12 JANUARY 1850, Page 11




London, 10th January 1850. Sra—This problem includes yours of last week how to gain " Cheap Capi- tal for Agriculturalists," and is, I believe, of very easy solution. At the request of a leading Equity counsel lately engaged in considering these sub- jects, I had devoted some holyday leisure since Christmas in putting down some notes.upon it ; and the contemporaneous appearance of your article has induced me to send you a copy of them.

Ha mortgage on land could be raised, and also could be paid off or trans- ferred in a day, (iniead of perhaps a year as it is now,) and at an expense of brokerage only, mortgages would be saleable- in the market almost as

readily as Exchequer B' certainly as readily as mercantile bills of ex- change ; and wouldt I doubt not, be negotiated at very low interest indeed. The one thing required to give mobility to real property is to make it as easily negotiable as stock. Any effectual scheme of tins art would be a boon to the landed proprietors, almost infinitely greater than the local taxation relief they hope for, and will never and never ought to get, and yet would be attainable without opposition.

The heads of " a Lands Permanent Improvement Act," applicable " to draining, irrigation, farm buildings, roads, planting, or any other improve- ment, the benefit of which to the estate might be reasonably expected to last mere than twenty years," were' at the request, I understood, of the Duke of Richmond's 'louse of Lords Committee, prepared last session • I have a right to say, with great care, and, I believe submitted by Master Brougham to the Committee. It will be found to ;ally very exactly with your project of last week.

(Copy of Letter.) "I stated to you in conversation, that 1 believed that by 's wise alteration in the law of conveyancing, land in England might be raised from its present value of (say) thirty years' purchase, to at least forty; or in other words, that by a wise change in the law, property may actually be created to an amount equalling: more than one- fourth of the whole landed property of England. This I fully believe, wild notion though it seems.

"There is, as you say, a vast quantity of capital in this country looking out for investment, and a vast quantity of land wanting capital. How can the two be best brought together? This lathe question you have asked me to put down my ideas upon. My answer is—By the wise change in the law above referred to. "Were I desired to investigate the matter fully, I should Snit inquire how the re- lations existing here between land and money stand in comparison with those abroad. In this comparison, our land here would be expected to have the advantage; be- c"m" there is no other country in which the rights of property are so secure; and according as insecurity of property in any place exists, money (bullion, bills of ex- change, Szc.) is always the investment more desired. Facts, however, would, I arn sure, be found to be altogether contrary to such an expectation; and lands would, in the comparison, be found a less advantageous investment here than elsewhere.

"Take land here to be worth thirty years purchase ; and say that money is worth in the City 21 to 3 per cent, or thirty-five years' purchase; and go and look how the matter stands in France or Switzerland, and you would find that land was there worth forty to fifty years' purchase, while money at the same time should be there worth 4 to 5 per cent, or only twenty to twenty-five years' purchase. I put thi. hypothetically, because I am not sufficiently familiar with the value of the diffe- rent species of property in foreign countries to state accurately what this disparity would be; but it would, I know, turn out a very considerable and remarkable one.

"The next point would be to ascertain what was the-cause of this disparity. Why should land be worth more in proportion to money in a country where property was certainly not more secure ? This money test is obviously the right and the true test of the comparative values of all legal arrangement or modes of transfer of land, and indeed of the value of all change of judicial forms whatever. Our Legislature and Commissioners proceed to examine how deeds are registered or lands conveyed in a great variety of foreign countries; but that knowledge is worth very little, un- less it is accompanied with information on the number of years' purchase land will fetch in such countries, and the rate of interest which money commands there; and also with information on the probable bearing of the various schemes of registration or modes of transfer on the purchase value of land.

"No doubt, the great desire for land among the lower classes, as in Ireland, and the great subdivision of land practised in many countries, as in France, will have a bearing on enhancing the purchase value. But error from causes of this kind may be much avoided, if we direct our inquiries to the question—How much per cent OH ' the purchase value of land in any given country can be borrowed by way of mortgage on that land ?

"On land in England worth 1,0001., no more than 5001. or 600/. could be borrowed; and on land here worth 1001. nothing could be borrowed: but I think if you were to inquire, you would find that in Switzerland 90/. could be borrowed on land worth only 1001. to sell. Now if this is so, and if any such state of things could be brought about here, there can be no doubt that the facility of dealing with land which would have been thereby effected, would increase the marketvalue of land to the full extent of ten years' purchase. Wherein, then, lies the simplicity of the method of dealing with land in Switzerland ?

" I believe it will be found that the title to land in Switzerland is placed on a basis practically, as nearly as possible, the same as the title to stock here; and that a transfer is made in nearly the same way as stook is transferred here; the Registrar being there, as the Bank is here, the party responsible for the title to the purchaser. I am convinced, at any rate, that such a scheme in this country would have the effect proposed ; and that any system of registration which leaves the law as to titles, and as to the parties who must join in conveyances, in the state it is in now, will be in- jurious to the market value of land, by making it more difficult and expensive than ever to procure a good conveyance of it.

"How far has the law of registry in Ireland made an 'Encumbered Estates Com- mission ' more necessary than it is here ? I believe it will be found to have had a very "In eotnildedoloites, all dgeellsehlave that acleosngsitne been fully registered; and under the Slave Compensation Commission, these titles were very largely examined in this country. I was considerably employed in the contested cases under this Commis- sion, and can confidently say that the effect of registering every document (by dis- closing such a vast number of charges and liens on the estates) rendered it impossible to make a good title to a large part of the landed property in the Colonies where English laws prevail.

" Perhaps a still better way of testing the subject hypothetically, would be, to sup- pose it were enacted that for the future all persons having equitable interests in stock must be parties to its transfer, and that all purchasers of stock should be bound to examine its title and see that they had a proper conveyance. What would be the effect of such a law on the value of stock ? It is now worth about thirty-two years' purchase; would it then on an average be worth twenty years' purchase ? I am very confident not. I need not point out to you that the law of entail and settlement of real estate need not in the slightest degree be affected by such a change as I am speaking about. There is no more difficulty in settling stock on a marriage, or in tying it up for lives in being and issue in remainder, than there is in tying up land. "Nor need I point out that by the clauses of sale and exchange and interim-in- vestment so generally inserted in instruments settling land, the general real estate of the country now really and truly enjoys no greater protection than is afforded to par- ties inserted under settlements of stock ; land being under such clauses convertible into stock at any moment.

" Nor need 1 point out that, while any stock which isunder settlement retains its marketable value, from the great facility of legal transfer possessed by the trustee, the cestuique trust is protected from frauds by the simple contrivance of a distring,as, a contrivance just as applicable to land as to stock. " It has been before suggested, I am aware, to apply the machinery of stock to land. See Mr. Wilson's Outlines ofe Plan for adapting the machinery of the Publio Funds to the transfer of real property, and the paper of the Law Amendment Society Com- mittee on these Outlines. But the proposition therein contained left the laws re- quiring the concurrence of all equitable owners ma sale of land just as it is now ; and.wouldi therefore,? am confident, be of very little practical value.

"The scheme I am considering would in short be this.

"Let the owner of every estate be registered, and recognize on your register. only legal fee-simple titles ; and let a conveyance from the registered party give an inde- feasible title to the estate against all the world, making the Registrar responsible (as

the Bank is) for forgery by the transferer. Protect the owners of every estate less than fee-simple, or of equitable fee-simple estates, from fraud by the trustees by placing a notice in the Registrar's book (similar to the Bank distringas) that no trans- fer was to be permitted without previousnotice to such owners of partial or equita- ble estates ; and make the Registrar responsible (as the Bank is) for seeing that the notice is given. "The changes under consideration are of a nature very analogous to the changes In judicial procedure ; and I would strenuously contend here, as I have always urged with reference to changes in procedure, that the true rule in making any change is to open a new door without shutting the old one. "As therefore, no doubt, many persons would at the first have fear as to the effect of such a change, I would propose that the adoption of this system should be vo- luntary to owners of land ; and that all who did not choose to avail themselves of it might continue to hold and convey their estates under the old system. We should thus have two classes of titles recognized by the laws, the registered and the un- registered; and the market value which each would command would be the real test of the comparative value of each system. I myself am confident that, within ten years. you would find that the registered and indefeasible titles commanded 25 per cent mere than the others ; and that loans by way of mortgage could be procured almost without legal intervention, and at a rate as low as the rate of interest on Ex- chequer Bills ; and that in this way the problem how the capital and land are to be brought together would be solved.

" Though I have no doubt many people will say this is a very wild-goose scheme, it is one about which I myself entertain no doubt, and with which I have no ob- jection to have my name coupled ; and you are, as you desired, at full liberty to make any use of this letter you may think fit. "I cannot conclude without saying, that to carry out this, or any of those now acknowledged schemes of improvement of the law by which the value of the landed property of England would be vastly increased, (e. g. the abolition of the testa- mentaryjurisdiction of the Ecclesiastical Courts, or an entire remodelling of Chan- - eery procedures,) there must be a department of the Government specially ad- dressed to it, and a member of the Government in the House of Commons who can be pestered there if any part of it is not properly worked, and called to account there for the existence of all delays or difficulties. In other words, there-must be a Minister of Justice. In the creation of such a department, we solicitors (the law tax-gather- ers of the country) know well that there is no class who have so large an interest as the landed proprietors. I only wish they were 'wise enough to find it out also."