Spencer Heath Archive

Item 1310

Carbons of exchange between Heath (Roadsend Gardens, Elkridge MD) and Frank Chodorov (Director, Henry George School of Social Science, 30 East 29th Street, New York NY). Note that the attachment to Heath’s letter of August 7, 1940, entitled, “Society and Its Services” (contained in the Originals envelope) appears to be the first draft of “Society and Its Services: Why the Henry George Idea Does Not Prevail,” later printed as a booklet.  

 

 

 

 

Dear Mr. Heath:                          July 2, 1940

 

     Thanks for your letter of June 27^th. But what does it mean?

 

     I have read this letter several times and I still am unable to evaluate your position definitely. This undoubtedly is due to my obtuseness. My type of mind deals with concrete facts and simple statements. This is a mental deficiency I presume, but what am I going to do about it?

 

     Undoubtedly your position can be summarized in a few statements which would register on a mind like mine. You need not supply the arguments, because I can get the arguments from your letter of the 27^th, and perhaps I can from my knowledge of Georgism, supply the argument. If you will definitely summarize your thoughts I will be able and willing to give them my careful consideration.

 

 

 

                                     Yours sincerely,

 

                                     /s/ Frank Chodorov

                                     Director

FC:v

 

_________________________________________

 

 

Dear Mr. Chodorov:                       August 7, 1940

 

     In compliance with your request contained in your generous letter of July second, for a briefer statement of the matter presented in mine of June twenty-seventh, I submit the following:

 

All labor that commands voluntary recompense, and therefore has value, takes the form of services.

 

All voluntary exchanges are exchanges of some kind of services.

 

Services are of two kinds: Services by production (physical) and services by exchange or distribution (social).

 

All services of production are applied physically to land and incorporated in it or to some product from land (capital) and incorporated therein.

 

All services of distribution are performed socially — by making and executing contracts or exchange agreements with respect to the ownership and use of land as sites and resources, or with respect to products that have been made out of land as capital.

 

Land ownership provides for the social distribution of land. It is a defense and protection against the evils inherent in the political distribution of sites and resources.

 

The practice of land ownership or administration is the performing of these distributive services by contract and consent for value received and not politi­cally by coercion and compulsion and without specific consent.

 

Ground rent is the voluntary and spontaneous recompense that the served members in a community pay in order to obtain this service and protection. When the land owning real-estate interest extends its services to include the protection of its land using tenants and purchasers against taxation and other political violence, then new ground rent automatically will arise in ample amount to finance this extended public service and to compensate them for performing it.

 

This will not only diminish and finally remove the blight of taxation, but will at the same time introduce a positive and profitable process for supplying all public protection and safety, and security from aggression from without or political despotism within.

 

Further, it affords a sound and practicable procedure for the financing of every public improvement and community facility having use and value to the community and therefore making the community more prosperous and more productive, thus generating ample ground rent for the maintaining of them.

 

Thus may public needs be met and public affairs carried on by a public authority with entire freedom of contract and consent on both sides and without resort to compulsions or confiscations of any kind.

 

Social order can exist only so far as the members of the society serve and receive services by the voluntary engagements of exchange and consent. It is in this practice of contract and consent — this freedom of property and exchange with respect to public services and advantages as well as to private ones — that the natural law of society must be fulfilled. In the words of Henry George, “we must seek the laws which are a part of that system or arrangement which constitutes the social organism or body economic, as distinguished from the body politic or state. … These natural laws … though they may be crossed by human enactment can never be annulled …” (Sci. Pol. Econ. p. 428) “To freedom alone is given the spell of power which summons the genii in whose keeping are the treasures of the earth and the viewless forces of the air.” (Progress and Poverty p. 523).

 

What I have here endeavored to condense would be abundant in its content for a lengthy treatise. I am therefore attaching to this letter a more extended statement for your possible further interest and consideration.

 

                            Very truly yours,

 

    Spencer Heath

 

SH:M

Attached: “Society and Its Services”

________________________________________________________________

 

 

Dear Mr. Heath                         August 12, 1940

 

The keystone upon which your total argument rests, /it/ seems to me, is in this sentence, “Land ownership is a protection against the political distribution of sites and resources.”

 

This is a statement which is not borne out by ex­perience. And if this is so, if history proves that land ownership is not a protection against the political dis­tribution of sites, your entire case, as I see it falls down.

 

The historical record seems to indicate that land ownership is dependent upon political distribution of sites and resources. The state is an evolvement of slavery. As land became more valuable, due to the increase in pro­ductive arts, and the increase in population, chattel slavery was substituted by the private ownership of land. But the private ownership of land was possible only be­cause the beneficiaries of this system got control of the political machinery; in fact, at first they were the political machinery.

 

Your statement that land ownership is a protection against the political distribution of sites would seem to indicate that there is an antipathy of interest between land owners and politicians. This is not historically so. Politicians have been the tools of land owners, and the two groups have worked together for the private aggrandizement of both.

 

Furthermore, the phrase “land ownership is a pro­tection” involves the idea that land owners render a service. The only service that they might render is to hold the land against thieves who could pick it up during the night and walk away with it. But even that service they do not render because the public pays for police protection against possible robbers of the earth.

 

     Because your basic concept is historically incorrect, economically and morally unsound, I cannot see any validity in your thesis.

Yours very sincerely,

 

/s/ Frank Chodorov

 

_______________________________________________________

 

 

 

Dear Mr. Chodorov:                     August 25, 1940

Yours of the twelfth wherein you dispute my state­ment that “land ownership is a protection against the political distribution of sites and resources” seems like an attempt to discredit a fundamental institution of Society first by the assertion that one of its functions is not performed and then by asserting that no function at all is or can be performed by it. The first asser­tion is superfluous, if the last be true. It begs the question. Furthermore, it should be noted that both assertions are negatives and therefore not susceptible of any direct verification.

It would be pertinent, then, to inquire just what it is, if not land ownership, that stands in the way of a purely political distribution of sites and resources. If history shows that land was once held only by force against force and thus could not be held or exchanged by any process of contract or consent and hence had no value, that still does not prove that it is now so held. The fact that now to some extent it can be used and exchanged by consent and without resort to force is what gives it value — value in exchange, and there are no other values. If there are values of obligation, the obligation must be that of giving a recompense and therefore an exchange. An obligation other than by way of recom­pense and exchange would be a compulsion resting on force. This would be an anti-social condition or situation, cap­able of destroying values but not of creating them.

Since force was once universal, we need not cavil that it preceded and out of it grew all social institu­tions. The circumstance that order must evolve out of and away from previous disorder, becoming different in its mode of operation, is proof rather of a new dispen­sation than of any continuance of the old. We might as well say that free relationships are bad because they have supervened upon previously compulsive ones, that trade must be dishonest because of its birth out of piracy, or that freed men are still slaves because they once were.

The coercive or predatory political state is not an evolvement out of, it is a continuation of slavery, essentially so, with its mass conscription of property and services by taxation, making free contract, consent and exchange less and less possible and thus destroying all land and other property and service values.

It is true that land ownership is being, as it always has been, destroyed by the advance of political taxation. Laid on land value itself, taxation absorbs and cancels it. When laid on the private wealth and services that constitute the demand for land services — for the distribution of community advantages — it thus undermines and inhibits land values.

The services for which rent is paid are not per­formed by those who receive and pay for them. They are performed by land owners in their social distribution of the territory and its advantages. Those who pay rent produce only the wealth and services out of which they pay it. These private services and production constitute the demand for secure possession of sites and resources and the portion of production that is given as rent for the pro-social and peaceable distri­bution of sites and resources is the recompense for those services.

Sites and resources are not services; they are not performed and hence do not command any recompense in return for them. Only services can command recompense, and the recompense itself is the value of the service.

Taxation yields no recompense. “It drains the life blood of labor and capital” and thus inhibits the pro­duction of wealth and services. It diminishes all value by diminishing all recompense.

As political taxation destroys the basis of land values by limiting the wealth and services that are given in exchange for land services, the sites and resources must be distributed less and less by the pro­cesses of the market and more and more by political determination and preferment. The institution of property in land cannot, of course, protect against political distri­bution of sites any further than the institution is main­tained and permitted to exist. It is only so far as it exists that it can protect. When it ceases entirely to exist then it will cease entirely to protect, and land will then exist only in the physical sense and not in the social sense as an instrument of contract, service or value.

History gives no account of any successful revolt of slaves. Every political revolution has been only a change of the masters over the properties and the persons of the populace. Every Great Charter, Bill of Rights or Declaration of Independence or other barricade against political tyranny has been erected by landed proprietors in defense of their properties and of the liberties of the free men who occupied under them. It has always been the land owners who banished or executed kings and the predatory politicians who flocked around

and under them, — if that is what you mean by making tools of them. The -so-called charters of liberty are not very apt symbols of “the two groups working together for the private aggrandizement of both.”

There is the same difference between land ownership and physical land that there is between land value and physical land. Land ownership and land value are social phenomena. Physical land is not. Ownership and value — they are inseparable — are made by men exchanging serv­ices. Land is not so made. They may be destroyed by predatory politicians, by taxation. Land cannot, nor can it be carried away.

Henry George wanted us to see further into social phenomena than he had done. He wished our thought and the illumination of our minds to grow and expand as his had done< and not stop dead in his tracks. This means that we must see old things under new aspects. We can­not properly understand any principle or even any pheno­menon until we have viewed it in every possible aspect and relationship.

You know about the several blind, men each examining a different part of the elephant and all disagreeing violently for no reason at all except that they approached the same elephant from different directions. It is the philosophy of Henry George that this elephant, the social organization, gets its life only from the freedom that its members practice and enjoy. This means that what men do by compulsion and coercion brings on the death of society, and what they do by contract and consent, by the mutual engagements of serving each other in the democracy of the markets, gives to society all of the life that it has.

Now surely we must all agree that any political distribution of sites and resources would rest ultimately if not immediately upon the compulsion and coercion of the many for the special benefit of the few. All history, all experience confirms this. Henry George was aware of it. That was why he would not agree to nationalization of land — the abrogation of private titles and contracts and reliance on political distribution. He sensed that without specific owners of specified parcels land could not even be held, much less distributed, by contract and consent — that there could be no distribution to all upon equal terms without preferment or discrimination.

No doubt this is what prompted Henry George to write,

“Nor is there any difficulty in combining a full recognition    of property in land with a re­cognition of the right of all to      the benefits conferred by the Creator. …

 

“For while it is true that the land of a country is the free gift of the Creator to all the people of that country, to the enjoyment of which each has an equal natural right, it is also true that the recognition of private ownership in land is necessary to its proper use — is, in fact, a condition of civilization.

 

“When the millennium comes and the old savage, selfish instincts have died out in men, land may perhaps be held in common; but not till then. In our present state, at least, the “magic of property which turns even sand into gold” must be applied to our lands if we would reap the largest benefits they are capable of yielding — must be retained if we would keep from relapsing into barbarism.”

    

     Henry George knew that society could not live except by the practice of free relations. It therefore must provide itself with proprietary servants to function as owners in order to give contractual distribution of its sites and resources by merchandising them and with them merchandising the use of all the public territory and public capital improvements contiguous to the privately occupied land.

These public improvements — public capital — are not placed on the sites vertically as private improvements are but contiguous between and collateral with respect to them. So far as their use can be and is merchandised to the occupiers, so far, but no farther, land value can be and is created through them.

Just as private capital occupying land or existing as improvements upon it can have no value beyond that expressed in the recompense that is had for it or for its use, so the public capital can have no value beyond that developed and which arises in the course of merchan­dising it. For the public capital becomes public by a coercive process that takes it out of the market without recompense, thereby destroying its market value. But when land owners merchandise the sites or the use of them, including use of all the public capital and other public advantages, then their customers pay a market price or rent for this merchandising service, and this price or rent is the value of the merchandising service of which it is the recompense.

Where there is no recompense, no exchange, there can be no social value — no exchange or market value. The tax victim receives no value, no agreed recompense from the politician. If the politician permits the tax to result in a public improvement he gets no recompense from the land owner. But land owners do get recompense from land users because they give them the service of making a social, contractual or exchange distribution of the private sites and resources, of the use of the public parts of the community and of the use of all its public capital improvements and other resources.

Nor is the tax payer able to pay twice for his own goods by having them sold back to him. He has earned or paid for them once and he has received from the politicians — tax gatherers — no recompense wherewith to buy them back in any form. His market demand his purchasing power, is gone. And land owners cannot and do not give anything to the politicians for the capital (or the use of it) taken from their tenants because they cannot sell it again (or its use) to the tenants for the very good reason that they, the tenants, received no value or recompense for what was taken from them.

The only thing the tenants can pay the land owners for is the services that they perform, their highly valuable services as distributors — unless, indeed, the land owners should purchase or perform other and further services, such as protection against unnecessary (or all) taxation, as they very well and very, very pro­fitably might do. This law of voluntary payments being made for services only may be “crossed by human enactment,” as Henry George says, “but cannot be annulled.”

It is by service alone that voluntary recompense can be obtained. Thus are values made; and such volun­tary recompense not only measures but is, the value of the service. Likewise, the value of the recompense is the service it procures. Each obtains its unit rating from the voting of the market. These unit ratings are called prices. The value of anything depends on its

magnitude or quantity times price — the number of units times the market rating per unit — just as in hydro­mechanics, electricity etc. a rate or volume of flow de­pends on the number of units moving times their velocity or potential charge.

The validity of any description of phenomena — my description or that of anyone wise — depends entirely on whether it can be objectively or operatively verified, and not at all upon any person’s seeing or failing to see any validity in it.

Very sincerely,

Spencer Heath

SH:M