The Framework of Home Rule Part 22

[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 a.n.a.logy 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 princ.i.p.al 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) 3,750,000 for the maintenance of eight Government Departments; (2) 300,000 for public works; (3) 114,000 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 10,061,667.

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 15, while they covered only a little more than a third of the total agricultural area; 134,182 of these holdings were rated below 4, and covered only 1,360,000 acres.

All farms rated below 4, and a large number of those below 15, 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 cla.s.ses 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 const.i.tute 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 cla.s.ses 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.