The economic theories of Henry George
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Henry George, the champion of the single tax movement in the United States, was born in Philadelphia, September 2, 1839. After a brief schooling he tried sailoring for one voyage, and then became an apprentice printer. At the age of eighteen he migrated to California in search of better work and higher pay. He became an itinerant printer, then later gave up this end of the work to become a reporter and editor.
The fact that he was in San Francisco during the boom period and saw the coming of the transcontinental railroad, led to his first economic writinJS. The article, "What the Railroad Will Bring Us," was published in the Overland Monthly, and shows his power of inductive inference, although it was not a literary masterpiece.
On a business trip to New York, he was struck by the sight of filth and poverty so rampant, side by side with great wealth . Years before he had been curious as to the reason that wages are higher in new sections or countries, than they are in older sections. The two questions were combined and answered in his pamphlet Our Land and Land Policy which he published in 1871. He proposed to solve the problem of "advancing poverty with advancing wealth," by absorbing the "unearned increment" of John Stuart Mill, through a land tax.
After a number of years of mulling over the pamphlet in his mind, between his job as an editor and his work as a political orator, he amplified this essay into Progress and
Poverty, published in 1880. After a slow beginning, the book caught the attention of the public, and George was famous. He had moved to New York, meanwhile, and the rest of his life was spent lecturing and writing, both here and abroad. He was associated with the Irish Land Reform movement, and made two lecture tours of Great Britain in its behalf. He was a great orator, one of the best of his day.
In 1886, he ran for the mayoralty of New York, on a coalition ticket, but lost by a narrow margin. He entered politics twice again, once in the race for the Secretary of the State of New York, and, just before his death, again for the mayoralty. He was not successful at any time. In the middle of his last campaign he died; the date was October 28, 1897.
The chief problem always in Henry George's mind was poverty. He felt that the "wage -fund" theory (which maintained that wages tended to a minimum because there was a fixed fund of capital set aside for the payment of wages, and every increase in the number of laborers decreased the individual share of each laborer) was wrong, for he said that wages
are not paid out of capital but out of product.
George regarded labor and capital as but different forms of the same thing--human exertion. Only these two are productive. Rent is an unearned increment, and it reduces
wages and interest by its total amount. His problem, in the final analysis, was to find the best method of freeing the real producers of wealth by dispossessing the holders of the unearned increment.
The solution of the problem, as advanced by Henry George, was to remove the cause of the evil, and make land common property. Not, he says, the nationalization of land;
confiscation of land is not necessary, but the purpose will be served oy the confiscation of rent.
The value of land is built up by society. Therefore, the land tax is the most just of all taxes, for only those people who have received a peculiar benefit from society in the form of land will be required to turn back some of their income into the common treasury.
A summary of his theory would run in this manner: Land is the creation of God and everyone of his creatures has a right to a share. Increase in value is due largely to the
efforts of society, and is an unearned increment properly belonging to society. As a result, the returns from the land should be appropriated by the government in the form of a single tax, which will be economic rent.
Such a plan would eliminate uoverty, and at the same time do away with monopolists of natural rights. The whole society will tend, therefore, to level off, with the two extremes being exterminated Man's ingenuity or greater skill will not be taxed, and labor will receive its just reward.
None of Henry George's ideas are entirely original, but he joined his thoughts to the stream begun many years before. He had many predecessors in the land-reform movement down through the ages. However, it must be emphasized that he knew nothing of the work of Spence, Ogilvie, Paine, the Physiocrats, or Dove until after he had written Progress and
Poverty. He was only slightly familiar with the classical economists, Smith, Ricardo , and the Mills, but knew a little more about Spencer than the others.
The turning point of his career came with the nomination for mayor in 1887. From then on, his influence declined. Unfortunate quarrels and fancied aspersions led to his writing polemics against Pope Leo XIII and Herbert Spencer, both of which hurt his cause irreparably.
His followers have carried the fight for the single tax into politics; the greatest success has come in Australasia and Great Britain, although it is impossible to say how
much is due to his influence alone. Canada instituted land reform acts in the western provinces, but none proved too successful. In the United States, only a few high points can be traced directly to George, particularly an experiment in Houston, Texas, and the enclaves. All else has met with dismal failure.
The stress has changed from politics to education, and through the good work of some early leaders, Shearman, McGlynn, Fels, and Fillebrown, much was accomplished. Of recent years, the gospel has been spread abroad through the Robert Schalkenbach Foundation and the Henry George School of Social Sciences. There is evident a great awakening of interest
in economics and tax reform.
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Thesis (M.A.)--Boston University, 1940
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