Henry George, answered from the texts and cited to the page.
Interest is just, and the reason is plain enough once the thing is looked at from the right end. It springs from the power of increase which the reproductive forces of nature, and the analogous capacity of exchange, give to capital. It is not an arbitrary thing, not the creature of any particular social organization, but the result of laws of the universe which underlie society; and what rests on such laws is just.1
The socialist who would abolish interest falls into the same error that gives plausibility to the doctrine that wages are drawn from capital. He thinks only of what the borrower pays the lender. But whoever uses capital and obtains the increase it is capable of giving receives interest. If I plant a tree and tend it to maturity, its fruit is interest upon the labor I have accumulated in it; if I raise a cow, her milk morning and evening is not merely the reward of the labor then exerted, but the return on the capital my labor stored up in the cow.2
Abolish interest by law and you have not struck at the capitalist; you have forbidden the planter his orchard's increase and the shepherd his flock's. The man who saves would be robbed, and the saving of the world would stop. Nor is the capitalist the enemy of the laborer. Both are robbed by the same hand. The relation between wages and interest is fixed by the average power of increase that attaches to capital in reproductive uses; and as rent arises, interest falls as wages fall, both being determined by the margin of cultivation.3
Fancy a fool's paradise where sheep bore ready-made clothing and houses grew from the seed, with no labor at all: the capitalists would take the whole product only until the landlord demanded his share, and then rent would come out of capital's return, until nothing was left to capital but the minimum of replacement, and the land would take nearly all.3
That is the law of interest as a corollary of the law of rent. What the socialists denounce as the tribute of capital is, in great part, the tribute of land. As to the single tax, call it neither name. Labor, capital and land are the factors of production, the first two being forms of the human factor, the last the natural factor. Labor and capital must have a reward for their exertion, or they cannot continue to exert themselves.
But Nature claims no reward; land is her free gift.4 The primary division of the product is therefore into wages and interest, and the surplus that competition enables the owner of better land to claim over what labor and capital could earn on the poorest land in use is the part Mill called the unearned increment. That we would take for public needs in place of the taxes now laid on industry, enterprise and thrift.4
The socialist says the state should take capital. I say the state should take only what no man made. When we tax houses, crops, furniture, capital or wealth in any form, we take from individuals what rightfully belongs to them, and in the name of the state commit robbery. But when we tax ground values we take what belongs to the community, and which cannot be left to individuals without the robbery of other individuals.5
The value of a building is produced by individual exertion and belongs to the individual; the value of land arises only with the growth of the community, and belongs to the community. It is not because of what its owners have done, but because of the whole great population, that land in New York is worth millions an acre.6 So the single tax secures to every man the full wage of his labor and the full return of his saving, and secures to all the common fund that all make.
Socialism would put industry under officials who cannot direct it; I would leave industry to free men and take for the commonwealth the one value that the commonwealth creates. That is individualism where the individual's title lies, and common property where the common title lies, and it is justice at both ends.
Capital is wealth used to produce more wealth, and interest is not robbery: it arises from the reproductive forces of nature, which make the herd and the vine and the wine increase with time, and exchange extends that increase to every form of capital.78 Labor and capital are not enemies; both are robbed by rent. Socialism sees the injustice and mistakes its seat, and would put industry under a government that cannot direct it.
The state should take the rent of land and run the natural monopolies, the railroad and the telegraph, and leave everything else to free men.910
Thus interest springs from the power of increase which the reproductive forces of nature, and the in effect analogous capacity for exchange, give to capital. It is not an arbitrary, but a natural thing; it is not the result of a particular social organization, but of laws of the universe which underlie society. It is, therefore, just.Progress and Poverty, Memorial ed
If I plant and care for a tree until it comes to maturity, I receive, in its fruit, interest upon the capital I have thus accumulated—that is, the labor I have expended. If I raise a cow, the milk which she yields me, morning and evening, is not merely the reward of the labor then exerted; but interest upon the capital which my labor, expended in raising her, has accumulated in the cow.Progress and Poverty, Memorial ed
The relation between wages and interest is determined by the average power of increase which attaches to capital from its use in reproductive modes. As rent arises, interest will fall as wages fall, or will be determined by the margin of cultivation.Progress and Poverty, Memorial ed
Labor and capital must have a reward for their exertion or they cannot continue to exert themselves, or, indeed, to exist. But Nature claims no reward. Land is her free gift to man, her gratuitous service.A Single Tax on Land Values, Reply to Edward Atkinson
When we tax houses, crops, money, furniture, capital or wealth in any of its forms, we take from individuals what rightfully belongs to them. We violate the right of property and in the name of the state commit robbery. But when we tax ground values we take from individuals what does not belong to them, but belongs to the community, and which cannot be left to individuals without the robbery of other individuals.The Single Tax, What It Is and Why We Urge It
The value of a building, like the value of goods, or of anything properly styled wealth, is produced by individual exertion, and therefore properly belongs to the individual' but the value of land only arises with the growth and improvement of the community, and therefore properly belongs to the community.The Single Tax, What It Is and Why We Urge It
We both agree that labour does not find its proper opportunities or get its fair reward. Your contention is that, to remedy this state of things, not merely land but also capital must be made common property; while I contend that it is only necessary to make common property of that to which natural rights are clearly equal, and without which men cannot exist or produce—land. [Hyndman's turn omitted.] George.Socialism and Rent-Appropriation, A Dialogue with H. M. Hyndman, George's turns only
This is not so. Nor yet will I be expected to pay more interest if I borrow a fifty-dollar sewing machine than if I borrow fifty dollars' worth of needles; if I borrow a steam engine than if I borrow a pile of bricks of equal value. Capital, like wealth, is interchangeable. It is not one thing; it is anything to that value within the circle of exchange.Progress and Poverty, Memorial ed
Senator GEORGE. I would like to call your attention first, Mr. George, to perhaps a little indefiniteness which exists in your expression of your views in reference to the ownership and the taxing of land in its unimproved state, and I wish you would explain a little more definitely and incisively just what views you hold on that subject. The WITNESS.Testimony before the Senate Committee upon the Relations between Labor and Capital, New York, 22 August 1883
Capitalists, as capitalists, are not, and never can be, more powerful than landlords. Men can live in a rude fashion without capital, but cannot live without land. But the point I wish to make is, that where the capitalist receives rent he is to that extent a landlord. The effect of a mortgage is simply to divide proprietary rights. [Hyndman's turn omitted.] George.Socialism and Rent-Appropriation, A Dialogue with H. M. Hyndman, George's turns only
The doctrine that set him against the socialists of his own movement and that the economists of interest rejected; he is claimed by individualists and by socialists, and belongs to neither.