THE LAND QUESTION.

Gisborne Times, Volume XXV, Issue 2188, 18 September 1907, Page 1

THE LAND QUESTION.

THE CASE FOR THE LEASE-IN-PERPETUITY SETTLER. A VALUABLE CONTRIBUTION. ,31 r. J. E. Watson, of Invercargill, writing to the “Otago Daily Timos” on tho nbovo question, says:— It has been asserted with wearisome reiteration by tho Government and its press supporters that tho proposal to grant the freehold to the lease-in-perpetuity settlers at the origin.!,l value, even with the 1 por cent, difference in rent betweon l.d.p. and 0.r.p., with compound interest added; is immoral, that it involves a colossal breach of contract, that it is a huge bribe, highway robbery from the State, and so on, ad infinitum. I propose to show that it is not only none of theso enormities, but that, on the contrary, it would bo ,an unqualified advantage to the State, both" pecuniarily and otherwise. Let us study the proposition in the

light of cold arithmetic. Sections 1, 2, juulr3 aronof- equal area' (200 acres each), of exactly similar land, and of equal value. These three sections are each valued by the Government at 20s per acre, equal to £2OO .each. Section 1 is taken up by Smith under lease-in-perpetuity. He therefore gets a lease for 999 years at 4 per cent, on capital value, equal to £8 per annum. Section 2<is taken up by Jones under occupation with right of purchase. Ho gets a lease there! fore, at 5 per cent, on capital value,! equal to .£lO per annum, and he has the right of purchase at original valuo in 10 years. Section 3is bought by Brown for £2OO cash, and therefore he gets .a title to the freehold. All three work on their farms for ten years,..eacli putting-in the same amount of labor and skill, and treating their farms in exactly the same manner, and with identical results. After the lapse of ten years the Government valuer assesses tho unimproved value of section 3 —Brown’s .freehold

—at £4 per acre, and the other two farms are, of course, actually of the same value. Some people call the increase of £3 in unimproved value . “-the unearned increment.” I think you described it in a recent article much more accurately as “hard-earned increment,” and I am very sure that very few of those who call it the' former would care to put in half the work of Smith, Jones, and Brown- for the money. For, indeed, in the’great majority of cases the leaSedn-perpetuiiy settlers have not earned by their toil anything like the living wage of the city artisan,, and-the only compensation for years of foil lies in the appreciation in the value of their -holdings. To return to our illustration. At the end of ten years 'Jones converts his o.r.p. section (2) into' a ; freehold by paying tho Government £2OO, the original value. .He gets his.title, and tho valuer immediately assesses the unimproved- value ,at £4 per acre. Smith . now; rtisheetha bad 1 taken up his'sectioip-uhder p.r.p. r ”and' is very anxious to acquire -the .freehold and lie m--the : -same position s as> Jones and BiiAvrC' He accordingly asks the Government to grant him the freehold; and-offers to pay the 1 per cent, difference in rent - between-' liivp. and o.r.p. witlrcompound' interest, which, under the circumstances, is- an extremely fair offer. If the Government accepts Smith’s offer the State would be in -precisely th© same s position as if Smith had taken- ui> section 1 under o.r.p. instead'of J.i.p., as he had the option of doing when he took the land up. The Government says to Smith, “No, if you want the freehold you must pay tile present value of the land, free of-the encumbrance of your 1000 years’ lbase at £8 per annum rent”—or, .in other words,'he must pay , £4 -per acre, equal to £BOO. “But,” Smith-says, “Jones .and Brown only paid £2OO for their sections, and I have lived the ten years under precisely tho same-conditions as they, undergoing the same hardships, the same toil, and raising the same am-ount-of (produce. for the benefit of the country . - -AVhy, then, should I he penalised to the extent of £6OO as compared with them?” The Government replies: “You have made your bed and must lie on it ; you took your choice and must abide by it:Besides, to-give you the freehold oat the original value would he robbing the State.”

- Let us pause and-analyse .this assertion. Robbing the what? Wliat" is the yaliie 'to 1 the'State of section 1 (200 acres) leased to Smith for 1000 years at £8 per annum? The outside -value to the State is £2OO, -ahcV.it’ can nevef be'Mvoftli a -copper more to the State for -ait least 950 years- atr a .liberal estimate. iAsk the Government Actuary Or any other actuary. In granting Smith the goodwill of a 1000 years’ lease at £8 per ,-anmim the State lias to all intentß and purposes given, him the goo dev i 1-1 of .the’ fee-simple at--£2OO. If, then, the value to -the State be worth more ' than £2OO, is it not preposterously unreasonable to ask Smith to pay £BOO for it? That is, in effect, the nature of the offer the Government proposes, to make to the lease-in-per-peturty- settlers, --according to the latest edition of the Hand Bill. If the State owned Smith’s section 1, unencumbered, it would, of course, he justified in offering it for sale at to-day’s value—-£BOO. -Hut .the State does noit so own it. T-he State owns section 1, encumbered with a lease for 1000 years to Smith, at 4 per cent, on £2OO, or £8 .per annum; and

■this encumbrance fixes the value of section 1 to the State- at £2OO, and not a cent more. Smith wants the freehold instead of his 1000 years’ lease partly to get rid of the periodical visits of the ranger, partly because ho can get cheaper finance on the freehold, partly because —in spite of the oft-repeated and vehement protestations on the part of the Government and its press supporters of their unalterable respect for tlio “sacredness- of contraot” —lie lias a dread -that some day

the Government may, without his consent, arbitrarily vary the contract-, by increasing his rent o r shortening the term of his lease, or both; ; but chiefly. I believe, because he has the natural longing t>o own the land cn which he spends his life work. All the same, Smith is not such a fool -as to exchange his 1000 years’ leas© of his 200 acres at a rental of £8 per annum for a. freehold costing

him £BOO, equal -to an annual rent of £4O (counting: hL lmWicy as-'-worth 6 per cent.), oven -with the additional’ attraction of’ having to pay laiid tax: I .' And a Government which makes such a proposal to him is offering a stono when asked for bread.

It is q.uito possible, of, course, that the considerations referred to above

may iuduco some l.i.ip. settlers to acquire the freehold, evbn at'an 1 advance on tho original value, plus the 1 per cent, and compound interest, but they ought not in equity to bo asked to pay uny such premium,' because in buying their freeholds at the original value thoy are-letting tho State out of a bad bargaiu 'on- tennis ’distinctly advantageous to 1 tho State. For, to'revert again to our specific example, I will provo that section 1 burdened with Smith’s 1000 years’ lease is not worth- even £2OO to the

State: ' £2OO in'cash is worth £8 per annum, but section T does not net £8 per annum to the State, for, if Smith pays his rent punctually, he gets a reduction of 10 per cent., so that the State only receives £7 4s per annum from Smith. And that is not all, for the State has to pay a ranger’ to inspect the section periodically, to see if the tenant is Complying with' the conditions of the lease, and the State has also to pay a clerk to collect Smith’s rent half-yearly, and issue receipts for same, so that really the State probably does not geit more than"£6 10s per -annum clear, or at tho very most, say, £7—equal to 3J per'cent, on the original value. And

.the Government is to-day paying l 4 per cent, for money. This is had finance.

From this it follows it would pay the State handsomely to give Smith the freehold at the original value, £2OO, and no one would be robbed; and, in addition to all this, as soon as Smith got the freehold .the Government would have the pleasure and profit of collecting land tax from him, which it has'.to go without under the l.d-p.

To ray mind, instead of tho l.i.p. settlers going on their knees to Government to beg the freehold, the Government should bo chasing them to accept, it, oven ait the original falue, -without the 1 pea- cent, and compound interest. If all the l.i.p. settlers got tho freehold to-morrow at the original value the Government' woiildTiave some millions in hand with which to acquire -more’large estates for cutting up under the Land for Settlements Act, without having to borrow a penny. It would be enabled to settle thousands of additional settlers on tho land and add enormously to the wealth of ■the colony!' It would, further, “save (the loss in interest involved in getting only three and a half per cent., or less, on the value of, the l.i.p. laiids)*'and 'also’ the cost of ’rangers and the clerical and other expenses in cbniiection with collecting' l.i.p. rents. And what is more important —it ivould gratify the legitimate desire of thousands of deserving settlers for freehold; not' at the expense of the State,' but with great pecuriia -y advantage to the Starte. - The Minister of- Lands was quite' right when he said at Gore before last election' that the best course open to the State was to givo the land tor settlement tenants the freehold, au.l U6e the proceeds to buy other estates, ' although he now apparently holds the opposite opinion. .Mr. McN-ab is reported to have said in' the House last niglut: “So long as ,tho colony had to borrow mouey for the purchase of estates it should only dispose of land under lease-in-perpe-tiiity.” A more dangerous and unsound policy than this it would be difficult it© conceive, because if bad times should come .and the tenants bo

uliable to pay their rents an enormous loss to the colony might result which might easily cause serious financial embarrassment. ’Whether tenants pay their remtß or not the Government must pay tliq interest oi these enormous loans. And when Crown. 'tenants become sufficiently numerous they will develop into a political power sufficiently strong to compel reductions of rent in bad times. Whereas, if the Government gives its settlers the freehold it can carry on the land for settlements policy' without adding to the already far too large public debt. No private firm or joint stock company would dreim of borrowing money to buy land to let on lease'-to settlers and calmly sit under the risk of tremendous loss through bad times causing a serious shrinkage in the letting va-

lue of the land, and this policy of the Government is fraught with the possibility of absolute disaster; The theory - 'that the State is going ,to reap a great pecuniary benefit through aii increase in values of lands

leased to .Crown tenants is delusive. Any’ increase ill values will be swal-

lowed up by the cost of supervision, rangers, clerical staff, etc., which expense is going on all the time; ind, moreover, these rangers and clerk?, from the State point of view, would he much more profitably employed if they turned-producers. At pro lent they are drones in the hive. •To say that granting the freehold to the lease-in-perpetuity settlers is

playing into the hands of land monopolists is to advance an objection that can be easily met by attaching a condition' to’ the title providing that the land cannot bo sold to anyone already holding more than a certain area. To say that granting the freehold involves parting with the heritage of the people i 6 to talk rhetorical bosh, for no man can. take his land away with him when he dies, and so long as the land is closely settled] tlio freehold tenure cannot he prejudicial to the State. To Robinson, who does not possess a farm,'it

.does not.matter a rap whether Hodge,

. who docs possess a farm, holds it on 'freehold, lease-in-perpotuity, occu-pa-tioiY* with Tight of purchase, or 66 years’ renewable leaso. Hod-go’s farm .is equally inaccessible to Robinson whatever tho tenure.

•> lif trying' to kpeip’ ! farmers from getting, .the Government is working against human mature, for all over tho world the man who tills the soil has an intense desire to own his farm. And ho unprejudiced observer c-un deny that the freehold farmers aro the backbone of tho country.

To say that granting tho freehold to lease-in-perpetuity settlers involves a breach of contract is to talk nonsense, for there is .no breach of contract involved when both parties to a contract agree to vary it. In this case the lessee is willing, and the lessor ought to ho very thankful that the lessee is willing to let the State out of a bad bargain and should jump at the chance. -Of the labor unionists’;: land- na-tion-a Users, and Socialists,' wlho clamor incessantly for leasehold land nothing but leasehold—99 out of every 100 have not the remotest intention of going on the land. In every country of advanced civilisation the problem of the day is to get men on the land. Not only do the young men horn in towns show a pronounced objection to go on tlio land, but a largo proportion of the young men reared in the country will not stay there, but flock into the towns. The State should, therefore, offer every inducement to people to go on the land, and the prospect of a freeho.d is out of the most powerful inducements.

If the freehold is wrong in manciple, which I deny, then the State

should not countenance it under any circumstances; but if the freehold is right in principle, then the State should give every-Crown tenant the chance of it.