A Synopsis of Henry George's
Progress and Poverty
|This synopsis, inspired by Dr. James
Busey's fine condensation of the 565-page original, was extracted by
Alfred J. Katzenberger, Jr., of the Public Revenue Education Council
in St. Louis and the St. Louis Teachers Union, Local 420 of the
American Federation of Teachers.
About Henry George
Henry George was born in Philadelphia in 1839.
Appalled by the shocking poverty he saw around him in the middle of
one of the world's wealthiest cities, he pondered where mankind had
gone wrong and what could be done about it. Natural resources, he
discovered, are the key to understanding our economy, and the
failure of others to see this has led to increasing poverty and
environmental degradation. In 1879, Henry George finished writing
Progress and Poverty. During the 19th century, the
circulation of Progress and Poverty was second only to that of the
Bible. To this day, no other book on economics has been as widely
A Synopsis of Henry George's
Progress and Poverty
During the 19th century the U.S. witnessed a huge increase in
wealth-producing power. People naturally expected labor-saving
inventions to lessen toil and improve working conditions for all;
that the enormous increase in wealth producing power would wipe out
Instead, however, squalor, misery, vice and crime increased and
are still increasing everywhere as our villages, towns and cities
grow and as new technologies bring advantages to improve methods of
production and exchange.
The association of poverty with progress is the great enigma of
our times. It is the source of our industrial, social and political
difficulties. Our statesmen, philanthropists, and educators grapple
with it in vain. This riddle, if not answered, will eventually
topple our entire civilization. To solve the riddle, we must
research the immutable laws governing the science of economics.
Land, Labor, Capital:
Land, labor, and capital are the three factors of production. The
term land as used herein, is intended to include all natural
resources, such as the earth and all its locations, minerals, oil
and waterfalls as untouched by human hands; the term labor,
all human exertion whether by brain or brawn or both; the term capital,
all wealth (such as tools, machinery, investments and goods in
process of exchange) used to produce more wealth. The return to each
factor is distributed as follows: landowners get the part called
rent, laborers (whether by brain or by brawn, or both) the
part called wages, and capital the part called interest.
These terms mutually exclude each other. Any person may derive
income from any one, two or all three of these sources; but to
understand how the returns to each are exchanged we must keep them
David Ricardo (1772-1823), an English economist, discovered that
the rent, or the cost of land, is determined by the excess
of its produce over that which the same application of labor can
secure from the least productive land in use. This is proven by the
fact that locations in active manufacturing and commercial areas are
much more valuable than land (locations) in remote areas.
The increase of rent (the return to the location owner) in the
U.S. explains why wages and interest do not increase with the
increase in productive power. Wealth, which must be produced by
humans, is divided into two parts by the rent line
which is fixed by the return which labor and capital can obtain from
the natural resources free to them without the payment of rent. From
that part of the produce below this rent line wages and interest
must be paid. All production above the rent line goes to the owners
of land. Thus, where the value of land is low, there may be low
production of wealth, and yet a high rate of wages and interest.
Where the value of land is high, there may be enormous production of
wealth, but with a low rate of wages and interest.
The increase of rent explains why wages and interest do not
increase. The cause which enriches the landowner is the cause which
tends to impoverish the laborer and capitalist (investor). Hence,
the rate of wages and interest is everywhere fixed, not so much by
the productivity of labor as by the value of land. Wherever the
value of land is relatively low, wages and interest are relatively
high. Wherever the value of land is relatively high, wages and
interest are relatively low. Hence the increase of productive power
does not result in increased wages, but rather results in increases
in the value of land. Rent (which goes to the non-producing
landowners) swallows up the whole gain, and poverty accompanies
Human beings in the most abject, most helpless and hopeless
condition, are in the great cities of the U.S. There you will find
the ownership of a small location is worth a fortune, while actual
wealth producers gel only part of what they produce (landowners
getting the rest) and willing workers can find no jobs and no land
on which to apply their labor.
Effect of Material Progress Upon the Distribution
The term wealth means anything of value produced by human
effort. Thus, land (the earth and its locatioos) is not wealth,
even though some locations are enormously valuable, because humans
did not produce the earth.
Wealth in all its forms is the product of labor applied
to land or the products of land. The earth is not a product of
labor. Thus while the earth is the source of all wealth, it
is not, of itself, "wealth." Therefore any increase in the
power of labor, along with unsatisfied demands for wealth, generates
increased demand for land, from which, alone, more wealth can and
must be produced.
There are absolutely no limits to the progress of invention. Nor
can we assign any limits to the increase of land rent, short of the
whole produced. For, if labor-saving inventions proliferated until
perfection was obtained, and the need for labor in wealth production
was entirely done away with, everything the earth could yield could
be obtained without labor. And no matter how small the population
might be, if anybody but the landowners continued to exist, it would
be at the whim or by the mercy of landowners' bounty. This point, of
the absolute perfection of laborsaving inventions, may seem far
fetched, but it is the point to which the march of invention is
directed every day.
The improvements which increase land rent include the
improvements which directly increase productive power. Improvements
in government, manners and morals indirectly increase land rent.
Considered as material forces, the effect of all these is to
increase productive arts. Their benefits are ultimately monopolized
by the possessor of the land. If the corrupt governments of the
great cities of the U.S. were made models of integrity and economic
efficiency, the effect would simply be to increase the value of
land, not to raise either wages or interest.
The Problem Solved
There is a reason, in spite of the increase of productive power,
wages constantly tend to a minimum which will give a bare living.
With any increase in productive power, rents tend to even greater
increase, thus producing a constant tendency to lowering wages.
Thus, the laborer has no incentive to produce more, or more
efficiently, as all his or her increased production ultimately winds
up in the landowners pockets.
The simple theory outlined here explains this conjunction of
poverty with wealth and of low wages with high productive power. It
explains why interest and wages are relatively higher in developing
communities, though the average, as well as the total, production in
well developed communities is greater. It explains why improvements
which increase the total wealth, do not improve the rewards to labor
or interest. It explains what is commonly called the conflict
between labor and capital, yet demonstrates there is actually
harmony of interest between labor and capital.
Is it not a notorious fact, known to the most ignorant, that
developing communities, where the total wealth is small, but where
land is cheap, are always better communities for laborers than rich
communities, where land is expensive? Wherever one finds land values
relatively low, will one not find wages relatively high? Wherever
land value is high, will one not find wages low? As land increases
in value, poverty deepens and pauperism appears. Where land is
cheap, you will find no beggars, and the inequalities of condition
are very slight. In the great cities, where land is so valuable that
it is measured and sold by the square foot, you will find the
extremes of poverty and of luxury. And this disparity in condition
between the two extremes of the social scale may always be measured
by the price of land. Land in and near the great cities is valuable,
yet there you will see such great squalor, destitution and misery
that you will stand aghast.
For land is for the habitation of people, the storehouse from
which they must draw for all their needs. Material progress cannot
rid us of our dependence upon land; it can but add to the power of
producing wealth from land; and hence, when land is monopolized,
material progress might go on to infinity without increasing wages
or improving the condition of those who have but their labor. It can
but add to the value of land and the power which its possession
gives. Everywhere, in all times, among all peoples, the possession
of land is the base of aristocracy, the foundation of great
fortunes, the source of power.
The equal right of all men and women to the use of land is as
clear as their equal right to breathe the air. It is a right
proclaimed by the fact of their existence. For we cannot suppose
that some men and women have a right to be in this world and others
Any one human being who appropriates to himself or herself the
individual right to the land of any community or country, could
legally expel therefrom all the rest of its inhabitants. If you
extend this right to the whole surface of the globe, where would
non-landowning human beings have the right to live?
This supposition is occurring on a growing scale, realized in
actual fact. The comparative handful of proprietors who own large
surfaces of the U.S. are doing only what federal, state, and local
laws give them full power to do (and what many of them have done
already), excluding millions of American people from their natural
birthright, the land. And such exclusions are as repugnant to
natural right as the spectacle of the vast body of the American
people being compelled to pay such enormous sums to the few
landowners of their number for the privilege of being permitted to
live upon and use the land which they, the landowners, so fondly
call their own; which is endeared to them by memories so tender and
so glorious, and for which they are held in duty bound, if need be,
to spill their blood and lay down their lives.
Place one hundred men and women on an island from which there is
no escape, and whether you make one the absolute owner of the other
ninety-nine, or the absolute owner of the soil of the island, will
make no difference either to the chosen one or to the other
It was not nobility that gave land, but the possession of land
that gave nobility.
What is being proposed here is a simple yet sovereign remedy,
which will raise wages, increase earnings of capital and give
remunerative employment to whomever wishes it. The proposal is to
appropriate land rent for public revenue, rather than rob producers
of their rightful earnings by punitive taxation.
Now, as the taking of rent, or land value, must be increased as
we abolish other "taxes," we may put the proposition in
practical form by proposing to abolish all taxation and derive
all public revenue from a legitimate charge upon land location
"Taxation," which lessens the reward of the producer,
necessarily lessens the incentive to production. Thus, taxation
which diminishes the earnings of the laborer or the returns to the
capitalist tends to make the one less industrious and intelligent,
the other less disposed to save and invest. "Taxation"
which falls upon the processes of production interposes an
artificial obstacle to the creation of wealth.
If manufactures are taxed the effect is to lessen improvements;
tax commerce and the effect is to prevent exchange; tax capital, and
the effect is to drive it away. But the whole rental value of land
may be taken as public revenue, and the only effect will be to
stimulate industry, to open new opportunities to capital and to
increase the production of wealth.
The charge on land location values may be assessed and collected
with a definiteness that partakes of the immovable and inconcealable
character of the location itself. Were all charges for public
revenue placed upon location values, irrespective of improvements,
generating public revenue would be so simple and clear, and public
attention would be so directed to it, that valuation of the charge
on any location could and would be made with the same certainty that
a real estate agent can deterimine the price a seller can get for a
The charge upon location values falls only upon those who receive
from society a valuable benefit and falls on them in proportion to
the benefit they receive. It is the taking by the community,
for the use of the community, of that value which is the
creation of the community. When all location rent is taken via
legitimate charges for value received for the needs of the
community, no citizen will have an advantage over any other citizen
save as is given by industry, skill, and intelligence; and each will
obtain what he or she fairly earns. Then, and not until then, will
labor get its full reward, and capital its natural return.
Effects of the Remedy:
The advantage which will be gained by substituting for the many
taxes by which the public revenues are now raised, a single just
charge levied upon the value of locations, will appear more and more
important the more it is considered. With the removal of all the
burdens which now oppress industry and hamper exchange, production
of wealth would increase with a rapidity now undreamed of.
Consider the effect upon the production of wealth. Abolishing all
taxation which now hampers every wheel of exchange and presses upon
every form of industry, would be like removing an immense weight
from a powerful spring. The present method of taxation operates to
penalize energy and industry and skill and thrift like a fine upon
those qualities. If a person builds a ship we make the person pay
for such temerity, as though an injury had been done to the state;
if a railroad is opened, down comes the tax collector upon it, as
though it were a public nuisance; if a manufactory is erected we
levy upon it an annual sum which would go far toward making handsome
profit. We say we want capital, but if any one accumulates it or
brings it among us, we penalize him or her for it as though we were
giving the person a privilege. We punish with a tax those who cover
barren fields with ripening grain; we fine those who put up
machinery and clean up a dump.
To abolish these taxes would be to lift the whole enormous burden
of penalties from productive industry.
To change the taxation from production to a charge on the value
or rent of locations would give new stimulus to the production of
wealth; it would also open new opportunities. For under this system
no one would care to hold a location unless to use it, and locations
now withheld from use would everywhere be thrown open to
improvement. Millions of acres that today are being used
inefficiently would return to their natural, pristine state.
The selling price of locations would fall; speculation in
locations would receive its death blow; the monopolization of
valuable locations would no longer pay.
And it must be remembered that this would apply not merely to
agricultural land, but to all locations ... everywhere. Everywhere
that locations had attained value, the generating of public revenue
from those values, instead of operating, as now, as a fine upon
improvement, would operate to motivate improvement. Whoever planted
an orchard or sowed a field or built a house or built a manufactory,
no matter how costly, would have no more to pay in location value
charges than if such locations were kept vacant. The monopolist of
agricultural locations would be charged as much as though those
locations were covered with houses and barns, with crops and with
stock. The owner of a vacant city lot would have to pay as high a
charge for the privilege of keeping other people off of it until the
owner wanted to use it as the neighbor who has a fine house upon his
It would cost as much to keep a row of tumble-down shanties upon
valuable locations as if those locations were covered with grand
hotels or a pile of great warehouses filled with costly goods.
Consider the effect of such change upon the labor market.
Competition would no longer be one-sided, as now. Instead of
laborers competing with each other for employment, and in their
competition cutting down wages to the point of bare subsistence,
employers would everywhere be competing for laborers, and wages
would rise to the fair earnings of labor. The employers of labor
would not have merely to bid against other einployers, all feeling
the stimulus of greater trade and increased profits, but against the
ability of laborers to become their own employers upon the natural
opportunities freely opened to them by the location value charge
which prevents the monopolization of locations.
It is manifest, of course that the change proposed here will
greatly benefit all those who live by wages, whether of brain or of
brawn. And it is likewise manifest that it will increase the incomes
of those whose incomes are drawn from the earnings of capital, or
from investments other than in locations.
Farmers, not those who never touch farm equipment, but the
working farmers who are such a large class in the U.S., will benefit
by the proposed change. Paradoxical as it may appear to these
farmers until they understand the full bearings of the proposition,
of all classes above that of the laborer such farmers have the most
to gain by deriving all public revenue from just charges on location
values. The fact is that taxation, as now levied, falls on them with
peculiar punitive severity. They are taxed on all their
improvements, houses, barns, fences, crops, and stock. Farmers pay
personal income taxes and sales taxes. The personal property which
they have cannot be as readily concealed or undervalued as can the
more valuable kinds which are concentrated in the cities. They are
not only taxed on personal property and improvements, which the
owner of unused locations escapes, but their land is generally taxed
at a higher rate than land held on speculation, simply because it is
improved. But further than this all taxes imposed on commodities
fall on the farmer without mitigation. The farmer would be a gainer
by the substitution of a single charge upon the value of his or her
location instead of all these taxes. The charge on location values
would fall with greatest weight, not upon the agricultural
districts, where location values are comparatively small, but upon
the towns and cities where location values are high; whereas sales
taxes and taxes upon personal income, personal property and
improvements fall as heavily in the country as in the city. The
result of a charge on location values would be that speculative
values of locations would be kept down, and that cultivated and
improved farms would have not payments to make to support government
directly until the country around them had been well settled. In
fact, paradoxical as it may at first seeln to them, the effect of
putting all charges for public revenue upon the value of locations
would be to relieve the harder working farmers of all taxation.
Wealth would not only be enormously increased, it would be
equitably distributed. Not to mean that each individual would get
the same amount of wealth. That would not be equitable distribution,
so long as different individuals have different powers and different
desires. But wealth would be distributed by the degree in which the
industry, skill, knowledge or prudence of each contributed to the
common stock. The non producer would no longer roll in luxury while
the producer got but the barest necessities of animal existence.
All fear of great fortunes might be dismissed, for when every
person gets what each fairly earns, no one can get more than he or
she fairly earns. How many men and women are there who can
fairly earn a million dollars a year?
The Law of Human Progress
Civilization is cooperation. Union and liberty are factors of
civilization. What has destroyed every previous civilization has
been the tendency to the unequal distribution of wealth and power.
This same tendency, operating with increasing force, is observable
in our civilization today. As corruption becomes chronic; as public
spirit is lost; as traditions of honor, virtue and patriotism are
weakened; as law is brought into contempt and reforms become
hopeless; then in the festering mass will be generated volcanic
forces, which shatter and rend when seeming accident give them vent.
Strong, unscrupulous men and women, rising up, upon occasion will
become the exponents of blind popular desires or fierce popular
passions and dash aside forms that have lost their vitality. The
sword will again be mightier than the pen, and carnivals of
destructive brute force and wild frenzy will alternate with the
lethargy of a declining civilization.
Whence shall come the new barbarians? Go through the squalid
quarters of great cities, and you may see, even now, their gathering
hordes. How shall learning perish? Men and women will cease to read,
and books will kindle fires.
In the decline of civilization, communities do not go down by the
same path by which they came up. For instance, the decline of
civilization as manifested in government would not take us back from
republicanism to constitutional monarchy, and thence to the feudal
system; it would take us to emperorship and anarchy.
Where Liberty rises, there virtue grows, wealth increases,
knowledge expands, invention multiplies human powers and in strength
and spirit the freer nation rises among her neighbors. Where Liberty
sinks, there virtues fade, wealth diminishes, knowledge is
forgotten, invention ceases and empires once mighty in arms and arts
become helpless prey to freer barbarians.
Only in broken gleams and partial light has the sun of Liberty
yet beamed among men and women, but all progress hath she called
forth. Shall we not trust Liberty?
In our time as in times before, insidious forces that produce
inequality are destroying Liberty. On the horizon the clouds begin
to lower. Liberty calls to us again. It is not enough that men and
women should vote; it is not enough that they should be
theoretically equal before the law. They must have liberty to avail
themselves of the opportunities and means of life; they must stand
on equal terms with reference to the bounty of nature. This is the
universal law. This is the lesson of the centuries. Unless its
foundations be laid in justice the social structure of the United
States or any other country cannot stand.