Spencer Heath Archive

Item 1260

Carbon of a letter from Heath to Clifford L. Kendal, Editor, Land and Freedom, 150 Nassau Street, New York, New York

August 18, 1939

Dear Mr. Kendal:

I have wondered for some days how everything was going with you and Mr. Smith and Land and Freedom. I thought several times I must write to you and inquire. But today comes your July-August number and it looks about the same as ever. In fact, I don’t think I would have suspected from the contents that there had been any change in the editorship, and I mean this mainly as a compliment, certainly so far as editorial form and diction is concerned. But as regards its social ideology, I think there is less evidence of any progress, growth or development in this respect than in some of the recently preceding issues. This is probably fortunate and wise, lest the old-line sticklers for their rigid dogmas (right or wrong) be put to flight at seeing much evidence of life and growth. Talent, in moderation, is what gets the mob and the emoluments. Only the very elect can afford to keep so far ahead of their followers that few can follow.

Taking the editorial creed on page 102, “Taking the full rent” would be taxing the rent 100%. It would not then be possible for the farmer to have possession or anything “at a small land rental to the government” or to anybody else, nor “without the payment of any taxes” for taking — taxing — the rent would turn it all into taxes and there would be nothing else to pay. And the rent, now being degraded into taxes, would be taken no longer by the social process of contract and consent, but “administratively” (as the planners say) and arbitrarily by assessment and compulsion. This would leave the farmer with a whole lot less than “full possession of his entire product at a small land rental (!) to the government without the payment of any taxes.”

When it comes to mines, the laying of taxes on the operator by political assessment, there being no standard for this except the supposed amount of the rent, if there were any, and no means of enforcing such a standard on the assessors if it could be ascertained, would leave these same politicians entirely free to force many mines out of use in order to create a monopoly in favor of those who operated the mines that would be in use. It is practically certain that the mine operators (and the miners) would have enough political influence and voting strength to obtain the kind of legislation or the kind of administration that they would want in order to keep other mines out of use. Taxation (killing profits) is the only thing that keeps mines out of use now.

The third and fourth paragraphs are in opposition to the first. They are against taxation of wealth (nothing else can be taxed) instead of taxing (taking) the amount of wealth that, theoretically, would be paid in rent if there were any rent. The third and fourth paragraphs against taxation are excellent. Farm operators (or owners) and mine operators (or owners) cannot be freed from taxa­tion by taking (taxing) away their products and capital on the theory that this would be the same thing as though they were paying voluntary rent.

As regards the last paragraph, everything depends basically on land. But no land ever has any value unless the population of the community in which or near which it lies does something very important about it. They must recognize or authorize specific persons to act as owners of it. While they do this, then possession of land will be determined socially by contract and consent. Possession will then be secure, and it will be distributed and redistributed, either outright or by the year, by the just, peaceable and orderly process of the market without force or fiat, and by consent and agreement of all parties concerned. But if the population of the community does not support private ownership and private tenancies under it, then no possession can be effected or maintained except by the exercise of political preferment or other arbitrary and anti-social physical force. Land must be attainable, to be sure, but any land that can be attained otherwise then by contract and consent and upon the democratic measurement of its value by the process of the market will be land that is either entirely without any social services and advantages or land whose social advantages are entirely cancelled out by the insecurity with which it must be held. The democracy of the market with respect to the distribution of the community lands is absolutely fundamental to there being any orderly community at all.

Mr. Carroll (page 105) well quotes President Wilson: “The history of freedom is the history of limitation of governmental powers.” It ought to be more widely recognized that private ownership of land is the greatest limitation that has ever been imposed on governmental power. And it ought to be more widely observed how taxes destroy rent — how the extension of governmental powers destroys the value of land and finally the institution of property itself. But Mr. Carroll seems to think that if governmental power were to be thrown wholly against the land owner and liquidate him then everybody else would be quarantined against it and live happy ever after. It is indeed significant that Henry George suggested hanging on to the services of the land owner for even as little as five per cent of the full value of his services that are so essential to the very existence of the society. The pity is that he did not take time out from controversy, if need be, and write out explicitly his sound intuitions on this important subject.

Mr. Hanna very justly knocks the “insollubists” and he makes a very proper plea for sound methods of procedure in social discovery and interpretation, as in other sciences. If he will just come along with me now and make some sweeping applications of the principles he lays down we can have a good time together. Referring to Dean Russell’s current Congress on Education for Democracy, a columnist in the Baltimore Sun today says:

“The real point before the world has to do with how its economic resources shall be exploited and developed. It seems rather obvious that they can be best developed if the men who have the energy and ability to develop them are let alone and not held back by the scruples or jealousies of lesser men, either as individuals or as organized groups. Our democracy — or the more important part of it, which is civil liberty — is a device for giving the able exploiter as untrammeled an opportunity as possible to do his stuff. It seems to me that most of the apologists for democracy are just that, apologists, and that they spend a lot of time and energy apologizing for the very men that their system is designed to produce and cherish — the businessmen, the entrepreneurs and the exploiters, which is to say, they are seeking to limit the accomplishments of their own system.”

But I hope Mr. Hanna’s strong predilection for natural laws will not always dispose him so uncritically where they are alleged. This disposition is what gave the Malthusian fallacy such tremendous vogue that Henry George had to devote four whole chapters of Progress and Poverty to putting it down, himself only to fall victim to it, uncritically, in its Ricardian form and then seek to give it a vastly wider application than did Ricardo himself. Thus does Jove nod, for not even the great Newton who discovered the law of gravitation was above the promulgation of what he called the Sine Square Law in the field of aeronautics, proving by mathematics that mechanical flight was impossible, and this had the uncritical acceptance of practically all trained scientists and engineers for some two hundred years until Samuel Pierpont Langley finally broke away. These are the kinds of things that happen to men who have “been satisfied to ‘feel and fumble’ instead of using acquired knowledge.” Taking things for granted without demonstration, just upon authority or because we have a feeling that way, is an intellectual vice and failure from which none of us are entirely free. It seems to have overtaken Mr. Hanna in his criticism of Dr. Jas. T. Adams where he refers to “law and custom which makes speculation profitable.” Profitable to whom, I wonder? Certainly not to speculators, for every gain to one of them is exactly balanced by the losses of the others. It would seem hard to impute profitableness to anything that has always involved the collapse of banking institutions, with all their attendant evils and miseries.” And Mr. Hanna himself seems to realize that speculation brings forth no profits by his reference to “non-productive speculation.” It must be a great convenience to bureaucrats and tax-taking privilegees that uncritical publicists should nourish shadowy scapegoats to bear their very substantial sins away from the popular view.

Mr. McMillan seems exceedingly uncharitable towards the persons whom the community by all its actions and consent designates to the function of distributing its social values peaceably by exchange and consent, assigning to them for this service none but wholly voluntary and uncontested rewards. I am afraid he is grooming a very convenient goat for all those who seek the aggrandizement of governmental powers and would have the rigors of taxation displace more and more the amenities of trade and exchange for value received.

Mr. Luxton comes thundering down the lists with mighty challenge to the dragon envisaged with such moral horror by Mr. McMillan. He bids us arm for the battle. Flashlights might come in handy where there is such a superabundance of heat and no corresponding amount of illumination.

Your Strolling Reporter gives a grave account of how New York State has joined up with the New Deal with respect to slum clearance and providing phony untaxed houses for its favorites so the politicians can keep the tax load where they think it belongs. This should give much comfort and satisfaction to those who would fight for the abolition of private property in land. Taxation has already driven stupendous quantities of land in New York City and State out of private ownership and into political “administration.” These dehousing and rehousing projects may serve as a good model to the State politicians for their guidance in collecting the rent in lieu of taxation from the lands that have already been “socialized” by the ministrations of assessors and collectors.

Mr. Charles Joseph Smith, commenting on Mr. Willcox, brings up the perennial fallacy that the people who buy public social advantages by paying ground rent for them somehow themselves create the selfsame advantages that they buy and pay rent for, and that they do this by some kind of unconscious cooperation. They must be unconscious indeed to purchase from others that which they themselves create. The general body of society no more creates the public or social or governmental ad­vantages that it buys than the general society of pedestrians creates the shoes that it buys for its feet. Nor does the general society have any more ownership of the price (rent) that it pays for the public services and things that its members make use of in common than it continues to have ownership over the prices it pays for its private services and commodities after receiving them. The confusion arises from a feeling that the person whose demand expressed in price gives exchange value to a service is somehow the same person who created or performed the service itself and therefore he owns and should have back again the price he has paid for it. This is just a matter of confusing identity as between buyer and seller so that they are “unconsciously” imagined to be one and the same.

Public or community services differ from private services preeminently in kind, though not necessarily in value or degree. They differ in kind in that they are performed exclusively by public persons acting by consent or authority of the inhabitants of the community, that they have to do only with work and improvements carried on in connection with the public portions and not any private parts of the community and that they are availed of, used and enjoyed in common by the inhabitants of the community in common and not exclusively by any of them. Services performed in any other manner or received and used in any other manner might be cooperative in a limited way but they could not properly be called community or public services. The only reason that we maintain any distinction between governmental functions and public community services is because the former rest upon taxation and are coercive and anti-social and therefore practice no exchange and create no values but, on the contrary, destroy them, whereas the latter rest upon the voluntary payment of rent by way of exchange and are therefore pro-social and creative of public community (land) values. This is a distinction that under the socialization of government into non-coercive public services would disappear — the veritable fulfillment of the vision of Henry George.

Public community services and rent are services performed and the price that is paid voluntarily for them. The one cannot exist without the other. Upon the savannah, until some service is performed giving safety and security and other necessities or conveniences of communication and transportation it will not be possible for “two immigrants to look longingly on the same piece of land.” Every piece will be as serviceable as any other piece and offer no services for which anyone should pay or be paid. No one could “equalize the differences in natural opportunities” for Henry George expressly states that there are no such differences. Nor would the coming of a second settler result in any advantage that would not be equally available to both of them. There could be no inequalities of opportunity until some of the inhabitants performed some kind of community services, such as merchandising security of person and possession and conveniences of transportation to all of them, and then,

for such public and community services, rent would be paid.

There are no products or services except those of labor. Rent therefore could not be payment for any excess of produce unless it be for an excess of labor and this is absurd. So far from not recognizing “any such thing as a ‘social product,’” it seems to me that Mr. Willcox just doesn’t recognize anything else as the proper subject for the payment of rent or any other matter of exchange. And this is as it should be. This exchange relationship is distinctly and exactly what it is that constitutes a society as an integration and not a mere aggregation of men. And it would be very difficult indeed to imagine society, as a whole, being one of its parts as “one of the parties to production” or to anything else. This notion of society as a whole having transactions with each of its parts is not only a contradiction in terms but it is the dangerous doctrine upon which totalitarianism depends for all the plausibility that it has. The apotheosis of this supposed “excess of produce,” this “resultant” of the total of social activities is the foundation for the abject worship of a political state.

No, there cannot be rent without land, but there can be plenty of land without rent. It is the community services that are conferred upon land, or rather upon its possession, that cause rent to be paid for its possession and the special services that its possession affords.

Rent cannot be a gift of nature for rent is wealth and that is exactly what nature, according to Henry George, and properly, is not. Neither is the land value for which rent is paid a gift of nature, for payment can be made only to men and voluntary payments, of which rent is an example, are only paid for the services that men perform, including the wealth that they produce.

The land owner does not receive social services except as he pays for them when he becomes a land owner and performs them, after he becomes an owner, by merchandising its use and thereby giving security of possession and peaceable distribution among the members of the community — a very important and valuable social service, an indispensable one, indeed. It is he who delivers an indispensable social product to the land, however unconsciously he may be doing it, and it is to him that the community makes its voluntary rewards called rent. Rent does not pay damages to correct any “inequalities of opportunity for production.” Apart from compulsions such as the exaction of tribute or taxation or slavery in any form, the opportunities for production are as much open to one person as another. As to natural resources, nature makes the same terms alike to all men. So far as human services and products are concerned, the democracy of the open market, untaxed, plays no favorites among those who wish to give and to receive services or products by the finely balanced measures of exchange. What rent does do is to balance the receipt of net public services by market-equivalent private services given by exchange in recompense for them. And this recompense of rent does not go, nor should it go, to the population as a whole but only a part of it — the part of it that performs those inestimable services of merchandising, and thus peaceably and equitably distributing, the common security of possession and of access to the common facilities of community life. If rent were really an “unearned increment” it would have to be collected like taxes, by force.

Since rent is an actual recompense given in exchange for services, it cannot be rent unless or until it appears. “Potential” rent must be rent that has not appeared. Such rent cannot “disappear.”

Every tax, whatsoever may be the desire or intention concerning it, is a levy on wealth. Henry George insists that all wealth is the produce of labor on land. Every tax, therefore, reduces the reward and, in consequence, the production of labor. In the words of George, “Taxation which lessens the reward of the producer necessarily lessens the incentive to production.” It is true, as George says, that some taxes inhibit production to a greater extent than do other taxes of like amount, but it still remains true that all taxes, in one degree or another, lessen the production of wealth. Any tax, then, however intended, is bound to lessen the use of land, to throw land out of use. Any continuous or systemic levy on wealth, however the tax may be designed, must inevitably throw land out and keep it out of use. It is impossible, therefore, by any kind of tax to “force idle land into use.” The abolition of poverty cannot be accomplished by taxation or by any other technique of force. But it can and let us hope it will be accomplished by the extension of freedom — of the freedom to exchange with each other, the only freedom, including all lesser freedoms, that men really need or truly desire. In the democracy of exchange, wherein all things are done by consent of all and coercion of none, lies the only freedom of men by which a society can live and without which it must die. Henry George gave the key to this freedom, this true democracy, by his proposal, to abolish all taxation save that on land values, and finally that taxation as well, for the emancipation of industry would lead to such enormous expansion of production and opulent demand for land that the new rents rising upon the abrogation of taxes would afford an ample, profitable and voluntary, as well as the necessary basis in the hands of land owners themselves for the financing of all public services and desirable public affairs — and failure so to use these rents would be at the peril of all their income and recompense. Thus will government of force and by compulsions evolve into public services without coercion in the free democracy of consent and exchange.

Mr. Ashton’s three pages are in his usual imitation of Mencken, wisecrackerish and wholly destructive, only slightly illuminating and not at all inspiring, but all good fun, if one likes insolent waggishness about important matters of public concern. My good friend, Mr. Foley, sends out the clarion to those who take it for granted that the ownership of land is what keeps men starving and idle and keeps land from coming into use. For personal reasons, and for that alone, it would be pleasant to join up with him under that uncritical assumption. To minds that have not adopted this as a fixed article of faith and are still functioning in that field I should like to present the considerations upon which I have adopted precisely the opposite opinion. It is my vision bright and clear, based on exhaustive analysis, that private property in land is the essential institution whereby a society of men is enabled to attach itself to a territory, make use of the advantages of its environment, maintain security of possession and provide access to all public services and advantages without discrimination and upon equal terms to all. It is only because this institution has not been fully developed as the public service department of society that we have and suffer under any such thing as coercive government (except as to crimes) with its age-old tyrannies of taxation and attendant evils.

Well, I’ve reviewed about all that’s reviewable so I guess I can’t stretch this letter out much longer. For a man whose mind has been corrupted without being converted, I think you have done mighty well. I hope to see you make Land and Freedom stronger and stronger and more and more independenter. Tell me whatever I owe you for subscriptions or anything and I will remit. Please use this letter judiciously if you show it to anyone. I hope C. J. S. will catch the constructive spirit of my criticisms and can “take it.”

Sincerely,