Progress and poverty, an inquiry into the cause of industrial depressions and of increase of want with increase of wealth; the remedy

Book i — '—— PROGRESS AND POVERTY

AN INQUIRY INTO THE CAUSE OF INDUSTRIAL DEPRESSIONS AND OF INCREASE OF WANT WITH INCREASE OF WEALTH

BY

HENRY GEORGE

Author of " The Science of Political Economy," " Protection or Free Trade?" ''Social Problems," "A Perplexed Philosopher," "The Condition of Labor," " The Land Question," " Property in Land," etc.

TWENTY-FIFTH ANNIVERSARY EDITION WITH MEDALLION PORTRAIT OF HENRY GEORGE BY HIS SON, RICHARD F. GEORGE

Garden City New York DOUBLEDAY, PAGE & COMPANY

MCMXV

Entered according to act of Congress in the year 1879 By Henry George in the office of the Librarian of Congress.

TO THOSE WHO, SEEING THE VICE AND MISERY THAT SPRING FROM THE UNEQUAL DISTRIBUTION OP WEALTH AND PRIVILEGE, FEEL THE POSSIBILITY OF A HIGHER SOCIAL STATE AND WOULD STRIVE FOR ITS ATTAINMENT

San Fbancisco, March, 1879.

Make for thyself a definition or description of the thing which is presented to thee, so as to see distinctly what kind of a thing it is, in its substance, in its nudity, in its complete entirety, and tell thyself its proper name, and the names of the things of which it has been compounded, and into which it will be resolved. For nothing is so productive of elevation of mind as to be able to examine methodically and truly every object which is presented to thee in life, and always to look at things so as to see at the same time what kind of universe this is. and what kind of use everything performs in it, and what value everything has with reference to the whole, and what with reference to man, who is a citizen of the highest city, of which all other cities are like families ; what each thing is, and of what it is composed, and how long it is the nature of this thing to endure. —Marcus Aurelius Antoninus.

Introduction To The Twenty-fifth Anni- Versary Edition Of "progress And Poverty"

Out of the open West came a young man of less than thirty to this great city of New York. He was small of stature and slight of build. His alma mater had been the forecastle and the printing-office. He was poor, unheralded, unknown. He came from a small city rising at the western golden portals of the country to set up here, for a struggling little newspaper there, a telegraphic news bureau, despite the opposition of the combined powerful press and telegraph monopolies. The struggle was too unequal. The young man was overborne by the monopolies and his little paper crushed.

This young man was Henry George and the time was 1869.

But though defeated, Henry George was not vanquished. Out of this struggle had come a thing that was to grow and grow until it should fill the minds and hearts of multitudes and be as " an army with banners. ' '

For in the intervals of rest from his newspaper struggle in this city the young correspondent had musingly walked the streets. As he walked he was filled with wonder at the manifestations of vast wealth. Here, as nowhere that he had dreamed of, were private fortunes that rivaled the riches of the fabled Monte Cristo. But here, also, side by side with the palaces of the princely rich, was to be seen a poverty and degradation, a want and shame, such as made the young man from the open West sick at heart.

vii viii

Introduction

Why in a land so bountifully blest, with enough and more than enough for all, should there be such inequality of conditions? Such heaped wealth interlocked with such deep and debasing want? Why, amid such superabundance, should strong men vainly look for work? Why should women faint with hunger, and little children spend the morning of life in the treadmill of toil?

Was this intended in the order of things? No, he could not believe it. And suddenly there came to him — there in daylight, in the city street— a burning thought, a call, a vision. Every nerve quivered. And he made a vow that he would never rest until he had found the cause of, and, if he could, the remedy for, this deepening poverty amid advancing wealth.

Returning to San Francisco soon after his telegraphic news failure, and keeping his vow nurtured in his heart, Henry George perceived that land speculation locked up vast territories against labor. Everywhere he perceived an effort to " corner " land; an effort to get it and to hold it, not for use, but for a " rise." Everywhere he perceived that this caused all who wished to use it to compete with each other for it ; and he foresaw that as population grew the keener that competition would become. Those who had a monopoly of the land would practically own those who had to use the laild.

Filled with these ideas, Henry George in 1871 sat down and in the course of four months wrote a little book under title of ' ' Our Land and Land Policy. ' ' In that small volume of forty-eight pages he advocated the destruction of land monopoly by shifting all taxes from labor and the products of labor and concentrating them in one tax on the value of land, regardless of improvements. A thousand copies of this small book were printed, but the author quickly perceived that really to command attention, the work would have to be done more thoroughly.

That more thorough work came something more than six years later. In August, 1877, the writing of "Prog-

INTRODUCTION ress and Poverty" was begun. It was the oak that grew out of the acorn of ' ' Our Land and Land Policy. ' ' The larger book became "an inquiry into industrial depressions and of increase of want with increase of wealth," and pointed out the remedy.

The book was finished after a year and seven months of intense labor, and the undergoing of privations that caused the family to do without a parlor carpet, and which frequently forced the author to pawn his personal effects.

And when the last page was written, in the dead of night, when he was entirely alone, Henry George flung himself upon his knees and wept like a child. He had kept his vow. The rest was in the Master's hands.

Then the manuscript was sent to New York to find a publisher. Some of the publishers there thought it visionary; some, revolutionary. Most of them thought it unsafe, and all thought that it would not sell, or at least sufficiently to repay the outlay. "Works on political economy even by men of renown were notoriously not money-makers. What hope then for a work of this nature from an obscure man — unknown, and without prestige of any kind? At length, however, D. Appleton & Co. said they would publish it if the author would bear the main cost, that of making the plates. There was nothing else for it, and so in order that the plate-making should be done under his own direction Henry George had the type set in a friend's printing-office in San Francisco, the author of the book setting the first two stickfuls himself.

Before the plates, made from this type, were shipped East, they were put upon a printing-press and an "Author's Proof Edition" of five hundred copies was struck off. One of these copies Henry George sent to his venerable father in Philadelphia, eighty-one years old. At the same time the son wrote :

It is with deep feeling of gratitude to Our Father in Heaven that I send you a printed copy of this book. I am grateful that I have .

X

INTRODUCTION been enabled to live to write it, and that yon have been enabled to live to see it. It represents a great deal of work and a good deal of sacrifice, but now it is done. It will not be recognized at first — maybe not for some time — but it will ultimately be considered a great book, will be published in both hemispheres, and be translated into different languages. This I know, though neither of us may ever see it here. But the belief that I have expressed in this book — the belief that there is yet another life for us — makes that of little moment.

The prophecy of recognition of the book's greatness was fulfilled very quickly. The Appletons in New York brought out the first regular market edition in January, 1880, just twenty-five years ago. Certain of the San Francisco newspapers derided book and author as the "hobby" of "little Harry George," and predicted that the work would never be heard of. But the press elsewhere in the country and abroad, from the old "Thunderer" in London down, and the great periodical publications, headed by the "Edinburgh Review," hailed it as a remarkable book that could not be lightly brushed aside. In the United States and England it was put into cheap paper editions, and in that form outsold the most popular novels of the day. In both countries, too, it ran serially in the columns of newspapers. Into all the chief tongues of Europe it was translated, there being three translations into German. Probably no exact statement of the book's extent of publication can be made; but a conservative estimate is that, embracing all forms and languages, more than two million copies of "Progress and Poverty" have been printed to date; and that including with these the other books that have followed from Henry George's pen, and which might be called "The Progress and Poverty Literature," perhaps five million copies have been given to the world.

Henry George, Jr.

New York, January 24, 1905.

Preface To Fourth Edition

The views herein set forth were in the main briefly stated in a pamphlet entitled " Our Land and Land Policy," published in San Francisco in 1871. I then intended, as soon as I could, to present them more fully, but the opportunity did not for a long time occur. In the meanwhile I became even more firmly convinced of their truth, and saw more completely and clearly their relations; and I also saw how many false ideas and erroneous habits of thought stood in the way of their recognition, and how necessary it was to go over the whole ground.

This I have here tried to do, as thoroughly as space would permit. It has been necessary for me to clear away before I could build up, and to write at once for those who have made no previous study of such subjects, and for those who are familiar with economic reasonings; and, so great is the scope of the argument that it has been impossible to treat with the fullness they deserve many of the questions raised. What I have most endeavored to do is to establish general principles, trusting to my readers to carry further their applications where this is needed.

In certain respects this book will be best appreciated by those who have some knowledge of economic literature; but no previous reading is necessary to the understanding of the argument or the passing of judgment upon its conclusions. The facts upon which I have relied are not facts which can be verified only by a search through libraries. They are facts of common observation and common knowledge, which every reader can verify for himself, just as he can decide whether the reasoning from them is or is not valid.

Beginning with a brief statement of facts which suggest this inquiry, I proceed to examine the explanation currently given in the name of political economy of the reason why, in spite of the increase of productive power, wages tend to the minimum of a bare living. This examination shows that the current doctrine of wages is founded upon a misconception; that, in truth, wages are produced by the labor for which they are paid, and should, other things being equal, increase with the number of laborers. Here the inquiry meets a xii

Preface

doctrine which is the foundation and center of most important economic theories, and which has powerfully influenced thought in all directions — the Malthusian doctrine, that population tends to increase faster than subsistence. Examination, however, shows that this doctrine has no real support either in fact or in analogy, and that when brought to a decisive test it is utterly disproved.

Thus far the results of the inquiry, though extremely important, are mainly negative. They show that current theories do not satisfactorily explain the connection of poverty with material progress, but throw no light upon the problem itself, beyond showing that its solution must be sought in the laws which govern the distribution of wealth. It therefore becomes necessary to carry the inquiry into this field. A preliminary review shows that the three laws of distribution must necessarily correlate with each other, which as laid down by the current political economy they fail to do, and an examination of the terminology in use reveals the confusion of thought by which this discrepancy has been slurred over. Proceeding then to work out the laws of distribution, I first take up the law of rent. This, it is readily seen, is correctly apprehended by the current political economy. But it is also seen that the full scope of this law has not been appreciated, and that it involves as corollaries the laws of wages and interest — the cause which determines what part of the produce shall go to the land owner necessarily determining what part shall be left for labor and capital. "Without resting here, I proceed to an independent deduction of the laws of interest and wages. I have stopped to determine the real cause and justification of interest, and to point out a source of much misconception — the confounding of what are really the profits of monopoly with the legitimate earnings of capital. Then returning to the main inquiry, investigation shows that interest must rise and fall with wages, and depends ultimately upon the same thing as rent — the margin of cultivation or point in production where rent begins. A similar but independent investigation of the law of wages yields similar harmonious results. Thus the three laws of distribution are brought into mutual support and harmony, and the fact that with material progress rent everywhere advances is seen to explain the fact that wages and interest do not advance.

What causes this advance of rent is the next question that arises, and it necessitates an examination of the effect of material progress upon the distribution of wealth. Separating the factors of material progress into increase of population and improvements in the arts, it is first seen that increase in population tends constantly, not merely

PREFACE.

xiii by reducing the margin of cultivation, but by localizing the economies and powers which come with increased population, to increase the proportion of the aggregate produce which is taken in rent, and to reduce that which goes as wages and interest. Then eliminating increase of population, it is seen that improvement in the methods and powers of production tends in the same direction, and, land being held as private property, would produce in a stationary population all the effects attributed by the Malthusian doctrine to pressure of population. And then a consideration of the effects of the continuous increase in land values which thus spring from material progress reveals in the speculative advance inevitably begotten when land is private property a derivative but most powerful cause of the increase of rent and the crowding down of wages. Deduction shows that this cause must necessarily produce periodical industrial depressions, and induction proves the conclusion; while from the analysis which has thus been made it is seen that the necessary result of material progress, land being private property, is, no matter what the increase in population, to force laborers to wages which give but a bare living.

This identification of the cause that associates poverty with progress points to the remedy, but it is to so radical a remedy that I have next deemed it necessary to inquire whether there is any other remedy. Beginning the investigation again from another starting point, I have passed in examination the measures and tendencies currently advocated or trusted in for the improvement of the condition of the laboring masses. The result of this investigation is to prove the preceding one, as it shows that nothing short of making land common property can permanently relieve poverty and check the tendency of wages to the starvation point.

The question of justice now naturally arises, and the inquiry passes into the field of ethics. An investigation of the nature and basis of property shows that there is a fundamental and irreconcilable difference between property in things which are the product of labor and property in land; that the one has a natural basis and sanction while the other has none, and that the recognition of exclusive property in land is necessarily a denial of the right of property in the products of labor. Further investigation shows that private property in land always has, and always must, as development proceeds, lead to the enslavement of the laboring class; that land owners can make no just claim to compensation if society choose to resume its right; that so far from private property in iand being in accordance with the natural perceptions of men, the very reverse

XIV

PREFACE.

is true, and that in the United States we are already beginning to feel the effects of having admitted this erroneous and destructive principle.

The inquiry then passes to the field of practical statesmanship. It is seen that private property in land, instead of being necessary to its improvement and use, stands in the way of improvement and use, and entails an enormous waste of productive forces; that the recognition of the common right to land involves no shock or dispossession, but is to be reached by the simple and easy method of abolishing ull taxation save that upon land values. And this an inquiry into the principles of taxation shows to be, in all respects, the best subject of taxation.

A consideration of the effects of the change proposed then shows that it would enormously increase production; would secure justice in distribution; would benefit all classes; and would make possible an advance to a higher and nobler civilization.

The inquiry now rises to a wider field, and recommences from another starting point. For not only do the hopes which have been raised come into collision with the widespread idea that social progress is possible only by slow race improvement, but the conclusions we have arrived at assert certain laws which, if they are really natural laws, must be manifest in universal history. As a final test, it therefore becomes necessary to work out the law of human progress, for certain great facts which force themselves on our attention, as soon as we begin to consider this subject, seem utterly inconsistent with what is now the current theory. This inquiry shows that differences in civilization are not due to differences in individuals, but rather to differences in social organization ; that progress, always kindled by association, always passes into retrogression as inequalit y is developed; and that even now, in modern civilization, the causes which have destroyed all previous civilizations are beginning to manifest themselves, and that mere political democracy is running its course toward anarchy and despotism. But it also identifies the law of social life with the great moral law of justice, and, proving previous conclusions, shows how retrogression may be prevented and a grander advance begun. This ends the inquiry. The final chapter will explain itself.

The great importance of this inquiry will be obvious. If it has been carefully and logically pursued, its conclusions completely change the character of political economy, give it the coherence and certitude of a true science, and bring it into full sympathy with the aspirations of the masses of men, from which it has long been es-

PKEFACE.

XV tranged. What I have done in this book, if I have correctly solved the great problem I have sought to investigate, is, to unite the truth perceived by the school of Smith and Ricardo to the truth perceived by the schools of Proudhon and Lasalle; to show that laissez faire (in its full true meaning) opens the way to a realization of the noble dreams of socialism; to identify social law with moral law, and to disprove ideas which in the minds of many cloud grand and elevating perceptions.

This work was written between August, 1877, and March, 1879, and the plates finished by September of that year. Since that time new illustrations have been given of the correctness of the views herein advanced, and the march of events — and especially that great movement which has begun in Great Britain in the Irish land agitation — shows still more clearly the pressing nature of the problem I have endeavored to solve. But there has been nothing in the criticisms they have received to induce the change or modification of these views — in fact, I have yet to see an objection not answered in advance in the book itself. And except that some verbal errors have been corrected and a preface added, this edition is the same as previous ones.

Henry George.

New York, November, 1880.

There must be refuge ! Men Perished in winter winds till one smote fire From flint stones coldly hiding what they held, The red spark treasured from the kindling sun ; They gorged on flesh like wolves, till one sowed corn, Which grew a weed, yet makes the life of man ; They mowed and babbled till some tongue struck speech, And patient fingers framed the lettered sound. What good gift have my brothers, but it came From search and strife and loving sacrifice?

Ediciri Arnold.

Never yet Share of Truth was vainly set

In the world's wide fallow ; After hands shall sow the seed,

After hands, from hill and mead, Reap the harvests yellow.

Wliittier.

Contents

Introductory.

PAGE

Book I.— Wages and Capital.

Chapter I.— The Malthusian theory, its genesis and support 91

n.— Inferences from facts 103

LEL— Inferences from analogy 129

IV.— Disproof of the Malthusian theory 140

Book III.— The Laws op Distribution. Chapter I.— The inquiry narrowed to the laws of distribution— necessary

relation of these laws 153

n.— Rent and the law of rent 165

III. — Interest and the cause of interest 173

TV— Of spurious capital and of profits often mistaken for interest. . 189

V.— The law of interest 195

VI. — Wages and the law of wages 204

VLI.— Correlation and co-ordination of these laws 217

Vni.— The statics of the problem thus explained 219

Book IV.— Effect of Material Progress upon the Distribution of Wealth. Chapter I.— The dynamics of the problem yet to seek 225

II.— Effect of increase of population upon the distribution of wealth 228 in.— Effect of improvements in the arts upon the distribution of

wealth 242

IV. — Effect of the expectation raised by material progress 253

Book V.— The Problem Solved. Chapter I.— The primary cause of recurring paroxysms of industrial

depression 261

II.— The persistence of poverty amid advancing wealth. . . . , 280

CONTENTS.

Book VI.— The Remedy. Chapter I.— Insufficiency of remedies currently advocated 297

II.— The true remedy 326

Book VII.— Justice of the Remedy. Chapter I.— Injustice of private property in land 331

II.— Enslavement of laborers the ultimate result of private property

in land 345

III. — Claim of land owners to compensation 356

IV. — Property in land historically considered 366

V.— Property in land in the United States 383

Book VEEL— Application op the Remedy. Chapter I.— Private property in land inconsistent with the best use of land. 395

II.— How equal rights to the land may be asserted and secured 401

m.— The proposition tried by the canons of taxation 406

IV.— Indorsements and objections 420

Book IX.— Effects of the Remedy. Chapter I.— Of the effect upon the production of wealth 431

n.— Of the effect upon distribution and thence upon production 438

III. — Of the effect upon individuals and classes 445

IV. — Of the changes that would be wrought in social organization

and social life 452

Book X.— The Law of Human Progress

Chapter I.— The current theory of human progress— its insufficiency 473

II.— Differences in civilization— to what due 487

IH.— The law of human progress 503

IV.— How modern civilization may decline 524

V. — The central truth 541

Conclusion

The problem of individual life e 553

THE PROBLEM.

Ye build! ye build! but ye enter not in,

Like the tribes whom the desert devoured in their sin;

From the land of promise ye fade and die,

Ere its verdure gleams forth on your wearied eye.

— Mrs. Sigourney

INTRODUCTORY.

THE PROBLEM.

The present century has been marked by a prodigious increase in wealth-producing power. The utilization of steam and electricity, the introduction of improved processes and labor-saving machinery, the greater subdivision and grander scale of production, the wonderful facilitation of exchanges, have multiplied enormously the eifectiveness of labor.

At the beginning of this marvelous era it was natural to expect, and it was expected, that labor-saving inventions would lighten the toil and improve the condition of the laborer; that the enormous increase in the power of producing wealth would make real poverty a thing of the past. Could a man of the last century — a Franklin or a Priestley — have seen, in a vision of the future, the steamship taking the place of the sailing vessel, the railroad train of the wagon, the reaping machine of the scythe, the threshing machine of the flail; could he have heard the throb of the engines that in obedience to human will, and for the satisfaction of human desire, exert a power greater than that of all the men and all the beasts of burden of the earth combined; could he have seen the forest tree transformed into finished lumber — into doors, sashes, blinds, boxes or barrels, with hardly the touch of a human hand; the great workshops where boots and shoes are turned out by the case with less labor than the old-fashioned cobbler could have

INTRODUCTORY.

put on a sole; the factories where, under the eye of a girl, cotton becomes cloth faster than hundreds of stalwart weavers could have turned it out with their handlooms; could he have seen steam hammers shaping mammoth shafts and mighty anchors, and delicate machinery making tiny watches; the diamond drill cutting through the heart of the rocks, and coal oil sparing the whale; could he have realized the enormous saving of labor resulting from improved facilities of exchange and communication — sheep killed in Australia eaten fresh in England, and the order given by the London banker in the afternoon executed in San Francisco in the morning of the same day; could he have conceived of the hundred thousand improvements which these only suggest, what would he have inferred as to the social condition of mankind?

It would not have seemed like an inference; further than the vision went it would have seemed as though he saw; and his heart would have leaped and his nerves would have thrilled, as one who from a height beholds just ahead of the thirst-stricken caravan the living gleam of rustling woods and the glint of laughing waters. Plainly, in the sight of the imagination, he would have beheld these new forces elevating society from its very foundations, lifting the very poorest above the possibility of want, exempting the very lowest from anxiety for the material needs of life; he would have seen these slaves of the lamp of knowledge taking on themselves the traditional curse, these muscles of iron and sinews of steel making the poorest laborer's life a holiday, in which every high quality and noble impulse could have scope to grow.

And out of these bounteous material conditions he would have seen arising, as necessary sequences, moral conditions realizing the golden age of which mankind have always dreamed. Y^uth no longer stunted and

THE PKOBLEM.

starved; age no longer harried by avarice; the child at play with the tiger; the man with the muck-rake drinking in the glory of the stars s Foul things fled, fierce things tame; discord turned to harmony! For how could there be greed where all had enough? How could the vice, the crime, the ignorance, the brutality, that spring from poverty and the fear of poverty, exist where poverty had vanished? Who should crouch where all were freemen; who oppress where all were peers?

More or less vague or clear, these have been the hopes, these the dreams born of the improvements which give this wonderful century its preeminence. They have sunk so deeply into the popular mind as radically to change the currents of thought, to recast creeds and displace the most fundamental conceptions. The haunting visions of higher possibilities have not merely gathered splendor and vividness, but their direction has changed — instead of seeing behind the faint tinges of an expiring sunset, all the glory of the daybreak has decked the skies before.

It is true that disappointment has followed disappointment, and that discovery upon discovery, and invention after invention, have neither lessened the toil of those who most need respite, nor brought plenty to the poorc But there have been so many things to which it seemed this failure could be laid, that up to our time the new faith has hardly weakened. We have better appreciated the difficulties to be overcome; but not the less trusted that the tendency of the times was to overcome them,

Now, however, we are coming into collision with facts which there can be no mistaking. From all parts of the civilized world come complaints of industrial depression; of labor condemned to involuntary idleness; of capital massed and wasting; of pecuniary distress among business men; of want and suffering and anxiety among thp working classes. All the dull, deadening pain, all the keen, maddening anguish 3 that to great masses of men

INTRODUCTORY.

are involved in the words "hard times," afflict the world to-day. This state of things, common to communities differing so widely in situation, in political institutious, in fiscal and financial systems, in density of population and in social organization, can hardly be accounted for by local causes. There is distress where large standing armies are maintained, but there is also distress where the standing armies are nominal; there is distress where protective tariffs stupidly and wastefully hamper trade, but there is also distress where trade is nearly free; there is distress where autocratic government yet prevails, but there is also distress where political power is wholly in the hands of the people; in countries where paper is money, and in countries where gold and silver are the only currency. Evidently, beneath all such things as these, we must infer a common cause.