§2. 1 begin with the case of particular encroachment, as that in which the claim to full compensation is most undoubted. It would be obviously unjust that any single individual should suffer loss, merely because the State happens to want a piece of his land or other property; and the injury to general security that such injustice would cause would far outweigh the pecuniary gain from it to the community.
Indeed it is not clear, on strictly individualistic principles, that any forcible interference ought to be allowed in such cases as this. Why---it may be said---if an individual's property is wanted by the community of which he is a member, should not the price be determined by the ``higgling of the market''? In the first place, a Naboth might decline to give up his vineyard at any price: and then if the general welfare be accepted as our ultimate end, an urgent public need ought clearly to be regarded as a paramount claim, overriding an absolute refusal to sell. Such a refusal, however, would be a rare case; ordinarily, the only danger would be that Naboth would try to make the community pay as much as possible for his vineyard. The practical question, therefore, in most cases is whether Government should have the right to compel the sale of private property at the price it would fetch, apart from the special public need that occasions the compulsory purchase; or whether the owner should be allowed to charge an increased price for his property corresponding to this new demand for it, as he would in private bargaining.
Now, it would be clearly inexpedient to lay down the general rule that private individuals are never to make extra profit out of the needs of the community. For the hope of such extra profit is the main stimulus to the competition on which the progress of industry depends; hence the adoption of a rule prohibiting it would tend to paralyse the normal action of competition in the businesses that supply the needs of Government; and the general result, in the long run, would be that Government would be worse served at higher charges. But, as we have seen, when a business falls under the condition of monopoly, the good effects of competition tend to be lost. And sudden serious emergencies---such, for instance, as arise in war---may give the holders of particular commodities a temporary monopoly so effective as to enable them, if unrestrained, to raise their prices exorbitantly against the community, at a time when the financial exigencies of Government are likely to be great. Hence it may be expedient in such emergencies that Government should have the power of compulsorily purchasing at a fair price even the products of industry; though such a power should be jealously limited and rarely used, owing to the danger above explained of paralysing competition.
Where, however, what Government needs is land, there is no similar danger in compulsory purchase, since the special convenience of particular portions of land for particular public uses is ordinarily of a kind that cannot be materially increased by human labour or skill. Here, therefore, there seems to be no economic objection to the adoption of the principle that the individual should not be allowed to make a profit out of the special need of the community; the general security of property seems to be sufficiently maintained, if every landowner who is expropriated receives from Government in full what the value of his land would have amounted to, apart from the special need that is the occasion of the expropriation. And in applying this principle we must, of course treat the rights of temporary occupiers similarly to those of owners, and include along with the land any buildings or other ``immovable'' products of labour that may be attached to the land.
But further, if the landowner is not to gain by the special governmental need of his land, neither, on the other hand, ought he to lose by it; hence it will not always be sufficient to give him as compensation the market price of his property: as it may be worth materially more to him than the price it would fetch in the market, either from its connection with the rest of his property or from the nature of the business in which it is employed. Thus, if a shopkeeper is expropriated, compensation is due to him for the ``goodwill'' or business connection which he would lose by removal to another place. There is, however, a difficulty in applying this principle: for if, for purposes of compensation, we estimate the whole value of a thing to its expropriated owner, we shall in some cases have to include the purely subjective element of value called ``pretium affectionis'' the value derived from attachment and association or peculiar taste; on the other hand, if we include this element, it is difficult to put a limit to the claim for compensation. I conceive that this difficulty can only be dealt with in a rough way, by applying an average outside standard: that is, some compensation should be given for the special subjective value of a thing to its expropriated owner, when it is of a kind likely to have this special value in the case of an average man, and to the extent that would be adequate in such an ordinary case.
Hitherto I have spoken of purchase by government; but the same principles of valuation should obviously be applied in the case of a private company formed to supply a public need, and obtaining on the ground of this public service the right of taking land at a fair price.
Other questions arise in settling the details of any such compulsory purchase of land, of which the most important is this: Should the expropriator have the right to take more than is needed for his public object, supposing this additional portion has more value for the expropriator than it had---apart from the public need---for the expropriated owner? It seems clear that, if it is for the public interest that the expropriation should take place at all, it should be as economical as possible consistently with justice to the expropriated: hence, if the expropriator is limited to what is strictly necessary for his public object, at least any certain and undoubted increment of value added by his work to neighbouring land may be fairly claimed as a set-off against the compensation that has to be paid for what is taken.
A common example of this is the case of land taken for a road near a town; since the strips on either side of the road tend to be materially increased in their value for building purposes by the change.
So far I have confined my attention to rights of property. But an analogous and equally valid claim to compensation arises in other cases in which an individual's legally secured expectations, having a definite value, are sacrificed to public convenience by the act of government. Thus, if a post in governmental service, which is definitely understood to be held on the tenure of ``good behaviour'', is abolished on the ground of economy, the holder has a right to be compensated to the full amount of his salary; provided that he on his part is ready to give his services to government to the extent to which he would have been bound to do so in the post abolished. On the other hand, if he is definitely understood to hold his post during pleasure, he has no claim to compensation.[Back to:] [Elempol, Chapter 12, Section 1] Governmental Encroachments and Compensation