|
|
other hand, the relative proportion of revenue contributed by Western
Australia and Tasmania is diminishing. In Western Australia it was 12-49
per cent. of the whole in 1905, 8-13 per cent. of the whole in 1909. In
the same period, not only relatively, but actually, the gross
contribution of Western Australia has diminished from L1,431,624 in 1905
to L1,166,126 in 1909, while the repayment to her has also diminished
from L1,031,223 in 1905 to L627,933. Tasmania's repayment is also
diminishing, though her gross contribution has increased. These
circumstances suggest a slight resemblance to the growing disproportion
between the resources of Ireland and Great Britain, but they do not
assist us towards a solution of the Irish problem. Each Australian
State, while contributing the whole of its Customs and Excise to the
Federal Government, receives back at least half, and in some cases
two-thirds,[146] and adds that sum to its own independent revenue for
the maintenance of the State Government. The sum refunded amounts on
the average to a little below a quarter of the total State revenue--to
be accurate, 23.01 per cent. Of the remaining 76.99 per cent., only 10
per cent, on the average is derived from direct taxation; 10.10 per cent
from public lands, 4.15 per cent, from miscellaneous services, and no
less than 52.55 per cent, from Public Works--railways, tramways,
harbours, etc.
CONTRIBUTIONS OF, AND REPAYMENTS TO, THE STATES OF THE AUSTRALIAN
COMMONWEALTH, 1908-09.[145]
-----------------------------------------------------------
Contributions to Repayments from
Revenue. Commonwealth.
-----------------------------------------------------------
L L
New South Wales 5,621,958 3,326,276
Victoria 3,750,161 1,987,435
Queensland 1,989,540 1,027,047
South Australia 1,307,621 716,957
Western Australia 1,166,126 627,938
Tasmania 515,387 244,747
-------------------------------
Total Common- Total
wealth Revenue. Repayments.
--------------------------------
14,350,793 7,930,395
-----------------------------------------------------------
Here are the details of revenue for 1908-1909 in the richest and the
poorest State, respectively:
Particulars. New South Wales. Tasmania.
L L
Refunded by the Commonwealth 3,377,213 232,342
Taxation (direct) 907,249 250,835
Public Works and Services 7,309,062 329,192
Land 1,778,002 96,519
Miscellaneous 274,600 25,017
Totals 13,646,126 934,405
Now, Ireland raises no public revenues at all from Public Works, only
L24,500 out of a total of ten millions from public lands; while 29.25
per cent, of her "true" tax revenue comes from direct taxation and 70.75
per cent, from Customs and Excise. To take away even a third of her
receipts from Customs and Excise would be to leave her with a deficit of
three millions and a half, which would have to be made up by additions
to a direct taxation, which is already vastly higher than in any part of
Australia. She needs every penny of her revenue from whatever source
derived, and there is no possibility of extracting from her a
contribution to Imperial services, unless it be an illusory contribution
based on faked figures.
The real moral to be derived from the Australian comparison is that both
Australia and Ireland are countries where accumulated wealth is
comparatively small, and where the importance of indirect taxation is
very great. All the more reason for giving Ireland control of her own
indirect taxation. Canada, and, indeed, all the self-governing Colonies,
suggest the same moral. In Canada the Federal or Dominion Parliament has
an unlimited power of taxation, the Provinces being vested only with the
concurrent right of direct taxation within their respective borders
(B.N. America Act, Clauses 91 and 92). In practice, nearly the whole
Federal tax revenue is derived from Customs and Excise. We have no
materials for a comparison of gross and net provincial contributions,
because no records are compiled. Under an Act of 1907, revising the
former arrangements, two small subsidies, forming a fixed charge on the
gross Federal revenue, and bearing no specific proportion to the income
from Customs and Excise, are given to each Province.
1. A subsidy (from L20,000 to L40,000) based on the total provincial
population.
2. A payment of 80 cents per head of the provincial population.
Both together are very small by comparison with the Australian payments.
Neither is really a subsidy, though it is given that name, but the
return of a surplus indirectly contributed. It is, indeed, conceivable
that a new and poor Province might actually contribute less than she
received back. One Province, British Columbia, having long complained
that she contributed far more than her share, and received back too
little, obtained an exceptional grant of L20,000 under the Act of
1907.[147] The sums raised independently in each Province for the
support of the provincial administration are, as in Australia, derived
to a very slight extent from direct taxation, and to a very large extent
from public property; not, as in Australia, from railways, tramways,
etc., but mainly from vast tracts of public land. In this respect the
Provinces resemble the Dominion, which derives a large revenue from the
same source.
In three vital points, then, Anglo-Irish finance differs from that of
the Colonial Federations. Ireland's whole net income comes from taxes;
she needs it all; and her economic conditions are totally different from
those of Great Britain. So far from borrowing anything from Federal
finance, we should deduce from it the moral of financial independence
for Ireland. With all the powerful centripetal forces, moral and
material, which originally united, and now hold together, the federated
States of Australia and Canada, there is continual controversy, and
sometimes considerable friction, over finance, generally in connection
with the position of the poorer Provinces or States. Some problems are
still unsolved. Good authorities, among them Sir Arthur Bourinot, think
that the Canadian subsidies are unsound. Australia is dissatisfied with
her system. The American States, while giving up Customs and Excise, are
self-supporting entities; but that system has its drawback, in Federal
extravagance. We must remember, too, that even if these examples were of
any use to us, the weak States or Provinces in a Federation have a
greater control over Federal financial policy than Ireland could have
under any scheme which reserved Customs and Excise to the Imperial
Parliament; because the Federal principle, partially infringed only in
the case of Canada, is to give them disproportionately high
representation in the Upper Federal chamber, which can reject money
Bills.[148]
On all counts, Ireland's position is that of a country which
imperatively needs fiscal isolation similar to that enjoyed by States
prior to Federation, before it can dream of embarking on the perilous
sea of quasi-Federal finance. Trouble enough comes from the present
joint system. We should make a clean sweep of it, permit Ireland, with a
minimum of temporary assistance, to find her own financial equilibrium,
and so lay the foundation, perhaps, for a genuine Federation in the
future.
VIII.
ALTERNATIVE SCHEMES OF HOME RULE FINANCE[149]
Historically, these fall into two classes; though, as I shall show, they
are for all intents and purposes merged in one to-day.
The two classes are--(1) The Gladstonian; (2) the "Contract."
1. _Mr. Gladstone's Schemes_.--It is unnecessary to examine these in
close detail, though, if the reader cares to do so, he will find details
set forth in the Appendix. Four outstanding features were common to the
schemes both of 1886 and 1893: (_a_) Permanent Imperial control over the
imposition of Customs and Excise; (_b_) Irish control over all other
taxation; (_c_) an annual Irish contribution to Imperial expenditure;
(_d_) Imperial payment of part cost of the Irish Police.
With regard to (_a_), the most important point of difference in the two
Bills was that under the first Ireland was credited with her whole
"collected" revenue from Customs and Excise, under the second (as
amended) with only her "true" revenue, which was less than the former by
L1,700,000. Another point in which the two Bills differed was the
permission to Ireland, under the Bill of 1893, after six years, to
collect her own Excise. Both imposition and collection were wholly
reserved under the Bill of 1886. I have already given grounds for the
impolicy of retaining control over Customs and Excise. Let me only ask
the reader, in conclusion, to figure the situation. How could Ireland
frame a financial policy? Three-quarters of the revenue, as at present
levied, of a country profoundly dissimilar economically from Great
Britain, and in need of drastic reforms of expenditure and marked
changes in taxation, would be permanently outside the reach of an Irish
Chancellor of the Exchequer, and, in spite of the representation at
Westminster which Imperial control would entail, would in the long-run
fluctuate according to British needs and notions. In the long-run, I
repeat; but incidentally there would be sharp and damaging conflicts.
Occasions might occur like that of 1909, when the majority of Irishmen,
rightly or wrongly, resented the form of new taxation, and would have
secured the rejection of the Budget had not that step been hurtful to
the prospects of Home Rule. It will be useless to blame either Ireland
or Great Britain. Every country is bound to study its own circumstances.
A similar crisis would have imperilled even the strongest Federation. We
are not in the least concerned at the moment with the goodness or
badness of that famous Budget. We are concerned with the effect on the
relations of the two countries, and with the indefeasible right of
Ireland and Great Britain to do what they consider best for their own
interests.
With regard to (_b_), the Bill of 1893 differed from that of 1886 in the
provision of a suspensory period of six years, during which all existing
taxation in Ireland was to be under Imperial control, though Ireland
could impose additional taxes of her own. After six years--and, under
the Bill of 1886, from the outset--Ireland was to have control over all
taxation other than Customs and Excise. Where is the wisdom in
selecting direct taxation as peculiarly suitable to Irish control? It is
already higher in Ireland than in any country economically situated as
Ireland is. Yet Ireland's power to reduce it will be very small and very
difficult to use, if she is rigidly excluded from changes in the
indirect taxation which presses mainly on the poor. Would she naturally
be inclined to increase direct taxation? Land Value Duties produce next
to nothing in Ireland, and their extension would be unpopular. The
existing rates of Income-Tax and Estate Duties cannot be raised, though
their incidence might be extended to cover poorer elements of the
population, as, for example, the small farmers. That is a kind of
measure which the farmers would, if necessary, willingly agree to, in
order to balance the accounts of a financially independent Ireland, but
it is not the kind of measure they would care about when their national
finance was dictated by Great Britain. If one cared to make a
dialectical point, one could add that a common argument against Home
Rule is a fear of oppressive taxation of the rich or oppressive taxation
of North-East Ulster, at the hands of an Irish Parliament, through high
direct imposts. The fear is one of those which scarcely need serious
discussion. If Irish statesmen were as black as their most industrious
traducers paint them, they could not by any ingenuity invent any new
direct tax which would not hit all the provinces equally, saving perhaps
a tax on pasture ranches, which would hit North-East Ulster least; while
super-taxes on the exceptionally rich, if they were worth the trouble of
collecting, would drive wealth out of a poor country at the very moment
when it was most urgently necessary to gain the confidence of investors
and the few wealthy residents.
With regard to (c), Mr. Gladstone's various devices for obtaining from
Ireland a contribution to Imperial services possess now only a
melancholy and academical interest, because, without an elaborate
manipulation of the accounts, so as to disguise their true significance,
no such contribution can possibly be obtained. In 1886 Mr. Gladstone
provided for an annual payment from Ireland, fixed in amount for thirty
years; in 1893 for the contribution of a _quota_--namely, one-third--of
her "true" annual revenue from Imperial taxes, to run for six years, and
then to be revised. His calculations were conditioned to some extent by
_(d),_ the part payment from the Imperial purse of the cost of Irish
Police, coupled, of course, with continued Imperial control of that
Police, pending its replacement by a new civil force. It is easy enough
in ways like this to show a balance in Ireland's favour, and, at the
same time, to cripple the responsibility of the Irish Legislature by
transferring selected services from the Irish to the Imperial side of
the account. We can extend the process to Old Age Pensions, the Land
Commission, and what not. As I have repeatedly urged, this course is
radically unsound. As for the Police, there can be no responsible
government without control of the agents of law and order.
By crediting Ireland with her whole "collected" revenue, we can give her
at once a balance of half a million. By freeing her from the payment of
Old Age Pensions, we can make the balance three millions. With the
elimination of the Land Commission and the Police, we can make it five
millions. Then we can postulate an imaginary taxable capacity, an ideal
contribution to Imperial services, and a hypothetical share of the
National Debt, and so arrive at a Budget which will look well on paper,
but which will deceive nobody, and be open to crushing criticism.
2. "_Contract_" _Finance_.--It will be seen that both Mr. Gladstone's
schemes set up in Ireland--though under the Bill of 1893 only after six
years--a dual system of taxation, Imperial and Irish, after the Federal
model. The revenue, "collected" or "true," derived from Imperial taxes
levied in Ireland, was to be paid, after the deduction of sums due to
the Imperial Government on various accounts, into the Irish Exchequer.
And into the same Exchequer went the proceeds of taxes levied by Ireland
herself. The distinguishing feature of "Contract" finance is that it
maintains the fiscal unity of the British Isles. All taxation in Ireland
would be permanently levied and collected, as before, by the Imperial
Parliament, Ireland being allowed only the barren and illusory privilege
of levying new additional taxes of her own. Out of the Imperial
Exchequer a lump sum of fixed amount, or a sum equivalent to the revenue
_collected_ in Ireland, would be handed over to Ireland, by contract, as
it were, for the maintenance of the Administration.
The simplicity of this scheme seems to me to be its only merit. It
disposes of all complicated bookkeeping, all heart-burnings over "true"
and "collected" revenue, and all controversies, for a long time at any
rate, over an Irish contribution to the Empire; while it involves and
immensely facilitates a subsidy based on the reservation of selected
Irish services for Imperial management and payment. On the other hand,
it is not Home Rule. It annihilates the responsibility of Ireland for
her own fortunes, and is, indeed, altogether incompatible with what we
know as responsible government. Its germ appeared in the Irish Council
Bill of 1907--a Bill which did not pretend to set up anything
approaching responsible government, and to which the scheme was
therefore in a sense appropriate, though it must, I think, have produced
mischievous results if it had been carried into law.[150]
I wish to speak with the utmost respect of Lord MacDonnell and the other
patriotic Irishmen who have advocated this kind of financial solution.
There was a time when it might have been good policy for Ireland to
obtain any--even the smallest--financial powers of her own as a lever,
though a very bad lever, for the attainment of more. But we ought now to
make a sound and final settlement, and I do earnestly urge upon all
those who have Irish interests at heart to reject schemes which merely
evade, if they do not actually aggravate, some of the pressing
difficulties of the Irish problem of to-day. The fact that Contract
finance works well in India is _prima facie_ a reason why it should not
work well in Ireland. It does not exist, and it could not be made to
show good results, in any community of white men. If anyone is disposed
to trace a faint analogy--which in any case would be a false
analogy--with the lesser of the two small subsidies given by the
Dominion of Canada in aid of the Provincial administrations,[151] let
him imagine what the moral and practical consequences would be if,
instead of constituting a small fraction of the provincial income, this
subsidy were increased to a lump sum calculated by the Dominion
Government as correct and sufficient for the whole internal government
of the Province. And the pernicious results in a Canadian Province would
be trivial beside the pernicious results in Ireland, where the whole
system of expenditure and revenue needs to be recast; where large
economies are needed, together with additional outlay on education; and
where above all, the sense of national responsibility, deliberately
stifled for centuries, needs to be evoked. Nothing could be more cruel
to Ireland than to give her a fictitious financial freedom, and then to
complain that she did not use it well. No nation could use freedom well
under the Contract system of finance, whether based on a fixed grant or
on revenue derived from Ireland. It is not in human nature to reduce
expenditure unless the reduction is reflected in reduced taxation. Every
official threatened with retrenchment, even in the services under Irish
control and, _a fortiori,_ in the services outside Irish control, would
have a grievance in which the public would sympathize, while resentment
at an unequal fiscal union would be unabated. Irish statesmen, like any
other men in the same position, would be exposed unfairly to the
continual temptation of preserving institutions and payments as they
were, of making changes only of personnel, and of annually appealing to
Great Britain for more money for new expenditure. These appeals could
not possibly be refused. If Great Britain chooses to place Ireland in a
position of financial dependence, she must take the consequences and pay
the bill, as in the past, even if the bill exceeds the revenue derived
from Ireland. But, indeed, under Contract finance, attempts to make
Irish expenditure conform to Irish revenue would necessarily be
abandoned.
Bad as the results must be, we are inexorably driven to some form of
Contract finance directly we relinquish its anti-type, financial
independence. There is very little practical difference between the
Gladstonian and later plans. We may be drawn along the downward path
either by considerations of revenue, or considerations of expenditure,
or by both combined. To retain Imperial control of Customs and Excise,
while crediting the Irish proceeds to Ireland, is in itself equivalent
to making three-quarters of Irish tax revenue take the form of an annual
money grant fixed by Great Britain. If Englishmen also want to retain
control over Irish Police, and Irishmen are short-sighted enough to
desire Imperial control, as a corollary of Imperial payment, of Old Age
Pensions, National Insurance, or Land Purchase, there at once are four
millions, or more than a third of present Irish expenditure, withheld
from Irish authority. To cover the remaining seven millions by a
Contract allowance, instead of going through the pretence of allotting
items of revenue and of deducting a contribution to Imperial services,
is a step which is only too likely to commend itself to harassed
statesmen. But it would not be Home Rule.
This is not a matter of speculation, but of experience. As long ago as
1818, in the case of Canada, we discarded as vicious the old doctrine
that a dependency ought not to be allowed to provide for the whole cost
of government out of its own taxes, for fear that its Legislature would
control policy. If we are going to remove features which make Ireland
resemble a Crown Colony now, do not let us import others which recall
the ancient fallacies of a century ago.
There remains to be considered the important question of loans, and to
that I shall devote a separate chapter.
FOOTNOTES:
[136] Hansard, July 21 and 25, 1893.
[137] Both Bills provided for part payment of the cost of Irish Police
from Imperial funds.
[138] Return No. 220.
[139] See p. 234.
[140] See p. 234.
[141] I need scarcely point out that the newly-created Provinces of the
Dominion of Canada are exceptions to this rule. But there is no analogy
with Ireland. Such Provinces are carved out of newly settled public
territory and given local government.
[142] See pp. 244-245, and 277-278.
[143] Until two years ago even the remaining one-fourth, added to other
small items of Commonwealth revenue, was too large for the expenditure,
and a part of it was returned annually to the States.
[144] The other principal source of revenue is from Posts, but that is
almost exactly balanced by expenditure, so that it barely affects the
amount of the repayment to the States.
[145] These figures are taken from the Official Year-Book of the
Commonwealth of Australia, No. 3, 1901-1909.
[146] It must be understood that the law requiring three-quarters of the
Commonwealth revenue from Customs and Excise to be returned to the
States does not imply that each State should have three-quarters of its
contribution returned, but that the total amount returned should be at
least three-quarters.
[147] See p. 244.
[148] Except perhaps in the case of Canada.
[149] The Author is indebted, here and elsewhere, to papers by Messrs.
C.R. Buxton, P. MacDermot, and R.C. Phillimore, in "Home Rule Problems."
[150] By Clause 5 the following sums were allocated to the Irish Council
for five years: (1) L3,750,000 for the maintenance of eight Government
Departments; (2) L300,000 for public works; (3) L114,000 supplemental.
[151] See p. 299. Under the Act of 1867, No. 2 was earmarked for this
purpose.
CHAPTER XIV
LAND PURCHASE FINANCE[152]
I. LAND PURCHASE LOANS.
The data of the land problem are as follows:
The superficial area of Ireland is 20,350,725 acres, and in 1909 it was
utilized as follows:[153]
Acres. Percentage.
Area under tillage, hay and fruit 4,582,697 22.5
Area under pasture 9,997,445
61.6
Grazed mountain land 2,548,569
Woods, etc. 301,444 1.5
Bog, barren mountain, water,
roads, townlands, etc. 2,925,570 14.4
Total 20,350,725 100.0
The agricultural area, calculated by the exclusion of the last item in
the above column, works out at 17,425,155 acres, but since bog forms
part of a large number of farms, we may, for the purposes of Land
Purchase, place the agricultural area of Ireland at 18,739,644 acres,
the figure given in the Census of 1901, and its annual value for rating
purposes, as given in the same census, at L10,061,667.
This area is divided into 603,827 agricultural holdings, which are in
the hands of 554,060 occupiers, and vary in size from vast pasture
ranches to the tiny plots of miserable rock-sown soil, which abound in
the congested districts of the west.
But small holdings largely predominate. More than two-thirds do not
exceed 30 acres; 153,565 are between 5 and 15 acres, and 147,580 are
below 5 acres.
Size, however, is by itself an imperfect index to value. The effects of
the ancient confiscations and of the extraordinarily unequal
distribution of land which they and the bad Irish agrarian system
produced may be gauged by the valuation figures of the Census of 1901,
which showed that 335,491, or 68.5 per cent, of the total number of
holdings had an annual value (for rating purposes) not exceeding L15,
while they covered only a little more than a third of the total
agricultural area; 134,182 of these holdings were rated below L4, and
covered only 1,360,000 acres.
All farms rated below L4, and a large number of those below L15, may be
regarded as "uneconomic"--that is, incapable by themselves of supplying
a decent living to the farmer and his family.
I shall say no more here about the legislation beginning forty years
ago, which revolutionized the agrarian tenure derived directly from the
Penal Code, and converted the Irish tenant into a "judicial" tenant with
a rent fixed by the Land Commission, with security of tenure, and free
sale of the tenant-right.[154] There are now in Ireland two distinct
classes of occupying tenants, "judicial" tenants, and purchasing
tenants, and it is upon the question of the State-aided transference of
the land from the landlord to the tenant that I wish to concentrate the
reader's attention.
The principle of Land Purchase is this: The State advances money, raised
by a public loan, to the tenant, who pays off the landlord with it, and
becomes for a fixed period the tenant of the State. During this period
he pays, in lieu of rent, an annuity, which represents both interest and
sinking-fund on the capital sum advanced to him. At the end of the
period, which, of course, will vary with the fixed annual amount of the
sinking-fund, he becomes owner in fee-simple of his farm.
There is no charity to the tenant. He borrows the money and pays it back
in a perfectly regular way, and the State has made a temporary
investment of a profitable character.
And now, for the last time, I must trouble the reader with a little
indispensable history. There are four phases in the history of Irish
Land Purchase.
1. John Bright was the first British statesman to maintain that no
healthy and lasting readjustment of the relations between landlord and
tenant in Ireland could ever be made by law. He advocated State-aided
purchase; and in the Church Disestablishment Act of 1869 and the Land
Acts of 1870 and 1881, clauses were inserted allowing the State to
advance money for Land Purchase. The conditions, however, were so
onerous, both to landlord and tenant, that only 7,665 tenants out of
more than half a million were able to avail themselves of these purchase
clauses.
2. The Ashbourne Act of 1885 was the first successful measure of the
kind. Five millions were advanced under it, and five millions more under
an extending Act of 1887. Next came the Act of 1891, empowering the loan
of thirty-three millions, followed by the amending and simplifying Act
of 1896. These Acts form a body of legislation by themselves, of which I
need refer only to a few salient characteristics. They were all alike in
settling the tenant's annuity (in lieu of rent) at 4 per cent, on the
purchase money, though the proportions allocated to interest and
sinking-fund varied. Under the first two Acts the period for final
redemption of his loan by the tenant was forty-nine years, under the
third forty-two years, though this period was extended to seventy years
if the tenant availed himself of decadal reductions in the annuity,
proportionate to the capital paid off by the sinking-fund.
The average price of the holdings sold under these Acts represented
seventeen and a half years' purchase, and the tenant's great inducement
to buy was that, by the aid of cheap State credit, the annuity he paid,
even over so short a period as forty-nine years, represented a reduction
of more than 20 per cent, on his existing judicial rent.
Under the first Act, that of 1885, the landlord received the purchase
money in cash, under the other two, in guaranteed 3 per cent, or 2| per
cent, stock, an arrangement which suited him very well as long as
Government stocks maintained the high level which they reached in the
period preceding the South African War. With the heavy fall in stocks
during and after the war, purchase came to a standstill. The net result
of the operations under the Acts of 1885 to 1896 was that close upon
twenty-four million pounds were advanced to 72,000 tenants, occupying
about two and a half million acres, out of the total of 18,739,644
acres which constitute the agricultural area of Ireland.
3. Once begun, purchase had to be continued, if for no other reason than
that a purchasing tenant paid in annuity a substantially lower sum than
the non-purchasing judicial tenant paid in rent, with the additional, if
distant, prospect of an absolute fee-simple in the future.
Mr. Wyndham, acting on the recommendation of a friendly Conference
between landlords and tenants, took the bull by the horns in 1903, and
carried the great Land Act of that year. Under the Wyndham Act the
system of cash payment to the landlord, dropped since 1891, was resumed,
on a basis calculated to give a selling landlord a sum which, invested
in gilt-edged 3 or 31/4 per cent. stocks, would yield him as much as the
second term judicial rents on the holdings sold, less 10 per cent.,
representing his former cost of collection; while the annuity payable by
the tenant in lieu of rent was reduced from 4 to 31/4 per cent., of which
21/2 per cent, was interest on the purchase money advanced, and 1/2 per
cent, was sinking-fund. This reduction involved an extension of the
period of redemption from forty-nine to sixty-eight and a half years.
The annuity was calculated to represent an average reduction of from 15
to 25 per cent, on second-term judicial rents. Since the gross income of
the landlord was to be reduced only by 10 per cent. on a basis of 3 per
cent. investments, while the annual payment by the tenant was to be
reduced by an average of 20 per cent., clearly there was a gap to be
filled up, and this gap was filled by a State bonus to the selling
landlord of 12 per cent, on the purchase money, a bonus which went
wholly to him personally, clear of all reversionary rights under
settlements. A sum of twelve millions altogether was to be expended on
the bonus.
In addition to direct sales between landlord and tenant through the
Estates Commissioners, large powers were also given both to the Land
Commission and the Congested Districts Board for the purchase and resale
of certain classes of estates--land in congested districts, untenanted
land, etc.
The Act was enormously popular. The landlord, in view of the manifold
insecurities of land tenure in Ireland, made an excellent bargain, and
the tenant, tempted by the immediate transformation of his rent into an
annuity of reduced amount, ignored the extension by twenty years of the
period of redemption, and was willing to agree at high prices for the
purchase of his land. The average price of land sold rose from the
seventeen and a half years' purchase under the old Acts to over twenty
years' purchase, and the soil of Ireland rapidly began to change hands.
But the Act broke down on finance, as adapted to what were then
estimated as the requirements of the purchase operation. The estimate
for the total sum required was one hundred millions, and the purchase
money was to be raised by successive issues of 2-3/4 per cent.
Guaranteed Land Stock. Sums needed from time to time for payment of the
landlord's bonus were also raised by stock, and were placed to an
account known as the Land Purchase Aid Fund.
Now, any loss on flotation, due to stock being issued at a discount, was
to be borne, in the first instance, by the Ireland Development
Grant,[155] and, if and when that was exhausted, by the ratepayers of
Ireland through deduction from the grants in aid of Local Taxation.[156]
The stock, like all Government stocks at that period, fell heavily from
the first, and in 1908 the point was reached when further issues would
have entailed a heavy loss payable out of Irish rates, growing
ultimately, as it was calculated, to an annual charge of more than half
a million. The infliction of such a burden upon the ratepayers of
Ireland was felt to be inequitable. Ireland was not responsible for the
evils which necessitated purchase, and even if she were, the ratepayers
were not the right persons to be mulcted. Meanwhile, purchase was at a
complete standstill.
4. This serious situation led to Mr. Birrell's Land Act of 1909, which
was based upon the Report of a Treasury Committee which sat in the
previous year.[157] The problem was twofold: (a) how to deal with future
agreements to purchase, between landlord and tenant;(6) how to deal with
agreements to purchase pending under the Act of 1903, but as yet
uncompleted.
(a) With regard to future agreements, there are four main points:(1) The
old policy of payment in stock, instead of in cash, is reverted to, and
the stock is a 3 per cent. stock.
(2) The tenant's annuity is raised from 31/4 to 31/2 per cent.
(3) The period of redemption is reduced from sixty-eight and a half
years to sixty-five and a half years. (4) The landlord's bonus is
allocated on a graduated scale, under which the higher the price the
land is sold at, the less is the bonus conferred. These changes, though
no doubt somewhat prejudicial to the prospects of Land Purchase, were
absolutely necessary, owing to a cause beyond human control--the
condition of the money-market.
(b) In regard to pending purchase agreements arrived at under the old
Act, no alteration is made in the terms of the bargains already
concluded between landlord and tenant; but changes are made in the
method of financing these agreed sales. Briefly, parties can obtain
priority in treatment among the enormous mass of cases awaiting the
decision of the Land Commission by agreeing to accept 2-3/4 per cent.
stock at a price not lower than 92 per cent, (which means, at present
prices, that the loss on flotation is split between the landlord and the
State), or, by waiting their turn, they can obtain half the price in
stock at 92, and half in cash. Payments elected to be made wholly in
cash come last of all. Bonus to be paid in cash as before.
Losses caused by the flotation of stock at a discount no longer fall
upon the Irish rates. Any loss not capable of being borne by the Ireland
Development Grant is to be borne by the Imperial Exchequer.
Other important clauses gave compulsory powers of purchase to the
Congested Districts Board, and, in the case of "congested estates" and
untenanted land outside the jurisdiction of the Board, to the Estates
Commissioners. Otherwise Purchase and Sale remained voluntary.
So much for the history of Land Purchase. How exactly do we stand at the
present moment?
In round numbers, nearly 24 millions have actually been advanced under
the old Acts prior to 1903, and up to March of this year (1911) a
further sum of 421/4 millions had actually been advanced under the Wyndham
Act of 1903 and the Birrell Act of 1909.[158]
That makes a total of 661/2 millions actually advanced to 165,133 tenants
up to March of 1911, covering the purchase of nearly 6 million acres of
land, or nearly a third of the total agricultural area of Ireland. The
tenants of the land are now quasi-freeholders, and will eventually be
complete freeholders. In addition, agreements for the purchase of
properties by 150,490 tenants, under the Wyndham and Birrell Acts, at a
total price of 461/2 millions, for 41/2 million acres, were pending in
March, 1911, though the sale and vesting were not yet completed. The
properties represented by these agreements will be duly transferred in
the course of the next few years, though the congestion of business is
very great.
That will make a total of 113 millions advanced to 315,623 tenants for
the purchase of 11 million acres under all Acts up to and including that
of 1909. Now, how much more will be required? We have only one recent
official estimate--that made by the Land Commission in 1908 for the
Treasury Committee which sat to consider the crisis in Land Purchase. It
did not pretend to give an accurate forecast, but only to estimate the
maximum amount which would be needed, on the assumption that all unsold
land would eventually be sold at the average price reached under the Act
of 1903.[159] It is certain that the amount so calculated, covering as
it does all classes and descriptions of agricultural land, and including
land farmed by the landlord himself, as well as short-term pasture
tenancies,[160] will considerably exceed the actual requirements. Some
of the unsold land, especially of the pasture land, will never need to
be sold; nor is the average purchase price likely to remain permanently
as high as that obtained under the Act of 1903.
Still, this speculative estimate gives us an outside figure which is
useful. The conclusion from it is that 95 millions may be required to
finance all future sales initiated under the Act of 1909.
But if we want to know how much cash may be wanted, dating from March,
1911, onwards, to finance Land Purchase, we must add the 461/2 millions
needed for sales now agreed upon, and waiting to be carried through, but
not yet completed. That brings the total to 1411/2 millions.
For the reasons given above, I think we might very well strike off 20
from the 95 millions of future sales, and so reduce the total to 1211/2
millions.
Two further questions remain to be considered: (1) Can we assume that in
the future purchase will proceed smoothly? (2) Who pays for the
machinery of Land Purchase, and what is the security for the money
advanced?
1. The Act of 1909 is still young. At the end of March, 1911,
applications had been lodged for the direct sale of 5,477 holdings at a
price of L1,623,526, representing an average of 20-8 years' purchase,
and negotiations were in progress for the purchase by the Congested
Districts Board of estates worth another 11/2 millions. Total, a little
over 3 millions--a substantial amount of business in view of the
artificial acceleration caused by events in 1907 and 1908, the
subsequent reaction, and the enormous arrears of business still
remaining to be cleared up.
We should naturally expect a slight check to purchase under the Act of
1909, since the inducement both to landlord and tenant is less. The
tenant would be inclined to hold out for a lower price because his
annuity is higher (though signs of this check are not yet apparent), and
the landlord is paid in a stock whose market price seems to be slowly
but steadily falling. It is now (November, 1911) at 861/4. On the other
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