Furthermore--and this is my second main objection-not all of this $323,000,000 reduction will come from business and industry. A considerable part of it will come from monopoly and special privilege, from which it ought not to come. You will note Mr. Mellon proposes to reduce the surtaxes from a maximum of 50 per cent on $200,000 incomes and over to a maximum of 25 per cent on $100,000 incomes and over. While I have no objection to such a reduction whenever these incomes are earned, I do object to the reduction where they are unearned. And as Mr. Mellon himself shows in his annual report only a pitifully small fraction of the incomes above $100,000 fall in the earned income class, I figure that at least $70,000,000 to $80,000,000 out of the total reduction of $102,000,000 which will come from this source represents the earnings of monopoly and special privilege rather than the earnings of business and industry. This being the case, it cuts down very considerably the relief that producers of all kinds may expect from Mr. Mellon's proposal. With his plan to reduce the tax on earned income 25 per cent I am very much in accord. My chief criticism of it is only that it is insuflicient. It would meet my approval a great deal more if he included in his definition of earned income the "profits of business personally conducted" as well as wages, salaries, and professional fees"; also if he made his reduc tion here a total of 50 per cent instead of 25 per cent. Why, may I ask, reduce all the big unearned incomes above $100,000 by 50 per cent and the smaller earned incomes below $10,000 by only 25 per cent? Where is the justice in this? I might make several more criticisms of Mr. Mellon's tax recommendations, but I do not want to take up your time to do So now. All I want to say is that Mr. Mellon's tax plan is not only in many instances economically unsound, is not only unfair to our soldiers, but it is totally inadequate to meet the existing demands of commerce, business, agriculture, and the industrial field at large. A TAX-RELIEF PROGRAM WORTH WHILE. My second bill makes a distinction between earned and unearned incomes, and cuts the present rate on earned incomes in two, making a total reduction of about $230,000,000. My third bill increases the inheritance tax to the extent of about $110,000,000. My fourth bill places an excise tax of 1 per cent on the privilege of holding lands and natural resources worth over $10,000, after deducting all capital and labor values, improvements, standing timber, and fertility. This bill, as I shall show, will yield about $1,100,000,000 a year. CORPORATION AND NUISANCE TAXES REPEALED. I now ask your permission, Mr. Speaker, to take up these bills in greater detail, in the order named, and to show you that they meet every test of good morals, good economics, and good government. I want to prove that they are not only sound, just, and practical, but that they will provide sufficient revenue for all Federal needs, enable the payment of the soldiers' bonus, and yet permit a reduction of the heavy tax burden on industry and agriculture to the extent of $1,305,000,000 a year, or more than four times as much as that proposed by the Secretary of the Treasury, Mr. Mellon. My first bill is the repeal bill. This bill repeals all of the following harmful taxes on business and industry and their products: Sources and amounts. Corporation income tax. Automobiles, motor cycles, trucks, tires, and parts-- I shall not take up your time dwelling on the great desirability of repealing the various taxes above given. Not only do they hamper development and industrial progress, not only do they check enterprise and cripple trade, but shifted, as they always are finally, to the consumer in the price of goods, they inevitably add a grievous burden to the cost of living-a burden that, if we take the word of economists, is many times greater than the amount of revenue received from these sources by the Government itself. Not only, therefore, will the repeal of these injurious taxes lift an enormous and trying weight off those businesses which pay them in the first place, but they will reduce by at least three or four times as much the final cost of the articles sold to the ultimate consumer. TAX ON EARNED INCOMES CUT IN TWO. Now for my second bill. This bill makes a distinction between incomes that are earned and incomes that are unearned and cuts the present tax on earned income in two. By earned income is meant not only wages, salaries, and professional fees," but "the profits of businesses personally conducted," and is therefore broader and fairer to this extent than the definition laid down in Mr. Mellon's proposal. By unearned income is meant income derived from rents and royalties; interest on mortgages, notes, or bonds; dividends on stock. annuities, and so forth. It will be claimed, of course, that this bill is not perfect. I Let me now turn to the tax-relief program for business and admit that it is not perfect, but no bill based upon the principle industry which I propose. As I have already stated, this tax- of "ability to pay" instead of the principle of benefits rerelief program of mine has been carefully drawn up in collabo-ceived" ever can be perfect. I am sure of this, however, and I ration with some of the most prominent economists, statisti- say it without fear of contradiction, that this bill is much closer cians, attorneys, business men, and leaders of farm and labor to perfection than any income tax bill that has yet been progroups in the country, and already has, therefore, the distinct posed. including that in Mr. Mellon's plan. Not only is the indorsement of large classes in every field of activity. I might definition of earned income broader in this bill than in Mr. Meladd that it has the particular indorsement of the Manufac-lon's plan, but the amount of reduction on such income in my turers and Merchants' Federal Tax League of Chicago, an bill is 50 per cent as against only 25 per cent reduction in his. organization composed of more than 31,000 members in all What will the reduction to the taxpayer amount to from this parts of the Nation, and to whom I am indebted for valuable source? My estimate is about $230.000.000 a year. In figures assistance in preparing these bills. I mention these matters previously quoted Mr. Mellon estimates that the 25 per cent remerely to show that my program represents a real, honest, and duction on earned income proposed by him will mean a savintelligent effort to get some tax relief for business, industry, ing of $97,000,000 a year. Since my bill calls for a reduction of and agriculture that will be worth while. exactly twice this amount, and further, since my bill classifies the "profits of business personally conducted" as earned income-something which Mr. Mellon's plan does not-it is there fore quite safe to say that the total tax reduction from this source will be approximately $230,000,000 annually. The tax plan which I herewith submit consists of four bills. My first bill repeals a large variety of excise and nuisance taxes, including all corporation income taxes, the total reductlon from these sources amounting, roundly, to $1,075,000,000. WILL SAVE INDUSTRY $1,305,000,000 A YEAR. Let us now figure up the total amount that the industrial interests of the country will save from these two bills. The gain from the 50 per cent reduction on earned income will, as we have just seen, be $230,000,000 a year; the gain from the repeal of the corporation income and nuisance taxes will, as we have also previously shown, be $1,075,000,000 a year. Adding these two sums together, we have $1,305,000,000, this being then the total amount which business and industry will gain each year in lower taxes if these bills are made into law. Or to put the same idea into table form: Tax saving to industry and amount. From repeal of corporation income and excise taxes-From 50 per cent tax reduction on earned income--Total $1,075, 000, 000 230, 000, 000 1, 305, 000, 000 This, I want to add, will be the direct gain only. The indirect gain resulting from a greater freedom and ease of production, combined with a lower general cost of living to all the people, will be many times this amount. HOW REVENUE LOSS WILL BE MADE UP. lowering of the burden on business and industry, the real recovery will necessarily be made by my fourth bill, which is a land-values tax bill. I now turn to the consideration of that. THE TAX ON LAND VALUES. Since this bill, Mr. Speaker, is, in the opinion of economists, by far the most important bill ever presented to Congress for the raising of Federal revenue, I ask your permission to deal with it in considerable detail. I want to show that it will raise not only an amount of revenue conservatively estimated at $1,100,000,000-more than enough to equal the revenue lost by the repeal of the industrial taxes-but that its application is practical, constructive, sound, and just; that it is constitutional; that it will not fall upon the farmer, as its opponents will say, but upon large land speculators, absentee landlords, water-power grabbers, and the monopolists of valuable lots and natural resources; in short, that as a means of raising revenue without burdening the productive processes of the country it is the soundest and fairest measure that is within the province of human intelligence to devise. EXEMPTIONS IN THE LAND-VALUE TAX. Briefly, this bill provides for a 1 per cent tax on the privilege of holding lands and other natural resources valued in excess of $10,000 after deducting the following items: (1) All capital and labor values; that is to say, all im It is obvions, of course, that much the greater part of the loss of revenue entailed by this lightening of the tax load on the producing classes will have to be made up in some other way. How will it be made up? Particularly, how will it be made up without again being compelled to resort to the taxa-provements and man-made structures under, on, or over the tion of business and industry in one form or another? 1 purpose to make up the lost revenue in two ways, neither of which will burden the productive processes of the country in the slightest manner. The first way is by a moderate increase in the inheritance tax, and the second way is by the imposition of a 1 per cent tax on the privilege of holding lands and natural resources worth over $10,000. The new revenue raised in these two ways, as I intend fully to show before I am through, will amount to a total of $1,210,000,000, which when added to our present annual Treasury surplus of $325,000,000 will be more than enough not only to offset the loss of revenue resulting from the proposed tax reduction on industry but to pay the soldiers' bonus as well, and still leave a surplus of $85,000,000 a year for other purposes. THE INHERITANCE TAX. Let me first discuss my inheritance tax bill. This bill-which is my third bill-calls for a lowering of the present exemption from $50,000 to $20,000 and for an increase in the rates up to 50 per cent on inheritances exceeding $100,000,000 in amount. The present inheritance law does not impose any tax upon estates of less than $50,000. Its rates range from 1 per cent on estates of from $50,000 to $100,000 to 25 per cent on estates of $10,000,000, after which the rate remains stationary. There is no valid reason why this tax should not be increased. A tax on inheritances is not a tax upon industry and does not have an injurious effect on business. Instead, it actually will increase business and add more capital for productive purposes by taking money which otherwise would be held by individual heirs or trusteeships, generally in the form of tax-exempt securities, and diffusing it for productive purposes. According to Secretary of the Treasury Mellon, there are $12,000,000,000 now invested in tax-exempt securities and most of this amount can be reached in no way except through an inheritance tax. My second bill, as I have already shown, reduces the rates on earned income, and my inheritance tax bill, in effect, is a deferred income tax to be collected at a point where evasion is impossible and where the amount of the levy can not check production or retard investment. The justness of the principle and its social and economic necessity can not be questioned; all that is debatable is the amount of the tax. The bill I have introduced so amends the existing law that estates in excess of $20,000 and under $35,000 are taxed at 1 per cent; estates in excess of $35,000 and under $50,000 are taxed at 2 per cent; estates in excess of $50,000 and under $150,000 are taxed at 4 per cent; estates in excess of $150,000 and under $450,000 are taxed at 8 per cent, and so on until the point of $100,000,000 is reached, after which the tax is 50 per cent, or about 38 per cent of the entire estate. Under the existing law the estate tax last year yielded $126,705,206,55 of revenue and for the present year is calculated to raise $110,000,000. I estimate that with the lowering of the present exemption from $50,000 to $20.000, coupled with the gradual increase in the rates up to $100 000,000, the yield from this source from now on will be about $220,000,000, or a total increase of about $110,000,000 annually. While this $110,000,000 increase in yield from the inheritance tax will to that extent make up the revenue lost through the surface of the ground; (2) All standing timber, whether naturally grown or planted; (3) All costs of clearing, draining, and preparing the ground for the cultivation of crops, or other use; and (4) All soil fertility, which is placed at 50 per cent of the value of the bare land when used for agricultural purposes. It will thus be seen that this bill does not in any way touch those values that are due to the exertion of capital and labor. does not in any way levy upon the processes of production. It applies itself solely and exclusively to the taxation of the value of the bare land itself, whether in the form of town and city lots, agricultural ground, coal, oil, and mineral deposits, water fronts, railroad rights of way, public franchises, or water power sites. JUSTICE OF THE LAND-VALUE TAX. The essential justice of this bill therefore can not be disputed. For the value of land is not a value arising from any individual's own effort. It is a value that arises purely from the increase of population and from the growth and development of the whole community. It is thus a value that society-the Government-itself creates, and in all justice and morality therefore belongs to the Government. This has been recognized by every economist of repute from the physiocrats of a century and a half ago on down to the economists of the present time. Wrote the great Adam Smith in his "Wealth of Nations" (book 1, ch. 11): Every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landiord, his power of purchasing the labor or the produce of the labor of the people. Likewise Prof. Thorold Rogers in his "Six Centuries of Work and Wages": Every permanent improvement of the soil, every railway and road, every betterment in the general condition of society, every facility given to production, every stimulus to consumption, raises rent. And so John Stuart Mill, “Principles of Political Economy " (book 5, ch. 2, sec. 5): The ordinary progress of society which increases in wealth is at all times tending to augment the incomes of landlords; to give them a greater amount of the wealth of the community independently of any trouble or outlay incurred by themselves. They grow richer, as it were, in their sleep, without working, risking, or economizing. Since the value of land is thus a population-made value, and hence entirely unearned by the individual, it is unquestionably a vastly more fitting subject for taxation than the values due to the private effort of capital and labor, and which are in every sense of the word earned. LAND-VALUE TAX CAN NOT BE SHIFTED. Another reason equally as strong for the application of this tax is that it can not be shifted. It can not be passed on either to the tenant in the form of higher rent, or to the consumer in the form of higher prices for goods. The reason for this is that the tax will fall upon idle and undeveloped lands as well as upon those lands which are in use. The pressure upon the owners of the vacant lands will therefore tend to induce them either to use their land or to sell it to some one who will. In any event the keener competition among the vacant land speculators to sell their land or to rent it on easier terms to those who desire to use it will effectively prevent higher rents from being charged on ground that is already in service. Lest it still be thought that this land-value tax of mine is similar to a tax upon industry and its products and will only result in passing the burden on to the tenant or consumer, I desire to quote what the masters of economic science have said on this point: A tax on commodities is always transferred to the consumer. A tax on rent can not be transferred. (Prof. Thorold Rogers, Political Economy," 2d edition, p. 285.) 66 (Walker, "Political Economy," p. 413.) A tax on rents falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else. (John Stuart Mill. "Principles of Political Economy," Book V, Ch. III, sec. 2.) A tax on rent would affect rent only; it would fall wholly on landlords, and could not be shifted. The landlord could not raise his rent. (Ricardo, "Principles of Political Economy and Taxation," Ch. X, sec. 62.) Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenant, to whom the landlord is obliged to allow it in payment of the rent. (Adam Smith, "Wealth of Nations," Book V, Ch. II, art. 1.) A tax upon ground rent can not be shifted upon the tenant by increasing the rent. (C. B. Fillebrown, "A B C of Taxation," p. 31.) Not only the entire school of Ricardo and Mill, but also nine-tenths or more of other economic writers make it a fundamental doctrine of their science that such a tax never can be transferred to tenants. (Thomas G. Shearman, "Natural Taxation," p. 129.) If land is taxed according to its pure rent, virtually all writers since Ricardo agree that the tax will fall wholly on the landowner, and that it can not be shifted to any other class, whether tenant farmer or consumer. (E. R. A. Seligman, "Incidence of Taxation," p. 222.) When this important distinction between the land-value tax and a tax on industry is once grasped the passage of this bill will, I am sure, not be far off. FARMERS WILL NOT BE "HIT." But it may be asked, "Will not this tax hit the farmer?" Emphatically, no! I am not one who believes in coddling the farmer and giving him advantages not possessed by any other class, but in this and in the other bills that I am advocating the farmer has everything to gain and nothing to lose. I call your specific attention to the fact that this bill will not tax improvements or other labor values of any kind. In the case of the farmer, therefore, all houses, buildings, wells, orchards, fences, pens, vineyards, tiling, drains, farm machinery, crops, and so forth, will be exempt. Not only that, but it is specifically provided that all costs of preparing the ground for cultivation, such as clearing the land, draining it, plowing it, and otherwise getting it ready for crop production-costs that often run into the thousands of dollars per farm-are to be classed as labor values and deducted in making the tax return. On top of this soil fertility, whether original or improved, is exempted. The amount of this exemption has, for the sake of administrative simplicity, been placed at 50 per cent of the actual value of the land. In addition to this there is the general exemption from the tax of $10,000 of land value to each landowner. 66 The total of these exemptions would therefore place beyond the reach of the tax practically all singly owned farms worth less than $30,000 or $35,000 each. Not only all tenant farmers who own no land but practically every farmer who owns but one farm would thus escape the tax, while only large land speculators, country gentlemen," and absentee landlords, who own from two to five hundred or more farms-as Lord Scully is said to own-would come within the scope of this law. It is the opinion of Prof. John R. Commons, of Wisconsin University-and an analysis of all authentic information plainly bears out his opinion-that over 97 per cent of all farmers in America Would not be called upon for one cent of tax under this bill. I present herewith a table, carefully compiled from the last census report, showing the percentage of farmers in each State that would be exempt under the provisions of this law. When I say "farmers" I mean those actually engaged in agriculture, and I include tenant farmers as well as those who farm their own land. Per cent of farmers exempt under the land-value tax bill. Alabama. Colorado. Idaho Illinois. Indiana. Iowa-. Maine.. New Hampshire- North Carolina- Total 99. 7 94.2 99. 3 91. 1 96. 3 99.1 99.5 98.0 98.6 93.2 95. 3 97.6 88.4 94. 1 99.8 98.5 99.8 99.1 98.9 99.6 98. 1 99. 7 98. 3 93. 1 89. 2 91.3 99.4 99.5 93.4 99.4 99. 96. 99.6 99.2 95.6 99.6 98.6 99.0 93.4 99. 2 97.4 94.9 99. 7 98. 1 94. 98. 99. 4 91. 4 97.2 It is clear, therefore, that the farmer as a whole has nothing to lose by this land-value tax bill. And even to that small per cent whose taxes will be increased by a few dollars thereby the general gains will be immeasurably larger than the losses. Consider for just a moment what the farmers of the Nation will gain by the adoption of my whole tax program. First. They will gain immensely from the discouragement of monopoly of natural resources which the land-value tax will bring about. Coal, iron, and the raw materials entering into manufactured products of all kinds will be cheaper. The price of fuel, farm machinery, building materials, and like commodities will come down. Second. They will gain much indirectly from the reduction of the tax on earned incomes. Business everywhere will be easier to carry on, city purchasing power for farm products will increase, and the market for agriculture will widen. Third. The farmer will largely and directly benefit from the repeal of a host of taxes on industry and its products that are always shifted to him in the higher price of goods. The total taxes thus repealed amount to $1,075,000,000, which by the time they reach the ultimate consumer aggregate from three to five times this much. Altogether not only the direct but the indirect gains to the farmer from these various sources will be something enormous, Calculated in terms of money it should not be less than $250 to $500 per family of five. FARM LANDS WILL YIELD SMALL REVENUE. But, it may be asked, if the revenue to be raised under this land value tax bill will not come from the farming districts, from where will it come? The answer is very simple. It will come almost altogether from town and city lots, from coal, iron, oil, stone, and all mineral deposits, from railroad rights of way, utility franchises, terminal sites, water power, and so forth. Some revenue, of course, will come from the agricultural regions, but it will not be out of the pockets of those who actually till the soil; it will be out of the pockets of large land speculators, "bonanza" farmers, and absentee landlords, many of whom own farms numbering into the scores and even hun dreds. All of these will be touched by my land value bill and some of them will be touched pretty severely. I estimate that about $70,000,000 of revenue will be raised from this source alone. CITY LOTS WILL PAY. Assessed valuation of 50 properties in the business district of the city of Chicago, etc.--Continued. Property. The vast bulk of the revenue, however, will be raised from sources other than farm lands in the hands of big speculators and absentee landlords. Town and city lots alone, I estimate, Stewart Building.. I will raise $300,000,000. This is a conservative estimate, after making full allowance for all exemptions. For the value of city land is not only much more concentrated than farm land is but it has a value by the side of which farm land sinks into utter insignificance. I am indebted to Mr. George A. Schilling, former president of the board of local improvements in Chicago, for furnishing me with the following information pertaining to a little patch of ground in that city. The size of this lot is exactly 48 by 120 feet, or about one-eighth of an acre. Since 1830 this lot has increased in value over 12,000.000 per cent. Its present value, according to George C. Olcott & Co., expert appraisers, is about $51,000 a front foot, or a total of $2,448,000. This is at the rate of $20,000,000 an acre. It would take over 244 $10,000 farms to buy the lot without the improvements, and a man earning $5 a day and working 300 days each year could not earn enough to buy it in sixteen hundred years. History of an eighth-acre lot in Chicago. Reliance Building. Tobey Furniture Store. Kesner Building.... Michigan Boulevard Building.. Windsor Clifton Hotel. University Club Building.. 76 by 171 410,000 1,053, 295 15 Palmer House. 734, 763 8 Goddard Building. 254 by 248 400,000 6,695, 706 13 52 by 85 175,000 566, 615 5 Monroe Building. 1,645,000 1,435,604 1,343, 266 22 National City Bank Building. 157 by 198 1,650,000 2,474,598 6 90 by 131 150,000 Marquette Building.. 1,063, 914 The Fair Department Store. 1,060,000 1,774,680 11 Borland Building... 350 by 190 1,415,000 6,620,474 The Temple. 615,000 1,050, 576 200,000 1,470, 952 Pullman Building. 9 McCormick Building. Railway Exchange Building.. 120 by 171 350,000 1,932, 160 1,050,000 2,745, 426 Kimball Hall.. 2, 155, 800 2,604, 626 800,000 1,219, 716 Stratford Hotel. 75,000 Congress Hotel. 2,600, 500 13 173 by 400 1,762,000 4,030,968 285,000 4,457, 217 Revel Building.. Mr. Jorgensen further informs me that the selling value of land alone in the "loop" district of Chicago-a district about half a section in area-is approximately $800,000,000 and will total over the whole city about $2,500,000,000. These values are merely typical, more or less, of the terrifically high land values 61.66 existing throughout every city in the Nation. Two or three years ago the assessed valuation of the land alone in two of the five boroughs in New York City-Manhattan and Brooklyn616,66 was $3,896,572,000, or a trifle less than $4,000,000,000. This was enough to buy up all the farm properties, including improvements, in the four States of Kentucky, Tennessee, Alabama, and Mississippi in 1920. Throughout the whole city of 1,632.00 New York the land values aggregated $4.938.332,177, and with the enormous rise in rents and land values that has taken place since 1920, the values in New York City should now be over $6,000,000,000. 701.33 953.33 1, 133. 33 1,333.33 As further evidence of the colossally high value of land in cities I submit herewith a list of 50 property units in Chicago, comparing the value of the buildings with the assessed value of the land. It is very interesting to note that the buildings, whose average height is 13 stories, have a total value on these 50 patches of ground of $32,553,800, whereas the land, compris ing a total of only 26 acres, or enough for a little truck garden, has an assessed valuation of $93,346,162. And this $93,346,162, be it noted, is only 70 per cent of the full value. For this illuminating table I wish to thank Mr. Emil O. Jorgensen, assistant secretary of the Manufacturers' and Merchants' Federal Tax League in Chicago: COMPARATIVE VALUE OF LAND AND IMPROVEMENTS. Assessed valuation of 50 properties in the business district of the city of Chicago-About 10 per cent of "full selling value." I have already stated that this bill does not tax standing timber. It does not fall in any way upon the trees, whether young or old, or whether planted or naturally grown. The reason for this exemption is very plain. The growth of timber in this country must be encouraged, not discouraged. Already our timber resources have reached the point of virtual exhaustion. And this exhaustion has been hurried by no agency so much as by our criminal policy of taxing the growing trees, which has served the double purpose of prompting the rapid cutting down of the trees standing and of making unprofitable the planting of new ones. For this reason this land-value tax bill of mine does not tax 1,391,951 standing timber, but seeks to aid lumber producers and dealers 1,257,908 by having their present taxes substantially cut down. 640,974 321,300 715, 140 949, 170 1,448, 380 1,365, 80) 1,382, 500 1,760, 704 1,695, 66 2,491, 142 Masonic Temple.. 21 113 by 169 Atlas Block. 5 138 by 169 Dickey Building.. 6 80 by 180 16 80 by 140 400,000 Garrick Building. 17 80 by 180 250,000 Woods Building. 300,000 State Lake Building. 12 160 by 180 Sherman House. 15 160 by 180 300,000 1,000,000 Stock Echange Building. Hotel La Salle.. 550, 000 1,950, 000 Chamber of Commerce Building.. 13 113 by 181 Conway Building.. 500,000 2,500,000 Tacoma Building.. 14 101 by 80 100,000 Cunard Building. Kranz Building. 6 72 by 90 20,000 Or about 3 acres of cut-over lands for every acre of timberbearing land. Much of this cut-over land is being sold by land speculators for $30, $40, and even $50 per acre. Five dollars per acre for the total 463,000,000 acres would therefore be a conservative estimate of what all the timber and cut-over land in our country is actually worth. Making full allowance for all exemptions. I would expect the yield of revenue from this source under my bill to be about $15,000,000 a year. VALUE OF WATER-POWER SITES, ETC. I place the land value of water powers, fishing grounds, harbors, water fronts, and so forth, as at least $4,000,000,000, which, after making the necessary allowances for exemption, should produce about $30,000,000 of revenue annually. VALUE OF FRANCHISES, ETC. The value of public-utility franchises of all kinds, pipe line, stockyards, railroad rights of way, terminals of all sorts, and so forth, I estimate to be at least $18,000,000,000, which, taking into consideration the exemptions allowed, will yield well above $160,000,000 of revenue. VALUE OF COAL LANDS. The value of the coal lands in America, both anthracite and bituminous, I estimate as at least $11,000,000,000. It may be twice this amount. Indeed, there are those whose opinions are not to be sneered at who claim that the Reading Co.'s coal holdings in the anthracite regions alone are worth all of this, and that the value of the anthracite coal in Schuylkill County, Pa.--merely one of the hard-coal counties-amounts to the stupendous total of $20,000,000,000. In the Pottsville Republican, of Pottsville, Pa., lying in the heart of the anthracite coal field, we read this, ostensibly written by Mr. Frank C. Reese, a resident mining engineer, under date of March 1, 1922: READING CO.'s COAL LANDS ARE WORTH $15,000,000,000. When $3,000,000,000 is spoken of as a fair full valuation of the coal lands of Schuylkill County it may seem like an excessive figure, but when compared with the valuations in Luzerne and Lackawanna Counties they are not so greatly out of reason, for it must be remembered that these two upper counties have an assessment based on a threequarters valuation. The contention has been made by coal authorities that the coal owned by the Reading Co. alone is worth from $10,000,000,000 to $15,000,000,000. When this is compared with a total assessment of all coal lands in the county of $53,000,000 it can be readily seen that there is room for considerable revising upward. It has been claimed by these same coal authorities that a $3,000,000,000 assessment for the Reading Co. alone in Schuylkill County would not be unfair, if assessments of other properties are to be fixed on a full ratio of value. The Reading Co. owns about 85.000 acres of coal lands. If these are assessed as they are in the two upper counties, they would carry an assessed valuation of about $30,000 per acre, making their total valuation $2,500,000,000. But as they are so much greater in thickness of coal deposits in so many sections, the $30,000 would be too low if they are to be figured on the same basis as other coal lands in the State. VALUE OF MINERAL RESOURCES, ETC. REVENUE YIELDED BY LAND-VALUE TAX. Summing up, therefore, the revenue which my land-value tax bill will derive from the various sources we have I have stated this estimate is a conservative one. Although $1,100,000,000 from this source is more than is needed to offset the loss resulting from the reduction of the taxes on business and industry, yet it is not improbable that the yield of revenue will be a good deal more than this. We read in Commerce and Finance, of December 26, 1923: There has been a tremendous appreciation of realty values in recent years. Joseph Wild's estimate of a real-estate inflation of from twenty-five to fifty billions seems to err on the side of conservatism, if the advance in rents is any criterion. The Nation's wealth in the recent depth of deflation was figured at three hundred and fifty billions, and the land values should be approximately half of that sum, which to-day should be well over two hundred billions. That the mere growth of land values in three years should exceed our national debt may seem astonishing, but there is no reason to doubt that such is the case. LAND-VALUES TAX CONSTITUTIONAL, But it may be objected that this tax is unconstitutional. It may be said that Congress has no legal authority to levy a direct tax upon the value of land and natural resources, except as it be apportioned among the various States according to population. But this objection is overcome by the fact that the tax I am proposing is not a direct tax upon the value of lands and natural resources but an excise tax upon the "privilege" of owning and enjoying the use of such lands and natural reSources. In other words, the tax I am proposing is not a tax upon natural resources, which the Supreme Court holds are real estate, but a tax upon the “privilege" of owning them, which is a franchise, and which is, therefore, subject to taxation by Congress, like any other franchise. Viewed in this light, it is the general opinion of prominent attorneys that the bill is perfectly constitutional. As Mr. Jackson H. Ralston, a distinguished member of the District of Columbia bar and an authority on 1917, p. 889): In the same paper also, under date of March 2, 1922, we read constitutional law, has stated it (The Public, September 14, this: HIGH COAL VALUES BASED ON ESTABLISHED FACTS. Mining engineers have estimated that there was in Schuylkill County 41.000,000,000 tons of coal, and of this less than 1,000,000,000 tons has been mined. Estimating that coal is worth 50 cents net per ton, which is considered by engineers to be a low figure after allowing for all waste, it can be readily grasped how the valuation of $20,000,000,000 is to be figured as actual value, and yet there is an assessment of but $53,000,000 on all this coal on the part of the county. C. M. Dodson, lessee of 390 acres of coal lands at Locust Mountain, owned by the Girard Estate, testified that he will pay in royalties to the Girard Estate $9,335,000 for the coal he is to take out of these workings. Here the coal is but 63 feet in thickness. figures, the estimate of $60,000 per acre of value for some of the other coal lands of this county is not immoderate by any means. Based on these No better way can be found to get at real coal-land values than by the royalties that are being paid for the right to mine. When more than a dollar per ton is paid for royalties and this can then be mined at an attractive profit to the lessee, it can be readily seen that fabulous coal-land values are based on actual facts and conditions and not on mere guesswork. In the light of the above, I believe my estimate of $11,000,000,000 as the value of both the anthracite and the bituminous coal resources of the country is well within the bounds of conservatism. But even on this conservative basis it will yield a revenue from this source, allowing for exemptions, of at least $95,000,000 a year. The holding of land by one individual to the exclusion of all others is entirely due to conventional arrangements. Without the convention, it does not exist. This has been recognized more than once by law writers. Blackstone maintains it in the first chapter of the second book of his Commentaries, wherein he says: 44 There is no foundation in nature or in natural law why a set of The right to hold land, therefore, being purely conventional, is to be Mr. Ralston further informs me the constitutionality of the tax can not be doubted. I say this on the |