr. Buttenheim's article for feeling that, had Mr.
Buttenheim read Henry George more carefully, he would have omitted
many of his paragraphs.
It is true, as Mr. Buttenheim points out, that the land speculation
resulting from the opening up of new territory which was a feature of
the period prior to fifty years ago is not now as rampant as it was
then. It is true that the world changes, but we doubt the statement, "Had
Henry George been born a half-century later, he would have lived
amidst a new set of economic conditions." Details may change, but
the principle remains in its simplicity and has not changed. No one
can read the introductory to Progress and Poverty, written by
Henry George in 1879, without being struck with the fact that the
problem of today has been outlined as though it were written
yesterday. Henry George refers to "streets lighted with gas,"
but this is the only old-fashioned or out-of date reference to be
found. But whether streets are lighted by electricity, gas, or oil
lamps, the problem remains the same.
Mr. Buttenheim speaks of the slowing up of speculation in city real
estate. Mr. Buttenheim does not minimize the disasters which have
resulted from land speculation. We cannot, however, agree with Mr.
Buttenheim in saying that such speculation "has permanently
passed its peak." At no time in history has speculation in land
values reached the heights that it did in New York and elsewhere
within the past decade. The technocrats of recent fame are not the
only ones to prophesy from the advance of the arts a future economic
crisis more acute than any we have thus far known.
Mr. Buttenheim ascribes his assumption that land speculation has
passed its peak to the "slowing up in population increase in the
United States." Mr. Buttenheim draws a conclusion from this that
land value or economic ground-rent will cease to increase. Mr.
Buttenheim fails to observe as Henry George did that the increase in
land value is only partly due to the increase of population and that
there may be an increase in land value even though population remains
fixed or even recedes. We cannot but feel that Mr. Buttenheim would
profit by a study of Book II of Progress and Poverty, where
the subject of increasing and decreasing population is worked out by
In Book IV of Progress and Poverty and elsewhere, Henry
George discusses the effect of material progress on the distribution
of wealth. He says:
"The changes which constitute or contribute to
material progress are three: (1) increase in population; (2)
improvements in the arts of production and exchange; and (3)
improvements in knowledge, education, government, police, manners,
and morals, so far as they increase the power of producing wealth."
Henry George then proceeds to show the effect of increase in
population apart from improvement in the arts and then the effect of
improvement in the arts apart from increase of population. He makes it
clear that "without any increase in population, the progress of
invention constantly tends to give a larger proportion of the produce
to the owners of land and a smaller proportion to labor and capital."[Progress
and Poverty, p.252]
The facts and fears that gave such furore to the technocrats a short
time ago were anticipated by Henry George by half a century but with a
scientific base of explanation which the technocrats seem to lack.[Progress
and Poverty, p.252-253]
Among minor misapprehensions is Mr. Buttenheim's reference to farm
land values and the effect of the "back to the land"
movement. We think statistics disprove Mr. Buttenheim's assumption
that "urban areas show more of their total valuation in
improvements than do the rural areas" and that the Single Tax
will cause an increase of taxation to the farm in comparison with city
sites. We think the contrary is true. We estimate three-quarters of
Manhattan Island to be only about twenty per cent improved from the
viewpoint of area as well as of land value, i. e., $3,000,000,000 of
the $4,000,000,000 of land value in Manhattan is under-improved with
business and residence slums. The balance is overdeveloped and
overtaxed in spots. As we go outward to Queens, Bronx, Brooklyn and
Richmond, improvement values rise in their ratio to land value. Going
out still further into rural lands, the ratio rises still further in
favor of improvements. Figures on rural site value in relation to
improvements are largely lacking. Interesting studies have been made
by Cornell, Wisconsin, and other research bodies, which tend to show
that the labor side of a prosperous, going farm exceeds site value by
a ratio of at least five to one. Even "fertility," usually
classed as a natural resource, Prof. Commons points out is subject to
depletion and after a generation of use fertility is largely a labor
Nor do we agree with Mr. Buttenheim's assumption that the "differential"
in rent is less acute than formerly. The facts are quite to the
contrary. Improved transportation, while making outlying districts
more available, has made access to centers of population more easy,
causing urban site values to reach higher peaks than ever before
Elimination of speculation in site values will undoubtedly other
things remaining equal have the effect of lowering selling price of
land and will tend to throw much valuable land now held idle, into
use. "Back to the land" is not limited to farm land but
applies to all valuable land, most of which in value is in the centers
of population. This would not mean that the farmers, "already
impoverished by surplus production, would be constantly menaced by an
army of potential competitors." Not only would farmers go back to
agriculture, but builders would return to construction of homes and
factories, miners would return to mining coal and iron, and so on
through the entire range of industries.
Nothing is clearer in Henry George's writings than the proposition
that the restoration of equal access to natural resources, coupled
with free ecxhange, will result in an equilibrium between the basic or
extractive industries agriculture, mining, oil production, which comes
first and the dependent arts manufacture, invention, cultural arts,
which follow and are built upon the primary industries. The same law
of wages applies to all. With free exchange the raiser of wheat in
Dakota is in a literal sense printing books in New York and painting
portraits in Paris. The dreaded "menace" of "surplus
product," when limited to labor products, is transitory and never
The elimination of the speculative holding of valuable land idle will
throw such land into use, but we doubt that the true or economic value
will be less than is estimated today. Perhaps in a few places, like
part of New York City, an abnormal development has induced the
assessor to place land value at a speculative level, but this is not
true of the country generally, where assessments are placed at about
one-third of true value.
Furthermore, freer access to land and removal of barriers to exchange
will bring about new uses of land which will tend to increase economic
"Assessed valuation" for land may decline but other things
remaining equal so also may legitimate costs of government decline.
There may be less wars and wastes of war, less graft public and
private, less tax collecting costs, less public borrowing (if any at
all). Who can say that one will not balance the other? Economy in
government and savings in waste increase land value or the share that
goes to economic rent.
So also public "betterments" increase land value.
This brings us to the major point as to which Mr. Buttenheim seems to
think Henry George would have changed his views; that is, that Henry
George would now favor an income tax and an inheritance tax for social
and economic reasons, even though all economic rent were taken by
government. We do not think so.
Mr. Buttenheim has accepted whole-heartedly the fundamental principle
that all public moneys spent for public works and public services is
reflected in land value. Mr. Buttenheim will say, of course, that such
expenditures must be wisely made in order to increase land value. In
this we agree.
The basis of Mr. Buttenheim's argument for income and inheritance
taxes seems to be that economic ground-rent will not furnish
sufficient revenue to pay for all of the things which government "ought
to incur" and that, therefore, recourse must be had to income and
Henry George was familar with both of these forms of taxation. He
recognized that both of these taxes, being levied after exchanges are
complete, are direct taxes and cannot be shifted to buyers of goods.
To that extent they do not share the condemnation applicable to
indirect consumption taxes. There are, however, various ways in which
these two forms of taxation violate the canons of taxation. They
permit the holding of resources out of best use the tax being levied
on income only. The taxpayer, in the first instance, is the tax
assessor inducing evasion and avoidance. The income tax is secret
inducing fraud. It is a tax on industry discouraging individual
initiative. There can be little doubt today but that the income tax,
which is now about a generation old in this country, is fast
travelling the road of disrepute which was followed by the personal
property tax to its ignoble ending.
But aside from these inherent defects of the income tax, there is one
fundamental objection which Henry George clearly points out and which
Mr. Buttenheim has overlooked in this article. This basic objection is
Money received by government from the income tax which is wisely
spent for a public betterment or maintenance service is reflected in
an increase in land value. If government collects the annual value of
that bettermant or maintenance service from land value, then
government has obtained it twice once from the income tax payer and
again from the land owner. If government takes it from the income tax
payer and fails to collect the resulting value from the land owner,
then the economic effect is that government has taken money from the
poctet of the income tax payer and transferred it to the pocket of the
This is true also of the inheritance tax.
If we let the symbol "I" signify the income or inheritance
tax payer, the symbol "O" represent the owner of land, and
the symbol "U" represent US (that is, government), cause and
effect would work out something like this:
- I pays an income tax on his personal earnings;
- U receives it and spends it for public betterment;
- O gets the equivalent in the increase value of land.
- If O keeps it, that which is left for I and U is merely a
sort of IOU.
- The inexorable result of this maldistribution is the piling
up of an unearned excess or surplus product in O, with private
debt as the status of I and public debt as the status of U, with
O possessing ever-increasing power to dictate the terms of the
To say that the value of all governmental spending for public
betterments and maintenance is reflected in land value is not the same
thing as saying that all land value is a product of public spending.
But the lesser is contained in the whole. Economic rent may be more
than the total of all public budgets properly spent, but it cannot be
Henry George did not ascribe any "magic" to the Single Tax.
On the contrary, he expressly teaches that it is not a panacea for all
the economic ills of humanity. Among social problems to be solved in
addition to the major one arising from the private appropriation of
land values, Henry George mentioned patent laws; the difficulties of a
national currency based on public debt and "farmed out" to
private bankers rather than a currency based on exchanges; the
creation and maintenance of a public debt; tariff walls erected for
so-called "protection," even when not used for revenue
purposes; embargoes, boycotts, and the like.
Recognizing all of these difficulties, Henry George nevertheless
makes it clear that all human effort to correct our difficulties with
respect to these other matters will be futile so long as the
underlying evil, which Henry George calls the "great robber"
of all, that is, private ownership of land values, remains.
All "superfluous and socially injurious savings," which Mr.
Buttenheim mentions but does not define, can have their being only
through monopoly of some kind. There are only two possible fields of
monopoly: on the one side we have natural resources land; on the other
side we have labor products. Henry George first makes it clear to his
reader that a monopoly of a labor product is an economic
impossibility. The immediate effect of a "corner" or an
attempted "pegging of price" of any commodity is an
immediate increase in the production of that very same article.
England tried it for rubber, Brazil tried it for coffee, Japan tried
it for raw silk, pit traders have tried it for wheat. All failed,
disastrously to themselves. The U. S. Government is now trying it for
cotton and agricultural products. Its failure is already upon us.
Therefore, as Henry George points out, "if speculation be
the cause of these industrial depressions, it must be in speculation
in things not the production of labor, but yet necessary to the
exertion of labor in the production of wealth of things of fixed
quantity; that is to say, it must be speculation in land."
Henry George does not argue for the equal distribution of the
production of all wealth. What Henry George stands for is the
establishment of economic freedom; that is, equal access to natural
resources and an equal sharing in the product of social growth and
government. Differences will remain, but they will be differences in
individual character, desires, and achievements, which are personal
and which he would sacredly preserve to the individual.
Response by Harold S. Buttenhem,
in Land and Freedom, May-June, 1935
How can an advocate of land-value taxation as the major source of
local governmental revenues, if endowed with a rational mind, believe
literally in the Single Tax as the sole desirable source of all
governmental revenues, National, State and local? This question is
suggested by Walter Fairchild's courteous and critical discussion, in
the March-April issue of LAND AND FREEDOM, of my article, "If
Henry George Were Writing Today," which had appeared in the
February number of
The Journal of Land and Public Utility Economics.
Mr. Fairchild assumes, apparently, the inerrancy of Henry George; and
he argues, in effect, that a more careful reading of Progress and
Poverty,/i> would result in my acceptance of the verbal inspiration
of every statement therein and of his deductions therefrom.
From this assumption I must respectfully dissent. In repeated
utterances, in print and over the radio, I am on record as recognizing
the essential justice and desirability of the collection for public
purposes of the community-created economic rent of land. But I do not
believe it essential to the purity or perhaps I should say
productivity of that method of taxation that it renounce all of its
former fiscal associates and become a single tax. Here was what I said
in the concluding paragraph of my radio talk of April 20, 1935, on "The
Socialization of Ground Rent:"
"It is not the single tax that I am advocating, for
my creed is that of a triple-taxer -- not a Single-Taxer. I favor
properly graded income and inheritance taxes for National and State
revenues, and am emphatically opposed to general sales taxes and
other repressive levies. I do not believe that all community
expenditures are reflected in increased land values; nor do I
believe that all privilege and exploitation would be abolished by
the socialization of ground rent. But I do believe that privilege
for the few and prosperity for the many are mutually exclusive
terms; and I want to see a demonstration in the United States of our
ability to build a depression-proof civilization free from the evils
both of fascism and of communism. To such a civilization I know of
no economic readjustment which would give greater impetus than the
abolition of that major form of privilege which would disappear with
the socialization of ground rent."
With this expression of faith, it may now be in order to discuss two
or three of the points raised in Mr. Fairchild's article, as
indicating why I cannot go the whole distance with the 100 per cent
followers of Henry George.
Simon-pure Single Taxers embrace fervently the benefits-received
theory of taxation, and reject with disdain the ability-to-pay theory.
But are they wholly consistent? Do they not ignore the fact that
ability to pay has often resulted in large part from benefits
financial, physical or mental previously received from society or by
inheritance? and that for such benefits the recipient may deserve no
more credit than for benefits derived from land ownership? There is, I
believe, both ethical and economic justification for a system of
taxation based in part on the principle that the strong or the clever
or the 1ucky should bear the burden of the weak or the stupid or the
luckless. In other words, ability to pay may properly be coordinated
with benefits received in a scientific system of promoting the public
welfare in the raising of public revenues.
To what extent is governmental spending reflected in ground rents?
This is one of the most important questions raised by Mr. Fairchild.
He expresses agreement with my contention that public expenditures
must be wisely made in order to increase land values; but he goes so
far as to state categorically that economic rent cannot be less than
the total of all public budgets properly spent. Even if this last
statement were susceptible of proof, it would still leave up in the
air the tremendous sums that are unwisely or improperly spent whether
on wars or graft, or in planless building or well-intentioned
blundering. Who can say that all such expenditures are reflected in
ground rents or that they ought to be paid for wholly by land-value
taxation? Or why should any one assume that if the Single Tax were the
law of the land, waste and dishonesty and foolishness in public
spending would disappear? Certainly not Mr. Fairchild or Henry George,
for the former quotes the latter as ascribing no "magic" to
the Single Tax and as expressly teaching that "it is not a
panacea for all the economic ills of humanity."
Another important statement in my article in The Journal of Land
and Public Utility Economics which Mr. Fairchild challenges, is
that "urban areas show more of their total valuation in
improvements than do the rural areas." "We think the
contrary is true," says Mr. Fairchild. "Figures on rural
site values in relation to improvements," Mr. Fairchild points
out, "are largely lacking." But such figures as exist do not
appear to support his criticism of my contention. In November, 1934,
the Tax Policy League published a bulletin on "Assessing Land and
Improvements." The sources of data were the latest available
reports of State tax officials in most cases covering the year 1933 or
1932. From this study it appears that twenty-seven States published
figures on land and improvement values. In sixteen of these States
(Arizona, California, Colorado, Idaho, Illinois, Kansas, Louisiana,
Minnesota, Montana, Ohio, Oklahoma, Oregon, South Dakota, Virginia,
Washington and Wisconsin) separate figures are given for rural and
urban areas. It was found that, without exception, improvements
constituted a larger proportion of total real estate values in urban
than in rural areas. The value of improvements in urban areas ranged
from 44.2 to 70.5 per cent of total urban real estate.
Conversely, land values in urban areas ranged from 29.5 to 55.8 per
cent of the total values. In rural areas improvements ranged from 9.5
to 38 per cent of the total, while in rural areas they ranged from 62
to 90.5 per cent of the total.
[Note: Some state data not reproduced here that is in the
Mr. Fairchild urges me to re-read "Book II of Progress and
Poverty, where the subject of increasing and decreasing population
is worked out by Henry George." He says that I have failed to
observe, as George did, that ... "there may be an increase in
land values even though population remains fixed or even recedes."
May I reciprocate by urging Mr. Fairchild to re-read a sentence on
page 421 of Progress and Poverty:
"With every increase of population the value of
land rises; with every decrease it falls."
This statement by Henry George does not prove that his other
statement is unsound; but it does at least show as might be shown by
many other quotations that the Prophet of San Francisco, like other
great leaders, was not always and wholly consistent.
One need not insist on the verbal inspiration of Progress and
Poverty to believe, as I do, that it is one of the noblest of
books ever written. Nor need the Single Taxers fear that the
fundamental thesis of their great leader will be weakened by
constructive attempts to re-study and re-state it for the world of