Joseph Hyder: The Case for Land Nationalisation
Chapter XV: Land-Reform Palliatives
Parliament commits a great error in giving all the benefits of State credit to a comparatively small and select class.
Speech in Parliament on Irish Land Purchase Bill, 1903.
The turning aside of capital from the cultivation of the land to its purchase is one of the chief vices of our French rural economy.
TO thoughtful men it has long been clear that the evils of the present land system are so great that some important changes must inevitably be made in it. That feeling has steadily been growing, and the land question is now coming to take its proper place in the very front of practical politics. Even the great political party, which has always been dominated by and identified with the landed interest, is driven at last to admit that something must be done to make the land monopoly more acceptable to the people.
The first obstacle, which always confronts reformers, is the existence of a general feeling that everything is very well as it is, that no change is needed at all. And it always takes many years of patient and persistent education and agitation to break down that first barrier. Besides the active opposition of the vested interests themselves, a much greater difficulty is encountered in the sluggish contentment and inaction even of those who would be benefited by the proposed change. It is so easy not to think, so easy to do nothing. And then there are always so many other questions that may seem more urgent, usually questions of far less importance.
So it has been in the case of land reform. It has taken so long for the democracy to win a ‘place in the sun’ at all, that, until recent years, they have been content with the achievement of the franchise, and with political reforms of various kinds. And now, having the vote (though as yet incomplete), and a measure of education, they have begun to turn their attention to questions of social reform for the betterment of their condition.
The Chartists, nearly seventy years ago, were wise enough to see that political liberty was only a means, not an end in itself. And they saw that the land laws were the greatest enemy of the people. More than that, they saw that the only reform of those laws that was worth their consideration was one that would end in the nationalisation of the land. They were absolutely right, but they were ahead of their time.
The second obstacle which confronts reformers is the attempt that is always made by those who have hitherto resisted all change whatsoever to turn the attack aside to minor issues, and to direct it on to wrong lines. The loaf is asked for, the crumb is offered. And too often the crumb has been accepted, and the vested interest goes on for another period until a further concession becomes again inevitable.
A gardener knows that when a fruit tree gets into a certain condition of disease or age, no trimming or dressing is of any use at all. The tree must be grubbed up. It has outlived its usefulness, and it must make room for a better.
And so with a machine. It may have been excellent in its day, but it has at last to be scrapped.
In process of time, too, every building falls into decay. It has to be shored up, to prevent it falling down, it is a constant source of inconvenience and danger to those who live in it, and a constant expense and worry to its owner. Repairs are no longer of any use, and it has to be pulled down at last.
The present land system has been through the repair stage, it has outlived its day, and it must be reconstructed. Its foundation is bad, and always has been, for it has been built upon the denial of the great truth that all men have an equal right in Nature’s gift to all mankind.
That is the one simple test by which all land-reform palliatives must be tried. The difficulties which landlords and lawyers have artificially created in order to intensify the monopoly of land are absurd and unjust; but the mere registration of titles, limitation of mortgages, and cheapening of land transfer, good as they are while land is private property, are simply palliatives. They leave the root of the evil untouched.
It is wrong that the land should be monopolised by a few landlords, but the evil of the system is not that land is held in great estates, but that it is treated as private property at all. The mere cutting up of those estates into smaller pieces would simply remove some evils and set up others in their place.
Again, it is unjust that buildings put up by one man should be confiscated by another; but the elimination of the ground landlord, and the establishment of the leaseholder as a freeholder in his place, is no proper solution of the difficulty. It is merely a palliative, and leaves the root of the trouble exactly as it was.
When tried by the test above referred to, the proposals for free trade in land, small ownerships, and leasehold enfranchisement (as generally understood), all alike break down. For they all assume that the land is a rightful subject of private property. They all ignore the rights, which the community as a whole has in the land. They all involve inequality in the possession of it, and exclude great masses from its possession altogether. They all enable private individuals to appropriate to themselves the value of land, which is a social creation, and which ought to be applicable as public revenue for the public service. And they all shut out the possibility of that measure of public control of land, which is absolutely necessary for the safeguarding of public interests, and the development of land in the best possible way.
Apart from these considerations there are others. We have always been told by the champions of private property in land that great estates are better managed than small ones, and there is much truth in the contention. A tenant is generally better off under a rich landlord than under a poor one. He is more likely to be treated with some consideration. And the good of the estate as a whole is more likely to be kept in mind when it is under one ownership. For this reason, if for this reason alone, it would be better to treat the land as one great national estate, with large areas under one administration, than to cut it up into many separate properties, each conflicting with each other, and all together conflicting with the supreme interest of the community.
The artificial creation of small ownerships by the help of the State is reaction pure and simple. It is not only a partition among a part of the people of that which belongs to them all, but it is not the best system even for those who are intended to be benefited by it. For a tenancy of land is better than an ownership, if it he accompanied by proper conditions. These conditions are:
- Security of possession.
- Freedom of initiative in its development.
- Ownership of improvements effected by the tenant.
- A fair rent, fixed by an impartial Land Court.
- The payment of rent into the public exchequer, and the consequent exemption of improvements from taxation.
As regards the first three of these conditions a State tenancy is no whit inferior to an occupying ownership, for an occupying owner cannot rightfully claim, or reasonably expect to have, absolute fixity of tenure.
It is true he does not pay rent, but this is much more than counterbalanced by these three considerations:
- He loses the interest on the money he has invested in buying the freehold, and this is, in reality, equal to the payment of a rent.
- In most cases he is burdened with a heavy mortgage, and the interest on the mortgage is a second rent.
- If the State does not possess the land it taxes the buildings, and this constitutes a third rent. Moreover, the occupying owner has a great part of his capital locked up in the freehold. He would do much more good with it as working capital, and realise more interest on it as trading profit.
The tempting bait is being held out to farmers by the advocates of occupying ownership that the State will advance nearly the whole of the purchase money, if not all. But what would be the security for the advance? In Ireland the farmers generally own the improvements, and the State has some security for the money it advances. In England the State would have to advance the money, not only for the land, but also for the buildings, which are now the property of the landlord.
And, even if this difficulty were surmounted in favour of the first State-aided purchaser, all subsequent purchasers would have to pay a deposit, and thus deplete their working capital, besides, in the great majority of cases, having to raise the balance on mortgage, and to be subject to the disabilities already described.
There is the further objection that the universal tendency to the mortgaging of small freeholds would lead in time to their being merged into larger holdings. This tendency to the re-creation of large freehold estates is already at work in Ireland, and shows the wisdom of Lord MacDonnell (then Sir Antony MacDonnell) in inducing the then Government (in 1903) to provide in its Land Purchase Bill of that year that the State should retain a one-eighth share of the land by means of a perpetual quit-rent.
Unfortunately the Irish party were opposed to this provision, the Government were themselves not enamoured of it, and it was at once dropped.
Lord MacDonnell’s authority on this subject is so great that the following extract from a speech made by him at Dublin, in February 1903, is worth recording:
“Supposing that the land is transferred on a great scale from landlords to tenants; supposing that the tenants become the owners of their holdings on reasonable terms, shall we have seen the last of the Irish land difficulty? The answer to that question depends entirely on the character of the tenure to be conferred on the tenants by the coming Act. In this matter, gentlemen, I speak my individual opinion, and I beg you will understand that I do not pretend to express the policy of the Government.
“But I am free to say on my own account that if the fee-simple in holdings is without qualification conferred on the tenant, if the tenant, on redeeming his purchase annuity or on completing the payments under it, shall be free to mortgage, to sub-let, and to sub-divide his holding, then my conviction is that the time is not far distant when the condition of the tenantry of Ireland will be worse than it has yet been. Gentlemen, I wish to impress upon you and upon the country the tremendous importance of the issue thus raised. Its importance was present to the minds of Lord Dunraven’s Conference, which, in the 18th article of its report, calls attention to the matter, without, however, making any suggestion as to how it should be dealt with.
“I myself have no faith in a peasant proprietary unless protected against the evils incident to that system of land tenure. We have all read about, and some of us perhaps have seen, the working of the peasant proprietary system in Europe. I myself have had wide experience of the analogous systems in India, and my experience has always been the same. Everywhere the gradual declension of the peasantry from prosperity to ruin has been repeated.
“The process is this – First, there is a period of prosperity, with a rise in the standard of comfort; then follows indebtedness, slight at first, but ever growing with the facilities which are readily afforded by the usurer. Next come mortgages, and then comes a sub-division and sale to meet the mortgagees’ claims. Finally comes the crash; and the grandson of the tenant-proprietor becomes the sub-tenant on his former patrimony, while the usurer becomes the rack-renting landlord; a landlord of a far worse type than any which Ireland has presented in the past. Gentlemen, this is the process with which I am familiar, and, being familiar with it, I am naturally anxious that it should not be repeated in Ireland.
“It may be said that Ireland is not India, and that Irish peasants are able to take care of themselves and need no grandmotherly legislation. Well, let me give you an example taken from European experience, and of the present day. I quote from an important article in the Timesnewspaper of February 5, on the subject of indebtedness and its effect on peasant proprietorship in Italy.
” ‘The indebtedness of the southern agricultural population is equally notable. In the Neapolitan provinces alone the Bank of Naples and the Bank of Italy held last April, through foreclosures of mortgages, landed property to the value of 57 millions of lire – more than £2,000,000 sterling. The growth of debt, want of credit, scarcity of labour brought about by emigration, the ruin and gradual disappearance of peasant proprietors – all causes which act and react upon each other, have conduced to a state of things which grows increasingly worse every year. Baron Sonnino hardly exaggerated it when he said at Naples: “Agriculture is perishing; the country is being depopulated, losing the most healthy and vigorous of its labourers; property is being crushed under the cruel weight of its fiscal burdens, imposed both by the State and local taxation, and under the burden of its own debts; that portion of the rural population which does not seek exile plunges deeper into misery every day; local factions wage their fruitless warfare; mutually bandying accusations of responsibility for their common loss; and in the midst of the general discontent, sometimes actively rebellious, and at other times crushed and resigned, the only tiling which swells and prospers is the blood-sucking octopus of usury.” ‘ ”
The same kind of thing is going on in Germany. Mr. T. C. Horsfall, a great authority upon the conditions and institutions of that country, and to whom is due the credit for the introduction into England of the German system of town planning, wrote the following letter to the Times in February 1910:
“Sir, – Sir Gilbert Parker tells us that ‘every country adopting ‘the policy of freehold for small holders’ has made it successful – Germany, France, Italy, and, pre-eminently, Denmark, etc.’ This is a very bold assertion, having regard to the fact, well known to all who know anything about German landholders, that the burden of debt on them, small and great, is so intolerable that the country is inundated with books, pamphlets, and addresses, in which proposals are made for limiting by law the degree to which land may be mortgaged, and for getting the existing debts paid off, by the help, direct or indirect, of the State, till they are within the proposed limit. In the year 1902 the landholders were, on an average, in debt to the extent of 26.4 per cent. of the value of their land and capital, and the amount of their debts has continued to increase every year. This state of things leads to a large number of compulsory sales. Thus, in 1903 53.63 millions of marks of debt were paid off by the proceeds of compulsory sales of land; in 1904, 46.71 millions, and in 1905, 50.13 millions. In Austria the same evil exists. For some years about 10,000 peasants have had their holdings compulsorily sold each year.
“These facts ought certainly to be taken into account by all who wish to learn whether freehold or leasehold is the better system for small holdings in this country.”
Again, Mr. B. Seebohm Rowntree, in his thorough and valuable work, Land and Labour: Lessons from Belgium, has shown that there is the same tendency for the small owners in that country to mortgage their land. “The largest proportion of mortgages,” he says, “is to be found among proprietors who own from 7½ to 86½ acres, and with them the amounts vary from an average of £9 12s. 5d. per acre, on farms from 37 to 62 acres each, to £21 l0s. 7d. on those from 7½ to 121/3 acres.”
In America the freehold system has been given every chance, and yet the freehold farm is giving place to the rented farm, as is shown by the following, which appeared in September 1907 in the Chicago Public:
“An investigation into the relations of landlord and tenant in Wisconsin, made by Prof. Taylor, of the State University, has disclosed unlooked-for and ominous conditions – conditions which no philanthropic readjustment of the mutual interests of landlord and tenant can remedy. The rapidity with which tenant-farmers appear to be displacing land-owning farmers is startling. Prof. Taylor discovers that of a total of more than 44,000 persons in Wisconsin who are directly concerned in the leasing of farm land, 22,096, or 52 per cent., are tenants. The increase was from 12,159, during the decade–almost 100 per cent. …
“The truth is that this movement towards an increase of rented farms, which is advancing throughout the West, and has been for years, so far from implying an increase in independent farming, implies an extension of monopoly in farm ownership. The fact is now almost visible to the naked eye, that in the United States tenant-farming is becoming the rule”
In 1893 there was a land-mortgage crisis in America, and the question of the increasing indebtedness of freehold farmers to banks and moneylenders was widely discussed.
The census returns showed a mortgage indebtedness for 33 states and territories of over 4,935 million dollars, and, the same ratio of debt to assessed valuation being assumed for other States, the total indebtedness comes out at 7,100 million dollars, or 1,420 millions sterling, not including railway mortgages. An attempt to classify the lenders of all this money gave 355 millions sterling held by savings banks, insurance companies, etc., 788 millions by local investors and capitalists, 249 millions by non-resident investors, and 28 millions by American mortgage, loan, and trust companies.
Turning to the evidence supplied by our own country, we see the same absorption of small freeholds into large estates, a fact which has been noticed by one of the leading advocates of small ownerships, Sir H. Rider Haggard. In an article in the Windsor Magazine, he wrote the following:
“The most perfect instance of this change that I can remember to have met with in all my journeying in rural England was in the parish of Weston Colville, in Cambridgeshire. Here, Mr. Hall, who owns most of the land in that neighbourhood, showed me a map of it, dated 1612, which he had found hidden away in some cottage.
“This parish contains about 3,200 acres; and, as the map shows, in 1612, over 2,000 acres of it were held by some 300 or more small owners. Now that same land is owned by one man, and cultivated by three. The strange part of this case is that the soil is very light, in part almost a ‘blowing sand,’ which, to produce anything, must have been heavily manured. Yet in the time of Queen Elizabeth hundreds of people would appear to have wrung a living from it, which is more than the large farmers of such country do every year in our generation.
“Another case that I met with was that of Feckenham, in Worcestershire, of which I have also seen an ancient map. This map shows that, in 1591, nearly 3,000 acres were held by 53 different owners. Now they are held by six.
“How did this change come about? Doubtless the Enclosure Acts of the last century had something to do with it, since by taking away the common pasturage they rendered the little arable holdings almost valueless.
“Another cause was the great increase in the value of land which occurred at certain periods during the last century. Land was then looked upon as the safest form of property, and one of which the possession conferred dignity and other social advantages. Therefore, it came about that most English county families which had the money set to work to increase the size of their estates by buying out the little yeomen and other smallholders who held freeholds or copyholds in their neighbourhood.”
Again, Mr. W. E. Bear, in his Study of Small Holdings, refers to the small freeholds of the Isle of Axholme, in Lincolnshire, and says: “Judging from the information obtained, I should say that the occupiers who hire land are at least as favourably situated as those who own it, and that they do better than those who gave very high prices for their land some years ago, and who are burdened with heavy mortgages.” If this be true of private tenancies, how much more does it tell in favour of public tenancies, where fairer rents and greater security could be counted upon!
The statesmen of Westmoreland and Cumberland, as the surviving yeomen of those counties are called, came in for their share of consideration. In that district, again, the tenants have stood hard times better than the owners. One good authority told Mr. Bear that the small proprietors were dying out, “the reasons being the heavy burden of interest on mortgages, charges on the land which the heir has to pay the rest of his father’s family, and the tempting prices offered for the land by neighbouring owners and rich men from the towns.”
A mass of evidence was given before the Welsh Land Commission showing that in a very large number of cases those farmers who had bought their farms were weighed down by mortgages, and would have been better off if they were tenants. The following cases are typical of many others:
- (a) 44 acres bought for £700, present mortgage £600, annual interest £24, previous rent £22.
- (b) 31 acres bought for £650, present mortgage £400 at 4 per cent.
- (c) A farm bought for £1,000, present mortgage £700, annual interest £28, previous rent £34.
- (d) 44 acres bought for £1,000, present mortgage £900, annual interest £36, previous rent £30.
Mr. Pringle, in his admirable report to the last Royal Commission on Agriculture, told of a man in the Isle of Axholme who in 1850 had, as a farm labourer, saved £100, and with it bought a small holding with a grass croft and orchard. Such a beginning would, in fanciful stories, mean a steady ascent to independence and wealth, but in real life it was far different. The man gradually acquired more land, in every case at market value, but none the less at prices beyond its real worth; and now, after his fifty years of hard work and thrift, he finds himself in this position: he has paid in hard cash, saved out of his earnings, £880; he has also paid in interest (rent, i.e., in another form) from £50 to £60 a year for land whose market value was not, on the average, more than £30 or £40 a year at the outside, and he now owns (!) a farm valued at £975 and mortgaged for £1,415, and has to pay nearly £60 a year for the right to live there and to use the land. Nor, of course, is this the worst, for he is personally liable for the £400 or £500 mortgage debt which will remain due after sale of the land, and is liable at any time to be reduced to bankruptcy and to be sent to the workhouse as a pauper. Nothing, probably, saves him from this cruel fate but the hope of the mortgagee, that he may, by holding on, obtain a better price.
The Royal Commissioner was told that “the only way to obtain land in the Isle is by purchase, and farmers had consequently grown accustomed to look upon interest on mortgage in the same way as a tenant looks upon rent.”
Of course it is rent. It is, moreover, fixed rent, and fixed by reference to an artificial and temporary value. And, as some of them found to their ruin, the principal is not only a charge on the land, carrying with it a fixed rent above its worth, but also a personal liability. “About twenty years ago,” the Commissioner says, “when the price of agricultural produce was high, and trade of all sorts very brisk, the value of land went up by leaps and bounds. In a similar degree, the desire of small freeholders to add to their possessions and extend their farming operations increased. A regular struggle for land ensued, and unreasonable prices were; realized.” In 1873, “the selling value of land in the Isle of Axholme ranged between £120 per acre for the primest samples to £60 for inferior soil. The small farmers grew reckless and would have land, cost what it might.” They easily borrowed most of the money on mortgage, and so their ruin was effected, for the market value of land declined to about £30 per acre, and it was difficult to sell it even at that price.
The only persons who have benefited are the fortunate owners who realised in the good times. For in numerous instances, the mortgagees have been very heavy losers.
Take a few extracts from the report: “A labouring man bought three pieces of land for £225. He paid £125 in cash and borrowed £100. Quite lately, the mortgagee called in his money, and the place was sold for £90. There have been many cases within the last fourteen years.” “There have been several cases of late where foreclosure took place, and the mortgagee lost nearly one half.” “I am paying interest on mortgage. I can’t sell the property, for it would not clear itself.” “If the mortgagees were to foreclose and sell up my land, the proceeds would not nearly square the account.” “The mortgaging system has been the ruin of the Isle. If Haxey Parish were sold up to-morrow, it is not solvent.” “Others, who had lots of good clear property, have lost all by borrowing to buy more, and are now labourers living in rented houses.”
Dr. Alfred Russel Wallace, in his Studies: Scientific and Social, says: “The real obstacle to peasant proprietorship or small yeoman farmers in this country is the land-hunger of the rich, who are constantly seeking to extend their possessions, partly because land is considered the securest of all investments, and which, though paying a small average interest, affords many chances of great profits, but mainly on account of the political power, the exercise of authority, and widespread social influence it carries with it. The number of individuals of great wealth in this country is enormous, and, owing to the diminution of the more reckless forms of extravagance, many of them live far below their incomes and employ the surplus in extending their estates. The probabilities are that men of this stamp are increasing, and will increase, and the system of free trade in land would serve chiefly to afford them the means of an unlimited gratification of their great passion.”
And Mr. Balfour also put the case against small ownership with remarkable clearness at the Industrial Remuneration Conference in 1885. “With very great reluctance,” he said, “I am compelled to accept the view that a peasant proprietary may, and in all old countries where it extensively prevails actually does, co-exist with great poverty in the large towns, with low wages, and sometimes with harsh treatment of the labourer in the country districts.
“While the peasant proprietors are hard masters, and, where they have the chance, hard landlords, they themselves are too frequently subjected to a condition of dependence more cruel than that of any tenant of any landlord or any employer – the dependence, namely, of a small debtor on a professional moneylender.
“If its success has been so qualified under the exceptionally propitious conditions which prevail on the other side of the Channel, there is no ground whatever for supposing it would be other than a disastrous failure here, where neither the habits of the people, the tradition of the country, nor the character of the agriculture are suited to it; where it has shown no tendency to take root in districts in which it has not previously existed, or to thrive in districts where it has.
“The truth is that, except in the case of market gardening, the system of peasant proprietorship lies in unstable equilibrium between two opposite dangers, from both of which it rarely succeeds in escaping.
“If, on the one hand, the small freeholders are but feebly influenced by ‘land hunger’, those of them who are lazy and thriftless will sell rather than mortgage their holdings whenever the inevitable demand for money comes upon them; while those of them who are energetic and enterprising will also sell, because in old and settled countries it is usually more profitable to farm and pay rent for much land, than to own and cultivate a little.
“If, on the other hand, the peasants are powerfully moved by ‘land hunger,’ then, rather than sell, they will mortgage their holdings, if necessary at extravagant rates; rather than not buy, they will give extravagant prices for any plot of ground that comes into the market; rather than give up their share of the ancestral fields on the death of a parent, they will submit them to ruinous sub-division.
“In the one case the system gradually dies out; in the other it produces little but evil.”
The preponderating weight of all the available evidence proves, in fact, that small ownerships are inferior to tenancies, even when the tenancies are held under private landlords. It follows that they are still more inferior, for reasons already given, to State tenancies such as are here advocated. And, in further proof of this, it must be mentioned that no less than 98 per cent. of the applicants under the Small Holdings Act of 1908 have preferred to become tenants of the Public Authorities to becoming the freeholders.
The truth is that the small-ownership movement is mainly supported for political reasons. For, as the late Lord Derby said, a large addition to the number of landlords would give “a heavy blow to schemes of land nationalisation. For you may trust the owner of ten or twenty acres to defend the rights of property as effectually as if he owned 1,000 or 2,000.” It means that the big estates would be fortified against all attack by an army of small owners, and the nation would be still kept from its own by the selfishness of a large number of men interested in keeping it for themselves. Further arguments are given in the following extract from a speech by Mr. Asquith on January 22, 1895, and with it this criticism of plausible, useless, and dangerous land-reform palliatives may be concluded. Referring to Mr. Chamberlain’s proposal to give State aid to working men for the purchase of their dwellings, he said: “For my part, I am strongly opposed to any scheme of the kind, and for two reasons: in the first place, I do not believe the working classes of this country, as a whole, have any real desire or any real interest in the acquisition of the freehold of their dwellings. If a man has got a house, to that extent he is not mobile. He is a fixed man, and, in industrial operations which tend more and more to become migratory and to require the rapid transport of the labourer from one quarter to another, I can see the working man would find himself very much embarrassed in his negotiations with his employer by being tied down to any particular locality by ownership of the soil. But apart from that, in my judgment, if the municipality is to interfere – I don’t say it should not – in the execution of some scheme, which displaces a large number of existing dwellings, if the municipality is to interfere in this matter it ought to acquire the land and retain the land for itself. It ought not to seek the creation of new interests which will make subsequent dealings with the soil more difficult, and which will put the unearned increment into the pockets of the individual. The municipality ought to acquire the land for itself, and then I agree it becomes its duty to let it out upon reasonable terms to persons who desire to use it.”