Building Public Values - The Spencer Heath Archives

Spencer Heath's

Series

Spencer Heath Archive

Item 2442..

Carbon of a dog-eared, bound, 116-page (poor carbon), Building Public Values, containing eleven writings, all of which, except “Capitalism and Barbarism” and “The ‘Unearned Increment’ and How It is Earned,” later became chapters in Citadel, Market and Altar. Of these two, “Capitalism and Barbarism” is now reproduced in Heath Short Essays. The other is nowhere to be found in the Archive, here or elsewhere. It appears only by name in what seems to be the later of the two versions of the Table of Contents. Apparently BUILDING PUBLIC VALUES, completed by 1939, was the first version of what shortly became, by adding material on population, THE ENERGY CONCEPT OF POPULATION, and finally in 1942, by adding material on psychological implications, became CITADEL, MARKET AND ALTAR. There is also, at this same Item number, a cleanly typed copy of this.

Printout and original don’t fit in envelopes so are loose in the box.

BUILDING PUBLIC VALUES

BUSINESS AND ECONOMICS

FROM THE GROUND UP

For Land-Owners and Others

Spencer Heath

BUILDING PUBLIC VALUES

(Site Values and Rents)

* * *

The Business Administration of Land Value

A Source of Magnificent Incomes to Owners

Through Service to Wealth Production

(Which Is Wages and Profits)

Affording Supervision over Public Policies and Employees

and

Responsible Administration of Public Property

* * *

SPENCER HEATH, LL.M.

Elkridge, Maryland

and

420 West 116^th Street, New York City

King’s Crown Hotel

CONTENTS

Page

I. What Does Democracy Mean? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

II. The Business of Community Economics . . . . . . . . . . . . . . . . . . . . . . . . .

III. Questions for the Consideration of Land-Owners . . . . . . . . . . . . . . . . .

IV. Real-Estate Administration for Profit—Retrospect and Prospect . . . . .

V. On the “Value” of Unused Land and Natural Resources . . . . . . . . . . . .

VI. Why Does “Valuable” Land Lie Idle? . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VII. Ownership and Democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VIII. Civilization and the Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IX. Collectivism—True and False . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

X. Capitalism versus Barbarism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

XI. The “Unearned Increment” and How it is Earned . . . . . . . . . . . . . . . . . .

XII. Society—The Crown of Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

XIII. Recapitulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

In the natural world great discoveries are made by men who delve into the order of Nature and her laws under the inspiration of the beauty that they seek and find. Such labors are esthetic; art and beauty for their own sake, and for no other reward; fruits of the Creative Spirit of Man.

But these spiritual gifts come into the practical service of men only through the operations of production and exchange. The engineers, the technicians, the men of business, who buy and sell, must give bodies to these gifts of the spirit and market them to the populace in tangible forms—and for great tangible rewards.

So also is it with Nature as she manifests herself in the living societies of men. The working of her laws in the social organization can be discovered only by pursuit of the beauty that in them lies. This done, practical business alone can embody them in forms of utmost service to Man.

Once brought to light that happy relationship whereby proprietorship and the rent of land distributes public values by free and voluntary exchange; once discovered what service it is, that gives to locations their rental value; it becomes a plain matter of business to supervise and administer those services and to merchandise them profitably to the masses of men.

Good service is good business, be it public or private. No question of morals or metaphysics need be involved.

WHAT DOES DEMOCRACY MEAN?

Democracy assumes people doing things together. It has specific reference to how they do them — whether by compulsion or by consent. Men are free when they consent, slaves when they are compelled. There are no other social relations.

There is no democracy, no freedom, no prosperity, in crime, theft, violence or war, nor in government, when it engages in any of these. Democracy and more democracy is their only cure, because the more people do by agreement and consent the less they will be doing under coercion and force. Let me repeat, then: Democracy means doing things together by consent of all and coercion of none.

In their civilized state, men cannot live except as they have relations of service and employment to each other to which they consent. They must live, not some upon others, but by serving each other. They must exchange specialized services, and especially must they exchange the commodities into which these specialized services are wrought. All civilized existence rests on this exchange of commodities and services. But these cannot be effected except under the protection of community life — a mode of life in which they can securely own their services and commodities and thus be free to exchange them.

A community is a place with a population and property in which a portion of all these is given over to common or public service and use. A hotel or apartment house is a community; so is a town, a city or a state. These are all places where men can serve and exchange with each other — where there are people and property and services — and where some of the space and property — all the public parts — is owned and held for the common use. This gives people access to each other, protection to persons and property, and also those positive services delivered through the public parts of the territory that so greatly promote the private exchanges, the whole business of production and trade, upon which alone the population subsists.

All this private production and exchange is the administration of property and the selling and buying of services and commodities. This is all done by consent and agreement, without force and therefore democratically.

When a number of owners administer productively any property that they own in common, they resort to that form of democracy known as parliamentary procedure. Thus they determine their common will which they then execute by delegating authority to persons subordinate to them and properly under their supervision.

When different persons have different properties and services which they wish to redistribute socially and with greatest advantage to themselves, they practice the democracy of the open market. They call out or in writing vote their wishes and desires as to how they shall exchange their respective goods and services, whereupon they exchange and redistribute their wealth in precise accordance with the terms of their democratic voting for its redistribution. All the money and credits that they use are, legitimately, nothing but the authorized and accepted records of exchanges that they have not yet carried out to completion.

This great democracy of ownership and exchange, under community protection and by aid of community property and services, is all there is to constitute and hold together the foundation fabric of civilized life – the only fabric on which any patterns of ideal grace and beauty can be inscribed.

But what can be said as to the democratic administration of those community properties and services that are so necessary to all this?

Do the owners of the public, the municipal, property and capital unite and administer their joint public property in the interest of their tenants and occupiers who pay them for its use the same as do the tenants in a hotel? Do not these public landlords, rather, neglect their public property and permit their community servants to despoil their community tenants of their goods and services and finally break down the whole system of voluntary exchange upon which all civilized existence depends? Small wonder such lords of the land have fewer and poorer tenants and their values shrink and revenues decline.

The languishing democracy of trade and exchange needs the services of the community land lords to protect its revenues and operations from political raids as well as from other violence and to maintain those facilities of free association, communication and exchange upon which community life depends and community values and revenues voluntarily arise.

To rise on the wings of freedom a people must guard and cherish their democracy of mutual and voluntary services and their system of free exchange. Under the politician’s hat there are no magic rabbits of recovery, only further bandages and restrictions. No government, no servants of any community, public or private, can be democratic upon revenues raised by raids upon its occupants or wrested by force from its unwilling proprietors. While taxes increase, wealth diminishes, production declines, employment shrinks, unemployment rises, democracy is doomed.

Business, as such, when distinguished from force and fraud, politically or otherwise imposed, is purely democratic, for it operates by consent of all and coercion of none. Every independent business, whatever its kind or size, apart from law enforced privileges or restrictions, is administered and conducted basically in precisely one and the same way: first, there must be accumulated services in the form of material things to be exchanged or facilities to assist the exchange of other goods or services. For the current use of these accumulated services, or capital, the owner or owners must pay, periodically, an amount fixed by the open market, called interest. Second, the owner must engage the current services of persons qualified to work with or upon the kind of capital he has, and for these current services he pays periodical amounts, also fixed by consent in the open market and called wages. Third, he must have a place in a community to which the services of public capital and public labor are made available and supplied through public rights of way and their equipment. For these public services he pays periodically

amounts also fixed and determined by the voluntarism of the democratic market, called land value or ground rent. Beyond these three services, there is only one, and that the owner himself must supply. This fourth service is called administration. It consists in purchasing the first three services, determining and executing business policies, supervising of subordinates, coordinating the other three services, uniting them into a composite of four services in the form of a new product or service, and selling this new product for a return the amount of which is also determined by the voluntary democracy of the market.

Out of this gross return the owner must meet all of his contractual obligations for the other three kinds of services, as determined by the market, and the remainder is what the processes of the market democratically determine as his recompense for his administrative services. This recompense for administrative services is the only compensation that is determined by the market indirectly and as a residue. Therein it differs from interest, wages and rent, and is called profit.

There are evils in business. But they come not from doing it democratically by exchange. They come from preventing it politically by force. This breaks it down. The evils are not in the doing of business, but in the preventing of business being done. Free business is the only abundant business. Restricted business means less business. Less business means monopolized business — less employment of labor and capital. Less employment means low wages and low interest wherewith to purchase less plentiful consumers’ goods at prices artificially high. This means economic collapse with its concomitant subsidies and doles. This means mounting debts and deficits, more tax raids on production, more unemployment, more social violence, demand for dictatorship, regimentation, military servitude and forced labor at a slave’s standard of subsistence.

Just as democracy taught pre-social men how it prospered them more to exchange by consent than to seize by force — that it was better to trade than to raid — so must democracy teach unsocialized public servants how to exchange with and

not, by any pretext, practice force and seizures upon those whom they would serve. The mission of true and voluntary democracy is to socialize government, to transform crude political power into giving services by exchanging, value for value, in the community business, the same as in private transactions. Free democracy, by voluntary exchange, is the unique endowment of men. Nature has endowed also every community with persons to own and administer the common properties and services, as truly in the larger communities as in a hotel, and she bids us learn how these services can be democratically and without violence exchanged. When, by faith in its beauty, men are inspired to examine the nature of the democratic social process and the function of ownership in its creative aspects; when in the field of community services they learn to apply the same principles of exchange that have raised them above the brutes in their private relations and that have opened to them all the wonders and beauty of the natural world, then will age-old public violence and seizures cease and all private and all public values and revenues will leap to unimagined heights in a society of unrestricted service and universal exchange. Then will men come into the boundless bounties of civilized association and the joy of free and creative lives.

THE BUSINESS OF COMMUNITY ECONOMICS

“Economics” Means the Keeping of a House, a City or a State as a Community.

A socialized or civilized condition of men is one in which they co-operate by division of labor and in democratic or willing exchange of services with one another.

Civilized men must live in communities because it is only in community life that there can be any voluntary exchange of services, and here there must be community services and property in order that any other or private services and property may be created or exchanged.

A hotel or apartment house, an office or professional building or an industrial building is a community because a portion of its space and occupants is designated and given over to the common use and service of all. This refers to means of communication, corridors, stairways, elevators etc., with all proper furnishings, equipment, services, protection etc., needful to the inhabitants for their common use and enjoyment, often including heat, light, power, water and gas, when these are supplied by the proprietors of the community property or under their consent and authority.

The community property, with all of its services, is financed and maintained by the proprietors out of the proceeds from the sale of the community services to the inhabitants. For this purpose, a large part of the community property is set apart for separate and exclusive use and occupancy. The exclusive occupants of these parts determine among themselves the value and proper recompense to the proprietors for such of the community services as they receive through their exclusive possessions of these parts. They do this by bidding upwards for the occupancies of these separate parts while the proprietors of different communities or of different parts of the same community offer them at downward prices until the highest bidding is met.

The proprietors supervise the service employees and administer all of the community property as their capital.

Out of the rents they receive from the separate occupants the proprietors meet all the costs of current labor and services and interest on the capital investment. The balance they retain as profits of administration or the earnings of their administrative labor.

Just as all these indoor communities are carried on, so also are organized those outdoor communities called towns, cities, states, and nations. Like all the others, these public communities are owned by their proprietors who hold their proprietary jurisdiction under public power, title and authority and whose public servants and officers exercise community jurisdiction and perform community services in all that part which is devoted to the performance of public services or open to public or community use.

These larger communities, while essential to civilization, have been notorious throughout history for their lack of permanence and success. All but the more recent of them have decayed and fallen, and the signs are not wanting that these may tread the downward paths of their predecessors.

Seldom, if ever, has any great community gone down except from or after much internal decay, and small communities are no exception to the rule. Let us examine, then, what are the essentials to the successful and profitable conduct and keeping of the small communities referred to. The whole may be summed up in the one word, management.

Practical persons know that in a community house-keeping, such as a hotel, management above all else is vital to its success. Good management can overcome great obstacles and adversities, but under no amount of favorable conditions can a business continue and succeed under management that is bad, neglectful or lacking on the part of its owners.

The great social function of ownership is administration. This has to do with all of the property and capital, including the purchases and sales of services and products and supervision over the services of all non-owners or employees engaged in the enterprise.

These non-owners, however high in rank, can exercise no original but only the delegated authority of the owners. They come, therefore, rightly under that supervision. In all successful enterprises of ordinary size this supervision by owners is definitely performed. But in large-scale business, especially where there is monopoly or governmental control, ownership and management are frequently “divorced,” and high-ranking employees, coming under no adequate supervision, assume original instead of delegated powers and proceed to control the property and business in disregard alike of the interests of its owners and the welfare of those to whom its products and services are sold. This is a condition of internal decay that no small business, community or otherwise, can or ever does long survive.

Large business, however, is like large organisms; it is longer lived. It takes longer to grow and longer to die. This is especially observed in community business. Let a small private community like a hotel spring up: if ownership is divorced from management it quickly goes down. Let a city or a state arise, and under the like conditions it more slowly grows and the more slowly decays and declines. And an empire must have centuries to compass its career.

The great social need is closer association between and the ultimate remarriage of ownership and management in those large community enterprises that are called nations, states, cities and towns. In this marriage, it is believed, a community will be crowned in strength, beauty and peace and then give birth to riches and glories that can never die.

QUESTIONS

FOR THE CONSIDERATION OF

LAND OWNERS

Being the Proprietary Officers

through and by Whom

Society Exercises its Sovereignty over its Territory

1. 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 prospects for its enhancement?

Is not the value of occupied land made up of the actual rent capitalized, plus or minus the prospective increase or the prospective shrinkage in the actual income from rent?

And is not the value of all non-income-bearing and unoccupied lands merely a speculative value – the capitalization of the prospects of future rent being received?

2. Public Services

Are not public services of government indispensable to the existence of all civilized values and therefore does not your land have a value only so long as government, on the whole, does less harm to your territory and its inhabitants than it does good, and so creates ground rent?

Does not your net ground rent (present land value) represent merely the difference between all the government giveth to the inhabitants of your territory and all the government taketh away? Is not net ground rent the measure of what is left to you and your tenants (the rent to you and its market equivalent to them) between the right hand of public service and the left hand of property seizure by taxation, with consequent public disorder and general distress?

3. Public Business Poorly Organized

Is not the enormously important service of government the only business in the world in which the entire personnel consist of hirelings for wages and salaries and in which the proprietors (yourselves) who merchandise the services to their customers (your tenants) take no willing or active part in either the financing or administering of them?

Are not the public servants (servants of your territory) in need of proprietors to finance and supervise them and sell their services to the public — just as much as employees in private businesses are?

Is it not your proper interest, as landlords of your community, to finance and administer the services you sell to your tenants, the same as it is for the “landlords” of a hotel?

If the owners who collect, in rents, the value of all the general services performed, either in /an extended/ community or in a hotel, fail to administer the properties and supervise the services, and permit the servants to seize the property, regulate the affairs, and prostrate the business of the occupants, will not the one as surely as the other go bankrupt and eventually lose all income?

4. Land Value a Service Value

Do you think your tenants pay you rent for more earth or space, or for the net balance between good and bad services delivered to or imposed upon those who occupy that place?

Is not your net ground rent really the net income from the public business remaining for you after all labor and material and public debt costs have been deducted by taxation? – by the taxes on your tenants that smother their business and hinder them from paying rent, as well as by the taxes that fall more directly (but less injuriously) upon your rents after you have received them and that prevent you from keeping very much out of the little rents that your tenants can pay?

5. Land Value the Income from Public Capital

Since your final net income is really what the public business earns for you as the public proprietors, after all its costs, both proper and improper, have been deducted by taxation, then is not your income really and precisely what the public capital yields to you above the cost of public labor and public debt?

When each of you became, as land owners, the public proprietors did you not, in effect, make investment in the public capital with a view to the net income then yielded or then expected to be yielded by it?

6. Land Owners the Real Owners of
Public Capital and Income

Is it not the order of nature and of society that land owners, as the public proprietors, must receive collectively in ground rent whatever net income is yielded by the public capital?

Does not this fact constitute you the beneficial owners and therefore, in a business sense, the real owners of that capital?

Is it not highly advantageous to all parties that the real owners of the capital engaged in any service or enterprise should direct, finance and administer that enterprise?

And does this not apply to you, as the public proprietors of the public capital that is engaged in the public enterprises, as much as it applies to the private owners of the private capital engaged in private enterprises?

7. Duties of the Landlords of Community

If you were the proprietors of a hotel, instead of a /larger/ community, you would know that you owned the capital invested in that hotel and that your income was the earnings of that capital, after deducting all costs.

Would you permit the servants in that hotel to destroy your income by seizing the property, regulating and ruining the business and violating the liberties of occupants of that hotel?

Would it not be your very first and obvious duty to yourselves and to your tenants not to encourage but to protect them against such fatal exploitation?

Is it not now your corresponding obligation to yourselves and to your tenants to protect them against further seizure of their property and destruction of their business by taxation, in order that there may be active demand for your sites and for the public services that your sites afford?

8. Tax Reduction a Benefit and Service to Tenants

Would not the emancipation of all industry from every tax that is not needed and used to maintain essential public services be a service and a positive benefit, a virtual bounty, to every business that occupies land or uses public services and pays rent to obtain those services?

Would not your tenants be benefited first, by the direct amount of their exemption from taxation; second, by relief from the indirect discouragement of enterprises and curtailment of production caused by the imposition of unnecessary taxation; and, third, by their relief from those regulative, restrictive and destructive activities on the part of government that give excuse for needless taxation and which unnecessary taxation supports?

9. Tax Reduction to Raise and Restore Land Value

Do you think that, with all the foregoing benefits and advantages to the conduct of their business and their production of wealth, your tenants would not bid eagerly against each other for sites and public services until the amount of new rent created would far exceed the amount of old taxes abolished?

Would not the entire amount of new rent so created be your profit and proper recompense for your services to your tenants in lifting such burdens from them and safeguarding their prosperity?

Would not the unburdening of industry and wealth production from coercion and penalization return to you, in recompense, a voluntary income from rents far greater than all present taxes and all present rents combined?

Would this not result, eventually, in all public values coming to you as rents and all public cost flowing through your hands, making you the proper paymaster and thus establishing you as the natural supervisors of the public servants and the proper administrators of the public capital?

10. Public Business the Rightful Business of Land Owners

As owners, administrators and supervisors of the public capital and labor, would not every act and policy of good administration be rewarded and recompensed to you in superior rents for your location, while any lapse from good administration would be penalized by diminishing your returns?

Would not such conduct of your business redeem your now precarious fortunes and at the same time put the providing of public services upon an exchange basis and thus redeem government from its present practices of stealth and violence in seizing property and destroying business?

If, knowingly, you enter upon your ownership of the public capital, safeguard your tenants from governmental violence and expropriation, and undertake responsible administration of the services that you sell to them, will not the biggest and best business in the world then be yours and yield you incalculably large returns?

In the following pages, “Real-Estate Administration for profit,” an effort is made towards elaboration of the reasons underlying the answers already implied in the fore-going questions.

REAL-ESTATE ADMINISTRATION FOR PROFIT[1]

O’er forms of government let fools contest;

Whate’er is best administered is best.

-Alexander Pope

All business consists in the administration of property, and all revenue from business is the product of administrative services.

The real-estate business comprises the administration of two different kinds of property — land, with its public services appurtenant to it, and its improvements, with the services of the private capital invested therein.

The land yields to its owner a revenue that is called ground rent. The improvements yield to their owner, above ordinary interest, a revenue that is properly called the profits of administration, or the earning of administrative labor.

The ownership and management of real-estate, then is a special division of general business only in the fact that it is the administration of fixed instead of moveable and personal properties. It differs from a commercial, manufacturing or industrial business only in that the property being administered, with the services incorporated in it, is not being passed from hand to hand as in these industries, but the services of it are divided up into periods of time and sold piecemeal, as it were, under various tenancies, and the physical turnover of the business takes the form of renewals and replacements, instead of transfers of ownership in toto.

In a very primitive economy the owner-administrator, such as a farmer, merchant or manufacturer is commonly the owner of and must administer several different kinds of property. He owns personal property in his products which are his moving capital or turnover and also in his moveable equipment and appliances. He owns real-state in all his fixed equipment and improvements. This is fixed capital. And he also owns

real-state in his land, and this has the services of public capital to give it value. Not only must he administer all these various kinds of property but he must supervise all the subordinate labor he engages to assist him in his enterprise. Such organization of industry is simple only in the sense of there being but little division of labor. From the standpoint of the variety and multiplicity of functions that the owner must perform, it is relatively complex.

Now, the whole development of industry consists in its being divided up into many different kinds of units that are structurally separate and distinct but that are connected together by the system of commercial exchange. This division takes place along the line of the different kinds of properties and services to be administered, and the more highly the type of administration suitable for one type of property is developed the less such an owner or organization of owners can afford to have its capital tied up in properties requiring a different type of administration. This is exemplified in chain-sales organization, the owners of which cannot afford to have any of their capital tied up in or to give administrative services to the buildings they occupy, much less the land connected with them. In like manner, the most highly specialized business and professional persons seldom own the premises they occupy, not because they lack the necessary resources, but because they cannot give the special administrative services that such properties require.

So, with the advance of economic organization, it comes to pass that in metropolitan communities the different types of properties are held generally under separate ownership and administration. The movables, in both turnover and appliances, are owned and managed by tenants of buildings or other improvements on land. These buildings, with all their fixed appliances and services, are owned and administered by persons or organizations who are tenants of the lands they occupy. And these lands, with all the appliances and services appurtenant to them, are administered by persons and organizations who own them and who, because of the titles as proprietors that they hold and the services they perform, are, in effect, officers or servants of the community as a whole.

Every tenant in a building, living or carrying on business there, is a purchaser of the services that the building provides. And it is the proper and useful business of those who own and administer the building to see that all the services of the building to its tenants are adequately and efficiently supplied. Their whole profit from the building is the product of this administrative activity. This includes general upkeep and maintenance, the purchase of materials and supplies and the payment of wages for labor engaged in upkeep and in all of the services that are provided for the tenants. All of this, and the interest paid on or credited to the fixed investment, is the current capital turnover. The only return for administrative services, the only profit of the enterprise, will be the amount by which the returns from rentals exceed all these current costs.

Now, since building space and services are sold in open market, it is clear that the rentals represent the market value of the space and services. It is the aim and duty of good administration to make and maintain this value at the highest level. This requires, first, that the services be supplied and maintained, but, over and above this, it also requires that everything that is possible be done to keep up the public demand. This branch of building or hotel administration extends to such matters as protecting the tenants from all theft, injury or insubordination on the part of the service personnel, as well as policing the interior of the building and guarding the tenants against everything inimical to their comfort or prosperity. All of these negative services increase the demand for and therefore the value of the positive services supplied.

Now, just as the building owners depend for their market upon demand for building services on the part of owners and producers of moveable goods, so do the owners of land depend upon the demand of those who own and administer building properties. Just as the building or hotel owner sells service, so does the land owner sell service; and in both cases good administration has two aspects – not only the keeping up and improvement of the services themselves, but also the building up and maintaining of a proper demand for them.

It must be acknowledged that the building owners have thus far shown a keener consciousness of the essentials of their business. They have not at great cost purchased buildings, only partly tenanted or yielding but little income, and then abandoned them to the mercies of the servants and employees without supervision or control or sufficient funds, permitting them to fund the costs and deficiencies by levies on the properties and operations of the tenants. Building owners are too wise for this. But the owners of land and locations do something very similar. They purchase costly sites, idle or only partly tenanted and yielding little income. They contribute a portion of the cost of the public services received by their properties, and they leave the conduct of those services entirely unsupervised in the hands of the servants themselves. But, instead of doing anything to protect their present or prospective tenants in the quiet use and enjoyment of buildings or other improvements, the site owners acquiesce and even encourage the public servants and authorities in their practice of levying on and seizing the properties and demoralizing the business of their tenants, the building owners, and also the business and belongings of the occupants of the buildings. Land owners do not know or do not realize that all these charges laid against the tenants of buildings and against the tenants of the land who own the buildings – that all these respectable depredations against both kinds of tenants drastically limit their rent-paying power and cancel out the advantages for which all these tenants pay rent.

This condition manifests itself in two ways. First, as to the lands and the buildings actually occupied, it cuts down the amount of rent that can be offered or paid by the occupants and, second, by its deterrent effects upon new tenants and new occupancies, it limits and holds down the entire demand for land and building services to that of the present occupants alone. The result is that only the lands and buildings that are in present use have any present or income value, and all these potential properties kept out of use in this manner have no actual present value at all, however much may be the investment in them without income, unless they be allowed a mere gambler’s value – the value of hopes or expectations. And the carrying of all such idle properties without income is a heavy loss of capital earnings and profits for all owners of land and buildings, besides the actual melting away of capital in obsolescence and depreciation. This melting down of the value of idle buildings probably accounts for there being usually so much less of costly buildings than of costly lands kept out of use because of lack of demand for them.

The vast disemployment of potentially valuable land because of the destruction of all demand for it, because of the limitation on the demand for and earning capacity of buildings, which, in turn, comes from the hazards and poor earnings on the part of those who use building space and services (which again reflects their low production due to the scant purchasing power of all their customers) – this places an enormous burden upon land ownership such as no other one kind of property ever has to bear. In fact, this burden is the reflex of the burdens borne by every other kind of property and business that there is, for it is only the profits arising out of every other kind of business and services that creates and constitutes any demand for the use and services of land.

It is well, therefore, to consider just what service it is that land owners have to sell. To do this let us first look at the building owner. He does not sell mere space, but the services with which he surrounds and conditions the space, these comprising the administrative services that he directly performs and all the services that he hires and purchases from others, including the public services that he purchases from the owner of the land. Thus the building owner shows the true pattern for the value of land.[2] It is not the land but the supply of services surrounding and delivered to the site that constitutes the basis of all its present value.

But the mere presence of public services is not enough. There must also be demand. Every kind of service, including commodities, comes into being through human activity, but no service or commodity has any value except in the presence of human demand, and this demand must itself consist of other services or commodities that are offered (through open markets) in exchange.

The real value of the land, then, like any other value, depends, first, upon the kind and amount of services its tenant will receive, and, second, it depends also upon the effective demand on the part of actual or immediately prospective tenants. This effective demand arises out of the amount of services and commodities (wealth) that the occupants are permitted to create in connection with their use of the land, and the rent they offer to pay (which is the current value of the land) is that portion of this wealth which goes in open market in exchange for the public services they receive through the land. The land value, therefore, as seen by the occupier, is the value of the public services he receives and pays for; as seen by the owner it is the value of the rent – wealth – that is given by the occupier in exchange for the services he receives.

It is the right of the occupier to receive services and the right of the owner to receive the rent. The rent is, in fact, the only thing of value that the owner (as land owner) receives or has any right to receive, and this right is expressly conferred upon him by the will and power of the whole society. In virtue of his position thus established he is, collectively, the proprietary department of the society, and because of his proprietorship there must flow into his hands the control and disposition by sale to his tenants of the net services resulting from all the activities, both good and bad, of the political or public service department of society. These public servants and officers, as such, are not proprietors. They own no part of the territory. They receive stipulated wages and salaries as distinguished from profits arising out of ownership and administration. The proprietor, on the contrary, depends for his earnings or profits upon the net income remaining to him after all the labor costs (wages and salaries) and all the capital costs (interest) of the public services have been paid.

With the administrative position of the land-owning proprietor thus seen to be similar to the position of the proprietor in the conduct of any other business, it remains to point out the ways in which he is accustomed to exercise his administrative functions and the direction in which such activity on his part can be most profitably extended. And since the public services must extend, in varying degree, to the whole territory and so serve all the proprietors of a community it is necessary that they associate themselves together and act, for the most part, collectively and in their organized capacity. This is essential alike for unity and consistency of action and also for the exercise of effective influence and authority.

Every business consists in selling services, either directly or in commodities. They are sold for money or other instruments of debt and credit by means of which other goods and services, soon or late, are obtained in exchange for those that have been sold. There must always be a service and production department and, over it, a department of administration and sales. This latter department is always properly under control of the owning or proprietary interest.

What the proprietors of land have to sell and do sell is the net public services received by the occupants of their sites. Their tenants and lessees are their patrons and customers. The public servants and officers are the service and production department whence arise the services that are sold. Each proprietor is custodian of so much of the general public service as attaches itself and gives rental value to his particular location. Individually, he puts the land in possession of those tenants who can make the highest use of the services it affords, attending to all matters of the sales of these services and collection of the rent paid for them.[3] Collectively, he owes to his tenants and to himself the duty of protecting them from property seizures and political domination, all in the interest of higher productivity and purchasing power and consequent further demand for locations.

The land-owning proprietary interests as a group, however, have relation with two classes of persons, public and private – those who perform public services upon public territory or distribute them publicly through public rights of way, using public capital in connection therewith, and those who perform private services upon the private territory, using private capital in connection therewith and distributing these services among themselves by private contracts. These last, exchanging their products and services, constitute all private industry and trade. But private industry must have public rights of way for communication and exchange, security of property and possession, and other services that can be supplied only by or under public authority.

Since all such services can be delivered only though highways and to nothing but the locations served by them, it is the function of the publicly established proprietors to sell these services to the private occupants and users. This is the manner in which free bargaining to pay ground rent establishes the market value of the services supplied to each location and provides a right and proper basis of payment according to the value of that portion of the public services that each occupier individually receives. Thus through the proprietor the rent-paying occupant obtains the services of government by free negotiation and without either party imposing any duress or coercion upon the other.

But the relation of the public proprietors to that other class of public persons who perform the services that are sold to the occupiers who pay rent for them is of a different character. Notwithstanding that this class is properly a service class, they act and assert themselves virtually as masters, for, in the course of development of “free institutions,” they have inherited the kingly power of seizing private property – a power unknown to Anglo-Saxons for centuries before the Normans laid upon them the slave technique of despotic Rome. This right to seize property that the Norman Kings fought for and the Tudors and Stuarts exercised has been carefully preserved to their present-day successors in public office, by election or otherwise, in what is now tamely tolerated as the power of taxation.

So we have in the community business to-day the anomalous condition of the proprietors, who get all the net public value there is, standing idly by while the service department, being under no other supervisory authority, seizes increasingly the already diminishing private property of the population and so impoverishes and eventually depopulates the land. At present it is said to be seizing nearly a third of all the wealth and income (rent, wages, interest and profits) so meagerly and under so many restrictions now created.

These public servants, in the aggregate, are permitted to fix their own wages and other expenses and to pay themselves, not by any exchange of services, as other servants do, but out of their seizures and out of their borrowings on the faith of prospective seizures. They are under no responsibility to any paymasters or other authority apart from themselves. Their supposed responsibility to the electorate, in practice, takes the form of legislating special privileges and more public funds and plunder into the hands of special economic groups and classes whose support they find useful to their continuance in office and power. Such is the body of servants over whom the owners and proprietors of each community must exercise supervisory control. And this is imperative, for, as taxation mounts ever higher, rent must ever decline. This result must follow so long as public revenue is raised by force and stealth and spent on favored classes and groups.

As public revenue is now raised and expanded there can be no long-term outlook for anything but decline in land values and rents. This is so, not alone because the whole of present taxation is enforced tribute instead of voluntary exchange, but because the whole of it is a direct charge against the value of the public services and therefore diminishes rent in the first instance by the total amount raised by taxation. In addition to this, the present seizures by taxation create an indirect charge against the public services by an incalculable amount owing to the loss and damage it inflicts upon all users of land by hampering and demoralizing their business. It is necessary to deduct from the gross advantages of public services all taxes or other charges, direct and indirect, laid on those who receive the services, in order to arrive at the residuum which is their net value. This net value is precisely what is sold to the occupants of land and paid for by them in ground rent. Since this net value of the public services to land is all that the proprietors can sell, it is only by enlargement of this net value that their incomes can be increased. This is just where land-owners should organize and give their best powers of supervision and constructive administration. It is a field vast in extent and vastly in need of services of this kind. It is enormously inviting. It can be made highly fruitful to the community and enormously profitable to the whole land-owning interest in return for whatever amount of cultivation they will give to it.

What is desired, then, is to build up the net value of public services. This can be done only by increasing the demand for or the supply of them, whichever is the limiting factor.

There is in most places a far greater supply of public services than there is any effective demand or market for. There are almost endless miles of improved streets and highways through which are delivered to neighborhoods and locations the costly and complex services that public authorities and agencies acting under them know how to supply, and yet the ability of private capital and labor, of business enterprise in general, to pay for and make use of these services is so limited and restricted that probably over half of the property that should benefited by these services is entirely unoccupied and yielding to its owners no revenue at all, while other large portions of this property are so poorly improved and unprofitably occupied that the income fails to pay even local taxes, much less any return upon the cost or supposed value of the land. For all of these widely extended public services there is only such demand as is represented by the few and occasional occupiers who can carry on enough business to justify any investment in improvements and in that way make any profitable use of the public services with which the sites are supplied. It is only at the relatively few locations thus occupied that the public services enjoy any demand or give land any value, in the sense of present land values, for it is here only that any adequate rent is paid.

It is a habit of thought to consider land that yields no rent as still having value. We fail to realize that demand is just as essential to value as is supply. Whatever be the amount of land or the amount of public services supplied to it, it can at no time have any value beyond its yield in actual revenue or what can be gained by its use. Men may gamble in their estimates as to future yield, but no value is realized unless or until that future yield becomes a present reality. There is a tendency to suppose that because one location can be sold or rented all similar locations can be rented or sold, forgetting that value is strictly limited to demand. When the owner of twenty similar sites can sell or rent only one of them he is not thereby assured that he can sell or rent all of them. The entire demand has been satisfied by the one transaction and the value of all the unsold will have to await future demand. Similarly, if twenty owners should receive twenty identical offers for similar sites and only one sale is made, then each of the other nineteen will suppose that he could have made a sale and that therefore his is of the same value as the one for which there was a demand. In such case the present realizable value of all the sites together is no greater than the rent or price paid for the one for which there is actual demand. The same is true in any whole community. There can be no present value in their lands and the services supplied to them beyond the value of those which are in actual use in response to the actually existing demand for them. It should be clear to land owners that their chief obstacle is not any lack in the supply of public services and advantages that they have to sell but in the lack of demand for them. The truth is that

the whole present value of land in a community cannot at any

time be any greater than the present effective demand for the
services that it affords.

The foregoing prompts inquiry how comes this great disproportion between the supply and the demand for public services — just what it is that keeps the supply up and that keeps the demand down.

As to keeping the supply up, it is well known that practically all public services (as well as disservices) are provided and maintained out of the proceeds of direct and indirect taxation in all its thousand-fold rigors and insidious forms. Public services are not supplied in response to any economic demand on the part of those who are compelled to provide the cost of them, nor are these services distributed in proportion to the contributions of those who are forced to provide their cost. There is no relation of exchange between what anyone surrenders as taxes and what he receives in public protection or other services. It is a fact of nature and of society that public services cannot be returned in the same manner and proportion that their cost is collected in taxes. And any attempt by taxpayers to get value in exchange for what they give up would lead only to further violence and disorder.

But in the structure of all settled societies there is the institution of land ownership, with its incidence of rent, to provide for the fair and orderly distribution of its public services by voluntary exchange on a measured basis – a market basis – of value received. This is the great office and social function of land ownership, the just distribution of public services. No services that are truly public can be fairly distributed in any other way. Any services not distributed to the territory of the society by and through its system of public ways and communications and therefore not attaching to and reflecting themselves in the rent of land are necessarily private services. All private services are provided by and exchanged between and distributed among private persons — so far as they are not prevented or discouraged by taxation and prohibitory laws from doing so.

It is these private services, performed by the occupants of the private parts of the territory, that create all private wealth and give rise to and constitute all the demand that there is for land – rather, for the public services to land – for which rent is paid. Any service or property conferred upon a private person, class or group by any public authority becomes, ipso facto no longer a public but a private service, and, being privately received, it is a special privilege conferred at public cost and expense. All such as this is, of course, to the detriment of public service and therefore a deduction against rent.

Public services can be distributed in exchange for rent only to the extent that the private demand form them is active and alive. Whatever burdens private industry must bear; whatever restrictions upon its voluntary operation and exchanges are imposed; whatever inhibitions it suffers by reason of the hazards and uncertainties with which it is beset; all of these influences, both directly and indirectly, destroy its capacity to make profitable use of services, thus paralyzing the demand for land. Considering the magnitude of taxation, the violent and vexatious manner in which it is imposed, and the destructive purposes for which its proceeds are so largely used, it is a wonder that any demand for land persists and that far more of it is not idle and unused.

Paradoxical as it may seem, the taxation which now pays the wages of public servants so bears upon trade and industry as to all but destroy the demand for, and with it most of the value of, their services, as this value is reflected in the rental value of land. But what little value does remain, what little rent is paid (including under rent the advantages enjoyed by owner users), represents the final residuum, or net value, delivered to its territory, of all the services performed by or under public authority. The actual rent is the value of the governmental services that remains after deduction of all costs collected by it and of other detriments suffered under it. All these costs and detriments destroy demand; for general taxation, unlike rent, does not give any access to land on the basis of value received, as rent does, or on any other basis.

Industry does not pay for its public benefits and services first in taxes and then again in rent. The two together are all it does or can pay. Whether it pays chiefly in rent or chiefly in taxes, the taxes it pays are always a charge against rent, rent never a charge against taxes. Taxes are always taken by stealth or force, whereas rent can never be collected but by agreement and consent. If taken otherwise, it is not rent. It becomes taxation or tribute exacted by force. Land-owners have no coercive power. They are the merchandisers of public services in an open market. But taxation, being imposed without any reference to consent or value received, is a direct charge against rent, for it cancels out the demand for and hence the value of the public services and thus diminishes the rent paid for them.

From whatever angle viewed, it must be seen that the administration of land has to do not with the land merely as land but with the services that are supplied to it. And landowners must concern themselves not alone with the services but also with restoring and maintaining the demand for them, without which demand the services cannot have any value at all.

The implications of such an administrative policy on the part of the organized proprietary interest are at once a challenge to their public spirit and an invitation to almost unimaginable affluence and prosperity. The initial obstacles are small, and the incentive to proceed will be augmented by accumulating rewards. Rising values and profits will insure this administrative policy being more and more widely extended and applied. The getting of profitable tenants or purchasers has so far been left almost entirely to accident. In the business of land-owning, chance is no longer the arbiter of prosperity. The good administration of land rises above mere wishful thinking into intelligent action – the highest service to self through the best service to others. No other policy is profitable or sound.

The whole field of political action is marked by complete absence of any general and conscious policy of public service. In national, state, and even local governments, the public power is exercised largely at the behest or dictation of pressure groups and special interests, each seeking advantages to itself through measures detrimental to each other and to the public as a whole. A catalog of those groups would range from the manufacturers associations to the grocers’ or plumbers’ local unions; from the learned professional societies to the organized barbers and beauticians, not forgetting the endless seekers after subsidies, pensions and doles. The multiplicity of their diverse and antagonist interests, their clamor for privilege, and the demands of each group for the burdening and restricting of the others turns the process of the government into an orgy of conflict and away from the performance of public services. The politicians, political officers, seize property — taxes. They levy tribute. And they use public funds to maintain themselves in office and in the continued exercise of their deadly power. Even such net and final balance of services as they do perform, they are not in any position to sell to their constituents because the organization for it – the distribution of its value through land-ownership and rent — is not in their hands.

The owners of lands, sites and locations, however, constitute the one economic group whose interests rise superior to all this conflict and destruction. This group, always established by public authority, takes custody of and has disposition of all the truly public services. They are the real purveyors of public services in exchange for rent. This is the one group that depends for its revenues upon the productiveness and prosperity of all the others.

When men learn the art of peaceful exchange they cease to wander in search of subsistence. They settle in communities and rise above mere dependence on nature by the arts they develop in serving and exchanging with each other. This they cannot do without the aid and protection of public services. But taxation is a force that cancels the value of the public services and finally extinguishes it, and the society dies. Meantime, whatever public values remain unextinguished by taxation attach themselves to the territory as the net value of the public services. During this whole period of civilized existence, as long as there are any public values, the institution of property in land determines that ground rent shall be paid for these net services and that this revenue shall flow into the hands of the proprietary class. This natural and historical fact is what puts upon this class the prime obligation of administering the public services and also guarantees them ample and automatic returns upon such now little performed though sorely needed public supervision.

The proprietors must learn that every dollar seized by unsupervised public servants means at least one dollar less value in the services performed by them, one dollar gone out of the natural demand for their services, one dollar that can no longer be offered to location owners for services that are now worth a dollar less. Enlightened proprietors can retrieve that dollar from the hands of irresponsible public servants. Every dollar so retrieved will come into the fund of rent, for it will make the public services worth at least a dollar more and at the same time leave a dollar in the land user’s hand wherewith to pay for services that are now of at least a dollar’s greater worth. In fact, since all taxation, being barbaric and anti-social in its methods and its effects, is a burden on land value and rent, then, with taxation wholly discontinued the entire present tax fund would be transferred and annexed to the present rent of land. Out of this vast fund of rent the land-owning interest would need to expend only enough to maintain essential public services at their present existing levels.

But with taxation abolished, the value of these present services would be enormously enhanced. Without the monstrous impediments to production, direct and indirect, that taxation now imposes, and without any restrictions on the exchanges of wealth and services, this splendid liberation and expansion of productive industry would of necessity carry with it a corresponding requirement for public services and therefore a mighty expansion in the demand for and the use and occupancy of land. Thus, even without any improvement in the public services themselves, the increase in their demand and market value would be vast indeed. To satisfy this demand, all parcels of well served land now idle or but poorly used would be drawn into profitable use, the untaxed occupiers gladly paying rent to the owners according to the then market value of the services so freely enjoyed. And any owner who might choose to be his own tenant and occupier would enjoy advantages fully equivalent to the new rent.

If the proprietors of land should perform such a mighty service to the general public as to abolish all taxes, they could not only retain whatever revenues they now enjoy, but their reward would consist in the whole excess of present taxation above necessary public costs, all of the increased revenue from land now in use, and also all of that new revenue coming to the land that is now idle or only partly used or improved. At the same time, the clear gain to the unburdened users of land, to active capital and labor under complete freedom of production and exchange, would be almost unimaginable, while the net income to land, above all necessary public costs, would be stupendous. But, of course, all this would require that land owners, out of their magnificent sales returns contribute enough to meet the proper costs, just as any other business men do, and give all requisite administration and supervision to the public properties and employees. And the circumstance of the necessary costs being supplied out of their expanded incomes would of itself insure to them ample public power and administrative authority.

These reflections on the total abolition of taxes are not put forward to suggest that such a result could be accomplished by one stroke but rather to illustrate the position occupied by the owners of land in relation to taxation and to the cost of and demand for public services and to suggest a constructive policy. It is not possible for depressed land owners to form a pressure group to compel the public by law to use more land and pay higher rents. But land owners need to take advantage of the fact that taxes are just as injurious to the general interest as they are to their particular interest in land values and rents. Their work for the remission of taxes will benefit both the public and themselves. Increasing taxes means increasing public distress, but rent and the use of land are increased only by the improvement in the economic condition of the population as a whole. Just as taxation deducts from and depresses the earnings of the population, just as it depresses the demand for land and deducts from its income, so is any remission of taxes at once an addition (by restoration) to the earnings of the population and to the effective demand for land.

The power and influence of the owning interest in land is not inconsiderable, and a great deal is being done to lighten the tax burden on this kind of property, but this is not enough. This is only to shift the burden to other kinds of property and production and thus diminish the demand for real estate and make it even more idle and unproductive than before. What is required is not merely to ease the burden on real estate, but especially to unburden all those forms of production and exchange that create the wealth and services upon which all the demand for real estate rests. If the owners of buildings should find their tenants being impoverished and driven away by the personnel in charge of the building they would not hesitate to give the necessary supervision over the personnel to put an end to these injuries. It should be understood that the public servants, by their seizures of property and restrictions on production, are impoverishing all the users and occupiers of land, diminishing the profits and therefore cutting down the employment of both capital and labor and all that activity which alone creates demand for the public services attached to land. Indeed, the injury to the income from land is even more direct. Every dollar taken by public servants in taxes is a direct withdrawal from the taxpayer of just one dollar of the value of the services for which he pays rent. He therefore pays a dollar less rent then he otherwise would. Often, he fails in business and ceases to pay rent at all. The value withdrawn from him by taxes has more than offset the value conferred upon him by services. The left hand of the public servant has taken back in taxes more than his right hand has performed in services. The loss to the taxpayer is not merely the tax but also all that distress and demoralization to him and to those whom he serves that comes from the hazards, vexations and uncertainties connected with the laying of the taxes and with the restraints upon business for the enforcement of which the tax funds are so largely spent. How much greater the injury to production and business is than the amount of the taxes actually taken it is impossible to know, but the inhibition on enterprise must be incalculably large and severe. It is only when the indirect cost of the taxation is considered and how this may be many times greater than the taxes themselves that it can be realized what a mighty deduction is made by the harmful acts of the public servants themselves from the otherwise value of their services for which the occupiers of land pay rent. There can be no doubt that the penalizing of production by taxation destroys the rent of land by many times more than the aggregate amount of all taxes taken.

The suggestion is clear that so far as the proprietary interest becomes instrumental in lifting any tax upon the users of their lands they can increase their returns in rents by the full amount of the burden directly removed and also by a further indefinite amount. It is of tremendous importance to land owners to know that whatever tax relief they may procure for their tenants or purchaser will surely be rewarded to them in rents and selling values in far greater measure than the amount by which their land users are directly relieved. And if this tax relief to land users should be carried so far as to impair the revenues actually needed for essential public services it would yet be possible for the land owners to replace every dollar of the deficiency and still retain for themselves a wide margin of profit on every one of these necessary tax dollars lifted from their tenants. Rent is no burden to the land user, even if he should pay in rent more than he has been exempted in taxes, for he then pays for services he desires a price no greater than he desires to pay. And he finds it to his profit and advantage to pay in higher rent more than he has been exempted in taxes, for he has been relieved not only from the taxes themselves but also from indirect burdens and losses of far greater amount.

The fact that land users voluntarily pay rent for the indirect advantages as well as for the direct advantages that come to them by way of tax relief should be carefully considered by those who seek to obtain legislation for the limitation of taxes upon real estate. Examination cannot fail to reveal that whereas relief of rent or site value from taxation cannot benefit the owners above the amount of the taxes actually lifted, a tax relief for improvements or other capital not only relieves the improvements but also returns back to the land-owning interest an enhancement of rental and sales value far greater than the mere amount of the taxes remitted. The land-owning interest, as such, not being engaged in the active or productive use of land, they, as land owners, have no private business interests that taxation can weaken or destroy. It is therefore impossible for any tax relief upon sites values to bring them any benefit or increase of value beyond the flat amount of the tax relief itself, for a tax laid upon site value or rent cannot diminish net income by any more than the amount of the tax. But a tax laid on the use of land diminishes its desirability to the user and therefore its revenue and value, not only by the direct amount of the tax but also by the amount of indirect damage and detriment suffered by the business for which the land is used. It is therefore far more vital to the value and income of land that the improvement and use of land should be exempted than that taxation should be lifted directly from the land itself. Untaxing the use of land yields to its owner a multiple or at least a double benefit, whereas untaxing the land yields only a direct and single benefit to its owner.

When once it is seen that taxation of general business and its products and activities is a multiple detriment to the value of land and measures for the relief of those using it are put into effect some immensely important tendencies and influences are bound to arise.

The prosperity of all the interest engaged in production constitutes the whole demand for the public services afforded by land and gives these services their market value. But it cannot be expected that the wealth-producing, land-using interests will or ever can obtain much tax relief for themselves. Their interests are too divided and diverse for any unity or unanimity of action. Moreover, these diverse groups, wherever they are organized, are engaged in such a merry war of throwing tax burdens and other political restraints and embarrassments upon one another that they unwittingly keep their own capital and labor largely

disemployed and the productiveness of all of them is seriously diminished and impaired.

But land owners have a unity and solidarity of interest. Their only function as land owners, their only proper business, is to redeem and maintain their own incomes – the values of their lands. This calls for services in behalf of general business, in behalf of land users, present and prospective. Realizing that both the present capital value and the annual value of land is the value of the services publicly supplied to it; and that they themselves are the purveyors of these services to the whole productive population; and that what they receive for these public services is the whole rent or income from land; and that this rent, either current or capitalized, represents and in fact is, the whole exchange or market value of all the public services; and that all taxes are a deduction from this exchange value, the proprietors find their own supreme and immediate interest to be in the removal of all taxation that is not necessary for such public services as give rental value to land.

When it comes to the question of what taxes should first be removed, the proprietary land-owning interest will find that removing taxes on general business and the use and improvement of land results, as we have seen, in a double benefit to land – that rent is increased directly by the amount of taxes abolished and also indirectly by the removal of indirect damage and detriment that the users of land now escape. This makes it clear that the first taxes that the proprietors should seek to remove should be those that fall upon the sources of their incomes – that burden the payers of their rents. And in their untaxing of the sources of rent they should mark first for removal not necessarily those taxes that are highest in amount but those that are most injurious in their effects, for these are the taxes that destroy the most land value per unit of tax taken. These are the taxes whose abolition will yield back to land owners not only the amount of the tax itself but also the greatest measure of indirect enhancement of rent by reason of the greater amount of indirect damage and detriment to rent-payers thus removed. Besides this inherent advantage in the early removal of the taxes that are most injurious, there are considerations of policy as well, for by this course the greatest enhancements of rent are obtained by the smallest removal of taxes and therefore against the smallest amount of opposition on the part of the tax-gathering interest and authorities and with greatest amount of cooperation from the general business interest, for the more widespread and insidious taxes are generally not imposed at the behest of any special interest or group for purposes other than revenue and so have few friends apart from those who collect or receive them.

Starting at the level of least resistance the proprietary interest can extend tax benefits and exemptions to the business world of land users with corresponding enhancements of rent. With the taxation of wealth and production finally abolished and ground rent so enormously enhanced, a small part of this great enhancement would suffice to support public services at preexisting levels. This contribution of land owners out of their rents would not have any of the nature of a tax because of its being voluntary and self-imposed, like the cost of any other business, exclusively for the maintenance of income. The proprietary interests thus /would/ move into their proper position as paymaster and supervisor of the public servants and into a conscious and enlightened administration of the public capital from the operation and administration of which their income is derived. But primary to all this, it is their first and peculiar obligation to bring about the exemption of their land users from the ravages of taxation. And this primary service holds astonishing rewards. It transforms bodily into new rent all that was previously seized and collected as taxes and also a further and doubtless much greater rent in return for the immense advantages that the payers of rent find coming to them in consequence of removal of the indirect damages incident to the taxes formerly imposed.

The real estate interest is, or easily can be, the most powerful and influential of all business groups. But when it seeks political relief merely by shifting direct taxation into more indirect forms it simply puts business and production under increasing burdens that constantly weaken the demand for and the value of all property. But if it will serve all its tenants by lifting these restrictions upon them, then, by such public service, the real estate interest will be also serving itself with both hands. That part of it which represents improvements on land will be enabled to operate these improvements to their full capacity or find eager tenants at rentals based upon flourishing business activity and abundant production. But that part of the real estate interest represented by investments in land will find themselves beset with demand for their formerly idle locations and with increasing offer and demand for the locations already in use. The healthy effect upon rental and sales values can better be imagined than described. And such a boom in rents and values could not collapse, for it would be based upon the actual production of wealth and not upon obligations and debts.

All other businesses and exchanges of human services have been mightily improved and transformed. But the business of land ownership, of exchanging public services for rent, this ownership and business by which every society attaches itself to its territory and apportions, finally, all of its public values, this business alone stands passive and supine while being progressively undermined by predacious taxation that throttles all business and thereby keeps land out of /word missing?/ and therefore out of value and out of use.

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 and devastation. The only authentic and legitimate services of government are those bestowed upon its territory and thus into the hands 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 these services 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 administrative 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 service for the upbuilding of rent. Properly and democratically organized among themselves, they become the administrators and beneficial owners (enjoyers of the net revenue) of the largest, most necessary and indispensable, and therefore, when well conducted, the most profitable business in the entire world – no less than the whole business of government as the organization, production and distribution of public 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 preset 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 organization have been kept constantly in view. But it is worthy of note that such thoroughgoing application of these principles as has been proposed contains implications of deep and wide social significance. The progressive reduction of taxation and the still faster enhancement of ground rent and land values will surely transform government from the predacious character in which it finally destroys the society that it serves into that of a vast service agency, leaving to the 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 benign and creative practice of voluntary exchange. It is in this way that private services and transfers became socialized and redeemed from the rule or force and rapine. And this is the way in which proprietorship in land can redeem government to its proper service of society on a basis of free exchange. Thus may politics and economics at last become reconciled, government itself /become/ socialized and society /become/ safe, permanent and whole.

It should indeed be a matter of inspiration and encouragement to the whole real estate world that the owning interest in land in the proper and effective pursuit of its

own business 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 need for any pretenses of altruism or public spirits, it should also emancipate the arts and industries by securing them in the one freedom that includes all others — to serve and to be served — the freedom of untaxed and unpenalized production and exchange.

Retrospect and Prospect

When a population migrates from a land of debts and deficits and high taxation to a land of slight taxation and no deficits there is a phenomenal increase of land values, such as took place in North America in the nineteenth century.

The people brought with them no capacities or facilities for wealth production any greater, nor even as great, as they had in the old lands, but they did leave behind them the losses that the seizing of their property for taxes had imposed and the crushing burdens that the mis-spending of those taxes to regulate their business and limit their employment and production entailed.

With relatively free and untaxed production and exchange in their new land, so great became the need and demand and the ability to pay for necessary public services, principally the maintenance of internal peace and safety and ways of communication for free exchange, that fabulous land values sprang up upon sites where this demand arose and these services were supplied.

But rising debt and taxation and increasing restraints on business and production, financed by public debt and taxation, are now preventing employment and so limiting production that the effective demand — and the ability to use and pay for public services — fails, and land values no longer rise.

A great reduction or abolishment of coercive taxation, with its attendant and consequent evils, would have, upon the present population, the same economic effects as if it were to be transferred, by magic power and without inconvenience, to a still newer and freer continent already supplied with all the resources and equipped with every facility of production that they possessed in the one they left behind.

Such a release of productive power would bring forth unimaginable wealth, and the value of land would again leap to such further heights as we can but little more dream than could the simple Dutchmen of early New York.

Land value — the exchange value of public services — is a reflex of all other exchange values. It cannot create itself. It is determined by what the community offers for its net public services — always in terms of its own wealth and productivity. Without production there could be no rent or land value. With free and taxless exchange, and thus unrestricted employment and production, there are no necessary limits beyond which future land values may not be caused to rise.

ON THE VALUE OF UNUSED LAND

AND NATURAL RESOURCES

In the preceding pages all unused and non-income-bearing land has been treated as having no actual, realized, present or income value, and no reference has been made to the value of mineral or other natural deposits or advantages, such as climate, fertility or rainfall and ease of navigation or communication, because these are not services that can be exchanged, nor are they products or commodities, there being no services incorporated in them. All such natural conditions influence or determine the preferential order in which different parts of a territory will be settled and occupied or used and hence the order as to the location of the places where services, both public and private, will be performed and in demand.

Natural advantages and attractions are an important influence to determine the regions and locations in which both public and private services will be most performed and in or at which public and private values will most arise. These values, however, are the exchange values of the services performed and exchanged in or at the natural environment and not any value of the environment itself. The latter possesses social utility because it can be used, but not social value because, apart from present or prospective services either incorporated in or supplied to it, it cannot be exchanged, however much the services themselves may be exchanged when present, or expectations of future services may be exchanged though none exist.

But the operation of the exchange system itself, except as it is impeded and obstructed by taxation and the like coercion, does distribute over its entire membership the natural advantages of location, fertility, deposits or other natural utilities employed by any of its members. The exchange system performs this social distribution of natural utility advantages by setting proportionately low prices or exchange rates upon the more abundant production that arises from the use of natural utilities and advantages. The exchange system, in fact, so far as it is allowed to operate, distributes evenly over its entire membership, by means of its price system, any increase or decrease in the abundance of production that is due to the operation of natural causes. The exchange system is thus capable of distributing natural advantages or disadvantages equally over the whole population, in addition to its primary function of securing to each member the full exchange or market value of the particular services contributed by him.

What gives natural materials, locations and advantages often an appearance of exchange value, apart from the services involved in their use, is the tendency among men to stake their use of present capital against the prospective advantages of future income from public capital through ownership of land.

When production is rising more rapidly than taxation, or when, through monetary inflation or otherwise, it appears to be doing so, this speculation in land values is called expansion or inflation. When taxation rises more rapidly than production, and its effects become realized, this speculation, in reverse, is called retrenchment or deflation of land values.

This expansion and deflation of the speculative value of land, which is the speculative value of public capital, apart from its use or income value, which is rent, corresponds with what takes place with the value of private capital, according to the general expectation that it will become more and more or less and less productive. It is a reflection of how businessmen[4] feel with regard to present and prospective taxation and restriction on production as compared with the present and prospective technology and organization of the productive machine – their anticipation of the relative effects of these opposing forces on the forthcoming production and income.

Were it not for the irregularity introduced by governmental seizure of property and restriction on production and exchange, men would not alternately prefer future values above present ones and then present values above future ones in cyclic depressions, and speculation in idle properties would cease,[5] for there would be no values but present income values, and all values would rise at the same rate that production and income would increase.

In this condition of free production and exchange of present values, unhampered ownership and administration of capital, there could be ever-increasing production and rising values from the application of private and public services respectively to private and public land and natural resources, thus transforming them respectively into private capital and income and into public capital and land or location rent. But there would not be, nor could there need be, any “monopoly” or speculative value in any of the resources of nature themselves, apart from the services applied to them and the wealth and income thus brought forth. Freed from mounting restrictions on employment and production, administrators of capital would be too fully occupied with creating present incomes to spend time betting with each other for and against future ones, and supposing, as long as the odds favor future incomes, that their speculative values are wealth.

It is to the highest interest of all land owners that, by liberation of wealth production and exchange, all the potential values of their idle or half-used lands and natural resources be matured into actual incomes and into the magnificent capital values, actual and non-speculative, that such incomes from production would support.

WHY DOES “VALUABLE” LAND LIE IDLE?

Why is land not occupied and why does rent not arise in proportion to the amount of public services provided in the different parts of the community? If two or more sites are equally well served, how can it happen that one of them shall be used and improved and yielding a large amount of rent while the others remain unoccupied and yield no revenue at all in exchange for the like and equal public services supplied to them? Why is not the entire area of a community developed and occupied and improved evenly or in proportion to the amount of municipal services provided in its different parts and locations?

In asking these questions it is unconsciously assumed that there is or will be an equal demand for public services in all parts of the community, or at least that the demand for these services will exist in the same proportion as the supply. It must be remembered that the value (not utility) of any service or commodity depends upon its exchangeableness, which is to say, upon the amount of demand for it; and this does not mean mere desire, but the amount of other services of commodities[6] that are offered and can be obtained in exchange.

There can be no doubt but the total of ground rent that the land of any community actually yields to its owners is the total present exchange value of all of the public services that all of the land receives. The question is, how does it happen that this total rent is collected from only a portion, often less than half, of the area, even though it be a small community and all of its parts be about equally well served with police, fire, water, sewer, park, schools, and other community services. The answer is that there is an outlay of capital in municipal enterprises beyond the economic capacity of the people of the community to use it and pay for its use. Although in the absence of community services no property could be owned or any wealth produced, or exchanged, still the amount of production possible in the community is severely limited by the manner in which the public services, as a whole, are conducted. It is only the net services that remain after all disservices have been deducted that can be taken into account as creating land value. The positive services just enumerated are to a great extent offset by the disservices that public servants and authority carry on. These disservices or negative services consist almost entirely in the seizure of property by taxation or other penalization of the ownership and exchange of goods and services and this, together with its grave indirect effects of limiting business operations and volume, must be set off against all of the real and positive services the community receives. Only thus can the net, that is, the real, amount of public services be ascertained. This, of course, cannot be arrived at by any calculation but, in a very definite and practical way, the population shows exactly what the net value of the public services is by the amount of ground rent that it gives in exchange for them.

The public disservices that limit business are exactly the same disservices that limit rent; so it may be said that ground rent is the index of the amount of business that can be done in any community. The volume of business that can be done and the volume of income to land are both directly limited by the taxation and similar disservices that reduce the value of land. Business is poor for the same reason that rents are low. It is obvious to all that what raises business raises rents. It should be equally clear that whatever reduces business reduces rent also. Both depend at all times, other things being the same, upon the excess of public services the community can enjoy above the public disservices that it must endure. When this difference is large, production increases and rents rise. When it is small, business breaks down and little rent is paid. When there is no difference business and rent both disappear. The historian, Edward Gibbon, cites graphically how Roman taxation canceled the benefits of Roman protection so that in hundreds of Gallic cities the populations disbanded to join the barbarians and became, as he says, more barbarous than they.

Since, therefore, the amount of rent collected and the amount of business that can be done is so rigorously limited, the question of why “valuable” land lies idle is not far to seek. It is simply that if the limited amount of business were to be spread out over the whole community it could not be efficiently done. If, for example, the other tax-burdened business in a town can support no more than one hotel, that hotel will occupy and pay rent for only one of two equally available sites, each of which could be well occupied by a hotel if twice as much business were being done. The hotel could not be conducted at all if its limited business were compelled to be spread out over all the sites equally suitable for a hotel, even if it paid for all the sites taken together no more ground rent than it now pays for the one. The same is true of every other kind of business. The town simply cannot make use of all its streets and other public services and improvements upon the restricted amount of business that its inhabitants are permitted to carry on. The “valuable” sites are not idle because the rents that are paid are so high but because, business and production being restricted, rents and land values, in the aggregate, are so low.

If, without any release from taxation, the business of the town, country, city or state were forced to occupy more of its sites it would be less efficiently done and would then pay, not only less wages and profits, but also, in the aggregate, less ground rent. And any attempt to “force idle land into use” by levying taxes nominally upon it or upon its supposed value would, in fact and reality, only impose a further burden on the production of wealth upon land that is now being used and out of which wealth the new taxes would have to be raised. The supposed tax on idle land would be really a further tax on wealth and should have, therefore, precisely the contrary effect from that intended, for the increased burden of taxation would further reduce production and thus throw still more land and its public services into idleness and out of use.

Business and production consist in voluntary exchange for mutual profit. Exchanges cannot be compelled by taxation or otherwise forced. On the contrary, taxation, including prohibitions and penalties, is the only force by which business can be prevented and land thrown out of use.

Much land lies idle, then, in a community having public works and services, not because of the perversity of land-owners, but because, under the public disservices (of taxation) to which the community submits, only a limited amount of business and production can be carried on, and under these conditions the restricted amount of business, if spread over a larger area, would be less efficiently done, and if spread over the entire area probably could not be done at all. This is why only the land that is occupied and used yields any rent or has any income value and why so much so-called “valuable” land is out of use, and therefore out of value, in any but an imaginary and a speculative sense of the word.

It may be added that transactions in idle land are transactions in hopes and fears and not the doing of any business in the sense of creating and exchanging wealth or services.

OWNERSHIP AND DEMOCRACY

He shall be as a god to me

who can rightly define and divide.

-Plato

The only right that men can have in society and not elsewhere is the right to serve each other by voluntary exchange. Since most services are first incorporated in commodities, the right to own property is the right to own services — one’s own services or the services of others taken in exchange. The only social right is the property right – to own service, current or incorporated in products. The right of property is the right of its owner to put more services into it, as capital, and make more value, or to take services out of it, as consumers goods, and make it of less or of no exchange value.

The normal, peaceful and socially necessary “redistribution of wealth” among persons or groups who practice “division of labor” is by the natural democratic process of exchange. All goods and properties in course of exchange and all properties in any way used in connection with exchange are capital goods. Business and production has no concern with consumers’ goods, for when goods have reached their consumers they are no longer in the course of production, trade or exchange.

The use of wealth in the form of capital goods consists only in the administering of them; and only by the administration of capital goods are consumer goods brought forth. A society is fortunate to have its capital goods under ownership and control of those who can best administer them and thus make consumers’ goods most abundant and real wages high. If such persons receive great incomes, and these are not seized by taxation, they are not taken from but remain to increase the general stock of capital goods (except such small portions as the recipients of these incomes can personally consume or devote to philanthropy).

There is no real practical and voluntary democracy, except in the ownership, administration and exchange of capital goods.

Goods no longer in the course of administration and exchange as capital are consumers’ goods in the consumers’ hands and no longer subject to democratic or economic disposal, although they may be transferred from their owners to others by any kind of political power that seizes property whether by taxation or otherwise.

Different persons having ownership of or having borrowed the same capital goods administer them by applying their services to them, and also the services of their employees, before exchanging them. Democracy among persons having ownership of the same property takes the form and practice of parliamentary procedures among the several owners.

Different persons of groups having separate ownership or having borrowed different capital goods which have been separately administered by applying services to them, give them further administration by the services of buying and selling — exchanging – them. Democratic administration under diversity of ownership takes the form and practices of the free market in which the several owners, by voice or writing, vote their wishes and desires as to the terms and rates upon which they are willing to redistribute their wealth – goods and services – and forthwith carry out that redistribution. This democracy of the free market is spontaneous. Its decrees require no legislative enactment, executive enforcement or judicial review. And no person is moved, except by his own desires, either to exchange or not to do so. But exchanges cannot be affected at other rates than those the market prescribes.

Political administration, however “democratic” in form, cannot be democratic in fact while practicing the seizure of property because it is coercive and does not practice exchange. But public service can be democratic because service, when given for voluntary services or payments, is exchanged.

Land owners, in a very practical sense, have community of ownership of the same property, to wit, the capital engaged in public services except, of course, the borrowed capital. It is their social function ultimately to administer all this capital, including the borrowed capital, and to supervise all these services, unitedly and democratically, under parliamentary organizations and procedures among themselves.

The public services to their community, thus administered and supervised by democratically organized land owners, make their appearance as the rental values or, when capitalized, as the sales values of their respective holdings. Property in land thus confers services upon the territory and makes it possible to distribute them among the inhabitants by sale and exchange and without privilege or favor. The owners individually have the final administrative function of merchandising these public services democratically to the public at large. This consists of the land owners coming into the general market, as they now do, and there selling their shares of the current public services, according as they find demand for them at their respective locations, and receiving rent to the full market value of them in return.

Without taxation or any restrictions but rather with public aid and services to production, these gross returns must become exceedingly large – far larger than all previous land rent and all previous taxes of all kinds combined. As in any other business, this income from sales will defray all costs of operation, including ample recompense to the owners for their organized administration of it and for their democratic distribution of its product by sales to the public as tenants at rates which the general market prescribes. This conduct of the public business democratically, without taxing and without being taxed, will yield to its owners profits strictly commensurate with the social value of all the public services performed or social benefits and advantages conferred.

Nor can the land owners form any closed or hereditary class; for, without taxation or penalties on exchange, the free purchase and transfer of title to land will constantly recruit into the body of public owners and administrators those persons of greatest interest and capacity in public affairs, thus keeping them at the highest level of profit and efficiency. And all the net income to the owners, beyond what they can personally use or consume, will go, as a matter of course, for extensions of the public capital and business or be otherwise socially employed or consumed.

Government carried on by the peaceable administration of public capital in the public service and in pursuit of administrative profits will have no need for its scope and powers to be limited or defined. Its limits will be self-imposed. No activity will be extended or continued beyond the point where it adds to public values and thereby creates ground rent and administrative profits. Crimes against persons and depredations on property, it will forbid and prevent, lest the community become less prosperous or its population depart. But it will not attempt to administer any business, properties or improvements on privately occupied land for the same reasons that no businessman running his own business will undertake to run also the business of the customers whom he serves and upon whose prosperity he depends. It will confine itself to administration of the public business, property and improvements that occupy the public parts of the social territory and serve all the rest, for it is only from this management of this business and property that increasing incomes and profits to land owners can be derived.

Attempts to conduct public affairs by seizing property and administering it coercively under the forms of democracy have always led to economic distress, dictatorship and disaster. But in markets that are free from seizures and coercion all the different kinds of capital goods, including public capital, will flow, by purchase and sale, into the hands of those best capable of administering them; for no kind of capital is profitable, nor will long remain, in the hands of owners who are poor administrators. Thus the economic and political democracy of free ownership, administration and exchange of capital goods insures the direction and control of all services, public as well as private, coming into the hands of those best able to produce and hence best qualified to control. This socialized democratic process of administering all property, including the public property, by free association and exchange, instead of by seizures and coercion, leads out and away from all autocracy, but it does realize the aristocratic ideal of administrative services by

the best in all departments of economic and political life.

In view of the confusion of thought now prevailing as to the form and direction that social and economic progress must take, the writer hopes he may be excused for taking the long look that he as taken into the possibilities in store for the future of land administration. For, even if it be taken only as a dreamy ideal, the way towards it is not one of toil and loss for real-state owners but one of economic advantage and increasing profit to them with every step in that direction that they take.

CIVILIZATION AND THE COMMUNITY

A socialized or civilized condition is one in which men do things together and do them by consent.

Consent requires inducement or counter-consent.

Doing thus is called exchange.

Men have nothing to give each other but their services.

Nothing can be exchanged but unlike services and commodities into which services have been wrought and stored.

Men cannot exchange services, or goods containing them, unless they can securely own them. Nothing can be owned, and therefore nothing can be exchanged, except under the protection of community life and enjoyment of community services.

Services, which include commodities, are exchanged between men and men and between men and groups of men organized in business relations.

Services are furnished directly to individuals or groups.

Services are also furnished by providing them throughout a certain place for general or common use of the inhabitants occupying that place. Such a place is called a community and such services are called community services. A community organization may exist indoors or out of doors; it may be a building or collection of buildings or it may be a territory. If it is a building it is called a hotel or an office or industrial building. If it is a territory it is called a town, city state or nation.

A community must have space, population, services and property. The occupants must have private services and properties and be free to exchange these among themselves. They must own and administer these properties in order to exchange them.

In like manner, the property and services which are common to the community must have community owners to administer and exchange them, the same as individual properties and services must have private owners to administer and exchange them.

In exchange for the community services which they accept, the occupants of the community must give to the owners of the community properties and services a portion of their private properties and services.

Such private property and services, rendered by accepted custom of voluntary exchange for community services, is called rent.

The rent paid by the occupants of a hotel or other community building is paid in exchange for the common and general services the occupants enjoy. Special and particular services, not open to all are purchased and paid for separately as received and not in the rent.

The rent paid by the occupants of a town, city, state or other territory is paid in exchange for the common and general or public services that the community affords.

The amount of rent paid for community services depends upon their exchange or market value as it appears in connection with different plots, according to their size and location, and the demand for them. This is ascertained and fixed by the owners in different communities and different owners in the same community offering their community services, as attached to their respective plots, in competition with each other. This presses rents downwardly in price, while those who would occupy the plots, and enjoy the services they afford, bid upwards against each other until the two sides of the market are in agreement as to the price.

In a hotel community the owners of the community properties, facilities and services administer them for the benefit of the occupants. In this way they cause the occupants willingly to pay rent for them to an amount adequate to meet all the costs of maintaining this community and its services 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 much of its space either unused or rented at unprofitable rates. Hotel owners, therefore, do administer their properties and do supervise all the servants of the hotel community primarily in the interest of the occupants and thus in their own interest of receiving adequate rent to meet all the costs of the business and assure them their rightful profits besides.

The owners of outdoor communities, towns, cities and states, do not seem to know that their ownership of the space and area includes also the public capital and services of their communities, and that they are capital owners by the fact that their income from their lands is the earnings of that public capital and comes to them by virtue of such capital ownership, however acquired. These public community owners, therefore, do not consciously administer their property. They leave its management almost entirely in the hands of unsupervised community servants and employees of all degrees who hold place and office by getting themselves elected honestly or otherwise or by other usurpation.

Since the community owners neither supervise these community servants, as hotel owners always supervise theirs, nor administer the community capital and properties vested in them by their ownership of the land, the community income from rents very properly does not pay the owners for any services more than they do perform. Beyond paying the landowners, as a class, for the services and benefits which, on the whole, the community does receive from them, the net rent does not suffice to pay the cost of the hired services and the carrying charges on the borrowed capital engaged in the community enterprises.

In consequence of their default and failure to administer and supervise their community properties and servants, the community owners have no funds wherewith to hire public labor and capital. For not taking the authority and responsibility of owner they forfeit the income and so lose the financial ability to make good their proper authority. The public servants, therefore, have excuse and, in fact, no alternative but to exact taxes by compulsion and make seizures of the private properties of the inhabitants in order to maintain themselves and their public operations, both beneficial and otherwise. 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, with but little reference to the public interest and welfare, beyond a meretricious popularity to maintain themselves in place and power.

Although in all respects a public community is, in principle, the same as a hotel, the default of the owners of the community territory, who also own the community property and capital, turns the community business over to irresponsible public servants. The resulting chicanery and confusion, violence and distress, at last drives the despairing population into the iron arms of dictatorship and military despotism in which all properties and values are destroyed, social ties dissolved and savage barbarian returns.

Civilized life is community life. All civilized values are primarily community values. The value and income of sites and land is the value and income from all community properties and services. Failure of 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.

COLLECTIVISM – TRUE AND FALSE

Physical science teaches that all nature consists of one universal energy and that this energy is capable of transforming itself into elementary particles such as electrons, protons, positrons. These fundamental units, by further energy transfers and transformations among themselves, become organized into all the substances and all the structures that exist. They are the prime individuals, the fundamental units of nature, in the multiplication and combination of which all things come into and have their being.

This casts Nature in her role as the great collectivist. She brings her primordial units together in myriad combinations and her children are the atoms, the molecules, the cells, the structured plants and animals and their societies, the stars and the systems of stars. (In all these forms of existence, and at last in us, Nature has collected and organized her units together and we behold that it is good). This is the collectivism by which creation goes on.

Shall we say, then, that Nature has regard for the mass and not for the individual? That she destroys the unit that the structure may grow? Rather, we may perceive at every stage that only through combinations of units do individuals come into being, and in this new being they are not lost but their natures fulfilled. Nature works always away from undifferentiated mass towards higher organic unities of individualized components. It is the nature of individuals to combine and fulfill themselves always in the growth and being of a higher unity. In this they are not lost, but their own nature is realized, as they become meet and acceptable in the higher membership. Thus alone can they be “saved” from their own disintegration. For it is the law of each individual being that it shall come into such harmony of self-hood, such integrity of life and being, as qualifies it for the associative relationships that constitute the higher order of existence. This is the true collectivism.

Trace this law of nature in the life of man. As his nature grows in balance and beauty, in the fullness and integrity of his own being, does he not become more acceptable for associative relationships, for social integration into a society composed of him and his fellow men? And in this higher, this more complex mode of existence, this community life, does not the social environment and the freedom it brings condition him for still higher growth and realization of self in his individual being? Out of his own beauty and perfections, however unconsciously, man builds his social world, and here he is far more than requited for his individual gifts in that higher freedom and abundance that only the providence of social organization and exchange can bestow. In the Great Society man builds his heaven, for it is the function of the social organization to serve and minister him into the perfection of his individual life.

Come now into the world of affairs, the marts of trade, where the “mighty dollar” is pursued, and men are only half conscious that in this legitimate pursuit each is making the world in general his debtor by the special services that he gives. And, all the while, myriads of other men, little business and big, in the same pursuit, give other services that liquidate this indebtedness in a perpetual flow of services exchanged. All of their credits and all of the dollars that they hold for a time in their hands are, rightly, but the measure of what they have given and what, in turn, they shall receive. The law of society, of true and voluntary social service, is the law of exchange.

Primitive men and still lower creatures practice rude cooperation and exchange, but only in very limited groups, for measured and voluntary exchange are beyond their powers. They have no keeping of tokens or accounts, no democratic technique of the market, no system of price, value and accounts for the measuring and recording of what they exchange. The hive is a “nationalized state.” It has no exchanges with other hives, no external relations but that of war. It is a closed and regimented society. Its members have no lives as individuals; they grow into no personal charms and graces or comeliness of spirit. They work, or fight, themselves literally to death.

Men carry on their hives of industry, their business organizations, collectively, but with a view to exchange. Their work is always for the use and service of others, while all the others work for the use and service of them. All that they have and live upon comes to them, as income, by way of trade and exchange. In business organizations membership is voluntary, but the members must act collectively or not at all, and if their cooperation results in no service to others they must fall apart and their enterprise dissolves.

But the great and universal enterprise is the open market, in which men and organizations cooperate by exchange. This is a higher collectivism, in which the members bring together the fruits of their enterprises, or symbols and titles to them, and act together democratically, by consent of all and coercion of none. But this can be done only so far as the social function of redistribution by exchange remains unrepressed and not distorted by anti-social and undemocratic force or coercion, whether by public servants themselves, or, despite government, in what we recognize as crime. The open market, so far as it is free, is the great forum of collective democracy. Here, by the democratic expression of their separate wills, the members ascertain what is their common and collective will as to the distribution of the goods and services which in their separate enterprises they have prepared for one another. None are compelled to give or to receive, but so far as they do exchange it is upon rates and terms democratically prescribed by this collective will. This great democracy of the market rules its members by their consent and even men afar off avail themselves of reports from the markets for the gauging of their own transactions. In the open markets a single person may serve his millions and be served by millions in return.

As men more and more achieve and extend the free and democratic collectivism of their markets the more finely and fruitfully they can divide their labors and specialize their enterprises and the more efficiently create and abundantly serve.

But this creative democracy of exchange falls under increasing restrictions and restraints. The social function is put in leading strings and under bonds. The public power by which crime and force must be penalized and repressed, so that the social function can be performed, is turned against the social function itself. Public servants without any technique for giving services democratically by way of exchange derive their revenues, not from the sale of services, but by laying penalties upon ownership and exchange. The markets are raided by taxation, the exchanges are unbalanced, men get back less than they give, it is difficult to make sales of either labor or products, and the market is perverted from an agency of profit and advantage to all into an instrument of conflict, destruction and loss. And these burdens and penalties tend constantly to increase, both directly and indirectly, and cumulatively through the device of public debt and deficits until the whole system of exchange becomes biased and distorted and periodically breaks down under “surpluses” of unexchangeable labor and labor products, even when there is tragic need for them. Labor and capital alike are disemployed. Social stability is threatened by their distress and by the vicious warfare against each other and against the whole population that owners of labor and of capital resort to in their desperation.

With the exchange relation made unprofitable and broken down, with vicious practices rife and mob violence threatened on every side, the population, in its blindness, demands still more restraints, “regulations” and penalties upon exchange, even on exchanges of labor, in the vain hope of business purity by preventing business being done and of social security by the penalization of employment itself. This is the pseudo-collectivism that, not satisfied with the crippling of the exchanges by political levies and restraints, would have government, the power that makes wars, gather into its iron hands all the income and property and the very lives of the population. Such is the naive and vain resort for escaping the evils that misuse of governmental power has already brought on through breaking down the peaceful collectivization and redistribution of wealth as it is democratically carried on by voluntary exchange.

Under the social evils thus generated and thus intensified, the popular mind is so perverted and bogged down that it inverts even the rational meanings of words. The breaking down of the social function of exchange and attempts at the undemocratic distribution of wealth and services by crude political force it calls “the socialization of wealth” when de-socialization is what it really means. And the periodic showing of hands as to which demagogic individual or political group it shall choose for savior or master it calls democracy and popular government — so only it be allowed free clamor and protest all the while.

The so-called collectivization of the mass mind is the collectivization of the herd and of the horde. Never by any conscious effort has the mass ever even served, much less saved, itself. All material progress has come from men seeking individually to improve and profit themselves by ways that served others without the use of force. The providing of physical things has enriched those who gave them, and the greatest fortunes and rewards have come to those who have most facilitated communications and exchange. This individual motivation is preeminently social in its effects because it leads to the distribution of services and commodities socially by exchange. The main purpose, therefore, of this writing, in its recommendation of proprietary management of community property and services , is to arouse the income and profit motive of organized land owners, that this may lead them to the performance of those vastly remunerative administrative and supervisory services of which every public community stands in such dire need and by which alone the public community can be rightly controlled and the community values enhanced instead of destroyed.

The false collectivism that seizes property and thus destroys ownership and free exchange must be shunned and feared. If it shall overwhelm us in the night of a new barbarism, nature may yet again strive to draw the lives of men together by the threads of voluntary service and exchange. On another abandoned isle new barbarians of the north may once more weave them slowly into the fabric of an authentic state, based not on slavery and tribute or taxation, but on service by exchange — a government without taxation, such as Alfred in England served while all else in Europe festered and decayed in the black millennium that was its heritage from Rome. If this civilization must go down and new beginnings be made, let us hope that the distant New Society may escape corruption from a classic past and no new Caesar, in the person of a new William, after six centuries, return with the old Roman virtues of kingly tribute and taxation to poison and pervert all social relations for yet another thousand years. But, most of all, let it be hoped that in our own time we may discover the myriad beauties that lie beneath the seeming chaos in the social world.

When the distribution of services by sale and exchange instead of by compulsion and force shall become the sole technique of government, as it is in all good and successful business relations, then will government become the true servant of man. Then will abundance be universal and none be afraid. Then only will men’s wills be free. Secure in their material needs, their hearts and hopes will turn to what they truly love – to Beauty, to that which alone inspires. No longer fugitive from poverty and pain, even the lowliest may respond to Beauty and with inspired ardor and artistry create their cultural world and their spiritual lives.

CAPITALISM VERSUS BARBARISM

Many persons, otherwise well informed, nevertheless speak of “capitalism” or the “capitalist system” as though it were a transient or accidental phase or state of society. Such expressed or implied belief betrays a void of understanding as to the essentials of any social order at all capable of bringing to its members any values or abundance above that possessed by wandering predacious tribes.

The only way that large members of men can associate and continue to live together is by mutual service, employment and exchange with one another. They cannot do this to any extent unless they can own property and exchange it, thereby using it as capital. One man may serve another by compulsion, but two men can serve each other only by exchange, and unless each owns himself and his property and services free from compulsions, neither can exchange. Therefore, except in a community having the protection and services of government for the repression of violence and compulsion, there can be neither ownership nor exchange, and men are cut off from the only employment there is — that of serving or exchanging with each other.

But to serve each other well, men must not only be protected in their ownership of themselves and their services, but also in their ownership of the property — wealth, goods, commodities — into which they incorporate services and by means of which they, their services are exchanged — for all wealth and property is incorporated services.

Capital is property used for others. It is wealth in the course of exchange, including all wealth and property that in any way promotes exchange, but not including anything that is in course of being consumed, for such wealth is not engaged in the process of service by exchange and is therefore not capital. All the wealth in the world that is on its way to or aiding other wealth or services on their way to a consumer, at the end of the exchange series, is capital. Apart from capital, very little wealth exists. Consumers’ goods do not accumulate as do capital goods, for they are consumed and disappear almost as fast as they become consumers’ goods. Any wealth that is in process of disappearing, from whatever cause, is no longer capital. Capital is the accumulation of services in wealth and property. It is really a flow of services. These services accumulate in properties and commodities and by this means, through a series of exchanges, reach their maturity and find their way to the last recipient of the services whom we call consumers, with whom they cease to be capital and to whom they yield satisfactions.

Capital brings goods and services to consumers in society as a great water system gathers water for the inhabitants of a city. The water as it flows and all the works and properties that in any way conduce to its flow, all are capital. The only water that corresponds with, and in fact is, consumers’ goods is the small part of it that has flowed out of the faucet and has not yet flowed into the sewer or otherwise passed away. And all the water that is being prepared for the consumer is itself but a small part of the entire water system. The water, as it flows and accumulates from reservoir to reservoir, corresponds with what is called current moving capital or turnover capital, while the reservoirs, conduits, machinery etc. represent what are roughly called fixed capital or products of the “heavy industries.” Consumers’ goods, in point of both volume and value, is the smallest item existing in the entire system.

So it is with the general system of capital used for the production of consumers’ goods. The existing consumers’ goods is the smallest item in the total wealth. The great bulk is capital. What is socially important is that this capital wealth shall be administered; that it shall be owned by the persons who can use it most productively, however few such persons may be. If its ownership could be divided among the whole population, most of them, not being administrators, would try to consume it or let it decay. It would cease being capital because it would be no longer productive and its value and its substance would disappear.

Fortunately, there can be no wasteful dissipation of capital by peaceful processes of exchange — only its concentration into the ownership of those who can best administer it and cause it to yield. Poor administrators dissipate capital; good administrators accumulate it and cause it to yield consumers’ goods. The only power that can reverse this peaceful concentration is government, with its instruments of taxation and warfare against the ownership and administration of capital goods and therefore against the production of consumers’ goods or other services. The great wealth of a community and of the world consists not in what is actually received and consumed, but of all that is in process of being made fit and brought to the place where it is consumed and all the men-made facilities of every kind that contribute to that result. This is the capital by and with which there is a capitalist system — or, in fact, any economic system at all.

Ownership of capital wealth can be exercised only by its administration. Just as consumption is the only function of ownership as concerns consumers’ goods, so administration is the sole function of the owner of capital or producers’ goods; and the more inattentive or remote the ownership the poorer the administration and the less productive the capital will be.

All legitimate business consists in the administration of capital and the exchange of commodities or services. Administering the capital is the placing of it physically in the hands of competent subordinates, so that their services, together with the services of administration, enhance the value of the capital or of the services that constitute the turnover, and then selling, or supervising the selling, of the turnover goods or services in the general market, and then repurchasing more capital and more labor for further administration. The difference between the sales returns and the cost of the administered capital and supervised labor is the profit of ownership — the market value of the administrative services performed.

The ownership and administration of any private business may be viewed as the purchasing of three kinds of services, the performing of one kind, and the selling of four kinds of services. The owner must buy (1) the services of capital, which is accumulated services, and for which he pays interest, (2) The services of public capital — public services, for which he pays site value or ground rent, and (3) current services, for which he pays wages or salaries. To all these he contributes (4) his own management or administrative and supervisory services. He sells then the product into which he has combined these four services and out of his returns he must pay: (1) Interest for the capital service, (2) Rent for the public services, and (3) wages for the current services of subordinates. His obligation in respect to all these three has been determined by the market and fixed by contracts. His balance remaining is pure residue, also determined by the general market, but determined afterwards by what the market returns to him in excess of his market obligations.

It is the interest of the consuming community that the recompense to the owners shall be as large as the market will allow. If it becomes low, less capital will be administered, less business done, the production of goods will fall, and interest, rent and wages, all of them, in terms of production, will perforce decline. If the administrative profits become high in relation to wages and interest, more persons will embark upon independent enterprises and so raise the return to labor and capital by their increased demand for them.

The responsible ownership and administration of both fixed and moveable or flowing capital properties in business enterprises to create wealth in the form of revenues and profits is a social function of the very highest utility and value. From this it follows that its rewards should be, and they usually are, correspondingly high. It is a blind perversity, indeed, that would limit or deny the normal recompense to such creative work. Without understanding that capital ownership consists only in its productive administration, it seems enviously to be felt that those whose administrative and supervisory services bring labor and capital into relations of highest productivity and returns should themselves to be denied all recompense and have their profits confiscated by law – that such persons should be reduced to the rank and file of industry — as though there could be for long either rank or file without their enterprise and leadership.

If the profits of ownership and administration did not average higher than wages of subordinates there would be no tendency for business to organize itself into efficient cooperative groups. It is only out of this higher efficiency that profits arise, and from this same cause also that wages advance and social progress is made. The income to owners, in general, as to subordinates, in general, is entirely too low. Political penalization of profits and enterprise, even of work and wages, by taxation, has so far disorganized the economic structure that unemployment is rife and in some lines only a few privileged and virtual monopoly groups remain. This has made profits in general so small and interest, wages and rents so low that monopoly profits, by comparison, seem large. The truth is that unemployment and consequent monopoly proceed only from economic restrictions legally and politically imposed. It is a way of doing the least amount of business and so producing a lower and lower aggregate income for both owners and employees and, finally, no income at all.

But let us suppose that some persons should receive out of their property and enterprises huge incomes far beyond their capacity to consume. What equity does nature impose? The surplus above what they can personally consume becomes automatically socialized as capital and added to the general stock of producing facilities and goods. If the funds remain in bank they flow out in loans to enlarge either the capital structure or the turnover in many enterprises. If they are withdrawn by their owners it can only be to invest them in their own or in some other enterprises. In any case, assuming no increase in governmental penalties and restrictions, the total economic structure is enriched and enlarged and the flow of consumers’ goods and services is increased to all. Capital is inherently social. It cannot exist except in society, and it cannot be de-socialized, except by gross or partial failure of government or abuse of its powers.

Thus is capitalism rightly seen, beneath all the law-made restrictions that bind and distort it, as the true economic collectivism. It collects the capital resources of accumulated services into pools of enterprise and administration. Here the owners of the capital, by their own services, combine past, current and public services into new products and services that flow out and are collected into other pools of enterprise and services until, finally, all that is not automatically reserved for enlargement, equipment and stocking of the pools flows in myriad lines and streams into consumers’ hands. And all income that is not immediately consumed flows back by loan or investment into the general pool. Modern capitalism, rightly understood, is a vast collective system for the gathering of human energy and services, embodied in tangible capital forms, and the voluntary and automatic redistribution of these services and their products through its system of democratically measured exchanges, in accordance with the measured participation of each in production or service for all.

But this collective capitalism has not been extended to public community service and affairs. Here we are still trying to do business by violence and coercion instead of by consent and exchange, and the more we restrain by the one method the less business we are able to do by the other. Exchange is human and social; coercion is anti-social and barbarous.

If America and the Western World must choose, the choice is not between Capitalism and collectivism. Capitalism is collectivism, so far as, under political coercion and repression, it is able to carry on. The choice must be made between the capitalism by which we live and the barbarism into which we must sink as fast as government restraints and tyrannies break our voluntary collective capitalism down.

Men must either serve each other by exchange or oppress one another by force. They cannot exchange things unless they own them. Whatever they own or use in connection with exchange is capital. Wealth for exchange cannot be produced except through the administration of capital by persons who own it and who, if they fail to use it, or lend its use, productively, must lose it; for capital without income has no value and ceases to exist; its only value is the value of its assured income. The legitimate and only true function of government is to give aid and services to the administration of capital and the exchange of services and goods. When these public services are fully performed there will be no safeguarding of “rights” because no wrongs will then be imposed. Complete freedom to own and exchange will in itself, include all needed protection and all of the lesser freedoms, such as freedom of person, speech, press, assembly or any other thing for which men have any need or rightful desire.

Government is not all evil. It does give a degree of protection and does provide some facilities of transportation and communication and other services to wealth and exchange. For all its depredations on ownership and production, the balance is still on the positive side. If it were not so the community services would have no value and no site value or rent would be paid for them. It is not the services, but the essential barbarism, of government that must be feared. Let it but continue to extend the force of its taxing and penalizing power and all its community values must decline and the systematized violence of taxation will give way to barbarian raids.

The tolerated barbarisms of government reflect the primitive thinking that lingers from the ancestral mind. This is the thinking, so common among us, that brute force can be corrective and creative in lieu of service and exchange. The barbarian part of us sees this force in government, bows down to it and seeks salvation at its hands. This barbarian mind sees only crude struggle for power. It gives lip service to cooperation and exchange, in some mystical and mythical sense, while in practice it pins its faith to compulsion and force. It has no conception of public authority ever being civilized into service and exchange. It lauds and teaches the technique of the jungle – that its hordes and assassins shall capture government, seize and de-socialize all property and services, pander to the hates and fears of a “classless” populace, and dole out largesses with bloody hands. Call it collectivism, socialism, statism or what we will, that is the sinister psychology and the left-handed barbarism to which it must lead. Nearly all governments are now succumbing to it, with their mounting confiscations, licensings, regulations, penalization and regimentation, all in the name of charity that is a cheat, security that is a sham, and a “justice” that is indeed staggering and blind.

Let it be hoped that a new science and understanding of society may lighten the dark prospect that now lies beyond — a science in which the virtue and value, even the divinely creative beauty, of administrative capitalism will be revealed. Let us hope to understand and cherish the social technique of exchange for the enrichment of each of us in accordance with his voluntary services to all. And let us hope that the landlords of great communities may discover ere long their veritable ownership of the community properties and services and learn to administer their magnificent capital in the interest of their tenants and customers, as the enlightened owners of private capital and services always try to do.

In the communities of the earth, as in that of Heaven, the greatest of all will be those who accept their administrative responsibility as to the public wealth and capital entrusted to them and come into their rightly rich rewards as the public servants of all.

RECAPITULATION

The only actual, present and certain value that any land has is the income it yields — the present rent. Expected or hoped for rent is an expected or hoped-for value, not any present value.

Owners cannot get rent unless they give something for it, something that somebody makes or does and gives to the land.

The only thing that owners as such and not as occupants, can supply to their sites is public and general benefits and services. Anything done to or upon a site itself is an improvement or a private service, paid for privately to the improver as price or hire, and not paid to the site owner as ground or site rent.

The only things tenants pay ground rent for is what they get — the public benefits they get, just as private tenants in a building or a hotel pay for the private benefits they get.

Tenants pay for what they get, and not for what is taken from them. Taxes are taken from them.

They pay, therefore, for the service benefits delivered to them, less all the taxes taken from them and all the harm done to them.

The proprietors can sell their tenants only the difference between the good that is done to their territory and the harm that is done or permitted to be done by territorial authority.

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 to them; hence there are no net services and no rent is paid.

If it were not for the harm done or permitted by government, all the territory needing and receiving public services would yield rent.

What makes sites idle and rents low and scarce, is the harm that government does. What makes such rent and land value as there is, is the good that remains above the harm.

The remedy for idle labor and idle capital and for idle land (sites) is to diminish governmental dis-services (which consists of taxation, the evil effects of taxation, and all of the evil things done by the expenditure of taxes) and thus enable proper community services to have a net value so that they can be sold.

This is the only way to create rent. This is what proprietors should do. When they do it, the rent created by it will pay them abundantly for doing it.

If the public proprietors, landlords, do not take some of the harm out of public acts and expenditures, then the evil that is done will diminish their business, by reducing their rents and occupancies, until eventually taxation (with its political concomitants) will destroy all land values, and then communities will again disband into roving barbarians, as they have done in the past.

SOCIETY THE CROWN OF CREATION

All science is founded on observation, comparison and measurement, that is, upon induction. What constitutes the science is not the body or mass of data with which it deals, but the order and relationships that are found to prevail throughout the field in which the data are observed. This order and relationships, when first apprehended, are called generalizations or hypotheses, and when, later, they are independently verified, they become truly established and accepted as theories, principles, or natural laws. It is in this way that the separate sciences, each within its special and restricted field of observation first appear; and each new science, as separate from the others, requires a different field of observation. Thus the foundation sciences — mathematics, astronomy, physics, chemistry, biology, psychology, etc. — all have primary reference to present existing relationships in particular fields. But each of these new sciences, roughly in the order given, in addition to its own special field and data of observation, involves the inclusion and use of the principles and theories previously won. The factual parts of astronomy and physics possess no great significance except as they exhibit correlation with mathematical principles and laws. Chemistry assumes the relationships accepted as physical and astronomical laws, and biology accepts all of chemistry and physics as the foundation upon and frame within which all its special phenomena are to be observed. In the like way, psychology rests upon physiology as its necessary antecedent in the biological field.

All of these sciences are founded primarily on the inductive data of present observation; they are, first of all, descriptive. When, in the descriptive data, relationships that repeat themselves are discerned or assumed and finally verified, the principles and laws appear as invariable, and a consistency is found in the relationships of the phenomenal world. All of this comes about from science as the rational and objective (contra-emotional) examination of things as they are.

But the observation of things as they are renders up many evidences that things were not always as they are — that there has been a sequence in nature similar to the order in which the various sciences themselves have evolved. The scientific observation of these successive steps and sequences in nature at last leads to the hypothesis, not alone of invariable relationships but also of a definite order in which these successively come about. From this the theory of evolution was born, and, upon verification, accepted, bringing to the purview of science not only the relationship of things as they exist, but also the order, method and process by which they came. At first this was thought, in the living world at least, to have been by increments of variation within the otherwise relatively invariable relationships. It is now known that, while minor variations do take place in the structures and functions of living things, great and significant changes come about through the emergence of new organizational forms. This takes place through the association of previously independent or even antagonistic units or individuals in relationships tending towards stability and permanence in the new organism and giving it functions and powers far transcending those of its component units. This is called creative synthesis or emergent evolution.

Going beyond the static and looking upon nature from the dynamic and genetic points of view, science sees that which was once formless and void coalescing into organized units called, principally, electrons and protons. These it conceives as organizations of primordial energy that have come to possess a degree of structural stability. These successful electrons science sees as coming into group relations, through energy transfer and balance until new and highly stable groups known as atoms emerge. Repeating this process, but now using atoms as the units to be balanced and reconciled to each other, nature puts them together in higher organizational forms and the world of molecules comes to be. The time involved it is best not to try to conceive. The paths of possibility sought out and vainly explored we can only faintly imagine, but undaunted nature still goes on her creative way. She manipulates her molecules at last into that triumph and mystery, the biological unit, the living cell. Its complexities are extreme; its constituents are chiefly carbon and water, and its molecules are the heaviest, the most complex, of which chemistry gives any account. It has the protection of a garment as versatile as its needs; capable of ingestion, excretion and even locomotion, and it achieves that supreme function in which the cell becomes lost in its own progeny, in its self reproduced.

What shall nature do now with so wondrous a creation? Shall she rest from her labors? Or it is the essence of her own being that she must evolve — that she herself is really process and not entity. We know the answer; it lies in the layers of the rocks through the vastness of geologic time; in the tragedy of endless trying and almost endless non-success. The myriad extant forms of organized cell life in the plant and animal world are but the residue of those weighed in the balance of changing environments — and found wanting. The vegetative world itself only became secure by specializing in the molecular organization of carbon from the air by energy from the sun to build up the structures of the animal world and invest them with the peculiar modes of energy and higher powers that distinguish all the animal forms.

It was a great emergence when nature began to organize her cells, and again, when she achieved her world-wide symbiosis, in the universal cooperation between plant and animal life. The plant, throughout its existence, converts its energy into structure and ceases to grow only when it dies. But the animal re-converts its energy into the energy of physical and neural activity that continues throughout its life, though after maturity it ceases to grow. The plant accumulates energy for the animal; it does not change itself once in seven years or any other period. But the animal structure is constantly consumed and constantly renewed. Through the animal there is a flow of energy. The plant captures it from the sunlight, the animal takes it from the plant and what it receives continuously as food it puts out again in the complex functions that pertain to its higher life. Its myriad cooperating somatic cells constantly proliferate, give up their energy and die. Each generation of cells in its different organs is nourished into growth. Most of them are broken down into animal energy. Those that reach a critical maturity multiply by division (fission) and thus the animal structure is maintained until at last the capacity of the cells for integrated cooperation in some vital organ or part is lost, the interdependent parts can no longer serve each other and the animal dies. But this does not occur with all. There are highly specialized cells call genes that have the somatic structure for their special environment. Such of them as meet and conjugate with others that are contra-specialized as to sex set up new trains of cell multiplication and organization that constitute the individuals of the renewed and successive generations.

It is to its much higher complexity that the animal organism owes its unique and transcendent functions and power. This indebtedness it must repay in sensitivity and susceptibility to adverse environmental factors. The law of its life becomes: that to maintain its higher functions and complex forms it must modify them in such ways and to such patterns as the necessities of its environment impose; it must build up within itself such flexible powers of response and adjustment as will compensate the environmental changes that the individual and the race must withstand. The records left by extinct and surviving species tell this story of nature’s strivings in the world. Those extant are the animals of fixed habitat that have successfully modified and adjusted themselves to conditions that remained nearly uniform and those of such versatile and compensating powers as enabled them successfully to withstand wide changes within their habitat and finally, without essential change in themselves, to inhabit the most diverse environments that the earth affords. The animals best modified and adjusted to fixed habitats and therefore most dependent on continuity of present unchanged conditions have hostaged themselves to the future. Changes in their environment they must meet by changes of structure or perish, and the more completely adapted they are the more difficult or impossible it is for them to change. For animals that are not able to compensate within their existing structures, the future cannot be bright. They must become either totally extinct or take on modified forms as external conditions change.

The

The only animal whose versatility and compensating powers enable him to inhabit the whole earth is man. Even in a relatively primitive state he lives at almost any altitude and in every clime, and he exhibits as an individual always the same essential structure with the same functions and modes of action. This power of internal adjustment and compensation without change of structure is doubtless what has enabled man to occupy the earth and survive all other animal forms.

To this point the story of man and his capacity is not half told; for, as a social being, in an organic and symbiotic or exchange relationship with his fellows, he achieves an organization and powers by which he not only inhabits and occupies the whole earth, but actually inherits it — makes it his property in the sense that he brings it under the dominion of his will and he can remold it to his heart’s desires.

It was a great emergence when a creature like man was lifted into powers of adjustment and compensation so far above his fellow animals. But his attempts throughout history to socialize himself into a successful and permanent organic relationship of free exchange with his fellows (dis-junctive symbiosis) mark a vaster and higher emergence still. The one was the creation of a new animal form by higher synthesis of the original biological cells. But the emergence now going on is no less than the synthesis of a new living form in which the essentially similar units are the individual men themselves, an organization of life and therefore an organic being that stands in relation to its units as a living animal body stands in relation to the living and cooperating biological cells of which it is composed, but whose individual capacities the animal body so far transcends.

In like manner, living and vital social organization exhibits capacities far transcending those of any of their units, either as isolated individuals or in any unsocialized mass or horde not organized on the basis of exchange. Yet more, the social organization releases, in its individuals, powers and potentialities that under no other state of being could be exercised or fulfilled. In fact, the ultimate function of socialization, of the human society, unlike that of insects and animals, is the fulfillment of itself through service to and in the self-realization and fulfillment of the individual units of which it is composed.

It is the peculiar glory of man that nature has wrought into his being so much of her own modes of action and organization that through the eye of his mind she can look back and trace her own evolvement from mere primordial energy through all the structured systems, suns and stars, atoms, crystals and cells, through the myriad organic forms that lend at last to man, her one most complex and most completed offspring, gifted with versatile powers of internal adjustment to the widest habitat or environmental change and endowed, through his social and cooperative nature, with power to modify conditions external to him, to shape environment to need and desire and, measurably, at least, to rebuild his world to the pattern of his dreams.

But just as man’s marvelous powers of internal adjustment derive from the fine cooperation that exists between the component organs and parts of his individual organization, so does his building of his world depend upon the like cooperation of the individuals and groups, the specialized organs and parts, of which the great society of man, the social organism, is composed.

Into this Great Society of man nature unites the best fruits of her tree of evolving life. Creation cannot rest with the building merely of men. In the long nights of barbarism nature may rest from her labors but still she must move on to the building of society, of organized mankind.

With lesser creatures nature has made social experiments. Herds, hives, flocks, and schools are advantageous modes of life, forms of society. These creatures came better to withstand the rigors of environment. They prospered and multiplied but, unlike man, they did not build up or improve their environment and make it more serviceable to their lives. On the contrary, as their numbers increased their environment become impoverished and their place in the living world less secure. To this hazard nature, in general, responded by giving them higher reproductivity. As the

insufficiency of food and other factors shortened their lives, increased fecundity, at the expense of other capacities, increased the number of the shorter lives, in order that the vital balance might be preserved. But the increased numbers again pressed upon the declining subsistence until the stronger were compelled either to kill and eat, or to starve out the weaker, lest all should perish. This downward spiral must have led to complete extinction or to an indefinitely increasing number of indefinitely shortening lives – a reversion to the bacterial form and condition – but for the circumstance that elimination by conflict and starvation raised the vital resistance and virility of those who thus alone were able to survive.

Nature here again resorts to an improvement in the individual units before a successful and stable social organization can be evolved. The abortive or dead-end attempts at social organization have been complicated by climatic and other environmental changes and by cross-conflict between variant forms and species, but the general process of increasing the numbers at the expense of environment, higher fecundity to compensate a shortening vital span, and elimination of the inferior to improve the race, has still gone on amid other changing vicissitudes.

At last in man a creature appears who, in addition to his previous animal technique, possesses a new and further instinct for social organization. In him the services between individuals and social groups are not entirely unconscious. Although men do act primarily with regard to their individual advantage and only secondarily with a view to the advantage of the social group as a whole, unconsciously they enter into reciprocal relationships, biologically, in their intimate and family groups, and economically with those who are otherwise their close associates. But most important, and distinguishing him above all other creatures, man’s social instincts lead him gradually to abandon force and the relationships of dominance and subservience and to enter into a voluntary democratic relationship of exchanges measured by value and price with a system of charges and credits for the keeping of and adjustment of accounts, so that the utmost division of labor and elaboration of service and exchange can

be engaged in throughout an entire and extensive population. This highly productive and creative relationship corresponding as it does with the symbiotic relationships in the lower forms of life and between the individual cells that constitute these forms, leads to a social metabolism that guides the individual energies of men into their special participant functions in the society or social organism. Thus, society becomes the universal servant of the individual by maintaining for him an exchange relationship in which his special services are most abundantly performed for all, and in which he, in turn, is most richly and abundantly served. The preponderance of this new and intimate relationship is what constitutes all the life and power of the organic society. Upon its rise or decline hangs the fate of civilized nations and men.

The question may arise, why will not this socialized population of men also be compelled to exhaust its environment, consume its substance and, in the ensuing hazards of shortened lives, multiply its numbers into the necessity of starving, exterminating and finally devouring each other until only the ruthless and resistant survive. The answer is that the more perfect exchange relationships of men give them the unique power of improving and rebuilding their environment and thereby raising their subsistence far above anything that their increasing numbers can require. The further answer is that the high biological security that such socialization provides lengthens the days of the individuals and thus relieves nature of the need to multiply the units of life to compensate for a shortening of the span. Thus, a far higher biological economy and efficiency is obtained through prolonging the individual life and thereby putting forth vital energy more in functional and less in developmental forms, for all the years of each individual leading to maturity are years of cost and dependence upon the vitality of the race. The society or race in which the lives are many and brief is the least efficient. In a social condition of but little division of labor and exchange of services the span of life is but little more than the time taken to come to maturity. This condition is but little better than that of those plants that live only to blossom, bear seeds and die. The function of the social organization is to bring about, through its exchange relationships, that higher subsistence and biologic security under which, not more, but more perfect, individuals may grow and come into being by a prolongation of the period leading to maturity and in which there is a longer span for the exercise of their mature powers and for the utmost development of the potentialities of their individual lives.

In the evolution of living forms, clearly such is the condition and achievement towards which the integrative processes of nature tend. It is as though nature, with justifiable pride in men, as the highly organized and efficient units that crown her commendable labor from an infinite past, in whom she combines and confided her most precious powers and delicious dreams, leads them now into the household of social creation, endowed with royal and creative imperial powers. By exercise of these powers societies are born. By the practice of exchange men grow into cities, states, and nations — creations of ephemeral glory that seem to rise only to decline. As voluntary service and exchange raise wealth and subsistence, so does the public power increasingly penalize and pervert this vital process. Instability and insecurity set man against man, group against group, race against race, nation against nation. Divisions arise, barriers are set. Deadly agencies and instruments of attack and defense are piled up. The “nationalized” states penalize their peoples’ exchanges, both within and without. Impoverishment follows. They blindly destroy themselves and fall by each others hands.

By her rigorous penalties nature has taught men and groups of men to divide their labors and exchange with each other in order to survive. Under the like penalty of death she commands the same upon her public communities, her cities and states. The conduct of the public business, of the community services, which is the only proper reason for government, must be lifted above the barbaric practice of force and violence against the property and social relationships of the community members and be established on the firm and enduring principal of voluntary exchange, as any other successful business is. As in the long barbaric past myriad millions of men must have perished from failure to follow the principle of peaceable exchange in their private relations, so have countless communities gone down from their failure to practice exchange, instead of compulsion and force, in the conduct of their public and community affairs.

By what our predecessors have learned, we exist merely as we are. Only as /we/ ourselves learn can we make any advance. Standing now before the threshold of a social glory the realization of which will dwarf all poet’s dreams, men again must choose whether in their community affairs the practice of force shall cast them far from the House of Life into outer darkness or the practice of public service by profitable exchange shall lift them into its awaiting freedom and abundance. The great social mutation that awaits and impends is the socialization of public force into public service by exchange.

When the great business of community service is carried on as a business and not by depredation upon business, it will be the most marvelous business in the world. In one country alone it could have over a hundred million customers, every one a consumer of public services. For its internal capital structure it could have all of the existing public works, facilities and materials now employed in public and governmental activities. In its executive positions, from lowest to highest it would have the most constructive and creative officers and experts that the owners of the land, and therefore owners of all public capital, could engage in their service. Most of all, it will create its products and services at lowest cost, for it will bear no crushing burden of tribute and taxation. It will have no expenses and make no payments, except to purchase necessary services and materials at market rates. And the value of the public services thus performed will be commensurate with their great utility, for they will be sold to tenants and customers who likewise will be free from all burdens of tribute and compulsory taxation, and whose economic productivity and effective purchasing power and demand for public services will therefore be unimaginable high.

In a society thus composed of a free and unrestrained economic system and a free and efficient and well administered system of public services, each exchanging its wealth and services with and thus enhancing the value and productivity of the other, nature will have created and achieved a form of integrated life and activity, a social being and existence, in which the component individuals will be circumstanced in completest freedom to give and to receive and /with/ a consequent abundance of economic goods almost as automatic as the filling of the lungs with air.

Emancipated alike from the environmental compulsions that beset and enslave the whole animal world and from the political and governmental compulsion and repressions that bind and burden the functioning of the social realm, the spirit of man leaps upward in the free practice and culture of all the artistic, aesthetic and spiritual powers with which it is essentially endowed. As nature has crowned her animal creation with success in the physical and the psychological man, so in her final achievement of a successful society of men she will have crowned all her work with an imperial diadem, an instrument of progression and spiritual power rising to diviner things than men have ever even dreamed.

[1] Those who have no special interest in real-state may well omit this chapter or defer it to the last.

[2] It must be remembered that we are considering only real value of land – of the services to it that are at present existing and in demand — without reference to anything paid or offered in the mere hope or expectation of revenue or profit to arise only in the future, if, indeed, it shall arise.

[3] It would be hard to imagine such services being equally well performed by salaried political officers receiving their pay by way of taxation and not having the amount of their pay in any way dependent upon their selling the public services efficiently or even honestly.

[4] Meaning administrators of capital and employers and supervisors of the labor engaged in its use.

[5] This of course, does not refer to speculative enterprises in which capital is risked upon the successful development of new inventions, discoveries or methods of production and without which no economic advance could be made.

[6] Usually represented by money or credits which entitle the holder to receive the services of commodities.

Metadata

Title	Book - 2442 - Building Public Values
Collection Name	Spencer Heath Archive
Series	Book
Box number	16:2411-2649
Document number	2442
Date / Year
Authors / Creators / Correspondents
Description	Carbon of a dog-eared, bound, 116-page (poor carbon), Building Public Values, containing eleven writings, all of which, except “Capitalism and Barbarism” and “The ‘Unearned Increment’ and How It is Earned,” later became chapters in Citadel, Market and Altar. Of these two, “Capitalism and Barbarism” is now reproduced in Heath Short Essays. The other is nowhere to be found in the Archive, here or elsewhere. It appears only by name in what seems to be the later of the two versions of the Table of Contents. Apparently BUILDING PUBLIC VALUES, completed by 1939, was the first version of what shortly became, by adding material on population, THE ENERGY CONCEPT OF POPULATION, and finally in 1942, by adding material on psychological implications, became CITADEL, MARKET AND ALTAR. There is also, at this same Item number, a cleanly typed copy of this.
Keywords	Community Real Estate