Spencer Heath Archive

Item 1190

Carbon copy of letter from 434 West 120th Street, New York City, to Benjamin W. Burger, Woolworth Bldg., New York City

January 3, 1937

Dear Mr. Burger:

Thank you for yours of the 31st with comment on ownership and dominion over capital. I agree, substantially, with all that you say. We would have agreed if we had discussed it in detail. My definition would include all the characteristics you mention. Control of income (present and prospective) is the one incident of ownership on which all others depend. Land, itself, cannot properly be owned; it is not a labor product. But its position and extent does determine the title-holder^’s ownership (undivided) in the public capital because it measures his share in the earnings of that capital. His title deed is really his title to this income and therefore to the capital which is its source. This title is created by or, rather, sanctioned by law and rests in the nature and necessities of social organization. Without acknowledgment of such titles the society would be nomadic. It is true that title holders do not, as such, contribute the public capital. That is because it is raised in other ways — ways that are violent and anti-social. Yet all society is so organized that the earnings of this capital and all the net value of public services, all the actual, current value, can only flow in one channel, and that is ground rent.

It matters not what persons they may be, whoever collects the ground rent becomes by that fact not only the owners of the land (which in itself is nothing) but also owners of the public capital from which their rent is derived, even though they exercise no conscious jurisdiction over this capital. This would still be true, even though politicians should oust the land-owners and themselves collect the rents. They would then be the owners of the land and its revenue and the public capital. But they, having coercive power, would continue to seize property and all that immense and important distinction between rent and taxation would be lost and all public value (rent) would soon be destroyed. Society is destroyed by the anti-social acts of its servants, by their confiscation of private values and private purchasing power for public services. This cuts down effective demand for public services, and therefore their salability and therefore their value, much of the services (delivered to vacant locations) not being saleable at all. This is because taxation cuts down the amount of business that can be done and confines it to relatively few hands.

Land value is income from capital but the recipients don^’t know it. That is why they exercise so little dominion over it and public capital has no responsible administrators.

Remember, this ownership of the public capital is not in severalty, but undivided interests, as in a joint stock company.

Don^’t try to understand this offhand; there are many angles and a lot to understand about it. Remember, too, that this income (when it exists at all) cannot take any other form than rent. Such is the essential structure of society. So the capital out of which it arises can be owned and dominion over it can be exercised responsibly only by the title holders of land.

Mr. Hutter in his fourth paragraph, argues curiously that because a person who uses his own capital gets as much return as both he and the lender would get if he were using borrowed capital, this proves that the lender would be living off the labor of the borrower. The borrower simply gives to the lender a portion of the production that comes to his present labor by reason of having the cooperation of the lender^’s past labor. The accumulator of capital is the one to whom rightly belongs the market value of its use, whether he be a person who lends it to another or a person who supplies it to himself in his own business. In either case it is he who supplies the capital who enjoys the market value of its use. Mr. Hutter imagines a society in which men would be too unselfish to ask recompense for a loan but would also be selfish enough to accept a loan without making any recompense to the lender. This kind of emotional cooperation can be carried on in a small way among intimates but cannot be extended over any wide economic area. I like Mr. Hutter’s idea of altruism disappearing in a free society. I had that for my topic at the Master Institute last December 21st. It seems to me that Mr. Hutter visions idealistic and aesthetic relationships as a substitute for the practical and productive technique of the market. He does not seem to recognize that abundance is a prerequisite to any wide attainment of emotional and aesthetic satisfactions and that all wealth and all abundance arises out of the measured exchanges of the market, without which exchanges there could be no division of labor nor any of the highly specialized technique that is necessary for quantity production. The system of exchanges is the necessary foundation for the abundance and security upon which alone high transcendental values can arise. Most emotional persons are so obsessed by the evils that result from the political domination and distortion of the economic system that they attribute these evils to the economic system itself. They refuse to recognize it as the agency through which all social advance has been made. Instead of trying to understand it and giving it credit for what it has accomplished they condemn it for what it has not been able to do while its free activities are being more and more restricted and restrained and its basic and creative functions more and more seriously impaired.

Many thanks to you for arranging discussions etc. I look forward with pleasure to next Tuesday night. I shall also be glad to meet those high school teachers when the right time comes.

I enclose some circulars showing the present series I am giving at the Master Institute Sunday evenings.

Sincerely,