The Pamphlet Collection of Sir Robert Stout: Volume 67
Nationalization of the Land. — Resumption of Private Land. — ["Dunedin Echo," June 3, 1882.] — IV
Nationalization of the Land.
Resumption of Private Land.
["Dunedin Echo," June 3, 1882.]
"An individual never gives in present money, for a remote profit, anything like what that profit is worth to the State, which is immortal."—John Stuart Mill.
We have not space here to review the many devices for the resumption of private land by the State which have been suggested by writers on the subject. Suffice it to say that we view every proposal which has the effect of reducing the present value of property as untenable from a moral point of view. That is to say, the State has no right to benefit itself without a fair and equivalent compensation being made to those who are asked to part with something they legally call their own. The appropriation of rent is direct confiscation. The resumption without payment at the end of a certain period is no less confiscation in principle, though it may differ greatly in degree. The appropriation of the unearned increment is defensible, on the ground that the State has the moral right to declare that no person in future shall be entitled to property which others, not the person, may earn.
A finer question is involved here. It is said that when a man has purchased his property he purchases the unearned increment for ever. We are not aware that Mill has met this objection; but it appears to us that the reply is, that the State has always reserved to itself the right of readjusting taxation from time to time, in accordance with the capacity of the different classes and members of the community to contribute. page 18 The unearned increment is a question of taxation. If a class enjoy exceptional privileges, it is called upon, under a system of abstract justice, to contribute more than do those classes which are not in the enjoyment of those privileges.
We do not, however, think the appropriation of the unearned increment would be free from the charge of confiscation, or be the best way of proceeding. Indeed, we see great objections to the mixing up of the question of taxation with the question of nationalizing the land. Many prejudices will be avoided if the two objects are pursued independently. A progressive tax on land, for instance, can be justified by the theory of an unearned increment and exceptional privilege. The resumption of private land—though there is a connection—is very different from the question of the equation of burthens. In the quotation from Mill, at the head of this article, will probably be found the key to the solution of the problem.
When will the time come for resumption? How should we proceed? Public opinion will be ripe for action when pressure begins to be felt for land by those anxious to occupy and cultivate. This time will be hastened by an equitable leasing system applied to the Crown lands; and it is safe to predict that in less than ten years, with the protection of improvements inducing people to lease agricultural areas, a demand will have gone forth for the expropriation of the very large freeholds, simply because all other land will have passed into industrial hands. The principle of expropriation will be carried when the Crown (and Native) land has been leased; and a just leasing system will be the lever by which the deadweight of centuries of prejudice may be removed. The carrying of the last rampart is therefore not very remote, and the citadel must surrender at discretion when the besiegers have command of the town.
The expediency of resumption follows from the principle stated by Mill, that the State, being immortal, can look for a remote profit by purchasing at present values. That is all. When the State wants the land, it can afford to give market price for it, just as it gives market price for the land it requires for railways; and no one has a right to complain when he receives an equivalent value for what he has parted with. It might be expedient to begin by giving the right to re-purchase any estate above 10,000 acres in extent, in those parts of the Colony where the capacity to occupy land was greatest. The usual plan of arbitration would be available to decide disputes. We think it would be found advisable to postpone compulsory expropriation, if sufficient land within the limits laid down could be obtained by purchase in the open market.
These limits might be of a financial character. The department, we will suppose, started with a capital of half a million. As the land was acquired it would be leased, at a rental, say of 5 per cent, on the capital value; a reservation existing that at page 19 no time should more than half a million be advanced to the department in excess of that producing the standard rate of interest. Thus, if 20 millions were lent to the purchase department, 19½ millions, at least, would represent land yielding a rental equal to 5 per cent, on the amount. In this limitation would exist the safety-valve, as the absence of it led to so many improper investments in Native land by the Crown during the last ten years. The net result would at any time show whether the purchases were judicious, by the infallible criterion of persons being willing to lease at a rental equal to a low interest on the capital value.
We think it scarcely necessary to deal at any length with the question of the Colony being able to borrow the necessary amount of capital. Fortunately the modern institution of international honesty, termed "credit," has undergone without slight disturbance for a century or so a very constant development, until the loanable capital of the world has increased beyond the demand, except at a rate of interest tending from 3 per cent., on the best securities, downwards. Our Colonial standard of honesty, ability, and discretion is fixed at about 5 per cent, when we want to borrow, or about per cent, when we have got what we want, and have given a guarantee not to disturb the speculators for a time certain. We will take the very lowest ground, in supposing we pledged the rents of the Crown lands, and ask, would Lombard Street or Wall Street seek for better security? But we do not think the Colonial credit would stand so low, when the ability was shown in the economic rents of a large body of agricultural tenants, equal to the interest on the required capital. Before long, the Colonial market will be able to subscribe small loans, when the Government might get what it wanted, but at any rate if the Colony has the security and credit to offer, the money will not be withheld.
It is not our object here to demonstrate the amount of prosperity which would be created in so many ways by the nationalization of private land. It is a wide question. One consideration only shall we allude to. The private capital released, in all probability, would not leave the Colony, but be transferred to other industries. Even in the case of absentees, it is not unlikely it would return to find employment in the country where on a given area the number of producers had been so greatly increased, and where credit and capacity went hand in hand. If the Liberal party desire a national policy on which it might with confidence stake its future prosperity and position, we know of none which affords the same scope, or which would yield such splendid results as the nationalization of the land.
Note.—Since we began to write on the subject, an important advance has been made in the direction we indicated, as will be seen from a passage in the Governor's speech at the opening of the General Assembly, in which the principle of leasing is to be applied to some blocks of agricultural land.