photo credit: JPD Photos

AN EXPERIMENT IN INDIA

The much travelled and well known author, Karl Eskelund, whose many books on foreign countries and their people have countless readers, describes the effort which a band of young American and English Quakers made in the way of assisting some of the Indian population, millions of whom live at starvation level.

The young idealists took up their task in 1946 at the village district of Pifa, which lies in the Ganges delta, 45 miles east of Calcutta and four miles by bus from Basirhat railway station. They were fully aware that their work would test their patience, for in India you can get no results “at five minutes past twelve.” But after having outlined their plans to the peasants, the fishermen and the landowners, which met with general approval, they organised a co-operative enterprise in cultivating the land and in marketing the produce. They set up day schools for the children, evening schools for adults, clinics, etc.

After overcoming the initial difficulties, they saw signs of progress; inspiration grew. Health conditions improved. All took greater interest in their work and their earnings increased. New ideas took shape – there was advance along the whole line – an advance, slow but sure.

Five years after the experiment began Karl Eskelund visited Pifa and with one of the Quakers as his guide, he went through the village to see how it was faring. The Quaker had lost more than two stones in weight and was as thin and spare as the natives. But what was worse, he had lost heart because the experiment had proved a total failure. The day school still existed, but only one-fourth of the children attended it. The evening school was closed.

The clinic was hardly used. Agriculture, fishing and trade were back again to old methods. The author asked for an explanation of this fiasco. The young Quaker offered quite a number of reasons, none of which he could accept.

Finally he got to the root of the matter. This is what he says:- “In the first year after beginning the experiment, both peasants and fishermen earned more than ever before. What was the result?”

“The large landowners at once raised their rents and the smaller landowners followed suit. The peasants had to pay more for permission to cultivate the land. The fishermen had to find more money to buy permission to cast their nets on the flooded fields. In that way practically the whole of the increased earnings passed into landowners’ pockets.”

“The people of Pifa were unhappy at this. Nevertheless, in the next year they worked hard. Crops were plentiful; there was a rich catch of fish; good prices were paid for the produce. At once the landowners raised their rents still higher.”

“The people then began to lose courage. What was the use if for all their efforts they got no benefit? The land-owners waxed fatter. The peasants and fishermen did not become any thinner – that they could not, for otherwise they would die.”

“lndians are ignorant but they are not stupid. They can put two and two together. They had found themselves momentarily enriched by the new methods but in the end all the extra money went to the landowners. If one of the new ideas would not work, what faith could they put in any other novelties? Perhaps after all, the old methods were the best . . . ”
- “Land and Liberty.”

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This depressing story illustrates the futility of dealing with superficial remedies when a radical reform is necessary. It is like applying skin ointment to a sick person when what is really needed is a surgical operation. All well-meaning efforts to help poverty in India or elsewhere will not get to the basic cause unless the social cancer of land monopoly is dealt with.

Where people can get access to natural resources they will be able to earn a living for themselves without resorting to aid and hand-outs from others, and their dignity will be restored as responsible human beings.

A RESOURCE RENT SYSTEM WILL PROVIDE THAT ACCESS.

THE INQUISITIVE BOY

By “SPOKESHAVE” (circa early 1900’s)
Out of the vault – this sums up our message like few others – please pass it on

What place is that, pa?
That is a brickyard, my son.
Whose brickyard is it, pa?
It belongs to me, my son.
Do all these piles of bricks belong to you?
Yes, my son, every brick of them.
My! How long did it take you to make them? Did you make them all alone by yourself?
No, my son; those men you see working there make them for me.
Do the men belong to you, pa?
No, my son; those men are free men. No man can own another. If he could the other would be a slave.
What is a slave, pa?
A slave, my son, is a man who has to work for another all his life, for only his board and clothes.
If a slave gets sick, who pays for the doctor, pa?
Well, his owner does; he can’t afford to lose his property.
Why do men work so hard, pa? Do they like it?
Well, no, I don’t suppose they do, but they work or starve.
Are these men rich, pa?
Not to any great extent, my son.
Do they own any houses, pa?
I rather guess not, my son.
Have they any horses or fine clothes, and do they go to the seaside when it is warm, like we do, pa?
Well, hardly; it takes them all their time to work.
What is a living, pa?
Why, a living – well, for them a living is what they eat and wear.
Isn’t that board and clothes, pa?
I suppose it is.
Well, are they any better off than slaves, pa?
Of course, they are, you foolish boy. Why, they’re free; they don’t need to work for me if they don’t like to; they can leave whenever they choose.
And if they leave, won’t they have to work, pa?
Yes, of course they will; they will have to work for someone else.
And will they get any more than a living from him?
No, I suppose not.
Well, then, how are they any better off than slaves?
Why, they have votes; they are free men.

Download the original – one of our best documents!

If they get sick do you pay for the doctor, pa?
Catch me! What have I got to do with it? They must pay for their own doctor.
Can you afford to lose one of the men who work for you, pa?
Of course I can; it don’t make any difference to me. I can hire another when I like.
Then you aren’t so particular about them as if they were your slaves, are you?
No, I suppose not.
Then how is it better for them to be free?
Oh, don’t ask foolish questions, boy.
What are bricks made of, pa?
Of clay, my son.
Do the bricks belong to the men when they make them, pa?
No, my son, they belong to me.
Why, when the men make them?
Because the clay is mine.
Did you make it, pa?
No; God made it, my son.
Did He make it for you, pa?
No, I bought it.
Bought it from God?
No, from a man.
Did the man buy it from God?
No, of course not; he bought it from another man, I suppose.
Did the first man it was bought from buy it from God?
No, I suppose not.
How did he get it then? How was it his more than anybody else’s?
How, I don’t know! I suppose he just claimed it.
Then, if these men should claim it now, would it be theirs?
Oh, bother ! Don’t be asking such foolish questions.
If you didn’t own the brickyard and the clay, how would you make your living?
Oh, I don’t know. I suppose I would have to work.
Would you make bricks, pa?
Maybe I would.
How would you like to make bricks for only your board and clothes, and let the man who claimed the brickyard have everything else?
Nobody’d care how I liked it. Poor people must work for their, living.
If these men had brickyards of their own, would they work for you, pa?
Not likely; they’d work for themselves probably.
Isn’t it lucky that that man claimed this land first, and that you bought it?
Why?
If he hadn’t, maybe somebody else would have claimed it, and then maybe one of these men would own it now, and then you’d have to work for him for your board and clothes.
Maybe. You ought to be thankful to Providence for His goodness to you in giving you a father who can support you without working.
Should these men’s little boys be thankful to Providence, too, pa?
Well, I suppose they should.
What for, pa?
Because their pa’s have steady work.
Is steady work a good thing, pa?
Of course it is, my son.
Then why don’t you work, pa? Nobody could keep you from making bricks, could they, pa?
No. I don’t want to keep men out of a job. If I worked I would be keeping one of them out of a job.
That’s kind of you, pa. Do you think if you was to wheel that man’s barrow once while he rested, he’d get mad about it?
Oh pshaw! Gentleman don’t wheel barrows.
What’s gentlemen, pa?
Why, gentlemen – men who don’t need to work – the upper class.
I thought there wasn’t any upper class in this country. I heard a man say all men were equal. The man who said it was a socialist, or anarchist, or something, or maybe it was election time and he was trying to catch votes.
Say, pa, my Sunday School teacher says we are all God’s children. Is she a socialist, or anarchist, or is she trying to catch votes?
Oh no, that’s the right thing to say in Sunday School and churches.
Well, pa, honest now; are these men God’s children, just as much as we are?
Why, yes, my son, to be sure they are.
Say, pa, do you remember when you bought the dozen marbles for brother Jim and me, and I grabbed them all, and made Jim give me his top, before I’d let him play with them, and you called me a greedy little hog and gave me a licking?
Yes, my son, I remember.
Well, do you think you did right?
Certainly, my son; a parent does right to correct his children and keep them from acquiring bad principles. I bought the marbles for you both. Jim had as much right to them as you.
Well, pa, if those me are God’s children just as much as you, then you and them are brothers, and if you make them give you nearly all the bricks they make, for allowing them the use of the clay which God made, isn’t that the same as making Jim give me his top for a chance to play with the marbles?
Oh, bother, don’t ask such stupid questions.
Say, pa, do you think God thinks you a greedy little hog, and that he will punish you for grabbing that clay?
Oh, don’t talk so much. Say, ma, put this child to bed; he makes me tired.

The foregoing gives a hint of the injustice of allowing the value of land, which rightfully belongs to all, to be appropriated by a few. It is true that the man who is born into this world without inheriting “a title” to certain of the natural opportunities to produce wealth, is powerless to utilise his labour, except by dividing the results with those who have appropriated before him the source from which all wealth must be drawn – the land. Such men live, therefore, only by the sufferance of those who “own” the land, and on such terms as landowners concede them, which, needless to say, is generally a bare living only.
The Single Tax will rectify this wrong.

photo credit: euzesio

Mason Gaffney

February 2009

“Phantom faces at the window.
Phantom shadows on the floor.
Empty chairs at empty tables
Where my friends will meet no more” – from Alain Boublil, Les Mis

Many stores have closed in the last year; they stand empty behind signs reading “Available”, “For lease”, or “First month free”. So have many industries, their gates locked, their girders rusting. The capital in them is wasted, poured down a rat-hole. Multi-million dollar freighters are mothballed, with no cargos to carry; others sail with unfilled capacity. Vast warehouses stand half-empty. Fleets of trucks wait for loads that never come. Redundant McMansions stand waiting for buyers, some advertising “Bank-owned”. Freight trains haul too many “empties going back”.

It’s not just the capital that’s wasting. There is land under and around those empty buildings, often more valuable than the buildings themselves. It might better be vacant, for then at least the owner would not feel committed to speculate in the old building as well as the land. It’s more than the land literally under the building, too. Even residences have yards, garages, and driveways; some have palatial grounds. Retail and wholesale and industrial buildings have vast parking areas and aprons attached for employees, customers, and deliveries. When city planners count up vacant lots, if they do, they usually see just lots without buildings, of which there are many, but nowadays there are as many or more invisible vacant lots under and attached to empty buildings.

We worry about attacks from Al Quaeda, and invasions of immigrants from Central America, but these empty spaces and vacant lands might just as well be ceded to the Taliban, or drowned like the lost continent of Atlantis, for all the good they are doing us. Osama bin Laden’s attacks are pinpricks compared with the damage we do ourselves by mismanaging our economy: we are doing his work for him.

Trivializers tell us that abandoned lands in declining cities are worthless, noting that the median house in Detroit now sells for only $35,000 or so. However, that is to misunderstand three important matters. One is that Detroit not long ago was our fourth biggest city, home of the assembly line, core of the “arsenal of democracy” and the locus of our biggest industry. Its location has not worsened, but improved with the St. Lawrence Seaway opened and global warming lengthening its ice-free season.

The second is that Michigan’s leaders can renew Detroit and their whole state any time by shucking their terrible counterproductive “modern” tax system and returning to the system that sparked Michigan’s spectacular growth, as documented in this writer’s previous Insights column, “What’s the Matter with Michigan?”. The third is that urban renewal in a free market proceeds from the fringe of a slum in towards the center. Richard Hurd taught us back in 1903 that land values are marked by continuity in space, because developers seek to anchor new neighborhoods to the best of the old. The heart of a slum may be hopeless, if you try to start renewal there, but the edges are always renewable, and revival proceeds inwards from there.

But hold on, what’s the use of new buildings when so many old ones are empty? To be sure, new ones may replace old depreciated and obsolete buildings, there is always some of that, but many of these unsold buildings today are brand new themselves. Supply has outpaced demand, leaving us with a great housing crash. There were some 2.3 million foreclosure filings in 2008. It’s not saying much that it’s the greatest crash of this millennium so far, but going back to the one before it’s worse than 1990, worse than 1975, worse than 1958 … it is rightly being compared to 1929, for like 1929 it has brought the banking system down with it, and the rest of the world as well.

This brings into sharp focus a weakness in local-oriented Georgism, which emphasizes the benefits of modifying local property taxation to untax or downtax buildings. Not long ago the local Building Industry Association approached me to help them lobby to lower various fees in lieu of taxes imposed on builders. I could have used the money, and easily repeated the litany of Georgist arguments against taxing buildings, when it occurred to me we have too many buildings already.

I do not fault and I seek no quarrel with the many Georgists who give such splendid service in the cause of downtaxing buildings to uptax land values. But please consider this. It made more sense when Henry George wrote because the property tax was the major tax levied by both state and local governments, and federal taxes were small by comparison. Also, taxable property included “personal” (movable) property as well as real estate, while most states today have exempted all or part of personal property from the base. Reforming the property tax was reforming a major part of the whole tax system, in George’s day.

Today we have sales taxes, business taxes, personal and corporate income taxes, payroll taxes for social security and medicare, employer responsibility for workmen’s comp and, in many cases, pensions. We have an income tax system, federal and state, that has turned owner-occupied housing into the greatest tax shelter while simple basic labor bears the brunt of what housing does not pay. On top of that we have subsidy programs for housing, while no one subsidizes the overtaxed worker for working. Income from commercial buildings is mostly untaxed, too, as Hudson and Feder’s work for the Levy Institute has shown. This is done through a combination of accelerated depreciation, avoidance of the capital gains tax, and sequential depreciation of the same building. It’s not buildings per se that are overtaxed. It is USING the buildings that is overtaxed. That is why we have more buildings than are being used.

It also helps explain why we have such high unemployment. Construction makes jobs, yes, but not nearly as many jobs as using the buildings once constructed. Using buildings, in turn, depends on entrepreneurs’ raising funds to hire workers. Turgot perceived in 1767 (Réflexions) that investing is the independent force that “animates all the work of society”.

Adam Smith, who learned his economics from Turgot and the Physiocrats, put it this way:

“A capital employed in the home trade will sometimes make 12 operations, or be sent out and returned 12 times, before a capital employed in the foreign trade … has made one.”

Wealth of Nations, Republished, 1937, pp. 338, 341, 349.

Adam Smith is here referring to capital as cargo, a form of stock in trade. For generating employment, fixed capital frozen in buildings or turnpikes was so sterile as not to be worth Smith’s mentioning: the payback is too slow. Time has not changed that much. One modern desk worker occupies about 200 s.f. of floor space. The cost of constructing that is roughly $100 per s.f., or $20,000 per desk worker. Some 20%-30% of on-site construction cost is labor, say $5,000 per desk worker. If the mean desk worker earns $30,000 a year, and the floor space lasts 60 years, the labor input in using the space comes to $1,800,000, or 360 times the construction labor. It is using floor space, not building it, that makes most jobs and produces most goods and services.

The greater importance of building is that it gives labor better access to the location, which might otherwise go unused. In the absence of working capital, however, as today, even access to land via floorspace is not enough by itself. There must be “front money” too. There are two sources of front money: net new saving, and recovery of capital from sales of previously invested capital. The second item includes bank loans made from repayment of earlier loans. Most businesses, especially small ones, depend on lines of credit to finance day-to-day operations.

Consider retailing. Sales p.s.f. in modern department stores might be $300 p.s.f. per year – much more in downtown New York, less in smaller markets. Over 40 years, thus, sales total $12,000 p.s.f., or 120 times construction cost. The flow of capital through the store – the throughput – accounts for so many times more jobs and products than the capital in the store building that a macro-economist can nearly ignore building construction as a job source.

John Stuart Mill applied this insight to taxation, noting how a general sales tax would slow down investing.
“… if there were a tax on all commodities, exactly proportioned to their value,… there would … be a disturbance of values, some falling, others rising, owing to … the different durability of the capital employed in different occupations. 

… The gross produce of industry consists of two parts; one portion serving to replace the capital consumed, while the other portion is profit. Now equal capitals in two branches of production must have equal expectations of profit; but if a greater portion of the one than of the other is fixed capital, or if that fixed capital is more durable, there will be a less consumption of capital in the year, and less will be required to replace it, so that the profit, if absolutely the same, will form a greater proportion of the annual returns. 

… To derive from a capital of 1000 £ a profit of 100 £., the one producer may have to sell produce to the value of 1100 £., the other only to the value of 500 £. If on these two branches of industry a tax be imposed of five per cent ad valorem, the last will be charged only with 25 £., the first with 55 £.; leaving to the one 75 £. profit, to the other only 45 £. 

… To equalize, therefore, their expectation of profit, the one commodity must rise in price, or the other must fall, or both: commodities made chiefly by immediate labour must rise in value, as compared with those which are chiefly made by machinery.” – Principles, 1848, “Of taxes on commodities”.

Where Mill says “machinery” he clearly means durable capital of all kinds, including buildings, trees, breeding herds, freighters, oil wells, highways, airports … you can name a thousand examples. And where his numerical example contrasting two “branches of industry” is understated and abstract, let us contrast buildings with the “commodities made chiefly by immediate labor” inside the buildings. A building may last for, say, 50 years, and return the principal of the capital in it in, on the average, about 2/3 of that time (a little in the first year, a lot in the last years, according to the sinking fund depreciation formula of standard financial mathematics).

The “immediate labor” of workers inside the building adds value to materials to be sold in, say, a month, returning capital that the entrepreneur can reinvest immediately, for a turnover of 12 times a year. “Turnover” is the single word that epitomizes Mill’s labored prose, and “loan turnover” expresses its effect on bankers. Taxes on commodities tax capital each time it turns over. They “disturb The Force” (as Darth Vader might say) and push capital out of producing commodities “made by immediate labor”, hence more into commodities and services rendered over long periods by durable capital: capital of slow turnover.

Following Mill the baneful influence of J.B. Clark engulfed the profession like a miasma. In his tortured efforts to conflate land and capital, Clark deleted the turnover of capital from the professional consciousness, calling the product “neo-classical economics”. His main objective was to avoid singling out land for taxation, but a byproduct was to remove capital turnover from micro-economics.

Other economists struggled for a while to fit Böhm-Bawerk’s ideas into their neo-classical models from which time had been largely banished, only to reject or isolate such ideas when they could not fit them into their static, Clarkian models. From 1870-1920, “much of the economics was … an economic theory of a capitalistic production. Considerations of capital theory proper … simply disappear from the picture” (Robbins, 1934). It was Auguste Comte who wrote that all science consists of relations either of coexistence or sequence. Clark confined neo-classical economics into a box that shut out relations of sequence. Not until Keynes did they return, and then in distorted form.

Keynes picked up on Turgot’s insight, but in a twisted sort of way that loses much of its force. In Keynes, “investment” is the motor of the system, but it means net new investment only. He takes reinvestment and turnover for granted, as results of “consumption”, regardless of what is consumed – it could even be the services of land, for all he seems to care. He puts everything in monetary terms, with little attention to the corresponding flows of goods and services, as though their composition has no effect on the outcome. Thus for him construction is just as good as tailoring or cooking or delivering mail or waiting on table for making jobs, and maybe even better because construction soaks up the capital invested for long periods, and Keynes saw capital as being formed in excess of need – quite the opposite of today’s problem when businesses are starving for want of working capital.

In the previous Great Depression, as today, America was loaded with empty buildings and excess capacity. Empty subdivided lots went begging; owners abandoned many of them for back taxes. The Georgist message, locked into a paradigm from earlier times, seemed irrelevant and was shunted aside, where it has mostly remained.

What we need today is to attack taxes on Mill’s “commodities made with immediate labor”, and taxes on labor itself. We need to stress how taxes that “shoot anything that moves” keep things from moving. We need to show how removing such taxes will raise the value of empty buildings and lands, so we can replace such taxes with property taxes. We need to show that the present system, by seeking to spare property values, actually depresses them by more than would direct taxes on property, because of the “Excess Burden” of indirect taxes.

As we make this great shift we can also, of course, focus the property tax more on land, but as we do so let us give higher priority to untaxing work and turnover and cash flow and sales than to untaxing buildings. We already have empty buildings to burn.

Juggernaut was a god of India, a monsterous idol, whose huge nostrils loved the scent of the blood of human sacrifice.

When his great chariot was rolled through the streets, men and women in adoration flung themselves beneath its wheels and were gloriously crushed to death.

While the victims thought to gain thereby eternal joys and a paradise of indolent repose, their shrieks and groans sounded sweet in the great god’s ears, or, rather, in those of the fat priests who tended him, and who leered horribly at one another, knowing that such mad self-immolation assured them in their bloody offices. For it was the priests that fostered the worship of the beastial image, since to them fell the stripping of the slain and the toil-won offerings of superstitious devotees.

Such was the god of India, and like to him is the great idol of this land. Not Juggernaut is he called, though his attributes and worship are much the same. Our god demands the human sacrifice, and, at the bidding of fat priests, superstitious devotees fling themselves beneath his chariot wheels. He, too, heeds not the groaning of his victims , and wherever he rides for thin pomp desolation is attendant on him; the road that he passed is marked by many a skeleton, and watered by many a tear. Victoria’s Juggernaut has his slaughter houses where are huddled the men, the women, and the children that are his prey. He heeds not their moans, their prayers for air, for light, for bread. What are their sufferings to him, when the damps of starvation and death are the accustomed breath of life in the nostrils; as well ask the hangman to shed tears of pity on the scaffold or the murderer to weep for his prey.

Such is our Juggernaut; and yet louder and louder his fat priests cry, “Great and good is our god!” “Great and good is our god!” cry the butcher like priests as they seize in his name the pauper’s last penny, and, as recompense, fling him beneath the chariot wheels.

Should a heretic arise to denounce their awful cruelties, they are lashed into fury, crying, “What doubt you the settled religion of this country? Down, down beneath the triumphal car of Juggernaut and render thanks for his loving kindness

Whence sprang the worship of our woe-glutted idol; whence these awful sacrifices? From ignorance, from greed, from trust in lying promises. A paradise was assured all devotees, and the priests, capable double-faced, and insatiable, bound them fast in the great god’s chains. And a strange spaciousness was theirs, for while ostensibly they fed their victims, they secretly bled them to death. “Worship our god”, they cried, “and toil will cease”. And so the toilers listened, bowed the knee, and were given awhile fair dreams to amuse them.

But all is now changed, for the terrible voice of Necessity is calling to the toilers – “Awake!” At the call they are rousing from their dreams and feel the pressure of the vampire lips that suck and suck at their life-blood. The mask is being torn from the face of the Juggernaut, like the veil of the prophet Khorassan; it hides features horrible enough to strike aghast even the fanatic worshipper could he behold them aright and see their naked hideousness. The victims for the human sacrifice are crying to the fat priests, “Why pleaseth our god that we starve to death; hath he only power to destroy and none to save?” The priests in their turn are beginning to tremble lest they lose their dear bought perquisites; lest the truth be revealed and they and their teachings be accursed for ever. And so they shriek for fresh sacrifices to appease the wrath of their god.

Shall they be granted? Shall the voice from our Juggernaut’s slaughter houses – the sweating dens, the huddled cribs of the poor, the ruined homesteads, the bankruptcy court-be unheaded; or rather shall not our Juggernaut – the Corporation – be for ever dethroned, despite the wailings of the fattened priests?

Glen Innes Examiner, June 3, 1890
The Armidale Lecture
Henry George in New England
- by X.L.

Monday, the 26th inst., was announced as the date of the great social reformer’s visit to Armidale, but somehow his managers had contrived to make the least possible use of the occasion by neglecting to give publicity to the event by the ordinary means of advertisement throughout the district. Although the visit of Mr Henry George was intended to serve as his personal introduction to the New England district – including Glen Innes, Walcha and Uralla; yet, so far as we know, no advertisement outside of Armidale was inserted in any other newspaper circulating in New England.

Arriving at the city by the northern train, we certainly expected to see the usually crowded platform filled with representatives of the intelligence and even the beauty of Armidale, to do honour to the arrival of a man who – whatever may be his faults as a practical politician – has succeeded by the mere power of his genius in stirring the intellectual faculty of his fellow man throughout the civilised world to a depth which has not been equalled since the “Contrat Social” came hot from the brain of Jean Jacques Rosseau (sic), and developed itself in living action during the next generation by means of the French Revolution. Whether “Progress and Poverty” will so fertilise the mind of the present generation as to produce in the next a peaceful political Reformation, which will banish the inequality of the conditions of life, and save this fair country of ours from being swallowed up in the Stygian pool of landlordism; or whether its voice will be rather that of “one crying in the wilderness”, a warning note only of sudden and sanguinary revolution to come; the fact remains that the author of this monumental work, so far as Armidale was concerned on Monday last, “came to his own and his own received him not”.

Had a couple of unaspirating members of Parliament, aspiring nevertheless to be Cabinet Minister in futuro, arrived at the cathedral city to do a bit of log-rolling about land offices or railways, the platform would doubtless have been crowded; but on Monday, although the city was so full that a bed could not be got for love or money, and a shakedown was a matter of favour, yet it was not the great solver of social problems who had drawn the crowd, but a programme of trotting matches, hurdle races, and football which had filled the town with muscular Christians. From them the question, “Are you going to hear Henry George this evening?” brought the answer, “Perhaps I may look in after settling,” so that having no anxiety about getting a seat we betook ourselves leisurely to the Town Hall in the evening without much fear of being trampled upon by a crowd of hungry truth-seekers.

Yet the large hall was fairly filled, and when Mr George appeared on the stage the applause was hearty and genuine enough. A somewhat clumsy and insignificant figure, clad Yankee-like in broadcloth trousers and double-breasted frock coat, whose cut Holly would not perhaps own to, with a presence that at first reminded one of a “meenister’s”, gave no promise of great magnetic influence. A somewhat thin and harsh voice gave no promise of what is called oratorical power, but when the footlights illuminated the rugged, homely face, and brought the square cut brow and massive head into bold relief against the darkness of the empty stage behind, the eye then rested on something that commanded attention and as the lecture proceeded a certain art of posing the body in rhythm with the action of the arms and hands, and a marvellous control over the modulations of his voice, forced the listener to attend, made him feel that he was in the presence of one of nature’s kings, and impressed him all the more forcibly owing to the very absence of sensational adjuncts.

The lecture itself was short, little over an hour, and except that once the lecturer allowed himself to be betrayed for a few minutes into a rather tedious repetition, that hour sped swiftly. Of course it is impossible in an hour to do justice to all or even part of the topics discussed in Mr George’s writings; he therefore cleared a little space on the bedrock – the land question – which underlies all political enquiry, and there planted the seed which may fertilise hereafter in many a shrewd New England brain.

Taking the land question as necessarily the fundamental question – the bedrock so to speak – of all political enquiry, Mr George without preamble announced himself as about to give a reason for the doctrine of the Single Tax to which he stood pledged. In order to understand my doctrine, said he, you must understand the great economic law of rent. Economic rent has nothing whatever to do with rent as generally understood – that is, the rent of land inclusive of its improvements; it simply includes the unimproved value of the land in its natural state – which may be nil – together with the whole additional value conferred upon it by the increase of population, and consequent growth of civilisation. This is rent economically speaking, and he illustrated the increase of rent by the position of the ranks of chairs on which the audience were seated. Let the front rank represent land which produces 20 bushels of wheat, bags of potatoes, or anything else that is the best from its quality and position. Rank No 2 produces 19, and is therefore second best, and so on until the last, which is the worst. The labour on each class of land being the same, it is obvious that No 1 is five, 10 or 20 times better than inferior land; or, in other words, a man could give five, 10 or 20 pence, shillings or pounds more in proportion for it, as a stand upon which to employ his labour. Hence rent – economic rent – arises as a necessary condition of things, and is therefore called the law of rent. This rent must go to someone, and as its increase is not caused by the improvements or labour of any individual, but by the growth of population and public improvements consequent on civilisation, it is just that the community, whose increase in members and civilisation creates rent, should be the recipient of it. But when land comes into private ownership, the individual receives what he has not created, instead of the Commonwealth.

Henry George proposes therefore to appropriate economic rent as national revenue, which increasing along with, and in consequence of population will thus supply a constantly sufficient fund for all the purposes of government, will enable governments to sweep away the whole taxation through customs, and live upon the rent of the national estate, just as the landlords do now on the rent of their private estates.

By this means it is theoretically possible to establish Freetrade; by which Henry George means, not English or Sydney Freetrade, which levies duties through the custom (sic) houses for revenue purposes to the extent of one-fourth its whole income, and which he describes as spurious or German-silver freetrade – but absolute Freetrade – freedoms from customs as well as excise.

At this point the lecturer descended from his high level to a little play to the “gallery”, by tongue-flogging what he called “howling Protectionists”, though later on he let it be again seen that the great theme does not touch the colonial or domestic dispute between Freetrade and Protection at all, as he has no more sympathy for the one than the other. (See “Protection or Freetrade,” Chap VIII, in which he declares “protection is the only justification for a revenue tariff”, and that “the advocate (sic) of a tariff revenue only, have no case”.)

Returning to the Law of Rent, the lecturer declared that it was as simple as the laws of nature; profound and all embracing as they are, unchangeable and beneficent as they are – for the profoundest things are also the simplest. This irresistible (sic) and unchangeable economic law of rent provides therefore a means of relieving labor and the products of labor, as well as capital – which is but labor accumulated or labor saved, labor in latent condition-from all taxation. He traced some of the effects of the application of this doctrine, upon the actual conditions of life, leading to abolition of municipal rates, poor rates, customs and excise; the possibility of ennobling the national and individual (sic) life by creating libraries, public baths, even free railways, out of the rent of the public estate. Finally, its effect on poverty, that greatest of modern problems; illustrating the pressure of modern poverty by the declaration of an American judge that there were families to whom an increase of numbers among the proletarian classes of New York meant only “another boy for the penitentiary, another girl for the brothel”.

-ooOoo-

At the close of his lecture the chairman invited questions, and Mr George spent over half an hour in good humoredly replying to some childlike queries asked with a mysterious assumptions (sic) of importance by the junior member for Glen Innes, who, having been told by someone that Henry George is a Freetrader, sought to “put him down” by asking if he thought the Single Tax would abolish the natural selfishness of mankind, and especially of the Sydney importor (sic). Fortunately Sir Henry Parkes was not there, but as the audience clamoured loudly against monopoly of the privilege of questioning the lecturer, place was given at the chairman’s request to Mr Cleghorn and some other questioners who received instructive replies.

Mr Henry George and the chairman occupied the stage alone, and though the effect was to make the lecturer’s physique more striking when lit up by the footlights against the comparatively dark background, yet the loneliness of his position was to a stranger somewhat conspicuous, and suggestive of the position occupied by the prophets and truth seekers of all ages in the delivery of their messages, who have ever lived alone, worked alone, and died alone.

Re-printed in Good Government, October, 1996

The motive of Mr Henry George’s mission to the colonies is one which all philanthropic minds must approve. His purpose is to better the condition of that large mass of mankind, who, whilst a smaller section of their fellows is revelling in superfluity, are condemned to what he calls the “hell of poverty”. His fundamental position is that the Great Father has given in the land an ample estate for all, and that the few who claim it for themselves to the exclusion of others are guilty of injustice.

Addressing quite lately the Baptist Ministers’ Meeting at Philadelphia, he contended:- “The want that festers in our centres is not the fault of God. The fault is with men; it is in our institutions. We are animals; we are land animals. It is only from the land that men can live. Man is a maker; he is the only animal that brings things forth. He cannot create; God alone creates. The first human being who came here was a naked man. In his powers lay the potentiality of all that has since been produced. Land is the passive factor in production, as man is the active factor. Now, suppose the land is made the property of a part of the people. We will have wealth on one side and poverty on the other. Give me the land; and I am the master, and men are my slaves. Slavery claimed the right to make one man work for another, without giving him an equivalent. This is what the landlord does. When I am forced to give my labour for that which God has created, that is robbery. In England, Scotland and Ireland, you find good men, God-fearing men, slaving away all their days for the merest necessaries and other creatures living in luxury on their work, proud neither they nor their fathers have ever done anything. This is worse than negro slavery: hunger is more cruel than the lash or the bloodhound. We have not abolished slavery; the more insidious form remains.”

“We make private property of what God intended for all His children. No Christian dare deny that every human being comes into the world with an equal right to the land.” As illustrating the innate propriety of this claim, Mr. George cites the following naive claim of an unsophisticated aboriginal:- “In New Zealand, the English Government bought the land of the Maories. Then presently a woman with a baby would come along and say, ‘I want to be paid for the land that belongs to this baby.’ The English would say, ‘We have bought the land and paid for it.’ ‘Oh, no; you bought our land, but you did not buy this baby’s land. You could not; he was not born then, and he wants his land.’ The fact of existence is a title to as much land as is needed for one’s support.”

He urges that the right to possess unused land so as to exclude those who need it for their sustenance, is as absurd as to claim possession of so much sea. “A man may not claim the fish which I have caught out of the ocean; but he may claim the right to fish in the sea. The products of the land belong to the individual; the land itself belongs to the community.”

His ideal condition of things would be one in which the State retained from the first formal possession of the land as trustees of the people. As such they would lease, as perpetual landlords, the land at such prices as would prevent any person caring to retain more than would actually meet his requirements, whilst the increase in value which population would foster would pass to those who would be the cause of the enlarged value. The huge difficulty is that in nearly every State under heaven the rights of property in land have been conceded, and could not be wrested from their possessors without a revolution too violent to bear thinking about. Mr George anticipates this objection. The abolition of private titles and nationalising all land is a method advocated (in conjunction with the compensation of present holders) by no less an authority than Herbert Spencer. Mr. George, however, repudiates the claim for compensation as unjust, and consequently sees how shocking and unworkable would be any scheme the initiation of which involves the annihilation of all existing titles, and their merging into one great national possession. He would neither purchase nor confiscate private property in land.

Men shall continue to call it their land and sell and bequeath it, but they shall no longer receive the rent. “It is not necessary to confiscate land, it is only necessary to confiscate rent”, and the panacea for all social ills growing out of the mal-administration of landed property is discovered in the appropriation of rent by taxation. The land shall be taxed according to its value. If of no value, no tax. If of little value, a little tax. If of large value, a large tax.

By this means the whole value of the land would be appropriated by the State, preventing speculation in land, replenishing the public coffers, throwing open the land to those who really need it, and making its retention impossible to those who would fain keep it for unearned increments.

By this tax he would supersede all other methods of taxation and meet all requirements of government. “Under the plan proposed, a man who has a lot will then have to pay as much as if he had a house on it. This will remove the temptation to corruption. The land lies out of doors; it cannot be hid; its value can be ascertained more exactly than the value of anything else. If you choose, you can put up a sign,. ‘This land, so many feet by so many, belonging to AB, is assessed at so much’. If it is assessed at too much, the man himself will complain; if too little, his neighbours will complain. Thus we can get rid of oaths, and we should get rid of many bad officials.” The money thus levied would go to make the commonwealth rich, instead of enriching the few who, by extortionate rents, keep the many poor.

We should like to see Mr. George’s theories reduced to practice and so tested. It will be a bold community which first does so. Nothing, however, will so cogently convince men of its worth as a good experiment. Socialism tested its vaunted power to rectify all human ills, and issued in the three failures of Robert Owen its great apostle. It proved itself incapable, in Britain and America, of producing the effects which its advocate promised to his followers.

Our own conviction is that the great evil, the root of every wrong, is found in what Mr George calls the other “active factor ” in all production namely, man himself. To better the condition of man is, without controversy, a Christlike object, and worthy of every Christian, but we must better the man simultaneously, or every alleviation of his lot will only give him larger opportunity for a life self-centered, God defiant! Mr George’s aims are worthy. He has secured the respectful hearing of large numbers of the best men in America, and he is doing the same in Australia, and if his scheme is at all feasible, he will doubtless find that his most reliable allies will be the men who call Christ “Master and Lord”.

One unfortunate circumstance makes Victoria give but small promise of practical response to his appeals. Its interests have been and are so intimately bound up with the protection of the products of labour by taxation, that it will require powers of persuasion superhuman, to induce a reversal of this policy. South Australia has also committed herself to a similar policy. Perhaps New South Wales will listen to his siren song, and immolate herself in an experiment which is said to have in it the promise of all possible social adjustments. Doubtless Victoria will cautiously follow her lead in view of such an outcome. Meantime, we cannot withhold our admiration of the well- intentioned efforts of Mr Henry George to put things right – from our point of view an achievement only very partially practicable.

Our very best can only issue in rectifications very inadequate in power, and limited in range. We want the presence of “the Proper Man”. Nevertheless, our heart goes out with a hearty “God speed you” to every endeavour to minimise human wrongs, with their consequent suffering.

Faint praise and backsliding is palpable in the final paragraphs of what otherwise is a fair assessment of Henry George’s ideas. One is left to wonder: why?

Revised, November 22, 1997

1. Turbulent times

It was a different time, but often the same place (Cooper Union) in American life. No, it wasn’t radio, but the age of orators. One of the most spellbinding was Dr. Edward McGlynn; another good one was Henry George, who also wrote great books. They came together in 1886 to roil the waters of American politics and ideology. Through the Irish and Vatican connections, they also roiled world politics and ideology.

It was a time when a Republican Presidential candidate (James G. Blaine) could be nominated by a conspicuous agnostic (Robert G. Ingersoll). Blaine could lose New York’s key Irish Catholic voters, and the election, for a supporter’s casual slur accusing them of “Rum, Romanism and Rebellion.” The slur was transient; the revelation of electoral power was permanent. New York City held the balance of power nationally, and the Irish were a majority in New York City (Curran p.195).

It was a time when Dr. Edward McGlynn, the most popular Catholic priest in NYC and the nation, could dream of modernizing the American Catholic Church, leading it to shake off medieval trappings and old-world control, and leading the U.S. to genuine unity. McGlynn could dispute the Pope, question Papal infallibility, temporal power, vestments, Latin Masses, celibacy (n.1), and auricular confession (Curran p.172; Gilhooley, p.205). He could make his points in blunt, eloquent language such as that reading the Bible in public schools is “maintained as a kind of fetish … because it gratifies a certain pharisaical sense of religiosity, … ” (Bell, p.21). “The Church of Christ has largely been ruined by the … ecclesiastical machine” (Bell, p.177).

He could support rebellion in Ireland, public schools, radical reconstruction, the Fenian secret revolutionary society and its invasion of Canada (Curran p.172; Isacsson, pp.32-35 et passim), abolishing poverty by public action, the Republican Party, the single tax, and Henry George for New York’s Mayor (Post and Leubuscher pp.128-49). In the last matter, this Catholic priest joined forces with the militant agnostic Robert Ingersoll, another brilliant orator (Post and Leubuscher p.116), the same who had nominated Blaine in 1876. To McGlynn, charity was no substitute for a just distribution of land, which he supported by various citations to church patriarchs and The Bible (Isacsson, p.78; Geiger pp.357-58, n.33). His Parish, St. Stephens, was the largest and most influential in the U.S. He found it wealthy and socially “fashionable”; he made it a hub for the poor (Isacsson, p.18).

It was a time when the two leading candidates for Mayor of NYC in 1886 both declared they did not want the job. A Tammany envoy, William Ivins, told Henry George the machine would not let him be counted in; by running he could “only raise Hell” (Speek pp.76-77). George replied he would run, because raising Hell was what he wanted. Abram Hewitt(n.2) said he did not want the job itself, he only aimed to prevent the election of Henry George, “the greatest possible calamity.”

Hewitt’s neglect of his office, after winning by fair means or foul, demonstrated he had spoken truly. In eulogizing George in 1897, Dr. McGlynn said it was a blessing George lost, so he could devote his life to more important works. What was going on? Both candidates recognized the office as a bully pulpit, as well as a commanding height with key leverage and a great balance of power in the U.S. Electoral College system.

It was a time of class warfare, when hundreds of thousands of workers were on strike.

2. Heritage of those times

It’s been said that “All the flowers of all the tomorrows are in the seeds of today.” If so, it follows that the flowers of today were in the seeds of yesterday. Professor Nic Tideman has recounted how his great grandfather from Sweden learned English by reading Henry George, and began a long Georgist dynasty. Drew Harris has told how he was sixteen before he realized that not all Quakers routinely discuss Georgism at dinner. Agnes George de Mille never forgot her grandfather Henry.

The exploitation of Ireland by offensive alien landlords produced the core, or at least the bulk, of Georgism in the U.S. I am a product of that, although, unlike Harris, I was past my teens before I began to piece it together. My father’s professional survival had demanded he be discreet before blabbering kids. His father had been an active Fenian, joining the raids on Ontario.(n.3) Pope Leo XIII, needing English support in Italy, condemned the Fenians as he did all serious Irish rebels (Isacsson, pp.80-81; Curran, pp.181, 183; Bell, p.126; Geiger p.346). Dr. Edward McGlynn praised them: he defied his Archbishop, Michael Corrigan, and the Pope on this (as on some other matters). Not until this year did I discover by happy chance a long-lost cousin named Edward McGlynn Gaffney, Jr., a law professor. Ed’s father had introduced land-tax bills in Sacramento, as a State Assemblyman from San Francisco. His uncle, Dr. Matthew T. Gaffney of Newark, was a single tax leader there. Some of this spirit trickled through to me.

My mother was of traditional Yankee stock. She was related to John Henry Cardinal Newman, appointed to the post by Leo himself. Newman never showed favor towards George, and feuded with Cardinal Manning, who did. Her uncle Selah Merrill Clarke edited the New York Sun during the latter part of George’s career – but his paper opposed George and McGlynn. However, she later worked for Louis F. Post in the U.S. Dept. of Labor, and picked up his influence. It was she who brought me my first book on Henry George, although she never admitted to accepting his ideas.

I offer this otherwise gratuitous autobiography in the spirit of disclosure, to apprise the reader of my bias, if any. I am not now, nor have I ever been a Catholic, but a generic liberal Protestant, no longer very observant, becoming somewhat philo-Catholic after 1960 in the heady days of JFK, John XXIII and M.L. King, Jr. I was thrilled then to find myself marching through Milwaukee in demonstrations hand-in-hand with nuns and priests, who had always seemed so distant before. Little did I realize that that “distance” was the product of what Catholics call “Ultramontanism,” i.e. the domination of American churches by Rome (Curran pp.32-33); and that Rome had imposed Ultramontanism, and American conservatives had welcomed it, in order to avoid another radical uprising like that Edward McGlynn had led (Gilhooley p.207).

Whether that background biases me, others will decide, according to their lights. I have tried to compensate by studying works on the period by Catholic scholars, including John Molony, Robert Emmett Curran, Alfred Isacsson, Stephen Bell, John Tracy Ellis, James Gilhooley, and Arthur Preuss.(n.4) I hope to find a Catholic collaborator or critic on the present work.

3. Neglect of Catholic economics in Gaffney and Harrison (1994), Corruption of Economics.

In the above work I undertook to show how neo-classical economics evolved as a reaction and an antidote to Henry George. In haste, I omitted Catholic economics, which ran parallel to neo-classical economics, but with a life of and special twists of its own. The main Catholic reaction to George was Leo’s 1891 Encyclical, Rerum Novarum, (henceforth just Rerum). Rerum was a watershed document: the “first far-reaching formulation of Catholic teaching” since the long Council of Trent in the middle of the 16th Century, according to Molony. It was a new venture into social theology. It recycled Thomist economics, in which Leo was thoroughly steeped, but with special reference to “the worker question,” and with refuting false modern doctrines advanced by George and McGlynn. Later commentators have given it a reputation, ill-deserved, for criticizing “capitalism,” and upholding the interests of poor workers (Barker p.571). Actual reading shows it to give priority to championing private property in land against various attacks, real and imagined, and specifically against Georgist land taxes.

4. Wide and sustained influence of Rerum Novarum.

The influence of Rerum has echoed through the following Century. It “has become established in the 20th Century as the fundamental document of Catholic policy toward capital and labor under the industrial system” (Barker, p.572). One important American convert was Monsignor John A. Ryan (1916), “the chief theorist of social Catholicism in America” (Andelson, 1979b, p.342; cf. Barker p.577). Ryan as a young man was “electrified” by George, and one might expect an Irishman to remain a land reformer. However, after Leo XIII pontificated, Ryan came to heel. Ryan thought that George “was explicitly condemned by Rerum” (Isacsson, p.297). Ryan’s basic work, Distributive Justice, follows Rerum closely. (Barker, p.577, sees Ryan shading his views a little in favor of George; Andelson does not.)

Another follower was Padr‚ Juan Alc zar Alvarez (1917) of Madrid. Alc zar was endeavoring to put down what was evidently a strong single-tax movement in Spain of that era (Busey, 1979, p.326) – a movement that had been aborted in England by shipping the flower of its young men off to die in Flanders’ Fields. The Spanish single-tax movement remained a force clear until the accession of Francisco Franco. Alc zar’s positions are similar to those of Cathrein, although considerably more extreme, so as to seem ludicrous today, as perhaps they also were then outside of Spain. In any case, he received considerable reenforcement from Rerum.

Several succeeding pontiffs have reaffirmed the doctrines of Rerum in their Encyclicals, e.g. the Quadragesimo Anno of Pius XI, 1931. One can’t help wondering if the Vatican’s wretched record of response to Hitler and Mussolini and Franco and Paveli (in Croatia) might have been corrected by some different thinking at that critical time, and for years thereafter. As it turned out, the anti-Communist priority of Pius XI’s protege and successor, Eugenio Pacelli, inhibited the Vatican from opposing fascism, and even led it to collaborate in the escape of many fascist leaders after 1945 (Aarons and Loftus; E.M. Gaffney, Jr.). It was only a large bribe from U.S. President FDR that restrained Pacelli from blessing Hitler’s invasion of Russia (Miner).

In America, Pacelli (Pius XII) made Francis Spellman Archbishop of New York, and then Cardinal. Spellman cooperated in the fascist escapes (Aarons and Loftus, pp.132, 138), using his influence with the politically puissant National Catholic Welfare Conference to bend the U.S. State Department his way. He became a leading Cold Warrior, supporter of Senator Joseph McCarthy, and instigator of the American invasion of Viet Nam.

Spellman’s antipathy to McGlynn’s beliefs was not just indirect. He ordered McGlynn’s portrait removed from the wall of St. Stephens, McGlynn’s old parish (Isacsson p.viii). Not even Abp. Corrigan, vindictive though he was, had been so petty. More, he had materials on the struggle between McGlynn and Corrigan removed from the archives of the Archdiocese of New York (Isacsson pp. iii, viii n.5, 126 n.2), reaching back 75 years to control damage and rewrite history – or to prevent anyone else’s writing it.

Later reaffirmations of Rerum have been Mater et Magistra (1961) by John XXIII, Populorum Progressio (1967) by Paul VI, and Centissimo Anno (1991) by John Paul II. Philosophers like Jacques Maritain and Etienne Gilson and Mortimer Adler have carried Leo’s ideas forward into the intellectual life of our times.

The Catholic leaders of Christian Democratic parties in postwar Europe were nurtured on Rerum. These include Alcide de Gasperi, Konrad Adenauer, Robert Schuman, Carlo Sforza, and Luigi Einaudi. Through these and many others, Rerum became part of the history of modern Europe. In faraway Australia, the first Catholic PM, James Scullin, was an avid student of Rerum (Molony p.130). Thus, the anti-Georgist ideas of Vincenzo Pecci (Leo XIII) cast a long shadow through history, worldwide.

5. Leo’s outlook

Leo was a thorough Thomist. In 1879, the year George published Progress and Poverty, the new Pope Leo XIII had the works of Aquinas declared to be the official Catholic philosophy. This included the economics, with the ideas of just price based on cost of production (in practice, price ceilings), criticism of usury (in practice, a ceiling on the interest rate), private property (most emphatically and repeatedly), minimum wage (a very low minimum, in Leo’s view), and modernized guilds (morphing into labor unions).

Rerum also reduces “equal rights” to the right to life hereafter. This is vintage Aquinas. To Leo’s critics, it meant “You will eat bye and bye, in that glorious land beyond the sky; work and pray, live on hay, there’ll be pie in the sky when you die” (words attrib. to Joe Hill, union organizer). Corrigan, the persecutor of McGlynn, followed the same line, preaching in a poorhouse on the virtues of patience and acceptance of God’s will (Isacsson, p.85). Corrigan’s Vicar General, Thomas Preston, issued this statement: “The rights of property are sacred … by divine authority. You must not think as you choose; you must think as Catholics” (Curran, p.294).

Many Protestants preached on the same text. It was a standard line of the times. Abram Hewitt said that differences in wealth “were due to the laws of Divine Providence” and the “purposes of The Almighty” (Speek p.84). However, the R.C.C., with its heavy working class membership, had this specific, special reason to speak up and articulate the yearnings of the downtrodden for justice and daily bread “on earth as it is in heaven.” This was especially true of their Irish members, oppressed both in Ireland and America.

In this duty, Leo signally failed: he was following another call. That seems to confirm McGlynn’s saying, “This is the curse of religion – that men charged with the high duty of preaching the gospel are itching … to have authority with men in power … to magnify their own office” (Bell, p.175). Leo either made or let his Church campaign actively for Hewitt against George.

Leo opposed “liberalism,” but in both meanings, i.e. the Manchester School meaning and the egalitarian meaning. Even then, the term had both meanings, and one must judge from context which liberalism he is damning in a particular passage. This put him doubly at odds with Henry George, who generally favored liberalism in both meanings. George, the “free market radical,” sought to reconcile and compose the two liberalisms into a harmonious whole. It did not help that George quoted sympathetically from Giuseppe Mazzini, who had played an important role in stripping the Papal States from the Church. It was Kismet that Leo and George should collide.

The upper hierarchy of the R.C.C. was mostly of the landed classes. Leo, born Vincenzo Pecci, was of the minor nobility, and considerable wealth. Across the water, Archbishop Michael A. Corrigan of New York was also wealthy, but a complete arriviste, lace-curtain Irish, scion of a bartender who rose through liquor dealing to real estate, leaving a small landed fortune (Curran p.24). In addition, the R.C.C. in Europe had owned vast lands for centuries, and its bureaucrats naturally developed a protective attitude toward the ultimate source of its power and wealth. George never championed putting church lands on the tax rolls, to my knowledge, but the bureaucrat-hierarchs were hypersensitive to the point, owing to the power of anticlerical movements that had stripped them of many lands, most recently in Catholic nations themselves, like France, Italy and Mexico.

It was in character, then, when in 1888 Leo condemned Irish peasants who were agitating for land. Irish Catholic rebels and reformers thought him a Judas (Molony p.113). Rerum, when it came out, did not help. It testifies to the power of habituation that the R.C.C. survived so well in Ireland after these betrayals, and earlier ones that had moved Ireland into the horrors of the Coercion Act era (Bell, p.127; Curran p.180-81). Many Irish-Americans (like my grandfather) left the Church at this time, but most recognized they had an ethnic interest in the American Catholic Church which, to a remarkable extent, was controlled by Irishmen (Curran p.137), and had, at that time, some independence from Rome. The Irish priesthood had remained much closer to the communicants themselves than had those of other extraction – Edward McGlynn himself being an example (Molony, p.49).

6. Evidence of anti-Georgist intent

How do we know that Rerum was directed against George and McGlynn? Abp. Michael Corrigan, who had pressed Leo hard to issue it, took it as an answer to his plea, a “pronouncement against Henry George and his teachings” (Isacsson p.296). We have seen above that Msgr. John A. Ryan took it that way, and, acting on that belief, changed his thinking 180 degrees, or at least 150. Ella Edes, veteran “inside dopester” in the Vatican, wrote from Rome to Corrigan, “… the Pope’s aim was to condemn George’s theory without condemning his books” (i.e. without mentioning his name)(Curran p.385). Historian Sydney Ahlstrum (1972, p.835) sees it that way (cit. Isacsson, p.333 n.28). George did too, and published (1891) an open letter to Pope Leo in reply; but who was George to debate the Pope himself? Why would a V.I.P. like the Pope lower himself to notice and answer such a cipher? There is ample evidence, presented herewith, that this was a posture used consciously to slight George, and avoid the boomerang effect of a direct criticism. There is also evidence of great scurrying and rustling of papers in The Vatican in reaction to the power shown by George and McGlynn. This is found in works by Isacsson, Ellis, Bell, Molony, Curran, Gilhooley and Preuss.

Foreshadowing Rerum, Fr. Victor Cathrein (1889) had already attacked George, stigmatizing him as an “agrarian socialist,” along with Emile de Laveleye. The label did not fit George, who was neither an agrarian nor a socialist, but a free-market urbanist. However, it showed the same mindset as Rerum’s later slurring references to generic “socialists,” a fungible lot to Leo, obviously intending to encompass George with bloody European revolutionaries.

Cathrein attacked George and de Laveleye for observing that privatized, commercialized land tenure hardly existed in pre- industrial societies other than the Roman. They wrote that latter-day privatizers had reinvented it only recently by resurrecting Roman Law (Hudson, 1994; Andelson, 1979a). Cathrein wrote that “natural law” prescribes private property in land, an idea also expressed in Rerum, refuting George’s position.

George, by stressing ideas of “natural rights” and “natural law,” touched on areas that remained more central to Catholic social thinkers than they did to more secular ones (De Concilio). Where Marx alienated Catholics by atheism and anti-clericalism, the overtly Christian George offended some of them more by accepting the Catholic concept of natural law, in ways competing directly with certain Catholic views thereof (depending on which Catholic).

In Cathrein, the idea of equal rights became an empty shell hollowed out by an artful twist of wording to mean only rights to buy land from its rightful owners. Andelson (1979a, p.132) shows how this idea moved right from Cathrein’s attack on Henry George into Rerum. In Rerum, “By using the idea of worker savings it was possible to canonise the concept of private property” (Molony p.96).

Cathrein also anticipates the Rerum position that the rich need the poor in order to test their character by giving them chances to perform Christian charity (Andelson, 1979a, p.134). What a roar of derision that allegation would have provoked before most audiences in the last 50 years! Yet now, again, it seems to be back in style – without the Christianity.

Cathrein’s work, originally in German, was translated under the apparent aegis of Bishop Bernard J. McQuaid of Rochester (Hudson, 1994, and personal interview, 1997; Zwierlein, 1946, should be consulted). McQuaid, a stronger man than Abp. Michael Corrigan of New York, was his most influential mentor and advisor (Isacsson, pp.106-07). They were very close, sharing the services of one Ella Edes as courier, spy, gossip, translator, envoy, probable forger, and potent busybody in the Vatican (Curran p.183; Isacsson pp.v, 19-20, 82, 84, 91 n.66, 102, 135, et passim). Corrigan, in turn, was a major instigator of Rerum, as we will see, so we may assume that the drafters studied Cathrein’s recent attack on Henry George (n.5).

Corrigan, as Abp. of New York, had thrown the upper echelons of his hierarchy into the 1886 battle against Henry George as Mayor (Isacsson, pp.108-11; Post and Leubuscher pp.128-49). Priests who supported George were threatened with censure and retaliation and exile, which indeed were forthcoming. Corrigan had his Vicar General, Thomas Preston, publish a statement in all New York City churches urging a vote against George (Speek, pp.85-86; Isacsson, p.109; Curran pp.196-97; Post and Leubuscher, pp.132-33). At the same time he ordered McGlynn to stay out of politics and be silent, pretending that the Church never meddled in politics. In 1887 they “continued their strong opposition to … Henry George and McGlynn, condemning them openly and secretly” (Speek, p.139). They pressured Irish opinion-leaders Patrick Ford and Terence Powderly to withdraw their support. Clearly, Leo’s hierarchy was not above noticing George and McGlynn, nor above lying about it.

John Molony (1991) was a history professor at Australian National University who spent years in Rome researching the composition of Rerum. He had access to some Vatican Secret Archives, along with other standard Vatican sources. His writing shows sympathy for Leo, and a propensity to apply slighting adjectives to George and McGlynn, so we infer his bias, if any, is not to magnify them.

He does so, nonetheless, by frequent references to the importance of putting down their heresy. In his index we find 21 page references to George, 16 to McGlynn, and 15 to private ownership of land (37 if we add the generic “right to private property”). In contrast, there are only 9 to Aquinas, 8 to Marx, 6 to “freemasonry,” 5 to Christ, 4 to usury, one each to Newman, Mazzini, and Garibaldi, and none to Cavour or Victor Emmanuel. The last four were Leo’s arch-enemies and obsession who had nationalized the Papal States and made the Pope a “prisoner in the Vatican”; Newman, a leading Catholic intellectual for whom today’s collegiate “Newman Clubs” are named, was Leo’s appointee as Cardinal.

Here are some of Molony’s comments.

“… there was one American theoretician, Henry George, whose writings were of particular interest in the Vatican, and whose ideas had a decisive effect on the timing of Rerum and, to some degree, on its contents.” (p.50)

“In the Vatican, not much interest was shown in George until its attention was drawn to the fact that one of his main followers in America was the pastor of New York’s most important parish, St. Stephen’s.” (p.51)

“The blackest mark against McGlynn … was that he had begun to espouse with fervor the ideas of Henry George. … his words were taken careful note of in Rome.” (p.52)

“Throughout the 1880s, considerable attention was paid to George and McGlynn by the Vatican authorities.” (p.53)

“Cardinal (Camillo) Mazzella … derided the priest (McGlynn) as one who held that, rather than Leo, George was the ‘Redeemer of the poor’ and his personal ‘Holy Father.” (p.57)

The last point echos Cathrein’s resentment of George as a direct competitor. George spoke the language of religion, and evoked a quasi-religious fervor in some followers. This is part of what had attracted McGlynn, whose fervor was much more religious, as one might expect of a priest. Secular modern critics have faulted and even sneered at this “emotionalism,” but to religious leaders themselves it posed direct competition. In 1890 in Australia, “… converts, fired by enthusiasm, went about like the early Christians preaching their gospel” (PM “Billy” Hughes, cit. Molony, p.59). Barker is among those who infer from the evidence that George, not Marx, “had been the great enemy in ideas, at whom Pope Leo was striking” (Barker, p.573).

As to Mazzella, it was he who recommended excommunicating McGlynn, which Leo soon did; and putting all the works of Henry George on The Index, which he also did (Molony p.58). Mazzella was soon to help write Rerum in 1891. Note in passing how strange it was to notice any of George’s works on The Index. None of the usual reasons applied. George did not write specifically on religion, and all his references to religion bespeak of his strong Christian faith and family orientation. His wife was and remained a good Catholic. His background was Episcopalian, but he never baited Catholics as such, and worked harmoniously with them. He was skeptical of Darwinism. He deplored Marx’s atheism as well as his statism. It is as though Leo considered the essence of Christianity to be the privilege of rentiers to avoid taxes.

In Rerum, Leo lumped George as a “socialist,” and treated him anonymously as an “upholder of obsolete notions,” and one of “a few dissidents,” a “mere utopianist whose ideas were rejected by the common opinion of the human race.” “The thoughts of Henry George … were reduced to their utmost simplicity and rejected out of hand” (Molony pp.91-92).

“Unnamed (in Cardinal Zigliara’s draft), … both McGlynn and Henry George were given fuller treatment and their opinions, summed up as ‘the discordant voices of a few utopians,’ were rejected out of hand as contrary to common sense, the natural law and, finally, the divine law itself.” (Molony, p.79)

The following is included in Rerum itself.

“The State would act in an unjust and inhumane manner were it to exact more than is just from private owners (of land) under the guise of a tax.” (Molony, pp. 98, 194)

According to G.R. Geiger (p.362), “The doctrines attacked are labelled ’socialistic,’ but they are essentially those of George. … there was so flagrant a disregard of any attempt to discriminate between conceptions which were diametrically opposed (that many interpreted Rerum) as a direct attack upon that (George’s) work.” Geiger cites Henry Cardinal Manning and Abp. Michael Corrigan to that effect.

The tone of Rerum was also tailored to George and McGlynn. The first draft of this Encyclical, by the Jesuit Matteo Liberatore, was “The Worker Question.” Its focus was on the condition of labor. As it evolved through 6 drafts, under Leo’s supervision, it became an attack on critics of private property in land; it virtually blamed the poverty of labor on the critics of poverty, all lumped as “socialists.” A major influence was the team of Cardinal Camillo Mazzella and Cardinal Zigliara, the same pair who had recommended excommunicating Dr. Edward McGlynn, and putting George’s works on The Index of forbidden books (Molony p.57).

Accordingly, the title was changed. Encyclicals are known by their first words. Rerum Novarum cupidus … (The unseemly lust for change … ) was a put-down, well understood as such by Latinists of the time, of which Leo XIII was a paragon. It referred to what today a Tom Wolfe might put down as “radical chic,” or “politically correct,” while also implying a taste for violence and plunder, playing on the fear of revolution.

The actual phrase came from one of Abp. Michael Corrigan’s relentless philippics against McGlynn and an ally, Edward McSweeney, fired off in 1888. “Thus New York, the Vatican and the late Roman Republic were bound up in the first line of the encyclical” (Molony, p.115). He might have added Ireland.

Above all, about one-third of the text of Rerum consists of championing private landownership, upheld by police power, and impugning the motives of nameless persons who might think otherwise. These are “wily and restless men,” they “take advantage of confusion … to cloud judgement and agitate the masses, … stirring up hatred of the rich among the poor … which would do no other than harm the workers themselves. Moreover it would be unjust because it would set aside the rights of legitimate owners, … and throw the whole community into disorder. … swayed by false principles … they try at any cost to stir up the masses and move them to violence. The authority of the state must intervene to rein in such agitators, …,” etc., etc., etc. The tendentious, slurring nature of these remarks clearly purports to forestall thoughtful consideration of the matters at hand.

As to private property, Rerum refers again and again to land, hardly mentioning capital or interest. “… land is simply his (the buyer’s) wages in another form.” … “Nature has given to man the right to stable and permanent possessions, … to be found only in the earth … ” “The gift of the earth was not meant as a kind of common and indiscriminate form of property. … but it was left to the industry of man and the special laws of individual nations to determine the manner in which it would be divided up. … Those who do not own land do their part by their labour … the right to private property is in agreement with the law of nature. … When a man uses his mind and body to obtain the goods of the earth, … he is justly able to claim it as his own, … the right to private property has been recognised as pre-eminently in conformity with human nature. … The seal of the divine law also authorises that right and goes so far as to forbid, in severe terms, even the desire to possess that which belongs to another. Thou shalt not covet … it is the duty of public authority to safeguard private property by the power and strength of law. ” Etc., etc., etc. Notably lacking is any reference to the teachings of Jesus.

These words are aimed like speeding arrows at Henry George and Edward McGlynn. Whom else do they target so directly?

7. The silent treatment

Abp. Michael Corrigan of New York harassed and persecuted McGlynn relentlessly. I will not repeat the sordid history, already well told by Catholic scholars like Bell, Gilhooley, Curran (pp.196-214), and Isacsson. A Roman envoy, Cardinal Giovanni Simeoni, head of Propaganda Fide, had given him the green light as early as 1882 (Curran p.183; Geiger p.345), after which Corrigan willingly played the “bad cop.” Leo, the “good cop,” laid back issuing Delphic riddles while the two Irish- American innocents destroyed each other, opening the way for the crafty Leo to expand his power over the American Church, years later. Corrigan was also thick with Tammany, indulgent of its corruption, and dazzled by its connections with the rich and famous (Isacsson, pp.108, 110, 289, et passim). Tammany feared McGlynn because he contested their control of the Irish-American vote.

Corrigan, by most accounts, had a high degree of low cunning for inventing and planting rumors, press-leaking, spying, and gossiping (Isacsson, pp.274 ff., 302, 304, 315, et passim), but most of his attack was overt and public, and widely perceived as personal and spiteful, petty and vindictive. After getting McGlynn excommunicated, he systematically weeded out McGlynn’s supporters and disciplined, exiled, or demoted them (Bell, pp.128 ff.; Isacsson, pp.294 ff.) He circulated a pledge against McGlynn, which became a loyalty oath: non-signers were screened out of promotions (Curran, p.241). In the process he alienated masses of McGlynn’s loyal parishioners, and sympathizers around the country, as other hierarchs looked on in helpless dismay. He gave arms to those who opposed Philip Sheridan for U.S. President on the grounds that a Catholic would take orders from the church machine and a foreign potentate (Isacsson p.278). “Most bishops considered his administration a disaster” (Isacsson, p.303). The flow of Peter’s Pence to Rome was cut sharply. Cardinals all had their salaries lowered, compelling curial attention (Bell, p.242; Isacsson p.327).

Several other hierarchs, both in the U.S. and Europe urged a different course. Prominent among these was the most senior of American bishops, James Cardinal Gibbons, Abp. of Baltimore (Curran p.383). Gilmour of Cleveland took the same tack (Curran, p.384). Gibbons through his agent in Rome, Denis O’Connell, saw danger in making martyrs of George and McGlynn, “which might make George a hero of the Roman Inquisition, … ” He urged silence, and “demanded absolutely that George be left in oblivion.”

“It would be undignified for Rome to notice George with a condemnation.” (Ellis, p.580- 82)

Gibbons urged instead that Leo issue an encyclical.

“(Gibbons) told the Pope by letter that he did not pretend that the false theories of George should be tolerated by the Church, but … in his different encyclicals, the Pope had … convinced readers (on other matters). … A similar instruction in the same form … on matters touching the right of property, would bear the same authority.” (Ellis, p.582).

The same sentiments flooded in from other quarters, including the voices of Zigliara, Mazzella, and Abp. Ireland of St. Paul, and even Bishop Gilmour of Cleveland, Corrigan’s friend and fellow turf defender, the very one who had warned, “The assault will begin with wealth and end with authority” (Gilmour to Corrigan, 1888, cit. Curran p.316; Molony, pp. 79, 85, 108; Isacsson pp.253-55). George was to be made a non-person, semper infra dig. The preferred strategy was to declare his ideas to have died – a reverse bandwagon psychology, one that professional economists have later used so effectively.

Symptomatic of this tack was the enigmatic stratagem of placing George’s works on The Index, but then keeping that fact from the public. Rome forbade people to read the books, then forbade its people to tell anyone of the ban! This would seem to defeat the whole purpose of The Index, unless the idea was to pass the word quietly to a few insiders with clout, and highly developed skill in quietly spreading slander.

As to McGlynn, Corrigan took great pains to build a multi- pronged case against him, inventing evidence, planting spies and agents provocateurs (Isacsson p.84) to lay traps and a long paper trail, after the manner of mediocre bureaucrats in every age and clime. Some people still believe that the central grievance against McGlynn was his support of public schools. However, the issues are closely linked. Opposing public schools allied the R.C.C. with other enemies of property taxation (just as opposing public power linked the foes of property taxation with private power companies from 1920 to the present).

Bell, Gilhooley, Curran and Isacsson leave little doubt, though, that McGlynn was only a minor annoyance until he adopted George’s cause. It was this that triggered the drastic act of excommunicating him. There was no prior action against McGlynn for his many encounters with authority over 20 years, including his refusal to build a parochial school (Isacsson, p.70). Church authorities never objected when McGlynn, a Republican, hit the campaign trail for Cleveland in 1882 when he ran for Governor, opposed by Tammany, ally of the R.C.C. in New York (Speek, p.102 n.35; New Columbia Encyclopedia).

It is tempting to ascribe clerical anti-Georgism to a fear that church lands would be taxed, but these seem to be separable issues. George never, to my knowledge, challenged the existing exemption of church lands from the property tax (although others have). The singletax would only hit the church as an institution by raising the rate on taxable income properties held for investment; and it would offset this by exempting the improvements on such lands. It is rather non-property taxes, which George opposed, that anti-clericals push, in order to get revenue from churches that pay no property tax.

Rome even considered excommunicating the whole 700,000 members of the Knights of Labor “as a secret society” – but not until 1886. This was “because of the Knights … support of George’s candidacy” (Isacsson, p.104). Actually, the Knights had been a secret society, uncondemned, from 1869-81, and in 1881 dropped the secrecy, so the “secret society” rationale does not wash at all (New Columbia Encyclopedia). The anti-Georgist rationale fits like a wet tee-shirt. “The apparent support of the singletax by organized labor made it … ‘dangerous.’ This explains the alarm of … the authorities of the Catholic Church in New York … and the excommunication of Father McGlynn, in particular” (Speek, p.156).

Again, The Church never disciplined the outspoken, politically active Fr. Sylvester Malone, and why not? “Because he was … not as economically radical as Edward McGlynn” (Isacsson, p.49, n.25). The rest of the case against McGlynn was a cover story. When, years later, Leo let the aged, ailing McGlynn back into the communion it was on condition that he “put Georgism out of the picture” (Isacsson, p.355). Even then, Leo let the vengeful Corrigan exile McGlynn to a small remote parish, out of the loop.

Even that was not enough for Leo, however. McGlynn in exile became a powerful legend; his former parishioners in the confessional quizzed new priests, “Be you with or agin Dr. McGlynn?” Firmer central control was needed. McGlynn and his supporters had been pleased when Leo sent Francesco Satolli over with authority to “re-communicate” McGlynn in an apparent gesture to the liberals and a snub to Corrigan. Leo seized this opportunity quietly to make Satolli the first permanent apostolic delegate to the U.S., with liberal approval (Curran, p.394).

Next, when his pawns and bishops were aligned, the patient, wily European made what Fr. Gilhooley considers his big move. “… Leo XIII denounced Americanism in his landmark encyclical Testem Benevolentiae (1899)” (Gilhooley, p.207). Too many Americans had opened the door when a visitor said “I’m from The Vatican, and I’m here to help you.” The weak Corrigan had opened up first by heeding Cardinal Giovanni Simeoni’s behest to silence McGlynn, and then by so often turning to Rome for validation and support. McGlynn had opened up later by accepting support from the Pope’s delegate, Francesco Satolli. Terence Powderly and Patrick Ford had succumbed as early as 1887 when they abandoned George and McGlynn, seeking Roman acceptance and “respectability.” McGlynn’s allies, even Henry George, had opened up later by viewing their hero’s refrocking in 1892 as a triumph. George concluded from this act that Leo was “a very great man.” American media had opened up, too. The New York Evening Post, the Times, the Sun and the Herald all opposed foreign Catholic power in U.S. politics, but had turned around and praised Pope Leo for excommunicating McGlynn in 1887 (Bell p.124).

Indeed, Leo did seem to abate his rigid doctrinaire hostility to all things Georgist. He substituted an inscrutable ambiguity (Barker, p.577). He may have sacrificed Corrigan’s feelings in the process, but left him with great powers of petty tyranny, which he used to exile McGlynn and his supporters. In the end, Leo imposed “Ultramontanism” – Roman control – without ambiguity. “The American church was slouching toward ‘theological hibernation’” (Gilhooley, p.207), which lasted most of this Century.(n.6) The powerful Irish ethnic political bloc was confirmed in its introverted machine politics, and split away from Georgist reform. The Church was returned to “prudent and safe men” who left their members “inert” (Curran, p.172). Its most reactionary elements took power, as exemplified by Francis Cardinal Spellman, he who tore down McGlynn’s portrait and expunged his records from the archives.

Another ploy was to play dumb about what George really said. George’s tax proposal, reduced to its practical application, is simple and direct. It’s just a matter of raising the property tax rate, and exempting improvements – full stop. Yet, neither Leo nor any of his stable of erudite, advanced scholars seemed to get it. They persisted in characterizing him as a kind of open- range commonizer, whom they lumped with all “socialists,” although neither George nor most socialists held such a view.

Vatican intellectuals did not arrive there by being stupid or illiterate. It is hard to interpret their slow learning as being sincerely simple. Back in New York, Michael Corrigan was perhaps a bit thick, and in any case was a “control freak,” too carried away by Tammany politics, turf patrol, and personal spite to think clearly. Yet even Corrigan understood the essence and cutting edge of George’s proposals, for Corrigan had recently interceded in a New Jersey election to oppose a property tax bill that he (mistakenly) thought would hit Church lands (Isacsson, p.109). He was skilled at avoiding inheritance taxes through incorporating churches (Curran, p.44).

The Jesuits and Dominicans of Rome were literate, learned, and leisured, far from the threat of George as a New York political force. Being multi-lingual they were above semantic na‹vet‚. Mazzella and Zigliara had studied all of George’s works in the process of excommunicating McGlynn, and consigning George to The Index. Leo was a renowned Latinist and a deep student of Aquinas. These were not dull oafs, but fully capable of understanding and interpreting words accurately. They can only have chosen to play dumb to trade on the presumed na‹vet‚ and credulity of their readers. Modern academic economists either learned at their feet, or rediscovered the same technique.

Finally, they emerge from the cover of feigned confusion to condemn George’s policy itself, while keeping his name out of it. Under “Unjust Taxes” Rerum warns that “excessive taxes” will render real reforms impossible by exhausting private means. Zeroing in on the target they write:

“The State would act in an unjust and inhumane manner were it to exact more than is just from private owners (of lafew economists, so it is worth asking which group is the island, and which is the main? Prudence would dictate that economists give more heed to Catholic philosophers, whether to agree or not.

As to natural rights, apart from their role in Catholic doctrine, they are enshrined in the English Bill of Rights (1689), the American Declaration of Independence (1776), the French Declaration of the Rights of Man (1789), the Bill of Rights in the U.S. Constitution, and the United Nations Declaration of Human Rights (1946). Again, are economists in touch with the hundreds of millions of people who endorse those statements?

6. A fuller account would have to deal with the interlude of the sainted Pius X, 1903-14, known for his concern for the poor.

7. The wording is from Molony’s new translation, p.194. It comes at the end of para. #51 from the official translation, as reproduced in George, rpt. 1934, p.187, and in George, rpt. 1941, p.141. Molony’s wording is slightly different, without changing the meaning. In addition, Molony deleted the earlier paragraph numbers, in the process of changing the paragraph breaking points themselves.

- ” Whatever happened to the revolution? ”
- ” We all got stoned and drifted away”

Well, there might actually be quite a bit of truth in these Skyhooks lyrics – dope was firstly the gift and later the curse of all those starry-eyed ideals that we held back in the late ’60s through the ’70s.

These ideals were tied in with a movement which appeared to be irresistibly sweeping the whole world. It was seen as the dawning of the Age of Aquarius, or simply “The Sixties”. Its leaders were folk and protest singers, peace activists, political revolutionaries and Indian gurus. Its followers were flower children, dropouts, a whole generation of university students, hippies of various shades of grime, and even some ordinary Mums and Dads. If it had any “headquarters” to begin with, it was mythically located on the corner of Haight & Ashbury Streets in San Francisco.

But it died.

THE REVOLUTION THAT WASN’T

The death of this true revolution in consciousness seemed unimaginable at the time, as we had seen through all the old ways of the world and could never be fooled again……. – materialism, racism. conservatism, war, intolerance, greed, injustice, and personal hang-ups of all kinds. We had broken the mind-set that had imprisoned our parents’ generation. We were empowered with the ideals of love, freedom and spirituality. We were the generation that was going to inherit the Earth. And our own children were going to be even more enlightened than we!

ASTRAL ENTITIES RUNNING AMOK

What you will be presented with will be no less than a World Premiere – the long-awaited, sizzling expose’ of the waning of a generation’s collective ideals. I know not what crazed astral entities I shall channel through my keyboard. But I have asked for the answer to this – the Planetary Crime of the Century – and the fact that my cup of herbal tea has just been mysteriously tipped off the desk onto my lap signifies that, yes, my spirit guides are indeed prepared to cut loose. Hold onto your hats.

THE REVENGE OF THE NERDS

Not only is it evident that the seemingly-irresistible “Spirit of the Sixties” petered out, but that the present young generation (and the grown-up former young generation) have substantially less in terms of idealism and a general desire to better the world. One needs only to step onto a university campus to witness the deep conservatism and career- mindedness all-too-clearly evident in what should be the vanguard of change in the Western World. Their priests and prophets of the music world have little to offer compared to Dylan, Lennon & Co. – rather than wanting to change the world, their characteristic message is rather “F_ the world”.

Their recreational drugs are used even more self-indulgently today than were ours – witness the lack of experimentation in mind-expanding substances and the resurgence in popularity among the youth in one of the most anti-social (and conservative, for that matter) drugs in use, alcohol. Their attempts to drop out of the mainstream and forge a better way are few and feeble – the number of alternative communities are a mere fraction of what was flourishing by the ’70s, and those communes still surviving today appear to attract relatively few youth.

One could go on but the evidence should be clear, however depressing – that not only has the world failed to carry forward the ideals of the ’60s, but also that it has gone backwards in the last twenty years and has “sold out” on many noble principles.

A BIT OF STRUCTURE TO THIS RANT

So this is what you’ll get in this article:

1. A few brief arguments to back up the assertion that the most powerful revolution in consciousness went belly-up within 20 years. You’ve copped this already.

2. Non-Georgist observations to comment on the decline of the aspirations felt in the sixties….. By non-Georgist, I don’t mean to imply that these explanations are false. But the big picture can only be obtained when one has the key to understanding what makes the world go round. Go to 3 and do not collect $200.

3. What makes the world go round is economics. Unless you live the life of a hermit or have formed a very small and totally self-sufficient community, economic policies will impact on you, like it or not. In our present situation, with economic policies being in total disrepute, it is difficult to see any underlying economic “laws” as such. Nevertheless, economic policies affect your job prospects, the state of the environment, the price of the goods you buy, which political parties hold power, the cause of too many wars, the state of your personal wealth – in fact, it’s easier to identify what is not affected by economics. Not much.

DON’T DISEMPOWER YOURSELF

You owe it to yourself to empower yourself with the knowledge of what makes the world go round. And Georgist economics will show you why things are so unnecessarily screwed up. It’s the second-most-important thing you have to find out down here on Earth.

[The first is to find out what the hell you're doing here at this point in time & space. Actually, you're not a Cosmic Accident, but don't get me started on this one.]

LUCY IN THE SKY WITH DIAMONDS

OK, to the non-Georgist rant (2 above), picking up from where Skyhooks left off. Drugs did play a big part in breaking down a lot of encrusted old attitudes and world-views, but the means soon became the end. I gotta confess that I fell for this number – the Sergeant Pepper’s album triggered off a search for chemically-induced higher states of consciousness and, lo and behold, this gear really worked! To those who are ready, LSD and its chemical cousins open up worlds beyond, and don’t let anyone label them “hallucinogens” as if they invariably let loose some maddening and warped picture of reality.

NEURONS GOING UP IN SMOKE

But the drug law of diminishing returns (you can’t expect the revelations to continue with the same intensity) and the rule of thumb that says, “The bigger the hit, the greater the price you’ll pay in terms of physical &/or mental health” was lost in a haze of jasmine incense and funny-smelling smoke. Instead of using these special substances as sacraments to be used very occasionally and with great preparation, we really blew it. The Aquarian Age cannot be grounded by the neuronally-burnt- out. States of pathological paranoia and schizophrenia accounted for some of our best and most adventurous spirits, and the regular troops who were content with just smoking dope (i.e. marijuana or hashish, Grandpa) were mopped up by the overwhelming state of lethargy and apathy which is this particular drugo’s price. [Refer back to the first two lines of this article to now make better sense of them]. How could we ever hope to reform the world when none of the other buggers (never me) who share this dive could even be bothered doing the dishes?

TRANSCENDING NAPPIES?

Another explanation for the withering of a world which wailed the mantra, “All you need is love” is a fundamental design error in our species. The fact that we can’t push our progeny out of the nest until our planet has revolved about 20 times around its source of solar energy is a huge obstacle to getting anything done. Despite having done with materialism and having done India, family responsibilities hit hippiedom just as much as it had those who had listened to 20 Polka Greats and Val Doonican’s Family Favourites. It just wasn’t fair – why couldn’t we transcend nappies? So the Great Rot set in among those who started breeding, commonly known as “responsibility”. What time wasn’t spent directly looking after the kids was spent out in the work force somewhere (how come I couldn’t get rich making pottery?) in the proverbial 5- day-drag.

A GOLDFINGER IN EVERY PIE?

What about conspiracies, then – the big-time manipulation of the world by a handful of vested interests who control things, Goldfinger-style? Sorry, folks, you won’t hear such from this little journo, however much the sensationalism might do for circulation. Yes, of course conservative politicians, those with economic interests, and the churches tried to counter the Aquarian ideals, but rarely, to my knowledge at least, in any sort of coordinated, large-scale and clandestine fashion. The last truly great conspiracy of which I know occurred in the late 19th century with the introduction of socialist reforms as a palliative measure to counter the rising tide of popular support for the sweeping proposals of Henry George. For a stunning account of how American land barons controlled the major universities in order to get Georgist proposals off the academic curriculum, you are referred to Mason Gaffney’s and Fred Harrison’s 1994 classic, “The Corruption of Economics”.

WELCOME TO THE MACHINE

Let’s now see what fatally flawed economics did to our dream. Firstly, economic pressures and commitments took out many of the flower children and earth mothers. The fear of unemployment was enough to bring most into the system, despite life in the system being characterised as:

Get in line
Punch those buttons
And die

Here, then, is the real crunch: the vast majority of us were (and still are) obliged to embark on a working career within the system almost until the end of our active life. This huge constraint is also the means by which a type of programming or conditioning takes affect, and for most is the point of no return. This programming works by surrounding us with a world which reinforces the status quo, getting us to toe the line in order to “get on”, and bombarding us with mainstream media. The wonder is that anyone’s principles held out.

Today the indoctrination process is a lot more sophisticated, and dissent much rarer. As soon as a child is old enough to speak and think, they’re placed behind a schooldesk and told to be silent and to learn a curriculum. After a 13-year treadmill at school, the brightest kids jump straight onto a 3-to-5-year higher education treadmill. Then these obedient little citizens will jump straight onto a career treadmill, in which a successful career within the land-monopoly-capitalism system is seen as the pinnacle of personal achievement. During the early stages of this treadmill, marriages, mortgages and mouths to feed seal the reformist fate of the vast majority. So far as creating a better world is concerned, many can now be categorised as part of the problem.

BUYING IN …AND SELLING OUT

Another indirect effect of the current economic system is to totally confuse would-be reformers, such that they despair of ever finding a way through the maze of policies governing such apparently-esoteric subjects as national debt, banking, taxation, trade and unemployment (especially).

As if the economic system hasn’t already done enough, it has also lured many idealists to eventually “sell out”. Simply, it promotes greed. The lure of speculative profits – orders of magnitude greater than the lifetime savings of an ordinary, honest worker – has created an attitude that if one has gotten “something for nothing” through quick deals cut on the land, stock or currency market, then one is indeed a smart and successful operator. The system allows and even encourages a person to get something for nothing – never mind from whose pocket that something must have come! It wasn’t all that long ago that the scale of speculative profits obtainable today would have rightly been seen for what it was – legalised robbery, often of a mind-boggling magnitude.

WHAT DO WE WRITE ON OUR PLACARDS?

The fact of the matter is that our economic system is so screwed up that no positive reforms could survive in it, analogous to the biblical parable about seeds cast on dry ground producing plants that soon wither and die. The planet has defied the natural laws of economics so much that people can’t grow and prosper in any real sense. Something’s gone horribly wrong, but few even realise how insane human conditions really are, much less know how to fix them. And if no-one really knows how to fix things, then we can’t know where to take our protest march. Insane, indeed.

NOW THE SOAP-BOX FROTH STARTS TO FLY!

Did that rather strong term “insane” cause an eyebrow to be raised just a wee bit? What else would you call a system that makes it profitable to keep land out of use? What would you instead call an economic structure that makes each generation beholden to the former, such that idealistic and creative youth are burdened with the massive task of purchasing the very Earth from the elderly? Is there a more appropriate term to describe a system which allows landowners to personally appropriate the fruits of society that are built into land values yet, at the same time, legally robs the honest citizen through a hundred forms of taxation? What would you call academics and professional economists who make no effective distinction between capital and land, despite the latter being fixed in supply, having a never-ending demand, and whose value is built up by the community? On a planet that has a limitless need for work to be done (better housing, more teachers, building of infrastructure, care of the elderly etc. etc.), what else can one call the unemployment of countless millions except insanity? When the price of land is the great obstacle facing any prospective individual or business venture, what more appropriate label than “insane” would you put on real estate institutes and economic analysts who applaud rising land prices as being signs of economic health?

WHAT ARE WE GOING TO SING ABOUT, THEN?

Reactionary politicians and conspirators had nothing to do with the death of our dream – our cancerous economy killed it. The supreme irony of the whole thing is that the great world problem then and now is not materialism but poverty (which doesn’t make for such an interesting theme for protest songs).

Poverty – not just in terms of earnings, but also of lifestyle – must arise from being continuously bled by land prices and taxation. Despite a long list of widespread advances by the planet, such as:

* technological advances
* relative world peace
* the spread of democracy and other civilised values

……..those of us who do have a job are still working such ridiculously-long hours that following that dream of the sixties is almost impossible.

WHEN THE TRAP IS SPRUNG

The threat of poverty doesn’t really kick in until we’ve left school or university and are fully independent and responsible for our own well-being. With the further escalation of land prices since The Sixties and the consequent strangulation of the economy, the growing threat of unemployment has hit those who would create a better world right between their starry eyes. Just when human idealism, energy and creativity are at their peak, young adults find that they are beholden to the former generation in terms of having to buy their own share of the Earth from their predecessors. And over time as our taxes go to pay for upgraded infrastructure and more liveable cities, we discover (or remain ignorant of, actually) that our taxes have made the land which we need to purchase for our own homes even more unaffordable!!!

WHEN THE EARTH IS JUST ANOTHER COMMODITY

So then, honest work is penalised through the tax system while all sorts of massive speculative profits are pilfered by those with the cunning accountants and lawyers who can make tax almost optional. All forms of speculation – in land deals, in the stock market, in foreign currency dealings or whatever – can be seen by those with the “Georgist keys” to be grounded in the way we make it profitable to keep the very Earth out of use. And the way we treat the Earth as another mere commodity – to be bought and sold and profited upon, despite it being the basis for our very existence – can also be seen to have far-reaching detrimental effects on the environment.

“ALL YOU NEED IS LAND “

I really dug your lyrics, John Lennon, and you inspired me no end during my own hippy days. But – sorry to say, mate – love is not all you need. While we still keep incarnating into these bags of bones, we also need many forms of sustenance – food, clothing, shelter, education etc., plus a few basic creature comforts. But in order to apply our labour to get such sustenance, we all need some space to swing an axe or to open a filing cabinet. The trouble is that all the infinite space in the the third big rock from the Sun. And because we can’t puff into it or otherwise expand it, we find that the Earth is the most non-renewable of resources. And we all need a piece of that resource in order to apply our labour. In other words, John, you should have sung, “All you need is love and land ”

BRINGING A VISION DOWN TO EARTH

Your vision, Bob Dylan, was way too far ahead for us to grasp or to try and work with. A long way into the future, in a truly enlightened age, a willingness to share will thankfully replace a competitive spirit. But from where we are now we have to deal with the real problem of scarce resources, and how they can be shared amongst people not all of whom are willing to contribute responsibly to the progress of society. So, in the meantime, a free and fair market does a pretty good job in ensuring that a shit-stained plumber gets paid more per hour than a babysitter who does little more than watch TV and raid the fridge. Today (and for quite a few more tomorrows) we need economic incentives, not love, in order to build computer systems and to drive efficient safe engineering projects. None of those alternative communities worked where practically everyone wanted to get stoned and be the part-time resident artist.

THEY NEED A DAMN GOOD THRASHING!

It’s too easy to lose hope in today’s crop of very young adults if you venture on to a university campus. Rather than radical calls for reforming society, you’ll find career-oriented kids studying hard and already planning their road to personal “success”. Very much head-down. bum-up. Ask them what they think the whole sixties thing was about and the general impressions you’ll hear are of psychedelics, free love, hippy fashions and classic rock music. While these elements in themselves are pretty right, the tragedy is that these kids fail to realise that there was a great idealistic dream also. We wanted to change the whole world, big time.

A CORNY ENDING

We wanted to change the world – we had the will but not the way. The economic system was totally impenetrable without the Georgist keys, and it ground us down, forced us into line, and often instilled in us those very rotten values against which we had rebelled so vociferously. Without hope, few movements can maintain the momentum, however idealistic.

The EarthSharing or Georgist message, the noblest of all philosophies supported by the most detailed of mechanisms, is indeed a message of hope.

Tonight we could anticipate the time a year hence when the life of Henry George, on the centenary of his death, will be celebrated in so many parts of the world. My hope is that my remarks tonight will play some positive part, however small, in that soon forthcoming review of the man and the movement.

Tonight though my subject is less Henry George as a man and a life than Georgism as a movement of social and political change in Australia.

Let me start with the much celebrated visit of Henry George to Australia in 1890. When he spoke at the Sydney Town Hall – barely a hundred yards from where we are gathered tonight – he was greeted by large and enthusiastic crowds – as indeed he was in the other towns he visited in Victoria, South Australia and Queensland during his visit.

On the occasion of his first speech in the town hall the local newspaper which gave the closest coverage to his visit – the Daily Telegraph, at that time it was a progressive, even a radical newspaper – noted:

“One remarkable fact that could not fail to strike the observer at last night’s gathering . . . was the large proportion of comparatively young men present . . . The great majority of those present were men of the class with whom the future of Australia largely rests. It is one of the most gratifying features of the single tax movement that it should have brought to the front a greater proportionate degree of youthful energy, vigour and aggressive intellectuality than almost any other phase of our public life.”

(DT 7 March 1890)

It is this group of “young men” or some of them at least – that I would like to follow tonight. That group – who might have been twenty or thirty years old in 1890 and who reached their maturity of 50 or 60 years or so by the end of the first world war. And so the decades on either side of the century is our historical span tonight. What happened to them, to their political aspirations, to the Georgist message that they carried into twentieth century Australia?

This was a turbulent period in Australian politics and Georgism is a very important part of the story.

Two cautionary points first. One, to speak of “young men” is not quite right. No doubt there were women there, and we should not ignore their history in the Georgist movement. Clyde Cameron has reminded us of this in describing his mother:

“. . . the writer who came nearest to her own inclinations was Henry George . . . Every mealtime she used to talk with us about the state of society explaining that it did not have to be the way it was . . . It was her influence that caused me to become the secretary of the Henry George League in Gawler”.

(Connell, Confessions of Clyde Cameron pp 5-6)

A second point is that Georgism is important in Australian political history but that is not much or well documented. No doubt people here tonight are acutely aware of this fact. Much still needs to come from beyond mainstream Georgism, from the critics and from the academy.

The fact remains that unavoidably – with the material and in the time available – I’m led tonight to focus on public life: public office and parliament; and the creation of political parties. The fact remains too that essentially Georgism has been written off by most historians as a movement that had a significance, at a certain limited point, for a certain limited period. For example, Nairn says:

“George’s influence has been overrated by several historians and publicists. None of his doctrines was original and all were theoretically and practically flawed however beguilingly propagated. His views on lease-hold and taxation of unimproved land values were held independently by many Australians and their partial legislative adoption owed little to George. His central ideas of the “unearned increment” and single tax are now historical curiosities”.

(Nairn ADB p 242)

I would like to put it another way: to see Georgism as a movement with a history and ask could Georgism have become a political party? What difference might this have made?

For our purposes tonight it’s convenient and I think helpful to divide the early story of Georgism in Australia into periods of about equal length – of about a decade long. These uniform periods of time will I hope give some sense of the relative weight of Georgism in political debate and action in Australia as time unfolds.

And I can’t hide my broad conclusion that Georgist declined in political force across the period as a whole: the Georgist movement was not as strong by 1920, that is to say, as it had been in 1890 at the time of Henry George’s visit.

For reasons I will explain later, I don’t think that fact pre-ordained the later history of Georgism – after 1920 – and I don’t think it determines what is possible in the politics of the 21st century: but more of that later perhaps.

1. The Early Years 1880-1890

I define these as the years of the 1880s, before Henry George visited Australia of course. For Georgism was important before George arrived in Australia. ‘Progress and Poverty’ was published in 1879 and was serialised in part in an Australian newspaper that very year. The book itself was in circulation by the early 1880s and the Essays of 1883 were also available in a short time to readers. In today’s technological age we celebrate the immediacy of telephone, fax and the computerised Internet but we may underrate how quickly the important messages of a century ago were communicated.

It is certain that the message of Georgism was indeed spread quickly and widely throughout the Australian colonies. The time was ripe for the message.

I take just a few quotations from well-known commentators. According to one historian:

‘Progress and Poverty’ was discussed, damned, praised, and analysed on all levels from the professorial to the political”. (Picard p 46)

According to Billy Hughes, looking back over many years:

“This was the hour of Australia’s great awakening . . . Henry George with his panacea for all economic and social ills – the single tax – captured the imagination of thousands of young and ardent spirits. Single Tax leagues sprang up as if by magic and converts, fired by enthusiasm, went about like the early Christians preaching the gospel. and Multitudes heard them and enlisted under their banner.”

(Hughes, ‘Crusts and Crusades’ p 60)

But these are sardonic words. Hughes was 83 years old when he wrote those words after the Second World War and I think his memory distorted the contemporary reality – or more likely he had some scores to settle, perhaps with his own young self, in rewriting history.

The words of Hughes, written in retrospect, were not representative of contemporary reaction to Georgism. Whilst it would be absurd to say that everyone was a Georgist, the evidence is that a broad majority of the reforming elements of the polity came at least for a time under the banner of Georgism.

Included were radicals, labourites, socialists, reforming liberals, populists and others, including some voices that later were very well known, though their Georgism by that time was obscure. One was Alfred Deakin, thrice prime minister, who as early as 1882 declared himself “a declared Georgist”; another was (Sir) Samuel Griffith, premier and chief justice of of Queensland and founding high court justice. In the Labor party, apart from Billy Hughes, were Andrew Fisher, the second Labor prime minister; George Pearce, the long-serving defence minister; and William Holman, a premier of NSW. The voice of Georgism was also heard powerfully at the intercolonial trades union congress of 1888 when the famous motion, passed without opposition, was that:

“It is the opinion of this Congress, that a simple yet sovereign remedy which will raise wages, increase and give remunerative employment, abolish poverty, extirpate pauperism, lessen crime, elevate moral taste and intelligence, purify government, and carry civilisation to a yet nobler height, is to abolish all taxation save that on land values.”

By the middle of the 1880s the political system that had dominated all Australian colonies since self government in the mid 1850s was breaking down, though what would replace it was not clear. That system had revolved everywhere around domination by a political elite – a mixture of landowners in the upper houses and middle class professionals and business men in the lower. Excluded from politics were women, Aborigines, and virtually all the labouring or working classes and what has been called broadly “the democracy”. Georgism was part of the movement that gave these new classes their identity and representation. What exactly was the form and shape of that broad movement requires further detailed historical work, but it is clear that the influence of Georgism was seminal.

From the mid 1880s to around the turn of the century politics everywhere was turbulently reshaped, initially through the construction of politics as a battle between freetraders and protectionists. Georgism was crucially important in this transition, in influencing both the ways in which the freetrade and protectionist parties replaced the earlier factions, and then in turn how those parties were replaced by Labor and anti-Labor (as for convenience I must summarise the liberal and conservative parties for the moment).

Farrell and Cotton

Let us examine briefly the lives of two well known Georgists – not quite of the rank of those just mentioned but nevertheless important in revealing the political currents in which Georgism flowed. These are John Farrell (a journalist and poet) and Frank Cotton (a member of parliament). Both were prominent and active Georgists, especially in the Sydney of the 1890s. In some ways these two men represented the common core of Georgism, but also to some extent its differences, at least where political tactics were concerned.

They were both born in the 1850s and read Henry George in their early thirties, though they had rather different backgrounds. Farrell’s was pioneering and tough, Cotton’s a little more settled and moneyed. John Farrell born to Irish immigrants looking for work off the coast of Argentina at the time of his birth, and he ended up in the Victorian goldfields with his family; work was chancy and at the age of 15 he turned to droving. So did Frank Cotton, born in Adelaide to a richer family about six years later; he was droving by the mid 1880s too, at which time it surely was that both men became immersed in Georgism. As Farrell later said of those times:

“Out in the great bush where men have time to think, Progress and Poverty was read with understanding and passed from hand to hand until the sublime truth of it was impressed on many.”

Their lives took shape accordingly though somewhat divergently.

Farrell found a good job at a brewery in Queanbeyan for a time and became something we might not have expected: a writer, a poet, a representative of that new literary movement that was taking shape in Australia as a vital expression of the new sense of Australian nationalism permeating the still separate colonies. Such nationalism found its expression above all in the Sydney Bulletin, for which Farrell wrote. Indeed he is credited with having written the first short story about Australian local life (”One Christmas Day”) in 1884. By the late 1880s, still barely 40, he felt confident enough to move to Sydney as a writer and journalist – and political activist. He accompanied Henry George on his tour throughout the Australian colonies and wrote extensively about it. His poems, stories and journalism continued throughout the rest of the decade until his death in 1904, aged 57.

Frank Cotton’s droving in the cattle country and later activities among the shearers of Wagga Wagga made him a powerful unionist by the late 1890s and he came to Sydney – like Farrell – around 1890. Political action was sharpest in Sydney and it was the energies of the two men in Georgist politics that drew them to the city. The two must have known each other well, though from somewhat different positions: Farrell was the writer and propagandist and Cotton the political activist. Cotton’s position as a union organiser gave him prominence in the early Labor party and he was elected to Parliament as one of its original members in 1891. Though he left the party in the first big split, he retained his parliamentary seat as a freetrader until 1901. Cotton was to live until 1942 and remained an active Georgist to the end.

At the time of the political flowering of Farrell and Cotton, around 1885-95, it was not clear exactly what the Georgist movement would become. Clearly it was an influence upon the labor and freetrade parties but it could still be an open question as to whether Georgism might itself constitute a definitive and strategic political grouping within the polity – what we would now call a political party, though we must resist the urge to apply terms out of order. But could Georgism have emerged as a party in its own right? There is some evidence that this was in the sight of the early activists. Thus in February 1887 the Land Nationalisation League became the Single Tax League and by April 1889 its 15 branches wereaan independent and active force in NSW politics”. Then in 1889 or 1890 Farrell argued to old Sir Henry Parkes – in an important letter for my argument, though one which has not been precisely dated – that “It would be politic and advantageous for the Freetrade party to realise that we are both working towards the same end and we should work together . . . We – I speak of course for the Single Tax Party – do not expect Freetraders to come out and proclaim themselves in favour of our reform . . . but a Local Government Bill and a tax, . . . on land values . . . we may . . . expect.”

We might call this an approach consistent with a possibly emerging party, perhaps with a pressure or interest group. Even if Georgism had a limited claim to be a party, so too at that time did the other political forces that were coalescing around new poles.

In summary of the first decade, Georgism was everywhere evident as a political and social creed but it was not, or was not yet, a political party; and already perhaps the developments that were to rule out that possibility were gaining strength. Still, some real choices were almost certainly there, and they deserve further exploration.

2. THE PARTIES EMERGE 1890-1900

For our purposes, the principal fact of the decade leading up to federation was that the protectionist and freetrade parties did begin visibly to give way to a new nexus: of Labor versus anti-Labor. Georgism was an active force on both sides of the emerging politics. Here the visit of Henry George was important, though in ways that can be debated. One result of his tour was to identify Georgism in the popular mind with the freetrade doctrine, especially as it was manifested in NSW at the time, for George himself spent much time in attacking the NSW protectionists. Thus the link between freetrade and Georgism was greatly strengthened, as was of course already evident at the philosophical and policy level. Whether the identification of Georgism with a particular, emerging party in one colony was the correct tactical move at the time could perhaps be examined. At all events, Henry George did not see himself as a leader of a political party, and nor did others. Rather was he seen as a man of vision, as “the teacher” as he was called, but not as leading an alternative to both freetrade and protectionism. He was interpreted as being for freetraders against protectionists and thus was taken within the colonial terms of the debate; he was made local in a sense.

Whether or not that was a limiting strategy, politically speaking, we need to understand how quickly and deeply embedded Georgism became within the political parties of both left and right, to use a modern term. The link with the freetrade – later liberal party – was solidified through James Carruthers, the minister for education in the Parkes ministry of 1891, and later himself premier. As he wrote to Parkes on 19 April 1891: “As to Finance I hold . . . that we should put a tax upon the unimproved value of land and that tax should be sufficient to make up for the following items of revenue to be abolished viz, Stamp duties on trade documents such as promissory notes, receipts, policies of insurance, and transfer of land and other fees which are either impediments to trade or to enterprise.”

Georgism was thus active in the old freetrade party and Carruthers was later an important figure. In 1895 George Reid, Parkes’ successor, made skillful use of Georgist ideas and rhetoric in marshalling support for a reforming land act which though it could not be called strictly a Georgist measure was yet some testimony to the force that the ideas of Henry George then commanded.

And many also coming into the emerging labor party continued to be guided by George. Here Frank Cotton had a great influence, when he was the decisive force behind the famous article of the first platform which called for the “recognition in our legislative enactments of the natural and inalienable right of the whole community to the land . . . by the taxation of the value, which accrued to land by the presence and needs of the community, irrespective of improvements effected by human exertion.”

Bede Nairn, the historian most hostile to Georgist thinking, has written that the platform “could be interpreted as simply implying a tax on the unimproved value of land and not necessarily a single tax”; but this seems to miss the point that the measure was fought for and won as a specifically Georgist policy and was adopted as such. Debate on this item occupied a whole day! It is true that the plank was a crucial factor in dividing the Labor party soon after but the story of the “first Labor split” of December 1891 in NSW must be for another occasion.

By the middle of the 1890s, then, Georgist principles were well represented in two of the three major parties, and only the protectionists still continued to be both hostile to and uninfluenced by the Georgist approach. But by the turn of the century Australia was entering federation and Georgists had new problems of political action.

3. THE FIRST DECADE OF FEDERATION 1901-10

Not long after federation was achieved, it was apparent that political alignments were changed for the long term as, on the one side, a labor party had emerged; and on the other, the liberal and conservative parties were moving gradually or quickly (depending on the state) towards a fusion which eventually produced the liberal and later country or national parties much as we know them today. And the new federal electorates were large and hard to win by any but a large, organised group. Throughout the following century, up to our own time, Georgists were thus more likely to win local than state electorates or, most difficult of all, federal seats. There were Georgists at all levels of government but a clear Georgist identity, distinct from a party allegiance, became very difficult to achieve at the “higher” levels of the federal system. In brief, the parties which emerged in the 1890s were able to capture a hegemony in a federal system which they have maintained since.

Still the substantial achievements of Georgist politicians in this period should not be under-estimated. From 1901 the federal platform of the labor party had a plank calling for flat tax on unimproved value land, watered down in 1905 with a so called progressive tax and then in 1908 by a 5000 pound exemption; the fact that the 1910 federal election was fought on the issue of land tax – and though a debased land tax with sliding exemptions – showed that the political fight was real.

When Labor won the election and implemented the tax it did not win unqualified Georgist approval but it did affect the pattern of land holding and shift the incidence of taxation. In 1912 and 1915 and later years attempts were made to insert the original plank of a flat rate on unimproved land values and Clyde Cameron has detailed how the fight continued through until the 1950s and 1960s, with Georgist opponents resorting to unscrupulous tactics when necessary.

At the state levels of the party, Georgist principles were strong, especially in South Australia, Western Australia and Victoria; in the last, unimproved revenue remained a central plank until 1909.

Within the conservative parties, New South Wales under the premiership of Carruthers in 1904-07 was especially important.

As Carruthers said, “He could tell them [the Georgists] that he still continued to support the body advocating that principle [the single tax] and he trusted to be able to continue to give his mite in the same direction”.

Indeed Carruthers is remembered for his local government reforms of 1906 which set the method of revenue raising for local government throughout Australia and which exists in large part today. But Carruther’s success was limited and he remained a pragmatic politician who would take the fight only so far:

“He lived in the realm of politics and there the hour had not yet come when they could expect the politician to bring into play the full force and effect of the single tax doctrine. The work of education had to go on, and all that a public man could do was to give effect to public opinion”.

4. 1910-20

In brief conclusion, it became increasingly the pattern of Georgist politics that individuals could be elected to parliamentary office but usually at the price of subsuming their Georgist principles within a party organised on other lines. Two notable examples were Sir Elliot Johnston, twice speaker of the House of Representatives, and Senator Jack Grant, a deputy leader of the Labor party, whose lives I have dealt with elsewhere. Like other Georgists they continued to have an influence on the policies of their respective parties. By the end of our period, it seems fair to say that they and others had kept open a Georgist space within which effective criticism of public policy did lead to certain achievements: an argued alternative to the existing economic and financial system, focussing especially on inequities in taxation; the introduction of the unimproved valuation system within local government; the planning and development of Canberra; and the maintenance generally of land taxation and site revenue as the basis for an alternative paradigm of public policy. Much of this history remains to be written in detail.

It is said that in Britain some 80 per cent of democratic leaders around the turn of the century “passed through the school of Henry George”. By the early twentieth century it was becoming clear in Australia that many had indeed passed through and not stayed; but the possibilities of the early years still command attention, not least because those possibilities are still unfolding. We have seen that Georgism became confined within a party system which is, in world terms, relatively ancient. That might mean that today the party system is inflexible and out of date, or even that it is beginning to break down and enter another cycle of construction. The success over the last 20 years of so-called “minor” parties in upper houses and in the Senate might suggest that. Tonight we have concentrated on the past and have seen that the historical achievements of Georgism are highly significant. The historical record is still of course unfolding and it may be that some of the struggles of the past have lessons for the future.

Reproduced from “Good Government” (February 1997)

[Doug Herps was Deputy Valuer-General, New South Wales, and consultant to the Commonwealth Grants Commission in connection with Australia's land values]

Introduction

From the beginning of white settlement in Australia our forbears were confronted by the many problems of settling themselves into what was imagined to be an empty and hostile land. After the discovery of gold in the 1850s, however, the population rose dramatically and municipal problems multiplied. But the all important access to land was largely denied to many settlers because so much that was favourably situated or well watered and fertile had become locked up by the squatters, many of whom had gained possession, often illegally, of tracts as large as European principalities. What to do about this urgent social problem became the most pressing need of the second half of the nineteenth century.

This was a time when white settlement was constituted under separate colonial governments and each looked to the Motherland for precedents. What they found was not very helpful, for the English system of local government had grown up in a community of landowning aristocrats and rent-paying tenants – and public finance for welfare and basic services was largely provided by a system of rating on the Annual Rental Value of landed property. In Australia, however, the townsman was generally an owner- occupying tradesman, and the countryman an independent settler. The English model was tried in the beginning but proved unsuitable and gave way to a system based not on property income but on the market or selling price of land or, as it became known, its Capital Value and later its Unimproved Capital Value.

Local government, moreover, did not in the colonies occupy the important position it did in England. The colonial governments were each supreme in their own territories and the emerging cities, municipalities and shires were their creatures. It was to the colonial governments that the settlers looked for solutions to their problems, and the former responded by imposing taxation on the market value of land, both as a source of revenue and a means of breaking up the squatters’ holdings.

In 1879 there appeared on the scene in America a man with a message many thinking people were ready to hear. His name was Henry George, a self-taught printer turned political economist, who, in that year, published a book entitled Progress and Poverty which was soon hailed by leading critics as a remarkable book that could not be lightly brushed aside. It quickly gained a wide circulation throughout the English-speaking world and, along with George’s later works, was translated into the leading European languages .

George’s theme was that the fundamental reason for the mal-distribution of wealth in a free enterprise society was the private ownership of natural resources. He did not advocate the nationalisation of land as did some of his socialist contemporaries but a concentration of revenue-raising, or a single tax as it came to be known, upon the value of land, so that its yearly worth or economic rent would be taken into the public treasury in lieu of taxes on labour and production. He regarded the economic rent or annual value of raw land as society’s natural income, increasing as the need for revenue grew with expanding population and social progress. These were not original ideas for they followed the track blazed by the French Physiocrats and later by political economists such as Adam Smith, David Ricardo, JS Mill and Herbert Spencer. But George carried their implications further than his predecessors and expressed them in unsurpassed prose and with compelling logic.

In a comparatively short lifetime George travelled and lectured extensively and his thinking had a potent influence upon many colonial legislators such as Sir George Grey and Richard Seddon in New Zealand and Sir Joseph Carruthers in Australia. In the wider sphere people of many nationalities and backgrounds were impressed, notably Leo Tolstoy, Lloyd George, Sun Yat Sen, Albert Einstein and the eminent town-planner Walter Burley Griffin. Among those whom George influenced we must not forget the late FW Walsh whose generous bequest brings us together on this occasion and whose name we remember tonight.

In the course of this address I shall briefly outline the historical development of land or site value taxation in Australia and show how it developed down to the present. I shall try to measure its potential and its significance as a source of public revenue and finally point to ways it could replace many of the punitive taxes on labour and capital which presently plague our economy and threaten to reduce it to a so-called ‘banana republic’.

Historical context

From the earliest days of white settlement in Australia revenue from dealings in land was an important part of the consolidated revenues of colonial governments. As the English Crown, following Cook’s discoveries ln 17/0, had assumed ownership of all ‘wastelands’ in the eastern half of the continent and of New Zealand (then a part of ‘New South Wales’) it was able to charge rents for lands leased to settlers and lump sums or instalments of purchase money when land was disposed of under what became known as ‘conditional purchase’. But as more and more land came into private hands, both legally and illegally, it became clear that the diminishing Crown estate could not be relied upon to provide a worthwhile revenue from rents and sales alone as this source would eventually dry up.

In the second half of the nineteenth century, therefore, the colonial governments began to look for alternative revenues from land. In time they tapped this source at three points. First, they continued to collect rent from unalienated Crown lands leased for private occupation for terms of years or in perpetuity. Secondly, they began to impose taxes on the selling value of land and thirdly they provided legislation for the new cities, towns and shires to levy rates on land on the English model. Of these three sources we shall see that it was from rates on land that by far the largest revenues were collected.

By the late nineteenth century the rents of Crown lands had become the least important in revenue terms but enabled the various Lands departments to recover at least the expenses of managing what remained of the Crown estate. The rents of most tenures were periodically re-appraised and were based on the productive value of the land in its virgin or site-improved condition depending on its state when leased. In New South Wales, Queensland, South Australia, Western Australia and the Northern Territory the Crown estate included areas of arid or semi-arid land of enormous extent but of low value on which only open-range cattle and sheep grazing was possible; in Victoria and Tasmania there was little remaining Crown land, most of lt having been taken us during the first generation of white settlement.

As a second source of the Colonies’ consolidated revenue funds, land taxes were introduced:
first in Victoria in 1877 (1)
and then in Tasmania 1880 (2)
South Australia 1884 (3)
New South Wales 1895 (4)
Western Australia 1907 (5) and
Queensland in 1915 (6).

The newly created Federal Government, whose original source of revenue was principally from customs and excise, enacted a land tax under the Land Tax Act, 1911 (Commonwealth). This measure imposed a graduated tax beginning at one penny in the pound of the total Unimproved Capital Value of an owner’s holdings with an initial exemption of five thousand pounds. This Federal tax remained in operation until 1952 when it was repealed by the government of Sir Robert Menzies who invited the States to augment their revenues from land tax as a partial substitute for the States’ income taxes which they had surrendered to the Federal government during World War II.

It is of interest to note that New Zealand, which had become a separate colony in 1841, adopted the land tax principle much earlier than Australia. In fact, between 1849 and 1855, at a time when that country was divided into provinces, the citizens of the town of Wellington and the provinces of Marlborough and New Plymouth passed ordinances which provided for rates to be levied on the ‘fair value of land exclusive of the value of improvements’.

It is now known that in 1855 the province of New Plymouth gave effect to this principle, this being probably the first instance in modern times of the practical adoption by ratepayers of the system which became known as rating on the Unimproved Capital Value of land. In so doing it is claimed that:

this handful of settlers, in this most remote of European settlements … made a contribution to social theory and practical administration which was to prove of immense importance in the development of Australia and New Zealand. (7)

It is all the more intriguing to reflect that these early New Zealand settlers adopted this concept a generation before Henry George advocated the same system.

Later, in 1878, after provincial government was abolished in New Zealand, a national land tax was introduced which required that:

all land shall be valued at the capital value thereof to sell, after deducting therefrom the value of all improvements thereon. (8)

Undoubtedly these early efforts of our New Zealand cousins greatly influenced the subsequent land tax and land rating legislation of the Australian colonies, particularly in the official valuation of land, for the determination of which New Zealand established the first Australasian centralised valuing authority. (9)

By far the most significant way in which Australian Governments, first as Colonies and later as States, drew upon the value of land for revenue was in the development of a system to finance the needs of local government.

In the beginning the revenue base they adopted was borrowed from the law of England where it had operated since the beginning of the seventeenth century. (10) This was the system of rating on Annual Rental Value of land including improvements. However, as the early settlers found that this heavily penalised and discouraged the making of improvements, they quickly discarded it for a rate based not on total property income but on the market or selling price of raw land which became known as the system of rating on the ‘Unimproved Capital Value’ of land which was also the base the central governments adopted for their land taxes.

The pioneering work in local government rating was done by Queensland which, although the last to adopt a statewide land tax, was the first colony to abandon the English system and to embrace the principle of raising revenue from the capital value of land excluding improvements. This was introduced for local government purposes by legislation in 1879 (11) and made compulsory for all Queensland’s local authorities in 1890. Although the concept of rating on the unimproved capital value of land did not finally emerge in the colony until 1890, Queensland’s early local government legislation required every local authority to make a valuation of the ‘annual value ‘ of each parcel of rateable land and to levy its rates on that basis. Moreover, the 1879 Act provided for a separate valuation of ‘buildings and houses’ and allowed for the deduction of one-half of the annual value in respect of those improvements. In 1887 country land was assessed on its annual value with the values of improvements specifically excluded. In 1890 Sir Samuel Griffiths Liberal-Conservative Coalition Government introduced the Valuation and Rating Act (Qld.), a measure which excluded improvements from local authority rating in both urban and rural areas and was the first legislation in Australia to impose rater (as opposed to land tax) on the unimproved capital value of land. A Queensland Royal Commission of 1896 endorsed this concept and prompted a consolidating Act, the Local Authorities Act, 1902 which drew no distinction between rural and urban local authorities and confirmed the previously established principle of valuing land, excluding improvements, for local rating.

Queensland’s pioneering work in the field of local government finance was undoubtedly greatly influenced by its Premier and later Chief Justice, Sir Samuel Griffith. This outstanding legislator and jurist was motivated by a philosophy closely resembling that of Henry George as evidenced by his remarkable Law of Property Bill which he introduced into the Queensland parliament in 1880. It is unlikely, however, that he was influenced by George but rather by his great scholarship and acute sense of social justice.

Following Queensland, South Australia (1893) (12)
Western Australia (1902) (13)
New South Wales (1905-06)(14) and
Victoria (1915) (15)

each legislated to enable their local authorities to raise their finances by rates on the unimproved capital value of land, either as a compulsory alternative to or local option for the English system of Annual Value Rating. Tasmania alone retained the English system in toto and has continued with it to the present day.

In summary, by 1915 all the Australian States as well as the Federal Government and New Zealand were raising a significant part of their public revenues from land values. For land taxes the revenue bases were the Unimproved Capital Value of land, whereas for local government it was either the unimproved value base or the inherited English Annual Value system which included the value of improvements.

With the possible exception of the Queensland legislation, the laws enacting this system of raising revenue were not initially based on any political, social or economic theory although by the end of the nineteenth century legislators were pointing to Henry George’s philosophy to justify and amend it. It was certainly not directly inspired by him but was rather the response of settlers coming to terms with an alien environment. As Sir Edmund Barton said of Canberra’s leasehold system, it was a system chosen ‘as a matter of business’. (16)

How a Potentially Good System Became Debased

All States have retained to the present day at least a semblance of the land revenue schemes previously outlined. In addition, the Australian Capital Territory and the Northern Territory in recent years have adopted rating on the unimproved value oi land as their principal source of revenue for local government purposes.

Many alterations, however, have been made in the form and substance of these systems in the course of the century they have

Originally the basis of land taxation and land rating in Victoria and Tasmania was, as already stated, the English concept of the annual rental value of land and improvements. New South Wales and Queensland, however, rejected the English model outright and, at an early stage, embraced as the revenue base what became known as the Unimproved Capital Value of land. Quite early this concept also became the base for land tax in all States. It also became the only base for local government rating ln New South Wales, Queensland and the Territories and an optional base in Victoria, South Australia and Western Australia. In the result, at the present time, some 70% of Australia’s local authorities, controlling about 95% of the rateable area of the entire country and raising some $3 billions in revenue, nominally use the unimproved capital value for virtually the whole of their rate levies.

In recent years a variant of the unimproved capital value base has been adopted in all jurisdictions except Queensland. I should explain that the original definitions of this concept in Australian legislation required the exclusion of the value of all improvements including those of clearing and land reclamation which, in the course of time, merge with the land itself and become indistinguishable from it; these changes in the configuration of land are called site improvements.

The difficulty in defining a suitable land revenue base was well understood and anticipated by George who, in an oft quoted passage wrote:

… no difficulty can attend the separation of land and improvements if all that is attempted is to separate (and exclude from taxation) the value of clearly distinguishable improvements made within a moderate period … this manifestly is all that Justice or policy requires … (because) each generation builds and improves for itself and not for the remote future … (and) each generation is heir not only to the natural powers of the earth but to all that remains of the work of past generations. (17)

This modification of the revenue base is now referred to as ‘Site Value’ in some States and ‘Land Value’ in others. In the briefest terms it means the selling value of bare land in its present configuration but having the benefit of all surrounding amenities. From now on I shall therefore refer to the revenue base as the ‘Site Value’.

Two technological improvements in recent years in the administration of these land revenue systems should be noted. They are the employment of the computer in establishing the rolls of valuation and ownership and the great advances in all States in the techniques of determining the valuations which make up the revenue base.

As to the first, all States and Territories have either adopted or are now adopting advanced computerised land information systems which have greatly expedited the issuing of assessments and further reduced the acknowledged low cost of raising revenue from land.

Initially the States Land Tax Commissioners relied on owners to file annual returns of their landholdings to establish the official tax records of each owner’s liability. By integrating Australia’s highly acclaimed registers of Torrens Title ownership and each State’s valuation lists, assessments of land tax, local rates and land rents can each be compiled and issued by computer with a speed and accuracy unknown only a few years ago. South Australia and Tasmania have already demonstrated the feasibility and cheapness of integrated computer systems of this nature and the other States and the Territories are setting up similar facilities. Local councils can now have their rate notices in the ratepayers’ hands in the first week in January, whereas formerly they were struggling to issue them in the first three months of the rating year. Land tax offices are dispensing with owners’ returns and are able to issue accurate annual assessments over a few weeks.

Great strides have also been made in the techniques of determining the necessary revenue valuations. These improvements include the development of centralised independent valuation authorities in each jurisdiction on the New Zealand model, the provision of more timely and consistent valuations and the use of the computer in the actual valuation process.

Strange as it may seem, early land tax legislation did not always provide for determining the revenue base. Some States, especially Victoria and Tasmania, relied on valuations of rental value where these already existed for municipal purposes. In other States – Victoria is an example – the Land Tax Commissioner was himself empowered to make the valuations and compile valuation rolls.

The entry of the Federal Government into the field of land taxation in 1911 brought to light gross inconsistencies in locally determined valuations within and between the States and gradually the New Zealand concept of a central valuing authority gained ground in this country. Such an authority would be independent, centralised, impartial and responsible only for the prevision and maintenance of valuation rolls. In other words the valuation and revenue collection functions would be completely separated.

As this matter was considered to be outside the Federal Governments Jurisdiction the Premiers Conference of 1913 recommended that each State set up its own valuation office. At first only New South Wales adopted the recommendation and established the position of Valuer-General in 1916. (18)

Later the New South Wales legislation served as a model for the other States and the Territories all of which now have Valuers- General, the Western Australian office having been set up as recently as 1978. (19) Victoria, however, still remains out of step with this development for, although it has had a Valuer-General since 1960, its legislation restricts his main function to supervising the valuations made by Victoria’s municipalities and certifying them as ‘true and correct’ for land tax purposes. (20)

The rapid increase in land prices throughout Australia since World War II highlighted the need for revenue valuations to be up to date but early legislation made inadequate provisions for revising them. A common requirement was for revision at intervals of between three and ten years or even longer. In recent years the use of out of date valuations led to inconsistency and injustice resulting in a search for ways of shortening the revision cycle. Whilst the valuation authorities recognised this deficiency it was only the recent advent of the computer which made this practicable.

Two States, South Australia and Queensland, have recently demonstrated that annually revised valuations are feasible with computer assistance. The first results of this innovation in South Australia were indeed embarrassing. When annual valuations of all local authorities in that State became available for the first time in 1986 for land tax assessments an increase of approximately 100% in the revenue base was revealed. This prompted South Australia to raise the tax-free threshold and to concede an across-the-board rebate of 25% in land tax assessments for that year. A similar outcome seems likely to emerge in Queensland where by 1990 annual valuations are planned to supersede that State’s valuation interval of five to eight years. The recent experience in South Australia is a striking vindication of the aptness of tapping the economic rent of land to meet the revenue needs of a growing community: it is a growth tax par excellence.

In most official valuation offices the computer is now being used as an aid in the valuation process itself. For example, in the Northern Territory, the 1986 residential Site Values for the town of Alice Springs were produced, with computer assistance, at a cost for the entire triennial revision of 75% of the cost of the 1983 revision. It is by using this technique, refined and employed statewide, that South Australia is now able to produce annual revaluations of every rateable property in that State.

Despite the improvements which modern technology has brought about in the mechanics of determining the revenue base and the speed and cheapness with which assessments can be issued, it must be admitted that in both the States’ land tax and local government rating systems serious blemishes have been allowed to debase an otherwise efficient and equitable method of collecting public revenue.

In the case of land taxes, most have become highly progressive with Victoria’s 1986 rate scale (21) containing 22 steps ranging from 0.36 cents for each taxable dollar on a valuation of approximately $50,000 to three cents on taxable values over $1,152,800 with a further surcharge of one cent on values exceeding that amount. It seems that framers of land tax legislation did not trust the impartiality of the market to distribute the revenue, for they imposed higher rates on the larger landholdings in the belief that this was necessary to break up large estates which had resulted from the uncontrolled scramble for land in the squatting age. This argument no longer has the force it once had and the retention of progressive rate scales like Victoria’s is a valid ground of criticism; ad valorem distribution is inherently impartial and is much preferred by landholders.

In addition, many exemptions have been granted over the years under pressure from sectional interests thereby greatly reducing the land revenue base. Exemptions are now of two kinds. First, most States set a value below which no land tax is payable (the ‘threshold’ exemption) and secondly they exempt from liability important categories of land, usually rural land and owner- occupied residential land. The result is that land taxation in most States now falls with increasing severity on commercial and industrial land which, on a value basis, accounts for roughly one-fifth of the potential revenue base. Exemptions of any kind are also a fruitful source of irritation and criticism and have no place in an equitable revenue system.

There are two notable exceptions to these trends. The New South Wales land tax is now virtually a flat-rate tax at 2% but with a threshold exemption of $94,000 and of course it falls mainly on commercial and industrial land as most residential and rural land is exempt from the impost. The other exception is Tasmania. In 1983 that State widened the scope of its land tax to include all freehold land with no threshold exemption although lt has applied lower rates of tax and shorter progressive scales to residential and rural land than to commercial and industrial land. I am informed that these changes have made land tax much more acceptable in that State.

In the case of local government rating which was always based on the principle of equality of treatment of ratepayers, there are also unjustifiable exemptions for land owned by governments, religious, educational and charitable bodies and numerous concessions to groups ranging from landowning pensioners to large developers.

In Queensland all residential and rural land is valued on the concessional basis of existing use, from which the potential value for subdivisional, commercial and urban development is excluded. In New South Wales local councils are prevented from increaslng their rate levies by more than small annual percentages dictated by the State government with individual rate assessments compulsorily based on long out-dated valuations.

The system has been further debased by the introduction, particularly in New South Wales, of very high minimum rates which are applied to home units and land parcels of low value under the arbitrary and unfounded belief that owners of these categories of land would not otherwise pay their fair share of rates.

Finally, in New South Wales and some other States local authorities are empowered to charge different rates in the dollar on residential, rural and commercial or industrial land which is a none too subtle way of shifting the liability of some groups of ratepayers onto others, often others with less ability to pay.

All these defects ln the States’ land tax and local government rating systems are very serious distortions of a revenue scheme which originally promised equitable treatment for all. Already there are pleas for further exemptions from land tax, even for its abolition. Local government’s once independent financial basis has become a travesty of the original scheme and this important arm of government is fast becoming a mere puppet of central government. There is a real danger that local government’s very foundation could be swept away and suffer the same fate as Britain’s property tax which was to be replaced by a poll tax under which the landed aristocrat pays no more than his footman.

Current Land Revenue Bases In Australia and Their Significance for Public Revenue

The reform of this state of affairs, Henry George would have said, lies with an enlightened electorate. Sufficient men and women must realise the importance of land or natural resources in the economy. They must appreciate the basis of land value taxation and rating; they must understand that the value of land or, more correctly, its economic rent, provides a natural revenue base which expands with society’s expanding needs and is sufficient at all times to meet the legitimate expenses of government. So enlightened, they must demand that the politician undertake novel and radical reforms to our system of public finance. As has been said, the people must think for themselves in these matters for, in a democratic society, they alone can act.

Before examining the States and Territories’ land revenue bases and their potential as a source of revenue I therefore draw attention to the importance of the terms ‘land’ and ‘land value’ in Georgist philosophy and why these concepts loomed so large in his thinking.

The word ‘land’ as used by George is a technical term signifying the passive factor in production. It refers not only to the familiar categories of rural and urban land but also to the earth’s mineral, timber and water resources, its fisheries and air waves and the forces locked up in the atom. It therefore embraces all the earth’s natural resources outside of man himself. (22)

Land in this technical sense has a number of attributes of which four might be noted – although not in any order of importance:

First land has no cost of production since it is not the product of labour but is provided by nature.

Secondly, land was given not sold, to all mankind to labour and live upon; priority of possession does not give title to land, for that would exclude generation as yet unborn.

Thirdly, land is the source of all wealth and without access to it man can produce nothing and is as helpless as a fish out of water.

Finally, land is unequal in quality, some land being naturally more productive than other land and some sites more conveniently located than others.

It is this relative superiority of some land over other land which gives rise to the term ‘land value’ and here I must refer to the ‘Law of Rent’. In modern times this law was first given prominence by the French physician and economist, Francois Quesney, (23) the leader of the school of political economists known as the Physiocrats. It was later formulated by David Ricardo (24) and refined by Henry George who defined it concisely in the following words:

the rent of land is determined by the excess of its produce over that which the same application can secure from the least productive land in use. (25)

This law, sometimes referred to as Ricardo’s Law of Rent, has the force of an axiom and applies not only to agricultural land, as the Physiocrats thought, but to all land – as George emphasised. The economic rent of land accurately measures the relative superiority of some land over other land and hence arises the expression ‘land value’. In George’s words:

the value of land always measures the difference between it and the best land that can be had for the using … (lt) expresses in exact form the right of the community in land held by an individual and rent expresses the exact amount which the individual should pay to the community to satisfy the equal rights of all other members of the community. (26)

Some commentators have pointed out that in his use of the term ‘land value’ George departed from his usual strict precision with words and used it in two senses.

First, he used it as a common or general term to denote this relative superiority of some land over other land, that is as a synonym for economic rent. Secondly, he used it, as we naturally do in reference to the fact that, in a landowning society such as ours, land commands a market price which in reality is the commuted or capitalised equivalent of the economic rent which perpetual or freehold ownership confers on the title-holder.

ln relating theory to practice it can be seen that the revenues which our State and local authorities derive from land are in fact the collection of some part, in most cases a minor part, of the economic rent, whereas the price which we pay in the market for unimproved land is really the capitalised amount of the economic rent which remains in private hands after the payment of land rates and taxes. If we buy improved land, that is land including a house, a farm or a factory, the purchase price is notionally divisible into two essentially unlike components:

(a) the capitalised equivalent of the uncollected economic rent of the site and

(b) the current replacement value of buildings and other improvements which in strict economic theory are not land but wealth.

By the same token the rent which one commonly pays for a house or other item of real estate is also divisible into two parts:

(a) the site’s uncollected economic rent and

(b) interest on the landholder’s capital in the shape of buildings and other improvements.

The amount in dollar terms of that part of the economic rent which our governments collect in land tax, land rates and Crown land rents is obviously, for any one financial year, the total sum collected from these sources whilst the amount of the uncollected economic rent remaining in private hands is the total of the site value of all privately-owned lands. But as this latter component is a capitalised sum, it must be reduced to an annual equivalent if we are to quantify the land’s total economic rent. The sum already collected as revenue plus the balance of the economic rent in private hands I shall refer to as the apparent site rent, and its amount in dollar terms indicates how far the economic rent of land would go towards replacing our present multitude of taxes as George advocated.

Over the years a number of people have endeavoured to ascertain the amount of Australia’s economic rent and compare it with total taxation. The most exhaustive and reliable work in this field, in my opinion, is that of AR Hutchinson, late Research Director of the Melbourne-based Land Values Research Group.

In 1978 Hutchinson produced an excellent paper entitled Natural Resources Rental Taxation in Australia. (27) Using published figures of the Australian Bureau of Statistics, he pointed out that the combined revenues of all Federal, State and local authorities for the fiscal year 1976-77 comprising taxation in all its forms, income from public enterprises and from land rents and royalties were almost $29 billion.

He then noted that the taxation component of this sum included an amount of $2676 billions which was made up of: $220 millions from State land taxes, $1319 millions from local authority rates and $1137 millions from crude oil and other minerals, all of which were actually site rent in character. He observed that the gross income from public enterprises and from land rents and other royalties were also in the nature of site rent, so that, for the year 1976-77, no less than $6.6 billions were collected by way of rent for natural resources,

Hutchinson then examined the amount of site rent remaining uncollected and which was represented by the market value of all occupied land as determined by the States’ valuing authorities. He found that the official site valuations of the six States and the two principal Territories amounted to $85 billion approximately, which, when adjusted to a common date and after the exempt lands had been brought to account, came to a grand total of approximately $106 billions for 1976-77. He then converted this $106 billions to a site-rental equivalent, using a 5% capitalisation rate which produced an approximate annual sum of $5.3 billions as the portion of total economic rent remaining uncollected by government. By adding the $6.6 billions already collected and the $5.3 billions uncollected he arrived at an apparent economic rent for Australia as a whole of $11.9 billions for the year 1976-77.

On Hutchinson’s calculations, therefore, the apparent site rent of land or site rent fund as it might be called amounted to approximately 11.9/29 x 100, or 41% of the total public revenue receipts exacted by all levels of government for the fiscal year 1976-77.

Having carefully compared Hutchinson’s estimates with independent ones, I have made in recent work for the Commonwealth Grants Commission on the relative capacities of the States and Northern Territory to raise land revenues, I am of the opinion that his analysis is sound. My only criticism is that Hutchinson’s estimate of the total site values of the States and Territories and his use of an arbitrary capitalisation rate of 5% were conservative.

But this conservatism produced a lower figure for the uncollected site rent component and is, I think, a tribute to the integrity of his conclusion. If he had had the benefit of the land market information available to me and had used a market rate of 8% to convert the official valuations to a rental equivalent, he could have concluded that the apparent site rent for 1976-77 was a little over 50% of total revenues collected in that year.

In the most recent work I have done for the Commonwealth Grants Commission I had occasion to adjust the States’ and the Northern Territory’ s land tax bases to the 30 June 1984. (28) In that exercise I found that at that date the site values of occupied lands had greatly increased between 1976-77 and 1983-84 and amounted to approximately $243 billions or $246 billions if the Australian Capital Territory is included. If the exempt lands are brought to account this total becomes approximately .$270 billions which, if converted to an annual equivalent at a market rate of 8%, amounts to $21.6 billions. This, of course, represents that part of the apparent economic rent which, in that year, remained uncollected in respect of land in private ownership or occupied by public utilities and exempt bodies.

In the same interval the total revenue of all levels of government had also increased sharply. Taxation had grown to an estimated $55.7 billions: in this total State land taxes had doubled and local council and water and sewerage rates had increased by approximately two-thirds. Of the other receipts, income from royalties had increased by about three times.

It can readily be seen, therefore, that although between 1976-77 and 1983-84 taxation receipts from all sources increased dramatically, the apparent economic rent of the nation’s land increased at an even faster rate and could have provided at least one-half of the total taxation receipts for 1985-84. Since that year there is no reason to believe that the position today is any different. Although total taxation has continued to increase we are all familiar with the extraordinary increase in the market price of land which has occurred in New South Wales in the last twelve months. It is also reported that land prices have increased ln other parts of the continent although less steeply than in New South Wales.

That Australia’s site rent fund is presently equal to at least half of total public revenues is reinforced by recent investigations which have been undertaken overseas. In England, David Richards, using recent United Kingdom Central Statistical Office figures, conservatively estimated that the capital value of land in the United Kingdom was £UK485 billlons in 1985, representing 183% of national income whilst the American, Steven Cord, using similar sources, arrived at a figure of $US3914 billions as the capital value of land in the United States in 1981 – or 166% of the national income. 29 My estimate of a capital value of $270 billions for Australian land at 30 June 1984 represented 145% of this country’s Gross Domestic Product for 1983-84.

Was Hutchinson’s finding that for 1976-77 the site rent fund would have provided 41% or, more accurately, 50% of Australia’s total public revenue an accidental relationship applying only to that year? I do not think so . In fact, I think this proportion has remained fairly constant over the past ten years and is more likely than not to have increased in that period.

Of course some might be inclined to say that all that any investigation such as Hutchinson’s shows is that the site rent fund still falls far short of the financial needs of the Welfare State. There is a short answer to this: it is that total government expenditure could be very much lower than it is today, and few would argue against that proposition. Government expenditure, moreover, should be limited, in George’s view, to whatever revenue the site rent fund provided, because he considered it constituted society’s natural revenue.

George, however, together with the Physiocrats and Adam Smith, argued that the current market value of land represented only that part of economic rent left in the hands of landholders. The true potential rent of land is this figure plus all other taxation; that is to say, existing taxation diminishes rent and all taxation is ultimately at the expense of rent. If you wish to pursue and test this argument you will find it clearly expounded in Chapter I, Book VI of Progress and Poverty.

The Way Ahead

Thus far it has been shown that in Australia the present level of the apparent economic rent of land is capable of replacing at least one half of the multifarious taxes which plague our economy. It is emphasised that this proportion is true of the present level for, if the politicians could be persuaded to extend the principle already established, the potential economic rent would rise dramatically. As George said:

… to shift the burden of taxation from production and exchange to the rent of land would not merely be to give new stimulus to the production of wealth; it would open new opportunitiest For under this system no one wokld care to hold land unless to use it and land now withheld from use would everywhere be thrown open to improvement. (30)

The selling price of land would tend to fall but its site rent would rise in favoured locations to take advantage of these new opportunities. Thus an expanding site rent fund would allow further reduction in the remaining taxes on labour and production. George claimed that his proposal was a genuine reform ideally suitable for the gradual dismantling of an arbitrary and regressive taxation system and its replacement by one based on incentive and enlightened self-interest.

How can we be confident that beneficial results would follow? The answer is that wherever the land rent fund has been tapped for revenue this has ensued as the following examples of its partial implementation have shown.

The Australian Capital Territory is a unique example. In this Territory, freehold ownership is forbidden by law and between 1920 and 1970 land rent and rates provided significant funds for developing and maintaining Canberra’s basic services and parklands. It is no accident that prior to 1970 house blocks in Canberra could be bought at auction or over the counter for a nominal sum and that the average quality and value of Canberra housing was the highest in Australia.

Those who are familiar with Perth will have noticed how clean and well-planned a city it is and how well served with parklands. This undoubtedly is due largely to its Metropolitan Improvement Act (WA) under which an annually increasing fund, amounting to $7 millions in 1983-84, is raised by a rate of a fraction of 1% on Perth’s site values to defray the cost of providing roads, parks, open spaces and similar amenities within the Perth Metropolitan Region Planning Authority.

Nor is lt generally known that Melbourne’s new underground railway was partly built and is being maintained by a similar development fund, although in this instance the development rate is imposed on the net annual value of land and improvements. Nevertheless the principle of paying for a large public work from the land values enhanced thereby is sound and much to be preferred to the ill-considered arrangements for funding the new Sydney Harbour tunnel through escalating bridge tolls.

If further examples are required one has only to look at what has happened in Victoria when ratepayers exercised the option of having the basis of their municipal rates changed from net annual value to site value. In every case a surge in building activity and urban renewal has followed. In a group of American cities where the weight of the municipal ‘property tax’ has ln recent years been shifted from the value of improvements to the value of land, similar results have been observed.

In New South Wales the problem of Aboriginal Land Rights has been addressed with this principle in mind. The Aboriginal Land Rights Act, 1983 (NSW) makes provision for the annual setting aside and payment to the State Aboriginal Land Council of 7.5% of the land tax receipts for a period of 15 years from 1984 to 1999. The 1984 appropriation was approximately $13 million and with the rapid increase in receipts since then, and likely in the years ahead, the total fund could reach half a billion dollars. Of this fund one half is being applied towards purchasing land on the open market for the Aborigines’ benefit. Land so acquired is vested in local Aboriginal Land Councils and is being developed by them for farming and other purposes. In reference to this legislation the Sydney Morning Herald of 23 April last carried an article describing its advantages. This is a prime example of the capacity of the land rent fund to meet future revenue needs. I am informed this and similar projects financed from the State’s land tax receipts are already attracting landless Aborigines who would otherwise crowd into intolerable living conditions in the Redfern ghetto. This story may well be the pointer to a solution of a seemingly intractable problem.

Of course the examples I have just mentioned are no more than faltering steps in the right direction, and we must not blind ourselves to the fact that progress towards genuine tax reform has been slow and tentative.

But George’s proposal is not just another tax. It is an alternative to taxation – not an addition to it, and care must be taken that any extension of the present land revenue system is accompanied by a pro rata reduction in current taxation.

I have earlier called attention to the critical financial plight of local government, particularly in New South Wales. I said that in this State local government was given the land rating system as an independent revenue source. I pointed out that over the years that system had become debased by exemptions, high minimum rates, concessions and devices such as rate pegging and differential rates to favoured groups of ratepayers. And as local government is being starved of its proper revenue, it has been encouraged to assume responsibility for social services while its roads, footpaths and stormwater drains deteriorate to the point where public health and safety are endangered.

In a country as extensive and varied as Australia there is a good case for greatly extending local government’s functions to such matters as police protection, local courts, community justice centres, infant and primary education and public housing but only if it has the responsibility to pay for them. Grants and subsidies from central government are not the answer as they destroy local government’s independence.

In short, local government should not only be obliged to carry out all these basic services but to raise the money to pay for them. Its rating system must be freed of the curbs and impediments it presently suffers, and the revenue from the land rating system expanded to provide for all its functions. In this State if the Sydney Water Board persists with its ill-considered ‘pay-for-use’ system for water supply and sewerage, the land rates foregone should be transferred to local government. At the same time there must be corresponding relief from State and Federal taxation now raised to assist local government by way of grants and a proportion of income tax.

At the State government level what could be more regressive and indeed hypocritical than the Payroll Tax? It should be swept away and its revenue made good by abolishing the wide ranging exemptions from land tax now available. Stamp duties, especially on house sales and preferably on all transactions, should be done away with and their revenue replaced from a small increase in the wider ranging land tax. A State Development Fund based on the principle of Perth’s Metropolitan Improvement Fund should be established and funded by the land tax to provide the finance for essential State works such as motorways and rapid transit systems for the cities, for airports and for improved country roads.

In the Federal sphere what could be more callous and inflationary than sales or consumption taxes on such necessities as soya milk for babies who cannot stomach other milk? As to company tax – why is it necessary at all when individual shareholders have to pay income tax on their dividends? Company tax is also inflationary, being treated as an expense of business and recovered in higher prices for the goods and services companies provide. All these Federal impositions could be more efficiently and cheaply raised by the ‘precept’ method of finance under which the required revenue could be raised at State or even local government level by a special rate of land tax or a special local government rate, care being taken to see that the collecting authority, whether State or local, is properly recompensed for the expenses of collecting the revenue on the Federal or State government’s behalf.

It will be said that such changes in basic financial relationships between the levels of government are too radical, too revolutionary, even to be entertained for it would turn present relationships on their head. But it would cut government down to size, reduce the present army of public servants and restore the power now wielded by politicians to the people where it belongs,

What then are some of the benefits which could be expected from a reform of the country’s public revenues along these lines?

First, George said there would be a surge in employment as idle and inefficiently used land, much of it now carrying ‘For Sale’ notices, was put into productive use. This could be expected to occur in and around the cities and upon land already close to settlement whilst marginal land might be withdrawn from use and preserved for future generations as national parks.

Next, the selling price of land, but not its economic rent could be expected to fall and many homeless men and women who want to purchase homes but cannot afford the present ridiculous prlces and high mortgages would find themselves able to do so and to marry and raise children. Perhaps the need for the overseas migration programme would disappear.

Finally, there would be lasting benefits to the environment. A great proportion, perhaps the bulk of present revenue, is derived by taxes on individuals and their incomes. Thus human work suffers now under the present tax regime because taxes on labour always tend to push the job towards capital-intensive, large-scale and environmentally destructive work methods. Therefore, abolition of such taxes would return work to the human scale and thereby give enormous relief to the environment. I would remind you that the Aboriginal inhabitants of this country lived in harmony with their environment for forty thousand years and all their labour was on the human scale. The concurrent rise in income taxation and the growth of environmental problems in this country may not be accidental; it suggests a cause and effect relationship. It is significant that the Scottish Environmental Farty has adopted Henry George’ s programme as its policy for promoting ecological harmony in their ancient land which has suffered so much from the private monopoly of natural resources.

If Henry George were with us tonight, I believe he would be telling us that the way ahead for a country like Australia is not to give more power to a Federal government invisible and isolated in Canberra, nor to provide more revenue for politicians to squander on what they assume is good for us. It is to free local government, which is both visible and controllable, from the corrupting influence of financial handouts and restore to it its original source of revenue, the economic rent of land; it is to extend the functions of local government, not those of central governments and finance those extended functions by gathering more of the economic rent of land without exemptions and without concessions to self interest groups. It is to define and limit the powers of central governments and finance them by development funds, collected locally by means of further instalments of economic rent.

If you say this is too radical a programme, George would probably reply that it is preferable to being crushed by the socialist juggernaut.

We note here that ‘the socialist juggernaut’ ran out of steam throughout eastern Europe shortly after Doug Herps’ Walsh Bequest address.

NOTES

1. Landed Estates Act, 1877 (Vic.)
2. Assessment Act, 1880 (Tas.)
3. Taxation Act, 1884 (SA)
4. Land and Income Tax Assessment Act, 1895 (NSW)
5. Land and Income Tax Assessment Act, 1907 (WA)
6. Land Tax Act, 1915 (Qld.)
7. Rating in New Zealand, Rolland O’Regan (1973, p21)
8. Land Tax Act, 1878 (NZ)
9. Government Valuation of Land Act, 1896 (NZ)
10. Poor Law Act, 1601 (UK)
11. Divisional Boards’ Act, 1879 (Qld.)
12. Land Value Assessment Act, 1893 (SA)
13. The Roads Act, 1902 (WA)
14. Local Government Shires Act, 1905 (NSW.) and
Local Government Extension Act, 1906 (NSW.)
15. Local Government Act, 1915 (Vic.)
16. Sydney Morning Herald, 18 January, 1901.
17. Progress and Poverty (Centenary Edn.) pp 425-6
18. Valuation of Land Act, 1916 (NSW.)
19. Valuation of Land Act, 1978 (WA.)
20. Valuation of Land Act, 1960 (Vic.)
21. Land Tax (Amendment) Act, 1986 (Vic.)
22. Progress and Poverty (Centenary Edn., p.38.7)
23. Tableau Economique, Francois Quesnay (1758)
24. Principles of Political Economy, David Ricardo (1817)
25. Progress and Poverty, ibid, p168.5
26. Ibid, p.344.
27. Natural Resources Rental Taxation in Australia, ARHutchinson
28. Commonwealth Grants Commission’s Report on General Revenue Grant Relativities , Vol. II.- Land Valuation Consultant’s report, p63
29. Land and Liberty, (Nov.-Dec. 1987, pp.92-3)
30. Progress and Poverty, p 436.7