Spencer Heath Archive

Item 1222

Copy of letter to Heath at 434 West 120th Street, New York City from Francis I. duPont, P.0. Box 847, Wilmington, Delaware,

August 31, 1937

Dear Mr. Heath:

Referring to yours of August 23rd, I still think there is something in your ideas of value, but I cannot agree to your presentation. In fact it looks to me as if some of the things you say could be easily enough shot full of holes. Take your statement:

“Ground rent is the only value there is to land. No rent, no value. Hoped-for or expected rent is a hoped-for value, but it is not any present or certain value.”

     This does not seem to me to be true for the reason that there is any amount of land which has never yielded any ground rent and may not do so in the next hundred years and yet it is bought and sold for a price. Again I cannot see your distinction between hoped-for or expected returns and a present or certain value, for the reason that the value of all income-producing securities is based on nothing in the world but expected or hoped-for return.

“The only thing anybody can give to a vacant site is services, public services.”

     If, in public services, you include the use of the police, the State militia and if necessary the Regular Army of the United States, to prevent anyone from using land otherwise than as the owner wishes, then I see that this produces a value by producing an artificial scarcity of that which is necessary to maintain life.

“He pays for what he gets, and not for what is taken from him. Taxes are taken from him.”

     I think I see what you mean, but you seem to have adopted Mr. Beckwith’s definition of taxes, in which he tries to adopt a new meaning for the word “Taxes.” As generally understood, taxes are any levy made by the government to defray government expenditures.

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

“If it were not for the harm done by government, all the territory served by government would yield rent.”

    I certainly cannot agree with this last statement, as I do not think that all territory served by government is capable of yielding rent for the reason that the population which would have to produce the rent does not exist.

     It looks to me as if you were clinging to Ricardo’s Law of Rent, which contains a fundamental fallacy. To repeat my understanding of your idea, I believe that you think that if land owners would, themselves, pay for all public services, they would make more than if they let the Government do it. I am not at all sure that this is true, but I am perfectly sure that you will never get the average proprietor of real estate to see anything in it.

     I am really very sorry not to be able to write a less critical letter. All I can do is to give you what I see.

Very sincerely,

FIduP/at