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New Zealand Times, Volume XXXIII, Issue 5465, 2 October 1878, Page 2

We li'vo beard so ranch about the unearned increment of value iu laud lately from Mr. Stout and the authorities ho quotes, that leaving the scientific side of the question for political economists to debate among themselves, wo think it may ho well to try and examine the subject from the simplo coirimou sense point of view of r.g ordinary plam-thmk- - if we can onabout ouv, not lik&ly.ti* difier iP.fflV. C P D * nM tfcp ps*l flifflculy if to find ft mg uim a®

simple definition of what is to be understood by the unearned increment. We suppose it to be the difference between the original cost and the present value of the land ; the private owner’s share of this sum being represented by the value of all existing improvements plus a fair allowance for the labor, capital, and thoughtfu ness expended upon the land by him from the date of its sale by the State. The simplest case of all is that of a property which has lain for many years unoccupied, but surrounded by enterprising settlers, and which has been rendered valuable and accessible by roads, railways, or other public works. It is proposed to take this case as an example, and to assume, for the sake of simplicity, that as we are all servants of the State, landowners are but tenants, and that the State represents their landlord. Their rent has been capitalised ho as to secure a tenure the limit of which is strictly fixed by the requirements of the public ;as a whole. In other words, tho State can at any time resume possession of the freehold for State purposes upon payment of the surrender value of the so-called fee-simple of the land. State cannot do this with a man’s houaeho'd effects or personal property, and it is this acknowledged difference that to a non-profesdonal mind makes “real” estate seem the most unreal of any. The arguments used against the absentee are that he has not improved his property; he has spent neither time care nor money upon his estate; why should he benefit by the labors of his neighbors ? But has not the very same argument been used in olden days against the money-lender ? and did it not produce a crop of usury laws that New Zealanders at any rate have declared by their actions utterly impolitic ? In the first place, this absentee landowner (with whom we may say we have no sympathy) has been content to forfeit both simple and compound interest on his capital; and those who have ever made compound interest calculations know how rapidly they mount after the first few years. All those who have a practical acquaintance with the facta know that an absentee’s property is for many years often a convenient commonage for his neighbors; by-and-by it becomes more valuable and is leased at a lew rent by one or other of them, but is still very often' looked upon as the right place to. cut firewood or timber from to supply the casual wants of the district. In his case, indeed, the truth of the French adage, Les absents ont toujours tort,” is confirmed. As the settlement progresses he may be called upon to pay road rates, railway rates, education rates, and also to pay half the cost of fencing in his neighbor’s sheep or cattle, with the certainty that convenient gaps will be left, so that no feed upon the absentee’s pro, erty shall be wasted. In none of these cases is ,he likely to receive much favor either in the assessment of the rateable value, of the value of fences, or in a due return of his road or railway rates being made to him by expenditure upon lines that would especially benefit his property. The above case is submitted because it tends to prove that even in the simplest case of any, and the one that is generally brought forward as an incontrovertible proof that the unearned increment exists, and does not belong to the individual, there are general considerations that tend to re luce the amount of this mysterious sum. In the more complicated cases, where the land has been settled, how is it possible to assess the amount due for “ the labor, capital, and thoughtfulness” expended upon the land ? It may be asserted without fear of contradiction that every settler who renderarhis fanning successful has done much to convince the public that land of like quality is worth buying; the riddle of success has been solved, and the real value proved by him; he has shown the profit that can be made and the small risks that are attached to it. If this has established au “ unearned increment” in his neighbor’s land, it appears that this man and his neighbors deserve it rather than the State. But before entering farther into the question of fcho ownership of this unknown quantity, a point has to bo considered regarding the relative value of money. Thirteen years ago sheep could not be bought in New Zealand much under £1 a head; nowadays from ss. to 10s. is an average price up-country, representing a very important reduction in the profits of the business The purchasing power of money in providing the ordinary requirements of our present civilisation is very much less than it was ten or fifteen years ago. This decline in the purchasing power of money is constantly taking place, and goes far to bringdown the amount of unearned increment to au insignificant figure, if duly taken into consideration. It may be paid that the unearned increment, if it exists, ia probably much over-estimated ; that it is in a large measure due to expenditure that could fairly be charged against road or railway rates ; that the well-abused absentee owner is really made to pay directly or indirectly a good price for the privilege of being absent ; that in the case of an actual settler it is impossible to say how large a sum he may deserve to repay him for his own perseverance or for having given practical undeniable proof to the public of the real value of property like his own ; lastly, that a great deal of the apparent rise in the money price of land is due to the decreased and decreasing purchasing power of money all over the globe. People will believe that those who bought laud from the State based their calculations of profit mainly upon the assumption that if they were content with a low r»te of profit upon their outlay they would still be secured against loss whenever they realised their property by receiving this increment of value that political economists claim for the State that is to say, that when the State sold the land it also sold the right to the unearned increment, because it failed to reserve it.