SPENCER HEATH ON HENRY GEORGE

AND LAND ADMINISTRATION

Correspondence & Private Notes,

Published & Unpublished,

from the Spencer Heath Archives

122.

If the power of government be limited to preventing violence and keeping the peace, how shall that limitation be imposed or enforced? And how shall government be maintained if denied the king's prerogative of seizing property or funds be denied to it? Yet how can the same power to tax not become a power to destroy? Even a modicum of taxes must unbalance the system of exchange, for those who contribute to the system must take out less than they put in and hardship ensues. Those who contribute least must suffer proportionately most. This calls for intervention and remedy by the power that forced the distress and this necessitates further taxation to support the intervention--and thus the vicious cycles whose end is despotism.

The dilemma is real, for make no mistake, violence is the seed bed and taxation the tap root of the totalitarian state. Until the problem is solved there is no hope for a free but the certainty of a more and more restricted economy whether we will or no. All the mere resistance, reform or deference in the world can only for a time postpone the evil end.

I should like to [see] the problem manfully attacked. Let us try this approach:

Freedom from violence appertains not the persons but to the place wherein they are. The place must be a community--a com-munio, place of common defense. The safety and security, the immunities, such a place affords--the advantages above disadvantages of it--can be enjoyed only by those who occupy it. For this they hold secure possession and enjoy its advantages and immunities by contract under lease or deed and for which they pay ground rent or its value capitalized as purchase price. The rent so paid is set not by either party alone but by the democracy of the common market, and it rises and falls as the security and advantages appertaining to each plot increase or diminish. And the rent so paid only to the owner, for none but an owner can be in any relation of free contract towards an occupier with respect to the security and other services or advantages afforded by his occupancy. If he holds under any other authority, he holds by sufferance only and is not a free man but either a pampered favorite of a tax-paying slave or serf in servitude to political masters pretending as servants, or to a king or other master politician.

As a rent payer the occupier is a free-man because what he pays is gauged to his immunities and advantages and to his consent. But as a tax payer he is a serf because what he pays is inverse to his security and gauged to nothing but the will and power of the usurper, conqueror or elected authority over him. This authority cannot do for him but only to him and to his undoing as a free man. Such authority, being non-contractual, must first enslave him before it can serve him, and such service only deepens his slavery.

The land lord, however, in these modern times receives only in proportion as he serves. His primary service is as an impartial distributor of sites and resources into such hands as can make them most productive and can therefore pay the highest rental for them. In the modern process and evolution of community life or society this distributive function of land ownership is practiced only blindly and empirically with unenlightened motivation and without being understood. As land owners become enlightened as to the service they now perform and how their incomes and values are gauged to it, they will be impelled to undertake other and further services looking to the safety and security of their communities and the common welfare of the inhabitants who pay rent freely for what they already enjoy.

For this purpose they will unite in a corporate or similar form on a regional basis, pooling their individual ownerships and taking corresponding undivided interests in the form of corporate shares. Thenceforth all former income will go to the Corporation as rent and to its shareholders as earnings or dividends. From this point there will be no separation of interest as between the formerly separate owners. Each will now hold his proportionate undivided interest in the entire community of property held by the corporation. His interest will not be in any particular rent or property but in the community property as a whole, that it shall provide the highest immunities and advantages to its inhabitants and thereby yield the highest combined and total rents and revenues.

Thus there will be established a unitary community ownership and authority powerful and influential, having no motivation but the community welfare, automatically financed with voluntary revenues in proportion as it contributes to that welfare and in like manner penalized in degree as it fails so to do. Its general policies will be dictated by vote of its possibly very numerous owners, and they will be carried out by persons of highly specialized qualifications [engaged] for that purpose as officers and employes.

The land servants--political and public servants--however, do not give any services to others by way of sales or exchange. Their services are performed by way of taxation and distributed by political privilege and special legislation. Their recompense is seized recompense and not a voluntary one determined and measured by exchange.

Rent is voluntary and legitimate, the measure of a service by exchange and hence of a value. Taxation is arbitrary and compulsive. It measures no service, evidences no exchange and therefore creates no value. When land lords, in the exercise of their lordship--of their ownership--take any action or use any portion of rent to mitigate or abolish any taxation, they create community values. They use rent to transform taxes into rent, to raise the meager proceeds of compulsion into abundant recompense for service. For to mitigate taxation is a public service for which there is a desperate need, and rent is a voluntary public recompense for every public service that security of possession confers.

When community servants, land servants, in their exercise of compulsion "appropriate rent by taxation"--use taxation, which is compulsive, to destroy rent, which is voluntary--they convert rent into taxes--that given because of services into that given because of compulsions.

Exchange is the economic, the pro-social process. The function of ownership is to exchange. All social values (created socially) are exchange values.

To consume and thereby destroy is an individual function. To exchange and thereby create is a social function and attribute. All things that are exchanged and all things that contribute to exchange are capital, for they are socialized wealth engaged in the social process of creating social values by voluntary exchange. Exchange is an attribute of ownership; only so far as things or services can be owned can they be exchanged or have any exchange value. Ownership, therefore, is the only means of social service--the primary requisite to any social services being performed--for none can exchange anything except he own it, and then only so far as his ownership is uninfringed by taxation.

So far as security of possession in land, with its incidence of community services, can be owned, then to that extent it can be exchanged. When security of possession in oneself and one's services and products can be owned, then these can be exchanged. In either case the exchange is effected by a sales or merchandising process, performance of which is itself a part, the final and critical part, of the services being exchanged. When private property and services are transferred by this sales process in exchange for secure possession of land, and the public services incident thereto, the private value thus given by one and received by the other is called rent, and the public value thus given and received is called land value.

The full and proper function of land lords is to provide land services, i.e. community services and capital, and to merchandise these services to land users in exchange for rent. It is the full and proper function of land servants--community political servants--to merchandise to land owners their services (labor), and also the services of their capital, in exchange for salaries and wages for their services and in exchange for either purchase price or interest, on any public capital (community capital) they supply.

It is the full, proper and complete function, and the highly profitable function, of land lords collectively through land ownership and land administration not only to hire all the labor and services of every degree, and to procure by purchase or borrowing all the capital that can be advantageously employed for common and public uses in the community, but also adequately to supervise that hired labor and efficiently administer all that purchased or borrowed capital used in connection with the public reservations of ways and other lands of common use, and to do these public things in the interest and to the highest service of all those who occupy and use and pay rent for the privately and separately possessed lands of the community.

Such highly and socially developed community services, administered by an organized land-owning interest without the incubus of taxation to penalize production, inhibit exchanges, and thereby impair and finally destroy all values and all ownership, is capable of so ameliorating the distresses and increasing the productivity of the population that the values of a territory so served would become unimaginably high. As the productivity of the economic life arose, so would rise the quality and abundance of the public services incident to the possession and use of land. And the free interaction by exchange between the system of publicly administered services and the system of private services and values must establish such abundance of subsistence and so transform the material conditions of human life, that it can rise to its utmost and undreamed perfection in beauty and length of days.

158.

159.

. . . amount that meets all costs and maintenance and also a profit to the owners to the full value of their administrative services. A hotel not so conducted for the benefit of its occupants will have its space largely unoccupied or rented at unprofitable rates. Hotel owners, therefore, do administer their properties and supervise all hotel servants in the interest of the occupants and thus in their own interest of receiving adequate rent.

The owners of out-door communities, towns, cities and states, do not seem to know that they own the space and area of the community and also the public capital and services of the community and that they are owners by reason of the fact that the income from their lands is the earnings of that public capital and services and comes to them by virtue of such capital ownership, however acquired. These community owners therefore do not consciously administer their property. They leave its management almost entirely in the hands of the community servants and hirelings of all degrees. Since they neither supervise these servants (as hotel owners always do) or administer the properties entrusted to them, the community income from net rents very properly does not pay the owners for such services and is insufficient to pay the cost of the hired services and borrowed capital engaged in the community enterprises.

In consequence of default by the community owners in their failure to administer their property and supervise the community servants they have no funds wherewith to hire public labor and capital. By not taking the authority and responsibility of owners they forfeit the power financially to make good their proper authority. The public servants, therefore, have excuse and, in fact, no alternative but to exact compulsory payments and make seizures out of the private properties of the inhabitants to maintain all public operations, both beneficial and injurious alike, and to pay for the capital publicly borrowed, upon faith in future tax collections, for the carrying on of such activities.

The occupants of the public communities are thus exposed not only to the devastation of constantly increasing seizures of their property but also to having the public servants impose their unbridled activities and operations upon them, and upon their waning hopes and growing fears, with but little reference to anything beyond a meretricious popularity to maintain their political power.

Although a public community is in all organic respects the same as a hotel, by the default of the owners of the community territory and of the property and capital that gives it service and value, the community business is given over to a destructive orgy of violence, chicanery, confusion and distress that at last drives the despairing population into the iron arms of dictatorship and military despotism in which properties and values are destroyed, all social ties dissolved, and savage barbarism must return.

Civilized life is community life. The civilized values are primarily community values. The value of land is the value of all community properties and services. Failure of the owners to administer these properties and supervise these services so that their income will rise spells the inevitable decline. Rent and the value of land is the sole index of community values. Upon its rise civilization itself depends.

It should indeed be an inspiration and encouragement to the whole real estate world that the ownership of land in the proper and effective pursuit of its own business and special interests should be able to come into such magnificent prosperity and rewards, and that at the same time, by the very nature of the social organization itself and without any pretense to altruism or public spirit, it should also emancipate the arts and industries and give the one freedom that includes all freedom--to serve and to be served--the freedom of untaxed and unpenalized exchange.

165.

1 The economists considered rent as the sole fund capable of supporting taxes, and on which they ultimately fell.

Rent Defined - "that portion of the value of the whole produce which remains to the owner of the land after" all costs and profits of labor and capital at the "ordinary rate.

Immediate cause - "excess price above the cost of production at which raw produce sells."

p.32 "We see then, that a progressive rise of rents seems to be necessarily connected with the progressive cultivation of new land, and the progressive improvement of the old: and that this rise is the natural and necessary consequence of the operation of four causes, which are the most certain indications of increasing prosperity and wealth--namely, the accumulation of capital, the increase of population, improvement in agriculture, and the high price of raw produce, occasioned by the extension of our manufactures and commerce.

169.

Freedom is equality in exchange. It is new and young. It pays profits, yields dividends. Only in recent centuries, you men of business have won it--so much of freedom as we have--by vitalizing, under the rule of contract and exchange, of profits and values, the ancient arts and crafts almost wholly dictated and destroyed by governments of old.

You, in modern times, have raised the values and the length of lives that governments were not yet powerful enough to absorb or destroy.

It is crucial now that you discover how and what you have done and that you extend your value-building, your money-making, free enterprise into the field of community services and public capital the political administration of which is set to devour the whole free economy.

Free enterprise creates [its] own values. Property is organized and administered by its owners for the benefit and advantage of others who enjoy its services or products and who give profit and value in turn for value received.

Political administration, without free contract and exchange, creates no values. It begins with the seizure of property and prevention of exchange and it ends when there is no more to seize or prevent. It rests upon ancient habits of thought and the strange misconception that government can be miraculous and divine--that it can transform seizures into services--that it can give to a people more instead of less, far less, than it taketh away.

In the world of business a single principle, and not its adulteration, prevails. Men most succeed who most observe and practice the Golden Rule of mutual, market-measured exchange wherein each has equal authority over his own and each serves others according to his abilities and his possessions--and his freedom from government so to do--and is accordingly served and profited in return.

This Golden Rule is what marks off services from servitude, freedom from oppression, society from slavery. Most of us are unconscious of it. Few give it any credit for the freedom that we have. Fewer still understand how it operates at the very foundation of community life through the institution of property in land. This basic institution of civilized men gives them whatever freedom they have alike from raw anarchy on the one hand and the tyranny of a totalitarian state at the other extreme.

Property in land is nature's only gateway from barren tribal nomadism into the blessings of civilized community life. Proprietors are the first established public officers, the first to function. Once their particular titles are established, there is a substitute for violence or fraud, an alternative procedure for the allocation and distribution of community sites and resources and thereby of all the community services appurtenant to them. For this service of distribution by the equities of contract, of lease or sale, each proprietor is recompensed by current ground rent or by prospective ground rent capitalized at the point of sale. And the public is best served, as the proprietor is best recompensed, by each site falling to the highest bidder, for he it must be who can make it most productive and thus most enrich the common markets and enhance the common wealth.

This identity of the private with the public interest was perceived by Adam Smith and the French economists more than a century ago but is today practically unknown--obscured by the Medieval notion that not taxation but rent is the cause of poverty and war.

The contractual, and thus non-political, distribution of community sites and resources is at once the basic community or public service and also the foundation security without which no free enterprise or any other freedom from governmental domination can be maintained.

But the community proprietors, until they are organized

178.

Our feelings, emotions, therefore are colored and determined by what happens to us. Now action is always prompted by feeling--motion by emotion. Hence all actions that spring merely from feelings are but necessary and spontaneous reactions to the facts of circumstance and environment. All such action is creature action, imposed from without, mere animal tropisms, not determined from within.

But feelings, as spontaneous reactions--as mere reflexes--can be held in abeyance and automatic action delayed. (This is called self-control.) During such interval between action and reaction, stimulus and automatic response, contemplation takes place (con-tempo), reflection intervenes--reflection upon the facts instead of action under them. Such reflection is called intelligence and the action that follows it is not mere tropism, not mere animal reaction, but intelligent action guided by the unique, the creative, mind of man.

Let us therefore not merely react but contemplate and reflect upon the large, the fundamental facts and circumstances, the realities that impinge continually upon our collective lives:

As there are only two kinds of quantities, plus and minus, so any large or small number of men can act towards one another in only two ways, the way of peace and the way of war, the way of cooperation, freedom and life and the way of coercion and conflict, slavery and death. These two ways are mutually and conversely exclusive. Hence the more that men do of the one the less they can do of the other. The more they engage in voluntary cooperation, in the free process of contract, the more they disengage themselves from the processes of coercion and conflict, of government, slavery and war. Let us therefore examine with care the process of freedom, of contract, that draws men together in peace:

Voluntary, real contracts are performed by exchanging. There are only two parties to any one exchange and each party is both giver and receiver, exchanger and exchangee, and the thing exchanged is always a kind of reciprocal energy called services, and services are always with respect to some person or some object or thing (called property) and consist in each party transferring to the other for a limited or an indefinite time his socially accepted ownership or authority over the person or thing, over his right in himself or in other persons or in any property or thing that is by common consent treated as an object of exchange and therefore the subject-matter of contract.

By extension of this free process of contract a free society develops among men. Conversely, any restriction upon this free process, as by taxation, restricts the development of society and any destruction of it, as by war, destroys the society itself. Society creates and distributes without violence its own revenues and goods. it does not impose taxation and therefore cannot engage in war. It does not maintain itself by force but only by means of the creative and productive functions that it performs. The taxing power, the war-waging power long surviving [?] among men, is the only agency of force, slavery and war.

It may be wondered why or how the war power survives when Society has such mighty potencies for peace. We need but reflect that government at any time is only that portion of the total human energy (power) that remains outside of and not organized into the social system of contract and exchange. It owes its persistence to the partial and incomplete development, the under-development, of Society. In antiquity there was but little human power in the world, and of that little hardly any was functioning creatively by the golden rule of exchange. What power there was was almost all government power. Hence human life was chiefly predatory on its environment and consisted almost entirely of slavery and war. Man was predatory on the riches of his environment and government predatory on him.

But modern man, owning himself, and in large part owning his own services, has so expanded his system of free contract and his physical technologies that his productive power is enormous and the fund of human energy correspondingly increased. Government, however, still carries on as of old but now with the enormous resources of Society under its coercive command. We have bigger budgets and bigger wars because we have had, until lately, a developing and a growing society.

All this suggests the return of absolute sovereignties, their consolidation into one dominant power by conquest of arms or the propagandists' vain dream of their surrender to a single world sovereignty by conquest of men's minds. Governmentalism seems arrayed against man as an irresistible power. Its forms of thought infect all thoughtless minds.

The ancients knew government and its nature well but they had little vision of the Society to come. They called government "society" and had high Utopian dreams of freedom based on slavery just as vainly as we dream of life and freedom under an indefinite expansion of political operations and the sovereignty of a super-state. We are almost as little conscious of the processes, the functions, of our Society as ancient man was of the physiology of his body. We react unintelligently to the evils that beset us, embrace the evil for the good and mistake the good for evil just as to the ancient ascetic, the most essential was most depraved .

But evolving nature has resources and alternatives deeper than the surface consciousness of men. Our Society has never been much more than half born, the contractual technology much more than half applied. Its growth has been empirical and it has been consciously employed only in the performance and exchange of such services as men have separately and apart from one another such as food, clothes and private houses and the like. Here it has given us miracles of creation, such abundance as never was or even dreamed. All such things, up to the point of their being used or consumed by those who purchase them are capital goods and services never owned for the owner' s own benefit or sake unless or until he becomes not alone the owner but also himself directly the consumer or beneficiary of them. Such private capital is social-ized in the sense that it is administered contractually under the jurisdiction of the public markets and its beneficiary is the Society as a whole in such proportions as its members contribute to the exchange system whence these benefits are drawn.

But this private capital can [not] function alone for in addition to the services and goods that come to be separately and individually enjoyed or consumed and complementing them, there is perhaps an equal quantity of services and goods that men must have in common with one another and cannot be separately had or enjoyed. Such services and goods are community or public capital for they attach to the place or community itself and not elsewhere, and can be enjoyed only by those who occupy or in some manner come into the community itself. This community capital, this public service, is primarily not a government or political process but a process of serving by protecting the inhabitants against violence or other non-contractual process. This is a service that attaches not to the inhabitants who may come and go but to the place itself,which is called a community because it affords to its inhabitants not any separate or individual but a common defense. This primary service being provided, unless wholly canceled by some counter action of contrary effect, makes the place desirable to occupy and use and there springs up a need to pay for these common services in proportion as they attach to various portions of the community. If they are paid for to a conqueror or other political authority payment will be in the manner of taxes and the amount paid will be determined arbitrarily and taken coercively without benefit of contract or consent or any necessary check short of actual or threatened revolution either by violence or at the polls. And revolution is only what it says it is--a turning over again of the personnel within the wheel of arbitrary power.

But if protection of the community be provided not by victors at arms or at the polls but by the community proprietors who as such are alone qualified to proceed by contract and consent, then they will receive from each admitted occupant the full market value of all the community services and net advantages appertaining to his occupancy. If he pays any less the owner will find another occupant; if he must pay more he will find another owner. The owners thus distribute socially the net available community advantage obtainable by the occupants. As to services and advantages not provided by them the community owners can perform none but this service of social distribution and have recompense accordingly. If they do themselves supply further services then the market value of these further services will be in like manner recompensed to them. So far as the operations, good and bad, of the political authority result in any net advantages the community owners will be recompensed not for performing but for distributing them, but only so far as their automatic distributive function remains unimpaired by the political power.

We thus have in all the freer part of the world, where there is yet some limitation on the political sovereignty, an automatic distributing agency whereby community sites and resources and all community advantages are constantly being distributed into the possession and use of the most productive occupants who can most enrich the common market, for these alone, in the long run, can afford to pay the full market rent or price. Thus the "selfish" interest of the land owner is perfectly parallel with the interest of the producing and exchanging Society as a whole. Property in land then serves as the social alternative between possession under the insecurity of unorganized force on the one hand and the political tyranny of organized force on the other. Their tolerance of this institution, property in land, is the Achilles' heel of the ancient sovereignties. They are tolerated today chiefly because no other agency for maintaining order and providing "essential community services has been known, no known alternative to the autocratic and, bureaucratic conduct of the public services (other than their distribution) and creation of public works. But when the distributive services performed by land owners come to be consciously known then they or their successors will then organize and capitalize their business on the basis of appraised values and proceed to produce as well as distribute the protection and other common services of their communities.

By themselves providing public services they will doubly serve their populations, once with the negative service of relief from taxation and other arbitrary processes and again with the positive advantages of providing and distributing essential community services to them. Every advance in this manner will command public gratitude and applause and step by step take the ground from under the feet of the arbitrary political organizations. Beginning thus at the community level the free contractual Society will evolve by extending its creative function and hence profitable technique into the whole field of the common services. And the public capital that wastes away under political administration and is now maintained only by rapidly increasing exactions out of productive private capital will come into full productivity no less than that of the then emancipated private capital and the total productivity, the real income of the Society will beyond all computation rise. So will it become incorruptible in peace and unassailable in war.

It is worthy of note that when sovereign powers establish themselves by conquest or by a revolution of blood they brook no parties as domestic rivals nor tolerate elective revolution in office and power by the poll. To inaugurate their slave state by some subtle intuition they first destroy the institution of property in land, the first and only firm foundation of freedom and social order. And in our ignorance we approve of this as "social gains" and so by our applause invite our own "liberals" so called to bring the same calamity on us. The totalitarian objective in all its forms is to destroy the free ownership and administration of property--the process of contract and consent. And in destroying security of contract and consent in the ownership and possession of fixed properties they destroy all possibility of peace and security with respect to anything else, thus demolishing the very foundation of all social order. It is in the same spirit and with the same ignorant applause that our "liberals" single out the owners of land and other immovables for special legislation against participation in the processes and the equity of freedom of contract. Thus is our freedom imperiled and their totalitarian state advanced.

If we must be plunged into war as the alternative to slavery then we must fight that war to the uttermost and employ in it all the great power of human and material resources that under our relatively mild political institutions we have found it possible to achieve. But if we do not examine and understand and thereby more effectively employ not the political but the Social institution under which we have so richly thrived, we must in the aftermath lose for ourselves in victory all that we ever feared to lose in defeat.

Let us begin with a thorough examination of our relations towards one another with respect to the world at our feet, the social institution of property in land. It was not always a social institution. Less than two centuries ago it was the very fountainhead of political power. With the passing of royal absolutism under the pressure of nobles and lords the political prerogatives of taxation and war fell exclusively into the hands of those who by force held dominion over lands. They were tax lords and war lords, and masters of the serfs or slaves whom they owned by force as they owned the lands to which these were bound. Such were the lords from whom present-day [land owners] inherit prejudice and opprobrium but none of their political or other coercive power. These eighteenth century [lords] had no contractual relations with the individuals whom they taxed and ruled. But before that century closed there was such agitation for taxation with voting instead of taxation without voting that through the reform laws in England and similar extensions elsewhere the power to tax was voted away from the lords and into the commons where in England and in most "free" countries it now wholly resides. This left land owners no recourse for revenue but to the open market and none but voluntary recompense for their services in making a social and contractual allocation of land to men instead of their former political and coercive application of men to land. Had enough of them in those days had the wit of a Wyndham or a Locke they would have employed themselves and their now honest revenues to provide community services and thus protect the inhabitants of their land from taxation and other infringements of their freedom and productive power. Their honest revenues thus would have risen with the increasing freedom and productivity of the inhabitants and under a proprietary instead of a political administration England in the twentieth century might have re-enacted in modern dimensions the glory that shone through Alfred in the tenth. They failed in their knowledge and in their opportunity and so they are brought down with all England to their present sad case.

The development of present day property in land out of the system of tax lords, war lords and serf lords of the eighteenth century, so little attended to by historians, is probably the greatest single step in the evolution of Society that the world has ever seen. But it was only a beginning. It re-established the frame [?] within which Anglo Saxon liberty flourished and bloomed [?] under Alfred while all other Europe was barbarous or enslaved until it was stamped out by the Romanized Norman power under a deepening bondage in which liberty now has all but totally expired. America has trailed the same line. Some elements of the Saxon institutions took root on our shores but the "Fathers," taking no note of them, founded our Constitution in fear and mistrust

of land to men instead of their former political and coercive application of men to land. Had enough of them in those days had the wit of a Wyndham or a Locke they would have employed themselves and their now honest revenues to provide community services and thus protect the inhabitants of their land from taxation and other infringements of their freedom and productive power. Their honest revenues thus would have risen with the increasing freedom and productivity of the inhabitants and under a proprietary instead of a political administration England in the twentieth century might have re-enacted in modern dimensions the glory that shone through Alfred in the tenth. They failed in their knowledge and in their opportunity and so they are brought down with all England to their present sad case.

The development of present day property in land out of the system of tax lords, war lords and serf lords of the eighteenth century, so little attended to by historians, is probably the greatest single step in the evolution of Society that the world has ever seen. But it was only a beginning. It re-established the frame /?/ within which Anglo Saxon liberty flourished and bloomed /?/ under Alfred while all other Europe was barbarous or enslaved until it was stamped out by the Romanized Norman power under a deepening bondage in which liberty now has all but totally expired. America has trailed the same line. Some elements of the Saxon institutions took root on our shores but the "Fathers," taking no note of them, founded our Constitution in fear and mistrust of Anglo-Norman tyranny but in the frame and panoply of Republican Rome on the eve of her lapse into empire under imperial insignia and forms [?].

Property in land has never had any honor among us. We have held to the primitive conception that property in anything consists in its physical possession as a thing used or consumed by its owner notwithstanding that our whole development of free enterprise through the administration of property as capital is in contradiction to this. All our homestead and other political policies have held land in this aspect [?] while our social development has been in the direction of large holdings under leasehold administration not only in the wide fields of forest and mine and in agriculture but also in the great concentrations in metropolitan areas where leasehold administration and separate ownership of improvements has become the very general rule. Then there is the concentration of productive capital in housing projects, planned communities etc. in which community services are provided for leasehold occupants on a community wide basis just as in hotel communities water and lighting and watchman service, entertainment, music, works of art, are provided for the occupants in general in addition to the accommodations, properties etc. specifically assigned to particular occupants. Society is quietly and of itself slowly extending its proprietary and contractual jurisdiction into services more and [more] general to properties of wide extent owned by a single corporate or similar body yet occupied by many persons and the corporation itself most often owned by a very large number of persons holding easily negotiable undivided interests in the whole.

180.

Man is born an animal and animal he remains--unless or until his spiritual or creative nature is awakened. Until then he remains a creature, a mere beggar of life prepossessed with its evils, an existentialist aspiring only to exist.

The Reverend Thomas Robert Malthus well represented the unspiritual, the uncreative masses of men whose whole nature was depraved and whose sole destiny was death--save for a meager elect miraculously salvaged by divine favor in this world as in the next.

Out of such depraved conceptions this professed man of God formulated a monstrous doctrine, the Malthusian Theory that man is a mere breeding machine like the codfish whose progeny, but for "slaughter of the innocents," would devour all subsistence and be self-extinguished.

Under this theory man does not become a creator but only a destroyer; even the community-living man is as the nomad, a predator upon nature not building and enriching his environment but despoiling and exhausting it.

The author of this theory was a very learned man, a philosophic defeatist whose prepossession of evil far outweighed his knowledge of good. He lived through a third of the world's greatest century of production and exchange in the land most central to it, yet he was void of vision that free contract was the rational practice of the Golden Rule of mutual even if unconscious love, through reciprocal service; the creative and thus spiritual relationship among men free from dominance or subservience, rulership or servitude, by any party so engaged. He could not foresee that the bounty thus spiritually created would not impoverish or deplete in any part but would within that century alone so lift and richen the lives of men as to more than double their span and their rate of replacement accordingly decline.

Not only Malthus alone but his contemporaries and purblind successors, the Classical Economists, including the eminent J. S. Mill, also lacking this vision, fell easy victim to his neatly phrased animalism that denied the spiritual and creative powers of a contractually related and thus spiritually emerging, as against a politically dominated and coercively regulated, mankind.

Nor is Malthus without purblind successors even to the present day. His contemporary, David Ricardo, reinforced him with his so-called Ricardian Law of Rent based on non-existent premises and expressly limited to agricultural tenancy but which became widely accepted as of general application and thus encrusted along with Malthus in the tradition of academic authority. And the social science professionals, smug in their traditions, still accept Malthus "in principle" almost to a man, imputing none but vague and nebulous qualifications. And as for Ricardo they are blinded by Mill's dictum that his 'law' is the pons asinorum of political economy.

Ricardo, following Malthus, considered none but a predatory relationship between men and their environment. He premises that for agriculture there are "natural and indestructible properties of the soil" and that those properties differ, as between different lands, from those that are of the highest productivity to that of the poorest land in use. He assumes that upon the poorest as well as the best land both labor and capital are employed and that the poorest land does or at least could have the same application of capital and labor as any other land, including the most productive. He further assumes that all supposedly equal applications of labor and capital on the poorest and on the best land yield to them equal returns, any excess above the poorest being due to superior properties of the soil and taken by the land owner as rent. Hence upon the given assumptions, none of which are correct, the rent of any land is the difference between what a given application of capital and labor produce from that land and the produce of an equal application of capital and labor on the poorest land in use.

In the first place, man does not live by bread alone. A purely extractive agriculture is no more a criterion for a universalized exchange economy than hunting and fishing is a criterion for agriculture. Second, there is in fact no such thing as equal application of capital and labor on the most highly productive land and the poorest land in use. In the system of exchange that distinguishes society from a tribe a diminishing proportion of labor and capital is applied directly to land--engaged in the transformation of mere land (the natural elements) into wealth. Yet this smaller proportion is highly discriminate in its application. The most advantageous and fertile farm sites are most improved, best stocked and most worked; and even the crudest agriculturist discriminates between his best and his poorer fields. But labor and capital are far more extensively and intensively applied in the further transformation of things that have ceased to be land and have become raw materials or capital goods of some kind. Upon the lands occupied by these secondary (post-extractive) industries there is not an equal but an enormously greater concentration of labor and capital improvements and facilities, both private and public, than upon agricultural lands. And the most intense concentration of labor and capital improvements on land is found in the great marts of trade and finance, where the services performed are exclusively those of exchange, not incorporated in any"produce" at all, yet create and command the highest of values. For in such places the mere distribution of sites, or of the use of them, has the highest social utility and receives, accordingly, its highest recompense. Than that "an equal application of labor and capital" is made to "the best and to the poorest land in use" there could be no wilder dream; yet our author holds (page 161) that rent is gauged by what such fantastic equal application "could" produce--by a universal measure that in fact never exists.

Ricardo, following Malthus, considers none but a predatory animal relationship between men and their environment. He assumes that a civilized community is formed by a number of invaders seizing the best land as animals do and forcing all successive comers to subsist upon the fruits of lower and lower yielding land, subsistence thus diminishing with population increase. However, many late comers choose the alternative of yielding up to the earlier all the value or advantage of using good land above that of the poorest land in use. The late comers supposedly are forced to do this by competition against one another for the lowest returns and all except land owners becoming poorer as their numbers increase.

Third, the same quantities of capital and labor are not equally productive on any land, nor do all accept the least that any can obtain. Competition secures for each the market equivalent for what it supplies, and equal quantities of capital and labor no more contribute equally to the market than do equal numbers of men or individual men. Competition tends to relegate the least productive capital and labor to the poorest sites and to put the most productive in the most advantageous, thus most enriching the common market for all. For only to the most productive are the services of competing landlords in the allocation of sites of greatest market worth. And without this possession by a market transfer instead of political decree they could not in security produce.

Taking man only in his creature aspect, as a mere consumer and destroyer of such subsistence as nature supplies, Malthus was right. Like all animals the animal mankind, the unregenerate man, is a beggar of life, not a creator of it. He had no conception of a spiritual mankind rising out of its animal mendicancy by practicing the Golden Rule of non-coercive exchange, each one in this spiritual relationship creating subsistence for many others and being in turn multiply served, thus extending human life progressively towards its immortal dream instead of merely reproducing it in starved and shortened lives. On such ignoble premises did the Reverend Malthus set up his despairing theory of death and degradation for the vast majority of mankind. He assumed that men must always increase their numbers more rapidly than their food--unless very severely restrained. Accordingly, he sets up a simple mathematical expression of two quantities one of which is indicated to increase slowly and the other very rapidly. He calls the one subsistence and the other population, and gravely propounds such imaginings as scientific and mathematical proof that the masses of civilized men have no natural alternative but increasingly to breed and to die.

And David Ricardo, following Malthus, dreamed up his weird theory that capital and labor do not produce but only appropriate and consume what nature affords. He holds that land owners exercised arbitrary power over the inhabitants of their lands (which they did indeed do until about Ricardo's time, since they alone were government) and would therefore grant or withhold its use at will. Thus politically controlled, much good land was held out of productive use and both capitalists and laborers, thus deprived of opportunity, were forced to bid against one another for the possession and use of what remained. This was supposed to reduce labor and capital to acceptance of the least portion of the produce upon which they could continue to exist, all production above that amount being exacted by the political authority (land owners) in the guise of rent. This was the frame [?] of affairs in Ricardo's day, especially in the rural regions. In the cities and towns the landed authorities had largely lost or abdicated their political power of taxation and war. Having lost their coercive revenues they could no longer subsist by monopolizing but only by distributing their lands to productive users for such rents as would be voluntarily offered and paid. For revenue they were reduced to vying and competing with each other for tenants while tenants competed against each other for the most desirable lands. Rent thus became determined by the market instead of arbitrarily as tribute or taxation under the former political administration of land, and any validity the Ricardian theory may have possessed under political administration was lost with the passing of that regime. This doubtless was the reason why Ricardo limited the application of his so-called law strictly to agrarian lands. A further limitation was that his 'law' could operate only under the condition of there being equal applications of capital and labor upon all grades of land from the most desirable to the least desirable land in use, thus making his 'law ' dependent upon a state of affairs that never in fact exists, for even the most primitive agriculturist must discriminate in favor of his most desirable and against his least desirable fields.

Malthus and Ricardo were contemporary in a period of transition of the political power--the power to levy taxes and wage wars--from landed proprietors, including kings whose original and primary revenues came from their ownership of lands, to public authorities established by conquest of arms or by the 'democratic' suffrages of those who accepted or elected them. Nature at the social level was in the midst of a mutation of land ownership out of its age-old coercive political administration into the proprietary and contractual, the non-coercive administration over sites and lands--the mode of administration potential ultimately to supersede the political as society evolves.

Mankind, like the individual man, is but little aware of its own development and growth. Conscious thinking in general is imitative, traditional and superficial--especially that which is academic or scholarly. Historians, 'social scientists' are blind to the significance of the events they record, such as the 19th century separation of property in land from the political state and its gradual development into a non-coercive agency of public administration through its contractual distribution of sites and resources and thereby of all the services and advantages in any wise either appertaining to or inherent in them. With minds focused on past practice the Classical Economists were and remain unconscious of the fundamental change. They still regard land ownership as privileged and monopolistic, somehow tainted with coercive practice and look upon political measures designed to destroy it as "social gains."

Yet the development of organic society, a social life form, is presided over and directed by an unconscious mind that directs the pattern of its structure just as development of every embryo or maturing organism is determined and directed by its inherent unconscious mind.

The valid science in any living field is that which uncovers the hidden rationale that guides the development of every part and prescribes the pattern of the whole. And the valid thinking is not that which is brought to but that which is drawn from and thus reflects and parallels the development that it accurately observes.

Human society, even at its least maturity, is the supreme organization of life. The units of which its organization is composed are the end-product of the countless ages of biological evolution which is recapitulated in the development of each. Their integration into an organic society lifts them out of the random chaos of conflict and coercion into the mutual satisfactions of reciprocal relationships. This mighty artistry manifests at its highest the spirit and mind, the Creative Divinity, of the universal cosmos, to become at one with high understanding which is the supreme attainment and exaltation of the individual mind.

181.

The proper study of mankind is man. -- Alexander Pope

Everything In nature above the single electron or quantum of energy is composite and organized. This is what makes science possible--the fact that all things are organized in definite relationships that make them organic and in that sense alive.

Nature manifests herself in forms of organization--in forms of life. When any form attains internal stability, Nature treats it as a unit for organization into higher and more complex forms. This is Nature's progression.

Man is a unit composite of myriad living cells which are themselves composite of organized molecules and atoms. He has the most complex structure and the greatest internal stability against the widest range and variety of external conditions. He is therefore qualified and, in fact, is being organized into a still higher structure and relationship called Society, or MAN. As the proper study of [men] is the structure and organization of the individual man, so the proper study of mankind is the structure arid organization of Society as a high form of life.

Man is the longest living animal. His perfection depends on the lengthening of his days. Meantime, he must die and be renewed in successive generations. So it is with man as mankind. The growth and perfection of the social organization, of the Society of men, depends upon the lengthening of its term. Until it practices completely the law of its own life and being, it must die and decay, to be renewed only in the birth and dawn of a new age and civilization out of the intervening dark.

Societies live and grow by the organic interfunctioning of their individuals and parts. Such functioning is called service. Its mode is called exchange. By this mode, the peculiar genius and capacity of each becomes the endowment of all. Thus civilizations arise.

Societies die and decay by the dis-organization or mis-functioning of their individuals and parts. The mode of this is called coercion, compulsion and force. When it is permitted or perpetrated by the state, all peculiar genius and executive capacity is repressed, service by exchange becomes impossible, social bonds disintegrate and reciprocal service degenerates into attack and defense. Thus a war-like state is maintained and barbarism nourished in the heart of an otherwise civilized community.

The emergence of man has been by slow advance from a state of dependence on the bounty of nature to a state of mutual dependence on the bounty of each other through services exchanged. In the social primordial, this dependence was unrelieved; man could live only where conditions were mild and fruit or game almost fell into his hands. Even through the pastoral and into the primitive agricultural state, men could not exist in large numbers except in fertile valleys or plains with climate so mild that only a minimum in food, clothing or shelter was required. Under these favoring conditions, and with only a moderate advance in agriculture, it became possible for two men to live on the labor of one, and thus a slave-state could be maintained. Moreover, the great fertile and unbroken terrains best favored the support and the marching and marshaling of armies under kings and emperors of war. Until man learned how to trade and practice the efficiency of division of labor through exchange of services, such were the only geographic and social conditions under which large populations could exist.

Ancient Mediterranean and European culture was founded on this, their societies highly stratified and their masses enervated by climate and degraded by servitude. Hardy tribes from the more rigorous north penetrated southward, adopted the slave technique, and there were born first the brief, exotic flowers of decaying Greece, then the system of iron order that was Rome, and at last the death and darkness of a thousand years.

The rugged, less fertile lands of the north could support only sparse, primitive populations, nor could large armies be maintained or maneuvered to enslave them. The land would not support two by the labor of one; nor would the labor of both support them separately and apart, but only as they gave each other cooperation and mutual aid in the basic essentials of life. The north was no place for the anchorite or pariah. Small village groups were the rule, and high activity, industry and frugality were imposed, not by the dominance of masters but by the natural conditions themselves. Nature herself drove men out of slavery and into a rude freedom that only mutual aid and dependence upon each other could sustain.

This free but rigorous relations bred rugged character and social virtue that were impossible among slaves. Moreover, the variability and vicissitudes of climate and other natural conditions stimulated to higher activity of all kinds and bred a versatility of physiological adjustment and capacity for external adaptations and improvements that only such changing conditions could require and bring forth. This was not without its psychological effect. Confidence in personal power and individual effort arose in contrast with the tropic fatalism of long and hopeless submission. Qualities of enterprise and leadership were encouraged and rewarded, both in migration and in war. Personal power was sustained more by the homage of the brave and strong than by submission of the timorous and weak.

The great conquerors and builders of all lands have usually descended from the north. The age-long oriental tyrannies have been southern fatalistic submission to northern dominance and competence. The historic turmoil of Europe has been its writhings and resistance to the slave technique of the south being alike imposed and resisted under leadership of northern race or extraction. Charlemagne and William were of northern breed, and the Corsican was a waif of the crusades.

The world holds two distinct types or tendencies of social organization. Its conflicts arise from their incongruous blend. The slave technique and despotic relationships indigenous to the fertile south are vastly the older. There are no such antiquities of the north. It is probable that all life originated in sunny lands and men moved to the inclement north only by slow migration---perhaps as they preferred the rigors of the north to the despotisms of the south. This would set the social organization of the north later in time just as the new conditions would set it higher in type. Socially and politically, the south was old and hardened before the north began; and in Europe, there was in the north little more than a tendency towards social integration under rude freedom without compulsions and under relationships of specialized service and mutual exchange.

It was a virility from the north that suckled on the she-wolf of the seven hills and rose to a fierce and independent vigor that, corrupted by tribute and slavery, gave Rome her dominion of the ancient world. In her the ancient despotism culminated and in her collapsed against the barbarian wall. The civilization of the north had not developed; it was still only a tendency. As its hordes broke over the south, it could only destroy. In the ensuing dearth and darkness all over Europe it began slowly to build anew its small, free communities under personal leadership and protection and held together by voluntary ties of mutual service and obligation. Thus, as a necessary convenience and by spontaneous desire and consent, the simple feudal and manorial communities arose so that men could make their livelihoods under the protection and security and by the aid of the public services that only community life and organization could afford.

The small community, with its voluntary engagements and obligations, was the all unconscious gift of the northern barbarians to the post-Roman reorganization of the world. Always theretofore, public authority was instituted to govern and to rule by force and seizure and without consent. Here were public authorities pledged to protection against force and seizure. And in exchange for this and for other community services, the inhabitants of these communities voluntarily rendered up to their proprietors and public authorities their feudal and manorial dues to an amount fixed by custom and agreement or by the market, as we would now say of rent.

These small communities, with all obligations, both public and private, based on service and consent and carried out by exchange, were the nuclei of an authentic society--the integration of individuals in a free community relationship of public and private responsibility and exchange of services without coercion or force, but all things for value received. They were like biological organisms fundamentally capable of symbiotic relationships and integration into higher and more complete and complex forms such as the higher animals and man. They were like individual men who, though fundamentally social and symbiotic towards each other, have not yet learned to enter fully into these relationships in preference to the parasitism and conflicts of slavery and war.

Small wonder these new-born babes of the social yearnings and needs of men could not grow up into relations of brotherly service and love. They came under bad influence and example. Individuals still loved to exercise destructive power---that was their animal endowment---and the Church, after earning its authority as spiritual exemplar, had put on the "garments of the Empire," endorsed its technique of tribute and enslavement and itself practiced government by deception and force. The lords of these free communities, not content with protection and service to their own, set out to subdue one another and enslave or, generally in the north, to hold their people under the ransom of tribute and taxation.

It is a long story how they fought and "liquidated" each other until the communities were (finally) bereft of all their original freedom under the iron rule of military lords, who used them only as instruments of war and gave the essential feudal relationships a horrid repute extending mistakenly into modern times.

As these petty despotisms were captured and consolidated, the European national states arose under the equivocal headships of Cardinals and kings, with the kings finally in chief command over the persons and properties of their populations. Thus, the small communities of service by exchange failed to practice the exchange and service relation with each other, as among their own members, and did not integrate into any general society under that relationship. The northern spirit of social organization by service and exchange became perverted by the southern spirit of servitude and force, and modern national states raised themselves upon the Classical foundations of tribute and slavery, taxation and war. But one small part of Europe was unique as to the manner and order in which this development took place.

At the beginning of the Christian Era, there was one outpost of Rome inhabited by a race of barbarians of relatively southern extraction, probably in part at least a Mediterranean race, and thought by some to be of Punic origin. At any rate, they were of a racial spirit more easily subdued and enslaved than that of the north. These were the Britons, probably descendants from Mediterranean exiles and slaves from the tin mines of Cornwall. The Romans in Britain placed them again under a subjugation from which they never in the least emerged through the three centuries until the legions were withdrawn to bulwark the nearer defenses of the tottering Empire.

But in this fifth century, some of the Germanic tribes, instead of descending on the Roman confines, moved westward and crossed the North Sea to British shores. These were the Angel-ish, Saxon and Jutish tribes, whom Caesar, Tacitus and Suetonius all described as having the least knowledge of the laws and institutions of Rome. They moved into England to stay. The miserable Britons that the Romans left behind, except in the west, they slew or enslaved. But they ignored the Roman cities and towns with their fine houses, temples and baths and set up their crude, small communities in the rural wilds. Their enslavement of Britons seems to have been rather by exclusion from communal rights than by forced labor, and slavery tended to die out rather than to grow into an institution upon which a master class would depend.

The Saxons had developed no technique for the regimentation of slaves. They did their own working as they did their own fighting. They were loyal to leaders for their rude valor and virtue and followed them by choice more than compulsion and command. They would not submit to personal power and dictation. Even crimes were proved and punished only by community condemnation and consent.

Insulated alike from the Roman tradition of seizing personal power and the slave religion of present submission for sake of a future emancipation, the Saxon villages slowly evolved in the free pattern set by social habits and instincts acquired under northern geographic and climatological conditions. The manorial communities grew and developed upon the basis of protection and other services rendered by exchange and under obligations fixed by accepted custom or contract .

Under this economy, the proprietary lords of the lands had no political power to tax or of personal rule, but were obligated to provide and maintain the customary public services and rents that those who held under them rendered and paid. The lord's proprietary interest in his revenues prompted him to support the agricultural and other production of his community by maintaining peace and civil order; to preside over justice (or revenge), either personally or by his paid subordinates, in accordance with community desires; to maintain public facilities in roads and bridges, and to guarantee the common rights in the forests, pastures and streams under his ownership or jurisdiction that were not held in private possession and to him sources of rent. The lord, with those employed by him, took substantially the form of a modern business organization in which the owner administers all the property, supervises his employes, and out of the sales returns on their combined services or products maintains his employes and his properties and in the profit or surplus remaining finds recompense for his own administrative and supervisory work. The lord, in effect, provided and sold to his people all such services as appertained to the land and served the common needs of his community, and the rent coming to him by custom or contract from occupancy of his community lands balanced all his costs and expenses, including his own labor, as a going concern.

It is not urged that this was carried on with all modern refinements; but, however rude, it was in principle the same. But in some respects it was superior. Not the Lord nor any under him had power to tax and seize, nor were tenants bound to the land.1

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1. That came centuries later for their protection against eviction by predatory lords under Norman power and Roman tradition. It resulted, of course, in a deeper enslavement that continued until property became more general and Norman tribute could be better taken by taxation than by compulsory service.

And just as tenants were under no compulsion of their lords, so the lords were not tributary to any king. Kings they had, to be sure, but they were chosen by the lords for their service, paid by them and by their authority alone prescribed and proclaimed the rules and regulations for their common conduct and performed the services necessary for their common security and protection.

The need of kingly services and protection became acute with the coming of the Danes. They came as the Saxons had come with fire and sword, but they also were of Germanic stock. The Saxon resistance resulted in treaties for the Danish to hold the eastern regions occupied by them, and here, in accordance with their racial instincts aided by the Saxon example, they adopted the same type of community organization and service as the Saxons before them.

As there were many tribes and regions all needing protection from the remnants of Britons on the west and the invading Danes on the east, so there were many kingdoms and kings and internecine wars; but the Saxon kingships did not include any right or accepted power to seize property or levy taxes. Life was rude in a rude age, but the form and spirit of the social organization did not encourage or admit of forced labor, tribute and taxation or slavery in any guise. From the Roman evacuation at the beginning of the fifth century, the social development that took place in England was free from the power and influence of southern despotism for nearly six hundred years. During this period, in the very midst of the Dark Ages of Europe, in this isolated isle there grew up a civilization, indigenous to its northern peoples and races, that climaxed in the character of Alfred and his almost golden time.

Out of this prosperity and the humane spirit of Alfred the practice of buying peace from the Danish invaders grew up, and under the brief supremacy of Canute took the form of tribute, laid chiefly on the earls and lesser lords. But the devout Saxon Edward soon after rescinded this taxation as a device of the devil.

However, this example by the Danish marauders, and the general Norman influence that was seeping into England, by intermarriage and otherwise, excited the covetous ambitions of contending earls to attempt the levying of taxes on their tenants, so that under Edgar, [?] the Saxon spirit of personal freedom and aversion to tribute again arose and by national enactment it was forbidden that any lord should take from a freeman any more rent than he was willing to pay. But this prohibition seems to have been ineffective, for the earls continued fighting at their tenants' expense until their much divided house almost tottered into the hand of the Norman William.

From this point on, the formation of a despotic state in England paralleled the erection of nationalized kingdoms on the Continent. But in England, a social growth and tradition of six hundred years so resisted the new Roman despotism that it took yet four centuries more (Tudor Henry VII, 1485) for its full weight to be imposed. Resistance to these centuries of Norman, Tudor and Stuart encroachment on life and property is what brought forth Magna Charta and all the so-called charters of liberty which we suppose to be the origin of Anglo-Saxon freedom and the foundation of the pseudo-democratic "liberty" now vanishing from the earth. The truth is that the Normans Romanized the Saxon social system from one of service and exchange into one of servitude and taxation, and the charters, one and all, were but the desperate defiances or cringing petitions for relaxation of the enslaving power.

The power to command and exact tribute or taxes is only dimly seen as being identical with ancient forced labor and personal slavery so far as its ultimate and economic effects are concerned. As the ancient wise and learned believed in slavery then, so they accepted taxation in later times.

In most of Europe this transition was imperceptible. But in isolated England, in the centuries between the early Roman rule and its return under Norman banners, there grew up among people of social instincts and habits molded by northern conditions a free pagan society of service, obligation and exchange. This social polity was the last to assimilate the despotic ideology of Rome. Its men were freemen and not hopeless slaves grasping at hopes of future salvation. Though the missionaries of Rome pressed them from east, west and north, in this land alone it was the kings who first gave them ear and saw in the new Valhalla surer promises of a continuation of the joys of life. As these free pagans were the last to accept Romanized religion, so were they the last to submit to Romanized politics. From the Conquest it took four centuries of turmoil to win their submission to absolute kings.

English liberty was not being won from her kings; it was being defended against them. Charters and constitutions, then as now, were really but barricades against despotic power. But then as now it was not against the acts of despotism but against the persons or parties in power that the revolt came. Always it is their masters and not their slavery that men seem to hate and against whom they rebel. The crimes of kings and governments have always been that they seized the property of their subjects and used this property to tyrannize over them and their affairs. The revolutions that overthrow kings do not abolish the power they abuse. They only transfer this power to new kings, dictators, cabals, oligarchies or the leaders of popular factions under other names. Only the outward form changes. The right of public seizure still remains, the social obligations of ownership and exchange are impaired, distress engenders violence and revolution again shifts the center of anti-social power.

The Saxon kings had been chosen servants without autocratic power. The Normans came as Roman masters by right of might and divine sanction. The new nobility, now beholden to the king and under forced contribution to him, could not perform their age-old obligations of community service, and the levies of the king upon their people (Statutes of Westminster, etc.) pressed down voluntary rent and impaired the local revenues. The property and service thus extorted from both high and low the king employed for war abroad or against his own lords and their people, while the lords, with their natural revenues impaired and weakened at the source and largely seized out of their hands, became themselves robber barons seizing the property and services of their people and warring against each other when not pressed into common cause against the encroachments of the king.

Under the strong and ambitious kings they stood, as at Runnymede, united against tyranny. Under mild kings they fought each other for power and for the crown itself until they became few in number as their lands fell into the hands of a lesser nobility (knights of the shire, etc.) and absolute power into the hands of the king. As the old, great barons curbed the tyranny of John, so the new and lesser ones for the same cause brought Charles to the block. The revolution "liquidated" Charles but preserved the tyrannical power that cost him his head. The Great Council of the king became the House of lesser Lords. To this new center went the power to seize property and compel services.

Corrupted by centuries of turmoil and tyranny, these new lords were not content to be lords of the land to provide public and governmental services out of the rent of land in the Saxon manner. Despite such warnings as Locke and Wyndham gave they practiced the same despotic power as the Tudors and Charles. Vainly, thinking they could preserve their rents intact to themselves, they laid the wealth and commerce of the nation under burdens of taxes that became again the public despair. This politically perverted, predacious landlordism with its levies on property and controls over elections frustrated the king only by its own succession to his tyrannies in a century of grotesque parasitism on industry and commerce.

Again imputing evil to its perpetrators and not to their acts, the rising commercial and industrial classes clamored for participation in what was being done and won the reform of the voting franchise and its extension to them. Under this wider suffrage the power of the Lords declined as the Commons rose, and the authority to levy tribute on production and trade and enslave business in a growing bondage of taxation and restraint passed entirely to the popular House.

However, the expansion of industry and growth of world trade---the so-called Industrial Revolution, in which there was no revolt---was so great that it was not until the Great War and its burdens that the democracy of production and exchange was fully borne down under the old-time enslavement to political force. The nations became so "democratic" in their employment of taxation and other violence against the economic democracy of business that they did not know they were breaking it down. They supposed that seizures by tyrannies of kings and lords would be harmless when imposed under "democratic" forms.

This almost universal error was fostered by the worldwide expansion of population and trade in the 18th and early 19th centuries in which economic values were created far more rapidly than they could be politically destroyed. The great growth of business values beyond the lengthening reach of tribute and taxation during this whole period is what made speculative enterprises so very profitable and conservative investments so certain and secure. Of this great expansion the peopling and economic rise of the Western World was the most significant part.

The inherent trend of social organization into despotic slave states in the mild and fertile south as against free communities based on obligation and exchange in the rugged north---this tendency under which European social and political growth has ever been and still remains a restless compromise in which northern freedom resists the despotic spirit of the south even after it accepts its coercive technique, whether under democratic or despotic forms---in a measure repeated itself in the New World.

When the seventeenth century began, England was low bowed under the yoke of despotism the Normans had brought from Romanized France and beyond. Her government was the same as had been that of Egypt and Rome. Her Coloni, like those of Rome, sweated for the enrichment of Imperial Masters. The dominance of the royal. power gave rise to a theory that the king, by some divine dispensation, was the sole original owner and all lands were held of and under him. Accordingly, all authorized settlements or conquests were in the royal name and the inhabitants were under the dominion of the king or of proprietors under and authorized by him.2

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2. The idea still persists that the Roman corporation, the "state," instead of Society, as a whole, is the original source and authority for the ownership of land.

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All colonial government, especially in southern lands, was, in theory at least, despotic. Slavery was recognized and proprietors and governors were under no restraint save that of a distant king, and the king even assumed to grant absolute dominion in cases where he desired to confer special favors or cancel obligations. Even the grant of Pennsylvania to William Penn, for example, was in absolute dominion. A tendency towards Saxon ownership and administration was frequently manifest, but for the most part the proprietors assumed no responsibility for community services. Neglecting the function of ownership, they lost ownership itself: as absolute states grew up the lands passed into many hands under systems of slavery and taxation that became general and in substance still persist.

But by a striking parallel a different form of settlement occurred in the north. Across the North Atlantic went daring ship loads of the dissatisfied. They went as their ancestors on the Romanized mainland a thousand years before had braved a northern ocean for an unknown land. They sailed unsponsored and not to extend but to escape despotic rule and organize their lives on freer lines. Again they subdued and drove westward the wild inhabitants, re-established the folk-moots of their ancestors and founded community responsibility and administrative authority upon the ownership of land. Nor did they set up the relation of master and slave that prevailed, except for a few northernmost, in all settlements under auspices of states and kings; but as of old it was not the rigors of conscience but of climate and geography that forbade gross bondage and imposed the more efficient relationships of freer exchange.

And so the Old World stamped upon the New its historic pattern of slave states in the south with relatively free communities in the north based upon free enterprise under voluntary obligations and exchange. But the exchange relationship was by no means wholly free; always it came under dominion and tributary to the Roman type of absolute state, itself practicing no exchange and exercising none but compulsive powers under whatever forms.

The National Period in the New World began with the same kind of revolt against taxation without representation that brought on the reform laws in England under which the power to tax became vested in the Commons as it was wrested from the Lords who earlier had divested the King.

America was settled by people whose wages and property had borne all the burdens of ancient tyrannies and wars. The labor and capital with which they braved the distant and unknown land was a free from ancient bondages and but lightly taxed to supply few and simple public needs. The revolt was against distant taxation and restrictions on immigration and trade, but it was not to abolish these. The seizing and restricting power must again be centered in new and nearer hands, but otherwise carefully preserved.

The Constitution framers were wise in classic lore. The ancient slave democracies of Greece and Rome were their inspiration and example. Their nearer Saxon heritage was neglected and lost in their more ancient view. There was no tradition of a free society by voluntary exchange of protection and services without taxes or slaves. The new central state must be given the dangerous power of taking taxes and making wars at home and abroad. To guard against its tyrannical use, power must be divided three ways and in a trinity of departments the jealousy of two would restrain the other one, while the great Charter would bind them all. Among the reasons urged to adopt the Constitution, none stood out like the need to lay taxes and regulate trade. In this, the basic cause of the great civil conflict, as of all other conflicts, was laid.

Slavery is forced labor--the denial to men of freedom to own and exchange their labor; for, except as to what is being consumed, nothing can be owned but by exchanging it or as an instrument of exchange. Taxation is forced contribution of labor products--denial of ownership and exchange, for, except as consumed, no products are owned but to be used in or in aid of exchange.

The irrepressible conflict was not between a slave South and a free North; it was between the enslavement of labor and the enslavement of exchange. The South needed to exchange its products for the products of the world. By its special type of taxation, the North shut out the products of the world. This compelled the South to forego the abundance of the markets of the world and made her tributary and enslaved to a monopolistic North. While the South enslaved the Negro, the North was enslaving the South. The slavery of labor came under the slavery of exchange. The war only widened and deepened the conflict between agriculture and industry which still goes on.

Just as the taxation and restriction of Colonial trade for the supposed benefit of British manufacturers brought on the Revolution, so the exclusion of world goods from the South in exchange for its products was a basic cause of the Civil War. The Revolution drove out the British Tarquins of trade, and under the "Industrial Revolution" the Republic, by its Roman manacles on foreign and domestic trade, set up a patrician industrial class to monopolize manufactures, destroy the landed aristocracy of the South, depress an unprivileged plebeian agriculture into the servitude of debt and reduce the artisan classes into the dependent industrial proletariat that Jefferson foresaw.

At the beginning, the burden of business was light and easily borne. Labor and capital in this new land were unyoked from the debts and deficits that European wars and tyrannies had entailed. Local government was simple and inexpensive, and the future Great Bureaucracy was as the she-wolf's nursling or a lion's cub. Never before had enterprise been so unfettered, and so much labor and capital so nearly free. Production arose with prodigious increase to heights of wage and profit that became the marvel of the world.

A full century witnessed the rise, but its rate of its rise declined. The burdens of taxation and restrictions, so light at first, steadily increased. Myriad monopoly interests appeared, and endless legislation arose to bind and burden the general economy to favor and privilege them to the cost and loss of all. These mounting restraints on business and employment, on the production of goods for wages to labor and profits to capital, gave a false appearance of values and induced recurrent periods of speculation and prostration. The steeply rising curve of taxation and restriction has implacably drawn down the curve of production to a lower rate of increase with frequent reversal and collapse.

The old Roman and pre-Roman curse of compulsory tribute and taxation continued to bear down on the employment of labor and capital. An age of applied sciences, improved business methods and organization and mechanized industry multiplied productive power, but the governmental penalties on ownership and exchange increased at an accelerating rate. And taxation was not imposed for revenue alone, but to injure and depress the general population or numerous groups to the immediate benefit of concentrated minority groups exercising political influence and commanding governmental power.

The whole theory of government (public service) getting its revenues by force and in devious hidden ways, whether by popular sanction or not, is, in its economic and social effects, quite indistinguishable from the tribute-taking policies of the ancient and southern world. When force is the instrument, it is not possible for the levy to be equable or just. Its immediate effect is to demoralize its victims into evasions and practices that shift the entire or greater burden on the forthright and simple to the relative advantage of the cunning and corrupt. This tends to divide the population into masses of depressed on the one hand, and special classes of exempt and relatively advantaged on the other. These favored classes attribute their merely relative good fortune to the depression of the masses, and in this narrow sagacity develop a theory of national prosperity by legislation to further penalize ownership and exchange and make business and employment insecure in ways that give exemptions, subsidies and monopolies and thus a merely relative prosperity to them.

Government is a willing partner to this alliance with special interests, for increasing levies and revenues put more and more economic power and control into political hands. Public "servants" in office and political parties in power thus have vast favors and patronages to dispense, not merely in appointments to offices and appropriations of funds but also in the extension and multiplication of restrictive laws and the bureaus, offices and agencies for their enforcement that the special interest demand. The growth of governmental power to penalize, rather than to facilitate by public services, the normal operations of employment and trade is accompanied by increasing demand for its pernicious exercise. Personal corruption of officials, though widespread, is dwarfed by whole political parties, recurrently before popular elections, selling out in advance their governmental powers, both legislative and administrative, to the special and monopoly interests that have grown large and affluent under previous beneficences.

This continued process of depressing and penalizing general business and inflating monopolies, especially from the Civil War onward, became a serious drag on the rapid economic growth going on in America as compared with Europe under its older and heavier burdens of taxation and debt. America thus took full membership in the world league of periodic depressions. Here the production of wealth rose more rapidly and to higher actual values, but so also did the capitalized anticipations of wealth being produced and of monopolies being created rise to enormous speculative values whose deflation in the periodic recessions made them especially severe.

These speculative values have risen highest during the rapid replacement of destroyed capital goods following the great wars. Each purely speculative gain to one person or interest was not any increase of wealth but was, in reality, either a loss or, more generally, a debt or obligation upon other persons or interests.

These so-called values rise rapidly and are converted into bonds, mortgages and other fixed obligations that mount up to an inverted pyramid of debt far beyond what the production of actual wealth can sustain. The saving and investing classes are engulfed in the same whirlpool with the less productive and the less affluent. As the burdens on property and production increase, small competitive and unprivileged businesses must liquidate their capital and reduce operations. This disemploys and reduces incomes in perfect coincidence with decline in production and consequent advance in retail prices due to the lessened flow of finished goods. The flow of raw materials is checked, and unexchangeable surpluses appear. Falling wages and other incomes reduce purchase demand and finished goods must presently fall in price.

188.

Only the non-coercive distribution of natural community advantages is thus far referred to. If there be artificial community "services," such as policing or public works, politically administered, then any net advantage, if any there be, above the tyranny inflicted in so supplying them, will be added to the natural advantages and likewise distributed contractually by the proprietary power.

To obviate the essential tyranny (coercion) of political administration the proprietary authority, suitably organized, must extend its jurisdiction, and thus its revenues, by itself supplying police and other community services without coercion, out of its own revenues and properties, and thus raise its own values and voluntary incomes.

This evolution out of destructive coercive authority into productive contractual relationships has been always the key to civilized progress. Its marks on the high road of history are patent to all, yet but little heeded because so simply subtle and so little understood. Thus has Destiny drawn [driven?] savage man into his partial pastures [?] of life as she has set the systems of the stars--out of coercion into contract, out of chaos into reciprocal harmony and light.

189.

Government, in the sense of rulership is always tyranny--some form and degree of slavery. In its right and proper sense government is a service--and a business, and like all other business it consists in the administration of property--in this case public property--for the interest and service of others and for recompense agreed to, paid and received as ground rent.

The rent of land, then, in any community is payment for its public services, and the value of the land is the value of these services. When the land and the public capital appurtenant to it are well administered . .

The land, with all its permanent improvements, both public and private, constitutes the Real Property, the Real Ownership of the Community--The Real Estate of the Realm. Like any other property, it can be administered successfully only by its owners. Successful ad-ministration means, literally, service to a clientele as the recipients of services from whom flows the income to maintain the property and to reward and recompense its owners for its successful administration.

The administration of Real Estate is thus the administration of the community property, the fundamental community or public service, the one and only form under which government can be administered as public services. Such services command their own income, create their own proper values, the values of the Real Property--The Real Estate--The Common-wealth of the social and civilized realm.

For forms of Government let fools contest

Whate'er is best administered is best

190.

Every contract is a sale, a quid pro quo. Nothing but services (in some form) can be sold. All wealth is service incarnate. It is services incorporated in land--separate bits of earth material brought into the category of wealth through services being wrought into them. This application of services to land, their incorporation in it, is called production. Production is a physical process--the changing of natural things into artificial.

There are also services of distribution. These are not physical; they are social. They do not change natural things into artificial. They only change the attitudes and relationships of men towards each other with respect to physical things, either natural or artificial physical things, either land or wealth.

These services of distribution take the form of contracts or covenants between men with respect to things.

Covenant and contract gives men the exclusive possession or use of things, natural or artificial, by agreement and consent. The alternative is force, violence and war. Under this societal distribution, by contract and covenant, men can hold and use the things of nature (land) and the things of artifice (wealth) in security and peace. Without this social distribution neither land nor wealth can be productively used or peaceably enjoyed.

Things made the subject of covenant or contract are said to be owned. Social distribution by contract and consent does not physically move or distribute any things themselves; what it does distribute is the ownership of things. It thus makes men secure from each other in the possession of things--of land and of wealth, and thus enables them to be peaceably and productively used or enjoyed.

Social distribution by ownership, contract and consent does not physically move either lands or goods. It does distribute their ownership and thus makes possible their peaceable possession and productive use. It is therefore a social service of the highest importance. Every contract is a sale or lease of lands or goods for a price or a rent, or the sale of services for a recompense or wage if gaged by time [?]. In the case of bare land the price or rent is paid for the service of distribution only--there being no service of production to be recompensed. In the case of goods the price or rent is paid in part for the services of physical production (turning land into wealth) and in further part for the services of salesmanship or social distribution. This latter part of the total recompense for goods is often referred to as "cost of selling." It often exceeds the total cost or recompense paid for the physical production and transportation of the goods.

There must be a social distribution of land, with security of possession and use, before there can be any conversion of land into goods or wealth. Ground rent is that portion of the wealth produced that the free contracts of the market award as recompense to owners for the service of making a social and contractual distribution of sites and resources. It is an earned recompense, not an "unearned" increment. It is paid for a public service of distribution without which violence and compulsions would so prevail that little or no wealth would be produced or services performed. It rises and falls with the rise and fall of production and services. It pays for a public service by public proprietors that makes general production possible. It is, in fact, that portion of the general production which the general market awards to land owners for those primary services of land distribution peaceably and on equal terms to all upon which the general productivity must be based and without which no general productivity could either begin or proceed.

Land ownership, as a means for the social and equitable distribution of sites and resources, automatically arbitrates conflicting desires as to the possession and use of sites and resources of nature and thus protects wealth producers against the practice of force and violence upon each other and among themselves. But such distribution does not protect them from the compulsions of government--against destructive taxation and the tribute and tyrannies of regimentation that inhibit and finally cause production to cease and land value thus to disappear. In the day that land owners become conscious of their present and potential functions they will act in concert to protect their territories and their inhabitants against political restraints on the production of wealth. This further and conscious service will release an enormous productivity and thereby an enormous now-suppressed demand for sites and resources. The new incomes and values thus accruing to land will be their natural and proper recompense for performing this new protective service. And this merely protective service will be followed by all the various positive public services that will increase the general productivity and thus bring to the united land owners ample income for maintaining such public services, and recompense for providing them. This will finally bring all public services under the business and contractual administration of the public proprietors. The public business will become solvent and profitable, instead of habitually indebted and insolvent, taxation will become obsolete and unnecessary, the public services will contribute to productivity and prosperity and no longer destroy them, government as restraint and restriction on productivity will disappear, and government as an enduring instrument and agency of freedom and service will have arrived. Proprietary government creating its own ample revenues by the services it supplies and performs to create them will have every power of service and peace, the highest power of defense and no incitements towards war.

292.

After many years of relative neglect and stagnation there are now many evidences that the basic philosophy of Henry George--the philosophy of absolute freedom of exchange--must be the foundation of all the social advance or improvement that the near or distant future can achieve.

The vanity and futility of more and more economic restrictions to offset the distress already caused by governmental restrictions is a lesson that is bound to be learned, even in the rough school of failure and experience. Meantime, it can be the high mission of the Henry George Schools to send out broad beams of light and inspiration--to teach despairing men that God and nature have endowed the present existing structures of Society, under freedom, with all the loveliness and beauty of the most rapturous social dreams. And it may also be their mission, as visioned by Henry George, to extend and make further application of his all dissolving principles of liberty and freedom in fields and directions that he made no attempt to explore. Like all

the wise and great, he knew that every truth, every conquest and triumph of the mind, is not merely a jewel to be cherished but a sure foundation on which to build.

It must be learned that ground rent is purely a social product--the payment and the measure of all the services that are social and public--and that until it is completely used, 100%, in payment of the public wages and other costs there must continue to be serious violation of the principle of free exchange and its attendant evils.

It is with deep regret that I find myself unable to attend the School dinner on the 11th. Before I learned that the dinner date had been changed from the 12th to the 11th I engaged myself to the head of the Social Science Department of the ____________ High School and the president of the _________ of U.W. of that place for a Thursday evening discussion of the Philosophy of Henry George.

I shall be happy if you will read this letter (with the exception, perhaps, of the first paragraph) at the School dinner and convey to all present my profound conviction and my congratulations that under the inspiration of Henry George each and every one may be a herald of the Social dawn.

294.

Men may destroy their social organization, their civilized existence, by restricting its operation, by employing force to restrain men from serving and employing each other--from carrying on trade and exchange, but in no other way can liberty be destroyed.

"The power to tax is the power to destroy." There is no other.

So long as pirates, warfare, violence (and for the time being fraud) is restrained, taxation itself with all that it maintains is the only anti-social power. With taxation abolished and no other form of violence permitted. [sic] Taxation does not save or protect. Taxation destroys. Taxation is anarchy. Only rent can save. Only through rent can we purchase the service of protection from violence and every other form of public service as well.

Taxation is violence; it cannot save us from violation.

Rent is exchange; it is a fulfillment of the societal law--the law of mutual exchange of services.

348.

[Snip] The true Christian precept is "Seek ye the light" and "With all they gettings, get understanding." For the good is its own reward and men do evil only by unguided impulses in the darkness of their minds. Men have sought and learned the ways of God and thus the mind of God in the rational organization and processes of His material and non-human world. Thus have they come to understand much of His creative ways and to share, in large part, His creative power, to dream dreams of good and beauty and with His help to objectify these dreams in the living world. It only remains for men to seek a like knowledge of God's ways and mind in His creation of a Heavenly Kingdom in the New Dispensation of a creative organization of men under His Golden Rule of reciprocal services and therein of mutual love. As that knowledge and understanding is achieved it will be found that only through property as the subject-matter of contract can [the] Golden Rule be put into any wide and general effect. The ownership of property as well as of one self is thus ordained of God. And it will be found that the Golden Rule administration of property for the satisfaction first of others and of its owners last has been thus far limited almost exclusively to those properties and services that can be enjoyed individually and separately from others and not applied in the administration of those properties and services that must be used or engaged in common with all the others in the community form of life. Since 1066 in England the administration of community property and services has been relegated to invaders or conquerors by force or by popular election and administered by the political process of coercion and expropriation of all kinds of properties in widely varying but increasing degree.

It is for want of developing the Golden Rule administration by the contractual process and equality of exchange into the field of community property that the ancient methods of political administration have not been relegated, as commerce relegated piracy, to the past. The social institution of property in land for a century or more has evolved out of government and politics and become the indispensable foundation of social freedom, as against slavery and serfdom, in any degree. For this institution performs the fundamental public service of exercising a non-political jurisdiction over the community sites and resources under which it (performs) the distributive function of allocating and re-allocating the sites and resources to the most productive users. For this primary public service--the only alternative as against the anarchy of no distribution and no security and the ultimate tyranny of political administration--it receives by free contract and without coercion its just and appropriate recompense in the highest rent or increment from its most productive use. In its performance of this basic distributive function--this primary and above all essential public service by the contractual process as against the arbitrary and coercive and for a public revenue that is automatic by agreement without taxation or any form of force, property in land proves itself the non-political social institution whose contractual administration can be extended progressively without coercion of any kind into the entire field of community and public affairs. For its services will precede and create its revenue and this answers the crucial question propounded by Princeton's President Dodds: How can we conduct our public and community affairs without resort to violence and war?

Until the Renaissance (roughly) there was no world-wide system of voluntary exchange with voluntarily accumulated property administered as productive capital, nor were there any considerable accumulations of property except by conquest, slavery, tribute and taxation, and this not for any productive administration but only to be dissipated in war waste, corruption and vainglorious display.

The free-enterprise system is founded on the voluntary and not the forcible--the political or coercive--concentration of properties and their productive administration in the service of expanding circles of patrons and purchasers as its necessarily prime and immediate beneficiaries. Civilization, in its modern form at least, thus depends upon the free accumulation and concentration of property by its owners as productive capital, as against political and coercive expropriations and profligate dissipation by non-owners. Administration of property by its owners is the key to a free as distinguished from a slave civilization; for property, proprietary jurisdiction over its subject-matters, is the first essential to any contract--to all free and contractual as against political and coercive relationships, to what makes men prosperous and free as against what makes them impoverished and enslaved. A free community therefore is one whose natural and social advantages are administered by the social and voluntary instead of the political and coercive process. It is one where the mores are such that its titles are respected and its sites and resources therefore can be distributed (and redistributed) by the contractual instead of the political and coercive process and in which the recompense (ground rent) for this prime community service is automatic and directly proportionate to the public need and to the excellence with which the service is performed. And this public community service, so recompensed, affords that basic security of peaceable possession, that freedom from force, without which no other freedom of production and exchange could be enjoyed. Thus free trade in sites and resources, in land, affords the prime example in nature of Henry George's fundamental philosophy of social freedom under which land value, as ground rent, is the natural revenue flowing directly in exchange and recompense for basic public service.

In these times when the contractual and responsible ownership of property as productive capital that serves others is being progressively destroyed by the political powers it is well to discover that property in land with its contractual administration of sites and resources is the natural and fundamental agency of public service in the organic free community. Is it not more than coincidence that this social institution is usually the first to be attacked and destroyed when freedom is lost and a population reverts completely to the totalitarian slave state.

510.

Yet, amid all our concern lest we revert to a more barbarous and despotic state and our pathetic reliance on political government to avert it, it should still be possible to stand aside, as it were, and indulge an esthetic interest, a scientific curiosity, in those little noticed because quietly working functions and relationships that have raised the social organization to its present heights and in which lies all its present maintenance and hope of advance.

It is a commonplace of the current learned diagnoses that modern technology has all but abolished the resistances of nature to the physical production and transportation of goods. Distribution is regarded as less well developed--as the open or broken link between our needs and their fulfillment, between desire and gratification. To concede this should suggest not that the current processes of distribution should be attacked or abolished but rather that they should be examined and understood, for it should be remembered that distribution, for all its difficulties, does at least measurably take place, and like any other phenomena it can be understood only in terms of its functioning and carrying on and never in terms of its non-functioning or failure to do so.

It should be noted at the outset, and fully realized, that production, including transportation, is primarily if not purely a series of physical processes and therefore the outgrowth from understandings of physical phenomena. But distribution is a social process, a function of the social organization; its development\ depends on an understanding of the operation of social phenomena--of what men do primarily with respect to each other--and only secondarily on what they do with respect to their natural or physical world, for this latter is the field in which they modify, rebuild and transport the elements of their physical environment and thus re-organize the natural world. Distribution is fundamentally the matter of how men arrange themselves with respect to each other--of how they constantly organize and reorganize not their natural but their self-environment--their social world.

In this view it is seen that distribution, which is social, does not depend upon the physical production or the movement of goods; it has to do rather with their ownership. It is, in fact, not the goods themselves that are affected by the process of distribution; it is the title or ownership of them, a change in the relationship between people concerning them, a social and not a physical phenomenon. In most cases the change of ownership does not affect the course and movement of property or goods but only the authority under which property is administered or goods and services are enjoyed and consumed.

The process of distribution by exchange--of property being transferred, sold by one and bought by another, therefore does not depend upon the physical production of artificial things but may be and, in fact, is applied also to those things in nature of which men have need in the preparation of goods and services for each other and which are capable of being marked off and separately held.

Now it is only within a community organization that there can be any exchange of services, any service of each other with goods or with personal ministrations to desire--any significant social relations of any kind. To have these it is necessary that the members of the community hold some parts of their territory in common use and communication and that the remaining portions be designated to separate and exclusive occupancy or use. Until by some form of social compact or convention this separation of the private parts of the community from the public is made and maintained there is no emergence from the pre-community or nomadic state. Acceptance of the convention of private property as to the non-public portions of the community territory, including access to and use of the public portions, is therefore the prime essential of there being any community life and of any community functions being performed.

We may digress for a moment to reflect that a society is an integration of individuals impelled by tendencies and potentialities within themselves that can be effected and realized only in that way. The spontaneous establishment of a community therefore is towards the fulfillment of a need--a need for higher development and organization of the individuals themselves, of a more extended and more abundant--a higher and finer functioning--life. This associative or societal relationship with its function of interchange of energy in the form of services and commodities corresponds with all the symbiotic relations and processes of the biological world. It provides the individual with a social environment that not only mitigates the rigors of his natural state and liberates him from the compulsions of a harsher environment, but constitutes him, with his fellows, as an agency of creation in the further building and organizing of the world--the evolution of the earth and of the life upon it. It affords the power of creation to him that was the creature of environment. It endows him with the power to re-create himself through re-creating the world in which he lives and gives him the key to an indefinite and continuing realization of himself--the divine promise wrought in the nature of man, the poet's hope, the mystic's dream.

We little understand any organization of life until we proceed beyond a mere examination of its lines and forms, of its structures and parts. This static or descriptive view is essential but not sufficient. There is in nature the utmost diversity of structure and form, but no such variety of functions; an infinitude of means but only one tendency and end--the organization of energy in its creative aspects, its qualitative manifestations. On the purely descriptive side of things the data are endless and, of themselves, unrevealing. Not until imagination is creatively applied can the picture come alive in process; only then are its functional operations and transformations perceived.

Hence, in our picture of a new-born society with its community confines divided by social convention into public and private parts we must look to the functions that in this societal structure, and in this structure alone, can be performed. The first of these is the process of social and peaceable distribution of its sites and resources, of the parts of its territory that are not in common and public use. Whatever savage rule or rudeness may have preceded or resulted in the present allocation that can be no part of the life nor any concern of the now-existing society. What does concern it is that the elements of its environment, its sites and resources, shall be or come into possession and control of those members who thereby will become most productive of those services and goods which the community most needs and desires--that the contribution of each to the general exchange and interchange, to the markets, of the community shall be most.

The society has attached itself to its territory by those specialized members whom its convention designates as original proprietors. Through the functioning of these members as its distributive agents the society proceeds and continues to redistribute so much of its sites and resources as its members have need of, so much as under the conditions affecting and limiting their operations they can profitably employ. The members who perform this distributive function are invested with their authority by common consent and by formal recognition and commission as proprietary officers. They perform a public or community service that is absolutely essential to there being or continuing to be any settled community at all. Without their security of peaceable possession and their merchandising of sites and resources to those most able to use them productively there could be no distribution of possession by any technique above that of force against force or the alternative of monopolization by some coercive political power to itself or by its special privileges. In the former case there could be no security of possession; in the latter no freedom or peace; in either case there could be but little if any productivity; and society must fall apart and revert to the nomadic state.

So essential to its life is this service of distribution by acknowledged proprietors that the society not only provides itself with proprietary officers to administer possession of its occupied lands but also provides itself from the beginning with persons to hold ownership of the unoccupied portions of the territory within its jurisdiction, both near and remote. These proprietors, although not yet distributing any possession or use perform what in other lines is called a stand-by service against the time when, through sites and resources continuing or becoming more profitable to use, they will come into demand. Whether the proprietors give current distributive services of the high importance and value demanded or whether they give only a stand-by and protective service against the day of a developed demand, in both cases there is provision automatically for their proper compensation. In the former case the several proprietors together petition (com-petition) land users to occupy their lands, thus pressing the price or rent down, while the land users together petition the proprietors for title or occupancy press the price or rent up. By this purely democratic process of voting on both sides of the market the values of the proprietors' distributive services in terms of other services and goods is properly ascertained and ownership and possession distributed or redistributed accordingly, the measure of recompense to the proprietors resting in the democratic and popular will. As to lands not yet in demand the recompense for the proprietors' stand-by services must accumulate in his "asking price" or anticipated value until such time as it may become profitable to use the land after paying the proprietor such value of his stand-by services as the market then ascertains. Where there is a succession of ownership prior to land coming into use each purchaser pays to his predecessor in title what the open market esteems as the value of the stand-by service to date, leaving each owner only such net increment as accrues during the time of his standing by.

The profit from the social ownership, administration and distribution of land depends, as do all other profits, upon the services performed in connection therewith being sold under a sufficient demand. But the demand for one kind of services or goods consists in nothing but the abundance of other kinds of services that can be obtained in exchange for them. Hence, where the general production is rising or high the demand for exclusive possession of land will increase. Rents and values will be high (as will be all other income). But when production stalls or declines, then rents and values go down, nor can they be redeemed unless or until general production is again expanded and the demand for land thus restored and renewed.

Thus it is clear that the value of the distributive service in connection with the spaces and resources of nature depends wholly on the exchange productivity of the community. These services are essential to their being any security and therefore necessary to there being any productivity, but when a community is under tribute or taxation and its productivity is penalized and otherwise obstructed to subsidize waste and war at a greater rate than the physical and technical productiveness can advance, then the need for distributive services in connection with land is diminished and their values--that is, their recompense--like the recompense to all other services, declines.

By this time it will be noted that no reference is being made to any values inhering in sites and resources themselves, apart from the distributive services, purely social and not physical, which are necessary to their coming into any security of possession and productive use. The purpose has been to show that the purely social service of making and executing contracts by the voluntary and non-compulsive technique of the market with respect to sites and resources is anterior to all physical production or transportation, is, in fact a prerequisite to there being any physical production with the social connotations of division of labor and service by exchange. The social phenomenon of contract, consent and exchange is being examined in its basic and simplest manifestation. It is exhibited in that common acknowledgment of proprietorship which alone makes it possible for men to distribute the things of nature among themselves with the peace and security of mutual and unanimous consent. These are the only conditions under which any socially significant physical productivity can be achieved. What makes the resources of nature socially and productively available is the social service of democratic and contractual distribution under community auspices and conventions without which they cannot be either peaceably or productively employed to bring forth physical goods.

We have now examined and done justice, let it be hoped, to the necessary social basis of physical production which we find to be in the functioning of the institution of property in land as the foundation of all the exchange processes that constitute community life. The way is now prepared for an examination of the methods of physical production and transportation and the contractual engagements under which productivity is expanded as technical knowledge is applied. But since this has been exhaustively dealt with by many competent pens and since distribution is our immediate and relatively neglected concern we will pass over physical production and give attention to those social and community arrangements in which men change their relations with regard to each other and to things physically produced without thereby making any change in the physical things themselves.

Among men so primitive that they practice no exchange relations, no trading economy, all production is for the use and not for the recompense or profit of the producer. But civilized men live in communities and produce for each other and for the recompense or profit that they receive in exchange, the term "profit" being specifically applied to the recompense remaining to the owner or owners of an enterprise after defraying all the costs of doing business except their own services in conducting it. Since, then, social distribution by the contracts and engagements of voluntary exchange is the only immediate purpose of physical production in community life, we find there the same distributive technique with respect to the artificial goods produced that we observed in the society's distribution of its community sites and of the resources which provide the material substances contained in the wealth produced. Production and distribution is thus a three-fold process. It begins with the services of land ownership in making sites and materials peaceably available and distributing them socially by contract and consent. It continues in all those physical processes by which services are wrought into the materials of nature to bring them into the form, place and condition in which they can be used in aid of production or can themselves be consumed. And the three-fold process culminates and ends with the merchandising or social distribution of the product physically brought forth. Here again it is to be noted that the distribution is social and not physical. It has to do with the ownership entirely distinct from any physical movement or manipulation of the goods themselves.

The basis of all social distribution is mutual consent. It is the fundamental of social democracy as practiced in the open markets wherein men distribute ownership and control of the services and goods they have prepared for others and receive distribution of what others have prepared for them. Here is the forum in which the basic democracy performs its constant and its silent beneficence, however scorned it may be by those who put their faith in force, distrusting freedom and consent. The processes of the market are predicated on service and not rulership, on universal contract, agreement and consent, not on coercion or compulsion or any external limitation or regulation. Within this area of freedom, this domain of contract and consent, is found and practiced all the right, all the liberty, that exists.

This field of freedom is circumscribed and constantly cut down by the contrary and anti-social practice of force and deceit. The animal and savage propensity to cunning and force has not completely receded. Those persons who by nature or by circumstance have become

534.

The amenities and advantages, improvements and benefits that are [appurtenant to] any place, whether by nature or by artifice--any improvements to a location--increase the usefulness of that location to many persons, and those who occupy it will pay for that occupancy. This payment is called the ground rent. It is called ground rent because the ground is the only specific thing that people see and know that they are paying rent on. It is the thing that is written down in the contract by metes and bounds.

732.

When the School makes many think as one man thinks, they will have many times the physical (political) power but not any more intellectual power.

Yes, Unless right thinking leads to right action without resort to force.

See Franz Oppenheimer in The State.

620.

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?

["The people who have to stay there. Who can't pull out easily. Who own property there."]

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

["Some of them are awfully big and have an awful lot of property attached to them."]

726.

1. By the direct amount of the taxes

2. By the pyramiding of the taxes

3. By checking production and competition, thus establishing monopolies

4. By the effects caused by spending the taxes for antisocial purposes such as subsidies and doles and other purchases [?] of political support, and in trade repressions that cause wars and for munitions to prevent (?) wars.

Taxes on production, on the use of land (and capital) are multiple detriments on rent.

Upon the sale of lands the new owners discount in their purchase price all the present taxes that are collected and all the prospective taxes that are feared. They take the lands free from all present or anticipated taxation.

Taxes collected on the supposed or estimated value of unused land must be paid out of the production of the land that is in use. Those also must fall on land users, [?] hence, on the earnings of labor and capital, thus reducing the demand for land and so causing more land to go out of use and less wealth to be produced and less rent to be paid.

Taxes taken out of rent after it is paid are only a flat deduction from rent. They reduce gross rent to net rent by the amount of the tax only. Such taxation is most favorable to land owners.

Upon the sale of any land the new owner has discounted all the old taxes on it and pays no taxes on it whatever, unless new ones are imposed. Each succeeding new purchaser takes the land absolutely tax free. No investor in land ever pays any taxes on it except new and unexpected ones. Also all new taxes that are expected or feared will be capitalized against the present owner. New owners will fully discount all present and prospective taxes in the purchase price.

737.

The assembling of various kinds of properties and services into a single or united ownership and redistributing them in modified form--all assembling and redistributing being by the social process of free contract and exchange--is the conduct or administration of a business or free enterprise. All administration of free enterprise is carried on directly by or under authority of those who are or by purchase become the owners of the properties and services engaged in the enterprise.

The owning authority of an enterprise purchases and recompenses the use of three kinds of services and sells and is recompensed for the use of four.

1. For the use of current services it pays wages (including salaries etc.).

2. For the limited use of credit or currency as generalized property or services wherewith to obtain the use of specific property, it pays interest.

3. For the limited use, simultaneously or successively with others, it pays rent.

If in either case the use obtained is unlimited as to time, it pays price or capital value and foregoes and thus indirectly pays interest or rent.

To the three services for which it pays wages, interest and rent, the owning authority contributes its own administrative and supervisory services, both productive and distributive, and sells the combined four services in the form of services or of property or of its use for a combined recompense called gross income. The net recompense, if any, above that part of the gross required for payment of wages, interest and rent is the contingent recompense for proprietary, administrative or ownership services. This contingent recompense is called profit. It is distinguished from wages, interest and rent in that its rate or amount, if any, is not determined by the terms of any contract in advance, but is contingent upon the social serviceableness and efficiency with which the administrative services are performed.

739.

In his last and maturest volumes, Science of Political Economy, Henry George at the outset is at great pains to develop, as a foundation premise, the idea that civilized mankind is

And preliminary to his premeditated attack on the institution of property in land which he assumed from the start to be anti-social in its operation and effect, he took occasion to attack systematically the intellectual errors of his predecessors as though to transfer the blood-guilt--the responsibility for social evils--from all other causes or arrangements of things and fasten it indelibly upon the brow of the one great social institution that it was his chosen mission to condemn.

But in this intellectual house cleaning he was far from impartial. The Ricardian diagram of an assumed increasing insufficiency of the earth for the needs of a growing society was uncritically endorsed and retained, despite its obvious parallelism to the Malthusian fallacy that our author had so completely exposed.

This change of attitude and approach [in his later work] reflected a similar improvement in the author's material affairs. The earlier work with its pathological point of view was written under the cloud of a galling poverty and personal distress. But in the intervening decade or more his oratorical powers had won for him almost a world-wide acclaim as well as affluent friends who were happy to subsidize his pen. This doubtless accounts for the relaxed emotional_________and greater intellectual freedom with which he set out upon his final and_____________

756.

His basic concept was the spiritual nature, the potentially creative power of man, and that the key to its development rest in the freedom of the human spirit. And this freedom was not mere freedom from violence at the hand of his fellow man, not freedom from but freedom with his fellow man. This he called the "law of human progress," the law of freedom in association in which alone man could come into his divinity as co-creator with God.

This wonderful principle, however, needed to be applied. And in his application, the whole reasoning of Henry George in his economic argument rested on the hidden premise that freedom was in the gift of the political state. With this false premise, his reason took over and led him to appeal to Caesar, to the sword of taxation to sever the chains and open the doors to liberty--taxation by the worldly power.

Thus reason led him far afield from his general principle. Yet he was not without his intimations that there was more beyond. In the second paragraph of his Preface to the Fourth Edition of Progress and Poverty, he writes, "What I have most endeavored to do is to establish general principles, trusting to my readers to carry further their applications where this is needed."

For his poetic insight and for his popularizing the idea of freedom--and that it was in the heart of nature awaiting its discovery and application of men--the world is indebted to Henry George. It still remains for his readers to carry further its application than he had done.

He made great illumination of rent as a voluntary revenue designed and provided by nature to provide for the common or community needs of mankind. It was only in the application of this principle in nature that he fell short. For he urged the administration of rent by the political and coercive authority, based upon force instead of upon the social and creative relationship of contract in which none but owners can engage. Apart from the common and community services of mankind, Henry George was a most brilliant, most trenchant and most uncompromising advocate of the contractual in place of the coercive relationship--in absolute free trade for the non-coercive distribution of all things modified by the hands of man, for the free distribution of all the gifts from man to man. For distribution of the gifts of nature alone did he rely on coercive power. Free trade in all else, but no free trade in land.

757.

Only then will you rise above it!

(That little pun had a point to it. That was the point of attack.)

997.

In the physical world, power from the atom has been long sought. Important relationships within the uranium molecule are being disclosed by the study of nature at several educational institutions. Once these fundamentals are clearly perceived, it will not be necessary for the general public to be converted to the idea; the great new power sources will spring into being and into popular distribution through the exchange system and thus create its own appropriate values and rewards.

It must be the same with social relationships, once they are properly understood. Not by "complaints and denunciation, by the formation of parties or the making of revolutions," but by the motive of service for the recompense of profit in accordance with how the free and open market shall make its appraisals and awards.

Let us all work together (or separately, if any man fear his brother's light) in earnest endeavor for that clear enlightenment of things controversial and obscure under which right action will be so powerfully induced as to follow as a matter of course.

You are very right in your principle that education must precede action, but that education must not be "vain repetitions" of prescriptions, precepts and admonitions, but the discovery and such illumination of relationships as will make action certain to follow and to be appropriate.

Since your suggestion nearly a year ago that we should talk matters out some time, I have been disappointed that convenient occasion did not seem to arise. This circumstance will, I hope, excuse the very great length to which I have written upon only one aspect of a very important if hitherto obscure matter of proprietary administration of public as well as of private capital and services.

Sincerely yours,

799.

971.

In asking these questions it is unconsciously assumed that there is or will be an equal demand for public services in all parts of the community, or at least that the demand for these services will exist in the same proportion as the supply. It must be remembered that the value (not utility) of any service or commodity depends upon its exchangeableness, which is to say, upon the amount of demand for it; and this does not mean mere desire, but the amount of other services or commodities* that are offered and can be obtained in exchange.

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* Usually represented by money or credits which entitle the holder to receive the services or commodities.

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There can be no doubt but that the total of ground rent that the land of any community actually yields to its owners is the total present exchange value of all of the public services that all of the land receives. The question is: How does it happen that the total rent is collected from only a portion, often less than one-half, of the area, even though it be a small community and all of its parts be about equally well served with police, fire, water, sewers, parks, schools, and other community services? The answer is that there is an outlay of capital in municipal enterprises beyond the economic capacity of the people of the community to use and to pay for its use.

Although in the entire absence of community services no property could be owned or any wealth produced or exchanged, still the amount of production possible in the community is severely limited by the manner in which the public services, as a whole, are conducted. It is only the net services that remain after all dis-services have been deducted that can be taken into account as creating land value. The positive services just enumerated are to a great extent offset by the dis-services that public servants and authority carry on. These dis-services or negative services consist almost entirely in the seizure of property by taxation or other penalization of the ownership and exchange of goods and services, and this, together with its grave indirect effects of limiting business profits, operations and volume, must be set off against all of the real and positive services the community receives. Only thus can the net, that is, the real, amount of public services be ascertained. This, of course, cannot be arrived at by any computation, but, in a very definite and practical way, the population shows exactly what the net value of the public services is by the amount of ground rent that it pays in exchange for them, plus the amount of ground rent that land owners who are also occupiers could command.

Since, therefore, the amount of rent collected and the amount of business that can be done is so rigorously limited, the question of why "valuable" land lies idle is not far to seek. It is simply that, if the limited amount of business were to be spread out over the whole community, it could not be done efficiently. If, for example, the other tax-burdened business in a town can support no more than one hotel, that hotel will occupy and pay rent for only one of two equally available sites, each of which could well be occupied by a hotel if twice as much business were being done. The hotel could not be conducted at all if its limited amount of business were compelled to be spread out over all of the sites equally suitable for a hotel, even if it paid for all of the sites taken together only the same amount of ground rent that it now pays for the one. The same is true of every other kind of business. The town simply cannot make use of all of its streets and other public services and improvements upon the restricted amount of business that its inhabitants are permitted to carry on. The "valuable" sites are not idle because the rents that are paid are so high, but because, business and production being restricted, rents and land values, in the aggregate, are so low.

If, without any relief from taxation and its attendant evils, the business of the town, county, city, or state could be forced to occupy more land than it now does, then this business would be done less efficiently and would pay, not only less wages and profits, but also, in the aggregate, less ground rent. Any attempt to "force idle land into use" by levying taxes nominally upon it or upon its supposed value would, in fact and in reality, only impose a further burden on the production of wealth upon the land that is now being used, for out of that wealth the net taxes would have to be raised. The supposed tax on idle land would be really a further tax on wealth and would have, therefore, precisely the contrary effect from that intended, for the increased burden of taxation upon wealth would further reduce production and thus throw still more land and its public services into idleness and out of use.

Business and production consist in voluntary exchange for mutual profit. Exchanges cannot be compelled by taxation or otherwise forced. On the contrary, taxation on wealth and on the use of wealth, including prohibitions and penalties, is the only force by which business can be prevented and land thrown out of use and out of revenue and its value destroyed.

What has been said of idle land is, of course, equally true with respect to idle buildings or other capital improvements on real estate. The capital thus invested yields little or no returns, not because of any defect or deficiency in the capital itself or on the part of its owners, but the same unwise conduct of public affairs in ways that make it unsafe or unprofitable to use land also makes it unprofitable to use the improvements that now exist upon the land. Whenever the forces that restrict production tend to outrun production itself, then there is necessarily a decline in the use and occupancy of improvements on land. This causes existing capital improvements, in a large measure, to fall into the same general category as idle lands

--and from the same general causes.

It may be added that transactions in idle land are transactions in hopes and fears, and not the doing of any business in the sense of creating and exchanging wealth or services. Such speculation neither increases nor diminishes wealth.

972.

The question arises, however, of the effect of heavier taxation of the land that is already under occupancy and in productive use--that is, upon land that is rented and yielding ground rent or that, being occupied or utilized by the owner himself, yields to him an equivalent value in its use. A tax on such land is, either actually or in effect, a tax on ground rent. It is often supposed that such a tax cannot be shifted but must be borne out of the income to the landowner himself and that it cannot impair any other interest or value.

It cannot be doubted that such taxation does reduce the selling value of the land. The land owner does suffer a loss of the value proportionate to his loss of income, for no purchaser will take it except at the lower valuation set by the discount of the tax. An example should make this clear:

A tenant pays voluntarily the ground rent that the open market sets as the value of the services that the landlord supplies in merchandising to him the use of the land, and the tenant gets this full value so ascertained. Other tenants also pay the market rate for land value received and thus all are on equal terms and in democratic equality one with another in respect of the occupancy and use of the land. Now let us suppose in a given case the ground rent paid is one thousand dollars and the current rate of funds five per cent. This would set the capital value at twenty thousand dollars. When the policy of taxing land values has advanced until the rate has become say thirty per cent of the rent, the direct effect must be to reduce the net rent of the landlord to seven hundred dollars and the capital ground value from twenty thousand to fourteen thousand dollars. This beyond a doubt would injure the landlord. But it remains to be seen whether this would be an advantage to the tenant, as is so often claimed.

The tenant now can indeed get land cheaply by reason of the reduced capital value at which he can purchase it. He thus becomes his own landlord with the thought of saving his former outlay of rent. It now costs him as owner a carrying charge of five per cent on his purchase--only seven hundred dollars instead of one thousand dollars in rent. But he has also through becoming an owner brought himself under a tax charge upon the reduced valuation which even at a lower rate amounts to at least the three hundred difference between his former rent payment of one thousand dollars and his present carrying charge of seven hundred dollars. And this tax charge, even if his whole outgo should be no greater than before, is laid upon him by a power with whom he does not contract but whom he must obey. He has no free option of a new or altered contract or a new location, and his default will not only jeopardize his possession and capital investment but may deprive him of all his other property as well. This is the situation under which the tenant is brought by the enforcement of tax measures directed against the so-called "unearned income" of the land owner and supposedly for the relief or advantage of the tenant. From a condition of freedom under a voluntarily assumed contractual relationship with the land owner, he has now come into a state of compulsion under tribute to political authority, in which state he suffers grievous wrongs and discriminations unless, being among the favored few, he enjoys special privileges and exemptions to the detriment of the many.

To the extent to which voluntary and contractual rent has been degraded into compulsive taxation or tribute and the non-occupying or absentee land owner thereby eliminated--to that extent the now supposedly independent owner-user has lost his democratic equality with other land owners who may be more favored than he. He has become degraded in his position, dependent upon political intrigue and authority and subjected to despotic power. Let this process continue; let this tax movement against the property and income of land owners go on, as some reformers propose, and then all voluntary payment of rent, all rent itself as such must disappear and the occupancy or non-occupancy of land and the terms and conditions thereof become a matter of purely political and arbitrary determination and inevitable discrimination. Security of possession under respected contracts will then be displaced by privileged adverse possessions and arbitrary exclusions maintained either by entrenched dictatorial authority or by the transient and tenuous political powers that are set up under so-called democratic or popular self rule.

Notwithstanding that it has been overlooked for so long by the learned and the wise, it is still not possible to maintain any condition of permanent freedom while holding or occupying land under the dispensations of a political authority or in any other wise than under free contractual relationships. Such relationships cannot even begin unless or until there exists a proprietary interest or authority such as private ownership and property in land affords. Public ownership, so called, implies a compulsive single authority over all the sites and resources within its jurisdiction and, therefore, an exclusive and complete monopoly control. The land user, desiring to use some of the community resources and seeking the necessary security of possession, must make his application to a single source, without alternative, and abide by the consent or favor that it grants or by its compulsory decree.

Under the dictatorial state without private property in land, those natural resources or advantages of location most highly desired, with all their natural and economic advantages, would be at the disposal of none but favored persons and groups who would flourish as monopolies against the interest of the popular mass and in the hollow of the dictatorial hand. And under popular governmental forms, the choice locations and resources would go to those interests or groups who, at the particular time, had most corrupted the dominant political power or could most intimidate it by the voting strength of their organized rank and file.

Thus taxation, which admittedly is a grave deterrent when laid on the properties and processes of economic production and exchange, when directed against the institution of private property in land becomes a threat and, if continued, becomes an utter menace against the first and last foundation on which alone it is possible to have any economic equality or for any free institutions to arise or continue to exist. Archaic as it may seem, it is still, as it ever was, profoundly true that the private ownership and allocation of land is the basis, as it is the historic bulwark against inequality or against arbitrary and despotic power.

[Pencil note: "Moreover--to most productive user."]

Such are the benefits flowing from the negotiated relationships of landlords and tenants with respect to all the community territory and its public benefits and advantages so far as it is possible for the inhabitants, under their seriously restricted economy, profitably to make use of them. All further inhibitions of production by increasing taxation, and by restrictions on business that taxes are expended to enforce, can only serve to contract the general economy and thus diminish demand for the community sites, resources and advantages no less than for the private capital and labor that would otherwise be employed.

But taxation laid upon land or sites that are in process of being utilized and from which, therefore, the owner receives or enjoys a current return is in reality a tax upon rent and is, in effect, a tax on the sales and purchases of the public security and benefits that make the sites and resources of the community desirable and are essential to their having either utility or value. The taxation of current rent or land-value as a going concern imposes an arbitrary and compulsive technique upon the basic civil and contractual relationship of land lords and free men--upon the natural process by which the community resources and advantages are socially distributed and justly enjoyed. It strikes directly at the foundation of all civil order, freedom and peace. Insidiously, it converts and degrades the voluntary rendering of rent for public values privately received into the compulsive extortion of tribute or taxation by superior crude force. More and more, it reduces the members of society from the state of free men in relationships of free contract to the status of industrial serfs, tax-enslaved and tributary to advancing despotic power, the end of which is the destruction of all land and other values until, as Gibbon, the historian, describes, the civil populations disband to join the barbarians and become even more barbarous than they.

The obvious remedy is for real estate owners, and especially land and site owners, to unite upon a policy of providing tax relief for their present and prospective tenants or purchasers. An organized land owning interest can certainly exert more influence on the public policies of a community than any other organized group. A determined campaign against wasteful and injurious public expenditures would be salutary in almost any community or larger political division. Doubtless, this lack of any strongly organized interest in opposition is what permits the ever increasing public extravagance to go on unchecked.

Every other legitimate interest, business or profession is engaged in providing valuable services to its clients, patrons or customers. But the landed real estate interest has for its patrons all those whom it serves with the use of land and, thereby, with the permanent resources, public services and community advantages appertaining thereto, and this interest has no other business or function to perform. Upon them alone the population wholly depends for making the community economically inhabitable and for the policing of the so-called community servants to that end. And it is they who, in the consequently increased rents and selling prices, would reap their rich and immediate rewards. By giving first and immediate attention to those taxes that most undermine business profits and confidence, and those whose effects are cumulative and compound, there can be released an enormous demand, now only potential, for the active and productive use of real estate. And the new rents and values thus created by the owners will far exceed any possible cost of the service in procuring the relief to users necessary to generate them.

An active real estate interest of this kind giving these services of relief will build business and values for itself precisely as the owners of a hotel would do if their occupants and tenants were being harassed into poverty and distress by depredations and extravagances on the part of the community servants of the hotel. And just as the proprietors of the hotel, for sound business reasons, would give their first and most zealous care to the protection of the properties and businesses of their tenants, so will the enlightened owners of real estate best serve themselves by first serving and protecting the interests of those who rent or purchase public services and advantages from them. In any case the vital interest of the proprietors is bound up with that of their tenants on whose prosperity they depend.* Tax relief to tenants and occupants, by

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* At this point SH deleted the following phrase, presumably after rejection by the editors and in an effort to make the article less controversial (this agrees with later conversation remembered by me): "For this reason, the taxes that fall directly on their sites and locations may well be the last abolished, for these do not directly affect the interests of tenants or of future purchasers, whereas...". --SM

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releasing business activity, extends far beyond the mere amount of the exemption itself, and raises rents and values correspondingly more. Moreover, long before all other than land taxes are abolished, the new business released and the new rents and site values thus created will more than offset all previous taxation of land values. This will, of itself, abolish it as taxation and release it for voluntary application, under properly interested supervision, to the cost of the positive governmental services that raise values and yield rent.

The finally successful relief of real estate lies in constructive services and protection on behalf of its tenants and occupants and in the new revenues and values that will result. In these new revenues are to be found, ultimately, an ample source for the sound and profitable financing of public community services and affairs by the community owners themselves, without any taxation, the same as in any other service or enterprise of a community character that is properly administered under the supervision of those by whom it is consciously owned.

976.

1001.

Mr. Frank Chodorov, Director

Henry George School of Social Science

211 West 79th Street

New York, New York

Dear Fellow-Single Taxer:

In partial return of courtesies I send herewith an outline booklet on the practical application of the "Single Tax" of Henry George, or, preferably, on the abolishment of taxation as proposed by him in Progress & Poverty at page 406. I do this in the hope I may be excused for whatever boldness it has required for me to bring forth from an entirely new direction a body of sound business and economic considerations in support of the practical remedy for poverty [?] and social decay that he proposed.

Very Sincerely,

1007.

The Government, State and Federal, provides public services just as a manufacturer provides goods. It delivers these services to the owners of valuable locations, whether improved or unimproved. The owner has these public services for sale or rent. He calls it selling or leasing land or lots. Large owners of unimproved lands that have public improvements and services adjacent to them are wholesalers of public services. They sell to consumers--land users--the services that government manufactures and they would gladly pay for these goods like any other merchants, wholesale or retail, if they could sell the goods at a profit. Under this arrangement the taxes would be no burden. There would be a profit in paying them and no tax collector would be required.

But something is the matter with the customers. There are plenty of public improvements and services but they are not selling well. There is lack of demand, land values have fallen, rent has declined.

Our taxing arrangement [?] puts most of the costs of public services exclusively on the users of land in many and devious ways. It is as though the manufacturer of goods should make the consumer pay his costs before the goods go to the merchant. This method of taxation destroys the market of the wholesaler so that it is difficult for him to sell and he pays very unwillingly a small part of the cost of the public services which he has, so to speak, on his shelves for his retail customers. Of course, the consumers pay unwillingly for the public services they do not get and thus it transpires that taxes become a burden to all concerned.

The ownership of land, apart from improvements, is indeed a high calling. The owners must see that the public services are adequately financed and efficiently manufactured and, at the peril of their rents and values, they must protect the prospective users of their lands from every kind of tax and imposition that reduces their profits and productiveness and keeps them out of the market for public services. They must be vigilant and valorous against taxes on incomes, on sales, on purchases, especially on imports, on gasoline, on private improvements, on all kinds of personal property, all licenses on occupations and other charges and restrictions that hamper and diminish the production of wealth and hence the need for and the ability to pay for public services.

If they would prosper, the lords of the land must be lords, indeed. They must protect the users of land--the producers of rents and of every form of wealth and revenue--from official racketeering in the guise of necessary taxes and restraints and, by maintaining and directing the public services, become the "greatest among you" through being the "servants of all."

Your Mr. James F. King [?] in a recent article on Sources of Tax Revenue points to the need of basic change. He says:

1014.

Notes by Spencer Heath for a letter to Mrs. Ethel Clyde, 1934?

Dear Mrs. Clyde:

Before considering the pro-social or the contra-social effects of the posthumous devolution of property, it is well to remind ourselves that we are considering property and the ownership of it in relation to the welfare of a Society. We are therefore not considering property or ownership in any situation, in any relationship

Of property and its ownership there are two precisely opposite and contradictory practices and conceptions. One is pre-social and primitive, the other civilized and social.

The primitive practice and conception of property is to exclude others from its possession or use. All such property is obtained, held or possessed, by whatever means, only for the use of its owner and not for the use of others in general by sale, lease or exchange. The popular and general conception of property is in this exclusive sense. It is even held as a ideal in the slogan, "production for use and not for profit."

Ownership in the civilized or social sense is not exclusive but inclusive. In a social community, as distinguished from a tribal one, practically all services and properties are communized or socialized by being placed in the common markets and thus in the service of persons generally, either without limits for a price or for limited periods of time for a rent, wage (in the case of services) or other income. The property or services so communized or socialized is in part placed directly in the use or possession of others. In other large part the property or services is so administered as to prepare or produce other property or services for the direct use of others and is thus owned and administered indirectly for the use and benefit of others. All the private property and services in a community (except that which a man employs for his own consumption or use) is employed either directly for the limited or unlimited use of others, or indirectly in the preparation of property or services for the limited or unlimited use of others; or it remains unemployed without profit, rent, wages or other income to its owner who holds it for the future if not for the present use of others or persons generally.

Property and services cannot be put (for long) to the use of others without recompense.

The services performed by owners (directly or by others and ratified) are called administrative. Their recompense, net above all costs, is called profit. The recompense for services performed by non-owners (of property), if general in character and not measured directly by the time or by specific items of service are called salaries. The recompenses for specific items of service are called fees and commissions. The recompenses for services that are measured and gauged on the basis of the time given to performing them are called wages. The recompense for the unlimited use of specific property or of any part or interest in specific property is called price. The recompense for a limited use (as to time) of any specific property is called (always) rent. The recompense for use of credit or generalized property and services--claims against the general market--is called interest.

Administrative services are of two kinds: (1) Those performed in the preparation of properties or goods (or services) for the service or use of others, commonly called production, and (2) Those performed in the transfer and allocation of ownership of property or goods or services to others, commonly called distribution, by a social technique called contractual.

Both of these two kinds of services are recompensed in the rent or price paid for the limited or unlimited use of any kind of property that is produced and also distributed.

There is, however, one kind of property as to which no services of production are ever performed--the sites and resources, gifts of nature, the common general advantages, of a community. Ownership of these properties is the first established and first recorded in any community, and since their owners cannot perform any services in the production of them, the only administrative service they can perform is that of distribution--that of making a social, a contractual, distribution of them so that all can have access to and use of them democratically, that is, upon equal terms.

In confiding the administration of its lands and resources and things of common use or advantage to proprietary instead of political public officers, the population of a community insures itself alike against the anarchy and insecurity of the occupants taking and maintaining their own possession and the tyranny of an arbitrary or at least invidious distribution by a political and therefore compulsive authority.

Moreover, by the exercise of its social instincts in placing the distribution of sites and resources in the hands of an owning or proprietary authority, the population secures for itself not only a peaceable, contractual and consensual administration of them but also their highest productivity and the greatest flow of common wealth into its general market

1020.

They have a philosophy that they call the Philosophy of Freedom, and they propose a politico-social technique that they call "scientific," yet they propose, as their "sovereign remedy," that the coercive political state shall use its age-old power of compulsory seizure, the brute power of tribute and taxation, as the instrument of justice and equity for righting the wrongs, the poverty and distress that the practice of this selfsame political power has for so long inflicted on suffering mankind. And as for being "scientific," the body of their "science," as currently urged, contains not a conception or a significant thought that was not frozen into it some sixty years ago.

Single-taxers, like most other reformers, have a high and worthy object that they aspire to attain--the ending of economic depression and the abolition of poverty--but again, like other reformers, they believe that evil conditions can be abolished by their prescribed legislation whenever they can obtain a majority to sanction it. Characteristically of reformers in general, they believe that laws enacted against those who have will, by that fact alone, necessarily be to the advantage of those who have not. Their attack is against private property, but, unlike the socialists and communists, they assume to defend private capital and they concentrate their agitation almost entirely against private property in land and natural resources. With apparent sincerity, they hold to the naive belief that by employing the powers of government through its strong and long arm of taxation to destroy private property in land outright or at least so far as any beneficial ownership of it is concerned, they can make private property in other things more secure. They do not understand that property in land is the foundation of all property and of property right. The only condition of property or of property right is that condition of security against violence under which goods and services can be at least imperfectly owned and therefore to that extent can be peaceably accumulated and socially distributed by the democratic process of free and voluntary exchange. Without some security of ownership there could be no exchange, for only that which is owned can be exchanged and then only to the extent that the ownership is unimpaired by any tax or other charge or lien against it.

When tribes are completely nomadic they have no exchange relationships and no security of property or of any other kind. Their production of goods is always for use and never for profit because they practice no exchange and they do "take who have the power" and they do "keep who can." Not until there is an area of land within the confines of which labor products can be securely owned and exchanged can there be any such thing as property of any kind. This is a condition that cannot exist unless there are social conventions that provide some security of private possession of land and of public ways and places for communication and exchange. This means that as a prerequisite to any other kind of ownership or exchange there must be private property in land. This institution is the mark of transition from the tribal and nomadic condition to the permanence and security of community life. It is not established by legislation, edict or decree but by the pact of ceasing to rove and taking up relationships of ownership and exchange. For without the security it provides, no goods could be produced and accumulated for the purpose of exchange--for the social process--or otherwise owned except to be immediately and personally used and consumed. There could be no such thing as capital or socialized wealth in the sense of being owned for the use and benefit of others through the process of

exchange. All wealth must be owned either individually, to be consumed, or, socially, to be exchanged. Exchange is the social process--the one and only process that transcends compulsion and coercion and gives men any freedom from trickery and force. Seldom is it disputed that, apart from that in common or public use, the land of a community must be securely and individually possessed. But many have thought the land for private possession could be distributed and administered by the police or political power and private property in land thus abolished without social disaster. They fail to reflect that such distribution and administration would have to be arbitrary and compulsive and therefore unequal as to terms and utterly insecure. It would necessarily be devoid of the equities and amenities of the market and of consent and exchange. Not only would the distribution itself be by privilege and favor, and therefore insecure, but the charge or price taken for such governmental services would likewise be arbitrarily laid, for, with only one source of supply and without the alternatives of the market, the distributees would have no protection against arbitrary and discriminatory charges short of pressure-group action or mass revolt.

The great social mission and value of land ownership is to provide security of possession and use by the merchandising process of free contract and exchange for value received, and the compensation for this service of equitable distribution and secure possession is only such and no more than the community in its open markets voluntarily awards to those who perform it. The amount of its ground rent paid is the community's own measure of the value to it of social as opposed to governmental distribution of the private occupancy of its lands.

The great emotional leader of the Single Taxers was oppressed by the sorrowing and the suffering of the world ...

1032.

The services they buy are as follows:

(1) SERVICES OF MATERIALS -- for which they pay purchase prices.

(2) SERVICES OF LABOR -- Direct and Indirect--for which they pay wages and salaries by contract.

(5) CAPITAL SERVICES -- which cost them interest at the market rate. This is a share in the advantages that come from using physical facilities in he business.

(4) PUBLIC SERVICES -- for which they pay location rent, after due deduction, automatically, for all rates, charges, taxes and other impositions or restrictions by officers and agencies of public service or authority.

The services they sell comprise:

(1) ALL OF THE ABOVE SERVICES -- for which they receive "cost of production" as one part of total sales return, and

(2) ADMINISTRATIVE SERVICES -- For which they receive profit to the amount of the remaining part of their total sales returns. This profit iscreated and earned by their own services in administering the capital and supervising the personnel of the business. It is contingent upon services and will be negative (loss) if the services are negative. All of the other services are purchased and paid for at stipulated rates. Profit for administrative services is pure residue. It arises only as returns on sales exceed all contractual costs.

Where an owner performs non-owner services and receives wages or salary comparable to the pay of non-owners doing similar work, such wages or salary is part of the cost of production. Profit is the return for strictly administrative and supervisory services performed by owners, as distinguished from subordinate services for which wages and salaries are paid. Profit is what they receive as owner-administrators, under no superior supervision or authority, acting upon their own judgment, and responsible out of their own present-existing properties for all obligations or losses.

Owners act as joint administrators of their united properties and receive administrative earnings or suffer losses in proportion to their respective owner-interests.

Where there are many co-owners of the same business, their common and united judgment is ascertained by parliamentary procedure, as in stockholders' meetings.

In actual practice, the conduct of business, the buying and selling (exchanging) of services is heavily burdened by politics and government with innumerable restrictions imposed and enforced by taxes, penalties and other arbitrary seizures, without any reference to exchange or any value received. The result of this is that the number of persons and organizations who can engage in business is much reduced and is being steadily diminished, thus constantly disemploying more and more persons and more and more of the capital facilities with which business is done. This creates an apparent surplus of capital and surplus of men while the flow of consumers' goods (finished services) is being constantly reduced. These restrictions and limitations of business to a diminishing number of persons and organizations give business its generally monopolistic character in which the relative abundance of unemployed capital and men accounts for the relative scarcity of finished consumers' goods, their relatively high cost and price and the difficulty with which they are generally to be obtained.

Because the enforced limitations on business check the flow of finished goods into the hand of the consumer and raise their cost, they also check the employment of capital and of every grade of administrative, supervisory and subordinate labor and services that is requisite for the administration and manipulation of capital goods into finished goods to the consumer's hand. In this situation the would-be business organizer finds both capital and labor--accumulated services and current services--abundant and cheap with interest and wages abnormally low. His taxes, direct and concealed, are abnormally high, being from a quarter to half of all that is produced. This makes his costs and selling price abnormally high and his profit, like all other returns for services, abnormally low. He therefore either remains out or goes out of business and among the unemployed or, if he belongs to a pressure group or is otherwise influential in politics, he seeks to mitigate his burdens by obtaining subsidies or other special exemptions and advantages for himself to the cost and detriment of others and by procuring more and more legislation to increase the political burdens that already bear upon some other or all other parts of the business and economic world.

The rivalries in business therefore descend from normal rivalry in production and service to a warfare of mutual destruction by legislative and political means, thus diverting public power and authority away from its normal function of conferring public services upon its territory, without which services no business can be done, and converting the field of government and legislation into a battleground of contention for the vicious misuse of its destructive powers. As these powers grow, all production must diminish and values (not prices) decline. Less materials are bought, less labor hired, less capital borrowed, and less public services engaged by productive occupancy of the locations upon which public services are conferred; Fewer well-serviced locations are occupied, less ground rent is paid and site values decline in proportion as the misuse of government power cuts down the production of goods wherein alone resides all the power to purchase public services and all demand for the use of land.

How to reverse this general misuse of government to destroy business is a problem that nature must solve if her great work of evolving social and business organizations among men is to be preserved.

Happily, she has done this, but it remains for men to discover what provision she has made before they can avail of it.

She establishes in every society two kinds of territory, public and private, for corresponding uses, and she sets over the one public officers, and over the other proprietary officers. She causes the public officers (all public agencies) to perform public services by the aid and protection of which alone private services--that is, business and exchange--can be performed within the private territory. She causes the proprietors she has set over the private territory to have at their respective locations all of the public services that are performed and thus to receive their value or to attend to the collection of their value in a revenue called ground rent. This revenue is the wealth-producing occupant's own measure and valuation of the difference between the public services and advantages that he receives by virtue of his occupancy and his disadvantages from the seizures, penalties and restrictions imposed upon him, against his desire and consent, by the same public servants and authority that also serves him. Rent is thus the net value to an occupant of the public services and advantages that he receives. It is a part of production, and it rises where and while the aids to production by public services to the private territory are exceeding the detriments imposed within that territory by public force and power, and it declines where and while the advantages of public service increase less rapidly than the misuse of public power.

The proprietors of land, therefore, suffer common misery with producers of wealth. Nothing can save their revenues or the values but more abundant production, less political inhibitions upon capital and men. Nature, in the formation of society, has established them and put into their hand a power of service and reward that no other men possess. As mere quiescent owners of sites, they are only structural members of society, producing no wealth and performing no service beyond giving the social organization its necessary form above the nomadic state, and that is the least service they can perform. But let them discover their dependence upon production and concertedly engage their social influence and power in behalf of all who produce, and who out of their production buy public services from them, and they will find themselves reaping such rewards in fuller occupancies at higher revenues from their sites as will lead them to vast extensions of influence and service.

Since taxation is the basis of restriction, and generally the more devious the taxes the more subtly injurious to production, the proprietors, once enlightened, will serve their tenants and enhance their production by mitigating the rigors of destructive taxation upon them. Every burden so lifted will raise general production, tend to the expansion of all operations and the use-demand for land and public services and bring back to the proprietors in rents and enhanced values rich rewards for their services of emancipation. Such collective and concerted action on the part of proprietors will be a public service earning its proper rewards because exerted on behalf of the whole wealth-producing community and not on their own behalf at any cost or expense to any of the rest as in the case of all other pressure-group action. With such a group consciously motivated and properly rewarded, their influence could certainly extend to a very large abolition of taxes that are now used for useless or injurious purposes before there would need be any impairment of the essential public services that give rise to the payment of rent. Before any new revenue could be required for extension of any of the positive services of government the increases of rent from the abolition of taxes and negative services will have placed the proprietors in position for favorable financing of such extensions of actual public services as are in most demand and will therefore yield to them the highest returns in rents. Such employment of rent for public costs will escape the vice of taxation by taking the form of voluntary investment for the creation of profits, and profits that cannot accrue except as reward for services to others. It will, in fact, mark the beginning of public services being performed upon the basis of exchange and value received, for now the proprietors, financing public services, become public servants themselves and the paymasters of all subordinate public persons and will thus extend their supervisory influence by the power of ownership and administration.

With the public business thus financed by the sale of public services and conducted without the seizure of any property, all public services will create the revenue for their own financing. They will be paid for and supervised by persons whose incomes will depend upon the services being honestly and efficiently performed and will be purchased at market value by the wealth-producing users and occupants of land conducting their operations, exchanges and employments of each other free from the slavery of mounting taxation and monopolizing restrictions. Adequate and constructive public finance, honest and profitable public administration and general public freedom from monopoly and unemployment all will be the natural fruits of proprietorship in land coming into its proper function of financing and administering the public business and selling all its services as the proprietors of every private business must do.

1034.

Science is not a relief or escape; it is an illumination. It has no problems of peace or war. It is the ongoing and outreaching of the mind into light. It weighs and measures, systematizes experience by experiment. Thus grows in the minds of men patterns and processes that correspond with the structures that exist and the changes found uniformly to occur in the outer, in the objective world.

Science first discovers the limitations of things. It thus has definitions and puts things in classes, according to their limitations. It next discovers the relations of and between things. This process is discerned in structure; time is united to space.

Science deals with things and their relationships in space and time, with structures and changes, as they resemble and repeat themselves.

There are sciences that deal with structure and process in the individual man

--anatomy, physiology, etc. There are sciences that deal with the not-man, the environment, the structures and processes whence man is derived--astronomy, geology, chemistry, biology, etc. There are yet to be the sciences dealing with men in association, with the social structures and their processes which, taken together, will constitute the Science of Society.

One of these nascent social sciences is Economics. It deals with the structures (or groupings, institutions) of men and the processes among and between them--their exchanges of energies in service forms, that is, in acceptable and reciprocal forms.

Now just as the life of man must take on a physical form, so must the life of a society, the service energies of men, be performed by the aid or use of and wrought into physical things. These things before being so transformed are called land. After they have been in any degree so altered or transformed, they are called wealth or, more properly, capital. When the services incorporated in these things are no longer being exchanged, then these artificial things cease to be capital. And when all the services that have been wrought into them have gone out of them either by use or by decay, consumption or waste, then they cease not only to be capital but even to be wealth. As they were land before, so they become land again.

Now to have a social existence, a societal life form, with power to transform and thus exercise dominion over the earth (the land),in order to cease being merely the creatures and to become the creators of their world to the image of their desires and dreams, men must cease to wander and consume and destroy, and begin to create. To do this, they must attach themselves to a portion of the earth and convert it into a community. This means that they must so arrange themselves with respect to each other that a portion of their territory may become their common means of unmolested communication, association and exchange with each other. This takes the form of a street or road and a public or market place lying along and between the borders of their privately held lands. They designate special persons as public officers to take jurisdiction over and ensure equal and peaceable opportunity to use the public parts of the community.

In like manner, they make an arrangement among themselves for the equal opportunity of all, and upon equal terms, to have peaceable use and possession of the non-public parts of the territory. Invariably it is the popular will to do this by accepting those persons first in possession of locations, sites and resources as the necessary officers for effecting all further transfers of possession. These persons are given a formal investiture of title with authority to resist force, but to practice none but the contractual relations of contract and consent concerning further transfers or distribution either of the land outright, or of its limited use, and these proprietary officers receive in rents and "increments" such compensation for their service of social distribution as the common will, under the equal democracy of the marketplace, awards.

The things of nature in a community can no more be distributed by fear and favor, force and fraud, than can the things of art. When they cannot be allocated to the most productive persons--to those who can offer most--by the peaceful technique of contract and consent, then they cannot be securely or productively held and their use and value both disappear. But under the contractual allocation

1041.

Dear Sir:

Any man who owns any property for the sake of or in hope of profit or income from it is in business. If the value or income from it is declining he is in a declining business. Such is the real-estate business.

The strength of any business lies in the services performed for its present and its prospective customers. Its owners must give more in order to get more. We who own real estate (property) are in a declining business. We are trying to sell the services of public capital (as land value) and the services of private capital (as improvement value) in a weak market where they are in low demand--where the general business and production of our customers is at so low a level they have little need for real estate and still less power to rent or purchase it. They cannot use and so cannot purchase the

1071.

Three Great Problems confront the Western nations today: The problem of unemployment affecting both labor and capital; The problem of public revenue and finance, aggravated by the need for public relief, and; The problem of clean and efficient performance of the functions of government, that is, of the public services, for, beyond serving the public, there can be no rightful thing for public servants to do.

In its present state of evolution government is a compound of predatory and tribute-taking activities carried on by elected and appointed politicians and creative activities in the form of public services carried on by special officers and agencies established by public authority and delivering their services through the public highways and other rights of way only to the territory served by them and not to any individuals as such.

Where private labor using private capital, that is, using the materials and facilities of industry, needs the cooperation of public labor and public capital, the public authority takes private capital by taxation or otherwise and puts these materials and facilities into the hands of public servants and agencies to perform their public services.

These public services delivered by the government to its territory by the hand of its servants and agencies and through the public rights of way greatly increases the productivity of the private labor and capital which has access to these government services. A portion of this increased production is rendered up to the owners of territory along and between the rights of way in exchange for access to and use of the public services. This portion of increased production so rendered up to land owners is called rent and this rent is the value, year by year, of the public services delivered to the particular location. A portion of the rent pays the wages of the public servants. The other portion, remaining with the title holders, is their interest on their investment of capital in the public services. This interest capitalized is the proper selling price of land value. It is good business practice that land owners should receive this interest because all of the public capital is taken either directly from them in land value taxation or at their ultimate cost and detriment by taxes being levied on production and so reducing rent. The position of a land owner, therefore, is that of an investor of capital in the public enterprises of his community. This makes it of the utmost interest to him that the public capital be employed and administered in the most efficient manner. Moreover, he is, in effect, the paymaster of the public servants--directly so if he bears the whole burden of the budget and there are no taxes or other governmental restrictions on production and trade, and indirectly so if the public services are financed by the taxation of capital and business activities for, as the great finance minister, Turgot, maintained, all public levies and restrictions are to the detriment of rent.

Landlords are therefore the natural stockholders in the public enterprises and directors of the public servants not alone because they are the public paymasters but also because they are the only class or group whose private and particular interests are exactly the same and identical with the public and general interest. For every slackening of the public services reduces their rents and every needed improvement or extension of these services increases their net rents; that is, it increases the interest they receive from the capital which they or their predecessors have invested in the public services.

It is of the organic nature and structure of society that needed public services must create land value in the form of rents and that out of rents must the public services be financed. Adjusting the political economy in conformity with this organic law solves automatically three great classes of social problems: The problems of unemployment of both labor and capital, of want mid potential plenty and the need of public relief; the problem of public finance, of raising ample public revenue without distress or opposition; and the problems of public administration, of inefficiency, corruption and demoralization in public affairs.

Public financing directly out of production, taxation of industry and trade, disemploys the socially efficient capital and labor and leaves the socially inefficient entrenched as monopolies without competition, production declines, prices rise under the double influence of scarcity and monopoly, the disemployed capital is driven into destructive speculation upon the rising prices of commodities and securities and the disemployed labor is thrown on public relief to be financed by further taxation levied on a still more declining volume of production.

But the financing of all public services out of rent, out of what producers offer and freely pay for these services, emancipates labor and capital from all restraints upon their efficient employment--leaves them fully and creatively employed and provides for them the cooperation of public capital and labor in the form of facilities and services delivered to them in and through the public rights of way. Further, the public funds now coming solely from the rents collected by location owners, there comes into being at once a special class of persons who become directly the financiers of the public services and the direct paymasters of all public servants. By their position in the total economy, they are specially differentiated as guardians of the purity of government and the efficiency of all its services. These functions they may be relied upon to perform because only by protecting and improving the public services can their rents be maintained and advanced. Thus it becomes assured that the volume of production can be indefinitely increased by an emancipated private industry enjoying the cooperation of efficient public capital and labor in the public services and out of this increasing volume of production there properly arises a constant increase of rents accompanied by a decline in the cost of the public services that create them. The limit to this creative process can be seen only at the point where all the need and desire for wealth is fulfilled and the economic functions have become automatic and unconscious in the body of the social organism. From this point social growth and development doubtless will take the form even now already foregleamed in the unique psychic endowments and spiritual nature of mankind.

1079.

The total wages of any community of persons is the total amount of services, or useful labor, performed by that community.

Distribution of this gross amount of services among the members is in proportion to the capital administered by each of them, quantitatively and qualitatively considered.

Your Question Number One:

With rent degraded into taxation there could be no capital or exchange value in land or anything else, for the absence of rent points to the absence of any public services having any value, and without the protection of public services there could be no peaceable markets in which to carry on exchanges and no social values (exchange values) of any kind could arise. Since tax collectors and spenders could not sell services the only things they could sell would be privileges and immunities--exemptions of some to the detriment of others. These are the universal concomitants of taxation, increasing as taxes increase and ending only in social dissolution and return to barbarism.

For the benefit of those who may be so naive as to suppose that with increasing taxation predatory public servants can continue to give back in services the equivalent of what they have seized as taxes, let it be supposed, for a moment, that they actually do this. Then the value that they have destroyed by taxation they will have restored by public services. If this could happen, then rent would not be destroyed by taxation and land value would remain the same as before the taxation of rent was imposed. Land owners might then collect as much rent after taxation as before, and the capital or exchange value of the land would remain unimpaired. But increasing taxation, every kind of taxation, finally destroys all demand for land, all ability to use and pay for public services, and therefore all of their capital or exchange value. The answer to your Question Number One is, No. When all rent is abolished by turning it into taxes, land will not continue to have any capital or exchange value. Neither will there be any security of possession.

Your Question Number Two:

Besides all this, any levy on unused lands in addition to a levy on rent would throw more land out of use, instead of into use, because, after rent is confiscated, a further levy on unused lands could not be a charge against rent and would therefore necessarily be a charge against private labor and capital and would have to come out of wages and interest. This would reduce the production of wealth and therefore the demand for and the ability to pay for the use of land. More land would thus be thrown out of use.

Your Question Number Three:

What is necessary is that men (and groups of men in organizations for production or services) be permitted to create values by exchanging services with each other. To do this effectually they must embody most of their services in materials which they draw from the earth. Their services enter into and modify the materials and put them into the system of exchange. Such materials, before they have any services impressed upon them, are properly called land. As land, they have no human services embodied in them; they are not modified, they are not in the course of exchange, and they have no value. When they come into the course of exchange, either by being themselves exchanged or by serving as instruments to facilitate exchange, they are properly called capital--roughly classified as moving capital and fixed capital. When they reach the end of the exchange process they are no longer capital but are properly called consumers' goods. Their function is no longer to receive services but to yield services in the form of satisfactions. Just as they gain value while they are receiving services, so do they lose value as the services are transformed into satisfactions. When they can no longer yield satisfactions they can have no value and have become again, as they were in the beginning, land. This creative process is carried on by reason of the associative nature of men which prompts them to serve each other by exchanging services and thus create values and derive satisfactions. Nothing can restrain them from this process but brute force. Unhappily, men are not yet fully integrated as men. Besides their social nature, they have also an animal nature which prompts them to use brute force upon one another and destroy or seize from one another. Wherever there is any public service (government) adequate to restrain private violence there can be no employment of violence except it be on the part of the public servants themselves. All public violence rests upon taxation, which is itself a violation of the exchange relationship and which gives rise to every other form of public violence, including wars.

Most men desire to exchange. But because some men desire to get goods and services without giving goods and services in return, and some of them are disposed to use force to that end it is necessary to have the primary services of government as a public service to prevent this. Without such public service it would not be possible to establish and practice a system of exchange. It happens, however, that public servants are not content with restraining and punishing anti-social, anti-exchange, activities; they also restrict and restrain, and with increasing effect destroy, the very processes and instruments of exchange itself. Thus, by the seizure of private property and by the anti-social use of the property after it has been seized, political power not only fails to assist but is directed against the fundamental social technique and all civilized values are finally destroyed. This is because the exchange technique that is carried on by the use of prices democratically determined in open markets has been brought into use only as affecting the exchange of private services and has not been extended to include public services. A successful society awaits and depends upon government being brought within the democratic social process of exchange. This, and this alone, is true socialization. Most of the economic functions formerly carried on within the family organization have been socialized in this way. Increasing trade and division of labor brought them out from the arbitrary control of the family head and brought them within the democratic market control of the general system of measured exchanges. It remains to bring the services of government within the same system. It is not that society must be governmentalized but that government must be socialized. Only when this is done can there be a free and efficient system of production and exchange. All private services have been socialized, so far as they can be while under governmental restrictions, by adoption of the principle of exchange. The last refuge of force and tyranny in human relations, the last citadel of arbitrary power, is government by seizures and restrictions, by what is so often miscalled "social control." To tame such government into a technique of service by measured exchanges through the mechanism of rents paid to public owner-administrators is the true task of all constructive statesmanship, the only effectual patriotism, the only fundamental philanthropy. To extend the scope of such governments as now exist is treason to society, the betrayal of mankind.

Henry George refused to make common cause with those who proposed to abolish private property in land. He stood for private ownership as opposed to nationalization or state ownership. Prophetic insight led him to preserve, by all means, the form, at least, of private ownership because he perceived, whether clearly or not, that there were indispensable social functions necessary to be carried on within that form and that could be carried on successfully in no other way. He therefore proposed to abolish not ownership and not rent but, "To abolish all taxation save that on land values." And he tells us that this would in effect abolish all taxation, for all payments would then be made on the basis of value received. He made his saving proviso only because he had not yet fully perceived that with taxation abolished all rents would freely flow into the public services that create them.

Sincerely and as ever yours,

1083.

Services

in land Rent to landowners

Labor uses And for them pays and

Services Interest to other laborers

in goods for which it also pays rent.

But cost of collection and damage to production is, say, three times net taxes. But when collected, not more than one half of net taxes are productive of land value. This makes land value (services) cost eight times more than it should, so rent falls below cost except as advance in the arts carries production ahead of costs. When this occurs rents rise rapidly, speculation sets in, all costs are thereby increased to offset the advance in the arts and rents fall again. Rent, wages and interest all come from production and all rise or fall together. The only exception is where fast growing population keeps up an abnormal demand for land value. Why do not all three advance continuously? Because [of] the high cost of producing land values (by public services costing eight times what they should).

This cost could be reduced by requiring land owners to pay out of rents the entire cost of public service. This would relieve industry and productions of about seven-eighths of its present cost and damage by reason of taxes, leaving one-eighth to go to increase rents, for land value then would be worth at least its cost to industry as measured by the total rent (taxes) paid via the landowner.

If the landowners, besides paying out of rents the cost of public service, should also work the public enterprises, the most of their taxes (out of rent) would come back to them in wages (salaries), and if besides taxes they made further investments in public enterprises and effectively administered these investments and enterprises, they would make enormous profits upon their investment and labor. And the same could then be true of those investing in private enterprises then emancipated from the destructive tax burdens on productive activities and the burden of public waste and corruption.

1084.

Dear Mr. Kendal:

I promised you so here goes.

The first thing is this:

Whenever anything is paid, the thing in which payment is made is either wealth or services in some other form. The thing for which it is paid may be either of two things and must be one or the other. It may be wealth or services received in exchange or it may be exemption from some harm or greater evil at the hands of him to whom the payment is made. In other words, payments are not made except on the one hand to gain or repay some benefit from the payee or on the other hand to escape some harm that he has power to inflict.

Now taxes are payments that are made in order to escape some greater harm at the hands of the power that collects. They are paid to escape loss, not to make any gain. The motivation to pay them is animal--to escape harm--not the human motivation which is pursuit of what is good, what is desired, and what has been visioned and dreamed.

But rent is no such payment as taxes. Rent is paid by way of exchange and without compulsion. No land owner can levy rent. Rent is rendered; that is why it is called rent. It is taken a render and not a prender, as the old law terms go. It is taken not by levy but by exchange. The historic struggle with the English kings was to keep them on their original basis of being maintained out of the rents freely rendered to the lords and barons within the realm and then by their consent rendered to the king in exchange for his public services to the realm. The Norman and later kings sought to break down this aboriginal plan. They sought to lay taxes--tribute, by force and without consent--instead of being content to take their revenue by consent of the lords out of the rents rendered to them.

Under the Saxon kings, this conflict did not arise. These kings were the servants of the Witan, the council of the earls who owned the lands, and the kings remained the servants of the realm because they had no power, no revenue, but that rendered to them by the lords of the land.

But with the Norman kings it was different. They had mighty dukedoms in France and there they recruited, again and again, the treasure and the men to make virtual warfare against their own people, against the free institutions of their English realm. Where Alfred enacted laws by express authority of his Witan, to whom he was beholden for all his power, the Norman kings took the moralistic view and sought to acknowledge no authority unless it be that of God, and that only as manifested in their personal will.

So, in England the institution of taxation by tribute, a prender instead of a render, was a Norman importation that brought chaos into the whole societal structure for hundreds of years and is today fast dissolving all those bonds of social union upon which civilized life depends.

It would be interesting to show in full how this poison of taxation destroys--how the multitudes of our social and economic evils arise from it, how it is that we cannot have taxation without the chills of depression alternating with the fevers of speculation and spurious prosperity, and over all the pall of monopoly with disemployment and starvation wages to both labor and capital and consequent restricted production at artificial prices that only a few can pay. But all this belongs to the pathology of taxation, all being the symptoms, the various manifestations, of the one basic disease, whereas the present is intended for a discussion of economic rent, that is, rent that arises out of the services given to land.

Economic rent is a normal phenomenon, a manifestation of the harmonies of natural law. The reason taxation is destructive and abnormal is because it is a violation of the principle of free exchange. Rent is normal because it is a manifestation of that principle. Rent is wealth or services given in exchange and upon terms of exchange that are measured in an open market and consented to by all parties concerned.

What is rent exchanged for? The thing that is received and for which rent is paid in exchange is a special kind of services called public services. If rent were paid for other than services, it would not be rendered; it would not be an exchange; it would be giving without getting. It would be taxation, tribute, robbery, enslavement, or anti-social spoliation of some kind, whatever the name, but it would not be rent.

The services for which rent is paid, being public services, must of necessity be performed by persons having public authority conferred upon them or, at least, recognized and accepted by the society at large. Indeed, the society cannot exercise any of its authority, or effectuate its collective will, except through officers and agents whom it establishes or recognizes for that purpose. Now society recognizes two distinct classes of public officers and servants, according as they have jurisdiction respectively over the private and over the public parts of its territory. The first are the proprietary officers, the second are the political or public servants. No society exists without these two sets of officers, but the political is an offshoot from the proprietary, which is patriarchal in its original form. The patriarchal society grows out of the tribal, as its habitations become fixed, and the proprietary-political grows out of the patriarchal. Every advanced society is of the proprietary-political character as to its jurisdiction over its territory and all its public services and authority. The proprietary consists of the land-holding, land-administering, rent-collecting class of public officers. Their services are administrative. They negotiate leases, establish tenancies, and to them is rendered up by the users of land all the public revenue or rent.

In all free and spontaneous societies, that is, societies that are not planned or under dictators, the king with all his military and judicial subordinates holds power under them, for he and his entire political (public service) organization depend for their revenue and supplies upon the public revenue of rent out of the hand of the proprietary to whom it has been rendered. And this basic dependence of the political upon the proprietary gives to the latter their administrative and supervisory position. It may be doubted if throughout all history there has ever been laid upon arbitrary and coercive, tribute-taking, and political power a single finger of restraint except by the hand of the proprietary that also furnished the "supplies." Revolutions there have been, with but change of political personnel and transfer of power but never any curtailment of destructive political power--except by the landed proprietors themselves, in whatever age or land.

The aggregate rent that proprietors receive is the net value of all the public services, including their own administrative services. This rent is, on the whole, very scanty, because vacant lands yield no rent at all. This reflects the low value of government--how little worth having its services are. The destructive use of political power results from the modern lack of any supervision of the political power by the proprietary, to their very great cost and loss in public revenue (rent). The Physiocrats saw that taxes and all destructive acts maintained by taxes were impairments of the public services and therefore a deduction against rent. With this in view, at the present time it may be wondered that there is any rent at all now being paid. The fact is that little or no rent is now paid, except where large amounts of public capital have been put in public use. Even so, it can be paid only out of such production as taxation has not destroyed, and paid by the monopoly interests that rise out of the general constrictions on trade. So the rents now collected are only the shreds of value left in the public services after bad taxation and bad spending of the taxes have wrought their deadly results.

Having seen how it is depleted, we can now give attention to such rent revenue as there is. Like all legitimate revenue, it is paid for services and is the measure of their value. Let us see what are the elements from which arise any proper revenue: These are labor and capital. Labor is of two kinds, administrative and subordinate. The return to administrators is contingent and we call it profit. The return to subordinates is fixed and we call it wages. Capital is of two kinds: The materials worked upon and the tools and facilities used in working upon them. The services of labor are much more productive and of higher value when materials and tools are engaged than when labor is applied only to nature and no capital (materials and tools) is employed. But when the results of past labor (capital) are annexed to present labor, so much of the increase of productivity to present labor as the market determines for the owners of the capital is called interest. This is the market value of past labor (in its fruits) continuing to assist present labor. From these circumstances it comes about that there are two elements to be recompensed in every revenue: The return to present labor, this being the profits (or contingent wages) of administrators and the fixed wages of subordinate labor, and the return to previous labor that is called interest.

Rent being a revenue (wealth) that measures the value of and is given in recompense for public services, it must reflect the value of the labor and the earnings of the capital out of which the services arise. Now it happens that the wages of all public servants are taken by them through taxation, and taxation, being a negative public service, is a deduction from rent and therefore cannot appear in the rent (meaning of course net rent after taxes). For this reason the net rent received by proprietors today does not contain the wages of public servants. There is left to proprietors, therefore, beside the value of their present very small administrative services, only the earnings of the free capital employed in the public services--that is, the earnings of the unborrowed capital, the capital earnings after deduction of service on the public debt. So present-day net ground rent is chiefly the earnings of the unborrowed public capital. I say chiefly because a small portion has to pay the administrative costs of land owning-the costs of management of tenancies and collection of rent.

Taking the net rent of any community (after all taxes) as 100 and assuming the administrative costs of land owners as 10, then there remains a value of 90. This 90 is a true capital value because it is the earnings of all the free capital in the public use. It does not contain the land owners' administrative profits (or wages) for that 10 has been deducted, and it does not contain the wages of any public servants because such wages have all been taken by taxation, as have also the charges on the public debt. Taking 90 then as the actual income from all the free public capital, the value of all such public capital will be in accordance with the prevailing interest rate. In a market where such capital commands two per cent the value of this free public capital would be represented by the figure 4500. The capitalizable rent of 90 is therefore really the earnings of actual capital to the value of 4500. This capital, not having been borrowed, is really the property of those from whom it was seized by taxation, but as they cannot be identified no restitution of its earnings to them is possible. It is his undivided interest in this free public capital that a land owner sells when he sells "land" on the basis of its capitalized net rent. Of course when he sells land that yields no present rent he is not selling any present wealth. He is only trading his relative fear for other men's relative hopes as to future rent coming to be paid.

Having now seen that net rent (less administrative costs) is the yield from actual capital that has been forcibly appropriated to public use, it remains to inquire how this income distributes itself among land owners and what are the forces and conditions that cause it to rise and fall. This is illustrated by the condition common in many communities where perhaps only one in four of its most desirable and best served locations is occupied and yielding rent, notwithstanding that all of them have equal or similar municipal and governmental services. This condition reflects the fact that under the prevailing tax restrictions on exchange and production not enough employment of labor can be carried on to require the assistance of more than a small part of the public labor and capital and therefore not enough wealth is being produced to constitute effective demand for more than a small number of the locations to which the public services are supplied. All the rest of the locations must remain unoccupied and sterile of rent. The owners of the few occupied locations collect in their rents all the public service value that there is in the whole community and this, as we have seen, is almost exclusively the earnings of the unborrowed capital in the public use.

1086.

Dear Mr. Kendal:

Say a man owns (or receives the earnings of and therefore virtually owns) capital. The potential past labor stored in that capital can be brought out only by administrative services (labor) applied to the capital. When it is so brought out the product is the joint product of the past stored labor in cooperation with the present administrative labor. This joint product can be used all for income, in which case the capital gradually disappears and with it all that part of the joint income that was due to the cooperation of past and present labor, which is administrative earnings, and the erstwhile administrator would be reduced to carrying on without capital, and he would have no income but what he could create or earn by performing non-administrative services. He has, in fact, used up his capital by converting it into income and he now has this accumulated income--all that he received above non-administrative earnings while the capital was being used up as income--in place of the original capital.

If this amount of income that he has accumulated above non-administrative earnings is greater than the original capital, he is in position to replace or, in case it was borrowed, to repay, with interest, the original capital and still have remaining to him a portion of his accumulated income above non-administrative earnings. This, taken with what would have been his non-administrative earnings, makes up the superior income and earnings that he has by reason of his employing capital and performing administrative services in connection therewith. If this superior income for this superior service does not come to him it is because his services have not been superior, and such a man will either improve his services or he will cease using and administering either his own capital or any capital that he might borrow from another for that purpose. In the latter case, he resumes his rank as a wage or salary worker and receives in wages only the value of his non-administrative services under the supervision of another person who is a more successful (let us hope) administrator of either his own or his borrowed capital.

In the foregoing instance all matters of depreciation and obsolescence have been taken care of in the fact that the accumulated administrative income does or can replace, with interest, the original capital. And it does and must then also provide a superior income, earnings or wage (I prefer to say profit) to the administrative services above what non-administrative services can earn. If it did not, in general, do this, then there would be no inducement for persons having administrative capacity to use and administer capital, and capital would not be administered or used. Happily, there is a superior reward for administrative services and that is why capital is used.

It is true that wage workers also use capital, but they use it under supervision and not as responsible owner-administrators. It is true that a part of the increase of production that comes from the use of capital goes to the wage workers, but it goes to them, not as a separate fund or income, but in the higher wages that competing employers (administrators and owners of capital) must offer to their wage workers when their total production is increased by reason of the capital they administer being in the hands of skilled wage workers (skilled in the use of but not in the responsible administration of capital) under their supervision.

If and when (happy day) land owners abolish the taxation that now so nearly cancels their rents and take over the responsible administration of public services, their gross income of rent will be adequate to include: All wages and other ordinary costs of doing the public business, the necessary accumulation (reserves) with interest for replacement of capital as it is used up, and an income to them for their administrative services, depending upon the value of these services and being what they earn. If, in their replacement of capital, they are not able to replace it physically in such manner as to ward off obsolescence, then the replaced capital will, in time, cease to have any value, and they must then replace it out of their own accumulated earnings or out of the accumulated earnings of others who would lend it to them.

But at no time will capital continue to be employed in public service or in any other service unless it can replace itself and yield current interest to the owner or to the lender of the capital so employed, besides yielding administrative income to administrative services. It is this capital that (if it is owned and not borrowed) can be sold by a retiring owner-administrator to a new administrator who purchases his "land" at a price that is determined chiefly by the present and prospective earnings contained in its rent above all ordinary and all administrative costs. This margin above all costs will be the interest earned, and the capital sales value will be (roughly) this annual amount divided by the current interest rate.

What I have said about the administration of capital earning a superior income, I believe, applies to all capital at all times and under all conditions so far as the conditions permit the capital to be successfully employed. To the extent that seizing property by taxation (and the antisocial use of the property seized) slows down and prevents the operation of the general system in which services and commodities must be exchanged (if they are to be performed and produced), to that extent both capital and labor will be disemployed and the whole phenomenon of the responsible administration of capital and the supervision of wage and salary workers will be distorted and debauched with those distresses and irregularities which, existing under present conditions, make my description of their normal functioning, for many people, difficult to understand.

Most of what I have written in this letter is the result of recent thinking that has been stimulated and suggested by you. I am not at all certain that there are no errors in it, but it seems to stand up under all the criticism that I, myself, am able to give it. I will be very glad to have you go over it carefully and let me know if your mind is able to travel along the same lines. I do not think I have expressed anything that is contrary to your own line of thought.

1072.

To the Editor of The Sun:

Anent the much consideration being given to our economic order, a great philosopher has said:

"There is in human affairs one order which is best. That order is not always the one which exists, but it is the order which should exist for the greatest good of mankind. God knows it and wills it. We must discover and establish it. "

This order is not to be invented or manufactured, it exists. Like beauty, it shines on us, but we shade our eyes and looking down see shadows and confusion.

In our community affairs (as in personal ones) we acknowledge no derangements until they give us pain and then we are so preoccupied with our "evils" to be relieved by this or that artifice in opposition that we are all but oblivious to the good creative elements in the situation which, if we but permit them, are so ready to expand. And instead of rejoicing and giving reverence to those things which are creative we degrade and hobble them and we call such measures wise and corrective of evils.

There are many creative activities. They range wide--from mere social intercourse through recreational, literary, artistic, educational and religious activities, and from the simple economy of primitive community life to world-wide interrelations of production and exchange. All these are sacred and should be inviolate as God. There are also destructive activities. It is they that violate all the creative. We must learn to distinguish and desist. Plato said, "He shall be as a god to me who can rightly define and divide."

The present stage of history is marked by vast political organizations the very magnitude of which, perhaps, inspires superstitions, awe and the attribution to them of miraculous powers and virtues. They have only one power: The power to tax. All other powers derive from this power. This power bears upon the creative elements of society and diminishes them. By its nature it cannot create. The only proper use of this power is to establish and maintain conditions of free association--that is, conditions of peace and order and the necessary common highways of communication of every kind with their necessary improvement, equipment and services.

These common services--which cannot be provided privately nor enjoyed otherwise than in common--are the only creative activities that can be performed by the political organization, and this is only so indirectly through maintaining the necessary conditions of non-interference under which creative activities can be freely and effectively carried on. These and only these are the proper and fruitful services of government. The productiveness of the social organism must be watered by these services and immunities. Without this much government men cannot organize and put forth their cultural and economic activities. With more than this they are stifled and enslaved.

Now these public services have a value and they have a cost. Their cost is the taxes which support them. It is an annual cost. Their value is the rent or annual premium which attaches to exclusive locations in proportion to benefits received by or at these locations. We must note that government services are not furnished to individuals as such but only as owners of the locations where the services are performed. The owner, however, receives all the value and advantages of government either immediately, if he is the occupier, or in the location rent if he lets to anyone else.

This value received by the owners either in advantages or in rent is the return from government to them of all the taxes they have paid to support it and, in addition, all the profits created by its operations. In view of these returns to location owners no question can be raised as to the propriety of the tax contribution coming entirely from them. In fact, the owners, even if they desired, could not escape this contribution except at the cost of assuming a greater burden. If the cost of government should be laid otherwise than upon location owners, the imposition of such a burden upon producers would not only subtract from the community wealth but would hinder its production as well, and our location owner would now be reduced to collecting his rents from a community already impoverished annually by more than the amount of the rent. And he is constrained to the spending of such rents as he may obtain in a market oppressed and depleted by taxation.

A tax merely as such is a disservice and must be collected only from him who receives the service created by it. And if the value of this service is not greater than its cost (the tax), there is no advantage in the service being performed and no excuse for such a government to exist. The interest of the location owner therefore constitutes him the natural guardian of honor and efficiency in government administration. Doubtless, the historic predominance of land owners in government and statesmanship has some connection with their having been such large contributors to the cost of government and such heavy sufferers in the revenues received from their lands whenever government has abdicated to anarchy on the one hand

or, extending beyond its simple and proper sphere of services, has blighted the creation of and the enjoyment of wealth by its burdens and restrictions--as it does in nearly all lands today.

It is to almost everyone a strange and unaccustomed thought that government should be by and for the landed interest, that the value of its services should contribute exclusively to the revenue of land and that the ills of government badly administered should eventually impair and finally destroy that revenue. This seems a perfect antithesis to the common ideal. But a government economy based exclusively on tax contributions from land owners according to the annual value of their lands, and performing services directed by and delivered wholly to them, is the organic pattern of government to which nature invites us for complete economic freedom and the full enjoyment of all our creative powers.

To the Editor of the Sun:

With the Administration so hotly engaged in hiring people to destroy the Nation's so-called surpluses of clothing, grain, meat and other necessities, purchasing the premises of farmers to lessen their future production, combining all other industries into a congeries of monopolies for the raising of costs and prices and reducing output and with it dragooning all unclassified businesses into a frame of artificial costs and restricted operations, it may not be amiss to pause and ask: Why is a surplus?

If Texas wants wheat for bread she produces a surplus of cotton. If Minnesota wants cotton for shirts she raises a surplus of wheat. How are these two surpluses liquidated? Clearly, by trading (exchanging) the one for the other. Without this Texas, loaded with surplus cotton, starves for bread while Minnesota, bulging with wheat, shivers for a shirt of cotton. When these surpluses are exchanged the name for it is Trade or Commerce. Governments alone can prevent or destroy trade. Some of the weapons they use are: Taxes, licenses, quotas, tariffs, excises, inspections, restrictions, regulations, codes, quarantines, monopolies, embargoes, blockades. These destructive measures bear specifically on cotton and wheat in many ways so as to create an apparent surplus. Among the worst of these are taxes on processing, that is, taxes that reduce or destroy the profits of the milling and other secondary industries both of cotton and of wheat. Increasing five-fold in recent years, taxation has destroyed the millers' profits. Mills without profits are closed down, their operatives discharged. With the mills closed the cotton and the wheat appear at once as surplus unsalable on the farmers' hands. Damming the streams of trade at tax-blighted mills is but one example. Taxing profits out of production in secondary industries reduces first the value and then the quantity of taxable commodities, dries up the sources of public revenue and destroys the value of real estate for there can be no healthy demand for land while business profits cannot be made.

The Government can correct this condition only by reducing taxes as much or more than the national income from business has been reduced and by cutting down its operations and expenses so as to live within its reduced income without borrowing. There never was a royal road out of profligacy, except by honesty and economy, any more for governments than for individuals. The alternative is public bankruptcy and revolution whether it be under a new deal or under the old.

Spencer Heath

1088.

Dear Mr. B

I have kept your letter of last February in mind and am at last writing you my comment on your memorandum of what might happen if the abolishment of all taxation save that on land value should not destroy the selling price of land.

Under your memo, in no case does the user of land ("developer") appear to derive any value from it. In the three situations cited the "developer" is subjected to annual charges of $2400, $1700 and $2450 without appearing to get anything in return. It must be seen that the advantage or disadvantage of his situation depends vitally upon what are the annual advantages he enjoys to offset his annual charges.

While it is true that under restricted production (restricted wages and profits) persons will purchase land (with and without improvements) that yields them no annual income to offset annual charges, hoping upon a resale of the property to more than recoup themselves for the carrying cost.

But we should never forget that after abolition of restriction (taxes) on production all capital would be too gainfully employed to risk the hazards of speculation for it is only capital that has been disemployed out of its productive activity that is tempted into speculation upon the rising prices that follow the cutting down of production.

So, under existing conditions your man puts out $30,000, and it costs him $2400 annually to carry it. We do not know what return he receives from his enterprise but we know that he has a $10,000 ownership in the public capital (public service facilities) and $20,000 in private capital and his total capital should produce an income to him (interest) above all wages paid including his own. To bring him out even, under existing conditions as stated, his capital must yield him eight per cent (8% of $30,000 = $2400). But we all know that, by and large, capital is yielding only about two per cent and much capital is being destroyed and consumed. Since he cannot receive more than his capital can yield under present conditions so adverse to production, he can only realize, say, two per cent, which is $600 annually upon his capital. This leaves him an eighteen hundred dollar annual loss which, I believe, is a fairly typical situation today. He is, of course, trying to liquidate his holding and this keeps the values of both land and improvements at their present low levels.

Referring now to (a):

Here the carrying charge on his private capital (improvements) is $1,000 and on the public services and advantages appertaining to his land he pays $700. This seven hundred dollars is (by definition) the annual value of the land. But this includes both the wages of public servants and their supervisors and the interest on the capital invested in the public services. If we take the wages at $400 and the interest at $300 then the public capital value of the land is $6,000. This $6,000 has been invested in the facilities of public service either for or by the present owner or his predecessors in title and he will retain the $300 interest on this after buying the wages of public servants and supervisors. Thus out of the gross rent of $700 paid for the use of land, #300 is retained by the land owner (the same person as the land user in this case) as interest on capital invested in the public services and the capital value of this or market price of the land will be $6,000. By having this selling price, and only in this way, it is possible for persons having special interest in public enterprises to become the owners of the capital invested in such enterprises. So our man really must have an investment of $26,000 the carrying cost of which is $1300.

[The following is part of the memo referred to; additions in handwriting

Improvement values 1,000,000

State and national taxes 30,000

Under existing conditions

a real estate developer might pay:

For land $10,000

For improvements 20,000

Local tax at 2% 600

State and national taxes 300

Income from investment @ 3.5% 1,050

Capital withdrawn and put in savings bank

or government bonds @ 2 to 3% net.

improvements or personal property, and no state

or national taxes except on land values.

(a) If land prices disappeared, this developer would pay:

For land $00,000

For improvements 20,000

All taxes annual value 700

(b) Under Mr. Heath's theory, the developer would pay:

For land, say $15,000

For improvements 20,000

All taxes (assuming that increases in

governmental costs would be offset

by wise economies) 700

(1) He is a land owner whose business (under my "theory") is to create land value by financing and administering public services (Government).

(2) He is a land user whose business it is to produce private value (wealth) without any burden of taxes or other restraints but with the aid of the public services for which he pays rent so far as it profits (aids) him to do so, and no more.

If he finds it profitable to pay $1,000 per year for his part of the public services, the rent will be $1,000.

The landowner spending $200 in cash (taxes) for current operation and maintenance of the public services and $100 for his administrative services would have $700 left to cover return on his original investment of $14,000.

1089.

Land owners, in a very practical sense, have community of ownership of the same property, to wit, the capital engaged in public services, except, of course, the borrowed capital. It is their social function ultimately to administer all this capital, including the borrowed capital, and to supervise all these services, unitedly and democratically, under parliamentary organizations and procedures among themselves.

The public services to their community, thus administered and supervised by democratically organized land owners, make their appearance as the rental or, when capitalized, the sales values of their respective holdings. Property in land thus confers services upon the territory and makes it possible to distribute them among the inhabitants by sale and exchange and without privilege or favor. The owners individually have the final administrative function of merchandising these public services democratically to the public at large. This consists of the land owners coming into the general market, as they now do, and there selling their shares of the current public services, according as they find demand for them at their respective locations, and receiving rent to the full market value of them in return.

Without taxation or any restrictions but rather with public aids and services to production, these gross returns must become exceedingly large--far larger than all previous land rent and all previous taxes of all kinds combined. As in any other business, this income from sales will defray all costs of operation, including ample recompense to the owners for their organized administration of it and for their democratic distribution of its product by sales to the public as tenants at rates which the general market prescribes. This conduct of the public business democratically, without taxing and without being taxed, will yield to its owners profits strictly commensurate with the social value of all the public services performed or social benefits and advantages conferred.

Nor can the land owners form any closed hereditary class, for without taxation or penalties on exchange the free purchase and transfer of title

1091.

Dear Sir:

I wish at this time to offer you my sincere thanks for the very great service you have been to your State and to our country in resisting the destructive demagoguery of the "New Deal" and doing so much to preserve the foundations of our free government and civilized society. I am thankful that you have the historical sense to understand the significance of the whole movement to concentrate autocratic authority in a single man or his subservient group and the political fortitude to stand aloof from the false humanitarianism with which the ambitious politician always cloaks his lust for unbridled power.

The present underhanded attempt to stuff the Courts, superior and inferior, with "the King' s creatures" and to designate special judges for the trial of particular causes is too reminiscent of the Courts of King's Bench and Star Chamber and the Bloody Assizes to be thought of without shuddering, while the movement to take over all control of budgetary expenditures and the prosecution and persecution of "tax evaders" would set the stage for another Charles.

What gives men any life and subsistence above the beasts is the amount of free business they manage to carry on despite political pressure and regulation. It is only by the voluntary exchange and distribution of a variety of specialized services upon terms determined in open markets that men can have any employment to create the civilized values out of which to pay each other. All the evils and imbalances of our business economy comes of political pressure and repression that creates special privileges and monopolies and destroys the essential and unconscious democracy of the market-place--the place where men assemble and vote their wishes and desires and thus establish democratically the terms upon which they redistribute among themselves their goods and services or other properties, without any force, violence or arbitrary decree. It is the proper office of government to preserve the democratic freedom of the exchanges, not to destroy it by its arbitrary invasions. Government is the only undemocratic, unsocialized force in civilized society. It is the only service that is not based upon the principle of measured exchanges for its services, the only business that still continues to be conducted on "the good old plan, that he shall take who has the power and he may keep who can." What is needed is not more and more desocialization of the democratic processes of exchange by the coercions of government, but rather the socialization and democratization of government from an instrument of coercion by seizure into an agency of service by exchange. There can be no real and permanent prosperity or any social security at any level of society until business tames government into the technique of service and exchange in place of force and seizure. This change will sound Utopian no longer than we neglect to examine the structure and normal functions of our system of democratic exchanges of services and discover the relationship of rent and proprietorship in land to the public services. When this is understood (as it easily may be) the enormous profits and values accruing to every interest involved will insure the automatic socialization of the public services by their gradual adoption into the general system of democratic exchange.

It took men ages to discover the advantages of trading above seizing; how trading increased their wealth and subsistence while seizing diminished and destroyed it. It has taken ages of political repression of trade, under alternating absolutist and 'democratic' forms, for men to learn how governments can confer their public services by the democratic technique of measured exchanges and thus derive their revenues from sales instead of seizures.

The wisest of the ancients could not conceive of society without slavery. So, the moderns must learn to conceive of society without seizure, of government without taxation. If this seems Utopian, as did a society without slavery, we must remember that tribute and taxation, the seizure of property by political authority under whatever forms, has bankrupted every government and destroyed every social organization of the past and now gravely menaces the stability of every society in the Western World.

So long as government employs no technique but force, immediate or ultimate, and enjoys no revenue but from seizures and arbitrary charges, it is already essentially communistic and becomes completely so as taxation moves onward to an ultimate 100 per cent and control of all property passes to the dominant authority. But before that consummation, the basis of taxation will have been destroyed, there will be no capital to administer, and we will have reverted to the original barbaric communism from which society emerged.

The socialization of public services, as we socialize the services of food and clothing by the technique of the market, is the only escape from social dissolution and the only final answer to communism and all the other schemes for the governmentalization of society.

The nation is not without hope while there are in public life a few men who see clearly and feel strongly what is necessarily implied in the extension of governmental power and the breaking down of all constitutional barriers against its crudest and most vicious exercise.

1095.

This $1,000 rent must cover a number of items of public cost. (1) Interest on capital outlays for public works etc. (2) Current costs of operation and maintenance (3) Compensation to land owner for his administrative services. (2) would be paid as current taxes. (1) and (3) would remain in the land owner's hands. If he sold his ownership in the land he would and could sell only the capital value of (1). This would be a mere transfer of his share in the fixed capital devoted to public services. If (1) is $700, (2) $200 and (3) $100, then the land would sell for the capital value that would yield $700. At 5% this would be $14,000.

The land user invests and employs capital (improvements, equipments, stocks of goods etc) in the land. If this capital should be five times as great as the share in public capital devoted to this land it would be $70,000. A return of 10% on the capital in the business would leave $6,000 for profits (return on investment and salaries of administrators) after paying rent $1,000. If the building (fixed improvement) should be owned [?] by other than the user a due portion of the profits would go as rent of building.

1098.

Natural advantages and attractions are an important influence to determine the regions and locations in which both public and private services will be most performed and in or at which public and private values will most arise. These values, however, are the exchange values of the services performed and exchanged in or at the natural environment and not any values of the environment itself. The latter possesses social utility because it can be used, but not social value because, apart from present or prospective services incorporated in or conferred upon it, it cannot be exchanged, however much the services themselves may be, when present, or the expectation of them may be.

But the operation of the exchange system itself, except as it is impeded and obstructed by taxation and other political coercion, does distribute over its entire membership the natural advantages of location, fertility, deposits or other natural utilities employed by any of its members. The exchange system performs this social distribution of natural utility advantages by setting proportionately low prices or exchange rates upon the more abundant production that arises upon the use of natural utilities and advantages. The exchange system, in fact, so far as it is allowed to operate, distributes evenly over its entire membership, by means of its price system, any increase or decrease in the abundance of production that is due to the operation of natural causes. The exchange system is thus capable of distributing natural advantages or disadvantages equably over the whole population, in addition to its primary function of securing to each member the full exchange or market value of the particular services contributed by him.

What gives natural materials, locations and advantages often an appearance of exchange value, apart from the services involved in their use is the tendency among men to stake their use of present capital against the prospective advantages of future income from public capital through ownership of land.

When production is rising more rapidly than taxation, or when, through monetary inflation or otherwise, it appears to be doing so, this speculation in land values is called expansion or inflation.* When taxation rises more rapidly than

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production, and its effects become realized, this speculation, in reverse, is called retrenchment or deflation of land values.

This expansion and deflation of the speculative value of land, which is the speculative value of public capital, apart from its use or income value, which is rent, corresponds with what takes place with the value of private capital, according to the general expectation that it will become more and more or less and less productive. It is a reflection of how business men (meaning administrators of capital) feel with regard to present and prospective taxation and restriction on production as compared with the present and prospective technology and organization of the productive machine

--their anticipation of the relative effects of these opposing forces on production and income.

Were it not for the irregularity introduced by governmental seizure of property and restriction on production and exchange, men would not alternately prefer future values above present ones and then present values above future ones in cyclic depressions, and speculation would cease,* for there would be no values but present ____________________________________

*This, of course, does not refer to speculative enterprises in which capital is risked upon the successful development of new inventions, discoveries or methods of production and without which no economic advance could be made.

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income values and all values would rise at the same rate that production and income would increase.

In this condition of free production and exchange of present values alone, there could be ever-increasing production and values from the application of services to land and natural resources, thus transferring [?] them into capital, but there would not be nor could there need to be any monopoly or speculative value in any of the resources of nature themselves apart from the value of the services applied thereto or the wealth and income thereby brought forth.

It is to the highest interest of all land-owners that by the liberation of wealth-production and exchange all the potential values of their idle or half-used lands and natural resources be matured [?] into actual incomes and Into the magnificent capital values that such incomes from production would support.

1117.

Dear Mr. Geer [?]

FORTUNE stands for riches--the creation of values.

All riches come from using property to do things for others, thus inducing income. This income capitalized (headed up), Is the value as capital of the property so used.

Land is the basic property. Until owned, possession is precarious, holding for others impossible, income absent.

Possession for self-use is self-service, without income, without value--no exchange.

Possession without ownership is altered only by force. Possession with ownership is changed by agreement, contract, consent. Such change--redistribution--is a service, a sales or leasing service, inducing income.

Ownership is not merely possession. It is authority to make changes of possession--to distribute--peaceably without violence by a sales process, a sales service, and for this to receive the income called rent or, capitalized, called price.

Ownership, in practice, is distribution (nonviolent, non-compulsory) of the advantages, natural and/or artificial, appurtenant to sites.

(Imagine Galileo or Darwin or Mendel being asked to summarize his ideas in a short letter.)

Through these services of distribution, and not without them, annual values--rents--and selling values--sales prices--arise. These values are the recompenses for these fundamental social services, services that displace, supersede, distribution (change of possession) by force.

Possessing sites for self-service brings no income.

Owning sites for others--service by sales service--peaceable distribution of advantages appurtenant--makes land productive, brings rent or price.

Public, political, "services" are based not on services but on force, hence bring no voluntary income. Political authority (non-proprietary) serves it self only, therefore has no voluntary income but must seize the incomes of those who serve others.

1125.

In all their private and non-governmental affairs, civilized men among themselves tolerate no relations but the relationship of giving and receiving services by voluntary exchange and upon terms fixed and agreed by themselves.

In all their public and governmental affairs, the individual man is coerced by constituted political authority into giving up his property and services and submitting to their disposition and use in such ways as political authority finds expedient and prescribes--all without reference to any agreement or consent on the part of the individual. This is equally true whether the political authority be self-constituted by force or ruse or by the emotional upheaval of revolutions or of popular elections or whether the coercive authority be lodged in one or in many persons, in a compact oligarchy or a government of limited and divided powers.

It is the waging by government of virtual warfare against its citizens and against special economic groups of its citizens for the supposed benefit of all or of other economic classes that disintegrates all economic relationships. Before any society can become progressive and permanent, its public business must be lifted from the level of coercion and raiding for its revenues to the plane of merchandising all its public services for revenues voluntarily paid in exchange for them.

The institution of property in land merchandises equitably to the users of land at a price called rent all of the public services there are, as distinguished from anti-social favors and privileges which destroy public values and for which no proper recompense is paid.

The redemption of the whole Society rests in the raising of rents and land values by organized land owners through service to land and capital users in protecting them against depredations by public authorities. These services to land users by liberating the production of wealth will so increase the demand for the public services afforded by land occupancy as to increase the rent fund many times faster than the tax raids are reduced. Land owners will thus be enormously recompensed for this protective service to land and capital users by reduction of taxes, and by their supervision of public expenditures and economy will at the same time greatly diminish the need for public revenues. This will so greatly expand the margin between the increased revenue to land and the reduced needs of public finance as to establish for such enlightened land owners

1135.

Dear Sir:

Henry George, as a moralist, believed himself under command of God to destroy evil and drive it out of the world. To do this he thought it necessary to abolish private property in land. But as a political scientist, in order to pursue the freedom, properties and values of civilization, he proposed, "To ABOLISH ALL TAXATION, save that on land or land values." And he urged that this abolition would, in its effects, abolish all taxation whatsoever, for then all costs of public services would, of necessity, be met out of their proceeds in ground rent. Thus would public services become available to the population no longer as special privileges but as land values received in exchange for the ground rents (that public services and the demand for them, under no taxation, would then create).

His problem then was: In whose hands should rest the sales of public services and collection of the rent paid for them in the manner of value given for value received? Should political persons, as "public servants," grant and determine occupancies and seize rents under rules promulgated by them? Or, should proprietary persons, as "public owners," carry out the sales of possession with services and security, upon terms set not by them but determined in the freedom and democracy of an open market.

Henry George, the political scientist, pondered this problem and took his firm stand on the side of freedom and democracy by exchange and against the arbitrary dominion of political administration and control over property and possession, the prime essentials to civilized life. He felt, even if he did not clearly see, that land users completely under the heel of the tax-taking politician as to their possession, even without other taxes, would be in worse plight than ever before. To him, all science taught the ways of creation, of the Creator, and thus the ways to create, where moralists would only destroy. The political scientist in him taught the conservation of men's wealth and values by the abrogation of force, and the creation of public values by maintenance of voluntary exchange relationships between the users and possessors of land and those in whom its ownership and democratic administration publicly rests.

The problem of today is: Who shall deliver us out of the hand of the politician? Henry George, facing it but dimly still, turned sharply, even if unconsciously, to the protection of the land owner serving without force and only by consent and exchange. Should we follow him?

As one who would not strive to justify Henry George as a destroyer but who would honor him in his capacity as a creator, I should like to have the pleasure of your further acquaintance.

I am planning to be at my New York address, King's Crown Hotel, for the fortnight beginning August 28. Please advise me if you expect to be in or near New York at that time and if I may have the pleasure of entertaining you at our mutual convenience.

Sincerely,

1147.

Dear Mr. Geiger:

When great ideas or discoveries are set out plainly to the world, it is seldom that their sponsors have seen their full significance or even dreamed of their more remote implications. The history of epoch-making ideas has been of their enunciation, wide acceptance (with overbeliefs attached) and their final absorption in a wider synthesis.

The Single Tax of Henry George may be expected to come under this rule. By linking it with the general principle of organic development, socialized rent employed for public purposes may be seen as a seed value withdrawn annually from the sum total of social creation. It is planted (or invested) in the general service department of society (government) and cultivated (or administered) by husbandmen who are public servants engaged in the cultivation and production of public values which manifest themselves in rent or additional land values according to the yield or productiveness of the social enterprise.

Now if the husbandmen are without proprietorship and work only for hire, it will be necessary for them to take for their services (by taxation or otherwise) at least a portion, if not all of the yield. But so far as they become proprietors, the fruits of their services are theirs immediately without need for collection and repayment to them. As proprietors their contributions of rent would become not taxes but investments and the social yield upon their investments (realized as rent) would be the compensation for their services (wages) of management and administration including the return (interest) upon their investments. The advantage to society and the general public of proprietorship above the hire system for rewarding public servants lies in the fusing of their private interest as proprietors with the advancement of the public interest through the supplying of public services at lowest cost in the abundance which an emancipated private industry would demand.

I have tried to set out this general idea in the paper which I am enclosing in the hope that it may arrest your attention and stimulate your already great interest in land value taxation as a wholly creative project.

1140.

Land ownership with the renting of sites and locations affords the only market there is in which publicly created benefits can be distributed justly for value received and at rates socially and not arbitrarily set and determined.

All public benefits allocated otherwise and not in accordance with value received are beneficial to some only by being detrimental to others. No social values can thus arise.

The value of land as expressed in net rent actually received is the only value that results from public and governmental operations. The only social values resulting from government are those that manifest themselves in the value of the sites and locations, the territory served by it.

Changes in the form, quantity or scope of governmental action are socially beneficial only as they lift the limitations on the use and demand for land and thus raise rental values.

Land administration, landlord-ism, by merchandising publicly created benefits, transforms them from special and private privileges into social and public values justly apportioned

1175.

Dear Mrs. Sarker:

I appreciate the interest you have taken in my presentation of the social philosophy of Henry George, the practical application of which he sums up at page 404 of Progress and Poverty as follows:

In its practical application, what we propose is . . .

To abolish all taxation save that on land value.

Your letter inquires just how this will benefit persons engaged in the cleaning and care of office buildings and similar work. My reply is that the lifting of all the charges and restrictions on trade and production that government, by its taxing and police powers imposes, will permit an enormous increase in the production of wealth by every form of unrestricted business activity and therefore a mighty advance in profits and every other form of wages to all persons engaged in this free activity. Under this condition every business could expand its production and exchange its products and services freely with every other business, since there would be no restrictions on exchange. This expansion of production creates an unlimited demand for labor. Every employer has large earnings out of which to offer higher wages to hold his present employes and induce new ones to come to him. With this untrammeled production there is no lack of wealth with which to pay increasing wages. The old competition between disemployed laborers for work at starvation wages is turned into competition for laborers between employers all of whom are on a rising production at every stage of exchange up to the ultimate consumers and are therefore able and willing to pay rising wages in money, nominally, but really out of the increasing quantities of consumers' goods. In such a market as this there is also increasing demand for buildings and other facilities, both private and public, for carrying on business. This calls for more workers in connection with the care and maintenance of buildings. In this line, as in all others, the demand for laborers would exceed the supply, except at the greater wages that the greater production of wealth would provide.

It may now be asked how the expenses of government could be raised without laying any taxes or restrictions on production and trade. With all other levies abolished, the services of government would of necessity be financed out of the rent that all active business, as land users, would pay in order to have access to and enjoyment of these services. In this way, the cost of government is apportioned automatically among the wealth producing users of land in the exact proportion that government services are used by or made available to them. Then, as now, every dollar paid in rent would be a profitable dollar used for the purchase of advantages that only the government or its authorized agents can supply. These rent dollars, passing through the hands of land owners, would provide the interest payments on all the public capital invested in the streets and other public domain, all the wages and salaries of the public servants, high and low, including those who employ and direct the salaried public servants. This last class would logically and reasonably be those who collect the rents, for the amount of rents they collect would depend entirely on the quality and efficiency of the work of the public servants, because it is only for these public services that any rent is paid. It is highly probable that land owners, collecting all the rents and supplying out of them all of the costs of the public services, would, by their desires and by common consent, see to it that all these services were well performed. Some part of the rent paid for these services would be due to this supervision and would be retained as compensation for this kind of service and its amount would depend upon how well the public services were supervised. Those who could give the best supervision would remain or become owners of land and those who could best supervise and administer private services would enter or remain in private enterprises.

I have gone into these latter things to show you how the emancipation of labor and capital from taxes and restrictions not only raises all wages, profits, interest, rents--every proper income or revenue out of enormously increased production--but also to show you how government is reduced at the same time to becoming purely a service agency and how there automatically arises the sole and proper revenue for the public services and also a class of persons, namely, land owners, (as distinguished from land users) whose sole interest and advantage lies in their seeing to it that the public servants are capable and efficient and the government services well performed.

It was a magnificent achievement of the brain and heart of Henry George that, out of all the dismal theories of his time, he found the path to social and economic well-being and was able to lay down that right and simple public policy of unshackling industry entirely and defraying public costs out of the rents paid for public services, thus solving at once the three great problems of (1) The disemployment of labor and capital with consequent monopolies, speculation, debt burdens, stagnation of trade and downward competition for jobs between the disemployed and distressed, (2) The great difficulties and distresses attending the raising of public revenues and, (3) The notorious maladministration of the government services, functions and finances by political gangs who themselves have much to gain and nothing to lose by corruption and who are not supervised or directed by any class who have all to lose and nothing to gain except by honesty and efficiency in the conduct of public affairs.

Sincerely yours,

Dear Mr. Prizer:

I have been reading very carefully Mr. DuPont's ideas in regard to agriculture and industrial depressions as set out in the paper you handed me and also in a more extended paper that I received from Mr. Lane. I am very much impressed with these ideas. It is such as these that I would like to see more adequately presented to the various economic groups. We all know that a national economy is possible based on farming alone without any formal manufacturing industry but that no manufacturing and trading economy can exist except it be supported by agriculture. This makes agriculture fundamental in any mixed economy. I say we all know this but we do not always give it sufficient emphasis in our interpretation of the recurring disorders and distresses.

Since agriculture, including the other extractive industries, is primary and therefore of prime importance, any repression of creative activity in it, even though this repression be general as to all industries, must have the most far-reaching evil effects.

Now the evil which restricts agricultural activity and production, Mr. DuPont points out, is speculation or, as he terms it, investments in lands. I am in hearty agreement with this and I see it as of the very first importance. I am willing to generalize further and look upon speculation of every kind as a destructive phenomena that vastly hinders economic activity and prevents the production and exchange of wealth in every field. Although this phenomena is very general, I think Mr. DuPont does well to point out so clearly its critical effect upon agriculture, the basis of all industry.

Now, if speculation is inevitable and ineradicable certainly some means should be found and applied for holding it in check. But first we ought to consider whether speculation is not itself an effect or one of the many effects of an underlying cause and that speculation is only one of its many evil effects. I refer to the universal practice of governments in placing almost an infinitude of obstructions and restrictions upon creative activities of every kind, the cumulative effect of which is so devastating that the historian Buckle, even in his day of so-called "laissez faire," quoted with approval a statement that trade must have perished from the earth had it not been for those who broke the laws. None of these restrictions are services; and public or governmental services that arise out of them come to us at a stupendous cost. Every governmental restriction on industry is by actual or potential violence. There is no other way to drive capital and labor out of employment; there can be no restriction except by disemployment. Restriction is forcible disemployment. When the members of a community perform acts of mutual service they, for the most part, store up their services in materials and commodities and by free exchange of these commodities convey these accumulated services to one another. By this means a great deal of wealth is produced and enjoyed. But any restrictions on exchanges must cut down production and lower the standard of life. Thus, every restrictive act of government is predatory, but every service act is creative.

Let us imagine a certain type of industry in which there are, say, ten producing units all serving the public with the same kind of goods. Let us say that seven of these units have been long established and are somewhat fixed and conservative in their ways, while the three newer units are more progressive and are therefore able to serve the public more abundantly or at lower cost--with higher social efficiency. The older group resents the intrusion of this competition and clamors for regulatory laws. Perhaps it is a licensing system. Then a license bureau must be established with its horde of functionaries selected, of course, from or at the instance of those who procured the passage of the law. Leaving out of account the inevitable favoritism and corruption in the enforcement of such a law, its effect must be to impair the profits of those younger and newer units who supply the public at the narrowest margin and are therefore the most socially efficient. At all events, whereas capital had been coming into this business it is now on its way out. Bank loans are liquidated, thus taking materials and equipment out of the hands of labor and disemploying it. The disemployed capital is now in potential form and the disemployed labor competes for the jobs of those still employed and finally lands on the dole. Production of goods in this industry declines; prices rise under the double influence of scarcity and monopoly, for the remaining units are now exempt from competition and can easily combine to restrict output and raise prices, and thus show larger profits in licensed production. Thus the driving of capital out of its productive activity has of itself created the condition of scarcity and rising prices to tempt this disemployed capital into purely speculative operations. And while speculation is on its upward swing, the apparent profits it yields tempts, while restrictions drive, more and more capital out of productive enterprises. The vast speculative activities which restriction on production thus induces becomes as universal as the restrictions themselves. It invades the whole economic fabric, but is most conspicuous in the securities markets and in real estate, including farm lands. Almost everything is mortgaged or held as collateral or held for a rising price. This is what makes it difficult to obtain land or anything else at a price that can be justified by its yield. And when the inevitable crash comes there are two classes of people -- those who have the money or credits representing profits, not of production but from speculation, and those who hold the lands, securities and commodities, mostly mortgaged, for which there is then so little sale. It is not so much the constriction of currencies and credits as it is their siphoning off into the hands of the few who in speculation found success. We are in that situation now; bank deposits at maximum volume with securities (except good bonds), commodities and land priced low, and the national income down about two-thirds and still declining. While the speculation was on, the rising prices of lands did indeed keep them from being used, and after the crash only those who have money (credits) in bank are able to buy, even at declining prices, and they would be unwise to do so or to lend to others to do so while more and more taxes and restrictions of production are being piled on.

Certainly, as Mr. duPont urges, land ought to be brought into use, primarily farm land, for this is basic, but also other types of land and also the idle capital. There is no lack of resources, both of land and capital, but the owners and would-be users of these have not the temerity to attempt to use them while production is increasingly restricted and the making of profits penalized as a crime.

The remedy, of course, is to discontinue all restrictions and "abolish all taxation save that on land value." Speculation would cease, for no capital would be driven out of its creative employment. Abundance would arise. No labor would be disemployed and therefore no competition for jobs between the idle and the employed; and, out of the great abundance of wealth produced, wages, profits and rents would rise beyond all our present dreams. The restrictive activities of government would be eliminated and its functions reduced to a basis of service, and the services of government would of necessity be supported and paid for by taxation of the mounting rents which every industry, out of its abundance of production, would gladly pay for the locations they enjoyed in proportion to the public services delivered to them. It would become the obvious province of owners of land to collect the rents created by the public services and out of them to meet the public payroll and incidental expense, thus becoming the paymasters of the public servants and therefore their natural directors and supervisors. Thus would demagoguery and corruption come to an end, for the administration of and finance of the public services would be in the hands of a land-owning class whose net income would depend upon their making the value or earnings of the government services, as reflected in their rents, much greater than the taxes they would need to pay. The difference between rent and taxes would, indeed, become the reward and measure of the value of their services in directing the public affairs.

Among Mr. duPont's thoughts are many perfect gems. One of the brightest is:

Another:

And:

And again:

The intelligent interest Mr. duPont takes in economic problems certainly makes him worthy of his distinguished ancestor, associate of the great finance minister, Turgot.

Mr. duPont's idea that once agricultural lands were liberated from repressive taxes, cities would be forced to follow as a matter of business expediency appears to me to hold great potentialities. Certainly the practicability of this approach needs thorough discussion. I am very much interested in his suggestion that a few people of understanding in economics get together in a little meeting and try to arrive at some constructive views. I should appreciate being invited to such a meeting . I have no doubt a small group of able men like Mr. duPont, having arrived at clear and constructive ideas, could have a profound and beneficient effect on the critical decisions and adjustment that must be made in politico-economic affairs. Such a group, led by a descendant of duPont de Nemours, would be a poetic fulfillment indeed.

Very sincerely yours,

SP:N

Mr. Francis I. duPont 310 Riverside Drive

One Wall Street New York City

New York City July 6, 1935

Dear Mr. duPont:

I must, indeed, thank you for your letters of June 24 and 25.

Probably you are familiar with the volume by Say, The Life and Writings of Turgot. This gives a most interesting account of the Physiocrats.

I am sorry I did not make the distinction found in some of the text-books between pure speculation and speculative enterprises, for I had reference only to the former. The distinction is important because speculation rests not on wealth but on values that seem to arise out of scarcity and monopolies when wealth production is restricted or exchange units (money or credits) are inflated. This pure speculation is not any activity of real capital (materials and facilities of production in the hands of labor and administrators of enterprises) and therefore creates no wealth or service. When the deflation comes, speculative values vanish; only the intrinsic remain. But speculative profits (in the form of money, sound credits and obligations that cannot readily default) do remain, and thus actual wealth is transferred at deflated prices to those who have created nothing and who render no equivalent in return.

But enterprises which look to future production or service and are in that sense speculative are totally different in character and in their results, for in them actual capital is actively employed and wealth is produced.

Stock exchange transactions and similar legitimate operations are essentially the means whereby persons transfer and exchange their ownership of capital from that invested or loaned in one enterprise to that invested or loaned in another. This is a valuable social function and speculation in the bad sense does not inhere in it. Its great social and economic value lies in the fact that it enables persons to change their ownership of capital in different kinds of enterprises and obligations most freely and equitably and at minimum cost and so associate themselves always with the particular kind of economic activity for which they have the greatest inclination and capacity. As stockholders (owners of capital), their interest is in their highest earnings; as obligation holders (owners of debts), their interest is in the highest solvency and security. Both of these interests are valuable to most enterprises.

In a free economic system with the upward flow of value through exchanges unrestricted and the banking function not distorted or restricted, so long as there was increase of wealth production through division of labor and exchange, there would be rising bank credits. Wealth and credits would rise hand in hand. But let the exchanges be clogged and production restricted and credits would decline, unexchangeable "surpluses" would arise in primary industries while general production declined. This is a condition that governments alone can create. Men will exchange their surpluses (and thus avoid them) unless prevented by force directly or indirectly applied. The "surplus" bushel of wheat at one dollar represents the underproduction of some ten or more dollars worth of food by the labor and capital disemployed by the fifty-three different kinds of taxes and other restrictions laid upon the production of bread. Small wonder the producers of "surplus" cotton can buy so little food and the grower of "surplus" wheat such meager clothes.

The first effect of an increase in governmental repression is to reduce the return on working capital. This automatically liquidates the most socially efficient investments--the industrial units serving the community at the narrowest margin or return--thus freeing the less efficient from competition and so entrenching them as monopolies, for the basis of monopoly is the driving out of competition. The disemployed capital, materials and tools, now torn from the hands of working people and supervisors and administrators, leaves "surplus" labor competing against itself in a restricted and monopolized and underproducing industry until it lands upon some form of public dole to maintain which still more and more levies must be made on a declining production resulting in still further disemployment and still greater numbers thrown on the dole. With production thus declining while the doles increase and disemployed and liquidated capital accumulating in the banks, political pressure is applied to force loans into industries while by public policy production is taboo, turnover penalized, profit treated as a crime and the destruction of food and clothing actually rewarded by public subsidies drawn from what production still goes on in an economy so ravaged and destroyed.

Thus is the stage now being set for another riot of speculation. By diverting into channels of consumption much of the capital we have thrown out of production, we have held off for a time the acute shortages of goods that together with advancing inflation must result in scarcity prices and a scramble to spend. At this stage idle capital disemployed from production will speculate in rising prices in a big way. In millions of paper transactions "profits" and prices will rise together. Market values of inventories will rise and the lower the scale of production the higher the fever of speculation. The securities of monopolized industries mount skyward and bonds are issued with inflated stocks as collateral. Speculative "profits" are turned over and over in paper transactions that have no more relation to the production of wealth than a game of poker, until at last optimism turns to panic and the whole operation is reversed. From all desiring to buy, now all wish to sell and real wealth is deflated in favor of those who hold money and credits and is deflected from those who produce.

It seems clear that if we wish to bring about scarcity of goods, to lift prices to scarcity levels, to disemploy capital and labor, establish monopolies, raise up a need and demand for doles and "social security" and lay the foundations for a grand riot of speculation and ultimate collapse, all these things can be surely accomplished, nor can they be escaped, under a public policy of taxation, restriction and repression of the normal processes of wealth creation.

But all of this belongs to the dark side of the picture. Only those who have the inspiration of Henry George can glimpse the glories of the other side, and they only too faintly and feebly, especially those who center their attack on private property in land because he left them unaware that the annual value of land paid by land users is simply the value of the labor and capital applied to public services and the net value of land to land owners is simply the interest on the capital which they have invested or which has been invested for them in the public services, plus the value of their direction and supervision of the public servants. This administrative and supervisory function of land owners under an emancipated capitalism is a theme too extensive for this letter which is already too long. However, a year or more ago I developed it in an article which I will enclose hoping that you will find it of interest and that you will feel like giving me your reactions to it.

I am completely enamored of the last paragraphs in your letter to Mr. Beckwith as follows:

I believe that the Georgists do not sufficiently regard the vision of the vast amount of wealth which could be produced if we had true liberty. If they did, they would see that the whole of what goes to economic rent as things are now is so small by comparison as to be not worth considering.

We are like children quarreling on the floor over a few crusts and crumbs, whereas if we but stood up and looked we would see that the table is heaped with the most delicious delicacies imaginable.

Your idea for a group or society with authoritative standing in pure economics suggests to me a truly scientific school of economics--one not committed to any propaganda. I think such a school might develop from several persons having analytical and creative minds like your own associating themselves for discussion and arriving at a very few basic principles upon which to interpret economic phenomena.

The time is certainly ripe for some new fundamentals, and modification or abolishment of some of the old.

It is not possible to challenge your diagnosis of the causes operating to prevent rural settlement. Just how to eliminate these causes may be open to dispute. The Georgists say tax down the rising prices (I do not call them values). I am more disposed to untax and otherwise emancipate capital so that it could not afford to turn aside from its creative function into the hazards of inactive speculation. Moreover, any tax laid upon speculative values (holding prices) or even upon annual or rental value as they are today would be little more than a gesture, so far as revenue is concerned. I believe the way to raise revenue is to emancipate industry so it can produce it and then we will have actual and abundant land rents for public revenue needs and no other source from which to supply them. Landowners would become directly and of necessity the paymasters of the public servants and their selfish interest in the matter would compel them to so direct the public servants as to create the highest rents. Thus at one stroke, after emancipating production, there would be solved the problem of unemployment and doles, of destructive speculation and deflations, of raising public revenues and the problem of good administration of the public services. Landowners would be differentiated from land users and there would come into being a class of public administrators whose efficiency would be guaranteed, for their private and particular interest in rents would be identical with the public and general interest in good public services.

Very truly yours,

1171.

Dear Sir:

Some of the New York friends of Henry George's Social Philosophy of Freedom have suggested that you might be interested in some further application of his general principles, and in making explicit at the growing edge of his philosophy that which was necessarily implied, but not fully explicated by him.

I have particular reference to his insistence upon the exclusion of political authority from the direct collection of rent (p. 404), and to his proposed elaboration of the exchange principle as "another law or condition of nature related to man" for which he made provision at the end of Chapter 11, Book 3, Sc. Pol. Ecn., but did not live to carry out.

The enclosed monograph, "Private Property in Land Explained," is an attempt of the present writer to explain this institution as a provision of nature for the carrying out of this exchange principle between men in their community relationships, as they do in all their private relationships that serve and succeed.

If you believe with me that social freedom depends upon the liberty of men to engage with each other in mutual services upon the principle of exchange, you will appreciate my desire to understand social institutions in the light of this principle.

Please accept this as my cordial invitation to visit me in New York and discuss these matters at or near the time of the coming Henry George Congress. I suggest Sunday afternoon, September 3rd, at 3 P.M., as a convenient time. However, I will be generally available, especially before 10 A.M., at my New York address, Kings Crown Hotel, 420 West 116th Street (University 4-2700).

I look forward with pleasure to a further acquaintance with you.

Very truly yours,