CHEAP CAPITAL FOR, LANDOWNERS.
Om suggestions on "Cheap Capital for Agriculturists," to which the Times, the Morning Chronicle, and other papers, lent their cir- culation, have excited an active interest which may lead to practi- cal good.
But we are told that there is already an act of Parliament doing what is wanted, by placing the private lender on the same footing
with the State when it lent money for p of drainage. This is partially true, but not more than partially; in the spirit of the demand the measure has still to be supplied. Our correspondent " Agricola junior" is right in saying that an act was passed last session to promote the advance of private money for the improve- ment of lands in Great Britain or Inland, by drainage or other- wise ; but the fact that the statute remains little known and less used shows how imperfect its provisions must be. It labours under three serious defects.
Its objects are too specifically limited to drainage and such im- provements; whereas the thing needed is capital applied to the land bon& fide, but applied to any kind of improvement which can facilitate the passage of agriculturists through the transition state ; the private lender being secured, like the Government, by priority of claim upon the land in respect of which the money is borrowed.
Secondly, the peculiar method of returning the money, which is 'convenient enough for the State, may be highly inconvenient for the private lender : he is obliged to receive a specific annual in- stalment, paying for principal and interest in a given term; which perplexes the lender, as he does not know how to find investment for the driblets returned upon his hands. An instance of this has come to our own knowledge in the present week. Thirdly, the business machinery of the act is not sufficiently simple. If our correspondent knows of insurance companies who are prepared to act upon the statute of last year, we know that at least one insurance company was obliged to refuse a loan because the imperfect machinery- of the act presented legal difficul- ties; and that moneyed men in the City do not recognize it as a sufficient instrument for bringing the capitalist and the agricultur- ists into direct communication.
" Agricola " himself lays his hand upon one source of difficulty when he says-" The money is not allowed to be advanced. until a strict investigation of the validity of the security has been made by an Inspector from the Enclosure Office in Spring Gardens." Now, how is that to be done, easily and effectively, under any existing "Drainage Act," public 'or private ? The very purpose of such a measure is to obviate the endless and factitious difficulties created by our system of titles. To let the borrowing of capital depend upon the proof of satisfactorytitle, according to the exist- ing dilatory and costly practice, is simply to abridge the amount borrowed in one case out of ten, by one half, and wholly to pro- hibit borrowing in the other nine. The difficulty, indeed, would not exist were there a plan of general registration, like that suggested by our correspondent "E. W. F.," giving in itself a title to the fee-simple good against all claims, and leaving the Registrar, that is the State, answerable to claimants. A plan of the kind. has been propounded at least three years since, by Mr. Wilson, sanc- tioned by the Law Amendment Society, and laid before the Re- gistration Commissioners. It only remains for those function-, aries to make their report, and then the plan would be fairly before the public. And there can be no doubt that it would have the double effect of augmenting the marketable value of land and increasing its available utility as a security-you could borrow money upon land far more easily, more cheaply, more promptly, and in larger relative amount.
"E. W. F." mentions Switzerland as a case in point: there, you could probably obtain on land a loan equal to the value of the land itself minus the year's interest,-in other words, an amount which, with the interest of any current year, would be equal or nearly so to the full value of the land. Can you do so in Eng- land P But Switzerland is not the only Continental country in which this can be done ; as a recent writer shows from inquiries made on the spot. " In the free state of Frankfort, there is an excellent register, founded on a map, and the securities are almost entirely houses. There is a very lively •
exchange in that busy town. I am a resident at Frankfort. I want money. I carry my bonds, my rentes, my stock, to the banker. He tells me he does not like the look of things ; the credit of Europe is affected. He advances some money with reluctance, charges the full market value of interest, and protects himself very carefully as to the amount. But if I have a house in a good street of the town, he simply puts on his hat, walks to the register- office, demands to see the book in which the inscription of my house is set out, finds it unencumbered, and instantly gives me the money. It is the af- fair of a half-hour. He gives me on loan the full estimated value of the house, and at the very lowest rate of interest that the state of the market allows."*
The house is of course a freehold house, and built to stand, not to sell; and land would be at least equally available. But let the reader contrast this with the borrowing on land or other real se- curity in our own country. Let him remember the delays, the inquiries into title, the difficulties of settling the rate of interest, and the enormous expense of the whole operation, not only on the original transaction, but on every transfer of the mortgage ; and then he will understand why it is that borrower and lender equally complain of the present system, and why the landlord is deprived of the use of his "raw materiaL"
• Stewart on the Transfer of Land, p. 75.
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