LETTER TO MR. ALLEN W. DULLES FROM JOHN S. CODMAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R003800030059-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: March 13, 2002
• Sequence Number: 59
• Publication Date: May 6, 1958
• Content Type: LETTER

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JOHN S. CODMAN
T ;.y 6, 11)58
ILLEGIB
Mr . Allen W. Dulles
Central Intelligence Agency
C
Washington, D. C C.
Dear Mr. Dulles:
o in
In the Christian- Science Monitor of April 29,
referring to Soviet influence and control, you are quoted
to the effect that in the economic and subversive fields
"the fateful battles of the cold war, in the foreseeable
future, will be fought."
it seems to me that in the economic field, Russia is
outstripping us and will l continue to do so unless we can
do away with involuntary unemployment and excessive taxa-
tion. There are reported to be five million unemployed in
this country today and there are practically no unemployed
No wonder that Commuriism and Socialism are mak--
i~: Russia.
ing headway in our country.
We need to set our Yo in order and 1 ,ow to do so I
ose
have outlined in the enclosed article. I hope you will
read it and will note especially where I have made a mark
on page 2.
irncerely yours,
John _: . Codmar:
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the burden became too great to be borne, and- when once the check to
industry was- felt the whole structure of speculation collapsed with
RELIEF FROM TAXES
disastrous consequences to title holders, industrialists and wage earners JOHN STURGIS CODMAN
alike.
At last prices of title to land became deflated, and industry was in
consequence able slowly to recover. But, must we again go through a
period of business depression and unemployment? There is every reason
to expect it. Land prices are rising again as the result of prosperity, and
as time goes on the business men and wage earners will see those values,
which should be used for public purposes and consequent reduction of
taxes, passing instead into private hands and finally pushed up to such
speculative heights that industry will again stagger and finally collapse.
Is it not time for the business men and wage earners of the country,
including those who hold title to land and make adequate use of their
locations, to get together and demand that our governments secure
proper compensation for the privilege of title to land, and make a
sweeping reduction in taxes so that the business of the country may be
really free and thus be saved from another catastrophe?
And now it may be asked just how far taxes can be reduced so as to
constitute a "sweeping reduction". There are many persons who main-
tain that ground rent (rental value of land) can never be sufficient for
the needs of our governments, municipal, state and federal. It is insuf-
ficient now, but need not be in the future, if proper steps are taken.
The idea that ground rent cannot fully meet the requirements of
government, is due to the failure to consider an important factor in the
problem, namely, that taxes have a depressing effect on ground rent.
It surely is obvious that land on which it is possible to make a tax-free
improvement is more valuable than land which carries with it the cer-
tainty that, if improvements are made, a part of their value will be con-
fiscated through taxation. Therefore, as taxes on improvements are
removed, ground rent will rise.
The first step should be to collect the existing ground rent into the
local treasury and to reduce or abolish the local taxation. This will give
a tremendous stimulus to business, which will tend still further to in-
crease the amount of the ground rent, leaving a surplus available for
state and federal revenue. Then it will become possible to reduce the
state and federal taxes, and thus, step by step as taxes are removed,
ground rent will continue to rise and will ultimately be sufficient for all
the legitimate needs of government - local, state and federal.
For reprints, write M. S. Lurio, 101 Mt. Vernon Street, Boston 8, Mass.
Single copies S,?; special rates for quantities.
It has been said that the American people will not, for any long
period of time, tolerate special privileges nor permit obstructions in
the pathway of opportunity. Is it not true, however, that the longer
obstructions and special privileges are allowed to persist, the more their
true character becomes obscure, and the harder grows the task of re-
moving them? In fact are there not today certain unnecessary obstruc-
tions in the pathway of opportunity and certain special privileges which
have been with us so long that we fail to recognize them as such, and
therefore ascribe our present industrial and economic difficulties to
everything but the true causes? So, at least, thinks the writer of this
article. In his opinion, there is one obstruction of. prime importance
and one great special privilege, which combined together are quite
sufficient to account for the frequent and terrible business depressions
which we have periodically suffered, and will surely suffer again unless
we take drastic action to remove the obstruction and to curb the
privilege.
The great obstruction to the industry of the country can be
summed up in the word "taxation". It cannot of course be said that
this obstruction is unapparent to the American people, but it probably
is true that the detrimental effect of it on the industrial prosperity of
the nation is not fully appreciated. More important, however, as stand-
ing in the way of the removal of this great obstruction, is the far too
prevalent idea that taxation as we have it, is inevitable, and that all
that can be done is to shift the burden from time to time so that it may
be carried with a little less difficulty. Meanwhile taxes steadily increase
and multiply in character and the drag on industry grows greater.
The local taxes on buildings and personal property are a direct
discouragement to manufacturing, farming and transportation, to mer-
chandising both at wholesale and retail, and to home owning.
Income taxes devised to avoid in part the burden of local taxes
and to furnish revenue to the state and federal governments are no less
'burdensome. If levied on the net income of industrial concerns they
check the re-investment. of funds in expanding and cheapening produc-
tion. If levied on dividends and bond interest in order to catch the rich,
income taxes check the investment of funds in commercial enterprise,
while if levied on salaries and wages they are a direct burden on the
enterprising and industrious. The sales tax, adopted in a number of
states and urged in some quarters for the federal government, adds
directly to cost, increases prices, restricts demand and falls with unerring
force on those least able to bear it.
There are still many other onerous taxes, the mention of which
space does not permit, and finally there are the constantly increasing
demands for information to be furnished by the taxpayers at their own
expense under compulsion, in the form of tax returns,. reports, question-
naires, etc. These demands involve not only an appalling waste of time
and energy on the part of taxpayers, but the taxpayers must also support
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a huge body of unproductive workers requ.r to gat er toge er n privilege verify these returns. to collect the taxes, and to exact penalties for title is not collected in full. If it were collected in full, a land title could
failure of taxpayers to meet all requirements. have no price.
Is the problem really one that cannot be solved? Must we through We should bear in mind that a tenant, in his payment of ground
taxation continue to strangle business, restrict purchasing power and rent to the title holder, pays the full value of the privilege of possession
aggravate unemployment in order to secure revenue for our federal, as determined by the competition in the market, but the title holder
state and municipal governments? Yes, it would seem so, unless we pays only a tax on the premium above described, and this tax can
come to a realizing sense of the great privilege the people of this usually he shown to be far less than one-half of what the privilege is
country have been according to individuals and groups, for which worth. Let us now consider some of the evil consequences which result
privilege the people as a whole have not received, and are not receiving, from the failure of our government to collect full value for privilege
adequate compensation. When the people are ready to demand this conferred:
compensation it will be possible to get relief from the burden of taxa- First there is the tremendous loss suffered by the community be-
po s ct of they increasing demanb d it, there is little hope for relief, but every cause of the huge rental value of locations on the land which is per-
prospect of an urden. mitted to pass into the hands of the title holders, rather than to consti-
When the founders of this nation wrote the Constitution they tute the community's main source of revenue. The reader should here
showed themselves to be admirably far-sighted in many particulars, but note that "rental value of locations" covers locations only and does not
they failed, nevertheless, to remove the institution of chattel slavery, include the rental value of any buildings or other improvements which
and the nation went through an agony of blood and tears before its may be on the location. Buildings and improvements are rightfully the
abolition was accut ttplis field. They Mailed to remove another inst itu- property of their owner, and should not he subject to confiscation by
tion hoary with age and bequeathed to them by their European ances- taxation.
tors, an institution which is responsible for the economic slavery of Moreover, the rental value of locations is peculiarly the creation
Europe and is bound in the end to bring similar results in America. t, of the community, rather than that of the titleholder, because such
This was, and is, the institution of private title to land without adequate value is due to the density, character and activities of the population,
compensation to the community as a whole for the privilege accorded. is and to the security afforded and facilities offered by the government.
Private title to land is not in itself a harmful institution. In fact it The failure to collect these rental values as payment for services ren-
should be a benign and useful one, but as actually evolved it has led, dered, forces our governments, state, federal and municipal, to secure
through the failure to collect adequate compensation for the privilege, their revenue through the direct taxation of industry.
to disastrous consequences; and now for some time the same effects have
become apparent in America. The second and most serious of the unfortunate consequences of
Private title to land can with justice be defended on the ground failure to collect full payment for the privilege of holding title to land,
that it gives the possessor security for the labor and expense of improving is that it creates a motive for holding title to land, other than to make
and utilizing his property. It can hardly be expected that a man will build use of it for industrial or home owning purposes. This motive leads to
a home, a factory, or a store, will operate a mine or develop a farm if he the practice of holding title to land as an investment or a speculation
may at any time be dispossessed or interfered with by another. This with the definite purpose of securing an unearned profit from the rise
legal right, however, should be recognized for what it is, namely as a in the value of the privilege resulting from the business activity of others,
privilege of the most fundamental character. In fact, what greater legal from expenditure of public and private funds and from increasing popu-
privilege can there be accorded to any individual or group, than the lation. Thus the private holding of title to land instead of being an aid
right of exclusive possession of a piece of land guaranteed as against all to industry becomes a burden. The absence of payment for privilege
others by the community itself? This then is the great privilege for encourages the title holders to withhold land from use, or to demand
which the community fails to require adequate compensation, with re- abnormally high prices or high location rents from those who require
sults that are tremendously far reaching and harmful and the cause of land for industrial or home owning purposes. Thus the title holder
which is not recognized because obscured by too long continued often becomes a stumbling block to industry, a parasite who must be
toleration. bought off before industry can secure its first requisite. the land upon
which to do business.
At this point a reader may perhaps object that, as a matter of fact,
the holder of title to land does pay for his privilege when he pays the
tax on what is called his "land value", which usually means the fair
selling value of the title. It is true that such a tax does constitute, in
effect. a partial payment for his privilege; but, on the other hand, if his
title can be sold at a price in spite of the tax, it can only be because the
tax does not represent the full value of his privilege. In fact, if a title to
land sells for a price, such price represents nothing more than a prerni-
Throughout the years from 1923 to 1929 business was prospering and
many- were very foolishly predicting that this prosperity was to be perma-
nent. But it was this very prosperity which was leading to the inevitable
crash. Throughout the period land prices and location rents were
steadily rising and title holders were able to demand and to get a steadily
increasing tribute from the business men and wage earners. Finally, as
these prices were forced by speculative enthusiasm beyond all reason,
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