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,[6] 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.[7]
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.
FOOTNOTES:
[6] The electric light, with cheap motive power for its generation,
with glass-houses, may make even some of these things possible.
[7] _See_ “Fields, Farms, and Workshops,” by Prince Krapotkin, 1/-, and
“The Coming Revolution,” by Capt. Petavel, 1/-, both published by Swan
Sonnenschein & Co.