Spencer Heath Archive

Item 159

Pencil by Heath on notepad paper, perhaps the first draft of his printed booklet, “Real Estate, How to Raise and Restore Its Income and Value: Questions for the Consideration of Land Owners” (1940), Item 2039.

VALUE AND INCOME

     Does not the value of your lands, like the value of any other investment, depend, finally, upon the income that they return to you? Is not their present actual value the capitalized net rent that they yield and is not their prospective or speculative value merely the capitalization of prospective rent or prospective increase in the rent yield? Is not all your capital enhancement due, finally, to the enhancement of rent and to the prospect of its enhancement? Is not the value of occupied land made up of the actual rent capitalized, plus or minus the prospective increase or prospective shrinkage in actual income from rent? And, is not the value of all unoccupied or non-income-bearing lands merely a speculative value — the capitalization of the prospects of future rent being received?

… amount that meets all costs and maintenance and also a profit to the owners to the full value of their administrative services. A hotel not so conducted for the benefit of its occupants will have its space largely unoccupied or rented at unprofitable rates. Hotel owners, therefore, do administer their properties and supervise all hotel servants in the interest of the occupants and thus in their own interest of receiving adequate rent.

     The owners of out-door communities, towns, cities and states, do not seem to know that they own the space and area of the community and also the public capital and services of the community and that they are owners by reason of the fact that the income from their lands is the earnings of that public capital and services and comes to them by virtue of such capital ownership, however acquired. These community owners therefore do not consciously administer their property. They leave its management almost entirely in the hands of the community servants and hirelings of all degrees. Since they neither supervise these servants (as hotel owners always do) or administer the properties entrusted to them, the community income from net rents very properly does not pay the owners for such services and is insufficient to pay the cost of the hired services and borrowed capital engaged in the community enterprises.

     In consequence of default by the community owners in their failure to administer their property and supervise the community servants they have no funds wherewith to hire public labor and capital. By not taking the authority and responsibility of owners they forfeit the power financially to make good their proper authority. The public servants, therefore, have excuse and, in fact, no alternative but to exact compulsory payments and make seizures out of the private properties of the inhabitants to maintain all public operations, both beneficial and injurious alike, and to pay for the capital publicly borrowed, upon faith in future tax collections, for the carrying on of such activities.

     The occupants of the public communities are thus exposed not only to the devastation of constantly increasing seizures of their property but also to having the public servants impose their unbridled activities and operations upon them, and upon their waning hopes and growing fears, with but little reference to anything beyond a meretricious popularity to maintain their political power.

Although a public community is in all organic respects the same as a hotel, by the default of the owners of the community territory and of the property and capital that gives it service and value, the community business is given over to a destructive orgy of violence, chicanery, confusion and distress that at last drives the despairing population into the iron arms of dictatorship and military despotism in which properties and values are destroyed, all social ties dissolved, and savage barbarism must return.

Civilized life is community life. The civilized values are primarily community values. The value of land is the value of all community properties and services. Failure of the owners to administer these properties and supervise these services so that their income will rise spells the inevitable decline. Rent and the value of land is the sole index of community values. Upon its rise civilization itself depends.

It should indeed be an inspiration and encouragement to the whole real estate world that the ownership of land in the proper and effective pursuit of its own business and special interests should be able to come into such magnificent prosperity and rewards, and that at the same time, by the very nature of the social organization itself and without any pretense to altruism or public spirit, it should also emancipate the arts and industries and give the one freedom that includes all freedom — to serve and to be served — the freedom of untaxed and unpenalized exchange.