This Small Pamphlet
To my Fellow Colonists
In the Hope That its Circulation May Promote the
Settlement of the Colony.
March 26, 1889.
In departing from the usual rule, and addressing the public by pamphlet instead of by means of a public meeting, I may say I do so for several reasons. The particular subject which I wish to bring before you is, to my mind, of too great importance to be brought forward first at a public meeting, where the words of the speaker may be either imperfectly heard or imperfectly understood, and where it is inevitable that the mass of the people would be dependent upon the report of the meeting in the columns of the newspaper. Being politically a stranger amongst you, I could not expect a verbatim report, and lit is certain that in reducing the matter to publishing dimensions, it would hardly be possible to avoid at least some misconceptions and errors, which would probably create a mistaken and perhaps unfavourable view of my meaning.
It appears to me that the time has arrived liken we may, by the adoption of a bold and just policy, ensure an early and enormous extension of the settlement of the colony, and in laying my views before you as to the lines upon which I believe this policy may be conducted, I do so with the view of calling attention to the advantages to be secured to the colony by the repurchase and settlement of the large freehold blocks.page 6
New Zealand possesses every capability for supporting a population of several millions, and if a policy of progress, a policy of settlement is adopted, we shall, within a few years, find the colony with a population of three or four times its present number. In addition to the natural capabilities of the colony, we have a magnificent system of public works; a system of roads, bridges, and telegraphs, sufficient for the service of a far larger population than the colony at present contains. These public works have been constructed at great public expense, with the result that New Zealand is one of the most heavily indebted countries of the world in proportion to its population, and as a natural result, it is one of the most heavily taxed countries; indeed, so great is the pressure of taxation, that unless some means can be found to reduce it, we shall soon find the taxpayer repeating the sentiment of the poet (in the present instead of the past tense), and crying "the burden laid upon me" is "greater than I can bear;" but this pressure may be lessened, this taxation may be reduced by an increase of the settled population of the colony, and by no other means can it be reduced to any appreciable extent; but I believe that by the exercise of our just, legitimate, and necessary rights, we may, without injustice to any, and with speedy relief to the taxpayer of the colony, adopt a policy which, within a few years of its adoption, will double the settled population of the colony, halve its taxation, and create such a page 7 market for our local manufactures that the necessity for protective tariffs shall no longer exist.
The policy which I advocate is the policy of settlement by means of the re-purchase of the large freehold blocks of land, their sub-division into suitable areas, and their being let to tenants upon a leasehold tenure—atenure under which the tenant shall have absolute ownership of all his improvements, under which he shall have a perpetual right to the renewal of his lease; subject only to the payment of a fair ground rental, (or land tax, if you prefer the term), to the State as representing the community. This I maintain is the only just system of land tenure.
You are frequently told at public meetings feat the freehold tenure of land is the best, that the freehold tenure of land is the only tenure which will be acceptable to the people of this colony; but when you are told this, I will ask you to consider the position and interests of those persons who are so anxious to impress you with the advantages of the present system, I think you will find that they usually belong to one of three classes; large landholders, lawyers, or persons interested in the large mortgage and financial companies which flourish so rankly in the colony.
We will consider in a few words the interests of these persons, and I think we shall then understand why they are such strenuous advocates of the freehold system.page 8
The large landholder advocates the system because he plainly sees that the time must come when the increase of population, and the progress of the colony, will enable him (or his descendants) to either let the land, thereby placing him or them on a footing with the large territorial proprietors in the older countries of the world, or else to sell the land for a good price, and frequently on terms which leave the seller still virtually the possessor. The terms upon which land is generally sold are something like the following :—A deposit of one-fourth or one-sixth in cash, the remainder upon mortgage for a term of years, with periodical payments. Under the persuasive eloquence of an able auctioneer, and induced by the apparent easiness of the terms, a high price is obtained for the land; with the result that the purchaser is unable to complete his payments, and the land with all its improvements reverts to the original holder, who is then able once more to sell it with probably the same result. We cannot be surprised that the large landholder believes in the freehold system.
Another class whose members, with one notable exception, are earnest upholders of the system,' are the lawyers, but when we remember that by far the largest, portion of their professional income is derived from conveyancing and mortgaging, I think we must allow that their advocacy is not to be wondered at.page 9
The officials and shareholders of the large financial companies are also found very anxious to maintain the freehold system, but as it is by means of it they are enabled to draw their salaries or receive dividends of from ten to twenty-five per cent. we cannot be surprised that they are averse to any change. For these classes undoubtedly the freehold tenure is the best.
If the object of our social system is to create, maintain, and perpetuate class distinctions. If the object of our social system is the existence a society in which there shall be a few rich, and a large majority poor or working for a bare existence, then without doubt freehold tenure is the best, but if the object of our social system is the existence of a large, contented, and independent population, then the freehold system has proved a decided failure, and is the principal cause of a state of society which in the older countries of the world threatens to eventuate in a fearful revolution.
The reason there are so many supporters of freehold tenure among the mass of the people is because they look upon it as the only secure tenure, the only tenure under which a person can depend upon enjoying the full results of his labour. If we can substitute a system under which a person has a perpetual right to the renewal of the lease, under which the tenant may safely build, cultivate, and improve the land page 10 with absolute personal ownership of the whole results of the labour expended, a tenure, in fact, which while securing to the tenant the whole of the improvements, will secure to the people the increase in the value of the land, so far as it is caused by the progress of the colony, the increase of population, and the expenditure upon public works, we shall have instituted a tenure which will be beneficial to the tenant, and also to the community. This tenure would be a just tenure. It would be just to the tenant and just to the people.
Perhaps you will reply—"But under this tenure we shall have to pay rent." True, you will have to pay rent, and if you do not or cannot pay rent you will lose your hold upon the land; but I think a few minutes consideration will show you that under the freehold tenure you also pay rent, that you cannot avoid paying rent, and moreover that under the freehold system, if you cannot pay rent, you lose not only your hold upon the land, but also run a very great risk of losing a large portion of the capital value of the land, and of the money you have expended upon improvements.
Now as to this question of rent. If you hold a piece of land under the freehold system, you must occupy one of two positions, either you hold the land free of encumbrance, that is, the land represents capital, or you hold it subject to a mortgage.page 11
In the first case, the rent of the land is the interest of the capital value of the land. For instance, we will suppose that you hold a piece of land worth £500, and that money on investment will return seven per cent interest. Your £500 if invested, would give you an interest of £35 a year, but you forego this interest in exchange for the use of the land, which, if there is any logic in figures, is equivalent to paying a rental of £35 a year. To make the matter plainer, we will suppose you invested your £500, receiving £35 a year interest, and then pay that amount for the use of the land. I presume you would then allow that you were paying rent. In this latter case, you would frequently be in a better position than than if you held the freehold; for, supposing your occupancy of the land to be unprofitable, or, should you from any cause wish to leave it, if you were a tenant you could do so on giving a reasonable notice, but if you were a freeholder, you would have to find a purchaser for the property, and probably, if you were compelled to force your property on the market you would find the nominal value of £500 considerably reduced, and you would lose the difference.
In the second place, where you hold the property subject to a mortgage, the interest of the mortgage is the rent you pay for the land, but it is not the whole of the rent. The mortgagee always endeavours and generally succeeds in retaining a margin between the value of the page 12 property and the amount advanced upon mortgage. The interest of this amount has to be added to the interest paid on the mortgage, the whole amount being the rent paid for the land.
To the person holding under this tenure, the term freeholder is a sarcasm. The only freedom he has is the freedom to work for the mortgagee, the margin between the value of the property and the amount advanced upon mortgage, together with the money which, under the fond delusion that he is a freeholder, he has expended upon improvements, chain him to the land.
The principal of the mortgage is as a millstone round his neck, a weight from which he is unable to free himself, and which frequently, after a few years struggling, drags him to the bottom of a sea of debt. The mortgagee either for closes, in which case, the land submitted to a forced sale barely realises sufficient to pay the mortgage and expenses, leaving the so-called freeholder ruined and helpless, or else the mortgagee suiters him to remain in possession a freeholder in name, but a tenant in reality, a tenant without the option of relinquishing his tenancy, except under the penalty of absolute ruin.
Before I proceed to detail the plan I propose, I wish to devote a short time to the consideration of an objection which has been and doubtless will again be raised to the proposal for the re-purchase page 13 of the large freehold blocks by the State. It has been alleged that the proposal is unjust, that the State having parted with the land is not justified in resuming possession. If this contention can be proved, if the proposition is unjust, then we must look in some other direction for relief from those social dangers which threaten the community, for I am convinced that the people will never support an injustice, nor would anyone who has the welfare and the honour of the country at heart wish them to do so.
But I think those objecting to the proposal on this ground do so because they do not realise the difference, the essential difference, between land and personal property, they have not given sufficient attention to the writings of political economists, the utterances of statesmen, or the tendency of modern legislation upon landed tenure.
The difference between land and personal property is a difference not of degree but of principle. The land of a country is for the use and support of the inhabitants of the country, not as a matter of absolute ownership and property, but for their use and support, a life interest in fact, to be held in trust and handed down without restriction or reservation for the use and support of succeeding generations.
What moral right have the people of the present day, much less the first comers to a new colony, to allot and apportion the land, as absolute page 14 personal property, which must be the only means of support of all succeeding inhabitants of the country. There is no moral right, strictly speaking, there is not even a legal right, but were the legal right undoubted it could be legally altered, and where the legal right was a moral and a social wrong it would be the duty of our legislators to amend the law. But it is not my intention to take up time with any abstract arguments upon the question. I think it is better for me to quote a few extracts from the writings and speeches of those who have considered the subject, and to whose opinions, being those of men of acknowledged authority as political economists, statesmen or politicians, you will naturally pay more attention than to those of an obscure individual like myself.
Mr. Joshua Williams,
Who is considered the most eminent land conveyancer of modern times, in his standard book "Law of Real Property," says :—"The first thing the student has to do is to get rid of the idea of absolute ownership of land. Such an idea is quite unknown in English law. No man is in law the absolute owner of lands, he can only hold an estate in them."
A most conservative writer, says :—"Land is not and cannot be property in the sense that moveable things are property. Every human page 15 being born into this planet must live on the produce of the land if he lives at all," and "the land in any country is really the property of the nation, and the tenure of it by individuals is ordered differently in different places."
Says :—"To make away into mercenary hands as an article of trade the whole solid area upon which a nation lives is astonishing as an idea of statesmanship."
John S. Mill
"No quantity of moveable goods which a person can acquire by his labour, prevents others from acquiring the like by the same means; but from the nature of the case whoever owns land keeps others out of the enjoyment of it. The privilege or monopoly of land is only defensible; as a necessary evil, and it becomes an injustice when carried to any point to which the compensating good does not follow it." "The claim of the landowners is altogether subordinate to the general policy of the State. The principle of property gives them no right to the land, but only a right to compensation for whatever portion of their interest in the land it may be the policy of the State to deprive them of."
"Equity does not permit property in land : For if one portion of the earth's surface may justly become the property of an individual and page 16 may be held by him for his sole use and benefit, then other portions of the earth's surface may also be so held and our planet may thus lapse into private hands." "But to what does this doctrine that men are equally entitled to the use of the earth lead." "Such a doctrine is consistent with the highest civilization, and may be carried out without involving a community of goods." "Separate ownership would merge into the joint-stock ownership of the public. Instead of being in the possession of individuals, the country would be held by the great corporate body—Society. Instead of leasing his acres from an isolated proprietor the farmer would lease them from the nation."
"The truth is, and from this truth there can be no escape, that there is and can be no just title to an exclusive possession of the soil, and that private property in land is a bold, bare, enormous wrong, like human slavery."
"The man who is using land must be permitted the exclusive right to its use in order that he may get the full benefit of his labour." "Rent expresses the exact amount which the individual should pay to the community to satisfy the equal rights of all other members of the community."
"In my opinion if it is known to be for the welfare of the community at large, the legislature is perfectly entitled to buy out the landed page 17 proprietors for the purpose of dividing the land into small lots." "Those persons who possess large portions of the land of the earth are not altogether in the same position as possessors of mere personalty; for personalty does not impose the same limits on the action and industry and well-being of the community as does the possession of land, and therefore I hold that compulsory expropriation, if for an adequate public object, is a thing in itself admissible and even sound in principle."
"So far as he was able to judge, freehold tenure was not giving satisfaction at any rate in the old countries of the world where the population was thick. What would be the ultimate tenure it would be impossible to say. Land would not be cultivated unless the cultivator had an absolute title. He must secure the whole of his work upon the land and must have such a tenure that he could not be dispossessed so long as he was doing his duty by the land.
"He looked forward to the time when the whole land of the country would be the property of the State."
Sir George Grey.
"One generation should not be allowed to make laws binding the land up from the generations which follow." "The men who deliberately allow, in the unjust manner hitherto done, page 18 immense blocks to be picked up by a few individuals are providing misery for the people who are to follow them.
"Now the meaning of Land Nationalisation is that the whole of the lands should belong to the public, that they should be let to tenantry, that the rents should be the property of the State, and that the rents should be applied to take the place of taxation, in which case not only would the whole community be relieved from the burden of taxation, but a great many advantages would be bestowed on the public at large—That, by the most advanced thinkers of the day, was what every nation ought to aim at."
Sir Robert Stout.
"I approve of the principle being affirmed that the State should, whenever circumstances require it, have the right to purchase any land needed for settlement."
Speaking of the large freehold blocks he says :—"It would be quite possible for the Government to buy up many of those estates." "It would be practicable to cut these runs into small farms and to let them in perpetual quit rents." "The rent would pay the interest." "Can any one conceive anything more likely to promote the progress of the colony than properties of that kind, being cut up into small farms." "They" the tenants "might at once enter into possession page 19 of these farms subject only to the payment of a quit rent and without any of their capital being taken from them."
Sir Julius Vogel.
"In the course of time some of these estates may be wanted for settlement, and when they are, the State has a perfect right to take them on paying compensation."
The Irish Land Bill
Recently passed by the British Parliament, establishes courts to fix rents, which rents cannot be raised for fifteen years, thereby enforcing the principle that the State has a right to define the respective interest of the landlord and tenant. This legislation is entirely opposed to any absolute ownership of the land.
With regard to this Act Mr. J. E. Fitzgerald remarks :—"The recent legislation on the subject of the land in Ireland has greatly hastened the period when the question must be brought to a practical issue. That measure seems to me to be a final abandonment on the part of the British Parliament of the doctrine of the inviolability of the right of private property in land."
From the opinions of these writers and speakers, and the action of Parliament on the subject of land tenure, I think all must allow that the proposal that the State should repurchase the large freehold blocks, cannot be page 20 objected to on the ground of its injustice, and further, I think it must be allowed that the tables are turned, and that instead of its being an injustice to the landholders that the State should compulsorily re-purchase, it is an injustice to the community if the State does not do so, provided that it can be shown that the continued occupation of these lands is against the public interest, and that their occupation is preventing settlement.
To enable us to come to a decision on this question I shall have to trouble you with a few figures, showing the quantity of land alienated since the foundation of the Colony, and the quantity under cultivation.
The quantity of land sold since the foundation of the Colony, in round numbers amounts to 13,300,000 acres, in addition to which 5,600,000 acres have been alienated without payment, mostly in the province of Auckland, where a free grant system was in force for some time. This gives a total of about 19,000,000 acres.
It must be remembered that the land disposed of is the pick of the country, both for quality and accessibility.
We will now see what quantity of this land is under cultivation.page 21
|Broken up, not under crop||154,266 acres.|
|Under grain crops||738,603 acres.|
|Under green and other crops||454,824 acres.|
|Under Grass, Broken up||2,884,007 acres.|
|Under Grass, Not broken up||3,053,052 acres.|
That is to say, that of the nineteen million acres alienated, there are only four and a quarter million acres under cultivation, and even including land upon which grass seed has been scattered without the land having been broken up, the total is about seven millions and a quarter acres. The remaining eleven and three quarter million acres are still in the same condition as when parted with by the State.
Allowing for townships and small areas not included in the Government returns, there will be at least 10,000,000 acres on which the land-holders have never expended anything for cultivation.
Of the four and a quarter million acres under cultivation, over two and three quarter million seres are in grass. The total quantity under grain being less than three quarters of a million seres. Can any one doubt that if these large locks were used to the best advantage, instead page 22 of less than 750,000 acres being under grain crops, we should have at least three or four million acres, with an exportation of five times the present quantity, and a result that instead of our population being about 600,000, it would be at least 2,000,000.
There are in the Colony about 260 holdings of freehold land, of 10,000 acres and upwards, containing a total of about seven million acres, and valued for property-tax purposes at about £15,500,000.
I cannot profess to have travelled much in New Zealand, but I have conversed with those who have, and their reports all concur that mile after mile of some of the best land in the Colony is locked up in these immense blocks, employing very little labour, and that land which would provide employment and happy homes for thousands is now left vacant and uncultivated.
This is the cause of the stagnation of the Colony, this is the cause of the depression, the occupation of these lands is the remedy, and the only remedy. Retrenchment will not avail. The most ardent advocate of retrenchment does not profess to be able to effect a saving of more than £150,000 a year, which would be a reduction of taxation of £1 for each adult in the Colony, and I will ask any reader of this pamphlet whether he would be greatly relieved by paying £1 per page 23 year less taxation. Protection will not restore prosperity. The encouragement of our manufactures is good, but however advisable it may be to increase our manufacturing population, it is to the development of our pastoral, agricultural, and mineral resources that we must look to restore prosperity to the Colony.
We have now to consider the manner in which these lands may be resumed by the State, so as to combine justice to the community with justice to the landholder.
The unearned increment which has accrued up to the present time cannot be interfered with tut the future increment must be secured to the State. In order to secure this, it will be necessary to at once fix the price at which the State will repurchase. This step will effectually close the door against any political influence being brought to bear respecting the price at which the laud shall be purchased. For my own part, and considering that the bulk of these lands is still in the same condition as when purchased, I am of Union that the present property-tax value would be a fair price for the Colony to pay for their resumption, but, whatever sum may be fixed upon, the property-tax should be the basis, with perhaps a definite percentage added.
After fixing the price, the next step would be to secure to the State the pre-emptive right to the repurchase of the whole of the blocks of above a page 24 certain area, say 10,000 acres. This pre-emptive right should be for a term of ten years. As before stated there are about 260 estates in the Colony which come within the scope of these proposals, containing about 7,000,000 acres, and valued under the property-tax at about £15,500,000.
To re-purchase the land at property tax value would necessitate the issue of four per cent, land debentures of about the value of £1,650,000 a year. The £100,000 extra would be for purchase of improvements, establishment of village settlements and construction of roads as hereinafter detailed. These debentures would be issued on the security of the land repurchased, the rentals of which lands should be specially applied to the payment of the interest and the re-purchase of the debentures.
In the present state of the money market these debentures with this security would be saleable at par, and it must be remembered that a very large portion of this money would be used to redeem mortgages, upon which an interest of from six to seven per cent. is being paid.
The administration should be non-political and might be placed under the control of three Commissioners for each island. These Commissioned would decide, after consultation with the various Land Boards, which blocks were to be re-purchased.page 25
Neither the Commissioners nor the Land Boards would have anything to do with the price of the land, which would as before stated be fixed by the legislature on the basis of the present property tax value. They would merely decide as to the blocks required for settlement from time to time.
After deciding upon the blocks of land to be repurchased, the Commissioners would give the landholder six months notice that it was their intention to purchase the land for the State. The landholder would have the right within three months of the receipt of such notice to select land from the block in the following proportions : On blocks of from ten to twenty thousand acres, one half; from twenty to fifty thousand acres, one third; and over fifty thousand acres, one fourth of the area of the whole block. The land so selected should be in one block, the length of which should not exceed three times the average breadth. The present landowner to have a ten years lease of the land so selected, at a rental of five per cent upon the price paid for the land, regard being given to the quality of the land selected, in proportion to the average quality of the land on the block. Should the landowner not select land the Commissioners will proceed to value the buildings and improvements upon the land, or in event of the landholder selecting land, the Commissioners will value the buildings and improvements on the land not selected by him.page 26
These improvements will be taken over at a percentage above property tax value, or at a valuation, as should have been decided by the legislature.
The Commissioners would then proceed to subdivide the block according to the quality of the land and position. The necessary roads to give access to the various sub-divisions would he laid out, formed, and metalled. The cost of constructing the roads, which might be done by village settlers, would then be added to the cost of the land, and the rentals of the various subdivisions would be calculated so that the total rental of the block should not return less than five per cent, upon the total amount.
This rental would from the first give a margin of one per cent, for expenses and administration. By this means no additional burden would be thrown upon the colony. The increased railway receipts, the customs duties, the increased exports would be clear profit to the community, reducing the burden of taxation, while the increase of population would give a larger market for our local manufactures.
The leases would be for a term of ten years with right of renewal for a further term of ten years, at a rental of five per cent, upon the then value of the land. All buildings and improvements would be the personal property of the page 27 tenant, and the rental for the second and succeeding terms would be calculated solely upon the capital value of the land. This new value would be declared at the end of the ninth year of the current lease, and notice given to the tenant by that date of the rental for the next ten years. If the rental was considered too high, the tenant would have to lodge an appeal within three months and the case would be considered by a court in the same way as an appeal against excessive rating is decided now. If the court reduced the rental to an amount satisfactory to the tenant he would continue in occupation for the next term of ten years. If the court did not reduce the rental or did not reduce it to an amount satisfactory to the old tenant the land would be advertised by the State as to let, at the rental fixed by the court, subject to the payment by the incoming tenant of the value of the improvements.
If no new tenant came forward on these terms, then the old tenant would continue to hold the land at the old rental, subject to six months notice. This notice would be given on a tenant being found willing to take the land at the rental fixed by the court and pay a cash value for improvements.
Should the tenant wish to give up possession at the end of his lease he must give six months' notice to that effect. The land will then be advertised to let at the new rental, subject to payment for improvements.page 28
Should no tenant be found by the end of the term of the lease, the State will give compensation for improvements.
As settlement progressed there would be an increase in the rental value of the land, over and above the amount required to provide the 5 per cent, for interest and administration. Townships would be formed and the rentals from the town sections would belong to the community. The whole rentals I should propose to allot in the following manner;—5 per cent, interest on the capital expended to be set apart for interest and administration : one-third of the balance to go to the Consolidated Revenue of the country; one-third to be applied to the re-purchase of the debentures, which debentures should not be cancelled but held by the Commissioners until such time as the whole debentures issued should have been re-purchased. The interest received by the Commissioners to be applied to the purchase of other debentures.
The remaining one-third should be local revenue for the district in which the land was situated, to be applied in lieu of or to assist local rates for roads, etc., or for charitable purposes.
And now I have laid before you my proposal, and I ask you to give it fair consideration. I have placed it before you in the form of a pamphlet, so that, as stated previously, it may be page 29 quietly and dispassionately considered. In your homes, your clubs, and your workshops the proposal can be discussed free from the excitement and interruption of a public meeting. If you think it for the good of the colony I ask you to support it. If otherwise it will be your duty to oppose it.
So far as my own view is concerned, after long [thought and anxious consideration, I am convinced that it is a just, practicable and permanent solution of the land question, and that its adoption would mean the removal of the present depression and the renewal of prosperity.
All classes would share in the benefit. All classes would participate in the increased value given to our land by settlement. We should be able to realise that our country was indeed ours pot only as a matter of sentiment but as an actual fact. All would have an interest in its development, and every increase in settlement, every extension of public works, every improvement in mechanical invention would be for the benefit of the whole community.
The increase in the rental value of the land would eventually abolish all forms of taxation, for it may be confidently predicted that as the population and settlement of the colony progressed, as the facilities for communication Increased, so the rental value of the land would improve, and this improved value would mean increased revenue.page 30
The future condition of the masses of our population is a matter for serious consideration, and unless some more just system of distribution of wealth is established, the masses will be forced lower and lower in the social scale.
An American poet some years ago wrote a poem on the future of machinery, and introduced these lines with reference to the development he foresaw in mechanical appliances,
"And soon the world may go and play,
And I'll do the work myself."
Year by year the labour-saving machines are multiplying. Year by year the proportion of manual labour required to produce certain results is becoming less and less, and unless some change is effected in the social system regulating the distribution of wealth we may soon read the lines of the poet with a slight but important variation,
"And soon the world may go and starve,
And I'll do the work myself."
The great factor in the unequal distribution of wealth, is the freehold tenure of land. This is the foundation upon which all other inequalities rest. By doing away with freehold tenure and substituting a just system of leasehold tenure we shall lay a firm foundation for our social structure and promote a vast and rapid settlement of the colony, in the benefits of which all classes will share.page break
Note.—I shall feel obliged by receiving copies of newspapers containing comments or correspondence, favourable or unfavourable upon this pamphlet.
Printer at the "Lyttelton Times" Office, Christchurch.