§ 3. I now pass to the more difficult question of changes in general rules of law, which affect detrimentally the interests of individuals.
And first, let us consider changes in respect to property: as being most cognate to the interferences just discussed. Suppose that instead of a particular thing in private ownership being compulsorily taken for a purpose of public utility, we have an abrogation or a new determination of the right of property, in respect of a certain class of things, which destroys or diminishes their utility to their previous owners, with a view to an advance in social wellbeing. There are many historical instances in which legal rights having a definite market value have been completely abrogated in comparatively recent times, the most important being the abolition of slavery in America and of serfdom in Russia, and of manorial rights in other parts of Europe: and the question of compensation has been of great practical importance in all these instances. Approaching this question from the one just discussed, we can hardly doubt that compensation should be given in this case also; since the security at which law aims is no less intensely, and of course far more extensively, violated, if the legally secured interests of a particular class are sacrificed without compensation to the interests of the community, than it would be if an individual's interests were similarly invaded.
This reasoning clearly applies to the abrogation not only of rights of property strictly so called, but of any rights legally secured that have a definite pecuniary value; such as lucrative monopolies, secured to companies or individuals either by express grant of Government,---or by custom recognised as having legal validity,---and rights to appoint or to be appointed to lucrative posts. There is more doubt as to cases where the change consists merely in some restriction on the free use or exchange of things, or the exercise of any lucrative or marketable rights, that still remain secured to their previous owners: as when certain modes of treating animals are prohibited as cruel, or the use of the whip by overseers of slave labour before the complete abolition of slavery, or the payment of wages to workmen in commodities furnished at employers' shops, or the sale of advowsons except to certain persons. Any such restriction is likely to cause some economic loss to the person restrained but such loss will generally be difficult to trace and define and perhaps the members of a progressive community may be supposed to look for minor changes of this kind, and may within limits be fairly expected to take the bad with the good;---as they are likely often to receive benefits from new laws for which they are not made to pay. Still, it seems clearly equitable that the compensation for governmental encroachment on the legally secured interests of individuals should extend to cases of restriction on the exercise of rights, as well as to cases of complete abrogation; so far as (1) the rights in question were recognised as normally permanent, and (2) any part of the loss inflicted by the change is clearly and definitely ascertainable and considerable enough to constitute a substantial grievance. And at first sight it would seem that any such loss that is compensated at all should be fully compensated.
There are, however, in many cases important considerations on the other side, tending to the reduction of the amount of compensation. The abrogation of the class of rights which we are considering is assumed to take place because the existence of these rights is opposed to public wellbeing. Now in such cases the degree of mischief that results from the mode of exercising such rights that is most profitable to their possessors may often be very materially reduced if the possessors of the rights will consent to forego a certain amount of profit. Thus, the most crying evils of predial slavery arose from the endeavour to make the utmost gain out of the slaves' labour: and, similarly, the evils attending the venality of ecclesiastical appointments are much reduced if the purchasers of such appointments are restrained by a sense of duty from appointing unfit friends or relatives---though of course this restraint may materially diminish the value of the right purchased.
In any such case, as opinion becomes more and more unfavourable to the general existence of the rights in question, the moral condemnation of the persons who exercise them without restraint will tend to grow.
Under these circumstances, there seems an obvious advantage in adopting the principle that compensation will only correspond to what the pecuniary value of the rights in question would be if they were exercised in the more moral but less profitable way: for otherwise pecuniary interest would prompt selfish owners of the right, during the period in which public opinion is growing in the direction of the change, to exercise their rights to the utmost, in spite of the mischief, in order to establish a claim to larger compensation. Any such conflict between self-interest and current morality is clearly detrimental to the wellbeing of the society.
Sometimes, however, no important line can be drawn between a harmful and comparatively harmless use of the rights in question: any use may be so decidedly mischievous as to be altogether condemned by the growing body of opinion which will ultimately sweep away the institution. In this case all the persons interfered with by the change will be in the position of having made money by practices which, though not strictly illegal, are yet condemned by a widespread---and ultimately prevalent---moral opinion, as opposed to the general welfare. The slave-trade was in this position a century ago; and up to a comparatively recent date the keeping of public gaming-houses, in several European States.
In such cases, when the moral condemnation is sufficiently widespread, it supplies a strong reason for limiting compensation to what is required to mitigate any severe hardship that a sudden change in the law might sometimes cause: since the resulting insecurity is even advantageous to society, so far as it diminishes the inducement to lucrative practices that are recognised as socially mischievous, though not legally prohibited. It may be urged, however, that there is a counterbalancing mischief in the more widespread though less intense insecurity that would be generally felt by persons engaged in industry, if any industrial class were liable to suffer an uncompensated loss of their legal rights, merely because a majority of their fellow-citizens had suddenly become convinced that these rights were opposed to the public welfare. I admit some force in this argument; but I cannot think that the danger it signalises is very material, in the case of such a change in moral opinion as I have above supposed. Such a change, if we may judge the future from the past, is likely to be of slow growth: so that any class affected by it will have a long period of warning before the moral change has its legal consequences.
The reason above given for not allowing full compensation for the gainful exercise of legal rights in a manner opposed to the interests of society, when such rights are altogether abrogated, applies still more strongly where such rights are only restricted, so as to cut off the mischievous part of their exercise, without interfering with the part that is socially advantageous. In this latter case, if the line between mischievous and salutary use can be drawn with clearness, I conceive that there will be no occasion for compensation, except when a sudden change would inflict great hardship on individuals.
[Back to:] [Elempol, Chapter 12, Section 2] Governmental Encroachments and Compensation