The Stein-Hardenberg Land-Legislation;

Its Basis, Development, and Results in Prussia.

At the commencement of the nineteenth century the Prussian territory was divided between feudal landlords and peasant farmers, who were either serfs, or, when free, weighed down by every sort of burdensome obligation. Cultivation was at the lowest point, and the population so little attached to existing institutions, that these fell to pieces on the first attack of the invader. At the present time, the land is shared among proprietors, freed from all but public burdens. They own in widely different proportions; but, with few exceptions, both large and small owners cultivate, without the intervention of tenant farmers; the larger under their immediate superintendence, the smaller by their own hands. Agriculture has already made great advances, and is steadily progressive.

A revolution so great and beneficent must excite profound interest, at once philosophic, historical, and practical. We naturally inquire, what was its basis, what its development, page 10 and what its results. A residence of five months in Berlin, Dresden, and other parts of Germany, with the valuable assistance kindly afforded by the best living authorities, both legal and agricultural, enables me to submit the following replies. In so large and complicated a subject our limits only permit a brief reference to the essential points.

It is no where denied that the mainspring of this reform lay in the Stein-Hardenberg land-legislation. But English authors generally assume that it involved a setting aside of the rights of property, that its justification consisted in an urgent necessity. This view, however, is an entire misconception. The profound modifications introduced were, doubtless, greatly facilitated by the political crisis, but they were made with due regard, not merely to eternal principles of justice, but to existing, long established, mutual rights.

The situation in 1807 was shortly this—feudal tenures inherited from the Middle Ages modified by the monarchic authority, laws, and magistracy of the Modern State. All large properties comprised demesne land and peasants' land; the first being cultivated for the benefit of the landowner by peasants, who possessed and tilled the second for their own benefit. Each kind of land and each class of persons were in law distinct. The peasants' land was invariably subject to feudal dues and duties, embracing all agricultural operations and products, affecting nearly every human relation and event from the cradle to the grave. The larger peasant farms were, however, frequently the actual property of free cultivators; but the residue were occupied by serfs. The position of the serf-occupier was, nevertheless, totally different from that of a tenant-at-will. The German Common Law established the principle that peasants' land must remain peasants' land. Though the individual, peasant holder died or were dispossessed the landlord was bound to replace him with a page 11 tenant of the same class, and could not lawfully change the nature of the peasant's land by absorbing it into his demesne land. Moreover, the landlord was bound, in consideration of the feudal dues and services, to maintain the peasants' farms, and to relieve them in various emergencies of sickness or poverty. The servile holders also, in addition to such class rights, frequently enjoyed individual rights. Thus some held their farms for a term of years or for life; and the tenure of a large number had gradually acquired the stamp of an hereditary right, as fully as in the case of the English copy-holder. To the above mediaeval constitution of the tenure of land, the Modern State added an important element. The gradual disuse of military feudal services, and the formation of standing armies necessitated taxation, and the weight of the taxes was thrown by the privileged aristocracy on the peasants' land. The great proprietors also, were tempted by the increasing value of land to incorporate the peasants' land with their demesnes, in order to cultivate it either by serf labour or by letting to tenant farmers. The German rulers opposed, with varying success, these efforts of the great proprietors, as being at variance both with established law and sound policy. No where were greater efforts made than in Prussia, whose kings steadily pursued the twofold object, protection of the peasants' rights and their maintenance as an important class in the State.

Despite, however, of law and authority, the peasants remained practically insecure, and, at the best, were loaded with feudal burdens which cramped their energies. From such dues and forced labour comparatively little advantage accrued to the proprietors whose situation, as feudal landlords, precluded a proper cultivation of their demesnes. In this state of things a disastrous war hastened what had long been felt as a necessity—the emancipation of the peasantry and page 12 creation of a free agriculture. The problem, however, and its solution, were regarded in two widely different lights. On the one hand existed a school much devoted to economic abstractions. Its adherents urged that it was vain to expect good agriculture without large farms and proportionate capital, and that the majority of the peasants did not realize these conditions. It was, therefore, they said, expedient to arrange matters so that only the larger and wealthier class of occupiers could become proprietors. The opponents of this view insisted upon its injustice as a violation of established rights; its superficiality as ignoring historic and existing facts; its impolicy as involving an abandonment of the State's duty and paramount interest in the mass of the people, the improvement of their condition, and, with that, the strengthening of their loyalty. Such were the convictions of the distinguished men whose counsels happily prevailed; foremost among them, Stein. Stein's comprehensive reforms prove that he understood and respected economic truths. He was a sincere disciple of Adam Smith, but he was also a great statesman; a practical philosopher, imbued with that historic spirit, and guided by those profound instincts, to explain, to complete, and to confirm, which is the highest office of true social science.

The ordinary account given by English writers represents Stein's land legislation not only as a subversion of existing rights, but as having effected the necessary reform at a single blow. The second proposition requires correction as much as the first. The transformation of feudal tenures into an industrial constitution of landed property was effected very gradually. It extended over more than half a century, and embraced three distinct operations, which originated respectively in the years 1807—11, 1821, and 1850: first, the creation of proprietorship; secondly, the redemption of feudal page 13 burdens; thirdly, the establishment of a land-credit institution.

Of these three operations the first commenced with the abolition of serfdom by the decree of 1807, which also abrogated the previous legal distinction between nobles' land and peasants' land. After Stein's forced retirement, this initial step of personal enfranchisement was completed by the great reform (already effected under his ministry as to the Crown lands), the transformation of occupation into ownership. The decree of 1807 left the relation of landlord and tenant, as already described, substantially untouched. The decree of 1811, issued under Hardenberg's ministry, substituted for this feudal relation a system of independent ownership. It recognized subsisting and mutual rights, but awarded in lieu thereof compensation. As Dr. Lette, President of the Appeal Court for land-legislation affairs, observes in his standard work, the decree of 1811 "was based on the constitutional quality of the peasants' land as forming independent possessions withdrawn from the disposing power of the landlord." The decree expressly refers to this principle, recognizing the title of the hereditary peasant possessions. It further points out the obligation of the landlords "to leave their tenants sufficient means for their own subsistence and the satisfaction of the claims of the State," and estimates such peasants' proportion at two-thirds of the yearly produce. On this basis the compensation was regulated; a distinction, however, being drawn between the hereditary and the non-hereditary occupiers of peasants' land. The hereditary class by surrendering one-third, and the-non-hereditary one-half, of their farms, became absolute owners of the respective residue of two-thirds or one-half; the landlords becoming thereby also discharged from all feudal obligations to the tenants. The parties might also agree that the peasant, instead of surrendering land page 14 should become proprietor of his entire farm, compensating the landlord by a fixed money or corn rent, or by paying a lump sum. A commission composed of lawyers and agriculturists was established for each Province, and charged with the execution of the decree of 1811. This commission has continued its importantfunctions from 1817 to the present time, and forms a department of the Prussian Ministry of Agriculture.

The extensive transformation of occupiers into proprietors thus gradually effected was, indeed, a momentous change; but it constituted only the first step in the great land tenure reform. Two other steps were needed to complete the work of emancipation, the existence and working of which have been overlooked or imperfectly understood. These were the transformation of feudal and other burdens into fixed rents, redeemable on specified terms; and the establishment of a land credit institution destined to facilitate the redemption of such fixed rents.

The decree of 1811 did not improve the condition of that large and important class, who, independently of its operation, were peasant proprietors, burdened, nevertheless, with onerous dues and services. Under that decree, the landlords also, had frequently stipulated for the retention of specified services, particularly horse or hand labour for cultivating their demesnes, in lieu of the surrender of land. Rights of pasture, of way, and other easements, very prejudicial to agriculture, continued to subsist between the old and new proprietors. Accordingly, in 1821, decrees were issued authorizing and facilitating the redemption of all such dues, services, and easements. Their redemption could be effected in various ways. Compensation might be given in money or land; the dues, services, or easements might be converted into fixed money or corn rents; and these again were made redeemable by capitalization at specified rates.

The decrees of 1811 and 1821 gradually wrought extensive changes, economic, social, and moral, the advantages of which were generally felt, and at last acknowledged by the descendants of the old feudal proprietary. This progressive movement of public opinion, stimulated by the excitement of 1848, resulted in the comprehensive law of 1850, which consolidated and amended the edicts of 1811 and 1821, and the mass of subsidiary legislation. The decree of 1811 embraced peasants' holdings of every size, but after the peace of Vienna a reaction set in, and the great landowners obtained a royal declaration excluding the smaller class of holdings, and otherwise limiting the operation of the proprietary decree. The principal ground alleged in justification of this unjust and impolitic step was the supposed deficiency of free labour for the cultivation of the demesne or nobles' land. The decree of 1811 also made compensation in land the general rule, thus, in fact, increasing the difficulty of cultivating properties already too large. The terms offered by the decree of 1821 for redemption of burdens by money payments, fixed rents, and their capitalization were found not sufficiently advantageous to induce peasant proprietors to adopt this measure. Experience, however, had proved the comparative worthlessness of forced labour, and, on the other hand, shown that peasant proprietorship was compatible with the coexistence of a class of day labourers. Large landowners, stimulated by their new situation to pursue improved scientific agriculture with capital and free labour, became convinced of the inconvenience of compensation in land, and the advantage of capitalized payments over fixed rents. Accordingly, the law of 1850 enabled even the smallest occupiers of peasants' land to acquire the proprietorship. The same law instituted, as the general rule, compensation in money payments or fixed rents. The redemption of such rents by capitalization was also authorized page 16 on terms more favourable to the occupiers, and sufficiently advantageous to the great proprietors, whose most pressing need was agricultural capital.

The conversion of tenancy into proprietorship and the emancipation of the land from feudal and other burdens, thus constituted the two first steps in this great reform. It remains to mention the third and crowning measure, without which the efficacy of the two first would have been greatly impaired. The immediate payment of compensation and the capitalization of fixed rents equally required resources which the peasant proprietors either did not possess, or could only command by sacrificing their agricultural capital. To meet this special want, a second law of 1850 created the provincial land credit institutions called Rent-Banks. Their principle and working are shortly as follows:—The stipulated purchase money or capitalized amount is advanced by the Bank, and by it paid to the landlord, not in money, but in rent debentures. These are issued in amounts from 30s. to £150, bearing interest at four per cent per annum, payable half-yearly by coupons, and are transferable by delivery. They rank as State securities,^* furnishing a safe and lawful invest-

^* The following quotations are from the Berliner Fremden-Blatt of 7th June, 1867:—

—	Per Cent.	Market Price	Mortgage Debentures at 4 per Cent.
Prussian State Loans of 1852, 1853, and 1862	4	91	—
Prussian Rent Debentures in the provinces of Brandenburg	4	90¾	89 3/8
Prussian Rent Debentures in the provinces of Pomerania	4	91	89¼
Prussian Rent Debentures in the provinces of Posen	4	90	89
Prussian Rent Debentures in the provinces of Prussia (East and West)	4	90	East, 86; West, 84 7/8
Prussian Rent Debentures in the provinces of Rhine Province and Westphalia	4	95	—
Prussian Rent Debentures in the provinces of Saxony (Prussian)	4	93¾	—
Prussian Rent Debentures in the provinces of Silesia	4	93	—

The variation in the price of the rent-debentures arises from the circumstance that the banks are provincial and the demand for these securities, to a great extent, local. It is worthy of remark that the market price of the rent debentures stands considerably higher than that of the Prussian mortgage debentures bearing the like interest. These last are securities issued by private societies composed of landowners, and differ from the former in two important respects. The mortgage debentures are not guaranteed by Government, which only exercises a general control over the societies; and there is no obligation, as in the ease of the rent-debentures, to pay off at par, some time or other, by a drawing.

page 17 ment for trust moneys, public and private, and, in ordinary times, stand at, and even above, par. When above par, the holders can gain the benefit, since these debentures are only paid off by the rents received; when below par, the State can come into the market and apply the accumulated rents in purchasing the debentures on sale. Their payment cannot be demanded, but the State is entitled to give six months' notice of their liquidation, which must be in money, and at par. In order to prevent any inequality in the market value of the debentures, their liquidation is effected by a half-yearly drawing, the number drawn, and noticed for payment by public advertisement, being equal in value to the amount of the available surplus rents or redemption fund in bank.

The bank advances in rent debentures no more than twenty years' purchase, the amount which entitles the peasant to redeem his fixed rent.^* The bank thus obtains by receipt of this rent 5 per cent, per annum, of which 4 per cent, is applied to paying interest on the debentures. The remaining one per cent. forms the redemption fund which at compound interest extinguishes the principal debt

^* It may be well to mention that the peasants' rents were frequently much under the letting value; but it was expressly provided that the Bent-Bank might take up all rents not exceeding two-thirds of the net value of the land charged therewith. This net value was found by adding the perpetual rent into which the feudal services were converted to 4 per cent, on the selling value of the lauds, as determined by arbitrators.

page 18 in forty-one years and one month. At the end of this period the peasant becomes the absolute owner; but he may elect to pay the bank nine-tenths only of the fixed rent, that is four and a-half per cent, on the advance, which equally extinguishes the rent in fifty-six years and one month. The peasant may, in like manner, at the outset, redeem the fixed rent by paying to the bank eighteen years' purchase; the landlord being, however, entitled, at his option, to receive the twenty-fold amount in debentures. The peasant who has elected to pay the full or reduced (9/10ths) rent to the bank may, by giving six months' notice, at any time, pay the balance of the capital which appears from the official printed table to remain due. The stability of the Rent-Banks rests on the system of registration of title,—which in Prussia has also a local character; on the priority given to the rents over all other charges; and on the punctual collection of the rents by the land-tax officials. Their annual expense amounts nominally to about £20,000; but, in fact, they are self-supporting. The collection of rents is monthly, the payment of interest, half-yearly; and the periods of 41 1/12 and 56 1/12 years somewhat exceed what is required for redemption. In a few years the work of redemption had so far advanced that the rent-banks Avere closed, except for carrying out applications made up to 1858. These institutions exist for the like purpose in all the principal States of Germany. They were introduced in 1832, for the first time, in the Kingdom of Saxony, where their principle and machinery have been recently applied to the very important purpose of advancing capital required for draining, irrigation, and other agricultural exigencies. The Rent-Banks were everywhere established for the furtherance of great public interests, which called for the intervention of Government. No form of private enterprize could realize the essential conditions of such a financial operation. The State alone page 19 possessed the credit necessary for procuring advances at a low rate of interest, and a machinery adequate to secure the punctual payment of rents.

The following statistics may suffice to prove the magnitude of the interests involved in the above operations. They relate to the Prussian territory, as existing before 1866, which contains nearly seventy million English acres of productive land. To the end of 1865, 83, 288 Peasant Proprietors had been created; and more than a million properties, comprising upwards of 36 million acres, relieved from 29,884,900 burdens of various kinds. The compensation awarded for these amounted to £6,736,000 in capital; £823,000 in yearly money rents; in corn rents, 326,224 bushels per annum; and in land, 1,100,000 English acres. The collective operations of the provincial Rent-Banks to the end of 1866 were as follows:—They received rents to the amount of £563,131 per annum; £1,688,771 purchase money at the rate of 18 years paid at the outset; and £362,124 capital in respect of rents redeemed on six months' notice. They have issued rent-debentures amounting to £12,477,316, of which £1,453,573 have been already liquidated.

The results, economic, social, and moral, of the Prussian land-legislation, present a wide and interesting field, while our limits permit only an imperfect view of a few leading features. The lessons taught by the distribution of landed property and its agricultural management in Prussia, possess high practical value. The unquestionable and long experience of that country disproves views currently accepted among the proprietors of Great Britain and Ireland. Among ourselves, cultivation through the intervention of tenant farmers is the prevailing system of management; and primogeniture, with entails, artificially maintain, in comparatively few hands, properties of an exorbitant size. The history of landed property page 20 in Prussia, however, demonstrates that laws which, without compelling a division of the land, favour a more equal distribution, do not necessarily produce an excessive sub-division of the soil. The Prussian experience of the last half century also establishes, with increasing evidence, that the direct cultivation of the land by the proprietors, both large and small, is perfectly compatible with good farming and a progressive 'agriculture. The following statistics, which approximate sufficiently to the truth, may illustrate these general results. One-half, at least, of the Prussian territory (as it existed before 1866) comprises properties exceeding two hundred English acres. A considerable portion of this class, including farms from two hundred to four hundred acres, and even more, belong to peasants, sometimes by purchase, generally by inheritance. The largest proportion, however, constitutes the so called Nobles' land, or Knights' fees. As I am informed, about one moiety of these Knights' fees are subject to family settlements. But whether larger or smaller, entailed or free, management by tenant farmers is quite the exception. As a rule, these Knights' fees are managed by their owners, and cultivated under their direct superintendence, with the help, of course, of competent stewards.^* Agricultural labourers, instead of diminishing, have increased.^† In 1858, this class had more than doubled its numbers in 1816; an increase proportionately much greater than that (67 per cent.) of the entire agricultural population during the same period. The peasant's agricultural properties, generally speaking, are

^* The agricultural management of landed property considered from a social and economic point of view, forms the subject of a distinct treatise, by Professor Thaer, of Berlin; "Die Wirthschafts Direction des Landguts."

^† The condition of this important class in Prussia, is becoming the subject of increased attention. See the interesting essay by Professor Thaer, entitled, "Ueber die Stellung der Tageloehner," Berlin, 1865.

page 21 under two hundred acres. They fall, naturally, into two classes—properties cultivated by at least one team of horses or oxen, and those cultivated by hand labour. These latter, forming the smallest class, are, no doubt, very numerous, probably twice as numerous as the team-cultivated properties. But the unfavourable inferences hastily drawn by some English writers require important corrections. A very large proportion of the small properties specified in the statistical returns, are not agricultural holdings, but simply consist of a house and garden, as prevails near great manufacturing cities, and is not seldom the case as to miners, weavers, and even agricultural labourers. The cultivation, also, of vegetables, fruit, and especially of the vine, requires very small properties. When these deductions are fairly made, it will be found that the number of purely agricultural proprietors cultivating by hand labour, is much less than at first estimated. The sub-division existed before the land-legislation of Stein, and was not created by the new laws; nor have these materially increased sub-division. The extent of land, also, owned by small proprietors of every class, is not more than one-fifth of the land owned and cultivated by the team-owning class. The history and condition of the team-owning peasant proprietors in the seven eastern provinces of Prussia—that is excluding the Rhine province—has been investigated, and is elaborately shown in a recent report of the Prussian Minister of Agriculture, made with the co-operation of the Director of the Statistical Bureau. It is there demonstrated that during the long period between 1816 and 1859, the number of peasant team-cultivated properties has increased nearly two per cent., their average size remaining unchanged. The movement of property, the effects of free trade and inheritance, during nearly half a century, demonstrate, in the language of this valuable report, "the entire groundlessness of the page 22 bugbear that unrestricted legal divisibility must lead to an excessive sub-division of landed property."

The yearly reports of the Prussian Ministry of Agriculture, in accordance with the testimony of high agricultural authorities, justify the conclusion that agriculture has made great progress towards a system of scientific farming.^* It was, natural that this progress should have been much less decided during the first generation after Stein's legislation; a circumstance the oversight of which has led some English writers into very serious mistakes. The advance made since about 1840 has been steady and marked; and I believe that the development of her manufacturing intelligence and practical skill within the last ten years, as now fully admitted, has its counterpart in the progress of the agriculture of the seven eastern provinces of Prussia. Owing to a variety of causes, the Rhine province does not present an equal degree of progress; but its condition is by no means stationary, and affords reasonable prospect of more rapid improvement in agriculture. In the provinces of Westphalia, Brandenburg, Saxony, Posen, Silesia, Pomerania, and Prussia, the larger proprietors naturally lead the way, and their increasing demand for capital is one proof, among many, that modern resources—drainage, machinery, &c., are appreciated. The example thus set is not lost upon the peasant proprietors, who are steadily advancing in skill and general intelligence. For their special instruction twenty agricultural schools exist in Prussia, educating 300 pupils yearly, besides many farmers above the school age. Four agricultural academies of a higher class also educate about 200 pupils yearly.

The well-being of the population has steadily advanced

^* See, as to the recent and remarkable progress of Prussian Agriculture, the opinion of a highly competent authority, M. de Laveleye, in the Revue des Deux Mondes, 1st September, 1867. L'Allemagne depuis la guerre de 1866.

page 23 under the system of proprietorship. Already in 1842 the consumption per head had doubled that in 1805, the increase being chiefly in clothing, coffee, sugar, and other articles of comfort, and even luxury. That the subsequent progress in general well-being has been equally satisfactory admits of no doubt. It would be out of place to discuss the events of 1866. This much, however, is certain, and may be said: What gave the victory to Prussia was not a mere mechanical invention, but the force of her social institutions, and not least, of her reformed land-legislation. Sixty years ago her agricultural population was divided into two hostile classes; one class exclusively representing property and exercising dominion, the other, submissive without respect; everywhere practical insecurity with its attendant evils, poverty, mistrust, and if not disloyalty, yet profound indifference towards the monarchy and its institutions. The Prussian statesmen of that day had the courage to be just and wise, setting a noble example which has since been followed throughout nearly the whole of Germany. Their successors, in our day, have reaped the advantage of that policy in the dispositions of a population, among whom a wide diffusion of landed property has softened social antagonism, fostered material prosperity, and inspired a sincere and loyal attachment to their institutions and their rulers.