Spencer Heath Archive

Item 620

Taping by Spencer MacCallum of conversation with Heath.

November, 1955

 

 

 

 

 

There is the Empire State Building. The use of that building is being sold to the public by its owners, isn’t it? Well now, they don’t realize they’re selling also the street down below, they’re selling the subway, and they’re selling all the transportation systems and all the advantages of every kind in New York. And they’re being bilked by all the corruption and waste that the politicians are doing to their customers; because when a customer comes into the Empire State Building he has to come under the jurisdiction of the politician, and that politician is throwing the City into bankruptcy so that it is precarious for people to occupy the City. They have to pay income tax and State income tax and all kinds of State inheritance taxes and sales taxes and license to do business and God knows what all, and all that, it pulls down the value of the Empire State Building.

So while that is a very costly improvement, it can be a question whether or not, when a dollar of rent is being paid for some portion of that building, whether most of that rent isn’t paid on account of the public improvements — the difference between public services and public disservices. What would that building be worth if it were not for the public advantages, the geography, the waterfront, the physical condition of things, including the improvements of the bridges, the tunnels and all that? The only reason a tunnel or a bridge does us any good is because the service of it is worth more than the disservice. That’s true that anything that doesn’t come through the market, it is a disservice; but it also has a utility, some of the things have. If the utility is very great, the disservice is relatively /small/, well then it enhances the value of the locations that it serves. But the man who collects that dollar out in the Empire State Building, he has no idea that he^’s selling the Holland Tunnel — that is, the use of it. He isn’t selling the building; he’s only selling the use of it. He’s selling the use of the pavement outside, the use of the Fire Department and the use of the waterworks of the City — the water supply. He’s selling the use of all those things. Take some of those things away and think how much rent he would get on the Empire State Building. He’d know he was selling it if they commenced to take it away, wouldn’t he?

“Some people are finding that out as

the rates go up in the subways.”

The disservice will exceed the service. People will stop coming. And who’s going to hold the bag? The real estate owners.

“The people who have to stay there. Who can’t pull out easily. Who own property there.”

But taken over the long period, it just means the death of realty values in New York City if people can’t come and go. They’ll go somewhere else where they won’t have that handicap, where the subways haven’t been corrupted into 15 cents yet.

The tremendous business opportunities! John /Chamberlain/ could write a story about the wonders that have been done by people like Levitt and various others, and Webb and Knapp.

“He could bring in the shopping centers, too. That’s a real step in your direction, isn’t it, Popdaddy?”

Yes, well, anytime that people take undivided owner­ship in place of their several ownerships, that’s a step in that direction — in any kind of property.

“Don’t you think that the shopping centers are the most conspicuous step right now?”

Yes — because they’re sort of more novel, newer, shinier.

“They’re on a larger scale than hotels, even.”

I didn’t know that they were. I don’t know. I didn’t think so.

“Some of them are awfully big and have an awful lot of property attached to them.”

I don’t know enough about it. That’s something that John should bring out, and if he could, show how they were commencing to find out that we have to have policemen and parking space — free parking space, too, by gosh. Suppose you had two shopping centers, Spencer, about equally acces­sible to the same kind of population, and they were exactly alike in every respect except one, one minor one, just to bring out the idea. Both provided parking space. The parking space is exactly alike and just as much needed by the custo­mers in one case as the other. Everything else balances but one thing. They have to pay 25 cents or some kind of a gate price for tickets and so on for parking in one of them, and they get a rebate, directly, so they know it (I’m making the case strong). When they go in the store, they get a token or a ticket or something of the kind equally obvious. That happens in some places. The other one doesn’t charge anything, doesn’t give you any ticket or anything. Now, which one is going to, in the long run, be patronized the most? There’s only one inequality there, and that’s in the way they handle the parking situation.