franchises, and other privileges that compose it. The public authority demands money, and this is drawn, in one way or another, from liquid capital. The whole of the inheritance tax, then, is paid out of the fund of fluid, mobile capital, which is the sole financial basis of the goods which conserve or increase our productive equipment— the fund of which it may properly be said that it originates in saving.

With rates of inheritance taxation so light and accumulations so large as they are in most of our states, the tendency of such taxes to trench upon accumulated capital may be almost negligible. But it would be hazardous to assume that accumulation in the United States can continue indefinitely at the present rate. Our large savings from income may be explained, in part at least, by economic conditions which are manifestly transitory. Our working class, recently transplanted from a less fertile economic field, secure incomes in excess of their accustomed needs, and accordingly have a surplus for accumulation. Our men of wealth, newly enriched, have not, as a class, acquired the art of luxurious consumption. Their incomes outrun their expenditures, and the surplus accumulates without active effort on their part. New opportunities presented by nature or created by society have always been available and have served as an additional stimulus to thrift. One cannot gain title to a homestead, one cannot seize and exploit coal lands or street-railway franchises, without the control of funds accumulated from income. Rarely, in a rapidly developing economic state, is it possible for an entrepreneur to draw from pre-existing funds all the capital requisite to a full exploitation of his opportunities. He must supplement the funds which he already owns and those which he can borrow with funds saved from his current income, if he is unwilling to forego many chances of great profit. "Unearned increment" thus serves

as a premium upon thrift.

As our economic conditions become more settled the unearned increment loses much of its potency as a stimulus to thrift. Furthermore, our laborers are raising their standards of living and our capitalists are learning the ways of a society which knows how to spend its income. How soon the rate of accumulation will begin to decline, and how rapid the decline will be, we need not attempt to predict. For our present purpose it is sufficient to point out that a tax rate which would today absorb 20 per cent of our annual accumulations would absorb a much larger percentage of the annual accumulations of, say, 1964.

Granted, then, that the evil of unthrifty inheritance taxes is negligible at the present time, when the taxes are light and the rate of accumulation is high. Such taxes, nevertheless, are destined to become heavier and the rate of accumulation is destined to become

less. The evil, obviously, is one which has the capacity of growing into importance.

If the inheritance tax is indeed affected with the vice of unthrift and if the defect may lead to such serious consequences as have been indicated, it might be thought to be a part of wisdom to abandon the tax altogether, or to restrict it to so narrow a range that its power of destroying accumulated capital would be negligible. To propose such a restriction of the tax, however, would be idle, in view of the powerful social and political forces to which its development responds. Economists may urge the necessity of capital conservation, but the democracy will be slow to recognize such necessity, so long as the alternative to a policy of public dissipation of capital is the perpetuation of vast private estates. Must we accept this alternative? There seems to be no good reason why we should. There is nothing in the nature of the state which requires it to assume the rôle of a prodigal heir who squanders his inheritance upon current needs instead of administering it prudently with a view to its future increase. The state can adopt the same policy which every prudent person recommends to the private heir. It can treat capital acquired through inheritance as a fund to be maintained intact. Let the state set apart, as a permanent investment fund, the proceeds of all inheritance taxes, and depletion of the natural capital will at once cease.

The public capitalization of the inheritance tax would tend to conserve the national stock of productive wealth. It is a policy that would encounter no insuperable administrative difficulties; it would not seriously prejudice the interests of the private investor. Politically and socially such a policy, if it has potentialities for evil, would appear to have far greater potentialities for good.

There is manifestly nothing revolutionary in principle in a capital fund owned and managed by the state for the benefit of a particular public service. Public and semi-public endowment funds now in existence in this country amount, in the aggregate, to an imposing sum. We are living in an epoch in which the funded endowment is employed with growing frequency. There is an increasing reluctance on the part of private donors to contribute funds merely for current expenditures; there is an increasing tendency on the part of public and semi-public institutions to transform extraordinary current receipts into permanent endowment. Not on principle, then, can a plan of the permanent endowment of a public service be treated as revolutionary. If there is anything revolutionary in the plan, it must consist solely in the magnitude of the operations that it would entail.

Defenders of an economic system based upon the principle of private property must admit that at two points their position is de

cidedly weak: the private enjoyment of funded income, and the private burden upon the worker of mischances against which it is impossible for him to make provision. The private recipient of an absolutely secure funded income is freed from the necessity of ex-. ercising the skill and foresight which serve, in general, as an ethical basis for the defense of private property. The active manager of an industrial capital finds his position morally weakened by the fact that his property income is assimilated, in the social consciousness, to that of the functionless "remittance man." However much we may approve of the policy of throwing upon each able-bodied man the responsibility for finding means of self-support, we must admit that hundreds of thousands of our workingmen are exposed to chances against which they can make no adequate provision. For hundreds and thousands of our city workers, the only escape from an indigent old age is premature death. For hundreds of thousands of families, the death of the chief breadwinner means the maiming of children's lives almost past recovery. A system which permits such evils is surely not free from moral weakness. Now, the general tendency of the policy which I propose is to divert to the state part of the funded income of society from the private recipients in whose hands it subserves no useful purpose, and to charge upon it precisely those burdens by which the weak are now crushed. Not by the rough method of expropriation, however, but by a method which is legal as well as ethical, and which entails no sacrifice of the future to present gain. The public capitalization of inheritance taxes would result in an accumulation of funds which would be gradual, and it would hence leave opportunity for the development of efficient means of administration. Under this plan public accumulations would constantly increase; but their increase could never become so great as to restrict the field of private property unless private accumulations should come to a standstill and opportunities for private exploitation should fail.

F. THE SINGLE TAX

350. The Increase in Land Values

a) Land Values in the Fifteenth Century

BY THEROLD ROGERS

During the fifteenth century, notwithstanding the difficulties and losses of the landowner, the value of land rose rapidly. In the fourteenth century it was constantly obtained for ten years' purchase, "Adapted from Six Centuries of Work and Wages, 287.

the amount of land in the market being probably so abundant, and the competition for its purchase so slight, that it easily changed hands at such a rate. Land was valued at twenty years' purchase in the middle of the fifteenth century.

b) Rents in the Sixteenth Century

BY HUGH LATIMER

Land which went heretofore for twenty or forty pounds a year now is lent for fifty or a hundred. My father was a yeoman, and had no lands of his own, he had a farm at a rent of three or four pounds by the year at the uttermost; and thereupon he tilled so much as kept half a dozen men. He had walk for a hundred sheep, and my mother milked thirty kine. He kept me to school; he married my sisters with five pounds apiece, so that he brought them up in godliness and fear of God. And all this he did of the same farm where he that now hath it payeth sixteen pounds rent or more by the year, and is not able to do anything for his prince, for himself, nor for his children, nor to give a cup of drink to the poor.

c) The Power of Landlords18

BY THOMAS SPENCE

And any one of them (the landlords) still can, by laws of their own making, oblige every living creature to remove off his property; so, of consequence, were all the landholders to be of one mind, and determine to take their own properties into their own hands, all the rest of mankind might go to heaven if they would, for there would be no place found for them here. Thus men may not live in any part of this world, not even where they are born, but as strangers, and by the permission of the pretender to the property thereof.

d) The Influence of Rent on Trade and Commerce1o

BY A. O'CONNOR

What are the circumstances under which manufacturing industry is carried on in this country in respect of the use of land? With the falling in of leases so much higher a ground rent is charged that even with an increase of business there is less profit. Not only

18 From a lecture delivered before the Philosophical Society of Newcastle in 1775. Quoted in Wallace, Studies Scientific and Social, II, 435.

19 Adapted from Special Report of the Royal Commission on the Depression in Trade and Industry (1885).

in London does the amount paid for the occupation of ground bear a higher proportion to the profits of trade than it formerly did, but in Birmingham too, where trade prices have been lowered, profits reduced, and wages are less, and where there are large numbers of persons vainly seeking employment, the price which has to be paid for the use of land has increased. The evidence on this point from Sheffield, again, was of the clearest; and it was shown that in Jarrow, which the shipbuilding industry may be said to have created, the landowners draw from the earnings of the industrial classes an immense income in consideration of the occupation of ground the improvement in the value of which is in no way attributable to them. And so of other places. As in the agricultural and mining districts, so in the industrial and manufacturing centres, the amounts which have to be paid for the use of land constitute a burden upon industry which is constantly becoming heavier, both absolutely and relatively. It thus appears that over the entire country there is a cause at work-general, permanent, and far-reaching-affecting every branch of industry, in mine, and farm, and factory, the effects of which are traceable in the languishing condition of the agricultural, and the mining, and the manufacturing interests. That cause is the fact that under the existing land system the owners of the soil are able to obtain, and to exact, so large a proportion of the proceeds of the industry of the United Kingdom that the remainder is insufficient to secure adequate remuneration to the industrial classes, either in the shape of wages to operatives or reasonable profit to the organisers of labour, the employers, or capitalists.

e) A Land Boom in Iowa

BY ALFRED RUSSEL WALLACE

I stayed some time in a growing city in Iowa, called Sioux City, which has a population of 20,000. They were having what is called a land boom-every city tries its best to have one-we should call it a land fever; and the consequence was that land which sold at $50 an acre three years ago was selling at $750. It was two miles from the city and it was sold with the idea that the city would soon stretch out, and reach it. In the residential suburbs the price obtained was $22,000 an acre, and in the centre of the city it was $200,000 an acre. In the town of Salina, in Kansas, with a population of only 8,000, land in the suburbs is now selling at $22,000 an acre, and in the centre of the town at $150,000 an acre. Here also they have had a boom, and land has doubled in value in a few months.