1191.

Carbon of a letter to Mr. Clifford L. Kendal, 150 Nassau Street, New York City, care of Joseph Dana Miller, from 434 West 120th Street, January 14, 1937

Dear Mr. Kendal:

Thanks for your note received today, in reference to Tuesday evening. I do not think I was very effective. Probably it is bad practice to try to present an extension of ideas in terms of questions predicated on contrary ideas. It is something like asking a man whether he has or has not left off beating his wife. The question carries with it an assumption contrary to what the man wants to explain.

Another thing: If we are concerned chiefly or exclusively with what happens to a particular person's investment of a particular five thousand dollars and try to imagine all the special and particular things that might happen to him this will not give us any information of a general character. We might understand more about one man, but we will not understand any more about society in general. For the latter we must consider only those things which are typical and common to the experience of men in general. For example, if we know of or suppose an exchange transaction which resulted in a loss to one or both of the parties we must not take that as proof that exchange transactions are not the very basis of all exchange value and therefore of every social value and advantage.

I brought the discussion clearly to a point where we could see a land owner enjoying an income of ninety dollars which flowed to him automatically out of the earnings of public capital which therefore made him in effect the owner of that capital and therefore enabled him to capitalize his ninety dollar income at say, eighteen hundred dollars. He has an investment of eighteen hundred dollars into which he must have put eighteen hundred dollars in order to become the owner of the land, or he may have acquired it at a time when it was yielding less than ninety dollars net--when the public capital was earning a less income--and then he would have invested in it a less amount than eighteen hundred dollars. I am simply describing how a person purchases a part ownership in the public capital according to its income value. I am not referring to transactions in which people make bets or speculations on prospective increases or other changes in the earnings of public capital. And it should be remarked, in passing, that such speculation is the resort of persons who find conditions unfavorable for using their capital creatively as an instrument of production and employment of labor.

Considering the ninety dollars then as the income from a capital value of eighteen hundred dollars, the question that interests you is what will happen to a person who has invested eighteen hundred dollars in this land value (public capital) that yields ninety dollars. This depends on whether we take the single tax as an abolition of taxes, as Henry George taught it or whether we take it as the laying of a tax on the ninety dollars of annual land value as many of his professed followers teach it. In the latter case the ninety dollars passes from the hands of a public proprietor into the hands of a "public servant" or politician. If the politician uses the ninety dollars in ways that constitute public services, then the owner of the land who has had ninety dollars taken from him by the politician as a tax-gatherer will have ninety dollars (or more) restored to him by the politician as a public servant and his investment will still be worth eighteen hundred dollars or more. But if the politician does not use the ninety dollars to create public services but keeps it for his own use and service other than public services, then the public finds itself supporting a politician instead of a proprietor without getting any services from either of them. And this is a worse condition than before, because the politician is now the virtual owner of the land (land value ) and he, having coercive power (which the proprietor has not) will not sell the services coming to the land at a fair price in an open market but will seize the properties of the users of land without any reference to their consent or the market value of any services they receive. They will, in fact, merge rent into taxation--purchase price into tribute. There could be no longer any distinguishable revenue from public capital and therefore no public capital or land values and no person could buy any public services to a location at a market price. All would be at the whim, interest or caprice of the politician and no person could be secure in his possession and occupancy of land. Civilized society would be destroyed. This would all come from inverting the program laid down so clearly by Henry George. He said, in his "Standard" of January 21, 1888, "It is not by the mere levying of a tax that we propose to abolish poverty; it is by securing the blessings of liberty." He proposed to abolish poverty by the abolishment of taxes and "not by the mere levying of a tax." So, if the politician gets the ninety dollars we must suppose him to use it either for public advantage, in which case the land owner loses nothing (or even gains), or for private advantages, in which case only the politician gains, and he only for the time, for with the disappearance of rent and of security of possession,the entire fabric of social and public values will be in time dissolved. Your investor who formerly had a value of eighteen hundred dollars in the public capital will have forfeited his income to the politician and will have no capital value that he can sell.

Now let us suppose that the investor has put his eighteen hundred dollars into ownership of the public capital and we proceed after the manner proposed by Henry George, not to levy a tax but to abolish them. Suppose that instead of levying ninety dollars of taxes we abolish taxes to the amount of ninety dollars that now fall upon the occupant of the investors land--the occupant who is paying the market value of the public services delivered there, to wit, ninety dollars. Will not this remission of a charge of ninety dollars on the occupant increase the value of his occupancy by at least that amount? Will he not now be able to enjoy public services (and to pay for them) at least twice as much as before? Yes, unless the remission of ninety dollars taxes on the occupant has actually crippled essential public services (which it certainly need not) the rent will now rise to at least one hundred and eighty dollars and our investor will have an actual saleable capital value of thirty-six hundred dollars. However, let us suppose that coincident with the remission of the ninety dollars tax on the occupant the owner voluntarily or otherwise gives up the ninety dollars he originally received. He will still have at least ninety dollars coming to him by reason of the service to the occupant which consisted in remission of the ninety-dollar burden formerly borne by him; so the owner's investment is still worth at least the original eighteen hundred dollars. But if the ninety dollars which the location owner now gives up (voluntarily or otherwise) be used in such way as to create public services that are worth even no more than they cost, then the occupant will be receiving one hundred and eighty dollars worth of public services and paying one hundred and eighty dollars annually for it and the value of the land owners investment will be thirty-six hundred dollars at the least and this will not be occasion for any loss to the land occupier and user for he will be getting at least a dollars worth of services at his own valuation for every dollar of rent that he pays.

From all this it should be clear that the laying of taxes destroys land value, destroys rent, whereas the remission of taxes creates land value--both rent and capital value of land--and it does this to the advantage of both the owner and the user of land and without any loss to either of them. You may wonder how these great values can come into existence by the mere remission of taxes. The answer is that it is not by any new creation but by the restoration of the vast social advantages and values that increasing taxation progressively destroys. In today's Herald Tribune the National Economy League shows that current Federal expenses, not counting relief are 74 per cent higher than the average for the years 1923 to 1929 and that including relief but not including any sinking fund reserves for the public debt, the Federal expenses are now more than double what they were for those years. With the Federal Government collecting seven billions annually and State and local taxation taking about six and one half billions more, there is now a standing tax charge of about thirteen and one half billions or one hundred dollars per year for each man, woman and child.

I want to thank you for your kind and patient interest in my efforts to develop the creative side of the philosophy of Henry George.

Sincerely,

1178.

Carbon of letter to John H. Allen, president, Everlasting Valve Company, 49 Fiske Street, Jersey City, New Jersey, from SH at 310 Riverside Drive, New York City, December 12, 1935

Dear Mr. Allen:

I wish to thank you for your letter of some time ago with copy of your address reprinted from The Universal Engineer. I read this with great interest and have re-read it from time to time as your letter lay upon my desk awaiting my considerably delayed reply. I am particularly impressed with your quotation from Henry George's editorial in the "Standard" of January 21, 1888: "It is not by the mere levying of a tax that we propose to abolish poverty: it is by securing the blessings of liberty. " I am profoundly convinced that we Single Taxers lay too much stress on the mere laying of our tax and not nearly enough upon our proposed grand emancipation of industry and productivity from the blight of restrictionism in its thousand forms as increasingly practiced by governments today. The chief obstacle to doing right, the only thing that makes it hard to do right, is our persistence in doing wrong. I think we have been too long content with vain repetitions. I think we ought to make our philosophy alive by carrying forward the application of its principles as Henry George trusted us to do. We ought to give more attention than we have done--more even than Henry George has done--to the infinitely vicious results that do and of a certainty must flow from the wrong kind of taxation. We ought to study and show not alone its destructiveness upon the economic life but its effect upon government itself--how it not only establishes unemployment, creates monopolies, encourages speculation, but how the evils it breeds give excuse and occasion to multiply the bureaus and other destructive agencies of government to regulate and control the evils of its own making. And we ought to remember that just so far as the evils of wrong taxation can be fought down government can be cheapened and simplified, production liberated, and out of the enhanced value of government and the increased volume of wealth the actual payment of ground rent (not capitalized hopes) would pass far beyond the imperative needs for public revenue. In this situation the present objections to the utilization of rent for public purposes should largely disappear. The situation is this: The cost of government has been diminished and its value increased. Liberated productive enterprise (exchange of private services) is now in need of and in position to pay for a far greater amount of public services (public labor using public capital). But although the public services are now a highly profitable field of investment, private industry does not enter this field because the value and the profit from public services is reflected only in rents. This leaves this profitable field of public investment and administration wide open to those who hold rent-paying locations. These persons have funds to invest in public enterprises without any competition from private capital. Such investments by them, being wisely made and properly directed and supervised, should yield them in rents not only all the costs of the capital and labor which they have introduced into these additional public services but also a just compensation to themselves in proportion to the value of their services as supervisors and administrators. Such public administrators, of course, could not afford anything but an honest and efficient conduct of public services because any failure in this respect would diminish the revenue of their rent while every advance and improvement that they made in the conduct of the public enterprises would at the same time increase the compensation coming to them.

I think we single taxers should step out and take some cognizance of the tremendous creative potentialities that are latent in and only waiting to be developed out of the basic philosophy of Henry George. He has told us in language of ravishing beauty and poetic charm of what Liberty, partial liberty, in fitful gleams and glories has done for mankind, but he has trusted us to explore and discover in detail the beauties and perfections of that land of freedom towards which he has set our feet by proposing --"To abolish all taxation save that upon land values."

I thank you for the kindness of your letter and hope we will have further contacts and communications.

Sincerely,

1179. [1217 has been added into this item, releasing that number for reassignment. The new item appears to be essentially the same as the first, with some minor changes of wording--which have yet to be checked carefully--but possibly dated ten days later; note the discrepancy of dates at beginning and end of 1217. This item 1179 now needs to be described better and the originals envelopes made to conform.]

Carbon of a letter to John Lawrence Monroe, Field Director, Henry George School of Social Science, 211 West 79th Street, New York City, from 310 Riverside Drive. January 21, 1936

Dear Mr. Monroe:

You have asked me for an explanation of a question upon which you say some Pittsburgh friends of the Henry George School are unable to agree. Here is your question:

How can we tax land values without at the same time conferring equivalent benefits which will be absorbed in the value of land, thus leaving the land owners undisturbed in the exercise of the same privileges which they have when not taxed at all?

The first thing to note is that the question has reference merely to the levying of a tax, and not to the application of the remedy that Henry George proposed, which he stated was, in its practical form, "To abolish all taxation save that upon land values." He sets these nine words alone in a separate paragraph, and, for still further emphasis, he has them printed in italicized form. He further admonished, in his "Standard," January 21, 1888, "It is not by the mere levying of a tax that we propose to abolish poverty; it is by securing the blessings of liberty. " I make these quotations merely to make it clear that the question stated is not a question involving the application of or any of the merits of the great proposal of Henry George. He proposed to abolish poverty by the abolishment of taxes and, as he wrote, "not by the mere levying of a tax."

However, we can take the stated question on its own merits; but to keep out of the fog we must get right down to actualities and see that the only thing that can constitute a tax or any income or revenue is wealth--something that can be touched and taken. Value is an abstraction--a supposed or anticipated or potential exchange relationship. Such an abstraction cannot constitute taxes and cannot be taxed. When we say, "tax land values," we mean, touch and take the actual wealth (the economic rent) that land users, through the mechanism of exchange, yield up on account of the special services and advantages they receive. Every society sets up proprietors whose function it is to collect and receive this rent. To require these proprietors to convert rent to public uses instead of to their own use is the ultimate reality behind what we call taxing land values. Now, so far as this reality is realized, so far as this revenue of rent is converted to public uses, it will create public services and advantages and this will enhance rents, for public services and advantages are exactly what economic rent is payment for. And if this rent is converted efficiently into public services and advantages for which there is need and demand, they will be worth to land users in rent at least as much as they have cost in taxes, and rent will be accordingly enhanced.

But if there is a great desire to prevent land owners from making any advantage out of their conversion of rent into public services, if there is a desire to prevent them from having any reward (or wages) for performing such service, this can be accomplished by taking the rent revenues out of the hands of the proprietors and turning them over to persons who have less interest than land owners, who have no rents to be enhanced by public services, and who may be depended upon to use this revenue as wastefully and destructively as public revenues are now generally employed. In other words, to circumvent the land owner it is only necessary to turn the rent fund over from him to the politicians and depend upon them to handle this revenue in ways that will not result in any public services. That they may be depended upon in this respect seems rather well assured from the fact that at the present time nearly all political authorities, state, local and national, seem bent upon diverting, not only current revenues, but the vast resources of public credit as well, to ends that not only fail to serve but are highly restrictive and destructive to that free production of wealth and exchange of services in which liberty consists.

So this biased and lop-sided proposal of our Pittsburgh friends merely to tax land values--to tax rent out of the hands of land owners and into the hands of politicians--impales them on the horns of a dilemma: Either they will leave the rent revenues (such as they are) to the private uses of land owners or by taxation they will forcibly turn them over to our present administrative authorities. If these authorities spend them in ways that create public services and advantages, they will go back to tile land owners in the form of enhanced rents. But if the politicians use them in ways that are destructive or that yield no public return, then these rent revenues will go to persons who give no services, just as they did when left with the land owners themselves, and this last state is no better than the first. Perhaps the only sure way to prevent any private advantage from this revenue would be to take that portion of the community wealth represented by rent and dump it into the sea--a proposal that has been attributed, unfairly, I hope, to Henry George.

We get into all this confusion by degrading Henry George from his high magnificence as emancipator of men and apostle of human liberty to the sordid and petty dimensions of just another layer-on of taxes, falsely classing him with the devotees of restrictionism and all the other do-gooders, so hot for chasing their particular devils out of society by force and violence and more and more laws. What we single taxers need to understand is the Single Tax in its true beauty and creativeness. Henry George has led our feet into the sublime path towards freedom and has trusted us to proceed in the light of this eternal principle. For practical application, he gave us his concise proposal, "To abolish all taxation save that on land values." So often would we have the cart draw the horse. Merely taxing land values, as a hot lash upon the backs of land owners, can not result in any wealth or any freedom, but every repeal of other taxes casts a burden from the back of unfree labor and a manacle of unemployment from its willing hands. To abolish all taxes on labor is to open not merely resources but the very floodgates of creation as to wealth and services. Government would be vastly simplified, shorn of its predatory powers and paralyzing restrictions on the economic life. It could then give more attention to public services instead of restraints and repressions, and all its services would augment and magnify the revenue of rent that would be paid out of the abundance of production, and this rent revenue would be the only fund of wealth--taxes being abolished--out of which the costs of government, including wages of public servants and employes, and the interest on the capital used for public purposes could be paid. Can it be supposed that land owners would suffer from this? Yes, they might; but only in case the public revenues, the taxes, were so poorly collected or the public services so badly supervised and administered--the taxes so badly spent--that rents would be destroyed instead of created. But, taxes being well spent, the excess of rent received above taxes paid would depend wholly upon adequate collection and the skill and efficiency of the administration of the public services.

Freedom from economic restrictions is a command of nature that must be obeyed. Given this obedience, a single tax on rent--other taxes being abolished--becomes self-enacting and self-executing; for, if land owners should neglect to support the public services there could be no support for rent. And self-interest must drive them to far more than mere financial support. It must compel them, in their organized capacity, to give attention and exercise supervisory authority over governmental enterprises and services, for only in this way, by themselves giving services, can they keep their income from rent above their outgo in taxes, and this difference becomes their automatic compensation strictly in proportion to the value of their public work.

It requires some concentration of thought and cool reflection to perceive these equable and automatic relationships but, once perceived, it is seen that the full application of the Single Tax, in the practical manner that Henry George proposed, solves, without stress or strain, three of the gravest problems that confront mankind: It lifts all restraints and restrictions on employment, thus letting everyone be employed. It opens the way to automatic, abundant and profitable financing of every public service. And it redeems land ownership into its rightful and creative function in the honest and efficient administration of public enterprises and affairs.

Our Pittsburgh friends have shown great intelligence in various aspects of their work. I shall be very glad of their full consideration and discussion of the constructive views I have tried to set out.

Sincerely yours,

1217. [Hereby added to 1179, of which it is a very similar version, yet to be carefully compared and its description--as well as the originals envelopes--made to conform. This releases #1217 for reassignment]

Carbon of letter from Spencer Heath, 310 Riverside Drive, New York, to John Lawrence Monroe, Field Director, Henry George School of Social Science, 211 West 79th Street, New York City, January 21, 1936.

Dear Mr. Monroe:

You have asked me for an explanation of a question upon which you say some Pittsburgh friends of the Henry George School are unable to agree. Here is your question:

How can we tax land values without at the same time conferring equivalent benefits which will be absorbed in the value of the land thus leaving the land-owners undisturbed in the exercise of the same privileges which they have when not taxed at all?

The first thing to note is that the question has reference merely to the levying of a tax, and not to the application of the remedy that Henry George proposed, whitb he stated was, in its practical form, "To abolish all taxation save that upon land values." He sets these nine words alone in a separate paragraph, and, for still further emphasis, he has them printed in italicized form. He further admonished, in his "Standard", January 21, 1888, "It is not by the mere levying of a tax that we propose to abolish poverty; it is by se curing the blessings of liberty." I make these quota4 tions merely to make it olear that the question stated is not a question involving the application of or any of the merits of the great proposal of Henry George. He proposed to abolish poverty by the abolishment of taxes and, as he wrote, "not by the mere levying of a tax."

However, we can take the stated question on its own merits, but to keep out of the fog we must get right down to actualities and see that the only thing that can constitute a tax or any income or revenue of any kind is wealth--something that can be touched and taken. Value is an abstraction, --a supposed or actual or potential exchange relationship. Such an abstraction cannot constitute taxes and cannot be taxed. When we say, "tax land values," we mean, touch and take the actual wealth (the economic rent) that land users, through the mechanism of exchange, yield up in payment for the special services and advantages they receive. Every society establishes proprietors (land-owners) whose function it is to collect this rent. To require these proprietors to convert the rent to public uses instead of to their own use is the ultimate reality behind what we call taxing land values. Now, so far as this is realized, so far as this revenue of rent is converted to public uses, it will create public services and advantages and all these will enhance rents, for public services and advantages are exactly what economic rent is payment for. And if this rent is converted efficiently into public services and advantages for which there is need and demand they will be worth to land owners in rent at least as much as they have cost in taxes0 and rent will be accordingly enhanced.

But if there is a great desire to prevent land-owners from making any advantage out of their conversion of rent into public services; if there is a desire to prevent them from having any reward (or wages) for performing such service, this can be accomplished by taking the rent revenues out of the hands of the proprietors and turning them over to persons who have less interest than land-owners, who have no rents to be enhanced by public services, and who may be depended upon to use this revenue as wastefully add destructively as public revenues are now generally employed. In other words, to circumvent the land-owner, it is only necessary to turn the rent over from him to the politicians and depend upon them to handle this revenue in ways that will not result ien public services. That they may be depended upon tn this respect seems rather well assured from the fact that at the present time nearly all political authorities, state, local, and national, seem bent upon diverting, not only the current revenues0 but the vast resources of the public credit as well, to ends that not only fail to serve, but are highly restrictive and destructive to that free production of wealth and exchange of services in which liberty consists.

So this partial and one-sided proposal of our Pittsburgh friends merely to tax land values, --to tax rent out of the hands of land-owners and into the hands of politicians--impales them on the horns of a dilemma: Either they will leave the rent revenues (such as they are) to the private uses of land-owners or by taxation they will forcibly turn them over to our present administrative authorities. If these authorities spend them in ways that create public services and advantages they will go back to the land-owners in the form of enhanced rents. But if the politicians use them in ways that are destructive or that yield no public return, then these rent revenues will be going to persons who give no services, just as they did when left with the land-owners themselves, and this last state is no better than the first. Perhaps the only sure way to prevent any private advantage arising from this revenue would be to take that portion of the community wealth represented by rent and dump it into the sea--a proposal that has been attributed, unfairly, I hope, to Henry George.

We get into all this confusion by degrading Henry George from his high magnificence as emancipator of men and apostle of human liberty to the sordid level and petty dimensions of just another layer-on of taxes; falsely classing him with the devotees of restrictionism and other "do-gooders", so hot for chasing their particular devils out of society by force and violence and more and more laws. What we Single-Taxers need to understand is the Single Tax in its true and full beauty and creativeness. Henry George has led our feet into the sublime path towards freedom and has trusted us to proceed in the light of this eternal principle. For its practical application, he gave us his concise proposal, "To abolish all taxation save that on land values." Merely taxing land values cannot result in any wealth or any freedom; but every repeal of other taxes casts a burden from the back of unfree labor and manacles of unemployment from its willing hands. To abolish all taxes on production -- on labor and its products -- is to open not merely resources, but the very floodgates of creation as to wealth and services. Government would be vastly simplified, -- shorn of its predatory powers and paralysing restrictions on the economic life. It could then devote itself to public services instead of restraints and repressions, and all of its services would augment and magnify the revenue of rent that would be paid out of the abundance of production, and this rent revenue would be the only fund of wealth--taxes being abolished--out of which all the cost of government, including the wages of all public servants and employees and the interest on the capital used for public purposes, could be paid. Can it be supposed that land-owners would suffer from this? Yes, they might; but only in case the public revenues, the taxes, were so poorly collected or the public services so badly supervised and administered--the taxes so badly spent--that rents would be destroyed instead of created. But, the taxes being well spent and administered, the excess of rent received above taxes paid would depend wholly upon adequate collection and the skill and efficiency of the administration of the public services.

Freedom from economic restriction is a command of nature that must be obeyed. Given this obedience, a single tax on rent--other taxes being abolished--becomes self-enacting and self-executing, for if land-owners should neglect to support the public services there could be no support for rent. And self interest must drive them to far more than mere financial support. It must compel them, in their organized capacity, to give attention and exercise supervisory authority over governmental anterprises and services, for only in this way, by themselves giving services, can they keep their income from rent above their outgo in taxes, and this difference becomes their automatic compensation strictly in proportion to the value of their public work.

It requires some concentration of thought and cool reflection to perceive these equable and automatic relationships but, once perceived, it is seen that the full application of the Single Tax in the practical manner that Henry George proposed solves, without stress or strain, three of the gravest problems of the present day: It lifts all restraints and restrictions on employment, thus letting everyone be employed. It opens the way to automatic, abundant and profitable financing of every public service, And it redeems land ownership into its rightful and creative function and service in the honest and efficient administration of public enterprises and affairs.

Our Pittsburgh friends have shown great enterprise and intelligence in various aspects of their work. I shall be very happy to have them give their serious consideration to the constructive ideas and important relationships I have tried to bring out.

Sincerely yours,

SPENCER HEATH

New York City, January 31, 1936

1181.

Carbon of a letter to Francis I. duPont, One Wall Street, New York City, from 310 Riverside Drive, June 29, 1936.

Dear Mr. duPont:

Your proposed letter Number three is to me the most interesting of your series.

I would like to contact some of the Georgists who recognize that the present value of unused sites is only the value of the hope or chance to collect rent at some future time and that all such value would disappear as soon as it became certain that all future rent would be taken for public purposes. Such persons doubtless perceive that rent is not tribute but is purchase price paid for the sale of public services to the site occupant and that vacant sites having public services supplied to them reflect the lack of need and scarce demand for public services while capital and labor (especially administrative labor) are so largely kept out of full employment. Where the amount of business (production) that can be carried on is severely limited there can be rent-paying demand for only a few of the best served sites in the community. Restriction of production (of employment and exchange) is what causes lack of rent-paying demand for land and sets disemployed capital to speculating in the prospect of land coming into demand and so into use. This is what gives unused land a selling price that can never be realized while production is restricted by taxation.

I like the way you have illustrated this by there being seven equally available locations but not enough business being done to make demand for more than one of them. Any dealings with the other six must be purely speculative, with no wealth being produced and no rent being paid.

There is entirely too much confusion of mind between dealings in speculative values (the figures or numbers used by men who must trade in hopes because there is so little profit in the production of wealth) and the transfers and exchanges of actual wealth. If Henry George had kept this distinction clearly in mind he would not have departed from his fundamental definition of rent to make room for his conception of "rent potential." He would have adhered to his primary position that rent is one of the three portions into which the wealth produced is actually divided. This leaves no room for "potential" or "speculative" or any other kind of rent but actual rent, and this is why no other kind of rent can be taxed or taken--because it is not wealth.

I dare say you are not unmindful that your sixty-four island plots must have been supplied with some kind of public services (even if nothing more complex than protection from pirates and keeping communications open) and that it was the supply of this service, together with your purchaser's effective demand for it, that gave rise to the actual rent of a capitalized value of $1,000. If more persons were so untaxed or otherwise favorably situated so that they could carry on profitable employment, then they too could make profitable use of public services and would pay rent (capitalized at $1000) for more of the plots. All such actual rent (and no other) could be used (taxed) to maintain the public services.

Animals cannot create their subsistence. As soon as their numbers exceed their subsistence they must starve. They might all starve but, because they fight, the strongest may live. They must fight to survive.

Men can create their subsistence, and their subsistence need not be inferior to their numbers. To do this they must exchange services and practice division of labor. To exchange private services effectively, they must also have public services, and they must give private services (wealth) in exchange for the public services. Private services (wealth) so given are rent. Where private services are restricted there is less wealth produced, less need for public service, and but little rent paid. Taxation restricts private exchange of services, disemploys capital, creates monopoly, and makes wealth scarce and dear. This throws land out of use and into speculation. Less wealth is produced; less rent (actual) is paid. Only one well-served plot in sixty-four (perhaps) can be used.

Your diagnosis and mine, Mr. duPont, I believe are essentially the same; but mine seems very general and yours very specific. The former should have high theoretical value, but the latter, quite possibly, yes, very probably, has the highest immediate and practical value.

Where land values (actual rents) are low or absent, as in enormous rural areas, there can be no great landed interest mistakenly opposed to the emancipation of capital (rent-paying) values. I understand that you propose emancipation of capital values. I consider that as all that is necessary, for I believe that civilized men live not, as the animals do, upon the precarious bounty of the unworked earth, but upon the services they perform for each other and the wealth they thus produce and exchange with each other. And I believe that the taxation and penalization of the exchanges of goods and services is all that stands between men and that human abundance which alone can lift them above the animal necessity for strife and destruction and into the practice of brotherly love. I believe that when relieved of their burdens and restrictions all capital and labor will become productively employed, and that will put an end to all fictitious and potential values and all speculations upon them. I think, therefore, that the vitality of your proposition is in the exemption from taxation that you propose for rural occupiers. This, of itself, tends to destroy speculation by keeping capital employed. To most Georgists, this would seem a very small point of beginning, but it may be in this small point that the power of our truth can best be applied. Henry George describes how the force of a man cannot oppose that of a great beast, but if concentrated in the point of a spear can give him the effective power of ten. Moreover, your insistence upon the primacy of food in the order of basic and vital necessities suggests that the farm is the place where the beasts of monopoly and speculation must first feel the spear-point of our creative philosophy. The times are certainly calling, as never before, for some unfoldment of the deep implications of that great proposal of Henry George to abolish all taxation save that on rent and to bring it forward in its full creative aspects acceptably to every interest and to all intelligence. And the need is for men of capacity who can guide an effective policy to the most vital point of attack.

I am eager to see the publicizing of your views bring together an effective group. So, I am wishing you the happiest of responses to your letter Number 3.

Very truly yours,

I am enclosing for your possible comment a little sketch on inflation, prepared for a broadcast.

1182.

Carbon of a letter to Mr. Herbert M. Garn, Director of Education, Henry George School of Social Science, New York City, June 7, 1936

Dear Mr. Garn:

I am much pleased to have your letter of June 5th thanking me for my efforts to be of service to the Henry George School. I am proud that I have been, in one way or another a support of the School from its first beginning and that I was able to aid and encourage this noble project of Oscar Geiger from the time that it was first proposed.

After many years of relative neglect and lack of progress, there are now many evidences that the basic philosophy of Henry George--the philosophy of absolute freedom of exchange--must the foundation of all the social advance and improvement that the near or distant future can achieve.

The vanity and the futility of more and more economic restrictions to offset the distress already caused by governmental restrictions is a lesson that is bound to be learned, even in the rough and costly school of failure and experience. Meantime, it can be the high mission of the Henry George Schools to send out broad beams of light and inspiration--to teach despairing men that God and nature have endowed the present existing structures of society, under freedom, with all the loveliness and beauty of the most rapturous social dreams. And it may be also their mission, as visioned by Henry George, to extend and make further application of his all-dissolving principles of liberty and freedom in fields and directions that he made no attempt to explore. Like all the wise and great, he knew that every truth, every conquest and triumph of the mind, is not merely a jewel to be cherished but also a sure foundation on which to build. The world must be taught that the taxation of wealth is a social and a socialistic poison; that ground rent is the only just and proper payment for governmental services according to their market value, and that they must be used, one hundred per cent, to defray the costs of the public services that create it.

It is with much regret that I find myself unable to attend the School dinner on the eleventh. Before I learned that the dinner date had been changed from the twelfth to the eleventh I engaged myself to the head of the Social Science Department of the Somerville, N.J., High School and the president of the American Association of University Women of that place for a Thursday evening discussion of the Philosophy of Henry George.

I shall be happy if you will read this letter (with the exception, perhaps, of the first paragraph) at the School dinner and convey to all present my profound conviction and my congratulations that, under the inspiration of Henry George, each and every one of us may become a herald of the social dawn.

1183.

Carbon of a letter to the editor of Land and Freedom, from New York City, July 6, 1936

My dear Sir:

Mr. Bolton Hall has given us a pretty puzzle, based on trying to tax the untaxable, and you ask for suggestions how we should proceed. Proceed toward what, toward taxation or toward freedom?

Henry George proposed that we proceed by abolishing taxation. Unhappily, he left us to suppose that hopes--capitalizations--could be taxed. Only wealth (more properly services, including those stored up in wealth) can be taxed, for no man or men can take of another anything but his toil or its fruits. Capitalizations are mental phenomena; we cannot take or tax them. Neither can we, properly speaking, tax rent. It is the only kind of wealth that cannot be taxed. Only private wealth can be taxed. Rent is public wealth, for it is not rent until it is taken in exchange for public services by a public person, a proprietor (established in the nature of society with that and other public functions), and it cannot be put into his hand a second time. He may fail to use it for public purposes, but he has already collected it.

Mr. Hall's fifty dollars per year is not, itself, rent for it is not wealth. It is only the string that measures the quantity of wealth that is the rent. The occupier,

the producer, renders up this part of his production voluntarily, even gladly. It is the exchange value, market value, of the services he receives by reason of his location. These are the public services or, rather, such residue of them as is not entirely canceled out by taxation and other dis-services. All public services (net) are paid for in rent. To collect for them otherwise diminishes and destroys them--puts a charge against them--cancels them. Such is taxation.

Public officers collect their pay not by consent and exchange measured in a market, as rent is collected; they take it by direct action. But much private wealth so taken is used as public capital. The earnings of this confiscated capital constitute most of today's rent. These earnings belong to despoiled tax-payers but cannot be restored to them by any transfer of present rent from proprietors to politicians (both set up by society and together constituting the State) and calling that taxation. Not to confiscate private wealth is the remedy.

When land-owners themselves furnish public capital its earnings (that part of the rent) will be theirs, and this capital value is what they will sell when they sell "land." They cannot capitalize and sell any part of the rent that they must pay to maintain public services (there being no taxes), including that part of the rent derived from their own services.

Occupiers do not pay rent for the pleasure of being taxed. They pay for services. Public services create rent. Public charges, taxes, cancel these services, destroy rent. All taxes are deductions on rent. Abolishment of taxes is a needed public service, like abolishment of crime. It will create rent to the amount of the taxes abolished, at the least. Not until then can wealth be produced in adequate amount. Not until then can production, being untaxed, make adequate use of the public services and establish a demand for them. Not until then can the now disemployed forces of production occupy well-served locations, use the valuable sites and areas now idle and useless. Not until then will the earnings and wages of public officers be freely and justly paid in rent instead of forcibly collected by taxation. Until then there is no inducement for proprietors to use present rent for public services, only to have these services, the proper source of rent, canceled by taxation, and the rent itself annulled and destroyed.

If ever we single taxers discover that rent can be properly and profitably used to pay for public services only as production is so far untaxed that it can use these services, then we can become more faithful to that principle of freedom which is the basis of our philosophy and of ours alone. Then we will seek, with Henry George, to establish freedom by abolishing taxation, instead of thinking how to extend taxation into a field where, by its very nature, it cannot be imposed.

With the abolishment of taxes, whole new rivers of rent will rise out of the public services and flow back again to sustain them as surely as the waters rise out of the sea and seek it again. Under freedom, such is the natural law.

The implications of the Philosophy of Henry George are more profound, its applications more just and precise, than any of us have perceived. It is the Natural Law at the highest expression of its beauty and its divine creativeness: in Society. It is worthy of our love and our worship. Let us try to understand it.

1188

Carbon of a letter to Mr. Charles G. Baldwin, from 310 Riverside Drive, New York City, October 27, 1936.

Dear Charles G.:

I ought to apologize for my long delay in making answer to your kind letters but I won't, more than to say that for nearly a week I was confined to my room, mostly in bed, with some kind of influenza that kept me weak and miserable. The rest of it is just my perverse ineptitude as a correspondent.

However I have brought to light again the copy I made of your memorandum on some of my ideas that you wrote while you were up here and have made some notes on it indicating my reactions to some of its parts. I am happy to say that these and similar ideas are getting some serious consideration by a small group of old line single taxers, including Joseph D. Miller, Stephen Bell, Clifford Kendal, Benjamin Burger, and a few others. They have been meeting with me each Thursday evening for six or seven weeks and I feel that I have made very good progress with them. After this week we will meet in the rooms of the Town Hall Club on 43rd Street where I am a member. In this more central location they say they expect to increase their attendance considerably. I have only invited Messrs. Miller and Kendal and Burger and such persons as they might wish to invite. They have been sending out their own notices and invitations and some of the people attending have seemed greatly interested and to be people well worth talking to.

Regarding the possibility that landed proprietors joined together in a democratic organization for the production and sale of public services (land values) might practice some kind of race discrimination, I do not apprehend that this could enter into the matter of selling public services to any greater extent than it now enters into the sale of private services and commodities. Different neighborhoods would attract different types of populations and social classes. This natural tendency would be encouraged by the land owning administrators of government services by providing the kinds and types of services most agreeable to the respective kinds of populations and therefore productive of the highest rents in each locality. Moreover, only those persons who could make the most productive use of public services could afford to occupy those localities where the largest investments in public capital had been made and the highest type and grade of public services performed. Only such persons would have need of such services and be sufficiently productive to pay for them at a profit to themselves. In any event, the only good business on the part of the landed administrators would be to so conduct and distribute the public services as to make the populations most prosperous and productive in their places of business and most happy and contented in their places of residence. In no other way could the highest rents be obtained. In no other way could the administrative margin be made so great, that is, the spread between the ordinary costs of public services and the gross sales of them as expressed in rent. The sale of public services when properly organized under democratic-proprietary administration will be carried on under precisely the same sound principles as govern the successful administration of any private business and the production and sale of any private services or commodities. The great lag in social development has been in the failure to bring the distribution of public services within the principle of social exchange at market values. The services are being paid for, not by consent and agreement but by the seizure of private property and private services, and these seizures, themselves anti-social, and the anti-social uses to which they are put, destroy the demand for and ability to pay for public services, besides greatly impairing the quantity and quality and the value of the public services themselves. This is because public servants are now without any responsible (standing to lose) administration and supervision and therefore have unlimited coercive power. A government financed by seizures is hard to distinguish from organized piracy when socially accepted by people who have never known anything else.

Many thanks for your kindly interest in my feeble attempts to carry the basic principles of Henry George into a much wider field of application--and all the best in the way of personal regards to yourself and Mrs. Baldwin.

Sincerely,

1185.

Carbon of a reply to Mr. Ralph Borsodi, The School for Living, Suffern, New York, from 310 Riverside Drive, New York City, July 22, 1936. Mr. Borsodi's letter read in part as follows: "I have read with great interest the manuscript you were good enough to send me. I have been running over in my mind particularly the rather interesting way in which you functionize the landowner. This is an entirely new idea to me."

Dear Mr. Borsodi:

Mr. duPont and I have set, tentatively, next Friday, the 24th, to have lunch at one o'clock and then drive over to your place. I hope nothing will prevent.

Many thanks for your letter and its comment.

From the point of view I have taken, it is entirely demonstrable that the aggregate of all net ground rent, after deducting the taxes paid out of gross rent, is the precise measure of the net value of all the services of government, including all public services performed under its authority.

It is further demonstrable that the capitalizable net rent is the earnings of all the actual capital devoted to public uses, less the interest paid on the borrowed part of the public capital.

This means that whenever "land" is sold on the basis of its capitalized rent, what is really sold is an undivided interest in the actual public capital--such as street equipment, paving, sewers, public works, buildings, supplies, etc.--and therefore, all present land value, based on its yield of rent, is capital value. So much of this capital as is not borrowed belongs, of course, in right, to those from whom it was seized as taxes. Hence the selling value of land is the capitalized earnings of private capital that has been seized for public uses, plus any earnings of the borrowed public capital above the amount of interest being paid for it.

It further follows that whenever the seizures by taxation that are used to pay all the public wages and the interest on public capital amount to all that the public labor and capital can earn (as an aid to private labor and capital), then there is nothing left for rent to be paid for, and none will be collected or received.

An understanding of what rent, real land value, actually is may be of some practical interest to you and your projects.

Sincerely yours,

1189.

Carbon of a letter to Charles G. Baldwin, from 310 Riverside Drive, New York City, October 31, 1936.

Dear Charles:

I appreciate yours of the 29th. I am glad you are able to see with me that under an administration of public services by responsible proprietors who must respond with automatic losses and penalties if their administration is not good, their every economic interest would lie in the direction of freedom and independence on the part of those whom they served and to whom they sold the public services performed by themselves and their subordinates in a purely service government. In no other way could good purchasing power be maintained for the services they had to sell.

What men really want is not so much their abstract rights as it is to function freely as social beings; that is, to exchange services with each other, to work for and employ each other, to give each other jobs, both individually and by groups under responsible private administration and supervision, for it is upon this kind of free activity, and upon this alone, that all economic value and all civilized subsistence depends. It is our failure to organize the public services under proprietary administration and supervision and with the same sanctions and rewards as private administration that makes government supported by seizures progressively restrictive and finally destructive of all values and finally of the entire social economy itself.

Once men are permitted to exchange freely with each other and public services are performed in aid of this, I do not understand how any questions of inherent rights could arise at all. Certainly in land value, as in other values, the demand for the public services (to land) is as great a determinant of their value as are the services themselves. In fact, where supply does not equal demand, then demand is the principal determinant. It would seem that demand raises values (meaning unit values or prices) whereas supply always tends to diminish them. Certainly there can be no great demand for (or value in) public services unless private services are being performed in large volume to create the private values that constitute the demand for public services (land). I think it is the creative results of joyous activity that constitutes the entire demand for public services and therefore creates the entire value of land, so far as demand is concerned. Land values depend absolutely upon the creation of other values. Since there are no measurable values except values-in-exchange, every single value depends upon the existence of other values exchangeable for it.

Referring to Miller and Burger, I send you a letter from the latter which came to me entirely unsolicited about three weeks ago. Miller is generally non-committal, although he assents freely to details. However, his principal associate, Clifford Kendal, tells me how very vigorously Miller defends my ideas in discussions that take place in my absence. I do not think either of these men is ready to give open support to the newer ideas either at Cincinnati or elsewhere yet awhile, if ever.

Burger asked me today if I would not go to Cincinnati and present my ideas. He seemed to think I should do so, but I told him the little I could present (or would be allowed to) would only arouse opposition and it would be better for people to remain uninstructed than to have their minds locked.

I have attended a couple of meetings and affairs of the Economics Club at Columbia and have been (for an outsider) quite cordially received. I am especially invited to attend their meeting next Thursday, so I have arranged to have the next meeting at the Town Hall next Wednesday instead of Thursday. This club at Columbia is made up of classes studying under Dr. Wesley Mitchell, but I have not met him so far.

I think it would be a good idea to join up with the Academy of Political Science. I have been for many years a member of the American Academy of Social and Political Science, headquarters at the University of Pennsylvania, but they are a very formal and stodgy lot and I have intended for some time to drop them. I shall be glad to see you on or before the 12th. My daughter and I are getting fixed up in a building that faces the Columbia campus. Perhaps we can entertain you. The Columbia authorities certainly are in need of our ideas. They are honeycombed with communism and all its little pale brothers and sisters and do not seem to know how to meet it or what to do about it.

Sincerely,

1192.

Carbon of a letter written to Charles G. Baldwin, Munsey Building, Baltimore, Maryland, from 434 West 120th Street, New York City, March 15, 1937

Dear Charles:

I want to thank you a whole lot for arranging opportunity for me to present to your Greek Letter Society and to classes at Goucher and Johns Hopkins some of the broad and universal implications that I find in the philosophy of Henry George. It was a great delight to me to do this and to feel that considerable interest was aroused in all three places. After forty years' wandering in the wilderness of uninspired negation of property in land it is time that this burden be cast off and the Georgian philosophy stand forth in its positive and creative aspects acceptable to all men.

Some time ago, at the instance of Mr. C. L. Kendal, I wrote out answers to several questions that he propounded from the conventional single-tax point of view. I am sending you a copy of these questions and my answers to them, hoping that the matter will be of interest to you. What I have tried to say in answer to Question Number One is that when rent is paid, a rendre, it is the measure of the services for which it is paid, but when rent is taken, a prender, by taxation, it is no longer rent for it is not exchange, and it is not the measure of anything but the brute power of the political officers who take it. This abolishes the democracy of the market and substitutes arbitrary power. The payment of rent at the market rate is the only democracy we have in connection with public services, either in obtaining them or in paying for them. Outside of the rent market public services are conferred arbitrarily with favoritism and caprice and payment for them is collected in the same manner. The services paid for in the rent market are the only net public services we have. When this market is destroyed by substituting seizure there can be no net public services left and therefore no security of possession or of anything else and no public or private values. But to abolish all taxation would so increase public service and security as to raise rents vastly more than all the taxes abolished and at the same time leave no means for supporting the public services except the vastly increased rent then being paid for them.

You will note that I answer Questions Two and Three in the opposite manner from what is customary among single taxers.

I have partly re-written my fundamental epistle to the real property interests and organizations and I hope to finish it and send you a copy before long.

Best of all regards and wishes,

1193.

Carbon of letter written to Charles G. Baldwin, Munsey Building, Baltimore, Maryland, from 434 West 120th Street, New York City, April 26, 1937

Dear Charles:

I had a most delightful Saturday session at Mrs. Taylor's AND LOOK FORWARD TO SEVERAL REPETITIONS (Say, that apostrophe was my undoing; it threw me into upper case and there I stuck for half a line). We decided to review Progress and Poverty, book by book, and also to make commentary and bring out the implications as well as what is expressly stated under the various title headings and then take the whole thing together as foundation material for an understanding of the phenomenon of social organization. We went over the first four books with a survey of what is in them and of the various things that they open up and suggest. I hope to finish reviewing the book in three sessions and have two sessions left for general discussion. Mrs. Taylor had in the group two other very intelligent and educated women and another cultivated woman, a teacher, came at my invitation. Your nephew, Baldwin Garretson, was not able to be there except for the last three-quarters hour but said he hoped to be with us throughout the remaining sessions. He and I are going to have supper together Thursday night and talk things over, especially with reference to the place of the aesthetic arts in the development of higher social organization. This is an aspect of the matter in which he seems to be specially interested.

My topic at the Master Institute last night was "Creative Spiritual Life--An Emergence upon Social Organization." It was very well received. I am getting so I can put things across more and more rapidly and acceptably and cover more ground in less time and with fewer words. (I wish I could say the same when it comes to writing it). Next Friday night I am to talk to a bunch of some fifteen graduates of the Harvard School of Business who are now working in banks, trust companies and similar institutions. I have talked to two or three of them and feel sure I can interest them and pave the way for further sessions--at least I hope so. I have to show them, first, exactly what social organization fundamentally is, second, how public services promote it and are essential to it, third, how the institution of private property in land and rent provides the means for socializing the public services by putting them on an exchange (instead of predacious) basis under the ownership and supervision of proprietors who will be bound to give good administration under penalty of impairing their income from rent and destroying their capital values.

I have taken the trouble to write a lot of this out as a solid business proposition and policy for the real estate interests, but I am not much encouraged by the commentary Mr. Buttenheim gives me per the enclosed letter. I wonder what is the reason I can't seem to get this across better in writing. I send you the article he refers to with his comments. Please let me have your general reaction and criticisms. What do I need to do to get these ideas across to the real estate people? So far as I get at them in discussion I seem to make headway, but not so much in writing. An article in yesterday's Herald Tribune by President Paul Stark of the National Association of Real Estate Boards shows how the real estate people fail to distinguish between the value of the public capital as reflected in the income of land and the value of the private capital invested in improvements. They seem to attribute rent entirely to improvements, and since taxation makes improvements scarce and dear they think taxation raises rent. Of course, it does raise an owner's gross return on his improvements while reducing his net. It also reduces the amount of improvements and with it the aggregate return on improvements as well as the net. Mr. Stark's argument is O.K. so far as improvements alone are concerned; taxing them does raise gross and reduce net rents, but to transfer the taxes and to make them more indirect is to make them more costly and injurious and more damaging to the capital that is invested in improvements and most damaging of all to the earnings of the public capital which is the net ground rent. The reason taxation does not raise the gross ground rent is because ground rent (less any taxes directly on it) is itself a net return from the public capital, whereas the so-called "rent" from improvements is always a gross with all taxes on them deductible to arrive at the net. The only rent that is income (real income, not gross) is the net rent. The net rent or the income from any capital, public or private, can be increased in only two ways: (1) by abolishing (or reducing) the taxation or other unproductive charges against it (payments that are not by way of exchange and therefore do not create any values) and (2) by giving administrative services to the capital, be it public or private, and supervisory services to those wage and salary receiving persons into whose hands the capital is directly placed as materials and instruments to facilitate their supervised work. In fact, the very lifting or abolition of any dead-head charges on any enterprise is of itself a supervisory function proper to the owners of the capital who receive income from it (normally and properly) only in consequence of their administrative and supervisory services to the property and over the servants engaged in the enterprise.

So the abolition or reduction of taxation really is a supervisory service over the public servants and the increase of earnings (ground rent) from the public capital is the natural and proper earnings of and compensation for this supervisory service. The more these supervisory services are extended the higher will rise the ground rent and with it the capital value of land, which is really the capital value of the public capital, which becomes higher just as fast as administration and supervision increases the income from it.

It may be asked how the reduction of taxes on private capital will increase the value and earnings of public capital (rent). It will do this by releasing the production of the private wealth which alone constitutes the demand or purchasing power for public services as an aid and service to its own production, for it is only out of this production and purchasing power that rent is offered or paid. Taxation of private wealth and its production is taxation on the demand for and purchasing power for public services. This destruction of demand and purchasing power destroys the value of the public capital out of which the public services arise. Because private enterprise is the only customer for public services they can be sold only to private enterprise and when private enterprise is so diminished by taxation that it cannot buy, then public services cannot be sold, and when public services cannot be sold they cannot have any value, nor can there remain any value in the public capital out of which they arise, which means that there cannot be any rent or any value in the land.

Taxation of ground rent (land value) is taxation not on the demand for public services (as above) but directly on the income from them (rent). This taxation destroys the value of the public capital by cutting down the income from it. This is how taxation of rent destroys the so-called capital value of land. But it only destroys rent by the actual amount of the tax, whereas taxation of the demand side, of the private production and enterprise that is the source of rent, destroys rent in three ways: first, the direct amount of the tax, second, the indirect injury due to the manner in which the tax is seized, and, third, a further injury resulting from the destructive purposes for which the taxes are so largely spent. It is therefore more in the interest of land owners that they should procure reduction of the taxes on production and enterprise, which are a large indirect charge and burden upon their rents, than it is that they should fight for reduction of taxation on rent which is only a direct and not a compounded charge against their income. However, all taxation must finally be abolished, thus restoring all the rent which it has destroyed by a much greater amount than the taxation itself. This restored rent will then be the fund and foundation in great abundance to meet all public costs and financing of public enterprises.

Taxation destroys rent, but it destroys it faster when shifted to enterprise than when applied to the rent itself. However, if it be shifted to rent it will be no longer rent (which is fixed by the value of the services received) but will become taxation, and it will then be fixed and determined not by value received but by ability to pay (without corresponding ability to evade or resist) and there will be no security of possession because possession will depend upon compliance with the arbitrary demands of elected or other political persons. Henry George seemed to sense this in his insistence upon preserving (against the land nationalists) at least the form, the "shell," of land ownership while proposing to employ the arbitrary instrument of taxation for destroying it in substance.

And so I might go on; but my time, my paper and your patience (doubtless) have all given out, and so,

Cherio,

1195.

Carbon of letter, and condensation of same, written to Messrs. Benjamin W. Burger, Henry J. Foley, John Luxton and Raymond V. McNally from Butler Hall, 88 Morningside Drive, New York City. Also an earlier draft version appended at the end. A page each is missing from the final letter and its condensation. January 8, 1938. See also Item 1161.

Gentlemen:

Please let me give you my heartiest endorsement of the first five paragraphs of Mr. Burger's letter of December 31. Their wisdom and truth is timely and could not be better expressed.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. And he knew that nothing binds us as does our fears--fears that there may be no light, no land, beyond. He left us with a sovereign prescription: Abolish all taxation, save that on rent. This is his precept. How shall the world be persuaded to its acceptance?

We must not swaddle this precept of Henry George forever in the unaccepted conceptions of years ago; we must clothe it in garments of living light pertinent to the visions and conditions of today. To do otherwise is not to honor the man but to betray his trust. Too long have we buried and mourned over the talent whereof we have given, even until now, such poor account. We must not smother this vital spark in vain repetitions of moral sophistries that exacerbate the feelings but do not persuade the mind. We must not stunt the living truth of Henry George in the worship of garments it can no longer wear.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream go forward in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these. To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgians agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in support and justification of the principle, and this is because there are two opposite and contrary modes of approaching it. One is by feeling and the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is hot reaction against the evil and ugliness that disintegrates the world; the other is pursuit and enjoyment of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (betraying our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who would attack and destroy, mistaking it for evil, even the permanent in life, and would punish whomever they feel to be evil doers and even love to help the executioner wield his axe. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

It must be admitted that the Henry George School, in urging the practical principle of Henry George, tends to support it by arguments that are moralistic and retributive and therefore destructive--that contemplate destruction of values and institutions, rather than their perfection and their fulfillment. This honors Henry George more as avenger than as a liberator of men.

It is not in the fervor of moral indignation and destructive emotions but in the light of knowledge and science that freedom is gained. The sound principle of Henry George should be maintained by the strongest and clearest of the arguments that he advanced, and if his better arguments can be extended to higher and firmer grounds in support of his principle and thus bring it into higher and wider circles of acceptance and adherency, this is the enterprise of the highest loyalty to the great leader and that his living spirit would most deeply commend.

There are grounds for hope that Henry George may yet be rescued from his friends and that his positive and creative proposal may yet shine in the full light of its pure constructiveness. Those of us who have been searching for its full truth and beauty should try to learn from each other and let others learn, if they will, from us.

But we must not fall into the error of condemning the School. Institutions, like men, must be appraised by what they accomplish and not by how much they fall short. We must be thankful that the School, at the least, has brought some order and system and better organization to our cause. If it gives only a factual knowledge of what Henry George wrote, that alone is a valuable work upon which the largest numbers can unite and that we ought to encourage and applaud. If there are further and higher labors they can have no better foundation than this. Men in large numbers always need some kind of scriptures for their reliance and guide, and men in small numbers . .

[Condensation by SH of Item 1195--also incomplete:]

Gentlemen:

Please let me give you my hearty endorsement of the first five paragraphs of your letter of December 31.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. He left us a sovereign prescription: Abolish all taxation save that on rent. This is his practical precept. How shall the world be persuaded to its acceptance?

We must clothe it in garments of living light pertinent to the visions and the conditions of today. To do otherwise is not to honor the man but to betray his trust.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream of peace go forth in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these.

To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgians agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in justification of the principle.

This is because there are two opposite and contrary modes of approaching it. One is by feeling; the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is reaction against the evil and ugliness that disintegrates the world; the other is pursuit of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (from our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who, mistaking it for evil, would attack and destroy even the permanent in life. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

Many of us have become enamored of arguments that are . .

[The following, formerly Item #1172, is

an early draft of the complete letter:]

Gentlemen:

Please let me give you my hearty endorsement of the first five paragraphs of your letter of December 31.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. He left us a sovereign prescription: Abolish all taxation save that on rent. This is his practical precept. How shall the world be persuaded to its acceptance?

We must clothe it in garments of living light pertinent to the visions and the conditions of today. To do otherwise is not to honor the man but to betray his trust.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream of peace go forth in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these.

To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgists agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in justification of the principle.

This is because there are two opposite and contrary modes of approaching it. One is by feeling; the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is reaction against the evil and ugliness that disintegrates the world; the other is pursuit of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (from our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who, mistaking it for evil, would attack and destroy even the permanent in life. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

Many of us have become enamored of arguments that are moralistic and retributive and therefore destructive--that contemplate the destruction of values and institutions, rather than their perfection and their fulfillment. In this we honor Henry George more as avenger than as liberator of men.

It is not in the fervor of moral indignation and destructive emotions, but in the light of knowledge and science that freedom is gained. The sound principle of Henry George should be maintained by the strongest and clearest of the arguments that he advanced; and if his better arguments can be extended to higher and firmer ground in support of his principle and thus bring it into higher and wider circles of acceptance and adherency, this will be enterprise of the highest loyalty to the great leader and one that his living spirit would most deeply commend.

There are grounds for hope that the great positive and creative proposal of Henry George may yet shine in the full light of its pure constructiveness. Those of us who have been searching for its full truth and beauty should try to learn from each other and let others learn from us, if they will.

But we must not fall into the error of condemning the School. Institutions, like men, must be appraised by what they accomplish and not by how much they fall short. We must be thankful that the School, at the very least, has brought some order and system and better organization to our cause. If it should give only a factual knowledge of what Henry George wrote, that alone is a valuable work upon which the largest numbers can unite and that we ought to encourage and applaud. Further and higher labors can have no better foundation than this. Men in large numbers must always have scriptures for their reliance and guide, and men in small numbers must ever widen the horizons circumscribed by the keepers of these bibles, that the vital spirit in them may be kept alive and grow.

For my part, I will refrain from any condemnation of the shortcomings of the School. But I will gladly join with whomever I may for discussion and development of the higher and more persuasive conceptions that support our great principle. And I will do this in the hope that what is thus done will be so well and effectively done that the School, by our example, may be inspired to extend its work, perhaps with our assistance, into higher and wider and less controversial fields. Let us at least establish ourselves as seekers and finders of Truth before we ask the School to "change its course and truly become a truth-seeking institution."

With all sincerity and sympathy, I am

In truth yours,

Spencer Heath

1194.

Carbon of letter to Spencer Heath, 434 West 120th Street, New York City, from Charles G. Baldwin, consisting of a set of questions with space left between for answers, which SH subsequently filled in. September 16, 1937

[Dear Spencer:

In the Heathized State, when I rent a room for my own occupancy, I also rent the public hereditaments and public services appertaining to the land on which the room is situated and the private hereditaments and private services furnished to me by the landlord.]

Yes, exactly the same as in the pre-Heathized State.

[My democratic rights are protected by the open market, because if I do not like the room, I can move elsewhere.]

Yes, democratic. The offerers of rooms vote the occupancy price down; the bidders vote it up. The price you pay is the price fixed by a democratic election.

[However, if my choice of locations is limited by reason of my occupation, or for any reason, the landlord may have monopolistic rights and put up my rent above the fair market value of the tenement, thereby depriving me of my democratic status.]

He is no longer acting as a land lord taking rent by the democratic process of exchange. He has become a tribute taker seizing property by force--a tax gatherer.

[If I become incapacitated and unable to pay the rent, I then go to the City public hereditaments, without measure and without charge.]

You are cared for either voluntarily by private persons at their ownexpense or by public persons (servants) at other persons' expense without their consent.

[All my expenses are then paid by my landlord.]

So far as the public hospital is a public service (and no farther) the site occupants will offer and pay higher rents because of this service, and this will induce the landlords to supply it.

[So that the population is divided into three classes: Landlords, tenants, and public charges or dependents.]

All dependents are tenants at somebody's expense. A purchaser may consume what he buys either directly or by giving it away to dependents or others. All occupants of a territory are tenants, directly or indirectly. All tenants are either administrators or subordinates. All administrators are owners of either private capital or public capital (the capital that serves locations). All subordinates are the hired servants of private administrators or the unhired and unsupervised servants of public proprietors owning such amount of the public capital as is measured to them by their ownership of land. It is because they are unsupervised that public servants seize property and become rulers and destroyers.

Tenants -- whole population including dependents

Administrative

Private administrators

Public administrators (land owners)

Subordinate

Hired servants of private administrators and owners

Unhired and unsupervised servants of public proprietors

[Should the occupant of a rented room have any parliamentary voice in regard to the administration of the building, the employment and discharge of the servants who care for the building, etc?]

He voices only the value of the services. This makes him the unconscious dictator of what the others shall do for him. But he gives conscious dictation only to his own business of serving his own customers who buy his services just as he buys the services of the room.

[After each paragraph, I leave a space and wish you would briefly criticize on the copy which I enclose and return same to me.

Yours sincerely,]

CGB:VH

1195.

Carbon of letter, and condensation of same, written to Messrs. Benjamin W. Burger, Henry J. Foley, John Luxton and Raymond V. McNally from Butler Hall, 88 Morningside Drive, New York City. Also an earlier draft version appended at the end. A page each is missing from the final letter and its condensation. January 8, 1938. See also Item 1161.

Gentlemen:

Please let me give you my heartiest endorsement of the first five paragraphs of Mr. Burger's letter of December 31. Their wisdom and truth is timely and could not be better expressed.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. And he knew that nothing binds us as does our fears--fears that there may be no light, no land, beyond. He left us with a sovereign prescription: Abolish all taxation, save that on rent. This is his precept. How shall the world be persuaded to its acceptance?

We must not swaddle this precept of Henry George forever in the unaccepted conceptions of years ago; we must clothe it in garments of living light pertinent to the visions and conditions of today. To do otherwise is not to honor the man but to betray his trust. Too long have we buried and mourned over the talent whereof we have given, even until now, such poor account. We must not smother this vital spark in vain repetitions of moral sophistries that exacerbate the feelings but do not persuade the mind. We must not stunt the living truth of Henry George in the worship of garments it can no longer wear.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream go forward in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these. To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgians agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in support and justification of the principle, and this is because there are two opposite and contrary modes of approaching it. One is by feeling and the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is hot reaction against the evil and ugliness that disintegrates the world; the other is pursuit and enjoyment of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (betraying our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who would attack and destroy, mistaking it for evil, even the permanent in life, and would punish whomever they feel to be evil doers and even love to help the executioner wield his axe. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

It must be admitted that the Henry George School, in urging the practical principle of Henry George, tends to support it by arguments that are moralistic and retributive and therefore destructive--that contemplate destruction of values and institutions, rather than their perfection and their fulfillment. This honors Henry George more as avenger than as a liberator of men.

It is not in the fervor of moral indignation and destructive emotions but in the light of knowledge and science that freedom is gained. The sound principle of Henry George should be maintained by the strongest and clearest of the arguments that he advanced, and if his better arguments can be extended to higher and firmer grounds in support of his principle and thus bring it into higher and wider circles of acceptance and adherency, this is the enterprise of the highest loyalty to the great leader and that his living spirit would most deeply commend.

There are grounds for hope that Henry George may yet be rescued from his friends and that his positive and creative proposal may yet shine in the full light of its pure constructiveness. Those of us who have been searching for its full truth and beauty should try to learn from each other and let others learn, if they will, from us.

But we must not fall into the error of condemning the School. Institutions, like men, must be appraised by what they accomplish and not by how much they fall short. We must be thankful that the School, at the least, has brought some order and system and better organization to our cause. If it gives only a factual knowledge of what Henry George wrote, that alone is a valuable work upon which the largest numbers can unite and that we ought to encourage and applaud. If there are further and higher labors they can have no better foundation than this. Men in large numbers always need some kind of scriptures for their reliance and guide, and men in small numbers . .

[Condensation by SH of Item 1195--also incomplete:]

Gentlemen:

Please let me give you my hearty endorsement of the first five paragraphs of your letter of December 31.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. He left us a sovereign prescription: Abolish all taxation save that on rent. This is his practical precept. How shall the world be persuaded to its acceptance?

We must clothe it in garments of living light pertinent to the visions and the conditions of today. To do otherwise is not to honor the man but to betray his trust.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream of peace go forth in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these.

To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgians agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in justification of the principle.

This is because there are two opposite and contrary modes of approaching it. One is by feeling; the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is reaction against the evil and ugliness that disintegrates the world; the other is pursuit of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (from our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who, mistaking it for evil, would attack and destroy even the permanent in life. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

Many of us have become enamored of arguments that are . .

[The following, formerly Item #1172, is

an early draft of the complete letter:]

Gentlemen:

Please let me give you my hearty endorsement of the first five paragraphs of your letter of December 31.

Henry George was an apostle of liberty in thought as well as in deed--the unbound mind before the unbound man. He left us a sovereign prescription: Abolish all taxation save that on rent. This is his practical precept. How shall the world be persuaded to its acceptance?

We must clothe it in garments of living light pertinent to the visions and the conditions of today. To do otherwise is not to honor the man but to betray his trust.

As the babe must leave the womb to grow, the child the bosom to walk alone, so must the child of his dream of peace go forth in its own strength, no longer weakened by the hopes and fears of our cherishing arms. The earnest of our faith should be its fearlessness.

The basic principle of Henry George is the principle of exchange--that just as all sound business is the trading of service for service, of value for value, so must the public seizing of private property be discontinued and the rent that is paid for public services and advantages be applied to meet all the costs of supplying these.

To make practical application of this principle, Henry George proposed, To abolish all taxation save that on rent or land value. On this all Georgists agree. Their differences are not on what the principle is nor on how Henry George would apply it, but in the kind of arguments they advance in justification of the principle.

This is because there are two opposite and contrary modes of approaching it. One is by feeling; the other is by thought. The one is moral, reformatory, retributive; the other is mental, scientific and evolutionary. One is reaction against the evil and ugliness that disintegrates the world; the other is pursuit of the beauty that unites the world and under which it moves forward to all things that are attained. Henry George reflected both of these views.

Now it happens that many of us (from our animal origin) have more feeling for transitory evil and pain than we have for the beauty that alone is the strength and permanence of life. They it is who, mistaking it for evil, would attack and destroy even the permanent in life. Thus beauty stifles in the dust of conflict and on a thousand crosses bleeds.

Many of us have become enamored of arguments that are moralistic and retributive and therefore destructive--that contemplate the destruction of values and institutions, rather than their perfection and their fulfillment. In this we honor Henry George more as avenger than as liberator of men.

It is not in the fervor of moral indignation and destructive emotions, but in the light of knowledge and science that freedom is gained. The sound principle of Henry George should be maintained by the strongest and clearest of the arguments that he advanced; and if his better arguments can be extended to higher and firmer ground in support of his principle and thus bring it into higher and wider circles of acceptance and adherency, this will be enterprise of the highest loyalty to the great leader and one that his living spirit would most deeply commend.

There are grounds for hope that the great positive and creative proposal of Henry George may yet shine in the full light of its pure constructiveness. Those of us who have been searching for its full truth and beauty should try to learn from each other and let others learn from us, if they will.

But we must not fall into the error of condemning the School. Institutions, like men, must be appraised by what they accomplish and not by how much they fall short. We must be thankful that the School, at the very least, has brought some order and system and better organization to our cause. If it should give only a factual knowledge of what Henry George wrote, that alone is a valuable work upon which the largest numbers can unite and that we ought to encourage and applaud. Further and higher labors can have no better foundation than this. Men in large numbers must always have scriptures for their reliance and guide, and men in small numbers must ever widen the horizons circumscribed by the keepers of these bibles, that the vital spirit in them may be kept alive and grow.

For my part, I will refrain from any condemnation of the shortcomings of the School. But I will gladly join with whomever I may for discussion and development of the higher and more persuasive conceptions that support our great principle. And I will do this in the hope that what is thus done will be so well and effectively done that the School, by our example, may be inspired to extend its work, perhaps with our assistance, into higher and wider and less controversial fields. Let us at least establish ourselves as seekers and finders of Truth before we ask the School to "change its course and truly become a truth-seeking institution."

With all sincerity and sympathy, I am

In truth yours,

Spencer Heath

1200.

Carbon of a press release annotated by Mr. Gladwin Bouton as follows: "entirely tentative, of course" And also: "Copy for Mr Heath: I gave this to Mr. Street, secy Retail Dry Goods Association at 130 West 42, with your address and phone; so you may expect to hear from his office regarding further arrangements. Bouton Mar 8"

[RELEASE Wednesday morning, March 13

New York, March 12 -- Speaking over a radio network last night, Spencer Heath of New York City, real estate investor and vice-president of the National Tax Relief Association, charged that sales tax advocates support their schemes with flimsy arguments. He asserted that the proposed 2% levy would injure real estate owners instead of relieving their burdens as its sponsors have claimed.]

"Our first duty in these times," said Mr. Heath, "is to back up national and state authorities in their efforts to restore prosperity through increasing the buying-power of the consuming public. If the sales tax is retained or increased, it is bound to diminish employment because those who formerly bought 100 pieces of goods can now buy only 98.

"There are two classes of people who favor the sales tax: (1) those who have not thought it through and grasped the fact that it is a forced contribution to public expenses by the class least able to bear this burden; (2) those who have thought it through and favor the sales tax for that very reason.

"The flimsy argument that a sales tax will reduce real estate taxes is not the result of much brain work; it is mere juggling. The plea of realtors whose zeal outruns their discretion is being used as an excuse for loading the small-home owner and rent-payer with extra levies. Taking $120,000,000 from New York's 12 million people means on the average $10 yearly from every man, woman and child; $40 less value in merchandise to supply the needs of three million families, most of them with incomes under $1500.

"Instead of advocating a tax scheme so destructive to all business, real estate owners should consider the advantage of assuming all government costs themselves and profiting through the medium of greatly increased rental income."

END]

1202.

Penned notes for a letter to Harold S. Buttenheim, August 19, 1934

Dear Mr. Buttenheim:

Mr. Bouton has showed me your letter of July 26, and suggested my comment.

My letter to Mr. Schantz is, as you say, an attempt to show that transfer of taxes from improvements to land must increase the rent and the selling value of land. The benefit to the public is that untaxing improvements makes their use profitable and restores labor and capital to employment in their use and further production. This increases the demand for land as a source of materials and also as a place to work them up and to use them productively. Out of this increased production labor and capital will gladly offer higher prices for the land upon which they can make higher return. The price of rent is paid out of nothing but production and where production is high it supports high prices for land. The price is not extortion but voluntary investment for the sake of the production yield. Labor and capital will choose productive locations and pay for them out of their productiveness. Every rent dollar is a profit dollar, but every tax dollar wrung out of labor and capital is an extortion and demoralization.

The way to "decrease the cost of buying land" is to decrease its value. This is done by taxing the profits out of improvements and other production. This disemploys capital and labor and reduces the production out of which rent is paid and thereby reduces the value of land. The reverse of this will increase the value of land, and if the cost of land is high so is its value. Cheap houses, cheap garments, cheap fare, and cheap land are for cheap men--unproductive men, men who can produce but little wealth and therefore can afford to provide or to pay for but few public services--small rents.

Your second paragraph: Let us not forget that the value of land is maintained only out of the use of land--out of the production from it. The user of land receives public services and similar advantages to his production of wealth. For these he pays only one charge, rent (annual or capitalized). He does not pay taxes in addition. If taxes fall on the land they come out of the rent he pays; if they fall on his improvements (or other wealth) they reduce his production and with it the rent he will pay for his lessened advantages. Taxes now fall on production. That is why there is now so little advantage in using land and its rent is low because its yield is low. High rents, high selling prices, are desirable because they are a reflection of high yield, of unburdened production. Rent and taxes can never be added together. Taxes are either paid out of rent directly or they diminish rent if paid otherwise.

"But if the burden be transferred to the land it cannot exceed the amount of the out-of-pocket tax, for then the demand for land becomes not less but more." This means (replying to your inquiry) that the portion of rent that goes to pay taxes cannot damage the annual value of the land by any more than the amount of the tax (or its capital value by more than the tax capitalized) whereas a tax on improvements not only subtracts from them and takes away a part of their annual and their capital value, but it takes the profit out of their use and inhibits the demand for them. The transfer of this tax to the land makes the demand for land not less but more because it restores profit to the use of improvements and so causes demand for land upon which to use and extend them.

The reference to "costly enforcement agencies" etc. was not to their being abolished as a result of taking taxes off of improvements. This reference is used to point out that, besides increasing the demand for land by unburdening improvements, there is further recompense to the value of land through the employment of taxes to extend and maintain useful public services instead of maintaining prohibitions and restrictions upon business activities and production, with the political and administrative corruption usually incident. For example, the present system of licensing trades, occupations and businesses, regimentation and restriction of production and exchange by codes, tariffs etc. and their local equivalents usually purporting to be for the "protection" of particular classes.

"Taking of the improvements from between the jaws of tax-eaters who mangle even more than they consume. "--This is a bit of rhetoric to enforce the point previously made that the amount actually taken by taxes on improvements is only the beginning of the damage--that this may be only a bagatelle to the loss of value to both land and improvements through lack of demand and the physical decline of improvements when they cannot be profitably used.

Regarding Pittsburgh land values, I remember that Mayor McNair last winter in New York told us that he thought he would be smart and sell a piece of land before the partial exemption of improvements took effect, thinking to buy it back at a lower price. But some two years later he had to pay, I think nearly twice as much.

The thing to show real estate dealers is that the Pittsburgh plan so stimulates the profitable use of land that it will be in such demand as to transfer at higher levels. I do not think a shrewd dealer could be persuaded that there can be an active market in land at declining prices.

I wish to thank you for your studious examination of my letter and suggest to you the importance of the cause of land value taxation if its propositions can be established in the minds of some of the leaders in real estate.

Sincerely yours,

1220.

Carbon of letter from Spencer Heath to Adam Schantz, III, Chairman, National Committee on Local and State Taxation, National Association of Real Estate Boards, Ludlow Building, Dayton, Ohio, September 22, 1934.

Dear Mr. Schantz:

I thank you for yours of the 17th with extended quotation from a letter you received from an associate in your Chicago Office.

I note his former belief that continued capital appreciation of land values was inevitable. That was Henry George's belief--that all the advantages of advancing civilization would be capitalized in the value of land and swallowed up in the advancement of rent. We should all know now that this was not true.

I think I also agree with him that UNDER PRESENT CIRCUMSTANCES we have more than adequate improvement of land for commercial and industrial use. But, likewise under present circumstances, I think he will agree that we have also more than adequate facilities of production of almost every kind. However, I do not think we have these facilities adequately employed, certainly not the factories and the unprofitable buildings he so feelingly describes. These are facilities of production--capital, in other words, yet most of them do not produce. If they did all produce we would have, say, one hundred units of goods fully produced where we now have forty, and they would all be sold if fully produced because production is not ended--goods are not finished being worked upon--until they have passed the last exchange, and at that point they are SOLD. This makes exchange a part or extension of production, which it is, and that the foregoing might be true and all goods sold we have to assume that the capital facilities of EXCHANGE are as fully in operation as the factories and buildings. In fact, each is essential to the other: So it is apparent that WHAT IS NEEDED IS NOT MORE CAPITAL BUT A FREER USE OF THE CAPITAL WE HAVE.

Adequacy in the use of capital is often expressed as frequency of turnover. When turnover is fast capital is highly productive and much labor of all grades is employed, and both production and buying power increase. Profits also increase, for turnover and profits are the causes of each other. When profits are gained they are consumed, in part, in the standard of living and the balance is reinvested in facilities of production. Under fast turnover this happens rapidly, not only to extend profitable production but for replacement of facilities made obsolete by the fast turnover.

The apparent surplus of buildings arises from the lack of profitable use for them. The earnings of all capital are too low to create (by increased production) any great demand for either buildings or land. What demand there is is mainly speculative -- based on hopes for the future. Meantime, the capital that is tied up in "surplus buildings" is in the same case with capital in machinery and other industrial equipment which is now employed unprofitably or not at all.

No kind of property can be penalized into use but many kinds of property can be and often are penalized out of use -- to wit: buildings. Vacant land, of course, cannot be penalized out of use; neither can it be penalized into use. Nothing but demand can call it into use and demand arises only in the prospect of profit from use. No amount of mere penalties on the owner can increase the profits of a user. But a payment out of ground rent for needful public services can increase the profits of the user and therefore his demand. Such a payment is in reality an investment and it may be a highly profitable investment if prudently made and honestly administered. It was a "weakness of Henry George" to suppose that every tax on land must act as a penalty and so depress instead of enhance its demand and value. He did not recognize that every proper tax on site value is in the nature of investment and must enhance the value of the land unless the funds so raised are corruptly administered or imprudently employed. With population expanding as he saw it expand the income value was all but obscured in the speculative values. With population now more nearly stationary and no great increase in view, we must depend upon present use value and this, taken as a whole, is the portion of total wealth production that can profitably be paid for access to and use of public services in connection with land. Without public services (and a demand for them) nothing is paid for the use of land. Any value it has is wholly anticipatory and speculative, and the great incentive to speculation is the disemployment of capital in its productive forms by taxation and other restrictions.

I should like to know more about the theories of appraisal and the development of tax principles your correspondent refers to. I am impressed by his suggestion that sound taxes must be laid on annual or income instead of capital or ad valorem values. I believe that such taxes can be so laid and expended as to increase the incomes from which they are drawn.

There is much for us to learn and its importance, in my judgment, is too grave for any mere debating of "single land tax" or any other "fallacy." What we need is to UNDERSTAND the full nature of the situation we are in and not try to spell one another down on any narrow issue, especially a mooted one. In this spirit I would indeed like very much to learn from your correspondent more of the practical matters he refers to and to weigh with him all that is involved.

Very sincerely yours,

SPENCER HEATH

1218.

Carbon of a letter from Spencer Heath, 434 West 120th Street, New York, to Charles G. Baldwin, 522 Munsey Building, Baltimore, Maryland, February 13th, 1937

Dear Charles:

Many thanks for your note from Greenwich, Conn., and the copy of Christian Science Monitor with your letter in it.

I think your letter is fine. It goes at the matter from the standpoint of good business, which to me is exactly the same thing as high idealism put into practice.

I think, however, the best place to try to organize the land-owning interest is where they are already most organized, --that is, in the large cities where they have active real estate associations and where there is the most division of labor between the land owning and the land using interests. The more single the interest is the more possible it is to teach them to pursue and develop their particular interest. The beautiful thing about it is that their interest is the one interest that can only be served and advantaged by the enhancement and encouragement and advancement of every other interest. They are the only pressure group whose private and particular interest can be served only by the advancement of the public and general interest.

However, I think it should be the aim of the land-owning interest not to pay any taxes but to abolish all taxes, beginning with those taxes which do not maintain any public services and therefore do not produce any rent. Their reward for this would be a tremendous restoration of rents and land values. Before the abolition of taxes reached the point of impairing any essential public services the rent fund would be so enormous that it would be no burden to take over the financing of all necessary and productive services. This would abolish all the remaining taxes and this last abolition would more than restore in rents all that it took to finance the public services.

It is a mistake to suppose that the land-owners need to go into their present flat pockets for anything to support the government. All they need is to restore their rents by abolishing taxes and every dollar of taxes abolished without impairment of essential public services will of itself create much more than a dollar's worth of rent. When the time comes for them to do any financing of the public services they will be so flush with funds that they will be looking for good sound and profitable investments and they will find this in the field of public services themselves. In this field they will become the investors, supervisors and administrators and the rents which they will collect for such well financed and wisely administered and supervised services will so far exceed what it costs them to provide these services that they will find themselves carrying on not only the largest but also the most profitable business in the world. And this is the business that should be the most profitable, for it will give scope for the exercise of the highest type and capacity of administrative services (labor).

I think the organized land owners should take action looking to the reduction of all necessary taxation on business and the use of land. This will revive production and employment, check speculation in rising prices (caused by scant production), and so their income will be raised out of that very great increase in general production which will establish the need and constitute the demand for public services and thus raise rents and the value of land.

The enlightened self-interest of the land-owning interest demands that it build its own rents by abolishing the taxes, penalties and restrictions on trade that destroy the demand for land, keep it largely out of use and pull its income down and down. When we consider how much well located land is out of use and cannot be profitably used under present tax conditions, we can realize how pitifully small present ground rent is in reference to all the land that receives public services and therefore ought to have a value and yield rent.

I have prepared a somewhat extensive article with a view to its possible publication in some real estate journal in which I set out in much detail exactly what the business of land owning is and how it may be profitably conserved and administered. I think you will be interested in this and will send it to you as soon as I have some fair copies.

Many thanks for remembering me and the ideas I have tried to bring forward. I expect to be in Baltimore right after the 22nd and hope to see you.

1221.

Fragment of carbon copy of letter from Spencer Heath to Mr. Kendal, judging from a footnote, written prior to February 17th, 1937.

. . . as an aid to labor under proper administration of the capital it adds to the productiveness of administrative labor by an amount that pays something to administrative labor after taking care of all depreciation or maintenance and also of obsolescence. Any capital that does not do this is being improperly administered and the loss will fall on the administrator, if he is the owner of the capital. If he is a borrower of the capital, the loss falls upon him to the extent that he is responsible (that he owns anything) and the balance of the loss must fall on the lender who took a bad risk. All borrowed capital, under proper administration will add to the productiveness of the administrative labor by an amount sufficient to provide for all depreciation and obsolescence, for interest at the current or agreed rate upon the borrowings, and, finally, a net return to the administrator sufficient to induce him to borrow and manage the capital. Any capital that does not enable its administrator to meet all these charges and still have some profit or advantage left for himself is capital that is not socially efficient or productive. Not much capital of this kind can be used, nor for very long.

Coming down to the case of the land-owners who virtually are the owners of all the unborrowed public capital because their rents represent the earnings of such capital, it is clearly to be seen that in the absence of taxation to maintain it the public capital would depreciate and become obsolescent unless the landowners themselves maintained it out of their enhanced rents. If they did not so maintain the public capital, then the public capital would run down in its value and earning power and in this manner create less rent. The land-owners simply cannot have their cake and eat it too. If they would have their capital unimpaired they must use part of their rent to maintain it from depreciation and obsolescence. If they do not use part of their rent in this way the capital will run down and this will pull their income down by a greater amount than it would have cost them to maintain the capital out of their unimpaired income.

I expect to come down town tomorrow and hope to see you--perhaps lunch together.I still have the answers to those three questions to re-write and send to you.

1222.

Letter to Spencer Heath, 434 West 120th Street, New York, from Francis I. Du Pont, P.0. Box 847, Wilmington, Delaware, August 31, 1937

Dear Mr. Heath:

Referring to yours of August 23rd, I still think there is something in your ideas of value, but I cannot agree to your presentation. In fact it looks to me as if some of the things you say could be easily enough shot full of holes. Take your statement:

"Ground rent is the only value there is to land. No rent, no value. Hoped-for or expected rent is a hoped-for value, but it is not any present or certain value".

This does not seem to me to be true for the reason that there is any amount of land which has never yielded any ground rent and may not do so in the next hundred years and yet it is bought and sold for a price. Again I cannot see your distinction between hoped-for or expected returns and a present or certain value, for the reason that the value of all income-producing securities is based on nothing in the world but expected or hoped-for return.

"The only thing anybody can give to a vacant site is services, public services.

If, in public services, you include the use of the police, the State Militia and if necessary the Regular Army of the United States, to prevent anyone from using land otherwise than as the owner wishes, then I see that this produces a value by producing an artificial scarcity of that which is necessary to maintain life.

"He pays for what he gets, and not for what is taken from him.

Taxes are taken from him."

I think I see what you mean, but you seem to have adopted Mr. Beckwith's definition of taxes, in which he tries to adopt a new meaning for the word "Taxes". As generally understood, taxes are any levy made by the government to defray government expenditures.

"The presence of unoccupied sites where there are public services (there being also idle capital and labor) proves that the harm being done to the sites cancels the services delivered; hence there are no net services and no rent is paid.

"If it were not for the harm done by government, all the territory served by government would yield rent."

I certainly cannot agree with this last statement, as I do not think that all territory served by government is capable of yielding rent for the reason that the population which would have to produce the rent does not exist.

It looks to me as if you were clinging to Ricardo' s Law of Rent, which contains a fundamental fallacy. To repeat my understanding of your idea, I believe that you think that if land owners would, themselves, pay for all public services, they would make more than if they let the Government do it. I am not at all sure that this is true, but I am perfectly sure that you will never get the average proprietor of real estate to see anything in it.

I am really very sorry not to be able to write a less critical letter. All I can do is to give you what I see.

Very sincerely,

FIduP/at

1225.

Carbon of letter from Spencer Heath, 434 West 120th Street, New York City, to Francis I duPont, P.0. Box 847, Wilmington, Delaware, August 8, 1937.

Dear Mr. duPont:

I certainly appreciate the care and diligence with which you have examined my paper on the administration of real estate.

Of the three points into which you summarize my paper I am afraid I can fully agree only with the first, namely, "That land values are due entirely to the public services rendered to the land."

With the second, namely, "That the present taxes imposed by our Federal, State and Municipal governments represent the cost of these public services," I can agree that these taxes represent the cost, but only the direct cost, of public services. There are, as I see it, enormous indirect costs, due to the demoralizing and deterrent effects of the taxation machinery upon present and future business. And I also see a further cost in the anti-social (contra-exchange) manner in which so much of the proceeds of taxation are used, without resulting in any services or producing any kind of value at all.

[last pages:]

Notwithstanding the almost incalculable cost of taxation upon production and industry, I am not able to follow your third point, namely, "That the cost of these public services is far in excess of their value as represented by the actual demand," because, for all their terrific present costs, the public services are so indispensable to production and exchange (there could be none without them) that they do yet contribute some thing to the amount of production that is carried on. The measure of this contribution made by the public services is the net ground rent that production still pays. That is why we have any present land value or ground rents at all--because the sinister left hand of taxation does not quite cancel out and destroy all the essential services that the more or less dexterous right hand of public service supplies.

Of course, if taxation and its indirect effects continue to increase, and this is not outstripped by correspondingly increasing improvements in the organization and technique of private production, the time will come (as it always has in previous societies) when the cost of public services will exceed their value as represented by actual demand. When that time comes, there will be no land values and no rent paid, for there will be no public services above their cost in taxes. Then there can be no public values nor any production of wealth, and the settled communities will again disband and join the barbarians, as Edward Gibbon describes hundreds of cities doing when the protection and services of Rome were overborne by the taxation she authorized and imposed.

As I see it, we have not yet reached that condition where the cost of public services is "in excess of their value as represented by the actual demand," but we are certainly making long strides in that direction.

By your assistance and criticism I will now be able to re-write my real-estate paper with clarifications and necessary additions. In particular, I must make clearer the point that in the whole world of business (apart from physical compulsion or coercion or emotional impulses) men never give nor can give each other anything but services, nor can they receive anything else in return. So, what men get by occupying publicly served land is services, and what they pay is services in return (either direct services as rent or, more generally, credits convertible into services.)

Where natural conditions are most favorable to exchange of services (presence of special physical conditions, materials, resources, climate, conveniences of transport and communication) these will cause even a

modicum of public services to be in highest demand and therefore of highest value in terms of the higher productivity and exchange that is possible at such places.

All this higher productivity is automatically distributed by the operation of the markets, those things and services that are produced with the greatest facility by reason of favorable natural conditions or materials commanding the smallest prices in terms of things less easily produced, and therefore having the widest distribution at lowest cost. Thus the operation of the markets spreads equitably throughout the whole exchanging community all the aids and advantages to production that nature supplies. This keeps all men at the same level of opportunity as regards nature, but at varying levels of advantage as regards, and depending upon, the amount of services (production) they perform for each other, and at a corresponding and proper inequality as to the wealth, services and satisfactions that they receive in exchange.

We have society only to such extent as exchange has taken the place of brute force and coercion between men. Apart from the employment of force, of coercion or repression, it is not possible for men to give each other anything but services (private and public) or for them to receive anything but other services of equal market value in exchange.

The only place, outside of savagery, where force in lieu of exchange is the accepted rule, is government, and upon the forcible seizure of property and services all of its powers depend. When taxes are abolished and rent is consequently employed as the sole revenue to defray public costs, then all governmental services will be distributed at prices (rents) democratically agreed upon by the rule of the market and voluntarily paid for value received. And the proprietors, who sell these services to their tenants or lessees and collect all their market value, will organize, finance and administer them, as other business men do, in such ways as to give the highest values to their customers (tenants) and at the same time yield the highest profits, by way of returns for administrative services, to them. This is the great and wonderful and profitable business the conduct and management of which my paper invites the present owners and distributors of all the present public values to begin.

And I recommend that they begin as any sensible landlord or business man would begin, by procuring the exemption of their occupants and customers from some of the meanest and most vexatious exactions that the tenants are now compelled to endure. Surely, that is what the landlord of a hotel would do if the servants vexed and burdened the tenants,--and he would not have to wait long for his reward in higher rents and fuller occupancies. The returns to the community landlords will be no less immediate in higher rents, in proportion to the emancipation and consequently higher productivity of their tenants, and in the greater demand for their at present unoccupied and under-occupied locations.

In accordance with your suggestion, I am trying to write out a preliminary diagram of the ideas that my paper tries to bring out. When I get it in shape I hope I may have the benefit of some further criticisms and helpful suggestions from you.

Sincerely,

1229.

Carbon of letter from Spencer Heath, Butler Hall, New York City, to Mr. Stephen Bell, Clifton, New Jersey, November 12, 1937.

Dear Mr. Bell:

I have finished your life of Dr. McGlynn. I read without eating, drinking or sleeping until every one of its 303 pages was finished--and I am a slow reader.

"There were giants in those days."

But what a sad and sorrowing pity that all of that fear and hate and martyrdom had to be gone through with! And all because the minds of these great men failed to distinguish the functions of proprietary officers of society exercising its jurisdiction over its territory from the supposed ownership of mere land which can have no economic use or value whatever, except the value of the public service supplied to it, for without these services no persons could carry on exchanges of private products or services, and without exchanging there could be no value of anything, in the economic sense.

If those gratuitous and deadly slogans, such as "Property in land is a crime," "The capitalized value of rent must be destroyed," etc., slogans that have no practical meaning or value and that always arouse deadly fear and fighting resistance against the true and practical remedy for poverty and bad business: "To abolish all

taxation save that on land value," --if only they could have concentrated on the practical business of abolishing taxation, instead of wallowing in the morality and metaphysics and all the emotionalism of it, how much might have been saved and how much gained. And then constructive thinking might have showed how as taxes went down rents would rise in much greater amount and thus amply finance all deficit in taxation; and as taxation went down there would be nothing for land owners to do but finance and administer the public services, if they wished to retain any part of their increased rents and values. And then they would find out that the better they financed and administered the public services the greater amount of net rent they could retain by way of recompense for their administrative services, like any other business men having charge of and selling any other kind of services.

All of the great discoveries in the natural sciences have been made by men who delved into the order of Nature and her laws under the inspiration of the beauty that they sought and found. Such labors are esthetic, for their own sake, and not for other reward, and are carried on even despite persecutions most agonizing and prolonged. These discoveries are spiritual gifts to mankind. But they can be put to the practical service of society only through the operations of business and exchange. The engineers, the Edisons and the Fords, the men of business, must give bodies to these spiritual gifts and market them to the population in tangible forms.

And so it is with Nature as she manifests herself in the living societies of men, her laws must be discovered through pursuit of the beauty that is in them. This done

--and Henry George did much in this way--then it becomes a matter for practical business men to embody them in forms of greater service to men. Having discovered ground rent and its nature and its proper and profitable use, it becomes a plain matter of business administration and exchange to use it profitably for the public service of mankind. It is no longer a matter of morals or metaphysics.

Consider the following questions from the standpoint of practical business:

Are not the public services of government indispensable to the continuance of society, and therefore society can live only so long as government, on the whole, does less harm to its territory than it does good, and so creates ground rent?

Does not present (not anticipated) net ground rent represent merely the difference between all that government giveth to its territory and all that government taketh away? Does it not measure the net that the community has left between the right hand of public service and the left hand of taxation and consequent public distress?

Is not the public service the only service in the world in which the entire personnel consists of hirelings for wages and salaries and in which the proprietors who sell the services take no willing or active part in either the financing or administering of them?

Are not public servants in need of proprietors to finance and supervise them and sell their services to the public just as much as private servants are?

Is it not the proper interest of the landlords of a community to finance and administer the services they sell, the same as it is for the "landlords" of a hotel?

If the owners who collect, in rents, the sales values of the services performed, either in a community or in a hotel, fail to administer the properties and supervise the services and permit the servants to seize the property and regulate the affairs of the occupants, will not the one as surely as the other go bankrupt and eventually cease doing business?

Is not ground rent the income from the public businesses that is left after all labor and capital costs have been deducted by taxation and if so, is not ground rent the net income yielded by the public capital? Is it not the market value of the net public services received?

Is it not the law of Nature and of society that only land owners can receive the net income from the public capital? Does not this fact constitute them the beneficial owners of the public capital and therefore, in a business sense, the real owners of that capital?

Is it not highly advantageous for all parties that the real owners of the capital engaged in any service or enterprise should direct, finance and administer that service or enterprise? And will not this apply to public as much as to private services or enterprises?

Without land owners to merchandise the public services to their tenants at market prices, would not every occupant hold possession by grace of political persons having full power to compel arbitrary tax payments instead of free payment of rent for a measured value?

Could there be any secure possession if occupants were at the mercy of politicians as to the "rent" they must pay, the same as they are now as to the taxes they pay?

It is small wonder, indeed, that Henry George, in practice was opposed to public ownership (nationalization) of land, even if he did take what he thought to be a moral stand against private ownership.

It is my clear perception that rent must be treated as private property in the hands of the land owner in order that he may distribute it properly among all the persons whose public services to the land create it, and that he, collectively, will do this as fast as he discovers his enormous economic interest in doing so; but this cannot occur except as rent is restored by the abolishment of taxes. Rent so restored will far exceed all present taxes and rent combined. And it will provide vast profits above all the proper costs of good public administration to recompense all the proprietors for performing that administrative and supervisory service for which there is such sore need and for lack of which the social loss must be incalculably great.

Thus will be realized the high point in the practical application of the philosophy of Henry George, namely, to abolish all taxation save that upon rent (Progress and Poverty, Book VIII, Ch. II), permitting the public services to land to be financed wholly by the rent paid for them on the basis of their market values freely and democratically ascertained. The great principle of Henry George that rent be appropriated to the support of public services becomes, upon the abolishment of taxation, self-enacting and self-executing, like any other great law of nature. So will government find its true and proper administrators in the proprietors who sell its services, including their own services, to the public and who, taxes being abolished, must devote the proceeds of sales to the maintenance of the enterprises and services whence they arise. Automatically, as in other businesses, without coercion and by the rule of the market, the rent fund becomes, in the hands of the public proprietors, administered and appropriated first to the proper cost, at prevailing market rates, of the labor and the capital hired and borrowed in the public enterprises, and then to the proprietors such remaining amount as they have earned above all the costs of employing labor and capital and which falls to them by way of recompense for their services of supervision, administration and sales.

Thus does government, when shorn of its predacious power of taxation, exalt itself into a service organization with the necessary proprietary and administrative personnel distributing its services to its customers on the equitable, democratic and voluntary basis of market value received and distributing the proceeds from its sales in the like equitable, democratic and voluntary manner among the personnel of its own organization, including the proprietors themselves.

It is the glory of the constructive plan of Henry George that, by abolishing anti-social taxation, it leaves no technique to public services but that of exchange and so provides at last for the socialization of government by lifting it up from the barbarous level of fraud and force to the social level of voluntary exchange and its assimilation with all the other services in the general exchange system whence society derives all of its life, growth and strength. Unless government be socialized by abandonment of force and adoption of exchange there remains only a tragic alternative--the governmentalization of society with ultimate abandonment of all exchange and reversion to barbaric violence.

1232.

Carbon of a fragment of letter from Spencer Heath, Roadsend Gardens, Elkridge, Maryland, to Mr. Ingersoll, August 9, 1938.

Dear Mr. Ingersoll:

I was gratified to receive your letter of the third but am a little disappointed that some of the articles and writings that you mentioned in it have not followed. I would like very much to see your answer to A. P. Sloane Jr.; also your comment on Miss Patterson's column and the "Something else aimed at the Georgist attitude generally" that you said you would "particularly" send.

No doubt I owe you some gratitude for your efforts to elucidate my "unknown" position as an adherent to the practical program proposed first by the Physiocrats and then by Henry George who endorsed them. They were not able to find acceptance for their program, sound and practical as it was, mainly because they tried to support it upon a fallacious idea, namely that all production is that taken directly from the land and that all other industry is parasitic upon this. Henry George noted this but fell into almost the same error, for he insisted that all wealth was the product of labor applied to land. But wealth used in the course of exchange and wealth used to produce more wealth he rightly defined as capital, but we all know that nearly all wealth, as regards its value or exchangeableness, results from the application of labor to the wealth that became capital the moment it was lifted out of the land and set in the channels of exchange. Thus all wealth, except the raw products in situ of the crude extractive industries, results from the application of labor to that which was land but has now become capital and remains capital until labor has raised it to its highest value and delivered it into the hands of its (ultimate) consumers. No physical thing can be exchanged except it have value nor can it have any value beyond the value of the services incorporated in it or obtainable through it. The attempt to ascribe value to physical things apart from the services carried by them is what makes economics in general so artificial and unrealistic that practical people find very little utility in this so-called science. Business men know, or at least instinctively feel, that they are not primarily concerned with physical things but with the services that they exchange among themselves as they are measured by the consent and consensus of the market, whether they are incorporated and accumulated in physical things or not. Value is the democratic (non-coercive) measurement of services and most services are exchanged without having been previously incorporated in any physical things. This applies to all the services for which fees, salaries and wages are paid and especially to all those

personal and professional services that never are embodied in any commodity form

1238.

Carbon of a letter from Spencer Heath, Roadsend Gardens, Elkridge, Maryland, to Benjamin W. Burger, 150 Nassau Street New York City, June 9, 1939

Dear Mr. Burger:

I doubt very much if the management of the Henry George Congress has any desire for a full exposition of my socio-economic views--or, I should say, vistas. If such were the case, I dare say they would prefer to have them direct from me instead of through an intermediary.

However, if you desire to present to the Congress some part of the social analyses that I have been trying to make, I certainly have no objection to your doing so, assuming, of course, that you will give it, so far as is possible, in my own language, and with credit for its origin.

The social institution with which Henry George and his writings were primarily concerned and which Henry George proposed in some of his writings, should be completely destroyed or profoundly modified, to say the least, is the institution of private property in land. Henry George and his followers have shown a pronounced disposition to regard this institution as tyrannical in its origin, and as a continuing tyranny throughout the whole course of civilized life. My own examination of private property in land is based upon a presumption of its original and continuing utility, in that it maintains, at least a degree of cooperative and exchange--of social--relationship between the economic and political structure, between those who produce private wealth and services and those who create and merchandise to the community those common and public services without which no private wealth or services can be produced or exchanged.

Henry George assumed that private ownership of land was anti-social and pathological. I have assumed that it is pro-social and physiological. Where premises are so divergent, it is not possible that there be any further divergence in the analyses.

My printed monograph enclosed on private property in land is a very condensed and precisely worded statement of my analysis of this institution. If you think the Congress will be interested in any non-pathological analysis of this institution, I do not think you could do better than to write a review of the monograph I have just referred to. In this monograph you will find my own views and the clearest and best expression in my own words. You are at liberty to quote freely from it, but I caution you to remember that no single paragraph of it

is of any complete and full significance without reference to virtually all of the remaining parts. In other words, I do not think it can be any further condensed without loss of meaning. If, however, it should turn out that a number of other persons were interested in your review, or in the ideas constituting the subject of your review, it will be possible for me to furnish you or them with the full copies of the text from which you have quoted.

Replying to the last paragraph of your letter dated May 27th (but which did not reach me until June 7th), I should be very glad to prepare a written exposition in my own language, as you suggest. This however, I have already done in the printed monograph I referred to which deals directly with the social institution around which practically all of Henry George's writings revolve. If you are particularly interested in disagreements, your own knowledge of the writings of Henry George will enable you to search out any points that do not agree. I would remind you, however, that when it comes to the practical application of the remedy proposed by Henry George, as he set it down on page 406 of the standard edition of "Progress and Poverty", namely,

"To abolish all taxation save that on land values,"

there is no divergence of view, it being understood that in the absence of all other taxation, land value assessments would be automatically transformed, and would become the voluntarily assumed costs of operations of the public business whose products and services were then being merchandised to the occupants of the larger communities in precisely the same way as landlords now merchandise indoor community services to the occupants of hotels and other places of a community character. Any divergence between my views and those of Henry George respecting the Remedy has reference only to its mode of operation and its effects, and not to the remedy itself.

1239.

Carbon of letter from Spencer Heath to Raymond V. McNally, 200 East 16th Street, New York, New York City, July 14, 1939.

Dear Mr. McNally:

I have just returned from the University of Virginia where I have been attending the sessions of the Institute of Public Affairs.

Dr. Dillard seems to have gathered together a lot of speakers of very divergent and largely antagonistic views, or I should say, antagonistic interests, because I do not think that it can be said that any of the participants on the program even pretended to represent any impartial and universal interest of all governments and mankind. I found myself, therefore, quite sui generis among so many special pleaders and propagandists.

It seems to be the current idea that a grand symposium of opposing beliefs and desires will lead to some unity of purpose and agreement. Participating in one of the subordinate groups, I raised the question whether any constructive ideas had ever arisen out of the turmoil and swirlings of the mass mind. I cited how the special pleaders always play up, each his own narrow point of view in the brightest possible light against the background of his opponent's wicked and erroneous views, and I offer the classical example of those informal symposia of clashing opinions in the streets of Athens where nothing but disunity of thought and feeling was the result until Socrates joined them to make sport of all their partial and partisan views, and not until after plenty of this horse play did he turn their attention away from their conflicts and the unlikeness of their views and in the direction of that which they held in common among them whence he brought to birth a new creation of the mind, which all were constrained to accept. One of the group exulted that this was an example of agreement coming out of conflict; but I rejoin that this, on the contrary, was an example of the sterility of the mass mind; only the master mind of Socrates could generalize the uniformities lying within their respective views into a master thought, a new creation of the mind. Only the mind that is inspired by beauty can possess that detachment of special interest that is necessary to give it clarity and creative power. From the comments heard about the Inn where I was stopping and at other places, it would be supposed that I asked a considerable number of questions for which the particular propagandists were not very well prepared. Mr. Clarence K. Streit told me that he had received many thousands of questions concerning his propaganda for "Union Now" among some fifteen "democracies" as opposed to the Axis and Totalitarian Powers, but that only four times had anyone questioned him concerning the powers of taxation and borrowing against future taxation to be conferred upon his proposed new Federal Union. He offered this to me as his reason for thinking such questions not very important. In one of the open sessions I made bold to ask Mr. Streit three questions:

First, would the proposed new Federal Union be entrusted with any powers of taxation? Second, what safeguards, if any, would be erected against the inordinate extension and of this taxing power and against the mortgaging of future taxes in the form of Federal debts and deficits piled up under the plea of military necessity or humane economic policy? Third, if military alliances among the fifteen members of the new Federal Union were not to be anticipated, how would he avoid such military alliances as were formed by the Northern and Southern members of the American Union in 1861? I think these questions raised more apprehension in the minds of the audience than the speaker's answers allayed. But I was sorry to have to appear almost entirely in the role of an objector. I would like to have shown how it was the taxing power used against the expenditures of the agricultural South that put the South at an economic disadvantage and was the actual cause not only of the Civil War but of the economic sectionalism that still prevails and may bring on yet more internal conflict.

I met quite a lot of interesting people, some of them really intelligent, and at various luncheons and other informal gatherings did present some constructive ideas and had them favorably received.

On the whole it appeared to me that for considerable periods the eminent Mr. Browder, of the Communists, and the sanctimonious Mr. Streit, of "Union Now," were allowed to steal pretty much the whole show. Mr. Browder, of course, represented all those who look with equanimity upon the extension of the taxing powers of our Western copy of the Roman Republic to its ultimate of one hundred percent taxation under some form of benevolent (?) dictatorship. Mr. Streit represented a synthesis of all the emotional complexes inculcated around the patriotic emotions of the American Federal Union being God's best and last word, and the perfect model upon which the organization and government of the world must proceed.

However, a good time was had by all; the Institute was a grand success, each participant was more than ever confirmed of his own particular views, and the utmost disparity of thought and feeling maintained.

While I was at the University of Virginia I received from Mr. Burger a copy of the letter you wrote him on June 18th replying to his request as to points of disagreement between myself and the writings of Henry George. I had already received such a request from Mr. Burger to which I replied that I was far less concerned with points of disagreement than with those broader principles and foundations in which there was perfect harmony. I referred Mr. Burger to what I had printed on private property in land, and suggested that he make use of this for the constructive presentation of my ideas. I enclose a copy of my letter to him.

It appears that you have taken Mr. Burger in earnest and have played things up from the oppositional point of view. But you have done this with so much sympathy and insight that I am almost forgiving you for the controversial form. In this way you move people and get reactions in quarters where an analytical exposition would elicit only the epithet ''highbrow" or a cold and fishy stare. The emotional reaction you got from Mr. Goeller is a case in point, and his emotional argument (?) exhibits all the appropriate blur. I would not be surprised if by your controversial presentation, together with your rejoinder, you have converted our good brother from a condition of inept incomprehension to one of energetic antagonism, and I suspect that the publicizing of this controversy would have a tendency to align those who give it attention in support of one or other of the respective antagonists without very much regard to the essentials of the subject matter being discussed.

After all the sour sauce I have been putting upon your really commendable work, I want to give you some idea of how much it delights me to see how clearly you have visioned so much of the truth that I am trying to make clear. To know that one is not alone and that at least another sees far into the nature and the beauty of the things upon which he himself has fed the hunger of his spirit, is a pleasure hardly to be expressed by mere acknowledgement. The penetration and skill with which you analyze the dilemma of George between his spiritual philosophy of freedom and his destructive emotionalism against property in land, might grace the brief of any master advocate. You show the scientist in George tilting against the moralist. The conflict could only be resolved in the poetry of his compromise. Here all the essentials are implicit. It is here like all poets he builded better than he knew, for he was able to feel and to suggest the beauty that he was not able to elucidate. And the value of this is that he thus makes others feel this beauty and, at last, bring it to elucidation and direct expression. I think this is what you mean by your reference to your authentic functioning of the unconscious mind in the feeling of things rather than seeing them clearly. It is thus that all things must first be implicit in art before they become explicit and demonstrable as science. I always feel that George realized this, to some extent at least, when he wrote: "What I have most endeavored to do is to establish general principles, trusting to my readers to carry further their applications where this is needed."

Your reference to unconscious thinking being more comprehensive than the thinking of the mere intellect, suggested the following to me:

All untruth is evil and all evil is untruth. Nothing but evil can be spoken of evil. Therefore all speaking of evil is the speaking of untruth.

All truth is good and all that is good is truth. Nothing but good can be spoken of truth. Therefore all speaking of good is the speaking of truth.

When men speak of evil, they must speak only evil of it, and, therefore, only untruth; and they know not how much untruth they speak.

When men speak of good, they must speak only good of it and, therefore, only truth; and they know not how much truth they speak.

The truth that passeth understanding, the unconscious truth, is Beauty. Some call it God. It is this beauty alone that leads men on and on and makes them free.

When poetry or any art deals with good and not evil, it speaks only truth; but not all truth. In its unspoken truth lies its intimation of Beauty, its ravishment of the soul out of bondage. This is the truth that makes men free.

For my own part I do not feel any urge to write anything to Mr. Goeller. He is probably quite an old man and way past welcoming anything that he has not cherished for a long time. It is kind of him to welcome the opportunity of straightening us both out but I am afraid his ministrations in my case will have to be more directly applied. If he writes anything to me, I do not think he will be able to engage me in controversy. But I will be glad to give him my best possible expression of my positive views and understanding of things. If he gives these enough attention and consideration to comprehend them any conflict that arises between them and his long cherished views, will be a conflict entirely within himself, one that he alone must resolve, but not by any personal defeat.

I would, indeed, like very much to have the opportunity of trying to explain to some of the more flexible minded of the Henry George Confraternity some of the difficult questions and sources of intellectual conflict that have been vexing them these past fifty years. I would take a very considerable trouble and undergo some expense for an opportunity to do this.

Sometime ago our friend Burger wrote that I ought to engage a room near the hotel where the Henry George Congress will convene, and invite there a select group to listen to three carefully prepared talks. He mentioned the names of about twenty-five who he thought should be invited, and suggested also some of our English visitors. He proposed to round these and others up and obtain their assurances that they will attend, and give a "build-up." He thinks a hundred "choice spirits" could be mustered, but that it would require the expenditure of a few hundred dollars. I wrote him from Charlottesville thanking him for so much interest, and saying that I would gladly obtain a room at or near the Commodore, if he would bring in even four or five who seem as willing to learn as they are anxious to teach. I remarked that if the attendance should chance to be more than the room would accommodate, we could easily get any additional space that might be required. I remarked that I would expect to bear all expense alone, until such time as others might be so far interested that they would wish to give a hand. In a letter dated the 10th, Mr. Burger expresses disappointment, and predicts that it will take "one hundred years to spread your ideas."

I hope you have borne well with me for writing a letter even longer than yours to Mr. Burger. I look forward to being in New York again before the end of July when I hope to have the pleasure of seeing you and Mrs. McNally and, perhaps, a few other choice spirits. The time of my coming is flexible.

Henry George at the end of Chapter XI of his "Science of Political Economy" left six blank pages for a further elucidation of the productivity of the process of exchange. It may be that the remainder of this page will suggest to you something of my intellectual kinship to him.

1257.

Carbon of a letter from Spencer Heath to Mr. C. L. Kendal, Editor, Land and Freedom, 150 Nassau Street, New York City, July 27, 1939.

Dear Mr. Kendal:

Mr. Harrington' s "marginal" farmer, in order to be of any value for purposes of illustration, must be an average farmer or, at least, an average marginal farmer, for, as he rightly says, in his seventh paragraph, "For we must use the word 'average' in applying the laws of economics to our millions of citizens and our millions of acres, each different from the others."

Mr. Harrington's "farmer on marginal land" must also be a capitalist for, as he says, he is "applying the usual amount of labor and capital." He is, therefore, a functioning member in an exchange system; for capital, as Henry George so well defined it, consists in the instruments of production and exchange, including all "wealth in the course of exchange." So our "marginal" farmer, as capital user and exchanger, must have whatever it takes to carry on the production and exchange of products and services. He must have security of possession, of property, and of person. He must have the public services of a police power that will maintain his, or his lessor's, private ownership of the land. Lacking this, he can have no security of possession as against either superior brute force or against the arbitrary decree of unbridled political power. He must, in fact, have all the social, public, or community services that are essential for carrying on trade and exchange, including rights of way, with improvements thereon and the policing thereof, as necessary means of transportation and communication. The fact that he, as an average example of his class, is a user, producer and exchanger of capital is, of itself, proof that what he receives for his products must be sufficient (on the average) to maintain and pay the cost of all the community services and security that he uses and enjoys, and leave him a better living than he could obtain (on the average again) in a place lacking these public services without which exchange of products and the use of capital could not be carried on.

But if all this is true, how comes it that he gets only a marginal living, only a slave's portion, on which to subsist? Why cannot he make profitable use of the community services and advantages that appertain to his direct ownership or other secure possession of the land?

The tragic answer is that when he tries to employ his twenty-five bushels of corn as capital by exchanging it, he is permitted to own and exchange only about half of it, the other half (or its equivalent) being taken from him by taxation. This makes him a slave; not a chattel slave, but a tax slave. This so limits the return from his toil that it cancels out all of the advantages to him of the public services and security of possession that his ownership or his tenancy of the land would otherwise afford, and he has no land value upon which either to collect or to pay any rent. And all this is well confirmed, for it is almost notorious that few farms have any market value at all beyond the bare replacement cost of the capital with which they now stand improved. Thus does tax slavery destroy land value by rendering useless and of no service to the land user all the public facilities and services that are supplied to the land and even security of possession itself.

Nor will the situation be changed if the "incidence of taxation" be lifted from the produce of the land, and laid on the land itself, for the taxes will still be collected by taking either the corn itself or something that has been obtained by its exchange. It matters not how they be laid (except that the more indirect taxes are the more injurious), the value of the land is destroyed either way.

So our "marginal" farmer will gain the social securities of possession, of property, and of person (subsistence) both as land user and as land owner, only in proportion as taxation declines, and if the land owner is apart from the land user, he, too, will make the same gains. And out of the gains thus made, the land owner will find it a great profit to employ a part in obtaining further reduction of taxation and, thereby, the creation of higher and still higher rents and land values until taxation is no more and then, out of these magnificent incomes and values to finance and properly administer the public services that he sells to the users of land, just as any useful and profitable business is financed and administered--just as the owners of an indoor community, such as a hotel, finance and administer all the community services which they sell to the users of the spaces possessed by the hotel and supplied with its accommodations.

No "careful business man with money to invest" will buy the marginal farm.

A "careful business man" is one who so manages his capital to the advantage of others that his service of merchandising it and of the services of it, brings him an income. (Otherwise, it will not be capital, there being no income to capitalize.) Let us say he merchandises services in the form of soap and sausage. A day comes when these are so taxed that he feels that he could more advantageously merchandise social security in the form of security of possession, and access to public advantages. He enters into an exchange transaction with a land owner. Result: Our erstwhile land owner is now no longer a merchandiser of social security and advantages but a vendor of sausages, and the erstwhile vendor of sausages has become the merchandiser of social security--security of possession, property and person. Each is still giving services to his community, but in a different way; the open and voluntary market still awards him income by way of measured recompense, and if his recompense in the market is still depleted by taxation, both will continue to suffer as they did before.

Of course, so long as taxation makes land idle and keeps it idle by penalizing its use, the land owner can perform no merchandising services with respect to any security of possession that he may have, and he receives no recompense. And, likewise, so far as a land owner is taxed out of his security of ownership, he has no security of possession to merchandise to a land user. He then can perform no merchandising services, nor receive and compensation therefore, and the land user must be without security of possession or any means of obtaining it justly.

It is said of the land owner that, "In spending his ground rent, he is only a consumer of goods (and services) produced by others". This is true. But it is also true that he is a performer of services sought by and conferred upon others, and that these others value these services by the land owner as being the equivalent of the goods and services, of the rent, which they render, without any compulsion, to him.

Very truly yours,

P. S. I expect to write you something about Mr. Wilcox. See additional page annexed.

[Additional page]

I know you want me to write briefly, so I am giving you an additional page, as follows:

Do land owners pay taxes?

The answer is, that, apart from taxation, all economic wealth and services are the recompense received in exchange for other wealth and services. Taxation is the seizure (or diversion) of wealth (and services) from those whom it would otherwise recompense. All those persons who perform services, or store them up in commodities as wealth, receive out of a diminishing gross production a recompense depleted by the total amount taken by taxation. The distribution of this total loss among producers of wealth, including those who perform services as such, takes place in accordance with what, in their exchange transaction, men are willing to give and receive, in their exchanging with each other, out of the tax-depleted gross or total production.

Howsoever taxes may be laid and collected, they diminish total recompense, and the exchange system allocates the loss among all those whose services entitle them to recompense. Among these stands the land owner who, even though he should pay no direct tax, would still suffer taxation in the diminution of his recompense that he receives for socializing, by his merchandising services to land users, such security as he still has. And the value of his merchandising services is attested by the fact and measured by the amount of the recompense wherewith the free and open market rewards him.

The land owner, like any other owner who puts either commodities or services of any kind into the exchange system, must suffer from taxation. It is so ordered that if one member suffers, all the members suffer; that is the economic and social law.

1259.

Carbon of a letter from Spencer Heath to Raymond V. McNally, 200 East 16th Street, New York City, August 7, 1939.

My dear Mr. McNally:

Henry George, as a moralist, believed himself under divine command to destroy evil and drive poverty out of the world. To do this he thought it necessary to abolish private property in land.

But as a Political Scientist, in order to preserve freedom of exchange and the values of civilized life, he proposed:

"To ABOLISH ALL TAXATION save that on land values."

And he urged that this abolition would, in its effects, abolish all taxation whatsoever, for then all costs of public services would, of necessity, be met out of their proceeds in ground rent. Thus would public services be distributed no longer by favor as tax-supported privileges but as land values received in exchange for the ground rents that the public services, and the great demand for them under no-taxation, would create.

His problem then became: In whose hands should rest the sales of public services and advantages and the collection of the rent paid for them? Should political persons using force grant and determine occupancies and take rents under rules promulgated by or for them? Or, should proprietary persons using consent and exchange give possession and services by bargain and sale and upon terms fixed not "administratively" but in the freedom and democracy of an open market?

Henry George, the Political Scientist, took his firm stand on the side of freedom and democracy by exchange, and against the baleful dominion of political administration and control over property and possession. He felt, even if he did not clearly see, that land users under the heel of tax-taking politicians as to their security of possession, even without other taxes, would be in as bad plight as ever before. To him, all true sciences taught the ways of creation, the ways of the Creator, and thus taught men how to create, where moralists would teach them to destroy. The Political Scientist in him taught the conservation of men's wealth and values by the abrogation of force and the creation of public values by a voluntary exchange relationship between the users and the possessors of land and those in whom its ownership and democratic administration rests by public consent.

The problem of today is: Who shall deliver us out of the hand of the politician? Henry George saw this but dimly. Nevertheless, he turned sharply, even if ungraciously, to the land owner for public service without force and only by consent and exchange. Shall we follow him?

As one who would not strive to justify Henry George in the role of a destroyer of the exchange relationship and its values, but one who would honor him in his capacity as a creator, I should like to enjoy your further personal acquaintance. I plan to be at my New York address, Kings Crown Hotel, 420 West 116th Street (Telephone University 4-2700), the fortnight beginning August 28th. Please advise me if you expect to be in or near New York then and if I may have the pleasure of a visit from you during that time and at our common convenience.

1260.

Carbon of a letter from Spencer Heath to C. L. Kendal, Editor, Land and Freedom, 150 Nassau Street, New York, New York, August 18, 1939.

Dear Mr. Kendal:

I have wondered for some days how everything was going with you and Mr. Smith and Land and Freedom. I thought several times I must write to you and inquire. But today comes your July-August number and it looks about the same as ever. In fact, I don't think I would have suspected from the contents that there had been any change in the editorship, and I mean this mainly as a compliment, certainly so far as editorial form and diction is concerned. But as regards its social ideology, I think there is less evidence of any progress, growth or development in this respect than in some of the recently preceding issues. This is probably fortunate and wise, lest the old-line sticklers for their rigid dogmas (right or wrong) be put to flight at seeing much evidence of life and growth. Talent, in moderation, is what gets the mob and the emoluments. Only the very elect can afford to keep so far ahead of their followers that few can follow.

Taking the editorial creed on page 102, "Taking the full rent" would be taxing the rent 100%. It would not then be possible for the farmer to have possession or anything "at a small land rental to the government" or to anybody else, nor "without the payment of any taxes" for taking--taxing--the rent would turn it all into taxes and there would be nothing else to pay. And the rent, now being degraded into taxes, would be taken no longer by the social process of contract and consent, but "administratively" (as the planners say) and arbitrarily by assessment and compulsion. This would leave the farmer with a whole lot less than "full possession of his entire product at a small land rental (!) to the government without the payment of any taxes."

When it comes to mines, the laying of taxes on the operator by political assessment, there being no standard for this except the supposed amount of the rent, if there were any, and no means of enforcing such a standard on the assessors if it could be ascertained, would leave these same politicians entirely free to force many mines out of use in order to create a monopoly in favor of those who operated the mines that would be in use. It is practically certain that the mine operators (and the miners) would have enough political influence and voting strength to obtain the kind of legislation or the kind of administration that they would want in order to keep other mines out of use. Taxation (killing profits) is the only thing that keeps mines out of use now.

The third and fourth paragraphs are in opposition to the first. They are against taxation of wealth (nothing else can be taxed) instead of taxing (taking) the amount of wealth that, theoretically, would be paid in rent if there were any rent. The third and fourth paragraphs against taxation are excellent. Farm operators (or owners) and mine operators (or owners) cannot be freed from taxation by taking (taxing) away their products and capital on the theory that this would be the same thing as though they were paying voluntary rent.

As regards the last paragraph, Everything depends basically on land. But no land ever has any value unless the population of the community in which or near which it lies does something very important about it. They must recognize or authorize specific persons to act as owners of it. While they do this, then possession of land will be determined socially by contract and consent. Possession will then be secure, and it will be distributed and redistributed, either outright or by the year, by the just, peaceable and orderly process of the market without force or fiat, and by consent and agreement of all parties concerned. But if the population of the community does not support private ownership and private tenancies under it, then no possession can be effected or maintained except by the exercise of political preferment or other arbitrary and anti-social physical force. Land must be attainable, to be sure, but any land that can be attained otherwise than by contract and consent and upon the democratic measurement of its value by the process of the market will be land that is either entirely without any social services and advantages or land whose social advantages are entirely canceled out by the insecurity with which it must be held. The democracy of the market with respect to the distribution of the community lands is absolutely fundamental to there being any orderly community at all.

Mr. Carroll (page 105) well quotes President Wilson: "The history of freedom is the history of limitation of governmental powers." It ought to be more widely recognized that private ownership of land is the greatest limitation that has ever been imposed on governmental power. And it ought to be more widely observed how taxes destroy rent--how the extension of governmental powers destroys the value of land and finally the institution of property itself. But Mr. Carroll seems to think that if governmental power were to be thrown wholly against the land owner and liquidate him then everybody else would be quarantined against it and live happy ever after. It is indeed significant that Henry George suggested hanging on to the services of the land owner for even as little as five per cent of the full value of his services that are so essential to the very existence of the society. The pity is that he did not take time out from controversy, if need be, and write out explicitly his sound intuitions on this important subject.

Mr. Hanna very justly knocks the "insollubists" and he makes a very proper plea for sound methods of procedure in social discovery and interpretation, as in other sciences. If he will just come along with me now and make some sweeping applications of the principles he lays down we can have a good time together. Referring to Dean Russell's current Congress on Education for Democracy, a columnist in the Baltimore Sun today says: "The real point before the world has to do with how its economic resources shall be exploited and developed. It seems rather obvious that they can be best developed if the men who have the energy and ability to develop them are let alone and not held back by the scruples or jealousies of lesser men, either as individuals or as organized groups. Our democracy--or the more important part of it, which is civil liberty--is a device for giving the able exploiter as untrammeled an opportunity as possible to do his stuff. It seems to me that most of the apologists for democracy are just that, apologists, and that they spend a lot of time and energy apologizing for the very men that their system is designed to produce and cherish--the businessmen, the entrepreneurs and the exploiters, which is to say, they are seeking to limit the accomplishments of their own system."

But I hope Mr. Hanna's strong predilection for natural laws will not always dispose him so uncritically where they are alleged. This disposition is what gave the Malthusian fallacy such tremendous vogue that Henry George had to devote four whole chapters of Progress and Poverty to putting it down, himself only to fall victim to it, uncritically, in its Ricardian form and then seek to give it a vastly wider application than did Ricardo himself. Thus does Jove nod, for not even the great Newton who discovered the law of gravitation was above the promulgation of what he called the Sine Square Law in the field of aeronautics, proving by mathematics that mechanical flight was impossible, and this had the uncritical acceptance of practically all trained scientists and engineers for some two hundred years until Samuel Pierpont Langley finally broke away. These are the kinds of things that happen to men who have "been satisfied to 'feel and fumble' instead of using acquired knowledge." Taking things for granted without demonstration, just upon authority or because we have a feeling that way, is an intellectual vice and failure from which none of us are entirely free. It seems to have overtaken Mr. Hanna in his criticism of Dr. Jas. T. Adams where he refers to "law and custom which makes speculation profitable." Profitable to whom, I wonder? Certainly not to speculators, for every gain to one of them is exactly balanced by the losses of the others. It would seem hard to impute profitableness to anything that has always involved the collapse of banking institutions, with all their attendant evils and miseries." And Mr. Hanna himself seems to realize that speculation brings forth no profits by his reference to ''non-productive speculation." It must be a great convenience to bureaucrats and tax-taking privilegees that uncritical publicists should nourish shadowy scapegoats to bear their very substantial sins away from the popular view.

Mr. McMillan seems exceedingly uncharitable towards the persons whom the community by all its actions and consent designates to the function of distributing its social values peaceably by exchange and consent, assigning to them for this service none but wholly voluntary and uncontested rewards. I am afraid he is grooming a very convenient goat for all those who seek the aggrandizement of governmental powers and would have the rigors of taxation displace more and more the amenities of trade and exchange for value received.

Mr. Luxton comes thundering down the lists with mighty challenge to the dragon envisaged with such moral horror by Mr. McMillan. He bids us arm for the battle. Flashlights might come in handy where there is such a superabundance of heat and no corresponding amount of illumination.

Your Strolling Reporter gives a grave account of how New York State has joined up with the New Deal with respect to slum clearance and providing phony untaxed houses for its favorites so the politicians can keep the tax load where they think it belongs. This should give much comfort and satisfaction to those who would fight for the abolition of private property in land. Taxation has already driven stupendous quantities of land in New York City and State out of private ownership and into political "administration." These dehousing and rehousing projects may serve as a good model to the State politicians for their guidance in collecting the rent in lieu of taxation from the lands that have already been "socialized" by the ministrations of assessors and collectors.

Mr. Charles Joseph Smith, commenting on Mr. Willcox, brings up the perennial fallacy that the people who buy public social advantages by paying ground rent for them somehow themselves create the selfsame advantages that they buy and pay rent for, and that they do this by some kind of unconscious cooperation. They must be unconscious indeed to purchase from others that which they themselves create. The general body of society no more creates the public or social or governmental advantages that it buys than the general society of pedestrians creates the shoes that it buys for its feet. Nor does the general society have any more ownership of the price (rent) that it pays for the public services and things that its members make use of in common than it continues to have ownership over the prices it pays for its private services and commodities after receiving them. The confusion arises from a feeling that the person whose demand expressed in price gives exchange value to a service is somehow the same person who created or performed the service itself and therefore he owns and should have back again the price he has paid for it. This is just a matter of confusing identity as between buyer and seller so that they are "unconsciously' imagined to be one and the same.

Public or community services differ from private services preeminently in kind, though not necessarily in value or degree. They differ in kind in that they are performed exclusively by public persons acting by consent or authority of the inhabitants of the community, that they have to do only with work and improvements carried on in connection with the public portions and not any private parts of the community and that they are availed of, used and enjoyed in common by the inhabitants of the community in common and not exclusively by any of them. Services performed in any other manner or received and used in any other manner might be cooperative in a limited way but they could not properly be called community or public services. The only reason that we maintain any distinction between governmental functions and public community services is because the former rest upon taxation and are coercive and anti-social and therefore practice no exchange and create no values but, on the contrary, destroy them, whereas the latter rest upon the voluntary payment of rent by way of exchange and are therefore pro-social and creative of public community (land) values. This is a distinction that under the socialization of government into non-coercive public services would disappear--the veritable fulfillment of the vision of Henry George.

Public community services and rent are services performed and the price that is paid voluntarily for them. The one cannot exist without the other. Upon the savanna, until some service is performed giving safety and security and other necessities or conveniences of communication and transportation,it will not be possible for "two immigrants to look longingly on the same piece of land." Every piece will be as serviceable as any other piece and offer no services for which anyone should pay or be paid. No one could "equalize the differences in natural opportunities" for Henry George expressly states that there are no such differences. Nor would the coming of a second settler result in any advantage that would not be equally available to both of them. There could be no inequalities of opportunity until some of the inhabitants performed some kind of community services, such as merchandising security of person and possession and conveniences of transportation to all of them, and then, for such public and community services, rent would be paid.

There are no products or services except those of labor. Rent therefore could not be payment for any excess of produce unless it be for an excess of labor and this is absurd. So far from not recognizing "any such thing as a 'social product'" it seems to me that Mr. Willcox just doesn't recognize anything else as the proper subject for the payment of rent or any other matter of exchange. And this is as it should be. This exchange relationship is distinctly and exactly what it is that constitutes a society as an integration and not a mere aggregation of men. And it would be very difficult indeed to imagine society, as a whole, being one of its parts as "one of the parties to production" or to anything else. This notion of society as a whole having transactions with each of its parts is not only a contradiction in terms but it is the dangerous doctrine upon which totalitarianism depends for all the plausibility that it has. The apotheosis of this supposed "excess of produce," this "resultant" of the total of social activities is the foundation for the abject worship of a political state.

No, there cannot be rent without land, but there can be plenty of land without rent. It is the community services that are conferred upon land, or rather upon its possession, that cause rent to be paid for its possession and the special services that its possession affords.

Rent cannot be a gift of nature for rent is wealth and that is exactly what nature, according to Henry George, and properly, is not. Neither is the land value for which rent is paid a gift of nature, for payment can be made only to men and voluntary payments, of which rent is an example, are only paid for the services that men perform, including the wealth that they produce.

The land owner does not receive social services except as he pays for them when he becomes a land owner and performs them, after he becomes an owner, by merchandising its use and thereby giving security of possession and peaceable distribution among the members of the community--a very important and valuable social service, an indispensable one, indeed. It is he who delivers an indispensable social product to the land, however unconsciously he may be doing it, and it is to him that the community makes its voluntary rewards called rent. Rent does not pay damages to correct any "inequalities of opportunity for production." Apart from compulsions such as the exaction of tribute or taxation or slavery in any form, the opportunities for production are as much open to one person as another. As to natural resources, nature makes the same terms alike to all men. So far as human services and products are concerned, the democracy of the open market, untaxed, plays no favorites among those who wish to give and to receive services or products by the finely balanced measures of exchange. What rent does do is to balance the receipt of net public services by market-equivalent private services given by exchange in recompense for them. And this recompense of rent does not go, nor should it go, to the population as a whole but only a part of it--the part of it that performs those inestimable services of merchandising, and thus peaceably and equitably distributing, the common security of possession and of access to the common facilities of community life. If rent were really an "unearned increment" it would have to be collected like taxes, by force.

Since rent is an actual recompense given in exchange for services, it cannot be rent unless or until it appears. "Potential" rent must be rent that has not appeared. Such rent cannot "disappear."

Every tax, whatsoever may be the desire or intention concerning it, is a levy on wealth. Henry George insists that all wealth is the produce of labor on land. Every tax, therefore, reduces the reward and, in consequence, the production of labor. In the words of George, "Taxation which lessens the reward of the producer necessarily lessens the incentive to production". It is true, as George says, that some taxes inhibit production to a greater extent than do other taxes of like amount, but it still remains true that all taxes, in one degree or another, lessen the production of wealth. Any tax, then, however intended, is bound to lessen the use of land, to throw land out of use. Any continuous or systemic levy on wealth, however the tax may be designed, must inevitably throw land out and keep it out of use. It is impossible, therefore, by any kind of tax to "force idle land into use." The abolition of poverty cannot be accomplished by taxation or by any other technique of force. But it can and let us hope it will be

accomplished by the extension of freedom--of the freedom to exchange with each other, the only freedom, including all lesser freedoms, that men really need or truly desire. In the democracy of exchange, wherein all things are done by consent of all and coercion of none, lies the only freedom of men by which a society can live and without which it must die. Henry George gave the key to this freedom, this true democracy, by his proposal, to abolish all taxation save that on land values, and finally that taxation as well, for the emancipation of industry would lead to such enormous expansion of production and opulent demand for land that the new rents rising upon the abrogation of taxes would afford an ample, profitable and voluntary, as well as the necessary basis in the hands of land owners themselves for the financing of all public services and desirable public affairs--and failure so to use these rents would be at the peril of all their income and recompense. Thus will government of force and by compulsions evolve into public services without coercion in the free democracy of consent and exchange.

Mr. Ashton's three pages are in his usual imitation of Mencken, wisecrackerish and wholly destructive, only slightly illuminating and not at all inspiring, but all good fun, if one likes insolent waggishness about important matters of public concern.

My good friend, Mr. Foley, sends out the clarion to those who take it for granted that the ownership of land is what keeps men starving and idle and keeps land from coming into use. For personal reasons, and for that alone, it would be pleasant to join up with him under that uncritical assumption. To minds that have not adopted this as a fixed article of faith and are still functioning in that field I should like to present the considerations upon which I have adopted precisely the opposite opinion. It is my vision bright and clear, based on exhaustive analysis, that private property in land is the essential institution whereby a society of men is enabled to attach itself to a territory, make use of the advantages of its environment, maintain security of possession and provide access to all public services and advantages without discrimination and upon equal terms to all. It is only because this institution has not been fully developed as the public service department of society that we have and suffer under any such thing as coercive government (except as to crimes) with its age-old tyrannies of taxation and attendant evils.

Well, I've reviewed about all that's reviewable so I guess I can't stretch this letter out much longer. For a man whose mind has been corrupted without being converted, I think you have done mighty well. I hope to see you make Land and Freedom stronger and stronger and more and more independenter. Tell me whatever I owe you for subscriptions or anything and I will remit. Please use this letter judiciously if you show it to anyone. I hope C. J. S. will catch the constructive spirit of my criticisms and can "take it".

1262.

Carbon of a letter from Spencer Heath to C. H. Kendal, Land and Freedom, 150 Nassau Street, New York, New York, August 23, 1939.

Dear Mr. Kendal:

Your letter of the 22nd at hand, and I enclose my check for Two Dollars ($2.00), regular subscription rate as you suggest. Didn't I ask you to send the magazine to somebody else at my expense? Seems to me I did.

I note you are sorry I didn't like your Comment and Reflection. How do you get that way? I believe your Comment and Reflection is just about the only part of the magazine that I did not pull to pieces in my long letter to you reviewing almost everything else in it. When you read me some of your Comment and Reflection in advance of publication, I told you that it was fine and I am sticking to it.

I almost wonder that Mr. McNally has not offered you some material for publication. I suggest that you ask him to do so--either to submit original articles or to give you his comments on what has already been accomplished. I think Mr. McNally's views and reactions will be very similar to my own.

There is no getting away from the fact that Land and Freedom has been and remains a journal of propaganda. By this I mean that there are a number of entirely unproved sociological conceptions which this journal and its contributors take absolutely for granted and any questioning of which they are strongly disposed to resent and resist. Among them are: 1. The Ricardian law. 2. The idea that wages necessarily go down when rent goes up. 3. That rent is paid for natural resources--that rent is paid for land as land and not for the exchange services that give exchange value to land. 4. That taxation imposed upon the owners of idle land will force that idle land into use. 5. That the full taxation of the rent coming from the land that is not idle would not be sufficient to destroy all the present or prospective value of land that is not in use. 6. That the rent belongs to the people who pay it and not to those who exchange their services for it--to the people who get public services by paying for them and not to those who provide the services. 7. That rent can be taken in taxes and still remain rent and still be measured by contract, consent and exchange the same as rent is. 8. That it is that voluntary payment of rent, and not the arbitrary seizure of taxes that degrades capital and labor, so that "women faint and little children moan." 9. That private property in land is the curse of civilization instead of being the greatest limitation that has ever been imposed upon arbitrary governmental power.

It is rarely, if ever, that an article has appeared in Land and Freedom without propagandizing for some one or more of these nine assumptions. If any question of any one of them even faintly arises such question is put down as either stupid or sinful and against all the laws of God and the authority of Henry George.

Henry George himself on page thirteen of "Progress and Poverty" says, "I propose in this inquiry to take nothing for granted, but to bring even accepted theories to the test." On page one hundred sixty-eight he writes, "Fortunately, as to the law of rent there is no necessity for discussion. Authority here coincides with common sense, and the accepted dictum of the current political economy has the self-evident character of a geometric axiom. "

Again on page thirteen he writes, "I propose to beg no question, to shrink from no conclusion, but to follow truth wherever it may lead. Upon us is the responsibility of seeking the law . . . But what that law may prove to be is not our affair." At the bottom of page four hundred and four he writes, "Hence it will not be enough merely to place all taxes on the value of land. It will be necessary, . . . . . to increase the amount demanded in taxation, and to continue this increase as society progresses and rent advances. But this is so natural and easy a matter, that it may be considered as involved, or at least understood, in the proposition to put all taxes on the value of land. I have been for some years endeavoring to popularize this proposition." (The underscoring is mine.) From this it appears that although he proposed at the outset of his book to take nothing for granted and to shrink from no conclusion, but to follow truth wherever it may lead, it nevertheless led him to the identical proposition that he had been endeavoring to popularize for some years.

In hanging onto the Malthusian doctrine in its Ricardian form, Henry George gives us the perfect example of what Lord Morley referred to when he said that seldom does a discoverer of new truth fail to carry forward enough of the error of his predecessors to vitiate his own discoveries. It was a fatal error of his predecessor, Ricardo, that has vitiated and held back the essential truths propounded and natural relationships discovered by Henry George. And it is the more remarkable that he consciously swallowed the Ricardian application of the Malthusian theory as shown on page two hundred twenty-nine where he states "Thus the two theories, as I have before explained, are made to harmonize and blend, the law of rent becoming but a special application of the more general law propounded by Malthus, and the advance of rents with increasing population a demonstration of its resistless operation."

It was Ricardo who made it difficult for George to progress to any higher ground than that upon which he condemned private property in land. Just as Ricardo held back the thought and conception of Henry George, so does Henry George hold back the thought and conception of those who feel a greater loyalty to the error he transmitted than to the truth he tried to make clear.

I appreciate your continued interest in that short history of the world. I am thinking of calling it, "Slavery, Tribute and Taxation Throughout History." The spirit has been moving me toward its completion, but has not yet moved me enough.

1263.

Carbon of a letter from Spencer Heath to C. H. Kendal, Land and Freedom, 150 Nassau Street, New York, New York, August 26, 1939.

Dear Mr. Kendal:

Thanks for card and letter dated the 23rd, but mailed the 25th. If your card refers to my letter of the 23rd, you must be a little behind in your dates.

Henry George's preface to the fourth edition of Progress and Poverty is an extensive review of the whole scheme of the book. The last sentence of the second paragraph of this preface is as follows:

"What I have most endeavored to do is to establish general principles, trusting to my readers to carry further their applications where this is needed."

I think this must be the passage you ask me to locate in which "he says something to the effect that he leaves the development to others, or to those who will follow."

George naturally did not contemplate that there would be any serious or substantial errors in his book. He did not realize the probability of his carrying forward and, perhaps, elaborating upon some of the errors of his predecessors. He, therefore, doubtless, contemplated that his readers would be able to make further application of such of his "general principles" in their entirety. What has happened is that neither he nor his readers have been able to make further application of such of his general

principles as cannot be further established and maintained. For example, his attack on the morality of private property in land has never had any further application than he gave it. But his attack on the destructiveness of taxation in general and his proposal to abolish it, has been relegated by his followers to a place of secondary and even of minor importance, whereas the development of governmental affairs has made it, at the present time, imperative to make further application of his general principle against the confiscation of wealth by taxation.

In his later writings, Henry George stressed more and more the tremendous importance of maintaining the exchange relationship and the division of labor which it brings forth. He devoted a large part of his last book to illustrating the beauty and beneficence of what he called the unconscious cooperation of society. Probably you will recall his marvelous description of the intricacy and beauty of the unconscious cooperation of millions of men whose labors, through the processes of exchange resulted in the building of a ship. When he came to Chapter II of Book 3 entitled, "The Office of Exchange and Production," he had not written four pages before he came to this conclusion: "It is by exchange and through exchange that man obtains and is able to exert the power of cooperation which with the advance of civilization so enormously increased his ability to produce wealth." And then, very significantly, he added:

"And in addition to the laws already explained, there is another law or condition of nature related to man which is taken advantage of to the enormous increase of productive power in exchange."

Instead of carrying further the application of this principle, he noted at this point on his manuscript, "Leave six pages." It is certainly to be deplored that Henry George never wrote any more of this chapter beyond the first four pages. This is certainly one of the places where Henry George contemplated further application of a general principle, although he contemplated doing it himself instead of leaving it to his successors. This is an example of what he referred to at the beginning of his preface to Progress and Poverty where he says: " . . . it has been impossible to treat with the fullness they deserve many of the questions raised." Although I cannot immediately cite the passages, my memory is very clear that in many other places Henry George indicated the incompleteness of his own thought, and anticipated its further development and application.

1265.

Carbon of a letter from Spencer Heath to Mr. Willcox, August 29, 1939.

Dear Mr. Willcox:

Sometime ago my good friend, C. H. Kendal, called my attention to your article, "Ricardo's 'Law of Rent' Invalid," which appeared in the March number of Land and Freedom. He asked me to write him my full comments on this article of yours, and I did so under date of July 30th.

Thinking that my comments might be of some interest to you, I am enclosing, herewith, a copy of my letter that I had prepared for that purpose.

It gratifies me very much to find some of the more intelligent people of the Henry George persuasion raising serious question about this so-called Ricardian Law.

Like Malthus, Ricardo conceived the relationship of civilized man to the earth as being the same as that of savages and beasts. These men, like so many today, disregarded completely the exchange relationship by means of which socialized men practiced division of labor and exchanged services with each other, thereby constantly creating and recreating their subsistence out of the raw materials of nature. This is a vast improvement and contrast upon the method of the primitive forms of life which is merely to take their subsistence as and where they find it, thus making their environment less and less serviceable to them and keeping these forms of life, but not civilized man, under the bondage of Malthusian Law. Ricardo, doubtless, was influenced by the Physiocratic notion that agriculture was the only source of wealth.

It is certainly to be regretted that Henry George, after devoting four chapters to his masterly refutation of Malthus, should have so uncritically and without even any attempt at examination accepted the same general principle under the special formulation of Ricardo. In taking on the Malthusian Doctrine in its Ricardian form, Henry George gives us the perfect example of what Lord Morley referred to when he said that seldom does a discoverer of new truth fail to carry forward enough of the error of his predecessors to vitiate his own discoveries. It was a fatal error of his predecessor Ricardo, that has vitiated and held back the essential truths propounded and natural relationships by Henry George. And it is the more remarkable that he consciously swallowed the Ricardian application of the Malthusian Theory, as shown on page 229 where he states, "Thus the two theories, as I have before explained, are made to harmonize and blend, the law of rent becoming but a special application of the more general law propounded by Malthus, and the advance of rents with the increasing population a demonstration of its resistless operation."

It was Ricardo who made it difficult for George to progress to any higher ground than that upon which he condemned private property in land. Just as Ricardo held back the thought and conception of Henry George, so does Henry George hold back the thought and conception of those who feel a greater loyalty to the error he transmitted than to the truth he tried to make clear.

Mr. Willoox, from what I have heard of you and some of your writings, I think you are a man of much more than ordinary intellectual capacity. When I began writing this letter, I intended to send you nothing but my letter to Mr. Kendal commenting on your article. I try not to send to a correspondent more than I think he can absorb, but in this case I am going to send also two little printed pamphlets, "Private Property in Land Explained," and the "Inspiration of Beauty." I would like you to keep these at hand for serious consideration from time to time. I am not sending any conclusions for your acceptance but only for your consideration in the light of the induction and observations upon which they are founded. An understanding of the institution of property in land, not from the standpoint of an owner's interest but from the standpoint of the social functions that the institution performs has been the source of utmost satisfaction to me in contemplating the beauty and balance of natural law manifesting itself in the social realm.

It is coming more and more to be recognized that the extension of political authority and restrictions to the field of private exchange relations and cooperative affairs is now, as it has always been, the dark shadow upon the freedom and future of mankind. It must, therefore, be of the greatest interest and importance to observe that the institution of private property in land is the one great limitation on arbitrary governmental power--to which we owe all the security of possession and opportunity of creating social values by practice of the exchange relationship with each other under the shadow of the political power that slowly but inevitably breaks that institution down. For it is only with its proprietary authority that the members of a society have relationships that are purely those of contract and exchange and not those of compulsion and force. The institution shines as the only social instrument for practice of the exchange relationship between the members of a society and a public (proprietary) authority which they establish or recognize and maintain.

Since the functional interpretation of property in land is based upon the energy concept of population outlined on the mimeographed sheets which I also enclose, I am letting you have these also in the thought that you may be interested in the principal philosophic foundation upon which my social conclusions and interpretations are based.

Please do not think me presumptuous, or that I mean to be other than complimentary in offering so much that is out of the usual line of thinking for your consideration. If you attend the Henry George Centenary, I hope I will be able to see you in New York and enjoy your more immediate acquaintance.

1267.

Carbon of a letter from Spencer Heath to Harry Grant Atkinson, Managing Editor, The Appraisal Journal, 22 West Monroe Street, Chicago, Illinois, August 11, 1939.

Dear Sir:

I have to acknowledge receipt of the July number of your journal, in five copies, for which I thank you.

Please advise whether you can furnish reprints of the article, "Why does 'Valuable' Land Lie Idle?" I should like to obtain, for free distribution, say, from 250 to 500 or even 1000 copies, preferably in pamphlet form similar to my "Why 'Valuable' Land Lies Idle" if they can be economically obtained.

Anent Mr. Schmutz's article, I enclose two recent sales circulars from Geo. M. Mayer, 2 W. 46th St. New York, showing enormous discrepancies between assessments and cash sales prices in Manhattan and Brooklyn.

The article by Mr. Morris on "The Economic Position of Real Estate" brings up a number of considerations affecting real estate values that are tremendously important. But since all value is, presently and ultimately, only the value of income, I think we should give prime consideration to changes in the gross production of goods and services, or the national income, as affecting real estate values. It would seem that all the other matters he considers may be regarded as important only as they contribute to this. With reference to a reasonable distribution of the tax load, it may be questioned if this load can be so laid as to develop a "constructive tax system." To be constructive it must be worth more than it costs and thus be no load. It seems highly probable that all goods or services that are worth anything to those who pay for them are paid for without coercion or compulsion and that compulsive payments destroy values rather than create them. The possibility of obtaining necessary public services and security by voluntary exchanges instead of compulsions should be considered in any broad examination of this subject. In the matter of the distribution of the compulsive load, I think it should be seriously weighed whether the paralyzing taxation now laid upon the use of real estate (which comprises all business and production) is not equally or even more injurious, in its direct and indirect effects, upon real estate incomes and values than the taxes laid directly on the property itself. Real estate can exist and burden its owners, as we so well know, when it is out of use and out of demand, but it can have no value to its owners except as its profitable use creates an effective demand for it. This aspect of the tax problem ought to be analyzed and examined. There is much ground for believing that every tax on production reduces its profits and then its volume and thus seriously cuts down the demand for and hence the value of all fixed capital.

I observe that yours and other journals are taking considerable notice of population changes. This suggests that you might find of some interest an academic outline of basic principles that I have prepared for submission to the Population Association of America of which I am a member. I enclose copy of this with request for its return unless you should have some special use or desire for it.

1269.

Carbon of a letter from Spencer Heath to Franklin Wentworth, 30 Garden Road, Wellesley Hills, Massachusetts, September 27, 1939.

Dear Mr. Wentworth:

I beg to thank you for your card and for your kind letter of the twentieth and both you and Mrs. Wentworth for four delightful personal hospitalities and for the hospitality of your minds to some of the ideas that I think are of very high importance and value but which must seem very alien, not to say antagonistic, to what many of us have been cherishing these many years. There is exaltation in seeing what one believes to be a new and brighter star on the horizon, but there is a warmer joy in finding that others can gather its rays and perhaps join in being grateful for its rise. I hope to have the pleasure of seeing you and Mrs. Wentworth again before many months go by and also those two charming and intelligent boys if it is possible. Please remember me to all of them.

I have written considerably more than you have read, but I am not at all a facile writer. It requires a lot of labor and time to get it in a shape that will be at all satisfactory to me and doubtless a great deal more to make it satisfy any publisher, so it is hard to tell when it will see the light of day. Much of what I have is written for its special appeal to the real estate and land-owning interests. An entering wedge has already been published in one of their national journals and I have just received an inquiry from them saying their editorial committee would be interested in having me prepare another article on real estate valuations. I am wondering how I can keep my next offering to them from being more than they can stand. However, my material does not attempt to change anybody's psychology but is a frank appeal to the profit motive for the furnishing of public services, the same as for the furnishing of every sound and legitimate private service.

I copy below from the closing pages of the longest, and, I think, the strongest single presentation I have made.

Public and political officers, unlike the owners of land, have no stake or interest in the public values. Like the servants and subordinates in any other business, they need the restraint and supervision of the proprietors of that business, whose property and income is built up by supervised services or destroyed by unsupervised default or devastation. The only authentic and legitimate services of government are those bestowed upon its territory and thus into the charge of those who own that territory. It is the business of these proprietors to administer their property by keeping up the quality of and the demand for these services and to distribute them among the members of the community at prices arrived at in open market and voluntarily paid. But this last is only the sales side of the business. If the proprietors are to have for long any values to sell they must act also on the administration and production side of their business. They must draw public policies away from destruction by taxation and other violence to business and production, and guide them into the ways of public services to the up-building of rent. Properly and democratically organized among themselves, they become the administrators and the beneficial owners (enjoyers of the net revenues) of the largest, most necessary and indispensable and therefore, when well conducted, the most profitable business in the entire world--no less, indeed, than the whole business of government as the organization, production and distribution of community services, like all other services, on a measured market basis and for value received.

All of the foregoing has been stated with a view to land ownership being rehabilitated from its present moribund state into an active and prosperous business for which there is an enormous public need and to which the returns could not fail to be prompt and vast. The principles of sound business have been kept constantly in view, but it is worthy of note that such thoroughgoing application of these principles as is here proposed contains implications that are of deep and wide social significance. The progressive reduction of taxation and the still faster enhancement of ground rent and land values must surely transform government, from the predacious character in which it finally destroys the society that it serves, into a vast and benign agency of public service, leaving to the barbarous past the "good old plan that he shall take who has the power" and replacing the law of the jungle, as to public costs and services, by the kindly and creative practice of voluntary exchange. This is the way in which piracy became transformed into trade, and commerce redeemed from the rule of force and rapine. And this is the way in which proprietorship in land can redeem government into its proper character as an agency of service on the basis of free exchange. Thus are politics and economics at last reconciled, government itself socialized, and society made safe and secure.

It should indeed encourage and even inspire the whole real estate world to realize the happy truth that the owning interest in land, in the proper and effective pursuit of its own business and profits, should be able to come into such magnificent prosperity and rewards, and and that at the same time, by the very nature of the social organization itself, and without need of any pretenses of altruism or public spirit, it should also emancipate the arts and industries by securing to all the liberty that is the key to security, the one great freedom that includes all lesser freedoms

--to serve and to be served--the freedom of unpenalized production and exchange of services and wealth, with joy and abundance for all who enter in.

With reference to a plan for the satisfactory handling of mines, I am not able to propose any special solution for this because to my mind it is quite adequately covered by the general solution, which is simply the Henry George plan to abolish all taxation of, or on behalf of, labor and capital and let nature carry on. It is only necessary to abolish compulsions by abolishing the taxation that is itself compulsion and that is only necessary to support compulsion. We do not sufficiently realize that with the system of service and exchange by voluntary engagements in free play there could be no exclusions from any of the instrumentalities of production. All land, like all wealth, that functioned otherwise than for personal use or gratification would be included in the exchange system and therefore its ownership and administration would be open to all persons upon the same terms, i. e., the terms democratically prescribed by the election of (by) any and all persons who desired to vote in the open markets. When taxation limits or blocks the exchanges then the owners of capital are deterred from engaging the services of private persons. By the same token, they are deterred from engaging themselves to pay for many public services. This so cuts down the demand for land, that is, for public services, at all of those locations at which, by reason of situation or natural deposits or both, there would otherwise be a great effective demand for public services. This cutting down of the amount of business and production that can be carried on causes some of the most favored locations and some of the richest deposits to remain out of use. But there is some business being done by those who are being least injured or most favored by the tax situation and so some of the best locations and richest deposits are in use. Now, this limited amount of business constitutes all the actual and effective demand for public services that there is. Hence the public services have no value and the land has no value at the otherwise desirable but unoccupied locations. Now the owners of the well situated or richly endowed locations--as good as any of the others--but which remain idle, feel that their locations should bring just as much rent or price as the others. They do not realize that the other locations have absorbed all demand for public services that there is and that therefore theirs have no value at the present time and may never have any; so they try to hold on for what they think are current prices. But let us suppose they should reduce their prices. Then this competition would tend to lower the value of all the locations, used and unused. But would it actually do so? The answer is, No. This is because if the limited amount of business can occupy only a limited amount of land and resources without being less efficiently done. It is not land nor the cheapness of land that brings business into activity; but business activity and nothing else is what brings land into use. The "passive factor" does not govern the active factor.

However, it may be asked how it is that even when business is severely limited some of it is frequently done on land that is less favored in location or resources. Such business, in general, is done by persons whose capital and technical resources and (or) personal skill and capacity are relatively primitive and limited. These "marginal" enterprises are relatively few and relatively unprofitable, when not absolutely so. If

it were not for the volume of business being limited by taxation and other political action against it the larger volume would give rise to more of that complexity of organization that simplifies the functioning of the individuals engaged in it. Employment would be widened in variety as well as in volume and thus doubly enabled to utilize the more limited talents of the erstwhile marginal man. But increasing taxation and restrictions on production will cut down volume and lead to further concentration on the most favored locations and corresponding dispersion towards marginal locations. The ultimate effect of a continuation of this tendency, if long continued, is to reduce the whole population to a lower and lower level of industrial technique and finally to a primitive subsistence.

Under a free economy, however, a community would no more have recourse to its least desirable resources than the owner of widely varying lands would cultivate his harshest and least productive fields or bring his water or fuel from the places where it was least abundant and most remote. Of two coal deposits, one near and one remote, only the near one (if ample) would be used. At the near deposit there would be much activity, much need and much demand for public services and security of property and possession; at the far point little or none. Competition will fix the rent or royalty at the near point to the value of the public services there. It will also fix the return to capital and labor. This leaves the natural advantages to manifest themselves in the abundance of the product and thus distribute themselves throughout the population in the form of low unit prices for the product. Rent, wages and interest will all be paid out of the proceeds from the coal, and the coal itself will become "real" wages, interest and rent to those who finally purchase it, depending on the sources of their pecuniary incomes.

Somewhere I have taken it as my thesis that a free exchange system causes and a partially free exchange system tends to cause every kind of natural advantage or benefit that comes to some of its members to be distributed, by the effects of abundance on the price level, over the entire membership of the exchange system precisely in proportion to the market value of their respective contributions to it. And, conversely, every disadvantage is equalized in the same way, by scarcity raising the price level. This principle applies to all the natural factors that either favor or hinder production. The final incidence of taxation--of all taxation--doubtless, is in the higher prices resulting from the scarcity of production caused by it. Thus all taxes finally become income taxes that cut down everybody's income in proportion to the market value of whatever services he renders to obtain it.

I hope you have not felt obliged to read this long letter all at one time or in any other way except as you have the mood and leisure for it. I should have stopped long ago for I am planning to go to New York tomorrow noon and have many things to do.

I should certainly be glad to discuss many matters further with you, especially how the social equities are to be preserved in respect to mines and other natural resources.

Are you not likely to be visiting your daughter in Washington before many months? I would love to have you and Mrs. Wentworth visit me here and make this a base of operations for Washington--only thirty miles away.

I appreciate all your cordiality,

1276.

Carbon of a letter from Spencer Heath to John S. Codman, 222 Summer Street, Boston, Massachusetts, October 10, 1939.

Dear Mr. Codman:

Your kind letter of October 9th reaches me today just before my departure for Maryland.

I am particularly gratified that you are giving serious consideration to the ideas concerning land ownership and public services that have been appealing so much to me during the last several years.

I took the liberty of quoting to my friend, Mr. C. H. Kendal, now editor of "Land and Freedom," a portion of your letter in which you express "the idea of abolishing all taxes and deferring all public costs out of ground rent, the surplus ground rent to go to the land owners as compensation for the collection of ground rent by them and for their efforts to maintain ground rent at the highest possible figure." Mr. Kendal thought this was admirably stated, and I think that I can add most aptly and accurately. I would, however, suggest the propriety of regarding the primary function, as it is indeed the present function, of land owners to merchandise public services and advantages giving regard to merchandising as the only social technique of distribution, in fact, the only manner in which any services can be distributed on the basis of value received without resort to violence or dependence upon arbitrary authority.

As to land owners being prohibited from levying taxes, I believe that the most profitable services land owners can possibly perform for the members of a community would be to procure even a modicum of reduction in the amount of taxes now levied upon the producers of wealth and which, as Henry George says, are now "sucking the life blood of both labor and capital." Just as police protection of persons and property is the first duty of political government so Is it the first duty of the proprietors, who desire to collect rent in a community, to protect their land users from the depredation of political authority. If the administration of land should fall into the hands of political authority, which has no technique for determining occupancies by any merchandising process, it seems inevitable that there can be no possession of land or dispossession from it except by the force or favor of political authority. In this view, it is probably not too much to say that the institution of private property in land is the greatest barrier that in any society exists against the unbridled exercise of arbitrary political force.

You may have noticed my remark in the last paragraph of "Why Does 'Valuable' Land Lie Idle" that speculation in land is only speculation in hopes and fears as to the

possible payment or increase in the payment of rent on the land so dealt in, and that such speculation is not the doing of any business in the sense of producing or exchanging wealth. I know that business men in general look askance at any proposed new enterprise that savors of speculation. It seems very probable that when production is freed from the incubus of taxation, few men will prefer the risk and chance of making gains at the cost of each other rather than freely to produce goods and services for each other--for exchanging with each other. The mere chance of gain, including the risk, could hardly be more attractive than the virtual certainty of gain through productive activity that would be possible under freedom from taxation.

Enclosed I am sending you carbon copy of some material that I have submitted recently to some real estate authorities in the hope of getting some intelligent appreciation of it. I think you will recognize the theoretical basis and social implications involved in this very frank appeal to the profit motive on the part of real estate owners.

Since receiving your letter I feel more than ever disposed to make another journey and visit to Boston and vicinity. I certainly made the most delightful social and intellectual contacts from both inside and outside of the International Congress for the Unity of Science that I attended.

Please give my most excellent compliments to Dr. Morgan and Mr. and Mrs. Wentworth.

While I was in Cambridge, I went so far as to look up the address and telephone number of Dr. Lewis J. Johnson, but with the other very interesting associations I was having at the Congress, I was unable to follow this up. I am glad to send Professor Johnson the pamphlet you suggest.

I will certainly be glad to have an opportunity of meeting with a group such as you suggest when I come to Boston again. At present I have no other occasion for coming, but if you will be kind enough to indicate to me how soon or at what season of the year it would be most suitable for me to come, I will try to arrange it accordingly.

Yours very sincerely,

1280.

Carbon of a letter from Spencer Heath to Gilbert M. Tucker, Box 54, Capitol Station, Albany, New York, October 30, 1939.

Dear Mr. Tucker:

I appreciate your letter of October 16th, and hope later in the winter to be able to see you both in New York and at my home in Maryland. I will be particularly glad to have Mrs. Tucker stop long enough to enjoy my Evergreen Gardens for a while.

My definition of capital is not applicable to any situation where there does not exist a community or social aggregation that has become such by reason of its members entering into the service of each other by means of the exchange process and relationship. In other words, capital, with me, is a term of political economy and has no meaning outside of the place where the polis, i.e., the social community, exists. Any goods or facilities used by an individual carrying on outside of community relationships is not even property or wealth, much less a special kind of wealth called capital, because it is only in the presence of community services and under community authority that there can be any such thing as property. If the plow which your non-exchanging farmer, not functioning in any community or exchange relationship with respect to his produce, could be properly considered as capital, then the same could be said of any weapon or implement by which a solitary savage could increase the supply of his food, and we might even in this sense regard a web fashioned by a spider for the catching of flies, as capital because it enables him to obtain more food. The terms of political economy are properly designed for interpretation of politico-economic phenomena, and while it is entirely permissible for purposes of rhetoric to carry them into other fields, such transposition of the terms, I think, rather tends to becloud them with more ambiguity when used within their own proper frame of reference. From the whole context of Henry George, I am quite sure that his definition of the wealth produced by land, labor and capital as rent, wages and interest, has reference only to what happens among persons who are associated together in community relationships of service and exchange. It is a very prevalent error--one indulged in by the greatest thinkers--to try to interpret social institutions in the light of imaginary situations and illustrations in which no social relationships exist. This is the error that vitiates all of the Robinson Crusoe type of illustrations and examples and the mistake underlying the whole of Herbert Spencer's reasoning in Social Statics in respect to the institution of private property in land. Here it was not the reasoning or formal logic that was at fault; it was the premise on which the reasoning was based, these premises being, in the main, supposititious cases of conflict of interest without reference to there being any social organization involved. If property in land is, as I veritably believe, the social institution which provides for exchange relationships between public authority and the common services of the community and, thereby, provides all the security there is for other exchange relationships, then this institution could not be rightly interpreted except in the light of the community functions which it performs. Since Herbert Spencer imputed no social function to land ownership, it was, of course, impossible for him to describe it as a social institution. When people try to explain relationships of a higher order in terms of relationships of a lower order, it is something like trying to explain algebra in terms of arithmetic, or explaining geometry in terms of algebra alone. The social relationships of mankind cannot be explained in terms of those relationships which precede the social state or condition. If in your own book you have tried to do this, I think you will be able to recognize the inadequacy of such explanation. Unfortunately, I have not seen your book, nor do I find the circular in reference to it that you speak of having enclosed. I do find, however, a circular entitled "We, The Citizens."

As soon as I get back home, I will go through the T. R. A. circular and see if I can make any explicit criticisms and suggestions that might be helpful. If I can, I will be glad to have another copy of the booklet to use as you suggest.

I infer from your letter that you will not be in New York until after Christmas. Hence I am not making any attempt to reach you here while I am here at the present time. I do not understand your post script as follows: "Did I ever send you the enclosed? Use it if you should be up this way." I do not know what enclosure this refers to.

1281.

Carbon of a letter from Spencer Heath to Benjamin W. Burger, 150 Nassau Street, New York City, November 5, 1939.

Dear Mr. Burger:

Many thanks for the Sterling pamphlet of 1894 giving the controversy between Henry George and several defenders of Herbert Spencer. I have read it with much interest and attention, and am returning it herewith as you request.

None of these writers discuss in any way the merits of the question of Private Property in Land. It is all absolutely ad hominum and therefore of no interest beyond the personal.

Neither Spencer nor George seemed to have any conception of property in land as playing any functional part in the operations of an organized community. Both interpreted the institution in terms of individual rights and not in terms of the social process or function, namely, voluntary exchange. Both seem to have thought that society was held together by the passive fact of men acknowledging and respecting each others individual "rights". Both subscribed to the "law of equal freedom," the mere statement of a negative attitude of non-aggression, which, though essential to social relationships, is not in itself any social relationship at all in a positive sense. A social relationship, to be positive and veritable, must be a process, something that is performed between and among men, and not a mere condition of let-alone or non-aggression. The social process is exchange, voluntary exchange, and where this process is not being performed there can be no such thing as a social institution, not even such as the family or tribe, beyond the scheme of relationships within which the members consciously or otherwise perform services for one another. Spencer appears never to have had any clear conception of any of this. His negative analysis of private property in land in Social Statics completely ignores it, as does Henry George in practically all that he has to say about private property in land. Both of these men on the basis of their insufficient assumptions, came to an absolute condemnation of property in land, and both in part repudiated it, without knowing precisely upon what grounds they were doing so. George held that the institution should be preserved nominally and in form and also that there was a function for it to perform, a function at least sufficiently important and necessary that it should be recompensed to the amount of a percentage of the rents. But in most of his polemics against property in land George completely ignored his own reservations and limitations and proposed the same absolute abolishment of the institution as Spencer long before him had done. But Spencer gave no further attention to the question for many years nor until the fulminations of George prompted him to a qualified and not very adequate repudiation of his early argument and its uncompromising conclusions. The fact is, both men came to take a modified and qualified position, but George's highly moralistic temper prevented him from perceiving his own equivocal position. His neglect of his own practical qualification of his general position--so much so as to obscure it even to the present day--and his uncompromising absolutist crusade against the institution of property in land arrayed the more sober thought of Spencer and of the scientific and academic world and most of the theological world almost solidly against him. Thinking of land ownership as an obstacle instead of the actual means whereby voluntary rent could be enormously enhanced and canalized into all community services and needs, George misled himself to attack that institution instead of trying to analyze it and seeking to clarify its social potentialities. Spencer and his friends, being in no distinctly better intellectual position, had no better meat to put their controversial teeth into than the very highly personalized attack against Spencer, his character and motives, that George made in his volume entitled A Perplexed Philosopher. Spencer was too much the logician to defend his original position after he found himself perhaps intuitively withdrawn from it, although George was too much the moralist to content himself with any less than absolute denunciation of property in land albeit he had himself given it at least a partial validation. It was this crude moralizing instead of analyzing of the institution that brought on all the conflict with the Pope that Mr. Bell in his recent volume on McGlyn has so vividly and so tragically made to live again. Again it is the irony of fate that this very human institution, property in land, should be abused as the battle ground between professed and professional lovers and servants of mankind while it remained for that cold economist, Richard T. Ely, to be the first to attribute to it a positive utility and foreshadow its social mission. In 1922 he wrote, "In fact, the place and function of the land owner is rarely considered in a discussion of tenancy." And again, "In an ideal system of land ownership there will be an endeavor to create in the land owner a feeling that land ownership carries with it a social mission."

Harold Cox on Land Nationalism is an excellent historical review, quite learned in style and substance, with highly labored but only negative arguments against Henry George, but nothing analytical or original about it. John Orr's book is much more vital and original. I hope you will tell Mr. McNally how I recommend it and give him also my best wishes when you see him.

1282.

Carbon of a letter from Spencer Heath to Samuel Chugerman, 29 Broadway, 19th Floor, New York City, November 13, 1939.

Dear Mr. Chugerman:

Thanks for your acknowledgment and comments on my letter and articles enclosed.

All men of good will have the same ultimate desires for the welfare and happiness of mankind. Their only divergences are as to the manner and the means and not the object or the end. Before the nineteenth century the theologians prescribed the manner and means for the salvation of mankind and, as an arm of the state, compelled the masses of men to its acceptance and to its (and their) financial support. During the eighteenth century the more literate and intellectually influential men lost confidence in the sincerity and sagacity of the political theologians and got them gradually divested of their political authority and tossed out of the capitol building, the court house and the city hall. The secular politicians stepped in. Their rulership directly under divine right and appointment differed but little from that of their clerical predecessors. There arose great demand for coercive government (none other was known) under popular forms. Vox populi would surely be the real vox Dei and all would be well. But it was not. God's trustees (trusties) in general, all wore the same venal stripes and in the late nineteenth and early twentieth century an all but universal demand arose for a new salvation, for something to make democracy work. The theologians were called back again to give salvation by faith and compulsion

--and extortion. But this time it was not faith in a creed, an iron creed, but in a wooden "education" that would slowly turn to iron as it became more compulsive and more extortionate under political auspices. The state now imposes a vast hierarchical educational machine that reaches deep into the pockets of its credulous victims and threatens the independence of every private college and school by undermining the sources of their financial support. And the public, even at its most literate levels continues avid for this new theology, for this educational pedagology, all organized and enforced and supported as was the theology of two hundred years ago.

Auguste Compte offered up his intellectual sacrifices to this idol. Herbert Spencer refused to bow down to it, but he was not seeking the keys to salvation for mankind. But the vastly learned (and educated) Lester F. Ward embraced the new theology, the new doctrine of salvation for the masses through scientific (?) education of the masses at the hands of the coercive and compulsive political authority. Education for democracy! As though people could be regimented into free and voluntary relationships!

The tragic error in all this lies in the assumption that the ultimate peace and happiness of mankind must come from a dispensation from some higher powers than they instead of by the processes of structural organization and growth and the coming into adequate functioning of the organized parts. Social organization is not any exception; it is fundamentally the same as any other organization in nature. As soon as wandering tribes discontinue their customary practice of raiding one another and by establishing property in land settle down to peaceful pursuits in the performing of services by mutual consent and exchange, then there is a going society, just as a new-born babe is a going human being. The parts are not all fully developed and grown but the organization is there, the parts are properly organized; it only remains for them to come into adequate performance of the functions to which they are adapted and carry on to completion their structural growth.

It is not the proper business of the sociologist to look upon that portion of nature which manifests itself as human society as though it were shot through with some kind of diabolism that must be overcome--a vexatious problem that must be met and some means sought for escape. The wonder-waking adjustments, processes and functional relationships operating in this field of phenomena should be of no less dispassionate interest and esthetic appeal than the marching of the molecules into crystals, colloids and cells or the evolution of nebulae into galaxies and world-attended sun. When the searching spirit of science, of exploration and high discovery, shall enter this social field then the seeming confusion and complexities of the structures, of the institutions and customs, will be resolved in the discovery of the simple and invariable functions that these very diverse structures are found to carry on. When these social structures are understood from the standpoint of the functions they carry on, then what is now of necessity wholly empirical will become rational and a rational technique of social transformation will be as quietly and voluntarily accepted and applied as the corresponding technique of the natural sciences (so called) has been applied to the transformation of the natural and physical world. All of man's creative capacity through dominance over his natural world comes from his esthetic motivation, rational analysis and voluntary application of the general principles thus happily brought to light. It must be the same in his discovery and utilization of the social world. Knowledge of the physical sciences belongs only to a few; it is not a mass possession; but its successful application is always by a voluntary and never by any compulsive social technique. All the discredited techniques of human betterment from animism and demonology, through all the formal superstitions of religion and of democratic forms, so-called, to the current naive faith in mass education, all have the one fatal vice in common--they are compulsively applied, and social functions cannot be performed in that way. Professor Ward, for example, discovers no natural technique and writes no prescription for social growth and improvement but that of mass education--scientific education of the masses of men under compulsive political organization and control. It is certainly fair to presume that masses of men learned in science just as he was would then be able to prescribe mass education just as he did. If education of the masses was all he had to offer for the hope of mankind, how could they be expected to offer more? Despite the popular superstition, especially in academic and professional circles, as to the magic powers and properties of mass education, I, for one, have no confidence that a thousand men all learning the same things could thereby possess any greater knowledge or wisdom than one man who had learned it. A thousand men believing the same thing are certainly no wiser than one man believing it. To expect more of formal education or of any education, so-called, under compulsive authority is to look on it with superstition and impute to it some magic power.

I note that you are persuaded with Ward that matter rather than energy is the fundamental of nature and that this materialistic conception provides an escape from the logical morasses of a metaphysical absolutism. We must remember that Ward was of the time and in the thick of the scientific reaction against the theological conceptions of the nineteenth century and a near bystander if no great participant in all that controversy. It would be a wonder indeed if he had not lined up philosophically with the scientific materialists of that time. It was then only being learned that the various forms of energy were quantitatively equivalent and inter-convertible. The current doctrine of modern physics that matter and energy are inter-convertible was then only a remote hypothesis, and the transmutation of elements by changes in their energy content was not then believed in at all. However all this may be, I am quite sure we can find no escape from our metaphysical difficulties in connection with conceiving energy as the absolute by rejecting it in favor of matter. If in our alternative conception we endow matter with universal attributes to the exclusion of energy we have then only transferred our metaphysical difficulty from the one to the other. Whichever term is used, it would seem that we must broaden it to include the other if we would treat it as a universal or absolute.

I am very glad to have made your acquaintance and I certainly hope your valuable and exhaustive study of "The American Aristotle" will be favorably received and widely acclaimed.

1295.

Carbon of a letter from Spencer Heath to John S. Codman, 222 Summer Street, Boston, Massachusetts, January 25, 1940.

Dear Mr. Codman:

I want to thank you for giving me the opportunity of meeting your excellent friends at the Chamber of Commerce luncheon, and presenting to them what I believe to be some very important aspects of the Henry George philosophy and pointing out some of the tremendous and very happy consequences that must follow, logically and inevitably, upon the practical application of his simple formula for the abolition of taxes on production as a transcendent social service to land users. It seems regrettable that so much time has passed without it having been discovered and publicized that the performance of this service is a proper and profitable function to be performed by the land owning interest in the administration of its property. I would like to see some wide discussion and appreciation of the proprietary form of political administration for public and community affairs, as contrasted with the political administration by persons who have no ownership in and, therefore, no responsibility for the misuse of the properties over which they exercise disposition and control. I think it is a matter of tremendous significance to discover that the application of Henry George's practical measure, "To abolish all taxation save that on land values," taken and applied in its positive sense as a service to land users, must [lead] directly into the proprietary form of government or, more properly, public service by private contract, consent and exchange for value received. This is more revolutionary than most of us have ever dreamed, but it is revolutionary in the direction of human freedom under voluntary and contractual relations as contrasted with political despotism. In the former, statesmanship will consist in the providing of public and community services that a community most needs and desires as evidenced by its readiness to pay for them at market valuation in ground rent. This is in high contrast to political statesmanship which, at its best, consists in the erection and preservation of barriers against the encroachments of governmental power and authority. The barriers, however, always tend to recede. The institution of private property in land seems to be the one constant and effectual defense between free men and tributary slaves so long as this institution is not scuttled of its revenues and values by the taxation which "sucks the life blood of labor and capital" (land users), or broken down by the weight of direct taxation upon the institution itself.

There are many angles to this whole matter--historical, scientific, philosophical-- that can profitably be investigated and discussed. I am seeking every opportunity to go into this matter with all its angles and implications wherever I can engage the attention of competent minds. I shall be happy indeed if the extraordinary merits and advantages in the proprietary administration of public affairs shall be attributed to the practical and positive aspects of the philosophy of Henry George.

Mr. Kendal and I would have been pleased to shake your hand once more before leaving Boston for which purpose we called at your office while you were absent, but were only able to leave our best compliments and regrets.

Friday evening we were entertained by Mr. Thomas N. Ashton in Fall River who arranged an evening meal and conference with the Doctors Padelford and half a dozen others who formed a most interesting and intelligent group.

Tomorrow I am having further discussions with the Long Island Georgists, particularly with members of the teaching staff, who for sometime have become increasingly interested in the recent and more positive aspects and implications of the Georgian philosophy.

I am contemplating for the near future a journey to Detroit and, probably, several other mid-west cities. If you can acquaint me to any mid-west friends or acquaintances who you think would take an intelligent interest in what I have to present, I will very much appreciate your doing so and letting me have their names and addresses. I may even go much farther west, if the circumstances and opportunity seem favorable.

1298.

Carbon of a letter from Spencer Heath to Professor Lewis Jerome Johnson,

90 Raymond Street, Cambridge, Massachusetts, February 1, 1940.

Dear Professor Johnson:

I am writing to thank you very much for the delightful hospitality you and Mrs. Johnson gave to Mr. Kendal and me upon our recent visit to Boston and vicinity. We certainly enjoyed it very much from the personal point of view, and were also very much interested in your particular emphasis and interpretation of taxation reform along the general lines proposed by Henry George. Mr. Kendal is one of those persons of Georgian persuasion who not only believes that we should make further investigation in the directions marked out by him, but also that he imposed upon his readers and followers a trust that they would make further application of the general principles laid down by him as he explicitly states in the opening paragraphs of Progress and Poverty.

I have read with much interest your little red booklet on Taxation from an engineer' s point of view, and am pleased to find you among those who are not rigorously trammeled by the traditional approach or by the moralistic and destructive point of view.

My own departures have, perhaps, more to do with method than with subject matter, for I believe that all the things that distinguish civilized man in society from his nomadic predecessors has come to him by those services which have been reciprocal through being performed for profit (recompense) in the regular channels of trade and exchange. I believe that all improvement has come about through practice of the exchange process and relationship, and that moral or philanthropic measures have never resulted in any exchange or other values.

I am greatly interested in Henry George's final formulation in that portion of his great work entitled, The Application of the Remedy, namely, "to abolish all taxation save that on land value." I am constrained to believe that this abolition of taxation which you call "Government Taxes" is a kind of public service that is above everything else the primary social need of every community. I believe that this service can be performed on an exchange basis for value received, and that it cannot be performed successfully in any other way. This service must be performed either with or without recompense. If performed without recompense, it must be done by those who either rob themselves to serve others, or who would rob Peter to pay Paul. Either would be contrary to the way in which permanent results would be obtained. There is, however, in every community a class of persons (or interest) who are owners, but who do not

own any private property or capital but who only own the territory of the community, and who, thereby, merchandise to the community members so much of the public advantages of every kind as the members of the community can profitably possess and enjoy. These are the persons who derive all their income by acting as the social distributors of community advantages for value received. I speak of this as social distribution because it is the only kind of distribution that is based on contract and consent without compulsion or coercion, or any arbitrary determination by political authority, involving as it must, favoritism and privilege, and eventually complete monopolization by political beneficiaries. From this you can see that I regard the merchandising process, which converts community benefits into market values, and thus puts all persons on an equality with respect to them, as itself a public service of the very highest value. Without this service, all sites and locations would necessarily be allocated by preference and privilege, and without the peaceable and equitable distribution that is to be had by the process of exchange for value received. To land owners now performing this distribution by the merchandising process every prosperous community makes generous award for their services. When communities become more prosperous, they rapidly increase these rewards. As they become less prosperous, the community advantages become less salable and ground rent or, as

you prefer, "Economic Taxes" steadily decline.

Since land owners, as such, derive no revenue from any business but the public business and, as such, have no other business, it properly falls upon them to give their attention to the administration of public property and affairs, and to do this in the interest of their tenants and customers to whom the public advantages are sold. It, therefore, falls upon them to discover what services their tenants and patrons most need and to supply them with such public services as they most need and for which the owners will be thus most recompensed in ground rent. It is likewise to the business interest of land owners not only to police and protect their tenants against "government taxes" and other public evils resulting from them, but also, on their own part, to carefully avoid every practice or policy that would be in any way injurious to their tenant and, thus, impair or destroy the recompense they receive for public services in the form of "[economic] taxes" or ground rent, as it is more commonly called.

There is a great deal that I could say in elaboration of the proprietary administration of public services in contrast with their notorious administration by political authority. I have set some of these matters out in a mimeographed publication that I am sending you separately under the title "Politics versus Proprietorship." If you are sufficiently interested to look this through, you will observe that I came upon the ideas in question by way of some thirty odd years' belief in and activity on behalf of the practical proposition of Henry George. I would like very much to have your reaction, after mature consideration, to this general point of view.

I am not sure whether I left with you a copy of my "Energy Concept of Population," so I am sending you another to make sure. This is a concept that seems to be particularly attractive to persons who believe in the physical sciences, and gives promise of being an effective instrument of social analysis and development of technique for the social engineer. You will note that this population concept recognizes the necessity of and attempts to supply the necessary quantitative units upon which alone any scientific or engineering technique can be based. I am wondering what you will think of the application of the conception of energy exchange between units of structure, as it is known in the physical sciences, to the phenomena of exchange of services in the social realm.

I am especially hoping you will observe that my explanation of Private Property in Land is definitely based upon the "Energy Concept of Population." It gave

me much satisfaction to make this functional analysis and explanation of property in land which institution has been so much under controversy from the static point of view.

This letter is far too long. I only hope I can have the pleasure of seeing you again before very long. In the meantime believe me

1303.

Carbon of a letter from Spencer Heath to Dr. Schneidman, June 1, 1940.

Dear Dr. Schneidman:

Many thanks for the kind letter from you and Miss Grodman. I have delayed writing to you until I should have some definite idea of when I could come to New York again.

I am now making arrangements to be there on the 12th and for a few days following and will have free time from the 13th onward, both daytime and evening except as new appointments are made. I hope very much to see you and some of your earnest and intelligent friends and if we can find access to some selected groups or organizations who are intent upon the "nature of things" in the world of social organization it will be a great pleasure to try to draw their thought along those avenues in which we are finding so much illumination.

I am profoundly convinced that the exchange relationship, practiced by contract and consent, is the fundamental basis of all social order and organization. It is, in fact, the one and only bridge over which mankind may cross from the base condition of destructive nomads dependent upon the fortuitous gifts of their natural environment which they degrade and destroy but do not improve into the condition of creative artists divinely working and recreating a world, natural and social, fit for the physical and spiritual habitation of mankind--for the eternal growth and blossoming into beauty of its essential spirit.

As to the things which men have exclusively of one another, there is a vague but insufficient recognition of their source and origin in the exchange process and relationship, but as to those things which characterize a community and which men have in common with one another there is no recognition of, or conscious attempt to practice the exchange relationship at all. This is what makes it so important that the nature and significance of rent be studied and understood, for it is only through tenancies and rents that community benefits or advantages can be transformed from special privileges maintained by force and arbitrary discrimination into social values democratically ascertained and impartially disposed.

Wishing you many blessings and hoping to hear from you.

1306.

Carbon of a letter from Spencer Heath, The Science of Society, Roadsend Gardens, Elkridge, Maryland, to Frank Chodorov, Henry George School of Social Science, 30 East 29th Street, New York City, June 19, 1940 [?]

Dear Mr. Chodorov:

Let me congratulate you on the publication of your excellent letter recently in the Wall Street Journal.

This paper has a sober, sensible and moderately enlightened editorial policy. Their special articles by Thomas F. Woodlock in his column headed, "Thinking it Over," are always of a high order from a widely read and versatile mind. One of the vice presidents of the U. S. Trust Company has several times suggested that I should meet him because of the similarity of his thinking to mine.

I notice you refer to the School as an institution "for the propagation of Henry George's doctrines." It has been wisely observed that the purpose of propaganda is always to induce or influence action. Education looks to the "awakening of thought and the progress of ideas," illumination of the mind through enlargement of its conceptions and their continual extension. Right thinking is always followed by right action. This action is automatic, once the thinking is right. Right action, therefore, need be our least and last concern.

This, however, does not prevent us from knowing what right action is and how right actions are performed. Those actions are right which yield profits and satisfactions either directly of themselves or contribute to that result in their general context. In the social realm, the realm of associative relationships, those things are right which convey services to others in such manner that equivalent services are received in exchange. Such things are not only right, they are real, in the sense that they are abiding and permanent, so far as their own nature is concerned, and not self limiting, as wrong things are.

The reason men practice exchange is because each man finds greater satisfactions in the many things that many men can do for him than in the very few things that he can do for himself. Production for use is primitive and barbaric; production for exchange (for profit or recompense) is social and civilized. The motivation of exchange is mutual profit.

Without exchange of services men are either primitive or enslaved. Men are limited; the energy they devote to the service of each other cannot be perverted and diverted into oppression or war. The energy given to trading cannot be expended in raiding, but all energy must be expended in some form. The function of society, of all social processes and relationships, is to liberate. Freedom is a social product. Civilized man has no freedom but comes to him by reason of the services he gives and the services he gets by exchange. Freedom of exchange, therefore, is the highest, the most inclusive, freedom that man can desire.

The limited freedom of exchange that men now have comes to them through the services performed by the social functionaries whom society charges with the function of distributing its territory and resources by a process of exchange into the hands and secure possession of those who can use them most productively. The performance of this distributive service is limited to so much of the territory and resources as can be profitably or efficiently employed under the existing limitations and restrictions imposed by government upon the freedom of exchange--upon the freedom to employ one another by exchange of goods and services. But this distributive service performed by exchange for an equivalent called rent does give to all persons, without favor or discrimination and upon equal terms, access and possession of so much of the territory and resources as they can profitably use. In a highly productive community this distributive service upon the territory is of high value and is so recompensed. Without it, possession would have to be held by force against force and therefore without security, or, if the distribution were by government officers other than owners acting in a free market, the allocation and possession of sites and resources would have to be upon political considerations involving favor and discrimination and therefore ultimate monopoly to political privileges, whatever the form of the government might be.

Since the members of a community cannot have freedom of exchange either without security of possession or under monopoly of its basic resources, it must be clear that they obtain their present limited freedom of exchange from the services performed in the proprietary administration and distribution of land that they now enjoy. The rent they pay is the market price of the services that give them their present limited freedom of exchange. But they need far more freedom than they have now. They need freedom from the compulsive taxation that penalizes all their exchanges, demoralizes their plans and is spent to enforce many other restrictions upon them. In consequence, not only their labor and their capital, but the very land itself and its resources are largely idle, unused and unemployed. The members of the community are in sore need of more freedom; more freedom to exchange and thus to employ

themselves, their capital and their natural resources in the service of each other.

This is the light that needs only to be seen: What men live by is the services they give each other, using material things only as an aid. What men need is more services, and especially do they need the kind of services that will give them more freedom to exchange. None but proprietors can exchange property outright or its use for limited terms. None but political persons can penalize exchange.

When men have more freedom to exchange they will give each other more services and create more wealth and values of every kind. But they can obtain this greater freedom of exchange only by [having performed for them] an extension of the community services by which they obtain such freedom of exchange that they now have. These present proprietary services, as we have seen, give them peaceable security of possession and immunity from political discrimination in the allocation of community resources, but these merely distributive services do not give the members of the community any protection against the ravages of taxation which "now hampers every wheel of exchange." The service the productive community now so sadly needs is, "To abolish all taxation save that on land values." This is the formula into which Henry George cast the proposition made to the French land owners by the Physiocrats for the salvation and restoration of their rents and values. This is the proposition of public service to mankind as to which, in the words of Henry George, "there are few of the classes most to be benefited by it, who at first, or even for a long time afterward, see its full significance and power." "This is the secret which would transform the little village into the great city. With all the burdens removed which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamed of. This, in its turn, would lead to an increase in the value of land--a new surplus which society might take for general purposes."

Here George clearly recognizes that the public or community service that shall abolish taxation and thus liberate exchange will result not alone in a vast increase in the wealth and values flowing from private services but that out of this will arise also an increase in rent and the value of land. Unlike the Physiocrats, his intellectual eyes were not open to the relationship between this public service of liberating exchange and its natural and appropriate reward in higher rents and values. He assumed that this great public service could spring from the public itself or through governmental coercion administered by politicians without any restraint or supervision by the public proprietors and without any participation by them either in the service or in its rewards.

All organized services, private or public, are performed by the aid of capital goods and facilities; private services by the aid of private capital, and public services by the aid of the public capital, this latter consisting of all public improvements and other property in common or community use. Organized private services are always performed by the owners of the private capital either directly or through their supervised agents and employes and the services and/or commodities are delivered to the patrons of the enterprise by the technique of voluntary exchange. Private services cannot be successfully performed by private servants unless they are supervised (and paid) by the owners of the private capital that is placed in these servants' hands. It is the same with public services in which all the public capital is involved. They can be successful only so far as they are performed by the public proprietors and by public employes acting under their supervision and control. The total ground rent received represents the gross sales of public services in any community and the net ground rent remaining after payment of all labor and capital charges is the recompense to the public owners for their administrative and supervisory services. It is because this fundamental organization of the community services, of the owners, servants and capital, is not clearly seen that so much confusion arises.

The practical proposal of Henry George to abolish all taxation is a call to public service, but it has not been addressed to the public proprietors. On the contrary, it has been unthinkingly assumed that proprietors are superfluous and even injurious and that they must be eliminated--much as communists and such persons assume that the proprietors of private enterprises are superfluous and must be expropriated and "liquidated" at whatever cost.

There has been and still is too much foggy assumption regarding George's proposition and entirely too little analysis of it. As often happens with intuitive minds, his conclusion was sounder than his argument and he builded better than he knew, yet he urged those who were to follow him to build further and better than he. Now that his dialectic is silent and the moralistic conflicts that beset him and his more emotional adherents have all been resolved, his practical proposition can be found basically in accord with the universal principle under which socialized men serve each the others by exchange and all successful business is carried on with profit and success to all concerned. It can be seen to integrate harmoniously with a universal system of exchange inclusive of all public as well as all private services. And it involves nothing less than the entire transformation of political government by force into the proprietary and essentially democratic administration of public capital and services on the principle of contract and voluntary exchange for value received. It discloses a system of relationships, of natural law in the social world, inviting the oldest, most official and most influential class in any community to an extension of service that will liberate the full productive powers of the population and yield to themselves the most magnificent profits and returns. Like other great discoveries it needs only the light, only to be understood, not by all men, but by a sufficient competent company of those whose property and circumstance is such that they can utilize it in the service of all and be rewarded by all. Long enough and in vain have the followers of Henry George resisted intellectual progress and discovery and indulged themselves with emotional urge and moralistic appeals looking to destructive action and reform. "Until there be correct thought, there cannot be right action; and when there is correct thought, right action will follow."

1308.

Carbon of a letter from Spencer Heath to H. B. Cowan, 476 Driscoll Terrace, Peterborough, Ontario, July 28, 1940.

Dear Mr. Cowan:

I must thank you for your very interesting letter of the 17th with enclosure of your letter to Mr. Donan Jackson. I am writing from New York just before returning to Maryland where your copy of Maclean's Magazine doubtless awaits me.

It was a grand experience to make contact with your live intelligence and hospitable mind in Toronto and I appreciate your hope that there will be further opportunities of the same kind.

As to how far the real owner should go in directing and administering an enterprise, this can be answered from two points of view: From the standpoint of the patrons or customers of the enterprise (be it public or private) the owner-administrator should so conduct it as to give the utmost of service and satisfaction to his patrons; from the standpoint of the owner he should so conduct the enterprise--property--capital --that it will yield him the largest net return, which of course can only occur through his giving his patrons the largest service and satisfactions. Where there are many owners of the same property or enterprise it is a prime administrative function for them to act jointly in obtaining the most capable managers and other subordinates. Of course all this involves real and normal economic planning on the part of owners in the interest of their public and therefore in their own interest, for the value of all property depends at last on the quantity and regularity of the income derived from its use in the service of others. Nothing but income can be capitalized.

It is certainly not my idea that the tenants or customers of any enterprise should be excluded from any "say" in its direction and administration. I am sure there are no enlightened owners who do not welcome and earnestly seek every expression of the sentiments of their patrons as to how the enterprise can be conducted most valuably to them. This of course should not impose on the patrons any responsibility, nor would it be reasonable to expect them to take time out from their own respective businesses and affairs in order to give administrative services to any public or private enterprise by which they are being served. It is only because we imagine we can obtain public or community services politically--by the magic of masters or rulers invested with governmental power--instead of in the freedom of contract and exchange, that we persist in the notion that the general public who receive community services passively should at the same time be engaged actively on the side of administering them.

I have carefully studied your long letter to Mr. Donald Jackson. It is an admirable presentation of the proposition that when a particular class obtains special benefits at the general expense this increases the demand and thus the present and prospective value (annual value and speculative value) of the kind of land that is used by the benefited class. This is a recognition that in a voluntary exchange system a special benefit or advantage enjoyed by a special class will be immediately shared by those with whom this class has direct exchange relations. In the five examples you give there is in each case a special benefit conferred on a limited class at the public and general cost and expense. In each case this special benefit (which is a general detriment) increases the immediate market demand for the sites and resources that are used by the specially benefited class. Thus temporary land values are built upon the inflation of special benefits, and those who make future commitments (mortgages and other term contracts) upon the basis of these temporary values, thinking them permanent, must suffer a peculiar hardship during the period of deflation that inevitably ensues. The inevitability of the ensuing deflation follows from the fact that the original benefit to the special class was brought about by a compulsory burdening of the whole general economy, and when this detriment has finally distributed itself throughout the system then all classes are at a lower economic level than that at which they began--so far as the effects of this particular episode in compulsory governmental benevolence is concerned.

In your Australian example the special benefit to a limited class is not so directly apparent as in the others. It came about through inflation of the prices of "all primary produce on the world's markets" by governmental purchases with credits that did not arise from any governmental contribution to the supply of goods and services in the markets of the world. This gave a special though temporary advantage in high monetary prices to primary producers, especially when the demand for munitions and other luxuries of war declined. The great inflation of agricultural land values during and immediately subsequent to the war period was due to the increasing concentration of demand upon and therefore the rising prices of agricultural produce. If this elevation of farm commodity prices and farm land prices had been the result of a demand and purchasing power arising from the production of goods and services instead of from inflationary credits, then the resulting land values would not have been temporary and neither need nor necessity of the subsequent deflation would have occurred. I incline very much to the view that the agrarian problem and, in fact, all economic distress arises primarily from compulsive governmental distortions of the free flow and exchange of commodities and services by contract and consent and that the acute crises occur with the necessary collapse of the temporary, inflationary and only apparent values that are thus seemingly made to appear.

I am therefore skeptical of remedial measures that depend upon affirmative or positive governmental action, for such action is well capable of destroying actual and permanent values while creating temporary and imaginative ones subject to collapse. The remedy, therefore, should be found rather in the extension of the freedom to contract and exchange than in any alteration of the restrictions and restraints that so grievously impair it. This view is most admirably expressed in the naked words of Henry George's practical proposition, "To abolish all taxation save that on land value." This does not call for the imposition of any tax nor the destruction of any values. Nor does it call for the confiscation of any present existing rents or values, for the new income to land owners created by the lifting of taxes from production will be far greater than the amount of the taxes abolished and this will form a new and abundant basis for the financing of further protection and community services--all public services--to the productive community.

Moreover, if taxing measures or other coercive governmental technique is designed to improve the financial returns to producers we may doubt any such result. if "we must find some means of removing some of the many forms of taxation that are crushing agriculture," it is not quite clear how "This might be done by increased taxation on land values." Nor is it clear how this would enable producers to obtain land at a lower valuation, for it appears that in New Zealand and Australia as well as elsewhere, "The fact that buildings were not taxed encouraged their erection and thereby increased the demand for the land which in turn resulted in an increase in the value of land in spite of the increased municipal taxes upon it." (Bottom of your page 5) I take that the exemption of farm buildings and farm operations and farm markets from the blight of taxation would have a positive effect on farm land values at least equal to the effect that the exemption of buildings has upon their site values.

As you say to Mr. Jackson, these matters represent an enormous problem. I wish we might have opportunity of thoroughly discussing them. I recall that Mr. Ross had in mind a project of getting you and Mr. Owens and several others including myself together in his son's summer camp for a few days for just that. If he should arrange this for about the third week in August I think I could conveniently attend and I am sure I would both enjoy and profit from it.

I wrote the first page of this letter in New York whence yours was forwarded to me. I have just returned here and found your copy of Macleans. I am sure I will have much interest and pleasure in reading your valuable and extensive illustrated article. I hope by the time you receive this letter you will have read and further weighed in your mind some of the ideas I have tried to elaborate in the printed matter I left with you and of which I enclose additional copies. I shall be glad to receive any further comments or inquiries that occur to you.

With best personal regards,

1309.

Carbon of a letter from Spencer Heath, The Science of Society, Roadsend Gardens, Elkridge, Maryland, to Frank Chodorov, Director, Henry George School of Social Science, 30 East 29th Street, New York City, August 7, 1940.

Dear Mr. Chodorov:

In compliance with your request, contained in your generous letter of July second, for a briefer statement of the matter presented in mine of June twenty-seventh, I submit the following:

All labor that commands voluntary recompense, and therefore has value, takes the form of services.

All voluntary exchanges are exchanges of some kind of services.

Services are of two kinds: Services by production (physical) and services by exchange or distribution (social).

All services of production are applied physically to land and incorporated in it or to some product from land (capital) and incorporated therein.

All services of distribution are performed socially by making and executing contracts or exchange agreements with respect to the ownership and use of land as sites and resources, or with respect to products that have been made out of land as capital.

Land ownership provides for the social distribution of land. It is a defense and protection against the evils inherent in the political distribution of sites and resources.

The practice of land ownership or administration is the performing of these distributive services by contract and consent for value received and not politically by coercion and compulsion and without specific consent.

Ground rent is the voluntary and spontaneous recompense that the served members in a community pay in order to obtain this service and protection.

When the land owning real estate interest extends its services to include the protection of its land-using tenants and purchasers against taxation and other political violence, then new ground rent automatically will arise in ample amount to finance this extended public service and to compensate them for performing it.

This will not only diminish and finally remove the blight of taxation, but will at the same time introduce a positive and profitable process for supplying all public protection and safety, and security from aggression from without or political despotism within.

Further, it affords a sound and practicable procedure for the financing of every public improvement and community facility having use and value to the community and therefore making the community more prosperous and more productive, thus generating ample ground rent for the maintaining of them.

Thus may public needs be met and public affairs carried on by a public authority with entire freedom of contract and consent on both sides and without resort to compulsions or confiscations of any kind.

Social order can exist only so far as the members of the society serve and receive services by the voluntary engagements of exchange and consent. It is in this practice of contract and consent--this freedom of property and exchange with respect to public services and advantages as well as to private ones--that the natural law of society must be fulfilled. In the words of Henry George, we must seek the "laws which are a part of that system or arrangement which constitutes the social organism or body economic, as distinguished from the body politic or state. . . . These natural laws . . . though they may be crossed by human enactment can never be annulled . . " (Sci. Pol. Econ. p. 428) "To freedom alone is given the spell of power which summons the genii in whose keeping are the treasures of the earth and the viewless forces of the air." (Progress and Poverty p. 523)

* * * *

What I have here endeavored to condense would be abundant in its content for a lengthy treatise. I am therefore attaching to this letter a more extended statement for your possible further interest and consideration.

1310.

Carbon of a letter from Frank Chodorov, Director, Henry George School of Social Science, 30 East 29th Street, New York City, to Spencer Heath, Roadsend Gardens, Elkridge, Maryland, August 12, 1940. Followed by carbon of a letter from Spencer Heath, Roadsend Gardens, to Frank Chodorov, August 25, 1940.

[Dear Mr. Heath:

The keystone upon which your total argument rests,[it] seems to me, is in this sentence,

"Land ownership is a protection against the political distribution of sites and resources."

This is a statement which is not borne out by experience. And if this is so, if history proves that land ownership is not a protection against the political distribution of sites, your entire case, as I see it falls down.

The historical record seems to indicate that land ownership is dependent upon political distribution of sites and resources. The state is an evolvement of slavery. As land became more valuable, due to the increase in productive arts, and the increase in population, chattel slavery was substituted by the private ownership of land. But the private ownership of land was possible only because the beneficiaries of this system got control of the political machinery; in fact, at first they were the political machinery.

Your statement that land ownership is a protection against the political distribution of sites would seem to indicate that there is an antipathy of interest between land owners and politicians. This is not historically so. Politicians have been the tools of land owners, and the two groups have worked together for the private aggrandizement of both.

Furthermore, the phrase "land ownership is a protection" involves the idea that land owners render a service. The only service that they might render is to hold the land against thieves who could pick it up during the night and walk away with it. But even that service they do not render because the public pays for police protection against possible robbers of the earth.

Because your basic concept is historically incorrect, economically and morally unsound, I cannot see any validity in your thesis.

Yours very sincerely,

(signed) Frank Chodorov, Director.]

[Spencer Heath's reply to Mr. Chodorov[

Dear Mr. Chodorov:

Yours of the twelfth wherein you dispute my statement that "land ownership is a protection against the political distribution of sites and resources" seems like an attempt to discredit a fundamental institution of Society first by the assertion that one of its functions is not performed and then by asserting that no function at all is or can be performed by it. The first assertion is superfluous, if the last be true. It begs the question. Furthermore, it should be noted that both assertions are negatives and therefore not susceptible of any direct verification.

It would be pertinent, then, to inquire just what it is, if not land ownership, that stands in the way of a purely political distribution of sites and resources. If history shows that land was once held only by force against force and thus could not be held or exchanged by any process of contract or consent and hence had no value, that still does not prove that it is now so held. The fact that now to some extent it can be used and exchanged by consent and without resort to force is what gives it value--value in exchange, and there are no other values. If there are values of obligation, the

obligation must be that of giving a recompense and therefore an exchange. An obligation other than by way of recompense and exchange would be a compulsion resting on force. This would be an anti-social condition or situation, capable of destroying values but not of creating them.

Since force was once universal, we need not cavil that it preceded and out of it grew all social institutions. The circumstance that order must evolve out of and away from previous disorder, becoming different in its mode of operation, is proof rather of a new dispensation than of any continuance of the old. We might as well say that free relationships are bad because they have supervened upon previously compulsive ones, that trade must be dishonest because of its birth out of piracy, or that freed men are still slaves because they once were.

The coercive or predatory political state is not an evolvement out of, it is a continuation of slavery, essentially so, with its mass conscription of property and services by taxation, making free contract, consent and exchange less and less possible and thus destroying all land and other property and service values.

It is true that land ownership is being as it always has been destroyed by the advance of political taxation. Laid on land value itself, taxation absorbs and cancels it. When laid on the private wealth and services that constitute the demand for land services--for the distribution of community advantages--it thus undermines and inhibits land values.

The services for which rent is paid are not performed by those who receive and pay for them. They are performed by land owners in their social distribution of the territory and its advantages. Those who pay rent produce only the wealth and services out of which they pay it. These private services and production constitute the demand for secure possession of sites and resources and the portion of production that is given as rent for the pro-social and peaceable distribution of sites and resources is the recompense for those services.

Sites and resources are not services; they are not performed and hence do not command any recompense in return for them. Only services can command recompense, and the recompense itself is the value of the service.

Taxation yields no recompense. "lt drains the life blood of labor and capital" and thus inhibits the production of wealth and services. It diminishes all value by diminishing all recompense.

As political taxation destroys the basis of land values by limiting the wealth and services that are given in exchange for land services, the sites and resources must be distributed less and less by the processes of the market and more and more by political determination and preferment. The institution of property in land cannot, of course, protect against political distribution of sites any further than the institution is maintained and permitted to exist. It is only so far as it exists that it can protect. When it ceases entirely to exist then it will cease entirely to protect, and land will then exist only in the physical sense and not in the social sense as an instrument of contract, service or value.

History gives no account of any successful revolt of slaves. Every political revolution has been only a change of the masters over the properties and the persons of the populace. Every Great Charter, Bill of Rights or Declaration of Independence or other barricade against political tyranny has been erected by landed proprietors in defense of their properties and of the liberties of the free men who occupied under them. It has always been the land owners who banished or executed kings and the predatory politicians who flocked around and under them--if that is what you mean by making tools of them. The so-called charters of liberty are not very apt symbols of "the two groups working together for the private aggrandizement of both. "

There is the same difference between land ownership and physical land that there is between land value and physical land. Land ownership and land value are social phenomena. Physical land is not. Ownership and value--they are inseparable-- are made by men exchanging services. Land is not so made. They may be destroyed by predatory politicians, by taxation. Land cannot, nor can it be carried away.

Henry George wanted us to see further into social phenomena than he had done. He wished our thought and the illumination of our minds to grow and expand as his had done and not stop dead in his tracks. This means that we must see old things under new aspects. We cannot properly understand any principle or even any phenomenon until we have viewed it in every possible aspect and relationship.

You know about the several blind men each examining a different part of the elephant and all disagreeing violently for no reason at all except that they approached the same elephant from different directions. It is the philosophy of Henry George that this elephant, the social organization, gets its life only from the freedom that its members practice and enjoy. This means that what men do by compulsion and coercion brings on the death of society, and what they do by contract and consent, by the mutual engagements of serving each other in the democracy of the markets, gives to society all of the life that it has.

Now surely we must all agree that any political distribution of sites and resources would rest ultimately if not immediately upon the compulsion and coercion of the many for the special benefit of the few. All history, all experience confirms this. Henry George was aware of it. That was why he would not agree to nationalization of land--the abrogation of private titles and contracts and reliance on political distribution. He sensed that without specific owners of specified parcels land could not even be held, much less distributed, by contract and consent--that there could be no distribution to all upon equal terms without preferment or discrimination.

No doubt this is what prompted Henry George to write,

[Nor is there any difficulty in combining a full recognition of property in land with a recognition of the right of all to the benefits conferred by the Creator. . . .

For while it is true that the land of a country is the free gift of the Creator to all the people of that country, to the enjoyment of which each has an equal natural right, it is also true that the recognition of private ownership in land is necessary to its proper use--is, in fact, a condition of civilization.

When the millennium comes and the old savage, selfish instincts have died out in men, land may perhaps be held in common; but not till then. In our present state, at least, the "magic of property which turns even sand into gold" must be applied to our lands if we would reap the largest benefits they are capable of yielding--must be retained if we would keep from relapsing into barbarism.]

Henry George knew that society could not live except by the practice of free relations. It therefore must provide itself with proprietary servants to function as owners in order to give contractual distribution of its sites and resources by merchandising them and with them merchandising the use of all the public territory and public capital improvements contiguous to the privately occupied land.

These public improvements--public capital--are not placed on the sites vertically as private improvements are but contiguous between and collateral with respect to them. So far as their use can be and is merchandised to the occupiers, so far, but no farther, land value can be and is created through them.

Just as private capital occupying land or existing as improvements upon it can have no value beyond that expressed in the recompense that is had for it or for

its use, so the public capital can have no value beyond that developed and which arises in the course of merchandising it. For the public capital becomes public by a coercive process that takes it out of the market without recompense, thereby destroying its market value. But when land owners merchandise the sites or the use of them, including use of all the public capital and other public advantages, then their customers pay a market price or rent for this merchandising service, and this price or rent is the value of the merchandising service of which it is the recompense.

Where there is no recompense, no exchange, there can be no social value--no exchange or market value. The tax victim receives no value, no agreed recompense from the politician. If the politician permits the tax to result in a public improvement he gets no recompense from the land owner. But land owners do get recompense from land users because they give them the service of making a social, contractual or exchange distribution of the private sites and resources, of the use of the public parts of the community and of the use of all its public capital improvements and other resources.

Nor is the tax payer able to pay twice for his own goods by having them sold back to him. He has earned or paid for them once and he has received from the politicians--tax gatherers--no recompense wherewith to buy them back in any form. His market demand his purchasing power, is gone. And land owners cannot and do not give anything to the politicians for the capital (or the use of it) taken from their tenants because they cannot sell it again (or its use) to the tenants for the very good reason that they, the tenants, received no value or recompense for what was taken from them.

The only thing the tenants can pay the land owners for is the services that they perform, their highly valuable services as distributors--unless, indeed, the land owners should purchase or perform other and further services, such as protection against unnecessary (or all) taxation, as they very well and very, very profitably might do. This law of voluntary payments being made for services only may be "crossed by human enactment," as Henry George says, "but cannot be annulled."

It is by service alone that voluntary recompense can be obtained. Thus are values made; and such voluntary recompense not only measures but is the value of the service. Likewise, the value of the recompense is the service it procures. Each obtains its unit rating from the voting of the market. These unit ratings are called prices. The value of anything depends on its magnitude or quantity times price--the number of units times the market rating per unit--just as in hydromechanics, electricity etc. a rate or volume of flow depends on the number of units moving times their velocity or potential charge.

The validity of any description of phenomena--my description or that of anyone wise--depends entirely on whether it can be objectively or operatively verified, and not at all upon any person's seeing or failing to see any validity in it.

1311.

Carbon of a letter from Spencer Heath to Francis I. duPont, Number One Wall Street, New York City, August 19, 1940.

Dear Mr. duPont:

Reference is to your letter of the eighth.

I surely do know as well as you do that tenants cannot be found for every piece of land. I agree with you perfectly.

Such idle land yields no rent at present, if ever. Nothing is being given today, either outright, as a price, or for its limited use, as rent. If such a day comes, then what is received for it will be its value, then but not until then. Meanwhile, it produces nothing, neither price nor rent, and there is nothing that can be capitalized or otherwise taken as present value.

If it is "now held for a price" that does not give it any value unless or until the price (or rent) is actually received. What the owner has is not a value but merely a hope. (A hope that he will be recompensed, ultimately, for the standby services of himself and predecessors). What he hopes for, but has not, may be called a prospective value, but not a real value unless or until it becomes realized.

The real value of any property or service depends upon and is expressed by the recompense actually received for it--not an imaginary recompense. Real value depends upon receiving real income, either annually as rent or capitalized in price. Present values are dependent on a present income; and prospective values are nothing but prospective incomes. Values cannot be actualized in fantasy, but only in goods and services (or credits commanding them.)

The object of all owners should be to increase their present values and realize their prospective ones. This can only be done (legitimately) by supplying better and further services to present and prospective customers--tenants or purchasers. This is how all values are made, including the values of real estate.

My pamphlets are a prescription of more services to create more values, and these services are specifically described.

This is my fundamental premise. Is it sound? Is there any other or more practical way to "raise and restore the income and value" of any property?

I feel very strongly that the matters I am presenting with reference to a most important topic deserve more thoughtful consideration and should receive more thorough examination than you seem to have given them. I would like very much to hear further from you.

1312.

Carbon of a letter from Spencer Heath Roadsend Gardens, Elkridge, Maryland to Henry J. Foley, 8825 173rd Street, Jamaica, Long Island, New York, September 12, 1940.

Dear Friend:

I thank you a lot for your letter of August 19th. You are quite right: the plan that I, like Henry George, propose, as you seem to understand it, would certainly not make for prosperity. What we propose is: "To abolish all taxation save that on land values." Wages, including interest, profits, fees, commissions, etc., would still be the total product minus rent, but not minus taxation and the ruinous social cost of taxation. The magnitude of the total product would thus become enormous. This stupendous new value rising out of the service of abolishing taxation and all its paralyzing effects would flow into the general exchange markets, and there be distributed, as all values are, by the free and voluntary processes of contract and consent which constitute the democracy of the market. All income would be raised and all would be distributed by the process of the market in the same way that the market now distributes the beggarly little that remains after taxation takes forcibly more than a third out of a tax-stunted and under-functioning total productivity.

There is no distribution of rent or any other income until after the taxation that has first paralyzed and inhibited production has taken its heavy toll out of the production that does come through. This socially disposable balance of production, and this alone, is disposable under the free contractual engagements that constitute the general market and system of exchange. It flows in as many different directions as the different services that brought it into the market. The part called wages (real wages) flows to those who have performed current services at contracted rates. The part called interest flows to those who have supplied the use of accumulated services called capital. The part called rent flows to those who have merchandised and thus socially distributed the use of sites and resources, including the use of public improvements (public capital). The part called profits is the portion that remains in the hands of owners of enterprises to afford them recompense for their supervisory and administrative services as owners. The relative proportions in which this total disposable product is divided up to constitute these incomes is purely a matter of contract and consent among those who bring their current services or their services accumulated in commodities or properties into the general market. In this there are no preferences or discriminations. All have equal opportunity to deal with each other on equal terms--so far as the market itself is concerned. If there are any special and exclusive privileges or advantages, they are established and maintained only by the compulsions and favoritisms of the tax-taking political authority, or such criminal operations and activities as it incites or fails to suppress. None of these can arise out of the operations of the market itself.

[Copy indicates the intention was

to insert an additional paragraph here]

As to Ricardo's "law"-- that special formulation of the doctrine of Malthus--this operates among men, as among animals, who do not practice division of labor and thus produce for and exchange with others, but live only on their individual extractions from their usually precarious environment. Any driving off of late comers by earlier arrivals upon an area of bounty or fertility would be an operation of the law of the jungle, and not of a market, which is governed not by force but by contract and consent. In a civilized community, possession and distribution of land by force has been abrogated in favor of contract and consent upon terms democratically determined. There is always a diversity of owners competing against each other for tenants or purchasers. They bear the price down from above, just as diverse tenants and purchasers bear it up from below. This is equable; this is what prevents "the landlords from setting the rent at the figures which would leave the tenant only the wages necessary for subsistence." From the operation of the market there is no ground of dissent. And when there is an open market, there can be no closed monopoly. But where decree destroys consent, then only force and compulsion, and no free market, remains.

Ricardo assumed ownership not as a service whereby its distribution is peaceable and contractual but as a force preventing the distribution of land. Further he assumed equal application of labor and capital on the best and poorest--on all grades of land. Both of these assumptions are wrong.

It is a curious notion that because Production minus taxes equals Rent plus Wages plus Interest, and Wages plus Interest must equal Production minus Rent, then Rent must necessarily increase or decrease at a greater or different rate than Wages or Interest. The fact that the three together make up a total has nothing whatever to do with their relative magnitudes or any change therein--with how it is divided. It is no more pertinent than that because Three equals One plus One plus One, then Three minus One equals One plus One. The fact that the whole must equal the sum of its parts does not determine the size of the parts. That is determined by what process the whole is divided into parts.

So far as taxes are concerned, they are taken out of production by force and without any exchange or corresponding recompense. The amount seized depends on the amount of force or intimidation, but so also does the amount available to be seized. Taxation destroys its own source and base until at last there is no residue for distribution by the market. While there is a residue remaining in the market, it is there distributed under a non-violent jurisdiction in accordance with the agreements that are entered into by the respective parties, with consent of all. Competition (so far as it is not set aside by force) exhibits the social will and serves the common welfare.

But neither competition nor anything else can make it fair that under the blight of taxation there is so much land, capital and men either idle or only partly or uselessly employed and that over a third of what is pooled in the market should be taken forcibly away.

I certainly do not propose any system. I only propose that the system we have be better worked. The British land lords of the seventeenth century did, indeed, have this same system, and they worked it badly. There is no system or anything so good that it cannot be worked badly by the ignorant or the unenlightened. These British land lords did, indeed, own the government. That is how they were war lords instead of land lords; tax takers instead of land administrators. They used political instead of their contractual power. Against the advice of John Locke and other wise men, they levied tribute by force, just as their predecessor in power, Charles Stuart, had done. They cut off his head but did not cut off his prerogative of taxation. That they took for themselves and with it they "wrecked England and starved Ireland," just as you say. This brought on bloody riots and the series of reform laws that by the start of the present century completely divested the House of Land (and tax) Lords of their deadly political authority, and transferred the kingly power to tax, and thus to destroy, to the House of Common Demagogues, where it now resides.

We should awake to the fact that the revolutions of the nineteenth century stripped land ownership of all the political and compulsive power that it had under the Continental totalitarian states, and that William I introduced into England when he made a political distribution of the sites and resources of the land. No land lords with us today have the power to take any revenue, but only to receive rent as the market recompense (value) for the services they perform in making social distribution of land, or of its use, by contract and consent. If and when they learn to unite and perform and further public services without force then their values and their income in recompense will accordingly rise.

Henry George proposed the great master-service to Society when he "put the proposition into practical form" by proposing, "To abolish all taxation save that upon land values."

[Copy indicates the intention was

to insert an additional paragraph here]

This master-service being in effect, would make any bankrupt community solvent, any depressed community prosperous--every economic desert inhabited, any prosperous community a miracle of creative power.

A community, like an individual, must use the process of the market, with its technique of contract and consent, to pay for any service it receives. And the recompense that a community pays in this manner for all the services that its members have in common one with [the] other, is the so-called ground rent paid to land owners. It is, therefore, the business and to the interest of land owners to provide these services. As land owners, they have no other business, any more than the landlord of a hotel has any business but to provide for the comfort and convenience, safety and security of those who pay rent to him. Land owners are unique. They alone have a profit motive to abolish all taxation save on themselves. This motive will be powerful, for it is entirely demonstrable that by reason of the indirect effect a tax burden of One Dollar lifted or imposed raises or depresses rent by a far greater amount.

Yes, the landlords of England had their chance of being intelligent and becoming prosperous instead of being covetous and becoming bankrupt, as they now are. It is the same with those Single-Taxers who are so covetous to confiscate the landowners' rent that they cannot understand what services land owners now perform, nor how the proposition of Henry George would be a natural extension of the protective services for which tenants would automatically award more magnificent recompense than they ever dreamed.

Compulsion or a plan to employ compulsion is disaster to any cause. Only by the services that men perform for each other and exchange in freedom among

themselves--the making of money legitimately (building exchange credit)--has the material condition of mankind ever widely improved.

The reason why land users put rent in the landlords' pockets (and show no desire to take it out again), is that landlords perform an indispensable service for them. They make it possible for land users' to have sites and resources divided among them on equal terms, in accordance with their unanimous will by contract and consent under the democratic process of the market in which all are free to register their votes. Without this contractual distribution of possession by the agency of proprietors, locations and benefits would have to be distributed arbitrarily by some coercive authority superior and inimical to the land users, or they would be left to contend with each other.

In neither case could they have any security or equal opportunity of possession. In neither case could they perform and exchange services among themselves. In neither case could any society survive. In the words of Henry George, ". . the 'magic of property' . . must be applied to our lands--must be retained if we would keep from relapsing into barbarism." A service supremely vital to the very life of society, is not to be lightly dismissed as of no value and deserving no recompense. And when a population of land users under their free contractual engagements, determines and awards its recompense for this service, it has no more right than it has desire to reverse its own acts by relapsing into the barbarous technique of taxation, which Henry George proposed to destroy. Men do not make voluntary payments except they receive services, and the decent instinct of any community revolts at any proposition to seize back by force that which they have paid by way of exchange and consent.

If it were possible to distribute land by the services of politically elected or appointed persons, it would still not be possible to recompense such persons in freedom by contract and consent. They would take their pay in advance of their promised services, and take it they would--by the destructive technique of taxation against present wealth and mortgages against the future wealth even of generations unborn.

You are quite right: a hotel company does not demand back from the land owner any part of the rent it pays him for so serving it that it has peaceable and productive possession of its site. Neither does any number of hotel companies; nor does the entire population of land users in any community demand back from land owners or from anyone else any part of the price they have paid in recompense for services received. They do exactly what you say they would do--"They would pay over the rent and reward themselves by the products of their labor and services in running the hotel."

You are wrong when you say that "Every tenant under the George plan would pay to the public the value of the plot." Henry George completely and emphatically rejected the plan of having the rent paid over to the public, or to any persons claiming to represent the public save the land owners themselves. And he freely granted that a portion, at least, of the rent was the proper compensation to them.

Now, my good friend, I want to suggest that the whole matter of your third paragraph is something you would most likely leave out of your letter if you were writing it again. The kind of objection you make there would be chargeable against any improvement or amelioration of human conditions and affairs. Material prosperity cannot atrophy the manhood of mankind. What can and does enervate men is a material prosperity for which they give no recompense--for which they bestow no prosperity on their fellow men. It is only slavery or compulsion, lack of freedom to serve by exchange, the mass slavery of taxation or under whatever guise, that enervates the power of the masters as it deforms the bodies and brutalizes the souls of the masses of mankind. And let us never forget that, beyond the enslavement to his environment that is the lot of primitive man, there is no form of slavery that does not rest wholly upon the autocratic power of the political and predatory state--in short, upon the taxing power which Henry George proposed to purge from its public practices and thus emancipate mankind.

We need not fear that under a contractual administration of community affairs "tenants would have no say" concerning the public services rendered to them. They would have everything to "say" and they would say it with the price, the one price, the rent, that they would pay. With administrative proprietors as dependent on rent then as they are dependent on it now, having no power to tax, they would solicit every expression of the desires of their customers and of how they might be better served.

Men do not desire authority or responsibility over the business and properties of those who are serving them. The price they pay for the services supplied is an efficient and a sufficient regulator of the manner in which the services shall be performed. But men would have as, apart from taxation, they do now have, all the " say" in the world over their own property and business which they must conduct, first of all, in the interest, and to the advantage of the customers--the purchasers--whom they would serve. The public business, conducted as a business, would be no exception; its hazards, its responsibilities, its decisions and its rewards belong to the public proprietors and to them alone; its benefits belong to its customers whom they serve. When these benefits are large then their recompenses will be great and their values high; when they are small or not at all so will be their reward.

When the community business--government--is conducted by the community proprietors then and only then can it be administered by contract and consent and financed out of rent.

Where decision and responsibility are involved, men do not desire any directive " say" in the administration of the services they receive. And over the services they perform for others they do have all the authority that government now allows and taxation does not destroy and all the responsibility and danger of loss that they desire.

It is not the business of community government and authority to impose services and responsibilities but to perform them and to reap in the rising rents their voluntary recompense. And here, as elsewhere, under all pro-social relations and accord, those will be most great and most recompensed who are of the greatest service to all.

Unless we feel that freedom is poison and slavery divine, we need never fear that the socialization of politics and government--of political slavery by force--into community services by contract and consent will ever sap the manhood of mankind. The very reverse is true.

It is the function of Society--of the social practice of consent and accord and exchange--not to suppress but to liberate the energies of the race, to free them at once from the rigors, from the compulsions, of an unsubdued environment and no less to lift them out of the tyranny of anti-social or political power.

It is in their social organism, which Henry George so sharply distinguishes from the compulsive state, that men find all the power that enables them to transform their world. This higher organism emerges and evolves out of the barbarous and predatory pre-social state of mankind by its human units and groups coming to adopt and accept the organic relations of contract and consent--of operating together without destructive opposition but by exchange of differentiated services, just as the many parts that compose the individual are organized, ordered and arranged.

This functional integration of parts into an organic whole, this integrity, this at-one-ment of himself, is what gives to man in all its varying degrees his own self-kingdom and control. But this self-sovereignty does not give him the power to build a better world. Not all his individual strength, but only his social power can do this. Not until he unites in the social bonds of property and peace and service by contract, consent and exchange, can he even begin to re-create either a niggard or a bountiful world. In the one he remains as a beast; in the other he becomes but a slave.

All of men's social and creative power rests in the services that they perform for each other--in their practice of the divine injunction to do unto others as (in the manner) they would have others do unto them. This lifts man, and man alone, into the kingdom of the divine and gives him his inheritance of and dominion over the earth. It makes him a lord, that is, a giver. He thus becomes a creator in his own right, for it incorporates him into the body of the divine to carry on the perpetual and continuous creation of the world.

Into the cosmic dust was breathed a breath--a spirit--of divine life and power, and that dust became a living soul with power of choice, election, will. That which was void became full. God realized himself in his extended work. So man, carrying on God's creative will in peace and unity (contract and consent) with his fellow man, touches the rock of mountains and cities gleam and deserts bloom. In this divine commission and communion man creates the kingdom, builds the holy city of God with mansions of glory for the habitation of the soul.

And this is not the end,--In this habitation, self-created; into these gardens of beauty in which it refreshes itself, into these garments of glory through which it ineffably glows, the spirit of man is forever and ever reborn. It recreates itself not from the casual dust of the earth but from a bounty that its own creative labors have transformed into a subsistence and abundance far more divine. Through its own concord and communion of work the spirit of man, that came from and is the spirit of God, marches ever into higher realizations of itself--the ever infinite extension of God. This is the vision,--but it is a troubled dream.

For these ends we yearn. The means are close at hand but only slowly do we open our eyes. Blind to the beauty with which our social structure is already endowed, we lack the faith, the inspiration to create, and in our desperation we turn and return to the powers that destroy. From the beauty of creation by service, by concord and consent, we turn away. We invoke the false power, even the mistrusted beneficence, of that sole and only group or human institution that still remains unregenerated into creative services by the technique of contract and exchange. Like the many brands and breeds, all colors of collectivists, we actually invoke the power of taxation, the technique of mass enslavement and basis of all slavery, as though it were or could be employed as a social or creative force.

We who profess a Philosophy of Freedom and would honor him who gave it name should scorn the dark diabolism that puts its faith in destructive might and all that pagan superstition that the heavenly kingdom of high desire can be builded with the sword of force in the hands of principalities and powers.

The divine power, the creative power, comes to us from the Beauty that lies within the heart of the world and in the consensual engagements and contractual institutions of men. When we seek we shall find and when we open our eyes we are infused and inspired. Seeing that which abides and endures, we are free to rejoice in it, to think creatively--divinely--and divine action will follow and will attend us on every hand.

1313.

Carbon of a letter from Spencer Heath, Hotel Woodstock, New York City, to Gilbert M. Tucker, Albany, New York, September 18, 1940.

Dear Mr. Tucker:

I am still here in New York (Hotel Woodstock) but will be in Elkridge, Maryland very soon now.

Your kind letter and criticism of the fourth has been forwarded to me here.

I thank you for your encouragement of my efforts to present the Philosophy of Freedom in the more favorable light which it deserves and without any dependence upon a philosophy of force against or abuse of any person or institution. Recently I concluded a long letter to an earnest Georgist as follows:

We who profess a Philosophy of Freedom and would honor him who gave it name should scorn the dark diabolism that puts its faith in destructive might and all that pagan superstition that the heavenly kingdom of high desire can be builded with the sword of force (called justice) in the hand of compulsive power. The divine power, the creative power, lies not in "justice" but in the love that takes the form of services and is practiced by exchange. It comes to us from the beauty that lies within the heart of the world, in the consensual engagements and contractual institutions of men. When thus we seek we shall find and when we open our eyes we are infused and inspired. Seeing the practice of that love which transcends force and thus abides and endures, we are made free to rejoice in it, to think creatively -- divinely -- and divine action will follow and attend us on every hand.

The question you raise should be carefully thought out. It amounts to this:

Does not the land lord now receive from the land user more than he should for the undoubted services which he performs? To my mind the important question is not how much but how the land user pays. Does he pay in the freedom of contract or under the compulsions of assessment and decree? Shall he not pay what he wills to pay, no force being used or penalty imposed? Is it not lawful for him to do what he will with his own? He is free to forego the land owner's services by occupying land that he can take other than by contract and agreement in a market and therefore without the services that would make its possession secure. He is under no compulsion beyond this, that if he accepts the distributive services that make his possession secure, he must pay for them. The quantum of his payment is determined by his own consent and that of others practicing the freedom of the market--social freedom.

But if we could suppose that the amount paid by the land user under the award of the market is too great, it would seem much more reasonable that the compulsive authority should restore the excess to him (whatever its amount might be) rather than to appropriate it to itself for its own benefit or for the supposed benefit of the community at large (by whom the excess payment was not made). Or, if we think of the aggregate rent as being paid by the community as a whole (instead of only by purchasers or lessees as is the case) by what authority higher than their common consent and the inviolability of their aggregate contracts should they receive back any part of what they have paid?

It is my desire to view this social phenomenon, namely, the contracts that result in the payment of ground rent, as a scientist examines the phenomena in other fields, that is, with a view not to objecting to its mode of operation but only of understanding it, of thinking rightly concerning it. I think what makes the most normal and efficient social processes the last and least to be understood is that we are so nearly unconscious of them. As in our bodily organization, we have little consciousness of all that which is best and most perfectly performed, but a very acute consciousness of that which is poorly done or fails. This is why we have not been conscious of the social distribution of sites and resources through land ownership--because it has been so perfectly done.

Land--the world--is the necessary environment of man; he inherits it just as it inherits him.

The land has qualities, from nature, that are physical; it has values, from man, that are social.

A value is always one side of an exchange, the side of recompense, that which is received as distinguished from that which is given. That which is received (in exchange) is always the value of that which is given.

Ground rent is the value not properly of land but of the ownership of land, meaning the function or service performed by land ownership. This, at present, is only the service of giving it a social distribution--equably and by agreements instead of by chaos or compulsions. This is the service for which ground rent is received, of which ground rent is the value.

Up to the present, land owners have given no protection against taxation. Hence they are not paid for any such service, and their values decline. I believe this is their proper function and duty and that when they perform it their recompense (rents) will enormously rise.

Protection against robbery is a common service--a service received in common by the members of the community. It is not the common duty of the members, but the specific and individual duty of those designated to it and recompensed for it. And the general membership of the community can no more supervise in common the performance of this duty than they could in common perform it. Supervision is always the duty (function) of proprietors or of those supervised by them.

What has been said about protection against robbery is equally and precisely true about protection against taxation.

I feel very grateful to you and Mrs. Tucker for the hospitalities of your delightful home so freely extended and for your excellent and stimulating entertainment. I should love to be able to make you similarly indebted to me. I do greatly hope for an opportunity to make at least some little reciprocation. Please tell Mrs. Tucker how much I enjoyed meeting her.

Regarding the copies of your book that you kindly offer, I have spoken to several about it and there are at least two or three right here in New York whom I know who would like to read it. I wish I had asked you to let me bring some of them with me. Will you send them to me at Elkridge or shall I send the names and addresses to you?

Please remember me kindly to Mrs. DeMille if she is still with you.

1314.

Copy of a letter from Spencer Heath to C. H. Kendal, 29 Bellevue Avenue, Summit, New Jersey, September 30th, 1940.

Dear Mr. Kendal:

I send you the latest "No Taxes;" also two older numbers that I have just opened and looked through. Wish I had about half of Beckwith' s pep for putting things into print and circulating them.

There is a widespread but mistaken notion that tax raiders actually create public services and values--that after they have raided the producers of wealth they then use the spoil they have taken in such manner and with such benevolence as to undo all the damage, both direct and indirect, that they have caused by their rude and destructive manner of taking it and, in addition, create positive public services that are, somehow, the exchange equivalent of all the taxes taken. Most people seem to think these supposed services find their way back to the people who have been raided and, most marvelous of all, that they come back to the tax victims not only in greater amount than they have been wronged but in the same proportions that they have been forced to contribute. This certainly is evidence of the high and fine faith that the people have in their politicians. No wonder that emperors, kings and governments are looked

upon as being divine and the voice of the 'people' is the voice of God! Those who impute such wondrous white magic to the tax takers should be able to believe almost anything, either with or without being told.

But brother Beckwith goes them all one better. He not only believes that the tax takers create positive services in addition to restoring all the damage that they do, but that they sell these supposed services all to the land owners who in turn re-sell them to the land users for about five or six times the price that the politicians, by their taxes, compel the land owners to pay for them. According to this, it seems that taxation either makes or leaves the land users so prosperous that they are both willing and able to carry the land owners as a high and handsome overhead, although the alleged "services" are performed by the politicians and also by the same general public that buys its own services to itself back again from the land owners. If Brother Beckwith does not believe that Jonah swallowed the whale he certainly does not lack the capacity to believe it. According to him, taxes are payment for public services but the supposed services do not go to those who pay for them. They go first to the land owners and then the land users pay for them all over again to the land owners. In addition to all this and all the while, the land users are performing many kinds of services for each other. But while they are doing this they do not get from each other all of the services that they perform for each other. By some mysterious process a large part of these services goes to the land owners and the poor land users buy back from the land owners a large part of the services that they perform for each other. So the land users buy back from the land owners not only the "services of government" for all they are worth but also a large part of their own services to themselves, thus reimbursing the land owners about five-fold for all the taxes that the politicians take away from them. These are surely some wonderful land users.

And yet, the modern land owner has no political or governmental or other compulsive powers. He is no longer divine. He has no magic but the magic of the market, no technique but that of contract and consent.

How much clearer and simpler it is to recognize at once that the land owners perform a service of distribution in making a social, peaceable and non-forcible distribution of sites and resources, so far as it is possible or profitable, under taxation and other governmental restrictions, for them to be used. And how can these services of free and democratic distribution upon equal terms to all have any less value than that awarded to them in the open market? And how can these services of peaceable distribution be thought of as having small value when we realize that without them there could be no secure or peaceable possession, without which no wealth

could be produced or exchanged?

When it comes to the owning of unoccupied land, this is not mere speculation (in the opprobrious sense) ; it is a stand-by service that insures a peaceable and socially desirable allocation of the land if and when the restraints of government upon employment and production can be sufficiently overcome to permit its use. Like most standby service, payment for it is deferred until such time as it is actually called for. Each successive purchaser and owner pays to his predecessor in title the market value of the accumulated standby services and takes his risk as to whether or when his services as a distributor shall come into actual demand. This is the way with all standby services of every kind. The owning of land does not prevent its use. But it does make it possible to distribute and hold it under contractual arrangements instead of those of compulsion or force, and this is the only way that there can be any security of possession or any productive use. It is a great fallacy to suppose that ownership prevents use. In a community it is quite possible to have ownership without use, but not use without ownership. Henry George was right as he was emphatic about this in his early writings.

You should have seen the show I put on in Washington last Friday. Percy Williams arranged it and said he was much impressed--afraid I might be right.

1315.

Carbon of a letter from Spencer Heath to Ely Culbertson, 16A East 62nd Street, New York City, December 4, 1940.

Dear Sir:

As a fellow aspirant to an understanding of the structure of society and its vital processes, I am moved by your recent publicity (in "Mercury" Magazine) to communicate to you something of my own contributions to the Science of Society.

Current authorities in this field today reflect precisely the same subjective and emotional attitude that the professors of physics and the other natural sciences took in the days of Galileo. They regard the phenomenon as essentially evil; their problem one of salvation, not of solution; their technique (if any) that of escape (or attack), not that of adventure and discovery. They are in bondage to their hopes and fears. They deny that the social world has any discoverable order and process, as the natural world has and, thus, deny to themselves the possibility as well as all the thrills and joys of discovery and understanding. They insist that the methods and measurements common to the natural sciences cannot be applied and thus deny that there ever can be, in any proper sense, any Science of Society. My own convictions run counter to all this.

I believe that men, who alone find law and process in the natural world, can find yet more of rational processes and relationships in the social world of which

they themselves are the sole constituent and structural parts.

But I find that all discovery, in whatever field, must have the free and non-compulsive motivation of a scientific curiosity, of vision and inspiration, of belief in a beauty beyond, in something new to be achieved and enjoyed, not something old and oppressive to escape or destroy.

For mere maintenance of life men have no choice; they do what they must do or die. All the advancement of man comes from his realm of partial freedom in which alone there is any choice, any alternatives for him to choose. In this realm alone rises quality and value and beauty; elsewhere these things cannot be conceived, much less attained. Some of my reflections in this field have been printed under the caption, "The Inspiration of Beauty," copy of which I enclose.

Having the necessary inspiration, positive and constructive motivation, it is still necessary to find some method of approach already employed in the natural sciences and capable of being applied to the social field. This is found in the "Energy Concept of Population" which I have outlined very briefly in mimeographed form. It has been commended by high authority as the "most promising method of social analysis" that has been suggested thus far.

As you will observe, the qualitative aspect of social action arises directly out of a purely quantitative approach and under the basic formula proposed, it is only necessary to know the average numbers and duration of the lives in a society to derive a definite coefficient for its possible sociological capacity.

The next step is to employ this basic method for the examination of the social institution that seems most basic to any socially organized life, namely, property in land, the object being to ascertain in what manner (if any) this institution practices those relationships of measured cooperation and service by contract, exchange and consent by which the members can enlarge and extend each others' lives. This analysis has been made and put in printed form under the title, "Private Property in Land Explained." You will note that the exchange function or process is taken as the key to the validity of this institution, and that this is the same fundamental quality and value in the "Energy Concept of Population. " Every society seems thus to arise out of the nomadic state by the establishment of contractual and exchange relations among its members with respect to the possession and use of its natural environment.

I feel that all social institutions may well be interpreted and appraised in terms of their contribution to this basic social function, namely, voluntary exchange of energy in service forms. This building up and mutual enhancement of each other's life and power by the social units and groups is what gives the population power to recreate (reorganize) its environment, and thus the power to govern and determine, indirectly, its own evolution.

This analysis of property in land sheds a flood of light upon the actual and potential functions of those members whom the society has told off to give social or exchange administration of its sites and resources. It discloses the essential business and service relationship between the land owners of a community and those who occupy it in all respects similar to the position of the landlord in a hotel or other indoor community. This relationship being discovered and made known, it only remains for the land-owning interests, acting in concert, to enlarge the scope of their services in the direction of greatest needs of their communities, and thus receive for such services, the highest recompense and rewards. This application of social science may be called properly "Social Engineering." I have dealt with this in two small

booklets under the general title, "Real Estate, How to Raise and Restore its Income and Value." The first of these is a brief synopsis of what follows extensively in the second. It is in the form of questions addressed to land owners for the purpose of making them aware of their relationship to the general economy and how they can best profit by it. The second is a broader discussion of the same under the subtitle, "The Administration of Property as Community Services."

I am sending you these various papers, etc. under a belief that you have the same earnest desire that I have to discover and make known the basic structure of social or community life and its mode of operation, so that the practical men, who own and administer the community property, may have the guidance of a rational Science of Society to extend their community services to their communities' greatest and direst needs, namely, the liberation of production and exchange of services under the freedom of private and voluntary contractual engagements and relationships. My own interest in these matters is purely artistic and scientific without any commercial or similar ends for myself in view.

I shall be pleased to have your acknowledgement and comments, and as much information as you feel disposed to give regarding your own thoughts, your aims and their realization.

1318.

Carbon of a letter from Spencer Heath to L. D. Beckwith, 1325 East Poplar Street, Stockton, California, January 7, 1941. Published in Beckwith's paper, The Forum, January 16th, with Beckwith's reply. Newspaper enclosed with original.

Dear Mr. Beckwith:

The immediate purpose of this letter is to ask you to send your "No Taxes" to my able and excellent friend, Clifford H. Kendal, 29 Bellevue Avenue, Summit, New Jersey, for which I enclose my check for Three Dollars ($3.00), to cover two years.

Mr. Kendal was one of the trustees under the will of Joseph Dana Miller who so ably edited "Land and Freedom" for a short time, and was in the way of guiding that publication along some of the intellectual paths that you have already been breaking on the Pacific Coast.

While I have this occasion to write to you, I feel somewhat like carrying out an often deferred intention of complimenting you on your indefatigable labors and the intellectual progress you have made for yourself and so many others towards a proper understanding of ground rent. I refer particularly to your doctrine that rent is not paid for the things of nature but only for the things that men do and create. I regard this as a most important break in the intellectual log jam that has encumbered the teachings of Henry George for a half century or more.

It was my good fortune to get acquainted with Oscar Geiger just before he founded the New York School and I had the privilege of being the very first financial contributor to that project. About a year from its first inauguration, Mr. Geiger asked me to come to New York and assist with the teaching. I did so and shortly afterwards took an apartment in New York and put in altogether something like three and one-half years teaching in the school, the greater part of which was before the untimely death of Oscar Geiger. My association with him was most delightful, valuable and wholly harmonious, not withstanding a decided tendency on my own part to break new ground much of it in the direction of your progressive ideas--and beyond.

I am not a controversialist, (except as a matter of sport and recreation when it is all done in good fun and everybody so understands it), and so do not set any high value on picking our the errors or showing the inadequacies of anyone's philosophy. I find it much more profitable to try to pick out the gold from what has gone before and from what others are maintaining and use this constructively, together with my own contributions for the development of newer, more valid and more practicable conceptions. Pursuant to this, I have written occasional letters to friends and others who seemed in a way of expanding their ideas, trying to add to the values we already possess.

I am taking the liberty of sending you a copy of one of these letters--one taken from a series of several exchanged with the present director of the Henry George School. I do not expect this letter or the ideas expressed in the memorandum attached to be any more Immediately acceptable to you than to him, but I will say that I came to these ideas by the same intellectual road that you follow whenever you give your analysis of ground rent. I am confident that you, or possibly your successors, will eventually come to the same point of view.

Having been one of the secretaries of the Chicago Single Tax Club in 1900 and 1901, and having supported what we called "Single Tax" work continuously since 1898, I am almost perfectly familiar with all of the ideas that have been developed and put forward down to the present time. You will observe that in what I am sending you I am, at least, not thrashing over any old straw. I am not asking from you any comment or reaction because I feel perfectly confident that I already know what it would be, so much in fact that I believe I could write it for you in almost the same words. But I have reason to believe, with a number of others here in the East, that you are intellectually honest and, therefore, able to give candid consideration to a point of view which seems utterly at variance with what you most strongly hold. In your own economic philosophy, namely, the philosophy of freedom, you hold, as I do, certain fundamental principles. Beyond this, you make certain assumptions that are in no way derived from the basic principles. It is only with these assumptions and the ideas resting on them, that the material I am sending you will clash. I shall be pleased, therefore, to have you give this material your thoughtful consideration and test it rather by reference to your most fundamental conceptions with reference to individual freedom in a social organization. I hope you will consider it not as something to be accepted or rejected but rather as something that may possibly lead to some intellectual illumination and aid.

Appreciating the advance ground you have already taken, and wishing you much progress and prosperity intellectually as well as otherwise.

1319.

Carbon of a letter from Spencer Heath to H. B. Cowan, Director, International Research Committee on Real Estate Taxation, Peterborough, Ontario, Canada, January 10, 1941.

Dear Mr. Cowan:

I wish to thank you for acknowledging my Christmas Greetings and to congratulate you on the evident progress you have made towards the tax policy investigations you have been purposing to make in the Far Eastern Antipodes.

I certainly wish you a great deal of pleasure and success in this undertaking and the full backing and cooperation of your most excellent committee.

As to the fact of land value taxation having been extensively and for a long time practiced, we all are fully aware. I dare say you will bring the published data more completely up to date and that you will gather opinions favorable to the policy of land value taxation and attributing many advantages and favorable results to that policy.

I hope, however, you will not take it amiss for me to suggest that in your travels and inquiries you give particular attention to the effects upon the security and equity of land users and occupiers where the distribution of sites and resources has been coming more and more under political authority and decree. We must, of course, realize that the full political appropriation of rent would take the distribution of sites and resources entirely out of determination of contractual engagements by free negotiation, and leave this matter entirely to the dispositions of governmental authority. If it is better for the distribution of sites and resources to be carried out by political processes rather than by contractual engagements, some of the benefits of this extension of state power should begin to be apparent. I consider it important for us to weigh very carefully the possible disadvantages of a state allocation and administration of sites and resources. When your reports become available, I hope to find some treatment of this aspect of the matter.

I trust you will be interested in the point of view that I have entertained for some time, and is somewhat tersely set out in a letter, with its accompanying amplification that I sent to the Director of the Henry George School in New York a few months ago. There is material in this for some very serious thought. I hope in the course of your travels you will have opportunity of giving this material your earnest consideration, and that you will before very long let me know something of your intellectual reaction to it. I have great confidence in your judgment and analytical powers, and will look forward eagerly to hearing further from you.

Just to make sure that you will have with you some further and more complete elaboration of this important point of view, I am enclosing additional copies of some of the printed booklets to which I called your attention last year. The point of view presented in these is, of course, novel and radically different from what we have long been accustomed to, but I am sure you will agree with me that it merits the earnest consideration of the most competent minds.

I feel especially deprived, not to say aggrieved, at your having been in New York and Washington recently without opportunity of seeing me. I was very happy to renew your acquaintance with you in Toronto last summer, and hope I will be able to see you again before you start on your pilgrimage, or very soon after your return. I am pleased to know that the Toronto Single Taxers remember me, and hope to visit them again before very long.