appointments as are suitable to them, and Sir Bampfylde Fuller found that, while they number about two-thirds of the population, 90 per cent. of all posts in the Police Department superior to that of constable were filled by Hindus. It has always been the glory of the British Government of India that it has protected the weaker classes against the stronger, and the appointment of a separate LieutenantGovernor for Eastern Bengal has made this possible. Would the addition of two members of Council to the one Lieutenant-Governor in Calcutta have done as much? Certainly not, and the work which has been done can never be undone so long as the Government is true to its traditions, whatever Lord Macdonnell and the discontented agitators who shelter under his name may say.

How far the promulgation of these reforms will go towards allaying disaffection and rallying round the Government the best elements in Indian society it would be rash to prophesy. As far as Mahommedans are concerned we may assume that the mistake made regarding their representation will be corrected, or else the new measures will bring not peace but a sword. As to the Hindus, many leaders welcomed them at first with exuberant satisfaction, recognising perhaps the blow given to the Mahommedans, but already the tone has begun to alter, and they begin to talk, like the Irish, of accepting this instalment as a step towards further concessions. Independently of the cry for the revocation of the Bengal partition, we hear it urged that the deported men must be restored to their homes and the prisoners convicted of sedition must be released, if a treaty of peace is to be signed. We ought not to look only or mainly to the measures of reform themselves to achieve the ends we desire. It will soon be felt that there are very few points at which they touch the daily life of the educated classes, who long to make their influence felt. It is no great gain to the 'middle professional classes,' of whom the district and other boards are composed, to be able to place eight members on the Bengal Council instead of three, as before. What really will tell is, as I wrote at the beginning of this article, the spirit of the debate rather than the text of the reform-the pure sympathy with the aspirations of the new generation, the just appreciation of the high qualities of the natives of India, the determination to maintain the steady resistless march of British rule, unresting, unhasting, towards the goal of admitting them to a larger and larger share in the government of their country. These will, if anything can, allay discontent and ensure the co-operation of the real leaders, and compel all men to agree with the claim of Fitzjames-Stephen, some fifty years ago, that the Government of India is a Government of great ideas.

C. A. ELLIOTT.

1909

THE TAXATION OF LAND VALUES

THERE is grave reason to fear that some attempt will be made in the forthcoming Budget to raise additional revenue by the system known as the taxation of land values. Ever since the election of 1906 a large section of the Liberal party has been pressing the Government to tax land values, and during the last few months a vigorous agitation to secure this object has been maintained by prominent Liberal newspapers. Moreover, the agitation has behind it a great deal of popular feeling. In the last Parliament even some Tory members felt constrained to vote in favour of various schemes for the taxation of land values, and there can be no doubt that quite a large number of people really believe that not only can additional revenue be raised by this means, but that also many social problems will be solved or brought nearer to solution. Under such conditions any Government is liable to be driven against its better judgment to try and do something to satisfy the popular clamour.

Before giving the reasons why I hold that this popular clamour is based upon a series of delusions, it is worth while briefly to trace the history of the agitation. That the idea of taxing land values originated, so far as this country is concerned, with the late Mr. Henry George no honest apostle of that idea would for a moment deny. Indeed, many of the leading advocates of a tax upon land values openly avow that they regard this as only the first step towards Mr. George's ideal of the complete appropriation by the State of the whole annual value of land, apart from the improvements upon it. For proof of this statement-if proof be needed-it is sufficient to turn to the evidence given before the Royal Commission on Local Taxation by members of the Glasgow Corporation. The late Bailie John Ferguson, who may be regarded as the parent of the present movement, said that he was in favour of an immediate tax of 10 per cent. on the value of the land, rising to 100 per cent., with the object of obtaining the entire land value for the service of the community.' Ex-Provost Chisholm expressed a similar opinion, but laid stress upon the necessity of proceeding slowly, only increasing the tax 1 per cent. per annum. Ex-Bailie Burt said that he wished to

use the tax to restore the land to the people,' and he proposed that the tax should be increased until you take 20s. in the £.'

This evidence is important because the three men in question were among the principal authors of what has since been known as the 'Glasgow Bill.' The object of this Bill, which was first introduced into the House of Commons in 1899, was to authorise a municipal tax of 2s. in the £ upon the annual 'land value' of land in any burgh, the land value' being defined as 4 per cent. upon the capital value of the land' apart from the value of any buildings, erections, fixed machinery or other heritable subjects on or connected with it.' Owing largely to the efforts of the gentlemen above named, several municipal corporations both in England and Scotland were in succeeding years induced to support the Glasgow Bill, in the belief that it would provide them with a new source of revenue for municipal expenditure. Meanwhile an English counterpart of the Glasgow Bill was prepared and introduced into the House of Commons. Between the two Bills there was, however, one important difference. The Glasgow Bill provided that the person who immediately paid the new tax should be entitled to recover a proportionate part from his superior landlord, notwithstanding any contract he might have made to pay all rates and taxes. The English Bill respected existing contracts. This difference, as we shall presently see, is fundamental. There was also a difference in the rate at which interest was taken. The Glasgow Bill, as already mentioned, took 4 per cent., and the English Bill 3 per cent. In this case the difference is unimportant, except as illustrating a characteristic lack of precision in the minds of people who believe that they can reform the world by setting up a new system of taxation.

After some years of agitation, partly paid for by the Corporation of Glasgow out of funds belonging to the citizens of Glasgow, the Scotch Bill succeeded in obtaining a second reading in the House of Commons early in the Session of 1906, and was referred to a Select Committee, over which Mr. Ure, the Scotch Solicitor-General, presided. The overwhelming majority of the members of that committee were in favour of the principle of taxing land values, yet this is their verdict on the proposals of the Bill:

Your committee consider these proposals to be indefensible. No evidence was adduced in support of them. No one justified the choice of 10 per cent. It was apparently arrived at by haphazard, without any calculation or estimate of what its effects would be. The objections entertained by your committee to the proposals of the Bill were such as to compel them to come to the conclusion that it ought not to be proceeded with in its present form.1

So much for the Glasgow Bill, which had been so effusively welcomed by many town councils and so actively boomed by the land taxers. The Select Committee further reported that as a preliminary

House of Commons, 379 of 1906, p. 6.

to the taxation of land values it was absolutely essential' to have a valuation of the subject to be taxed. They added that in their judgment the taxation of land values should not be confined to urban areas, but should be extended to the whole country; that the whole of the rates should be raised by taxing land values in lieu of the subjects now taxed; and that the owners of feu duties and ground annuals should contribute a proportional part of the new tax.

In passing it may be remarked that if the proposals advocated by Mr. Ure's committee were carried into effect, country mansions like Chatsworth would only be rated upon the ground on which they stand, which cannot fairly be assessed at much more than agricultural value. The deficiency in the local revenue would have to be made good by the farmers and labourers of the district. In a town the value of sites is rarely on the average as much as a fifth of the value of the whole property. If therefore buildings were exempted from rating it would be necessary to impose a fivefold rate on land. As the existing rates range from 68. to 10s. in the £, this would mean a land values rate of 30s. to 50s. in the £. Who is to pay it, and how it is to be paid, nobody has yet explained.

Acting upon the report of Mr. Ure's committee, the Government in the next Session (1907) introduced a Bill to provide for the ascertainment of land values in Scotland.' This Bill after passing its second reading, went before a Grand Committee, and was a good deal knocked about. It failed to pass the House of Lords through lack of time, and was reintroduced into the Commons in an amended form in 1908, and sent up to the Lords after very brief discussion. The Lords insisted on amendments which the Commons refused to accept, and the Bill again dropped.

The importance of this Bill lies in the fact that it embodies the considered opinion of the House of Commons and of his Majesty's Government as to the meaning of the phrase 'land values.' The definition is as follows:

'Capital land value' in reference to any lands and heritages includes the value of any common interest in land, and means the sum which such lands and heritages or common interest might be expected to realise if sold by a willing seller in the open market at the time of valuation, if—

(1) Divested of buildings, erections or improvements of whatever nature, on, in, or under the soil, woods, fixed or attached machinery, and work of drainage and of reclamation, making up, levelling, and the like, where the benefit thereof is unexhausted at the time of valuation; and (2) Sold free from all burdens, public and private, except building restrictions or servitudes.

An apology is due to the reader for this bewildering quotation, but he will probably excuse the offence when he realises that if the Land Values (Scotland) Bill of 1908 had passed, and had been extended to England, Wales, and Ireland, every person in the United Kingdom having any proprietary right in land would have been called upon,

under penalty, to solve the conundrum above set forth, and to declare what was the 'land value' as thus defined of any piece of land which he owned or partly owned. Anyone who will read over the above definition three or four times, very slowly, will perhaps be able to appreciate the beautiful simplicity of the new system of taxation which is going to solve the problem of the unemployed, to provide an unlimited supply of working-men's houses at low rents, to empty our workhouses and prisons, and to take us all back to the land, there to live in an earthly paradise. This is not a travesty of the doctrines taught by the land taxers. It is a sober repetition of the promises they make and of the words of their master. In the book which is their Bible, their master declares that to appropriate rent by taxation' is

the simple yet sovereign remedy which will raise wages, increase the earnings of capital, extirpate pauperism, abolish poverty, give remunerative employment to whoever wishes it, afford free scope to human powers, lessen crime, elevate morals and taste and intelligence, purify government, and carry civilisation to yet nobler heights.2

People who are accustomed to use their reason in dealing with social or economic or financial problems will ask doubtfully whether anybody could be influenced by this rhetoric. The answer is that it was just because of his rhetoric that Henry George was able to influence thousands of people in this country, and to persuade them that he had discovered the key to social salvation. The number of his devotees is probably smaller than it was, for Socialism has to a large extent replaced Henry Georgeism as the creed of advanced' people. But the effect of his teaching still remains. Unless Henry George had taught that the value of land, apart from the improvements upon it, was the property of the community and ought to be resumed by means of taxation, the Glasgow Bill would never have seen the light, and the House of Commons would never have elaborated that wonderful definition of the meaning of 'land values.'

The land taxers, however, are not so foolish as to rely solely on the rhetoric of a departed prophet. They realise that in order to commend their so-called reform to a practical race like the English they must put forward arguments which at any rate appear to be based on common sense. They have done so, and many of their arguments are superficially quite attractive. It is with these that I now propose to deal.

Their first argument is that land differs from all other things which are the subjects of private property. This statement is true, but it does not carry us very far. Land differs from other subjects of property in various ways. It is essential to human life; it is fixed in geographical position; there is only a limited amount of it. For these reasons it is clear that if private property in land is permitted it must Henry George, Progress and Poverty, p. 288. (Authorised Edition.)