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by it for a new arrangement or distribution. In some schemes it is proposed that the state shall buy out the present owners, paying them the full value of the fee simple; in others it is proposed that the state shall simply resume the land on the death of the present owners, without paying any compensation to their heirs. Conceding the abstract justice of both propositions, it admits of little doubt that they would not be for the public benefit. Under the first the state would make a very bad bargain. Land, on account of its attractions as a subject of private property, brings a market price nearly 30 per cent. above its actual value. It sells usually at a rate computed to yield a clear return of not more than 3 per cent. But in order to bring this return the owner is obliged to lay out, in maintenance of buildings, drains, roads, fences, and other incidents, sums which on an average are not much less than a third of the net produce. If then the state is to buy at the rate of 3 per cent. what actually yields only 2 per cent., it is clear that the public will be a loser on the transaction. On the other hand, if the state is to take possession of land on the death of the present owners, either without compensation or with a compensation less than the market value, the result would be at once to stop all further improvement by the actual possessors. No one would spend money on that which was to pass, not to his own heirs, but to the public, and the land when it reverted to the state would be in a condition requiring enormous out lay to restore its exhausted fertility, and to remedy the general decay into which its appliances would have been suffered to fall. If again it be urged that the state might obviate this evil by offering compensation for the actual value of improvements which might be made, it can only be answered that private landlords and tenants have not yet found a method of satisfactorily ascertaining such value; that even when the principle is accepted tenants frequently prefer, when certain of not obtaining a renewal of their lease, to exhaust the land rather than trust to arbitration giving them an equivalent; and that this tendency would be enhanced when the state became the landlord and the valuers were appointed by it.
Supposing, however, the operation to be accomplished, and the state to have become the universal landowner, the next question is, What it is to do with the land? On this there is a still greater variety of suggestion. Some would have the land let by the state on lease merely, and would apply the rental to extinguish taxation. Others would have the state to sell in fee simple. But in both cases there arises the further question, To whom shall the advantage of a lease or a sale be given? Here there breaks out the dispute between the advocates of large and small estates and of large and small farms. Some would offer the priority of choice to the existing tenants; but, as this would result in the creation of a large proportion of estates or farms extending to hundreds or even thousands of acres, its superiority over the present system can only be considered as partial. Others would break up the whole land of the country into peasant properties, and even go so far as to furnish each with a house. But, considering that this scheme would further involve the abandonment of most of the existing farm houses and farm buildings, which would be quite useless to peasant proprietors, it would impose a heavy financial loss on the nation.
It must be further kept in view that there are only 47 millions of cultivable acres to be divided among 35 millions of persons, and that the acres are of every conceivable difference of value, dependent not merely on soil but on situation, climate, cropping, capability for improvement, and a thousand other circumstances. To divide these into plots of equal value would be a task of enormous expense, and perhaps scarcely possible to be accomplished. But, if the plots are to be of larger size and unequal value, it must be again asked, How is the state to be guided in selecting the individuals to whom its special favours are to be given? And if it be said that the state would exact a rent proportioned to the value, and thus confer no favour, there would then arise the further question whether the rent is to be fixed in perpetuity, which means a gift to the lessees of all capability of improvement in the land, or whether it is to be adjustable by valuation at intervals, which merely leaves the lessees in the same position as the present lessees are. In the latter case nothing would be gained except that some would be dispossessed in order that others might be put in possession.
It is, however, insisted that in any case the state would have the advantage of drawing the rental of the land, and it is argued that this would do no wrong to the lessees, because it would be only the rental derived from the original value of the soil, and would not affect their profits from the capital and labour they employ on it. This principle, if sound, might, however, be applied with equal force to every other species of material wealth. The state would be quite as fully entitled to acquire, by purchase or by annexation on death of the owner, factories and consols, as it is to acquire land for which it has suffered the former owner to pay a price. But there is a greater disadvantage in the state becoming the universal landlord. A farm is dependent not only on the soil but on the seasons and the markets, and its profits cannot be guaranteed. A rent for the use of the mere soil may be fair on an average of years, but occasionally there comes a series of years in which no rent at all can be paid without bankruptcy of the tenant. Private landlords can and do meet these bad times by concession and agreement, but the state can only act by laws, and in justice to the community it must be hard to its debtors. It is in fact the system which has been tried to be carried out in India, with a considerable variety of method, but with uniformity of failure, a failure to be attributed mainly to the fact that state taxation, necessarily inelastic, is disastrous when applied to income so fluctuating as that from land must be. In fact a tenant, paying full value for the unimproved land to the state, would be in precisely the position occupied at present by an owner who is mortgaged up to the ears; and, since the rent is to be in perpetuity also, he would be unable ever to redeem himself from the burden. An occupant so situated is the most unhappy of men, and the worst of cultivators, and that the state should hold the mortgage over him would only make his position the harder.
The unearned increment.
These considerations apply also to the recommendations which have been made that the land tax should be increased and that the "unearned increment in the value of land"; should be appropriated by the state. Including tithe and local rates, land is taxed at present to an average of about 30 per cent. on its net profits. An additional tax on land would operate to prevent investment of capital on its improvement, since capital will not be invested where its returns are below the average. The "unearned increment in value of land" is often strikingly apparent in and near towns; but it does not exist in the bulk of agricultural districts. Corn has not risen in price within the last hundred years, and, if meat has, so has the cost of raising and importing the food of cattle. The rise in the value of agricultural land generally is not on the whole more than a fair return for the capital that has been invested in improvements, and for the immense sums that have been lost in the experiments out of which the improvements have sprung. The cases in which it is more than this would be incapable of being discriminated, and would not be worth the trouble if it were possible. The idea would probably
