The story of the world’s smallest skyscraper

Scraping the sky. Almost. Image: Solomon Chaim at Wikimedia Commons.

According to Emporis, a real estate data company, a skyscraper is a “multi-story building whose architectural height is at least 100 metres”. By that measure, the Newby-McMahon building in Wichita Falls, Texas, which is widely known as the “world’s smallest skyscraper”, isn’t actually a skyscraper at all.

In fact, it’s not even close – the building is four storeys and 12 metres tall, which in most peoples’ minds makes it little more than a house with ideas above its station. When it was built in 1919, skyscrapers weren’t reaching the heights they are today – but even then, the Newby-McMahon wouldn’t have cut an impressive figure next to the 241 metre Woolworth building in New York, the world’s tallest building at the time.

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Newby-McMahon alongside its major worldwide skyscraper competitors.


Unfortunately for its investors, the building’s limited stature came as shock to pretty much everyone – apart from the man who built it.

J. D. McMahon was the owner of the Wichita Falls oil company, whose offices occupied a one-story brick building on the corner of Seventh and La Salle. Next door was a vacant lot, and during the local boom sparked by the discovery of oil in 1912, he decided to meet the city’s growing demand for office space by turning it into a new skyscraper. The building would, plans appeared to show, be 480 feet (146 metres) tall – not bad for a small city barely past its 40th birthday. 

McMahon drew up blueprints and plans to show investors, who promptly gave him a total of $200,000 (around $2.7m at today’s prices) to get going on construction. Preferring to keep things in-house, he decided to use his own construction company to build the structure. 

This might be why it took the investors a little while to realise they’d been had. Slightly too late, it became apparent that McMahon was not, in fact, building a 480 foot tower: he was building a 480 inch one. The investors tried to bring a lawsuit against him, but the judge found that they didn’t have a case: they’d signed off on the original blueprints. Sure enough, these promised that the building would be 480" tall, and not, as they’d assumed, 480'.

Construction was completed, if you can call it that, in 1919. The building was 12 feet long, 9 feet wide and 40 feet tall. The elevator company had pulled out, so there wasn’t even a way to get from one floor to the next. And McMahon hadn’t even asked for permission to build on the land. None of this bothered him, however – he disappeared from the town, and probably the state, shortly after, presumably with a good chunk of the investors’ $200,000 in his back pocket.

In his absence, the building became the city’s problem. During the oil boom, it had been an embarrassment; during the depression that followed, it was a liability. For a while, the building was occupied by two firms (the extra-narrow stairs that were added later took up around a quarter of the floor space); later it was boarded up.

For the rest of the 20th century the block was occupied by a string of barber shops and cafes, and on multiple occasions it was scheduled for demolition, but it somehow survived to be palmed off onto a local heritage society. However, the building remained controversial. In 1996, Ralph Harvey, of the Wichita County Historical Commission told a reporter from Texnews, “I’ve never understood why some people make such a big deal about it. But about half of the people around here want to save it. The other half would prefer it just to be hauled off.”

In the end, the first half won out, and the building was restored to its former, er, glory. Today it’s a local tourist attraction, with an antiques dealership on the ground floor and an artist’s studio upstairs.

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The plaque adorning the building today. The date is that of the completion of the one-story building next door. Image: Solomon Chaim at Wikimedia Commons

The Newby-McMahon has often been used as a symbol of the gullibility of the boom era: of the eventual realisation that no, the emperor isn’t wearing any clothes, the petroleum boom won’t last, and this building is not, by any definition, a skyscraper. Yet Fodor’s 2008 guide to Texas, which prides itself on highlighting “the best this big and beautiful state has to offer”, names the Newby-McMahon building as a must-see attraction. If those investors had known, maybe they’d have hung on to it.

 
 
 
 

The UK keeps sinking deeper into property inequality – and it's not alone

Oh, good, more luxury flats. Image: Getty.

Outrage has been mounting over the untaxed incomes of the global elite, foreign ownership of urban land and soaring rents in the private rental sector. Much of this boils down to two key matters: who owns property, and how they are treated.

The UK, it seems, is a place that makes it very easy for individuals to generate a great deal of wealth from property, with little concern for social justice or the provision of affordable housing.

But this problem is not uniquely British. Across the world – and particularly in many developing countries experiencing fast economic growth – capital is flowing rapidly into real estate. And increasingly, governments are waking up to the need to effectively capture some value from these investments, for the public good.

Yet, as my research shows, this can be extremely difficult to achieve due to complex historical legacies around land, as well as deeply entrenched vested interests.

Consultants from the UK and other rich countries are often the first on hand to provide advice and propose systems of property and land taxation, to enable governments in poorer countries to bring in revenues that reflect the real value of developments. Meanwhile, ironically, the UK’s primary property tax – a monthly “council tax” paid by residents to local authorities – remains scandalously out of line with modern property values.

House prices are rising – but council tax isn’t. London, 1995 to 2015. Image: Alasdair Rae, University of Sheffield.

Of course, property inequality looks very different in British cities than it does in cities in developing countries. In many African cities, a clear majority of people live in slum conditions, the like of which are (thankfully) consigned to the past in Britain. Yet the property markets are being transformed by very similar processes.

International capital flows are central in both cases: wealthier migrants from low-income countries now based in the US and Europe often channel their earnings into untaxed property back home, while the UK solicits property investments from footloose international elites. Whatever the context, the outcome is largely the same: luxury properties abound, often unoccupied and almost always undertaxed, while governments fail to provide proper incentives for developers to invest in cheap housing.

These issues are particularly concerning in poorer countries, not only because of the scale of inequalities and gaping absences of affordable housing, but also because investments in luxury properties divert funds from other sectors, which urgently need capital to make the nations' economies more productive.

What to tax?

It seems clear that governments of both poor and rich countries need to find ways to reduce the appeal of massive investments in high-end property, and to spend more on housing and services for low-income groups. The question is: how?

Stamp duty is obviously one mechanism for capturing some of the value of property, but as this is a one-off payment it deals with only part of the problem. Updating the council tax is an important step in the UK – though this will be very politically difficult.

More fundamentally, however, simply updating council tax bands sidesteps major questions about exactly what we should be taxing when we tax property. Given the state of the UK property market, a proper debate is needed on these issues. But as this is also a global issue, the UN’s biggest conference on urban development issues in 20 years should also provide a forum for discussing this at the global level.

One possibility that has aroused significant interest is a land value tax. The idea is that public investments in infrastructure – rather than private individuals’ effort – make land valuable. So, the government should “recapture” this value for further public investment, by taxing property owners a proportion of the annual rental value of their land.

Less vacant land. Image: Sinkdd/Flickr/creative commons.

Some argue that taxing land also encourages people to use land productively, and deters speculation; in other words, if you are paying a relatively large amount of tax on a plot of land, you will want to make the best possible use of that land (by building a tall tower, for example), in order to maximise your profit.

By contrast, taxing buildings discourages investment and development, so many proponents of land value taxation argue that structures should simply be ignored. There is a certain progressive logic to this: for the most part, growth in land value provides a windfall to the owner, so it seems like a fair revenue to tax.

Should buildings be off the hook?

But a land value tax could have some undesirable consequences: exempting buildings from taxation encourages developers to build for maximum profit – and this often means constructing expensive, luxury residences for wealthy investors. What’s more, large buildings impose on the surrounding residents and public spaces in a number of ways which can be seen to warrant taxation – for example by blocking light, generating traffic and adding to pollution and noise.

In countries where forms of land taxation are relatively high, but building taxes small or non-existent, there is a tendency to speculate on buildings for which there is no obvious demand. This can be particularly harmful when there isn’t sufficient public infrastructure or services to support these looming edifices.


If we consider property tax as a means of redistributing wealth from the rich to the less well-off, then it makes sense to tax buildings. After all, why should one person be able to own a large, immovable asset without paying tax on it, when others pay tax on so many goods, services and incomes? Is it really fair for the residents of high-rise developments to pay a small fraction of a land value tax, regardless of the actual value of the luxurious apartment which they occupy (or, more accurately, don’t occupy)?

No – taxing property wealth is not only about taxing the windfall of increased land values: it is about acknowledging that the playing field of society is not level, and that the rich should pay more because they can. And it’s not just a question of social justice – it’s also about the kinds of incentives we want to create for investment, and the kinds of lifestyles that this promotes. We should not be so keen to encourage intensive investment in land that we exempt buildings – no matter how extravagant and unnecessary – from any kind of tax.

In many developing countries, innovative approaches to valuing and taxing property are being proposed and piloted, and concerted efforts are being made to overcome political resistance. The UK would do well to follow suit and bring its system of property taxation into the 21st century.

Politicians fear these issues, and public discussions about property tax has fallen all but silent since the Labour party failed to win the argument for a “mansion tax” at last year’s election. No solution is simple; but not talking about it won’t solve anything at all.The Conversation

Tom Goodfellow is a lecturer at the University of Sheffield.

This article was originally published on The Conversation. Read the original article.