It’s always good to know your roots, to know what you’re up against, to know what to keep and what to change.
The saying was, land speculators “produce more poverty than potatoes and consume more midnight oil in playing poker than of God’s sunshine in the game of raising wheat and corn.” —Prof. Benjamin Hibbard, the earliest land scholar, 1924 (or even earlier).
Ever wonder where those names for towns and downtown streets come from? The names of US universities? Even the names of some military bases?
“The successful land dealer of one generation became the banker, the local political oracle and office holder, or the county squire of the next. Scarcely a city or country town in the West but had its first family whose fortune had been made by shrewd selection of lands and their subsequent sale or rental to later comers.”— 1942, Historian Paul W. Gates (1901–1999), widely considered to be the foremost authority on US land policy who wrote 10 books and 75 academic articles.
“America has always been a nation of real estate speculators… Real estate speculation was an integral part of the winning of the west, the construction of our cities, and the transformation of American home life, from tenements to mini-mansions.” — 2013, Economist Edward L. Glaeser of Harvard University and NBER
The original US Constitution, the Articles of Confederation, funded the new, federal US Government with a tax on land. About a decade later, some Founding Fathers met again, yet without Congressional authority and in secret, to replace the land tax with tariffs, at the behest of land speculators, which most of them were. Ben Franklin lost a bundle speculating in land— which may be what motivated him later in life to support the physiocrats, the thinkers who advocated a single tax on land value instead of on people’s labor or capital goods, like houses. (Daniel Friedenberg’s Life, Liberty, and the Pursuit of Land, 1992)
Soon after the colonies protested the taxes that the British levied on them, the farmers of western Pennsylvania protested the tax on their product — whiskey. As a replacement tax, the frontier sodbusters advocated a levy on land. Back then, people clearly saw that a tax on the value of land would collect much more revenue in cities like Philadelphia, where locations were very spendy (still are), than in the countryside like backwoods Pennsy, where land is dirt cheap. To quell the Whiskey Rebellion, president George Washington — the nation’s richest man and biggest landowner — put into the field four times as many soldiers as he ever led against the British (Nathan Miller’s Stealing From America, 1992).
For the first decades of its existence, the young US government supported itself not only with tariffs but also by selling western lands. Most of the sales of prime land were not to settlers but to speculators who eventually sold the fertile land to settlers. If the US had cut out the middle man, it could have directed all those sale proceeds into the public treasury. However, most often the employees of the government’s land office were in cahoots with the speculators; everybody knew what was going on (Everett Dick, The Lure of the Land, 1970). Further, the government did not have to sell the land but could have leased it, just as the modern state of Israel does today. Or, if selling, government could tax or otherwise levy land at its annual rental value (functionally, no different from leasing it).
One of the favorite places to found a city is by the mouth of a river: London on the Thames. New York on the Hudson. New Orleans on the Mississippi. On the Pacific Coast, the major river that drains the western half of North America is the Columbia. Near it’s mouth sits Portland, yet that city is not the region’s premier city. That title belongs to rival Seattle. How did that happen? Recognizing their natural advantage, the founders of Portland kept their prices for land high. The city fathers of Seattle undercut them—and soon outgrew the city to their south, by leaps and bounds. It’d be as if Philadelphia outgrew New York (which did not happen).
The hierarchy of cities was flipped again elsewhere by speculator greed. The natural pass thru the Rocky Mountains is by Cheyenne Wyoming. When railroads started extending westward, speculators figured the iron horse had no choice but to pass through Cheyenne so they kept the price for land high. To their south, the city fathers of Denver undercut them, attracted the railroad, and outgrew their rival to the north. Today, Cheyenne remains a town while Denver is a major American city.
Such is the counterproductive power of land speculation. Conversely, there is a potent, productive stimulant: the public recovery of land value. When Johannesburg South Africa was dying after the nearby mines played out, the city fathers shifted their property tax to fall only on land, not on buildings. So owners developed vacant lots and kept their parcels at highest and best use. Johannesburg grew to become the financial capital of Africa. Its rival city to the south, Cape Town, situated on one of the most strategic ports on the planet, lagged behind. It was as if Albany New York had eclipsed New York City—unfathomable.
“History is bunk,” Henry Ford said. Many Americans have expressed anti-intellectual sentiments. Yet it is good to know one’s roots, what one is up against, and what to keep and what to change. To his credit. Ford also said,“We ought to tax all idle land the way Henry George said—tax it heavily, so that its owners would have to make it productive.”
Will academia tell this tale? One of the major business schools in the US is Wharton’s at the University of Pennsylvania in Philadelphia. The Whartons were one of the early major land speculators. So were the Roosevelts. Later, so was Leland Stanford. And more recently James Irvine (University of California at Irvine). So don’t hold your breath. Instead, for more on the link between speculators and universities, see Dr. Mason Gaffney’s Corruption of Economics. Information such as this won’t be fed to you, You have to look for it.
Speculators Are Us. This is a brief, partial History of the United States from the POV of those who benefited the most from it.
The cascade of tit-for-tat tariffs has spooked corporate executives, potentially slowing investment, and the Federal Reserve suggested this week that it might have to rethink its economic forecasts if the trade wars continue.
.. The economy is booming, but Mr. Skarich said he was not reaping the benefits. Instead, as a result of Mr. Trump’s trade policies, Mr. Skarich said his nail company may soon be out of business.
.. Mid Continent, the largest American producer of nails, imports steel from Mexico to make its nails. That steel is now subject to the 25 percent tariffs that Mr. Trump imposed on dozens of countries, forcing Mid Continent to raise its prices by nearly 20 percent.
.. Orders have plummeted by 50 percent this month as the company tries to compete with cheaper foreign-made nails. Those foreign manufacturers are not facing higher steel costs, giving them an advantage over Mid Continent.
.. While Mr. Trump might propose that Mid Continent simply buy American-made steel, it might not be so simple: Mr. Skarich notes that the cost of American-made metal is much higher than what the company had been importing from Mexico, meaning it would still have to raise prices for its nails if it used domestic steel.
.. “He ran on ‘Make America Great Again,’ and the point was to defend and protect jobs in the United States,” Mr. Skarich said. “Now here is an action he decides to take that has the potential to cost 500 U.S. citizens their jobs.”.. China is expected to impose an additional 25 percent tariff on American lobster.. Trump’s policy was having the unintended effect of further helping Canada’s lobster market, which doesn’t face the same duties when selling to China... For several years, the cranberry industry has been struggling with an oversupply problem that has been eased somewhat by exporting juice and berries to Europe and elsewhere... Wisconsin is one of the world’s biggest cranberry producers and is the home state of Representative Paul D. Ryan.. exports to Europe were about $127 million last year.. European tariffs on peanut butter will be a blow for the makers of Peter Pan and Skippy spreads, but it is peanut farmers in Republican-leaning states like Georgia, Alabama, Florida and Mississippi who could struggle the most... The United States and China are the biggest peanut butter exporters in the world, according to the Department of Agriculture, and European tariffs would likely give China an edge in expanding its market share.
.. “If this can give him some leverage to get a deal made, they’d be all for that,” Mr. Broome said. “If it doesn’t work and he’s miscalculated, then it could be a different story.”