LAND, CAPITAL, AND COTTAGES. T HE offer made by a group

of prominent landowners to supply cheap land for the building of cottages marks an important stage on the road towards the solving of the rural cottage problem. In saying this we do not for a moment shut our eyes to the fact that the rural cottage problem will never be solved by cheap land alone. This is a delusion which has long possessed the minds of so-called land reformers, land taxers, and all that race of urban dwellers who think that they can regenerate rural life with a few Acts of Parliament. This point is so important that it is well to deal with it at once in order to clear the ground. We cannot do better than take the figures published by the London County Council showing the amount of the various elements that go to make up the weekly rent of houses built by the Council. Here is a typical statement showing the cost of two-roomed flats on the Oak Hill Estate, which are let at 4s. 6d. a week. For convenience we set out the figures in tabular form :- Per week.

s. d.

Cost of building ... 2 2 Repairs, supervision, insurance, empties, losses, and sundries ...

1

2

Rates and taxes, including water rate ...

1 0

Land ... ... ... ...

0 2

4

6

Obviously the cost of land on the Oak Hill Estate is cone siderably more than land would be in a rural district. Yet this table shows that even in the neighbourhood of London the cost of land for a two-roomed flat accounts for only 2d. out of a total rent of 4s. 6d. It may be argued that the comparison between a flat and a rural cottage is not a fair one, because the cottage, to begin with, would occupy a larger area, and, secondly, would, or ought to, include a garden. We can partly meet this point by taking the case of working-class houses built at Richmond, in Surrey, by the municipal council. The figures in this case are given in Mr. Chiozza Money's " Riches and Poverty," and are even more instructive than those just quoted. The land was bought at a price which works out at a capital cost of £32 per house. The total capital cost of building each house and supplying drains and fences was £254. The corporation was apparently able to borrow at the very low rate of 31 per cent., so that the annual cost of the site works out to just over £1, and the annual cost of the fabric to £8 5s. But it will be seen that although the corporation was able to borrow capital cheaply while it had to buy land dearly, the cost of capital still remained a more important item in the total than the cost of the land. If the rate of interest had been lowered by only 1 per cent. there would have been a saving of more than £2 17s. per annum, whereas if the land had been obtained for nothing the total saving would have been £1 per annum. It is easy to make a similar calculation for a hypothetical rural scheme of cottage-building. Suppose the land, instead of being sold as Lord Salisbury, Mr. Pretyman, and their colleagues propose, at agricultural prices, be sold at the fairly high semi-urban price of £100 an acre, and that eight cottages are built to the acre. This works out to £12 10s. a cottage. The cost of building cannot safely be put, under normal conditions, when allowance is made for the coat of road-making, drainage, etc., at less than £180, but in order to understate our case we will take the figure at £170. Adding the cost of land, we get £182 10s. Interest on this at 5 per cent. is £9 2s. 6d. Interest at 4 per cent. is only £7 6s. Suppose now we assume that the land is given free, so that the whole cost is £170. With interest remaining at five per cent., the annual cost would then be £8 10s. In other words, a reduction of interest from five per cent. to four per oent. means a greater annual saving than the gratuitous gift of land, even in a case where the land includes a substantial garden.

We do not put forward this calculation with the least desire to depreciate the value of the offer made by the landowners who have come forward to make their contri- bution to the solution of the rural cottage problem. Our purpose is to emphasize the fact that land is the least important element in the problem. The real value of the offer made by this group of public-spirited landowners lies not in its commercial but in its moral -aspect. It is a public recognition of the principle that men who have beenfortunate enough to acquire large areas of land owe a duty to the nation and are willing to discharge that duty. The fact that they have made this public recognition ought immediately to stimulate the owners of capital to recognize that they also owe a. duty to their country. The practical point which we wish to urge is that now that landowners have shown their willingness to help, it is the duty of capitalists to come forward and play their part. We are glad to see that this suggestion has already been made both in the Daily Graphic and in the Morning Post. In our judgment it is an infinitely better way of solving the cottage problem than by appealing to any system of State aid. Not only are State systems invariably expensive, but they are almost invariably unjust. Take, for example, the ease of cottage-building in Ireland, which is usually quoted by so-called social reformers as an example to be followed. In answer to a question in the House of Commons some time ago, Mr. Birrell gave figures showing the extent to which cottages had been built under the Irish Labourers Acts. Summarizing these figures, the number of cottages built up to March 31st, 1910, was 29,1:86. Nearly all of these plots contained at least half an acre of land, and half of them had more than three- quarters of an acre. The cost of building and providing the land was about £167 per cottage. The average weekly rent works out at ls. per cottage. It is obvious that the State is here directly subsidizing the persons who are privileged to occupy these cottages, and no reason has been shown why either the Irish ratepayer or the English tax- payer should shoulder this burden.

The disadvantage of these subsidizing schemes is that they constantly inflict a real, though often an invisible, injustice. It may, for example, easily happen, and a case has come under our own observation in England where it does happen, that the local farmers are called upon to pay rates for providing cheap cottages which are entirely occupied by men working in a local manufacturing industry. This is clearly unjust. There is no objection whatever to a rich man voluntarily subscribing either land or capital to build houses cheaply for his poorer neighbours, but there is the gravest possible objection to compelling by law Farmer Jones to give up part of his profit derived from agriculture in order to enable Mr. Smith, who runs a local manufacturing industry, to pay lower wages to his work- people. Moreover, if the work is undertaken by voluntary agencies it can be so safeguarded and limited as to prevent the undesirable result of using low rents as a subsidy in aid of wages. Not long ago the Land Union put forward a very excellent scheme, which we believe is still in being, for providing houses in rural districts for army pensioners, police pensioners, and other persons of small means who would be very glad to retire to the country, and who would add a most useful element to rural life.

We venture to suggest, then, that, either through the Land Union or through some other means a definite organization should be started for building cottages in the country, with adequate gardens attached, on semi-philanthropic lines for suitable applicants. By " semi-philanthropic lines " we mean that the landowners should provide the land either at a low price or gratuitously, as they offer to do, and that capitalists should provide the capital at a low rate of interest. The capitalist could either take his risk as an ordinary shareholder in local companies limiting the rate of dividend to 4 per cent., or alternatively he could lend to such local companies on well-secured mortgages yielding 3 per cent. The point is that English capitalists should now come forward to cap the offer made by English landowners, and must, for the sake of doing a service to their country, offer to lend capital at at least 1 per cent. lower rate of interest than they could get in the open market.