The Danes, by old tradition, have been accustomed to the concept that
the land belongs to the people. The rapid industrialisation and land
enclosures of the 18th and 19th centuries, begun in England, saw this
tradition come under sustained attack; attacks which grew more intense
as industrialisation grew.
Farmers were pressed in the later half of the 19th century; many of them
found support in the ideas contained in a newly released book "Progress
and Poverty", by Henry George. As the economic situation became even
tougher for small farmers, a so called "Georgist" movement began and the
Danish Henry George Union was founded in 1902. Some of its more active
members wanted a better platform for their political ambitions, and
these members cooperated with other philosophic groups and public
leaders in forming the Radical Left Wing Party, declaring that land
value taxation (site revenue) should collect all the publicly created
rent of land for government expenses, instead of levying taxes on
Around this time of course, Karl Marx was advocating that the workers
unite to fight the desperate conditions of the working man. The
Danish Social Democrats were inspired from this position. It too
advocated in its political program the taxation of land value (site
Over the next fifty years, (not only in Denmark but around the world),
there was long and intense debate about liberty and freedom; amongst
free traders, pacifists, humanists, philosophers and religious
institutions alike. Many of these people went to each other's meetings
and contributed articles to each other's publications. Finally, they
knew each other so well, that many of them decided to establish a union
with the object of appealing to voters for seats in Parliament. The
Justice Party was formed. Their economic policy was simple; to collect
the economic rent of land and abolish all taxes on labour and capital.
For a new political party, their effect was astonishing. Progress was
quick and in 1952, they won 12 seats of a possible 179. They effected
the appointment of a Government commission for ground rent in Denmark,
who wrote its report clearly advocating the benefits of site revenue.
In 1957 the Justice Party, together with the Social Democrats (Labour)
and the Radical Left Wing Party (Liberals actually) formed what was to
become the most prosperous ever Danish Government - later termed the
Ground Rent Government.
Three political parties made an agreement based upon the following:
It was therefore generally expected that after formation of the
government, some kind of land value taxation would be introduced. Land
speculation ceased immediately. Legislation on taxation of increased
land value was prepared, presented to parliament and passed.
- Collection of the Economic Rent
- Liberalisation of trade
- A tax freeze
The economic effects of the cessation of land speculation were
astounding and aroused much attention. On the 2nd October, 1960, the
New York Times headlined, "Big Lesson from a Small Nation."
Prior to the election of 1957, Denmark had a sizable deficit on her
balance of payments, was considerably in debt abroad, and burdened with
a relatively high interest rate, big unemployment figures and an annual
rate of inflation of approximately 5%.
From 1957 to 1960, the following improvements took place:
After three years in power, Denmark had no foreign debt, no inflation
and an unemployment level of 1%, considered full employment. So why is
this not continuing?
- The big deficit on her balance of payments was turned into a surplus.
- Denmark's total debts abroad amounting to 1,600 million kr. were
reduced to one quarter of this, about 400 million kr.
- The rate of interest, and hence mortgage levels went down.
- Unemployment was soon replaced by almost full employment, together with
considerable increases in production and wages.
- Inflation was brought to a standstill.
All wage increases were real wage increases, the highest ever in Denmark.
- No other taxes were levied during this period. (except one, referred to later.)
- The time was free of strikes. Industrial production went up 32%, investment
- Savings increased immensely, as once again it became profitable to
- Until 1960, the Social Democrats were advocating the collection of
site revenue for the purposes of government social responsibilities, the
Radicals and Justice Party advocated site revenue for the purposes of
income tax reduction. Minor conflict developed.
- Prior to 1960, "Georgist" beliefs dictated that when a heavy "tax"
is levied upon land value, land price will decrease. The consequences
of full employment, no inflation, no foreign debt, increasing production
and rising real wages however, brought about a prodigious demand for
homes, enterprises and of course land. Land prices did not initially
fall, as was predicted. In fact land prices rose. The Justice Party was
unprepared for this.
- In the late fifties, the Danish foreign debt was seen to be at
crisis level. To assist with this, the Ground Rent Government did levy
one new income tax. In addition to this of course, rising real incomes
were eroded in part with the progressive nature of income tax on higher
incomes. The self interested wealthy land owners had a field day
confusing the fact that overall, taxes did go down by 10%. The general
public found little reason to doubt the anti-Georgist literature stating
that site revenue was simply another tax on top of all the other taxes.
The land owners had no problem in fanning the now growing belief that
the "socialists", (read communists, given the era), wanted to get hold
of your property.
At the general election of 1960, the opposition used, for the time, the
largest sum ever in any Danish election campaign, financed by the
Conservatives and Landowner associations. Such is the power of self
interested groups. With its limited financial resources and lacking
support from the daily press, the Justice Party was unable to withstand
the attacks. Agitation against the site revenue legislation continued
after the election and the new, weakened government gave in. Further
strong pressure from land-owner associations had the site revenue laws
repealed in 1964.
A comparison between the three periods, before, during and after the
so-called "Ground Rent Government," gives a clear picture of the
importance of eliminating land speculation.
- The currency surplus became a currency deficit.
- The annual deficit on the balance of payments in 1972 was 3 billion kr.
- Debts abroad amount today to 20,000 million kr.
- The effective rate of interest has been doubled.
- Land prices jumped sky-high. Denmark's overall land value rose from 17
billion kr. at the assessment of 1960 to 67 billion in 1969, and
reached 100 billion at the next assessment in 1973.
- Rents in new housing are six fold those of 1964.
- The rate of inflation rose from barely 1 per cent to 5-7 per cent and was 8.6
per cent in 1965, the year after repeal of the land tax law in 1964.
- Taxes have risen again and again and are today five times higher.
- A more detailed discussion of these facts can be found in the book
"Triumph or Fiasco" (1969), written by Viggo Starcke, for many years
leader of the Justice Party.