Spencer Heath Archive

Item 1185

Carbon copy of letter from 310 Riverside Drive, New York City, to Ralph Borsodi, The School for Living, Suffern, New York

July 22, 1936

Dear Mr. Borsodi:

 

Mr. duPont and I have set, tentatively, next Friday, the 24th, to have lunch at one o’clock and then drive over to your place. I hope nothing will prevent.

Many thanks for your letter and its comment.

From the point of view I have taken, it is entirely demonstrable that the aggregate of all net ground rent, after deducting the taxes paid out of gross rent, is the precise measure of the net value of all the services of government, including all public services performed under its authority.

It is further demonstrable that the capitalizable net rent is the earnings of all the actual capital devoted to public uses, less the interest paid on the borrowed part of the public capital.

This means that whenever “land” is sold on the basis of its capitalized rent, what is really sold is an undivided interest in the actual public capital — such as street equipment, paving, sewers, public works, buildings, supplies, etc.— and therefore, all present land value, based on its yield of rent, is capital value. So much of this capital as is not borrowed belongs, of course, in right, to those from whom it was seized as taxes. Hence the selling value of land is the capitalized earnings of private capital that has been seized for public uses, plus any earnings of the borrowed public capital above the amount of interest being paid for it.

It further follows that whenever the seizures by taxation that are used to pay all the public wages and the interest on public capital amount to all that the public labor and capital can earn (as an aid to private labor and capital), then there is nothing left for rent to be paid for, and none will be collected or received.

 

An understanding of what rent, real land value, actually is may be of some practical interest to you and your projects.

 

Sincerely yours,

Excerpt from Mr. Borsodi’s letter above referred to:

I have read with great interest the manuscript you were good enough to send me. I have been running over in my mind particularly the rather interesting way in which you functionize the landowner. This is an entirely new idea to me.