Spencer Heath Archive

Item 1095

This $1,000 rent must cover a number of items of public cost. (1) Interest on capital outlays for public works etc. (2) Current costs of operation and maintenance. (3) Compensation to land owner for his administrative services.

(2) would be paid as current taxes. (1) and (3) would remain in the land owner’s hands. If he sold his ownership in the land he would and could sell only the capital value of (1). This would be a mere transfer of his share in the fixed capital devoted to public services. If (1) is $700, (2) $200 and (3) $100, then the land would sell for the capital value that would yield $700. At 5% this would be $14,000.

The land user invests and employs capital (improvements, equipments, stocks of goods etc) in the land. If this capital should be five times as great as the share in public capital devoted to this land it would be $70,000. A return of 10% on the capital in the business would leave $6,000 for profits (return on investment and salaries of administrators) after paying rent $1,000. If the building (fixed improvement) should be owned /?/ by other than the user a due portion of the profits would go as rent of building.