Spencer Heath Archive

Item 1428

Carbon of a letter from Heath at 11 Waverly Place, New York City 3, to Raymond V. McNally, 200 East 16th Street, New York City

March 4, 1945

Dear Mr. McNally:

     Thanks for your fine and keen criticisms of my review of Henry George’s Progress and Poverty.

     On page 2, I do, as you say, condemn George’s taxing policy as one that could have no other effect than the nationalization of land. It is also true that on page 20 I approve of his proposition to abolish all taxation save that on land values. While he did not so intend it, this proposition, taken alone, is in conflict with his general proposition to “concentrate all taxation upon land values” (p.406). His whole general argument is for the transfer and concentration of taxation, not for the abolition of it, either with or without any exception.

     But his proposition on page 406 is, in form at least, to abolish all taxation, save that on land values. This is a proposition not to transfer but to abolish taxation, one exception being noted, and while he doubtless had in mind that the excepted taxation — that on land values — should be increased to the point of confiscation, his exception does not so state. Here was an unconscious intuition of a social necessity — the abolition of all taxation, save that on land values, which latter would then be transformed and merged into the purposeful payment of expenses incidental to the business of providing community services and advan­tages and selling them to the general public — them or the use of them — in open market, just as the use of any other properties, services or goods are normally sold. He thus intuitively builded, literally and in form, far better than he knew, for he did not, in spirit and intent, propose to abolish all taxation save that on land values, or actually to abolish any taxation, but merely to trans­fer all other taxation to land owners, in addition to that already imposed on them. His aim was “to appropriate rent by taxation” and thus abolish voluntary and contrac­tually determined rent and set in its stead coercive and compulsory taxation, determined not by contract but by the decisions and decrees of a superior public power. He would thus not abolish taxation but would abolish rent and institute a supposedly equivalent taxation in place of it. Throughout the book, and especially from page 263 to page 407, the whole burden of his argument is to “make land common property” (page 328) by taxation, “by confiscating rent” (page 403) and thus to abolish private property in land.

     But the arguments are as inconsistent as they are unsound. On page 384, for example, he denounces private property in land as “an usurpation, a creation of force and fraud” but on page 405 he says:

“I do not propose either to purchase or to con­fiscate private property in land. Let the individu­als who now hold it still retain, if they want to, possession of what they are pleased to call their land . … We may safely leave them the shell, if we take the kernel. It is not necessary to con­fiscate land; it is only necessary to confiscate rent. We already take some rent in taxation. We have only to make some changes in our modes of taxation to take it all.”

Yet on this same page he contradicts this proposi­tion to “take it all,” for he proposes “leaving to land owners a percentage of rent” and thus to “assert the common right to land by taking rent for public uses.” He /would/ confiscate the rent, all of it, yet leave the land owner a portion of it which he thinks would be “much less than the cost and loss involved in attempting to rent lands through State agency.”

     Clearly, in view of all his fulminations against property in land and the alleged robbery and slavery involved in the payment of rent, this is an abandonment, in principle at least, of his main thesis, in his propo­sition to leave to land owners some of the rent. If some then why not all? Should land users not be permitted to determine for themselves the proper recompenses to land owners for making a peaceable distribution of sites and resources to them? Are they not the best to judge?

     Shall land owners not have as much as the competition of the open market prescribes and sets as “a limit to what he (the owner) can get?” (See page 167) On what theory shall any lower limit be set? Must the standard fixed in freedom be set aside in favor of decrees of State as a diviner law?

          Referring to your fourth paragraph, I do not find on page 504 anything to indicate any perception by George of what I describe in my review (page 22) as “the social function of distributing natural advantages and dispens­ing public betterments by free contract” that the modern institution of property in land performs. When he says that no new machinery is needed, that “the machinery already exists,” he is obviously speaking of the existing political machinery of taxation and not the existing social machinery of ownership and free contract. His remark that “all we have to do is to simplify and reduce it” has reference to the taxing machinery and not to any function of property in land.

     With reference to Malthus and Ricardo, George either uses or abuses Ricardo’s theory only to serve and support his own preconceived views. First he states (page 168) that this “accepted dictum of the current political economy has the self-evident character of a geometric axiom.” He then proceeds, on no authority but his own to stretch Ricardo’s “law” by forcing its application to non-agricultural lands where, by its very terms, it was not to be applied. Then (pages 231 to 234) he argues against “Ricardo and the economists who have followed him,” saying that the pressure of population that forces less and less productive lands into use also brings with it higher productive powers and so does not necessarily lower the average production. In holding this he com­pletely abandons the basic proviso in Ricardo’s “Law” that there be the “same application” of labor and capital to the least productive as to the more productive lands. For if population pressure makes “particular land” more productive “in greatly varying degrees” (page 235) then there is none of that “same application” of labor and capital on which the Ricardian “Law” itself is based.

     George first accepts Ricardo outright; he then stretches him, and then, still claiming allegiance, is forced to abandon him in an attempt to explain his implicit Malthusianism away. He leans on Ricardo for authority, but no part of Ricardo is sacred to him but the part that seems to support his thesis against private property in land. All else of this “accepted dictum” he ignores or explains away.

     I am much intrigued by your charge that I am in error when I state, “It is also true, as so stoutly maintained, that the rent of land is the difference be­tween the annual value of land where rent is paid and the value of so-called marginal land where no rent is paid.” You tell me that the rent of land, according to Ricardo and George, is “the difference between the produce of it and the produce of land where no rent is paid.”

     I accept your statement; for I find it only an equivalent of my own. If the rent of one piece of land is the difference between the produce of that piece and the produce of another piece where no rent is paid, then that rent is that difference, the difference between some difference and no difference — some rent and no rent, Q.E.D. For example, if the produce of the one piece is three and that of the other is two, then the difference between produce three and produce two is one. This difference is the rent one of the one piece against the rent zero of the other piece. There is, then, the same difference between produce three and produce two that there is between rent one and rent zero. The differ­ence between produce and the difference between rent is the same difference — the same things.

     I have found your criticisms helpful to me. I think the context of my approval, in its literal signification, of the proposal to abolish all taxation save that on land values is sufficient to justify such approval. However, in the matter of George’s apprehension of the unity of principle between the theories of Malthus and Ricardo, I am modifying the second half of page 19 and including on the next page much of the substance of my ninth para­graph in this letter to you. I do not think it necessary to call attention to the identity of difference in production and difference in rent under the Ricardian formu­lation.

     Many thanks for return of the manuscript and our interesting personal discussion of it.

Sincerely,