House Property

Alfred Russell Wallace :
Land Nationalisation
Its necessity and its aims (1882)

On the nationalisation of house property.

It has been already intimated[i] that house property may be advantageously dealt with on the same general principles as the agricultural land of the kingdom, but details were avoided, because it was felt that this part of the scheme was beset with exceptional difficulties and was open to many objections. A fuller consideration of this subject, after reading the criticisms to which my proposals have given rise, and after discussion with friends who consider the crucial test of the practicability of land-nationalisation to be its applicability to towns, enables me now to treat it more fully; and I therefore propose to indicate a method by which it may be effected. I wish however clearly to state that the proposals, which follow are put forth as suggestions—not as the only method by which the problem may be solved. They will, at all events, serve to show how nationalisation can be applied in towns, and will thus afford an answer to the cry of “impracticable” which is always raised if no workable plan is sketched out.

[i] p 215 in the Book – 3rdedition./pma

The State should resume possession of Agricultural Land first—of land occupied by house property, &c., at a later period.—Much consideration of the effects likely to follow nationalisation have convinced me of the importance of this proposition. When all the agricultural and waste lands of the kingdom are resumed by the State and rendered available for personal occupation in the manner indicated in the latter part of Chap. VIII. [ii], there will inevitably result an outflow of the congested population of the large towns into the country. All villages and small towns, which have long remained in an almost stationary condition, owing to the impossibility of obtaining land from the great landlords, will at once start into healthy life and growth. Numbers of persons who have been hitherto unable to obtain a country residence with a few acres of land in the district of their choice, except perhaps at an exorbitant price, will, so soon as land is obtainable everywhere, build houses for themselves, and thus there will arise a large demand for labour and a considerable extension of trade all over the country. Many labourers, mechanics, and small tradesmen, who have left their native town or village and are struggling vainly to earn a living in some great town, will then be able to return to their former homes, attracted both by the fresh demand for labour and by the enormous boon of being able to obtain plots of land at low rents and on a permanent tenure. The effect of this outflow of population will undoubtedly be, that rents and house property generally must fall in value considerably below the monopoly prices they have hitherto commanded. On the worse class of houses the fall will be considerable, on the better class probably little if any. Numbers of houses will become temporarily vacant, while the worst of all will have to be destroyed as uninhabitable.

[ii] p 192 – 224 in the Book – 3rdedition /pma

Some of the evils of land-monopoly in towns will thus be removed merely by the free access which nationalisation will afford to rural land; but other evils will remain, and in order to remove these it will be necessary for the State or the Municipality to become the sole ground-landlord, while every householder should be able, if he desires it, to obtain possession of his house or premises on the easiest terms. The most convenient arrangements, and those best adapted to secure the full benefits of nationalisation to the entire community will probably be somewhat as follows:—

How House-property may be dealt with.—When the free-selection of rural land for dwellings, the opening up to cultivation of the more extensive wastes, and the subdivision of large farms, have brought down ground-rents in towns to their true value (which may perhaps be effected in about ten years after the complete nationalisation of agricultural land), the entire house-property of the country will be in a condition to be advantageously dealt with on the principles already laid down in this volume.

Application being made by any person desirous of purchasing his house and premises, the local Land Court (established to carry out nationalisation) will cause a valuation to be made of the property, separating the value of the ground-rent from that of the buildings or other improvements on the land, and the occupier will then be entitled to purchase the latter, either by payment of the amount of the valuation or by means of a terminable rental extending over a period not exceeding, say, fifty-five years; and on paying this amount or this rental, as well as the annual ground-rent, he would become the virtual owner of the dwelling-house or premises. Persons who do not wish to purchase their houses might remain as tenants, but in this case the Municipality or the local Land Court would become the landlord, receiving the rents from the tenant and applying them to the payment of the terminable annuity awarded to the former landlord in lieu of ground-rent and also in liquidation of the amount at which the buildings, &c. upon the land have been valued. The terminable rental by which this last is to be paid would be always so adjusted to the valuation as to secure the public from loss. In this way the Municipalities or other local authorities would gradually become possessors of large quantities of house-property which they would be always ready to sell at very low prices to any occupier desirous of purchasing them.

Additional powers of Municipalities.—In order to provide for the wants of an increasing population, every municipality should have power to take any land required for the use of its inhabitants, either for health and recreation, for the sites of public buildings, or for the erection of dwelling-houses, paying only the official valuation price. Thus the needs of every locality would be provided for without trouble, delay, or unnecessary expense.

Replies to some objections.—Some of my critics have objected that the complete stoppage of speculative building would be highly injurious to the community and ruinous to many builders. I reply to this, that people would still build houses, and that, owing to the land on which they must be built being so much cheaper, larger and better houses would be built than now, so that the building trade would not suffer, except in so far as it had already built beyond the needs, or in a style unsuited to the wants of the community. It will hardly be urged that people should continue to live in bad or unsuitable houses in order that builders may thrive.

Fear has also been expressed that many who require houses, but who have neither the means nor the inclination to build them, would suffer. But such a fear is quite groundless, for Society will, as it always does, adapt itself to new conditions; while failing other means of supply the local authorities will always be able to meet a public want. It must be remembered, too, that the large number of houses which, under the present system are always “to let,” will have to be absorbed before there is really a pressing want of new houses. When most people own the houses they live in, and it becomes the general custom for houses to be built only when people require them, instead of by speculators on the chance of finding tenants (who often leave some other house vacant), unoccupied houses will be comparatively unknown. It will then be perceived that the many thousands of houses now always standing empty represent a vast loss of capital entirely due to the system of speculative building arising out of landlordism.

Concluding remarks.—Without going into further details it has, I think, been now made clear that the principles of Land Nationalisation as developed in this work, can be applied to house-property as well as to agricultural land; and that by so applying them the ever-increasing value of ground-rents in populous centres which now go to enrich individuals and give them injurious power over their fellow-men, will, as the annuities to landlords expire, form an ever-increasing fund for the expenses of government, and will ultimately render other taxes as well as local rates, altogether unnecessary.

State-tenants versus freeholders.[iii]

[iii] Originally written for the Land Nationalisation Society, and published by them as a tract (No. 15)

When Nationalisation of the land is advocated, a great many people reply: “I don’t see the good of Nationalisation; I prefer Freeholders to State-tenants”. Let us therefore see what are the comparative advantages of the two modes of tenure.

In order that the greatest number of people may become freeholders, many Liberals advocate the abolition of all restrictions on the sale and transfer of land. They say, make every man who owns land an absolute owner, with power to sell, or divide, or bequeath as he pleases, and plenty of land will come into the market. Then, every one who wants land can buy it, if able to do so; and if the mode of transfer is also made simple and cheap, everything will have been done that needs be done. We shall then have free trade in land; there will be no limited or encumbered estates, and capital will flow to land and develop its resources.

But people who talk thus forget that we have already had two great experiments of this nature, both supported by these very arguments, and that both have utterly failed. Thirty years ago the dreadful condition of the Irish peasantry was imputed to the prevalence of entailed and encumbered estates, the owners of which had no money to spend on improvements, and a most radical measure was passed, by which all these estates were brought into the market and sold to the highest bidder. But the result was not as expected. Capital flowed into the country, but with no benefit to any one but the capitalist. English manufacturers and speculators became owners of Irish land, and sometimes laid out money on it; but they were harder landlords than those whom they replaced; they looked upon the land they had bought merely as a means of making money, and utterly ignored the equitable or customary rights of the unhappy tenants. Irish distress was not in the least degree ameliorated by this drastic measure from which so much was expected; and it is now rarely spoken of, while legislation on totally different lines has been found necessary.

The second example of the utter uselessness of pouring capital into a country so long as the people are denied any right to the use of land is afforded by Scotland. In the early part of this century, the great demand for wool made sheep-farming profitable, and many of the Highland landlords were persuaded that they could double their incomes by establishing great sheep farms on their vast estates. They did so. Many thousands of valuable sheep were introduced; much money was spent in fencing and in building new farm houses for the Lowland farmers, while the rights of the hereditary dwellers on the soil were utterly ignored, and, by a series of barbarous evictions, these poor people were banished to the sea shore, or forced to emigrate. The result was, for a time, beneficial to the landlords, who proclaimed the scheme a great success; but it was most disastrous to the people, who, ever since, have been kept in a state of perpetual serfdom and pauperism. The present condition of the Highlands is a direct consequence of the application of capital to the land by landlords while the rights of the people were ignored; and the result of these two great experiments in Ireland and Scotland should teach us that any similar experiment in England cannot possibly lead to good results. It is true the conditions of society in England are different. There are here more capitalists, ever competing for the possession of land; but “free-trade” would simply enable those capitalists who desire land to obtain it more easily. What chance would the poor man have against such competitors? With population, wealth and manufactures ever increasing, as they are in England, the poor man will have less and less chance of getting land, so long as it is to be obtained solely by purchase and there is neither compulsion to sell, nor right to buy at equitable prices.

As land is ever getting scarcer in proportion to population, and in private hands must necessarily be a monopoly, it offers the greatest temptation to speculators, who, even now, frequently buy up estates offered for sale and resell them in small plots at competition prices which no poor man can afford to give; and this will continue to be the case so long as land is treated as a commodity to be bought and sold for profit. We maintain that this is a monstrous wrong and should never be permitted. Land is the first necessary of life, the source of food and of all kinds of wealth, and a sufficiency of health and enjoyment is absolutely needed by every one. It is a political crime to permit land to be monopolised by a few, to allow the wealthy to enjoy it for mere sport or aggrandisement while thousands live in misery and have to suffer disease and want because they are denied the right to live and labour upon it.

In order that all may have equal rights to use and enjoy the land of their birth, it must become, not theoretically only but actually, the property of the State in trust for all; and for all to derive equal advantages from it, those who occupy it must pay a rental to the State for its use. This is the only way to equalise the advantages derived by the several occupiers of land of different qualities and in different situations,—the only way to enable the whole community to benefit by the increased value which the community itself gives to land.

The use of land is two-fold. Its chief and primary use is to supply to every household in the kingdom, the conditions for healthy existence, and whenever possible, some portion at least of their daily food. When all are thus supplied with the land necessary for a healthy home, the remainder should be devoted to cultivation in such a way as to produce the maximum of food, and at the same time to support and bring up the maximum number of healthy and happy food producers. All experience shows that these two things go together, and that in any country the maximum of food is produced when the greatest possible population lives upon and by the land. At one extreme we have the great farms of S. Australia, and California, cultivated with the minimum of human labour and producing a net return of about ten bushels of wheat per acre, and at the other extreme, the allotments of our farm labourers, producing food to the value of £40 per acre.

But in order that our labourers and mechanics may each be enabled to have, say, an acre of land to live on, and an acre or two more to cultivate, if they require it, with the power of getting a small farm of, from 10 to 40 acres, whenever they have obtained money enough to stock it, the land must be let, not sold to them. For at first a man wants all his little capital to enable him to cultivate even the smallest plot of land, and if he has to buy it, even by the easiest instalments, he is to that extent crippled. Moreover it is a bad thing for him to own the land absolutely, because he is then open to the temptations of the money-lender. Instead of economising and pinching in bad seasons, he borrows money and mortgages his land, and thus falls under a tyranny as bad as that of the hardest landlord. In every part of the world the small freeholder falls a victim to the money-lender.

As a State-tenant the occupier would have all the essential rights and advantages of a freeholder. His tenure would be practically perpetual. He would have the right to sell or bequeath his holding, or any part of it, just as freely. His rent would never be raised on account of any improvements made by himself, but only on account of increased value of ground-rent, due to the growth of population or other general causes, which would affect all the ground around as well as his. He would therefore enjoy all the rights, all the privileges, and all the security, which a freeholder enjoys. But he would have this great advantage over the freeholder, that he need not sink one penny of his capital in the purchase of the soil; and thus, for one man who could save money enough to acquire a farm or a homestead by purchase, two or three would be able to become State-tenants, with money in their pockets to stock their land or build their house, and to live upon till their first crops were gathered. Those who maintain the superiority of freeholds, therefore, speak without knowledge; the superiority is all the other way.

There is one more point to be considered, which is of great importance, that under a general system of small freeholders, one half of these would very soon be ruined by the other half—would be obliged to sell their farms to money-lenders or lawyers, and thus great estates would again monopolise the land. The way this would necessarily come about (as it always has come about) is as follows. Suppose there are a body of peasant proprietors all over the country. Their land necessarily varies in quality and position, and, therefore, in value from fifteen or twenty shillings an acre up to two, three, or four pounds an acre; and all being freeholders, none of them pay rent. But the owner of the better land can afford to sell his produce of all kinds at a lower rate than the owner of the inferior land, because prices, which will enable the former to live and save money, will be starvation to the latter. Hence an unequal competition will arise between the two classes, in which the one must necessarily starve out the other. The payment of rent in proportion to the inherent value of the land equalises the position of all. The occupier of poor land at a low rent can fairly compete with the occupier of rich land at a high rent; and thus while a system of small proprietors is sure to fail, a system of small occupiers, under the State, combines all the essential elements of stability.[iv]

[iv] This danger has been attempted to be obviated on the continent by the farms consisting of scores of hundreds of scattered patches of land of different qualities. But this system renders economical cultivation impossible, and the remedy is worse than the disease.

Thus far we have considered the question solely from the economical and practical point of view, but the great superiority of State-tenants over freeholders is equally apparent when we treat it as a question of justice. Land necessarily increases in value as population and civilisation increase, and that increase being the creation of the community at large, is justly the property of the community. By a system of State-tenants we shall obtain this increase for the benefit of all, by means of a periodical reassessment of the ground rents payable to the State; but if we create a body of small freeholders we shall perpetuate injustice and inequality. A. and B. may acquire two farms at the same cost, and may bestow the same labour and skill in the cultivation of them. But in 30 or 40 years the value of the two may be very different. Minerals may be discovered or some new industry may spring up, causing the farm of A. to become the site of a populous town, while that of B. remains in a secluded agricultural district; so that, while the children of the one are earning their living by honest labour, the children of the other may be all living in idleness by means of wealth which they have not created and to which they have no equitable claim, and to the same extent the community at large is robbed of its due. If, on the other hand, we establish a system of State-tenancy over the whole country, the natural increase of land-value by social development will produce an ever-increasing revenue even if existing landlords continue to be paid the incomes they now receive from land, so that in addition to all the other advantages of the system, we shall acquire means of bringing about a steady diminution of taxation by which all alike will benefit.

Briefly, to sum up the argument:

  1. —Money must be sunk in the purchase which can be better invested in the cultivation of the soil.
  2. —The number of men who can advantageously acquire small farms is therefore greatly reduced.
  3. —The unearned increment of the land is taken from the community, who create it, and is given to individuals.
  4. —The inheritors of these small farms of different qualities of land will compete unequally with each other, and those holding the poorer land must sooner or later sell their farms, or fall into the hands of the money-lender. The system, therefore, contains within itself the elements of decay and failure.