Spencer Heath Archive

Item 2334

Carbon of letter of August 13, 1953, to Science of Society Foundation,11 Waverly Place, New York City 3, from Royal D. Rood, 4501 Cicotte Street, Detroit, Michigan, followed by Heath’s reply of August 21, and this in turn by Rood’s reply of August 27, 1953.

 

 

 

 

August 13, 1953

 

Science of Society Foundation

11 Waverly Place, New York, N.Y.

 

I was very interested to obtain and read some little while back the 26-page booklet issued by Spencer Heath, and I also have a little leaflet of his, SOCIETY AND ITS SERVICES, to which I have just attached your nice advertisement in the current July 27th issue of THE FREEMAN. Your program to keep the debate alive, indeed to revive the debate, is a most excellent program. Perhaps we can in some way be of help mutually.

 

I suspect one criticism might perhaps be deserved by Mr. Heath. Is he not possibly guilty of a somewhat excessive faith in today’s ownership class? In the same issue of THE FREEMAN, at page 784, is a very fine review of a book by T. K. Quinn. Some two or three years ago I was inveigled into attending a gathering at Washington, D.C. of a group calling themselves the National Ass’n of Small Business Associations. There I heard Mr. Quinn pontificate along the same thesis as now in his book, GIANT BUSINESS: Threat to Democracy. He believed then and still believes that we can legislate gigantism out of existence (while yet each of us desires through a magic of exchange to have all things done for us and all decisions made for us by specialists in other fields than our own?????). Mr. Heath may plead innocent perhaps, for in the leaflet on Society and its Services he very properly criticizes Henry George for supposing that mankind can be “saved through evil being attacked and destroyed, instead of by services being performed and exchanged.” But in your advertisement, you urge trustingly as if by his lips the argument of Heath, “landlords and private property in land as society’s first and last — its only ultimate defense — against total enslavement by the State.” If the reference to landlords were modified by an adjective requiring them to understand their function in society, perhaps Mr. Heath would not be accused of being over-trustful. /”enlightened” is here penciled in by MacCallum./

 

     But in any civilization, when the ownership class fail to understand the difference between economic rent and profit, when its members confuse rent with profit when they believe they may treat economic rent as if it were profit when they do not understand how it is not enough that economic rent should equalize livelihoods through the processes of competition which no form of life can avoid, but that the trustees of the rents received have a function themselves to perform; when they do not understand that function, and refuse to be responsible for its performance; what hope is there for the survival of such an ownership class? Laws against even the communism of Henry George would be futile.

 

     We also are engaged here in an educational effort. Would you suppose there might be a means of mutual aid? We like Mr. Heath’s effort.

Respectfully,

 

Royal D. Rood

 

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August 21, 1953

Dear Mr. Rood:

I am very happy to have your letter of August 15th.

     Referring to my work on behalf of social freedom as against political tyranny, it may interest you to know that I am running besides in the Freeman also similar advertisements in Barron’s Financial Weekly, about once a month each.

     I quite agree with your suggestion that land owners must have an intelligent understanding of their position and possibilities in society before they can combine and adequately function — just as there must be understanding of the basic chemical processes before chemical companies can organize and function as such in the service of mankind. Fortunately, society is not dependent entirely on the intelligence of existing land owners for great improvement in community services, any more than it was finally dependent on the existing wagon makers for the revolution­ary improvement in highway transportation.

     Once the principle involved in any great advance is understood, enterprising persons will put capital into the necessary properties for applying the principle and thereby serving the largest possible clientele with profit to all. The principle governing land ownership in its functional and administrative aspects is no exception. With reference to the survival of a non-functioning or under-functioning ownership class, there is no long-term hope for them. The non-functioning members of any organization, biological or social, if they remain so, are bound to be displaced by other members that can function more adequately.

     Rent is never anything but freely given recompense for the time-limited use of any specific property, whether real or personal. The distinction between rent and profit is that rent itself is the gross return per annum above costs and necessary maintenance. Profit is the net remaining to the owner above these necessary expenditures as recompense for his administrative services.

     I am sending you herewith three little booklets stapled together and dealing somewhat fully with land ownership in its functional aspect, both present and potential. These fundamentals have been sadly obscured by widespread acceptance of five basic premises of the land communist argument. Only recently these were again laid down and unqualifiedly endorsed in the July 27^th issue of the Freeman by Professor of sociology Glen Hoover. In this connection I enclose a copy of my unpublished letter to the Freeman editor in which the utter emptiness of these premises is exposed.

     Communism may be defined as 100% taxation. Land communism, as advocated by Henry George, would “socialize” the very sources of life and thereby enslave all men to their government.

     I have read carefully and with great interest, and shall read again your booklet “Two Kinds of Government.” I find it very arresting and thought-provoking — full of fundamental truths.

     Once more thanking you and hoping to hear from you again before very long,

                        Sincerely yours,

SH-m

Enclosures:

2 booklets complete

2 Basic remises letter

3 Property in Land etc. (3)

 

_____________________________________________________

 

 

August 27, 1953

 

Dear Mr. Heath:

                                       

I received yesterday from you the duplicate copies of your review of Henry George, which I had previously read with considerable care about a year ago, and of Society and Its Services, which I have read about two years or more ago, and then filed in my copy of Henry George’s Book. I shall review them, and shall read with care the latest, REAL ESTATE: HOW TO RAISE AND RESTORE ITS INCOME AND VALUE. I am a little disturbed to learn that the Freeman declines further to publish or distribute your matter, particularly the review of George’s work. But this letter I am writing with regard to your Letter to The Editor (Hazlitt). I wish it might have been published.

 

Your letter-head indicates that we are fellow attorneys. I took my pre-law studies at the Univ. of Michigan, 2 years, then Mich. State College 1 year, then back to Univ. of Mich. for a semester and a summer, then out of school for a few years, then back for four years at Detroit College of Law. Thus I have my LL.B. degree, but do not have the liberal arts degree which others received at U. of M. with only six years in which their law studies were combined. But I am currently doing work at D.I.T, beside teaching at Gt. Lakes College, and expect to sport a B.S. degree in a few more months. Then perhaps I will be able to get audience for some of my own material. It was in June, 1944, that I received a $12,000 law fee for work then completed, and two weeks later laid aside my law practice to devote my entire time and energies to the economic field, now having in my management the department of economics at Great Lakes College. You ask about the college. It is one of the few remaining colleges privately owned, and granting degrees in the liberal arts, chartered by the State of Michigan to issue baccalaureate degrees.

 

     Touching on your own thesis. In the letter to Hazlitt your remarks on Tenet N.2 may perhaps have dissuaded Hazlitt from publishing. In your letter to me you indicate a similar confusion of rent with profit. You say, “Rent is never anything but freely given recompense for the time-limited use of any specific property, whether real or personal.” If you will read in THE TWO KINDS OF GOVERNMENT the short paragraph on page 5 under the head, Dividing Rent from Wages and Profits, you will get the drift I think. In my teaching at the College we use David Ricardo^’s work, written 135 years ago, in order to have a work of a master. If one would be wise, let one study the masters, not their pupils. I will confess that I am not myself too bright. I had to go through that book actually eight times, before I finally got into my head the essence of the book, – that only three sources of wealth are known: Land, Labor, Capital. In my lectures I refer to them as Land, the Living labor of Today, and the Stored Labor of Dead Yesterday. That seems to get across without irritating the young socialist in the class. Then Ricardo examines the compensations for the three groups of trustees, the trustees of the land, of the living energies of the workman, and of the stored labor of yesterday. You say that the rent received by the one trustee and the profit received by the third trustee are the same sort of payment. I say you are badly mistaken.

 

     Rent has very different effects from profit, — and the obligations of their recipients are very different.

 

     First examine profit. Is there a man on the face of the earth who does not make mistakes? If there be no profit to balance the losses resulting from those mistakes, will not the capital assets in his hands evaporate? If those capital assets evaporate, and if additional profit do not enable production of additional machinery (tools), will not the lack of sufficient capital assets bring starvation and horror upon the people? This then is the function of capital, the stored labor of dead yesterday, to preserve the people from starvation and horror, and the obligation of its trustee is to preserve those capital assets from evaporation, and if he fail, then we starve. Interest money, by the way, is only the popular evaluation of expected probable profits. But as both parties to every loan transaction are always optimists, the interest rates which the people approve are always in excess of actual current long run profit rates, and since the mathematics of interest money do not provide for any reversal of the compound interest curve to harmonize with actual profits, the philosophers throughout the ages have warned against usury. But politicians have been induced to decree their own definition of that ancient word, and the masses are foolish enough to believe that what the public officials find it politic to decree is also the truth.

 

     Next examine rent. This time read the last paragraph on the first page of THE TWO KINDS OF GOVERNMENT, and you will understand the topic. The competition of life itself is the force that compels a voluntary surrender by him who lives in a fertile valley of all which the fertile soil yields over and above the scanty living which his competitor up on a rocky mountainside is able to get out of barren marginal soil.

 

     You say the landlord earns the rent he receives. I say he has now for near 200 years in America refused to earn it. He refuses to be responsible for anything. He insists upon enjoying irresponsibility. So it will not be possible for him to continue in possession. We shall witness in our own country all the horrors we have been witnessing in other countries. He receives the rent indeed. But to pretend that his distribution of the land to his fellow men in consideration of the rent they surrender to his trusteeship converts that rent into the same sort of money as profits does not make sense at all. His trust is to see to it that the rent shall serve its proper economic function. But what is that function? Look to your own letter-head and read the answer. It is “The extension of free enterprise into the field of community service, by organized owners. Are they willing to do so? How many do you know that are willing to keep some particular individual teacher answerable to them as individuals? How many do you know who have put themselves in position to withhold butter as well as bread from some particular individual, as a means of supervising the teaching he does? How many do you know who are willing even to listen and discuss with the teacher his work?

 

     On your letter-head I notice the words, “National University”, but do not get the significance of those words, whether an institution in which you are active, or the source of your degrees. And if the former, then in what degree, and by what process, and how financed, etc.? If you are yourself a teacher, then you know that no man may teach successfully except as the agent of others. Whoever endeavors as his own agent to teach will have no audience. The problem of men doing what you and I are doing is to understand that simple truth. They can recommend each other, and get audience for each other, but never for themselves.

         

 

 

P.S. Under Tenet #4 to Hazlitt you confuse the issue, because the only issue is: How can the politico be induced to understand what you do indeed say? Ricardo quite disagrees with you, and agrees with Henry George on that particular tenet. Both George and Glenn Hoover got it from Ricardo, who devotes the last 200 pages of his 300-page work to a careful examination of every kind of tax. You ought to study Ricardo. His only real concern was, how to collect the taxes with least unnecessary burden of expense. Then you might more effectively do what you are trying to do.

 

/Encl:  TWO KINDS OF GOVERNMENT

        “Testimonials Earned at Great Lakes College”/