Garden Cities of To-morrow/Chapter 2

by Ebenezer Howard

CHAPTER II.

THE REVENUE OF GARDEN CITY, AND HOW IT IS OBTAINED—
THE AGRICULTURAL ESTATE.

Amongst the essential differences between Garden City and other municipalities, one of the chief is its method of raising its revenue. Its entire revenue is derived from rents; and one of the purposes of this work is to show that the rents which may very reasonably be expected from the various tenants on the estate will be amply sufficient, if paid into the coffers of Garden City, (a) to pay the interest on the money with which the estate is purchased, (b) to provide a sinking-fund for the purpose of paying off the principal, (c) to construct and maintain all such works as are usually constructed and maintained by municipal and other local authorities out of rates compulsorily levied, and (d) (after redemption of debentures) to provide a large surplus for other purposes, such as old-age pensions or insurance against accident and sickness.

Perhaps no difference between town and country is more noticeable than the difference in the rent charged for the use of the soil. Thus, while in some parts of London the rent is equal to £30,000 an acre, £4 an acre is an extremely high rent for agricultural land. This enormous difference of rental value is, of course, almost entirely due to the presence in the one case and the absence in the other of a large population; and, as it cannot be attributed to the action of any particular individuals, it is frequently spoken of as the "unearned increment," i.e., unearned by the landlord, though a more correct term would be "collectively-earned increment."

The presence of a considerable population thus giving a greatly additional value to the soil, it is obvious that a migration of population on any considerable scale to any particular area will be certainly attended with a corresponding rise in the value of the land so settled upon, and it is also obvious that such increment of value may, with some foresight and pre-arrangement, become the property of the migrating people.

Such foresight and pre-arrangement, never before exercised in an effective manner, are displayed conspicuously in the case of Garden City, where the land, as we have seen, is vested in trustees, who hold it in trust (after payment of the debentures) for the whole community, so that the entire increment of value gradually created becomes the property of the municipality, with the effect that though rents may rise, and even rise considerably, such rise in rent will not become the property of private individuals, but will be applied in relief of rates. It is this arrangement which will be seen to give Garden City much of its magnetic power.

The site of Garden City we have taken to be worth at the time of its purchase £40 an acre, or £240,000. The purchase money may be assumed to represent 30 years' purchase, and on this basis the annual rent paid by the former tenants was £8,000. If, therefore, there was a population of 1,000 persons upon the estate at the time of the purchase, then each man, woman, and child was contributing towards this rent-roll an average sum of £8 per annum. But the population of Garden City, including its agricultural land, is, when completed, 32,000, and the estate has cost them a sum on which they pay an annual charge by way of interest of £9,600. Thus, while before the experiment was initiated, 1,000 persons out of their united earnings contributed £8,000 a year, or £8 a head, on the completion of the town 32,000 persons out of their united earnings will contribute £9,600 a year, or an average of 6s. a head.

This sum of 6s. per head per annum is all the rent, strictly speaking, which the inhabitants of Garden City will ever be called upon to pay; for it is all the rent which they pay away, any further sum they pay being a contribution towards their rates.

Let us now suppose that each person, besides contributing annually 6s. a head, contributes an average annual sum of £1 14s., or £2 in all. In that case two things may be noticed. First, each person will be paying for ground rent and rates only one-fourth of the sum which each person before the purchase paid in ground-rent alone; and, secondly, the Board of Management, after the payment of interest on the debentures, will receive an annual sum of £54,400, which, as will be presently shown, would, after providing a sinking fund (of £4,400), defray all those costs, charges, and expenses which are usually met by local taxation.

The average annual sum contributed by each man, woman, and child in England and Wales for local purposes is about £2 a head, and the average sum contributed for ground rent is, at a very low estimate, about £2 10s. The average yearly contribution for ground-rent and local rates is, therefore, about £4 10s. It might, therefore, be safely assumed that the people of Garden City would willingly pay £2 per head in complete discharge of ground-rent and local rates; but to make the case the clearer and stronger, we will test the supposed willingness of the tenants of Garden City to pay such a sum as £2 a year for rates and rents in another way.

For this purpose, let us deal first with the agricultural estate, leaving the town estate to be dealt with separately. Obviously the rent which can be secured will be considerably greater than before the town was built. Every farmer now has a market close to his doors. There are 30,000 townspeople to be fed. Those persons, of course, are perfectly free to get their food stuffs from any part of the world, and in the case of many products will doubtless continue to be supplied from abroad. These farmers are hardly likely to supply them with tea, with coffee, with spices, with tropical fruits or with sugar,^[1] and their struggle to compete with America and Russia for the supply of wheat or flour to the town may be as keen as ever. But surely the struggle will not be so despairing. A ray—a beam of hope will gladden the heart of the despairing home-producer of wheat, for while the American has to pay railway charges to the sea-board, charges for Atlantic transit and railway charges to the consumer, the farmer of Garden City has a market at his very doors, and this a market which the rent he contributes will help to build up.^[2]

Or, consider vegetables and fruits. Farmers, except near towns, do not often grow them now. Why? Chiefly because of the difficulty and uncertainty of a market, and the high charges for freights and commission. To quote the words of Dr. Farquharson, M.P., when they "try to dispose of these things they find themselves struggling so hopelessly in a spider's web of rings, and middlemen, and speculators, that they are more than half-inclined to give up the attempt in despair, and fall back on those things that stand up straight and square to their prices in the open market." A curious calculation may be interesting with regard to milk. Assuming each person in the town consumed only one-third of a pint a day, then 30,000 would consume 1,250 gallons a day, and might thus save, taking railway charges at a penny per gallon, upwards of £1,900 per annum in railway rates upon the one item of milk, a saving which must be multiplied by a large figure in order to realise the general saving to be effected by placing consumer and producer in such close association. In other words, the combination of town and country is not only healthful, but economic—a point which every step taken will serve to make yet more clear.

But the rents which the agricultural tenants of Garden City would be willing to pay would increase for another reason. The waste products of the town could, and this without heavy charges for railway transport or other expensive agencies, be readily brought back to the soil, thus increasing its fertility. The question of sewage disposal is naturally a difficult one to deal with, but its inherent difficulty is often much increased by artificial and imperfect conditions already in existence. Thus, Sir Benjamin Baker, in his joint report with Mr. (now Sir) Alexander Binnie to the London County Council, says: "In approaching the consideration of the vast question of the whole sewerage system of the Metropolis, and the state of the Thames, as a practical problem … we had clearly at once to recognise the fact that the general features of the main drainage system were unalterably settled, and must be accepted in the same way as the main lines of thoroughfares have to be accepted whether quite as we could wish them to be or not." But on Garden City site, given the skilful engineer, he would have comparatively little difficulty. He would have, as it were, a clean sheet on which to prepare his plans, and the whole estate being equally the property of the municipality, he would have a free course before him, and would doubtless succeed in adding greatly to the productiveness of the agricultural estate.

The great increase in the number of allotments, especially such favourably situated allotments as are shown in Diagram 2, would also tend to raise the total sum offered in rent.

There are yet other reasons why the rent which a farmer on the Garden City estate would be willing to pay for his farm, or a labourer for his allotment, would tend to increase. The productiveness of the agricultural part of the estate, besides being increased by a well-devised system of sewage disposal, and by a new and somewhat extensive market, with unique conveniences for transit to more distant markets, would also be increased because the tenure on which the land is held encourages maximum cultivation. It is a just tenure. The agricultural portion of the estate is let at fair rents, with a right to continue in occupation as long as the tenant is willing to pay a rent equal to that offered by any would-be occupier, less, say, 10 per cent. in favour of the occupying tenant—the incoming tenant having also to compensate the outgoing tenant for all unexhausted improvements. Under this system, while it would be impossible for the tenant to secure to himself any undue share of that natural increment of land-value which would be brought about by the general growth in well-being of the town, he would yet have, as all tenants in possession probably should have, a preference over any new-comer, and would know that he would not lose those fruits of his past industry which were not yet ingathered but were still adding their value to the soil. Surely no one can doubt that such a tenure would, of itself, tend greatly to increase at once the activity and industry of the tenant, the productivity of the soil, and the rent which the tenant would be willing to pay.

That there would be this increased offer of rent will become yet more obvious if we consider for a moment the nature of the rent paid by a tenant of Garden City. Part of what he pays would be in respect of interest on the debentures on which the money to purchase the estate was raised, or in the redemption of those debentures, and would thus, except so far as the debentures were held by residents on the estate, pass away from the community altogether; but the whole of the remaining sum paid would be expended locally, and the farmer would have a share equal to that of every adult in the administration of such money. The term "rent," therefore, has, in Garden City, acquired a new meaning, and, for the sake of clearness, it will be necessary in future to use terms which will not be ambiguous. That part of the rent which represents interest on debentures will be hereafter called "landlord's rent"; that part which represents repayment of purchase-money "sinking fund"; that part which is devoted to public purposes "rates"; while the total sum will be termed "rate-rent."

From these considerations, surely it is obvious that the "rate-rent" which the farmer will be willing to pay into the treasury of Garden City will be considerably higher than the rent he would be willing to pay to a private landlord, who, besides increasing his rent as the farmer makes his land more valuable, will also leave him with the full burden of local taxation resting upon him. In short the plan proposed embraces a system of sewage-disposal which will return to the soil in a transmuted form many of those products the growth of which, by exhausting its natural fertility, demand elsewhere the application of manures so expensive that the farmer becomes sometimes blinded to their necessity, and it also embraces a system of rate-rents by which many of the farmer's hard-earned sovereigns, hitherto lost to him by being paid away to his landlord, shall return to his exhausted exchequer, not indeed in the form in which they left it, but in a variety of useful forms, such as roads, schools, markets, which will assist him most materially, though indirectly, in his work, but which, under present conditions, entail so severe a burden as to make him naturally slow to see their inherent necessity, and even to look upon some of them with suspicion and dislike. Who can doubt that if the farm and the farmer can be placed under conditions so healthful and natural alike in a physical and moral sense, the willing soil and the hopeful farmer will alike respond to their new environment—the soil becoming more fertile by every blade of grass it yields, the farmer richer by every penny of rate-rent he contributes?

We are now in a position to see that the rate-rent which will be readily paid by farmer, small occupier, and allotment holder, would be considerably greater than the rent he paid before (1) because of the presence of a new town population demanding new and more profitable farm products, in respect of which railway charges can be largely saved; (2) by the due return to the soil of its natural elements; (3) by the just, equitable, and natural conditions on which the land is held; and (4) by reason of the fact that the rent now paid is rate and rent, while the rent formerly paid left the rates to be paid by the tenant.

But certain as it is that the "rate-rent" would represent a very considerable increase over the bare rent formerly paid by the tenants on the estate, it is still very much a matter of conjecture what the "rate-rent" would be; and we shall, therefore, be acting prudently if we greatly under-estimate the "rate-rent" which would probably be offered. If, then, in view of all the circumstances, we estimate that the farming population of Garden City will be prepared to pay for rates and rent 50 per cent. more than they before paid for rent alone, we shall reach the following result:—

Estimated Gross Revenue from Agricultural Estate.
Original rent paid by tenants of 5,000 acres, say	£6,500
Add 50 per cent. for contributions to rates and sinking fund,	3,250
Total "rate-rent" from agricultural estate,	£9,750

We shall in the next chapter estimate the amount which may, on the most reasonable calculation, be expected from the town estate, and then proceed to consider the sufficiency of the total rate-rents for the municipal needs of the town.

1. The electric light, with cheap motive power for its generation, with glass-houses, may make even some of these things possible.
2. See "Fields, Farms, and Workshops," by Prince Krapotkin, 1/-, and "The Coming Revolution," by Capt. Petavel, 1/-, both published by Swan Sonnenschein & Co.