The Principles of Political Economy

Henry Sidgwick

Book III

Chapter IV

Section 14

§14. Assuming that land is allowed to pass into private ownership, it remains to consider how far the conditions of its tenure and transfer should be placed under special regulation by Government. Here it should be observed that the interferences of this kind that have actually been carried out are to be classed under very different heads, even if we confine ourselves to those that have been recommended on strictly economic grounds and in the interest of production. In the first place we put aside, from our present point of view, the very important cases in which European Governments have intervened not to restrict the liberty of individual owners but to render it more complete; by removing relics of feudalism which divided the rights of ownership of land generally in various complicated ways between lords and cultivators, and further impeded its transfer through the restriction of particular estates to particular classes----nobles and roturiers, or nobles, burghers and peasants. Akin to these are more permanent laws restricting the right of each generation to restrict the freedom of their successors, by such bequests or contracts as would hamper the alienation of land, and tend to prevent it from getting into the hands of the persons who would make the best use of it. For legislation of this kind, as was before said, can not strictly be regarded as an interference with natural liberty; it is rather a compromise adopted in an inevitable collision of freedoms, to secure the fullest possible realization of the economic advantage of laisser faire. Similar to this, again, is the aim of another class of minor interferences, such as the compulsory registration of dealings with land---which are designed to render the sale or mortgage of land more easy and less expensive, by removing the necessity of complicated and costly legal proceedings. Along with the above, again, we may class the intervention of the legislature in order to substitute, in the case of land cultivated by other persons than its owners, a certain and definite tenure for one regulated by more or less uncertain customs and understandings; so far as such legislation does not override freedom of contract, but merely interprets what is left vague in customary agreements, or defines normal conditions of letting---as regards length of tenure, compensation for improvements, &c.---in default of express contract to the contrary. When, however, the governmental determination of the conditions of letting land is compulsory, and pro tanto prevents freedom of contract between owners and tenants, the interference is of course of a much graver kind; and such as can only be justified by clear evidence either that it is not for the interest of the landowner to grant such terms of letting as would give the tenant the greatest possible inducement to make the land productive, or that the former, if let alone, is likely to mistake his own interest.

To illustrate the kind of evidence required, I may refer to the grounds on which the revolution in Irish land-tenure effected in 1881, and the important restriction of free contract relative to land in England in 1883, were advocated from a productional point of view. It was contended (1) that the Irish landowners, under the system of free contract, have been often found to raise the rent so high as to leave the tenants but bare subsistence, and so prevent them from having the capital---or in bad times even the physical vigour---requisite to render their labour adequately efficient; and (2) that both Irish and English landowners have diminished the tenants' inducements to treat the land in the most economic way, by not securing to them the value of their improvements. How far these contentions are in fact valid, I do not now inquire: but we have before seen that the first-mentioned result is quite a possible one, even on the supposition that all parties are actuated by enlightened self-interest; since even when an increase in the incomes of tenants or labourers would lead to a more than equivalent increase in the value of their labour, it is obviously not the interest of the landlord to furnish the increment of income unless he is to profit by the increased efficiency. Now in the case we are considering, the increased produce would in the first instance be appropriated by the tenant: and even where the loss to the landlord would ultimately be compensated by a rise in rent or perhaps by greater regularity in its payment, the prospect of this compensation may easily be too remote and dubious to induce a prudent landlord to make an immediate and certain sacrifice of income in order to obtain it.

So again, it may seem,---or even sometimes be---inexpedient for the landlord to give the tenant, through lease or otherwise, the fullest security of profiting adequately by his improvement of the land; because such security cannot be given without diminishing the former's control over his land more than he likes or thinks expedient. The simplest method of giving this security is by a long lease; but we have already noticed the difficulty of framing a lease that without hampering the tenant will practically make it his interest to treat the land in the best way; and, where tenants are poor, a long lease is open to the further objection, in the view of the landlord, that the benefit of an unforeseen rise in the value of the land will accrue entirely to the tenant for the period of the lease, while the landlord is likely to bear a considerable share of the loss due to an unforeseen fall, through the actual or threatened insolvency of the tenants.

Taking into account all difficulties of this kind, and not overlooking the more indefinite loss of the stimulus given to industry by the sentiment of property, we may conclude that there are inevitable disadvantages to production involved in a general separation of the ownership of land from the business of cultivating it: which would probably prevent this from being the common practice if land were held merely as an instrument of production. But in England this consideration has been outweighed by other powerful motives, in particular by the traditional social prestige and political influence attaching to the possession of land. Hence some reformers consider that an important gain to agricultural production would be secured by breaking down the tendency of large estates in England to remain in the possession of the same families from generation to generation: and that this would be attained by assimilating the law of real to that of personal property, and conferring on life-owners an inalienable right of determining the distribution of the property thus owned among their children after their death. It seems doubtful, however, whether even these changes would have the desired effect in a wealthy country; since the peculiar gratification of the sense of proprietorship which the possession of land gives, and the attractions of country residence and field sports would still tend to keep great portions of it in the hands of rich persons not desirous of personally superintending its cultivation.

The question of interference on the grounds above mentioned has been practically a good deal mixed up with one which, theoretically considered, involves economic reasoning of a very different kind: the question, namely, whether agricultural production should be carried on on a large or a small scale. The ownership of land by rich persons who do not personally manage its cultivation, has a certain tendency to encourage large farms. Since it is less troublesome for the owner to collect rents from a few large farmers than from many small ones; and again, the large farmer, having more capital, is not so likely, if holding under a lease, to throw the greater share of any unforeseen losses on the landlord. Hence it is a priori probable that this system of ownership prevents the existence of a certain amount of small farming which might otherwise be prosperously carried on; there are, however, no adequate reasons for supposing that farming on a small scale is likely to be generally more economical, at least as regards the chief staples of agriculture.

Here, however, another consideration is often introduced, which, as was before noticed, is not directly included within the scope of the present discussion, as I have defined it. It is maintained that the system of small farming tends to give a greater gross produce, though a smaller net produce, than that of large farms; and therefore ought to be encouraged by Government, as tending to increase population---though not average wealth---within a given region. And this is certainly a possible result, if the increase in gross produce due to the small-farm system decidedly outweighs the decrease in net produce:---unless, however, the latter difference were comparatively slight, this organization of agricultural industry would be always in a state of unstable equilibrium, since the greater profitableness of the large-farm system to employers would be continually tending to introduce it.

Finally we must notice a kind of interference which has actually taken place in England, and has often been advocated in the interests of agricultural production; but which is not to be so regarded according to the definition of produce adopted in the present treatise. I refer to the law that gives the occupier of agricultural land an inalienable right to kill certain kinds of game, on account of the damage done by them to crops. For this interference with free contract can only be required for the end in view, on the ground that many landlords prefer game and sport together to what they would get by the extra produce which is expected to be obtained in consequence of the destruction of game by the occupiers. Hence---sport being a purchasable commodity---the primâ facie inference is that the aggregate of utilities actually obtained from the land bears a higher value than the material produce to which this legislation sacrifices it: so that the change is no more beneficial to production (as I conceive it) than the conversion of valuable vineyards into less valuable cornfields. It is, in fact, rather an interference for distribution,---as it tends to cheapen the commodities consumed by the poor, at the expense of the luxuries of the rich: though its importance from this point of view is not likely to be very great, under the existing conditions of communication and transport, provided the freedom of trade is maintained unimpaired.

While considering the case of game, we may note the legal prohibition of killing certain kinds of wild animals during certain parts of the year: i.e. chiefly during the breeding season, when the destruction of future supply that would result from any given amount of slaughter would be much greater than at any other time. This interference exemplifies the theoretical case discussed in §5 of the second chapter of this book: the case, that is, of restrictions to which it would be the interest of all---or almost all---to conform, provided that each could rely on their observance by all others, but which it would be very much the interest of individuals to break if they were imposed by mere voluntary mutual agreement, without stringent penalties for non-observance.

So far we have considered Government as interfering with private management of land by way of regulation. But modern governments have also exercised an important and apparently successful influence on agriculture by carrying out certain extensive improvements of land (such as reclamation with drainage or irrigation) or by assisting private associations for this purpose with loans of capital, guarantees of interest, and sometimes powers of compulsory interference with recalcitrant landowners. This kind of interference seems to be theoretically defensible,---on the principles previously laid down in respect of railways, &c.---wherever there is a decided advantage in carrying out the improvements in question on a single system over a large area. Again, as I have before said, there seems to be no special reason why Government should not carry on the business of lending money to individual landowners, on certain conditions: in the chief cases, however, in which operations of this kind have been successfully undertaken by European Governments in recent times, the interference---though quite defensible from the point of view of production---has bad so markedly a distributional character, that I have thought it more appropriate to reserve it for a subsequent discussion.

Before concluding this chapter I may perhaps observe that governmental interferences of which the primary intention had no relation to the production of wealth have often had important productional effects, which a statesman ought carefully to estimate in considering their expediency. Thus (e.g.) the restrictions placed in the English Factory Acts, on the labour of women and children, in order to prevent deleterious effects on their health, have practically had the effect of reducing the normal day's labour of male adults in most of the branches of industry to which they have been extended. And in the succeeding chapters in which we shall be considering measures designed to render distribution more equitable or more economical, we shall find that the chief objections to such measures are drawn from the bad effects on production which are found or believed to be inseparable from them. On the other hand it should also be observed that the interferences to promote production which we have discussed in this chapter become in effect interferences with distribution, so far as the gain resulting from them accrues to particular classes in the community, or the expense they involve is similarly specialized in its incidence. This last remark applies also to the operations of Government discussed in the preceding chapter. We shall have occasion hereafter to notice some cases in which this consideration becomes important.

Note on compulsory purchases of land.

A peculiar development of the system of natural liberty, in respect of what has always been a difficult point in this system---the appropriation of land---has been recently suggested in a vigorously written little book by Mr C. B. Clarke, called ``Speculations on Political Economy''. The right tenure of land, in Mr Clarke's view, being a tenure ``such that every piece of land shall fall into the hands of that man who is able to make the most of it'', he suggests that this might be sufficiently attained by giving any man a right to take any piece of land, provided that he was prepared to pay the price at which the land was valued by the owner himself in a ``national rate-book'', together with 33 1/3 per cent. as compensation for disturbance. The valuation being determined by the owner himself---I suppose at certain intervals---no complaint of spoliation could arise, and the necessity of ``law expenses, juries, arbitrations'' would be avoided: at the same time the owner would be restrained from overvaluing his land by the fear of having to pay taxes on the higher valuation, while the fear of being bought out would tend to prevent him from undervaluing it---at any rate by more than the equivalent of the compensation for disturbance. Mr Clarke, however, does not propose that any land for which an offer was made should necessarily be sold: the owner would have the alternative of raising the value of his land in the national rate-book, on payment of a fine for undervaluation. Thus a Naboth might always keep his vineyard: but with the liability of paying taxes for it in proportion to the amount that it was worth to him. There would, I think, be some difficulty as to the portions in which land held in large masses should be valued; and, unless a purchaser were always compelled to take the whole of any such portion, the scheme would hardly get rid of the necessity of arbitration so completely as Mr. Clarke seems to suppose. But it is scarcely necessary to consider in detail the objections to a proposal which is certainly not within the range of practical politics: I only note it as a novel and ingenious device for harmonizing the conflicting claims of human beings to their material environment, in accordance with strictly individualistic principles.

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