Spencer Heath Archive

Item 1978

Pencil notes for a letter to Francis I. duPont, inserted in a small, six-ring-binder notebook containing Heath’s daily class notes from his attending Teachers College, Columbia University, during the academic year 1933-34. The notebook was badly damaged by flood water while in storage in San Pedro, California, some time after MacCallum had transcribed Items 1978-1989 for the Spencer Heath Archive. The class notes are not transcribed but should have been, since they reflect much of Heath’s philosophy. This would be difficult now, but might be worth the trouble.

 

White envelope has items 1978-1997.

 

 

/Dear Mr. duPont:/

 

     I want to thank you for including me in your happily arranged little supper conference last Friday.

I have the utmost sympathy with your desire to have basic economic conceptions brought to the attention of men of capacity and affairs in such manner as to enlist their sympathies without flying in the face of their lifelong habits of thought and action.

Some two or three years ago I concluded that my thirty years’ continuous (though very modest) support of the Henry George movement had been largely misdirected.

Having retired from my own active business and from my subsequent connections as a “research engineer,” I engaged myself in an examination of the practical Henry George proposition itself without direct reference to the arguments and theories propounded by him and employed by his followers for many years with such little effect.

I tried to approach the matter without any prejudice against the institution of private property as applied to land (or rather to land value), but rather with a view to land ownership having something authentic about it consistent with the highest ethical principles of Henry George and well worthy of being preserved as beneficial, if not essential, to a high state of society.

To begin this I made a distinction (which Henry George never made except in connection with taxation) between land, mere physical land, and land value. I observed that value (meaning exchange value) attaches to the substances of which things are composed only as labor has been applied and services incorporated in them — and then only when and where there is a need and demand for such services as have been stored up in the particular goods. I think no one disputes this.

Applying this thought to land (substance in situ), it seemed that to have any value some kind of labor or service must be performed upon it. Such values, however, are improvement values, but it still appears that values do attach to locations that are not due to any improvements in or on the land. To find the labor or service to which such pure land value is due is not far to seek, for in every community in which any kind of public authority exists there are services performed by the public authority itself through delegation of its power to public officers and agencies with provision for their being paid either directly or, more primitively, by collection of charges and fees for their services. Here we find a kind of services wholly public in character delivered to the community by public officers and agents by means of public rights of way and by the use of capital (materials and facilities) that has been appropriated to the public services. It is of the constitution of the society that, in order to avail themselves of these services, individuals must occupy locations to which they are ________________ and must pay for these services, in proportion as they are received, to persons or agencies known as “proprietors” (also established by sovereign authority) what is known as ground rent or land value.

This ground rent represents the net value of the public services — that is, after deducting all costs collected by public servants and agencies and also allowing for the detrimental effects of all injurious methods and activities carried on by public authority or permitted by it. Thus rent (or land value, if commutated) is the differential between those acts and operations of government that are of service to its community and those which are detrimental and injurious. This constitutes rent as an index to the net value of government.

From all this it is clear that of all persons having an interest in the services of government being of high value, the interest of the collectors of rents — the proprietors of rent-yielding lands — is most immediate and direct. Here is a unique special interest, a special interest like no other, for it is one that thrives on public efficiency and suffers from public incapacity and default and especially from public acts and repressions that destroy and inhibit the production of wealth.

When we reflect that rent is a portion of the wealth that is currently produced, that it is the portion of current wealth production that competing users of land voluntarily and profitably pay for access to public services, and that they pay it out of their increased production which is only made possible by their use of these services — when we reflect upon these very obvious facts we cannot fail to perceive that it is supremely to the interest of the recipients of rents that labor and capital, the only active agents of production, be emancipated from all the restraints imposed by government that hold in check the production of wealth and that the public services be improved and extended to the highest degree.

This makes it clear that whenever the business and producing interest make any serious effort to throw off the paralyzing burdens of taxation, regulation and restriction, they should find powerful allies in all those whose ownership of land places them in position to enjoy enormous enhancements in the rents that must arise out of the mighty increase of wealth that must come to a liberated economy.

But this reward to the owners of land is, in the nature of the case, conditional. To get these benefits in their rents, all those activities of the public servants that are useful to producers of wealth must be financed and maintained. The public servants of all degrees must be paid if their services are to be continued, and without these services it is certain that the landowners’ rents would decline and finally fail.