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The Life and Work of Richard John Seddon

Chapter XVIII. — Settling The Land

page 289

Chapter XVIII.
Settling The Land.

Sufficient has been said in previous chapters to show that the land question has always been an important one in New Zealand's politics. It is necessarily so in a young country, with large areas of well-watered and fertile land waiting to be used. Settlement has meant prosperity to New Zealand, and those who have done most to place people on the land are ranked among the colony's greatest benefactors. It is not invidious to select from the large number of politicians and writers who have worked in this direction four notable men. They are: Sir George Grey, Mr. Ballance, Mr. Rolleston, and Sir John McKenzie. Mr. Seddon has named them as the most prominent land reformers who have sat in the New Zealand Parliament. He has repeatedly given much credit to Mr. Rolleston, who was opposed to him in general politics. It was Mr. Rolleston who, as Minister for Lands in the Hall-Whitaker-Atkinson Administration, which turned Sir George Grey out of power in 1879, introduced the perpetual-lease system of tenure. Before the Liberal Party came into power in 1891, more than 1,000,000 acre had been taken up under this very popular tenure, although the area that could be leased by any individual in that way was limited to 640 acres of good agricultural land and 2,000 acres of second-class land.

When Mr. Ballance became Minister for Lands in the Stout-Vogel Coalition, he set the village settlement system on its feet. It helped many of the unemployed to take up sections, and it has proved to be a great blessing to the settlers and their families and a decided benefit to the colony. The tenure of these sections was based on perpetual-lease, the rent charged being 5 per cent. on the unimproved value, which was about £1 an acre. Mr. Ballance, however, was in office on that occasion page 290 for only a year after his village system came into operation, and as his successor did not give very much attention to the welfare of the settlements, they were not as successful as they would have been in better circumstances. On the whole, however, their establishment has been more than justified. The nature of their tenure has been altered by the present Liberal Party under the provisions of the Land Act of 1892, from perpetual-lease with re-valuations to lease-in-perpetuity (999 years) without re-valuation.

These two systems, perpetual-lease and village-settlement, mark distinct epochs in New Zealand's land-settlement history. The next epoch was ushered in by Sir John McKenzie shortly after Mr. Seddon and he were taken into the Ballance Ministry. Mr. Seddon would have been the last to claim for himself a place as a land-reformer; but from the day he entered Parliament, close settlement and liberal land-laws were leading items on his political programmes, as his first speech in the House will show. He was always strongly opposed to the “land-grabbers” and “land-sharks,” and lost few opportunities of denouncing them as clogs on the colony's progress. He joined with Sir John McKenzie in fierce and unrelenting attacks on big and almost useless estates. Checkered maps sent out from some of the land offices to show the result of the “gridironing” process, as it was called, on account of the strange appearance they presented, were compared by him to old cathedral windows. He never threw himself into the land question with the ardour that was shown by Sir John McKenzie. In the early days of his Ministerial work Mr. Seddon supported his colleagues in this direction, but did not attempt to lead. His simple doctrine was that land meant power, and he said repeatedly that as long as New Zealand kept her land for her people, she need never fear many of the ills that have overtaken other countries.

One of the troubles which beset the colony when the last Conservative Government gave place to the new order in 1891 was the increase of large holdings. Sir John McKenzie once described in Parliament large estate after large estate, splendid in its fertility, but carrying only a few human beings. One of these estates covered 40,000 acres; most of it was of magnificent page 291 quality, and only one or two families resided on it; another estate was between 60,000 and 70,000 acres in area, and there was a resident population on it of between sixteen and seventeen persons.

Some time after the Ballance Ministry took office it agreed that its land policy should be:

  • The conservation of the remaining Crown lands for genuine occupation on a true perpetual-lease system.

  • A land tax of one penny in the pound on the unimproved land value of the colony, with a progressive land tax on large holdings.

  • The repurchase of land for close settlement.

This is known as the “Ballance Policy.”

The Legislative Council would not accept the compulsory clauses in the Land Act of 1892, and, taking half measure, Sir John McKenzie allowed it to go on the Statute Book without those clauses. The re-purchase clauses became law, but experience showed Sir John that they were practically inoperative unless supported by compulsion. Nearly a million acres were offered to him in 1893, but most of the land was worthless for close settlement, or was valued too high. The first estate purchased under the Act of 1892, Pomahaka, in Otago, has never been successful. It is the worst land bargain the Government has ever made. Half of it remains unlet, and the note written against it in the land settlement tables of the Land Department's annual report is still: “Position unsatisfactory, prospects poor.”

While Sir John McKenzie was trying to make his Act work without the compulsory purchase clauses, and was meeting with very little success, there was thrown into his hands, by Providence, no doubt, he thought, a large estate called Cheviot, 84,000 acres in extent, and twelve miles square, on the east coast of the South Island, between Canterbury and Marlborough. The year following the passing of the Act, the Government found itself involved in a dispute with the trustees of the late Hon. W. Robinson, the owner of this estate. In the new Land and Income Assessment Act, just passed by the Ballance page 292 Government, there was a clause, since repealed, providing that if a land owner objected to the valuation placed on his land for taxing purposes, he could compel the Government to reduce the assessment or take over the property at his valuation. The Government's assessors valued the estate for taxation purposes at £304,826; the trustees valued it at £260,220, a difference of £44,606. The trustees objected to the assessed value. The Commissioner of Taxes disallowed the objection. He was upheld by the Board of Reviewers. The Commissioner then received a letter from the trustees demanding that he should reduce the valuation to their figure, or take the land at their price.

It was a critical moment for the new Ministry. Its taxation scheme was under trial, and it saw in the demand of the trustees of Cheviot a menace which, if not met by a bold face, might seriously damage the land tax and embarrass the finances. It was not a matter of Cheviot alone; there were many other large estates in the same position in regard to the assessed values, and if the Government allowed the value of Cheviot to be reduced there would be reductions in all parts of the colony.

The Government considered the position in all its bearings. It had to take one of two courses, and both called for serious consideration. It could not allow a deadly blow to be struck at the system of taxation for which the party had been fighting for more than thirteen years, and it was much inclined to take the course, which its opponents never thought it would be courageous enough to follow, of purchasing the estate. The fact that the compulsory clauses had been struck out of the Land Act was additional incentive to the Government to come out boldly and say that it would maintain its system of taxation and take Cheviot. It was looking about for land for settlement purposes at the time, in order to carry out the promises made to the people. Sir John McKenzie had been able to do hardly anything in the way of close settlement. Here, then, was his opportunity. Cheviot was admirably adapted to his purposes. Most of it was good land, and it could be cut into suitable areas for agricultural and pastoral settlement. In view of the results that might ensue, the Government acted with great caution. page 293 Not satisfied with its assessors' valuation, it had several special valuations made. Two of these placed the value at more than £40,000 above the trustees' valuation, one £35,000 above, and the fourth £25,000 above. The Government came to the conclusion that beyond all doubt Cheviot would be cheap at £260,000; and at the end of December, 1892, an order-in-council was issued declaring that the estate had been taken over by the Government. The transaction was completed in April of the next year. The trustees were paid £60,000 in cash, and the balance of £200,000 by cheque.

A few months after the transaction had been completed, a syndicate offered the Government £40,000 on its bargain, but Sir John McKenzie was not likely to depart from his course. He had bought the estate for settlement purposes, and settled it would be; so he immediately laid out the township which now bears his name and had the estate roaded and cut up for selection. There were eighty souls on it when he bought it; in the middle of July of the following year, he pointed proudly to a thriving and industrious population of 650, cultivating the land and making improvements in all directions. There are now more than three hundred Crown tenants on the estate, with 78,000 sheep, over 1,000 head of cattle, and 850 horses. They hold 76,000 acres, and they pay in rent £15,000 a year. The Cheviot purchase has proved to be successful financially and in all other respects, and the estate is now looked upon as one of the colony's most treasured possessions. Previous to the Government taking it over, Cheviot produced sheep and wool, and little else. Now, with its population multiplied ten fold, it grows wheat, barley, and oats; it has a dairy factory, which sends out large quantities of butter and cheese; it breeds and sells splendid horses and cattle; and to-day it exports more wool, fat lambs, and sheep than it did when producing those alone.

In 1894, Sir John McKenzie was made a happy man by the passing of his amended Land Act, with the compulsory clauses and he at once entered upon his scheme of land settlement, sending people out into the country at what seemed to be a furious pace. The brilliant results achieved by the land policy which he administered single-handed until his death in 1901 page 294 have been the theme of many speeches, newspaper articles, and parliamentary reports. Supported by Mr. Seddon, Sir Joseph Ward, and other members of the Government, as well as by many staunch members of the Liberal Party, he stood by his land policy when it seemed to be overwhelmed by a sea of criticism. Some of the most exciting incidents of debate in the New Zealand Parliament have taken place when Sir John McKenzie was being bated by the opponents of his settlement schemes.

Many years passed before the Liberal land policy was placed above criticism. It now stands as one of the most successful items of the policy Mr. Ballance and his colleagues submitted to Parliament in 1891. The results have proved more satisfactory than anyone could have expected at its initiation. Under the Land for Settlements Act the Government, up to 1906, has acquired over 120 estates, including Eccleston, Annan, and St. Helens, which were re-named in compliment to Mr. Seddon. The acquired estates cover an area of 680,000 acres, all of which have been opened for selection. There are over 3,000 settlers and their families on the estates, and they pay as rent about £170,000 a year. The total number of souls on the holdings is 10,283. The value of the improvements is £803,000. The arrears in payment of rent amount to only £5,000, and the total receipts since the inception of the system amount to £721,600. The Government borrows the money with which it pays for the estates. Last year it paid £134,705 in interest and received £162,481 in rents, making a profit of £27,776 on the year's transaction. Added to the profit of £166,259 the previous year, it had realised on March 31st., 1905, £194,035, all of which it spent on roads and other works connected with the settlements.

These estates are an enormous national asset. It is expected that the settlements will continue to progress, and that the holdings will become more valuable to the possessors of the leases. Each time a fresh estate is opened up, there is a rush of applicants, and keen interest is taken all over the colony in the ballots for selections. The Government claims, with much justice, that its policy of acquiring freehold properties and page 295 settling them with Crown tenants has been an unqualified success, from the point of view of the tenants, the Government, and the colony.

As the land system stands at present, its outstanding features are State-ownership of the soil, perpetual tenancy to the occupier, and the restriction of the area that any man may hold, thus applying the principle of the land for the people and preventing the aggregation of large estates. No Crown tenant can hold more than 640 acres of first-class land or 2,000 of second-class land.

Besides the lease-in-perpetuity system, which is the only one allowed under the Land for Settlements Act, the Government offers tenants other systems, to meet the wants of different classes. As a rule, ordinary Crown land thrown open to “optional” selection is offered to the public under three tenures, from which the settler can make his choice. These three tenures are: Cash, lease with the right of purchase, and lease-in-perpetuity (999 years).

Most of the Crown land is taken up for 999 years. Nearly 2,000,000 acres have been leased under that tenure. The rentals are based on the value of the land when it is first disposed of. As no re-valuations are made, and as there is no increase in the rents, the holders of those leases-in-perpetuity are often extremely fortunate men. They have a tenure that is practically equal to the freehold from every point of view except the sentimental one. Like the freehold, the lease can be sold, subleased, mortgaged, and disposed of by will. Besides that, the improvements made by the tenant are secured to him if he forfeits or surrenders his lease. The values placed on Crown lands are low when they are leased, as the State seeks to encourage settlement rather than to raise revenue directly, and the leases have sometimes increased enormously in value in a few years.

Most of the Crown tenants went on to the land poor men; but many of those who took up leases-in-perpetuity with little or no capital twelve or fourteen years ago are now rich, mainly on account of the remarkably cheap rates at which they obtained their leases and the facilities given them by the Government.

page 296

In recent years, there has been a demand that these Crown tenants should be given the right to acquire the freeholds of their leases at the original valuation. The representatives of the old Conservative Party, knowing that the Government was committed to the leasehold, took up the cry of the freehold and made it echo in the colony. Political leaders and the newspaper press went gladly into the controversy. It raged through several sessions of Parliament, and resulted in the setting up of a Royal Commission, which, after spending several months in different parts of the colony gathering information, reported that, on the whole, the condition and position of the tenants were progressive and satisfactory, and that the land reserved under the Land for Settlements Act should remain for all time the property of the State. The members of the Commission were not unanimous in coming to that decision, but nine out of ten pronounced emphatically in favour of the State retaining the land it had purchased; four recommended that the tenants who had taken up ordinary Crown land, apart from the land for settlements scheme, should be allowed to acquire the right of purchase under stringent conditions after they had occupied their holdings for six years; and four recommended that all sales of Crown land of every description should cease. One urged that all Crown tenants, whether occupying ordinary Crown land or land resumed under the Land for Settlements Act, should be allowed to acquire the freehold, and one suggested that when a tenant's improvements on ordinary Crown land represented three times the original value he should be given the right to purchase.

It was one of Mr. Seddon's most marked characteristics that when the Government of which he was a member had decided upon a definite course of action, he followed it unswervingly. He defended the policies of other Ministers with as much courage and determination as he brought to bear on the schemes he himself put into operation. When Mr. Reeves went to England to take the Agent-Generalship, and the Arbitration Act was assailed, Mr. Reddon cared for it with as much solicitude and anxiety as Mr. Reeves would have shown; and when in recent years Sir John McKenzie's land scheme was in danger from the attacks of the “freeholders,” Mr. Seddon, in a page 297 memorable phrase, announced that his back was to the door of the leasehold. He committed himself to the “Ballance Policy,” and denounced the proposal to give the Crown tenants the right to purchase the freehold at the original valuation as absolutely immoral. “I see no reason whatever,” he said, “why these tenants should be given a million of money belonging to the colony, as that will be the outcome of the proposal if it is adopted.”

The disturbance raised by those who posed as the Crown tenants' friends drew attention to the position of the holders of leases-in-perpetuity, and the colony began to consider whether it had been acting fairly to itself in granting those leases at all. It argued that a vast amount of unearned increment which ought to belong to the State was going past it, and that there was springing up, to a great extent, the very condition of things that Sir John McKenzie had racked his brains to guard against.

The lease-in-perpetuity has an interesting history. The Ballance Government found that it could not maintain its proposal that no more Crown lands should be sold. Sir John McKenzie was convinced in his own mind that the time had come when the State should sell no more of the land that remained to it. He was strongly opposed to giving anyone the right to purchase the freehold of Crown lands. He did not want to have a freehold clause inserted in any Land Bill of which he was the author, or which he had to administer. He had a reputation for possessing an obstinate and uncompromising temper, which would bow to no other man's opinion. It is a reputation that he never earned, and did not deserve. He repeatedly gave way to other views, against his best judgment. He did so in this case. Recognising that there were many people in the colony who had not come to his way of thinking, and having a deep sense of the responsibility that rested upon him as a Minister, he felt that he had no right to go further than public opinion could go with him. There was no doubt in his mind that those who said that no more Crown lands should be sold were right; but he respected the opinions of others, whom he credited with equal sincerity, and who page 298 believed that all men should be allowed to obtain the absolute freehold of their homes. He had intended to submit a Bill that would do away with the freehold tenure; but he felt that he must give way to the desires of the people of the colony. The first Land Bill he drafted in 1891, therefore, retained the freehold system. It contained the deferred payment system, and it also provided for a perpetual lease. Sir John McKenzie, bowing to the wishes of the “freeholders,” said that if a man had cash he could pay it and get his land; if he had not the cash he could still get his freehold on the deferred payment system; and if he preferred the perpetual lease tenure it was there for him, and he could take up the land on lease for 50 years. The Bill was not passed in 1891, and when it appeared again in 1892 Sir John stated that he was prepared to go still further in the way of compromise, and would give a system under which tenants could take up a lease for all time, the lease-in-perpetuity. He offered this to meet the objections of people who said that there ought to be no re-valuation. It was quite an afterthought. The lease-in-perpetuity was not in the Bill of 1891. It was not in the Bill of 1892 when it was circulated among members, but when he moved the second reading in the latter year he struck out the perpetual lease for 50 years and substituted the lease for 999 years; and that is how the lease that many people now consider a great mistake had its origin. It was a compromise on a great principle, and it has produced a harvest of discord. The great feature of the Bill was the optional system, under which an applicant could choose his tenure. He could purchase for cash, the Crown grant being issued only when improvements were made; he could have an occupation license at a rental of 5 per cent., with the right of purchase after 10 years; or he could have a lease-in-perpetuity at a fixed rent of 4 per cent. on the prairie value.

Mr. Seddon realised shortly before his death that the time had come for a new Land Act. He had made up his mind in 1905 that there should be improved conditions in regard to leasing the remnants of the colony's Crown lands. The scheme he had adopted was that all the Crown lands available for selection should be classified. The poorer land, he considered, page 299 should be taken up and occupied for four years without any rent whatever being taken from the tenants; for the next four years those tenants should be charged only 2 per cent., and for some succeeding years only 3 per cent. During the whole term, including renewals, the rent was not to exceed 4 per cent. on the capital value of the holding at any time.

He held that the State should not look to the rent it exacted from the tenant. He had seen many instances where there was really no value in the land itself. The value was created by the tenants going upon it. It had practically only a nominal value until it was improved by the tenants' efforts; and he did not see why, when the State came to renew the lease, the tenant should be penalised for his improvements. He went further, and said that the condition insisting upon the tenant residing on the land should not be exacted until the land had been roaded and proper approaches had been given to the land, so that the settler could take his family straight on to his section. Besides that, he did not see why the settler should suffer greatly from the lack of facilities for obtaining what are now regarded as necessaries. He would have erected schools on the estates, so that settlers could in every instance get education for their children. He thought that the residential conditions were altogether too severe, and he intended to bring about changes which would relieve settlers who found that their rents were too high, and would enable shopkeepers and artizans who had saved a little money to “go in for a bit of land.”

He submitted to the House in 1905 a long set of motions, asking it to come to some decision on several aspects of the land question, in order that a Bill could be introduced to bring about any changes desired. He first asked the House whether it considered that the lease-in-perpetuity should be repealed, and that a perpetual lease, for not less than 50 years or more than 99 years, should be substituted, with re-valuation. He did not, of course, propose to interfere in any way with those who hold present leases-in-perpetuity. He recognised that contracts had been entered into by the State with those tenants, and that the contracts could not be broken or repudiated; but he asked Parliament to decide whether those tenants should have the page 300 right to acquire the freehold, and, if so, whether it should be at the present or the original valuation.

Another question he asked the House to decide was whether any individual or company holding 5000 acres of first-class rural land, or 10,000 acres of second-class rural land, should be allowed to purchase the freehold of any more land, or to increase the areas owned; and whether, if any land in excess of the areas named should fall in by way of mortgage or by will, it should be held for five years, and, if not disposed of by that time, the State to have the right to acquire the land at the land tax value, with 10 per cent. added. As to urban and suburban lands, the restriction was to be up to £50,000 unimproved value, the State to be allowed to acquire anything in excess in the same way as with rural lands.

Before the session closed, the House passed a motion that no further leases-in-perpetuity should be granted, that leases should be granted up to 90 years in tenure, and that holders of leases-in-perpetuity under the Land for Settlements Act should not be allowed to acquire the freehold. Mr. Seddon endeavoured to avoid party politics in dealing with the land question, but the discussion was given a party turn by a no-confidence motion affirming the freehold principle. After a long debate, the no-confidence motion was rejected by a large majority. The freehold cry was repeated at the elections in 1905, but it had no effect on the position of parties. Both “leaseholders” and “freeholders” lost prominent leaders, and the public gave no indication that it considered that the right of purchasing the freehold should be granted to the tenants.

October 18th, 1894, is an eventful date to the Liberal Party. On that day, Sir John McKenzie passed his compulsory purchase provisions into law, and Sir Joseph Ward placed side by side with them on the Statute Book his advances to settlers scheme. It is an adaptation of the old Credit Foncier system, which was first established in Germany as long ago as 1770, and was in operation in France in later years. The originator of the idea had the same object as Sir Joseph Ward—to lower the rates of interest on money and to enable producers to work under better conditions. Sir John McKenzie page 301 was finding a means for men to reach the land; Sir Joseph Ward was finding a means for supplying cheap capital. It is fitting that these two enactments should become law on the same day, as they have gone hand-in-hand in a dozen years in the work of the colony's settlement.

During the few years that the Liberal Government were in office up to 1894, there had been a marked tendency on the part of the money-lending institutions to refuse fresh mortgages and to call in existing ones, even when good security was offered, and land owners found that if they wanted to have mortgages renewed they would have to submit to unreasonable terms. Sir Joseph Ward's measure was intended to afford relief. It did so almost immediately. Rates of interest came down at once. They have never risen again. It is estimated that the scheme has been the means of saving mortgagees in the colony £8,000,000 in interest alone. The incomes of some people have been diminished by the Act, but the farming classes have reaped a great benefit. The Act has helped materially to bring about the prosperity the colony now enjoys. The Government has borrowed £3,200,000 to lend under the scheme. It charges 5 per cent, which is reduced to 4 ½ per cent. if the instalments are paid within fourteen days of the date when they fall due. The scope of the scheme has been extended on several occasions, and money is now advanced on city and suburban properties. Mortgages are granted on either the instalment or the fixed loan system. The law costs are very light. Up to the time of Mr. Seddon's death, the department had made 13,350 advances, representing £4,173,970, against which it holds security valued at £9,172,962. The department is conducted so well that the cost of management is only 3s. 2d. per £100 on the capital employed. The department's net profits are £35,000. It has absolutely no losses on advances since it started operations; there are no securities on its hands; and there are practically no arrears of interest.