Practical Measures of Land Reform

Practical Measures of Land Reform

The most tantalizing facts about land have always been that owners of it receive a return on its use without doing work; and that as population increases, land increases in value, again accru­ing to the owner without labor on his part. The English econo­mists—beginning with Adam Smith and greatly reinforced by Ricardo—did not quiet the ever present discontent with land distribution. In fact it was Ricardo's theories which served as "scientific" justification for modem efforts to make land com­mon property. The seeming injustice of "reaping where he has not sown," has led social reformers to give a prominent place to measures eliminating private ownership in land. John Stuart Mill, believing that rent and the increase in the value of land represented unearned increment, advocated a tax which would take from the land owner all future rents. A periodic evaluation, would be made to see whether any increase in value had occurred as a result of society's action. If so, a general tax would be levied upon the increase. Mill was not opposed to immediate appropriation of land in principle, but he felt that more efficient adminis­tration would be forthcoming if the community acquired title to the land slowly. This he felt would eventuate as the profit was removed from ownership in land.

Gossen (1810-1858) presented a plan about the middle of the 19th century which bears a resemblance to Mill's and fore­casts the program of Henry George which was to come some time later. Gossen believed that industrial progress was hindered by lack of capital and by the obstruction caused by private property in land. He therefore advocated a government bank to take care of the first need, and a system of taxation which would absorb all rents and ultimately lead to government ownership, to deal with the second. Expenses of the government would then be entirely paid by the rents or rent taxes which it received. However, owners of property should be paid not only for present values but for anticipated values in any transference of ownership to the state. Indeed, Walras (1834-1910), in advancing his own theory of land reform in 1867, advocated outright purchase of land by the issuance of government bonds providing not only for present value but anticipated income. The rents of the property would be received by the state and used to pay off the bonds.

The scheme which has had the longest period of popularity and which is frequently advocated as a practical measure for systems of local taxation in America today is Henry George's single tax program. The tax would be levied upon that portion of the rent which remained after the expenses of maintenance and the return of capital invested in improvements had been deducted. The apparent simplicity of the proposal is misleading and the practical difficulties of the plan have prevented potential advocates of the reform from obtaining active support.

Land reforms of a more practical and less theoretical and radi­cal nature have been devised from time to time throughout human history as necessity demanded them. Such programs have seldom been the work of scholarly economists, but usually that of professional politicians and statesmen. There were the reforms of the Gracchi in ancient Rome whose purpose it was to preserve the small farmer from extermination at the hands of the great land owners. Then there was the program of land reclamation by the Cistercian order of monks which helped to re-establish individual freedom by opening up new lands to free tenants. Later the Inclosure Acts of 18th and 19th century England broke up the village commons in order to provide additional areas for tillage. More modern programs (the United States government's free land policy of the last half of the 19th century, and its more recent attempts to safeguard the farmer through mortgage moratoria, aid in soil erosion, and crop reduction payments) have sought to adjust land use and land ownership, not only to eco­nomic, but also to social needs. The Hitler government in Ger­many, finding itself faced with a persistent agricultural problem existing for decades, likewise evolved a program creating a new nobility of farm proprietors and guaranteeing the maintenance of a family estate through new laws of inheritance. Thus in theory and in practice the problems of the land challenge the thought of man. Yet in the age of industrialization the concern of most people is directed to the machine and its products. It is the ma­chine and the market which bring ease of life and personal wealth. How different is the outlook today from that of the economists of yesterday!