The Principles of Political Economy

Henry Sidgwick

Book 3

The Art of Political Economy

Chapter 4

Important Cases of Governmental Interference to Promote Production

§12. This intervention will be facilitated, if the unoccupied lands of the region of immigration are owned by the community, so that the sale or lease of them supplies a fund from which the expense of importing colonists may be defrayed. And in fact (as I before noticed) the question of governmental aid to immigration has had a close historical connexion with the regulation of the acquisition of land in a new country. Here the theoretical problem of determining the grounds and limits of legitimate interference is complicated by a peculiar difficulty of deciding what is, and what is not, interference; or, to put it otherwise, what precise action on the part of the Government would strictly conform to the principles of natural liberty. At first sight it may seem that in new countries, as Merivale argues, ``the `natural' course of settlement is that which would take place, not if land were sold at the sum which it will fetch, but if it were granted away without any purchase at all. Free grant is the natural system; deviations from it … produce artificial, though perhaps very useful effects.'' But this view seems to me to overlook the peculiar characteristics of property in land which render it impossible or manifestly unreasonable for Government to act on the simple principle of securing it to the first occupant. In the first place, how shall we determine the extent of occupation? it cannot be said that a man is to be understood to occupy what he is able to use, because the `use' of land by any individual may vary almost indefinitely in extent, diminishing proportionally in intensity---e.g. it would be absurd to let any individual claim possession of the whole ground over which he could hunt, as against another who wished to use it for pasturage: but if so, ought the shepherd, again, to have possession as against a would-be cultivator, or a cultivator as against a would-be miner? Even if we confine our attention to one kind of use, similar difficulties occur: there is no natural and obvious definition of the quantity of pastoral land useful for a given number of sheep or cattle, or of the quantity of tillage-land suitable for a given amount of labour---especially where the kind of tillage most immediately profitable is that which exhausts the soil---or, again, of the amount that a miner may legitimately claim. The settlement of these questions must in any case require the intervention of government: but, apart from these difficulties of detail, the general principle of allowing complete property rights to the first occupant does not seem properly applicable to land. For the economic ground on which this jural principle is based, in the case of the produce of hunting, fishing, and other occupations by which things become property that have hitherto been unappropriated, is that the labour of search and pursuit thus receives its natural remuneration, without which there would be no adequate inducement to perform it: but no such labour is required in the case of ordinary land in a new country: there is no advantage to the community in allowing the first comer to appropriate it gratuitously to-day, if some one else is likely to come to-morrow who will be willing to pay for it.

It seems, in short, that if land before it is occupied has a market-value, the competition of the market is the `natural' method of determining what individual is to possess it, the price thus obtained belonging naturally to the community; and hence that---to realize Natural Liberty---Government must undertake the business of owning it, so far at least as to arrange for selling it in the most economical way. Nor can it even be laid down that this ownership should be as brief as possible, and should be transferred at once by sale to the highest bidder. Indeed, it is obvious that if more than a certain limited amount of land were offered for sale at once, at whatever price it would fetch, the value of it would fall so low that the practical effect would be nearly the same as if gratuitous occupation were allowed: and if it be said that it should only be sold to those who can really use it, the before-mentioned difficulties arising from the great variations in intensity of use recur in a different form---e.g. a wealthy shepherd could use a large province at the rate of 100 sheep per square mile, which is taken to be the carrying capacity of pastoral land in Queensland; but it would be obviously unreasonable to let him have a province for private property at a nearly nominal price, if in a few years the progress of colonization is likely to give large parts of the same land a substantial value for agricultural purposes. Rather it is clear that where land is likely to be in demand both for agricultural and pastoral use, the claims of the different uses can only be fairly adjusted by allowing the shepherd a temporary occupancy of land that is not yet required for agriculture.

I conclude, therefore, that Government is acting most in accordance with the principles of Natural Liberty if it allows the alternative of sale or lease, and the terms of either, to be decided by purely commercial considerations, merely endeavouring to make the best bargain for the community? But if so, it may be fairly argued that on strictly commercial principles, land ought only to be sold at a price that will include the present value of the future increment of value which the land as a whole is likely to receive from the increased numbers and wealth of the persons residing on it. Certainly it seems that if, as seems probable, individuals are not sufficiently interested in remote and doubtful gains to rate this prospective increment at its true value, at any rate during the earlier stages of the economic life of a colony, Government ought, during this first period, not to sell the land at all, but only to let it on lease. On the other hand, we have to consider that it may be even financially more advantageous for the community to sacrifice immediate gain to the end of promoting immigration by offering absolute ownership to bonâ fide settlers: and actually, in the colonization of England, the greatest colonizer among modern communities, the financial interest of the community has been generally subordinated to this latter end.

The most obvious way of attracting settlers is by freely granting land, or selling it at low prices, in such portions and under such conditions as are thought likely to secure the actual cultivation of the land. This, in fact, is substantially the same thing as paying a part of the expenses of the transfer of emigrants out of national funds, provided the emigrants were of the class that would in any case buy and cultivate land;---since it obviously makes no difference to such an emigrant whether it is the cost of his journey or the cost of his purchase of land that is artificially cheapened at the public expense. In practice, however, this system, in the form in which it prevailed generally in the English colonies during the 18th and the first quarter of the 19th century, was not effectually guarded from being perverted to the profit of speculators: and the system that has been more recently adopted of making the benefit offered to settlers to consist more in the deferring of payment than in the lowering of price, seems in every way preferable.

A different and more elaborate plan of promoting emigration through the sales of unoccupied lands, which we may call the Wakefieldian system, was urged upon the English Government by the Colonization Society from 1830 onwards, and partially carried into effect for a limited period in some of our Australasian Colonies. It will be observed that the immigration encouraged by the system of free grants or low prices is that of labourers who intend, and are expected, to become cultivators of their own land at once. Now it was believed by Wakefield and his followers that the labour of immigrants so attracted tended to lose materially in efficiency through want of cooperation; so that it would be a distinct gain to production if they were to a large extent prevented from buying land and their labour organized under the direction of capitalist employers. The characteristic principle, then, of the Wakefieldian system was that it aimed at attracting such capitalist employers by providing them with labourers willing to work for hire. With this aim it was proposed to sell land at a price so high that the mass of immigrants would not for some years afford to buy enough to become cultivators on their own account; and at the same time to devote the whole, or a fixed and substantial part, of the proceeds of such sales to the importation of immigrants, so that the immigrating capitalists might always find an adequate supply of hired labour ready to hand. The partial attempt that was made to carry out this system in our Australian colonies, for the 15 or 20 years from 1836 onward, had, in the opinion of competent judges, an important degree of success. And the fact that it was afterwards abandoned is hardly evidence that it ultimately failed; since its abandonment may be probably attributed to the mere desire of obtaining land on easier terms generally felt by the labouring class, whose influence over colonial administration became preponderant when self-government with universal suffrage was granted to the colonies.

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