|A3I6|! i^ ^ I THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES PRICE SIXPENCE. — — ^ Pros and Cons OP Leasehold Enfrandiisement. DENNIS CLAYFIELD IRELAND. CASSELL & COMPANY, Limited LONDON, PARIS, NEW VOKK &* MELBOURNE. PROS AND CONS OF LEASEHOLD ENFRANCHISEMENT. DENNIS CLAYFIELD IRELAND. CASSELL & COMPANY, Limited LOiWDON, PARIS, NEW YORK &' MELBOURNE. 8 DEC.W20 .' I NOTE. In the following pages I have tried to indicate briefly the general line and drift of the evidence given before the Town Holdings Committee with regard to Leasehold Enfranchisement. It is hardly necessary for me to ob- serve that, so far as the arguments used on either side are concerned, I can lay no claim to originality of any kind. So many books and pamphlets on this subject have already been published that it would now be extremely difficult to say anything about it which should be at once new and true. But as the facts and figures here set forth are derived to a great extent from the recently pub- lis hed Blue B ook, I venture to hope that this pamphlet may be of some service to local politicians, candidates for urban constituencies, and other unfortunate people whose duty it may be to make themselves acquainted with the latest information on all the political questions of the day. D. C. I. 9 Old Square, LincoltCs Inn, December iSSS. 1-333 PROS AND CONS OF LEASEHOLD ENFRANCHISEMENT. - I. ^ The main facts in the history of the agitation for I.ease oc hold Enfranchisement are few and fairly simple. According QS to the Daily News, the movement was at the outset based 3 in great measure on sesthetic considerations. " The ugly, lamentable effects of the leasehold system upon domestic architecture, and the ugly and lamentable eftects of that architecture upon the tastes and the character of dwellers in ' brick-boxes ' — -that, rather than the fiscal and other S material injustices of the leasehold system, was what chiefly 22 arrested the attention of Rcvieiu writers on the question ' sixteen years ago. When, a dozen years later, the poli- ty ticians and publicists took the question up systematically, Q they soon discovered they were labouring upon a soil fully prepared." Foremost among the fortunate persons here referred to stood Mr. Henry Broadhurst, who was then member for Stoke, Mr. James Rowlands, who is now member for Finsbury, and Mr. Howard Evans, the author of " Our Old Nobility " and other useful works. These ^ three gentlemen some four years ago founded the Lease- ^ holds Enfranchisement Association, of which the first- ^ named is past-President, the second is Secretary, and the last is Honorary Secretary. The object of this Associa- ;s9is^"^r> 4 LEASEHOLD ENFRANCHISEMENT tion is, says Mr. Evans, " to obtain for urban leaseholders compulsory power of purchasing the fee simple on equitable terms ; or, to put the matter still more simply, to enable a man who holds the lease of a house to buy up the ground- rent." The Association seems to have thriven and grown rapidly. Before the end of the first year of its existence (1884) nearly forty members of Parliament had joined it, and more than a hundred thousand copies of publica- tions on the leasehold question had been distributed by its agency throughout London and the provinces. Nor was this enthusiasm destined soon to spend itself. At the Association's third annual meeting, which was attended by a crofter from Glendale and by a Queen's Counsel from Lincoln's Inn, the chairman " was much pleased to be able to say that the Association was gathering strength every day. The members had every reason to congratulate themselves on the increased amount of support that was now being given to the programme of the Association ; in fact, the public interest evinced in it was so great and so earnest that it would be very difficult for a Liberal candidate in an urban constituency where the leasehold system prevailed to abjure them or the work they were seeking to do. So far from that being the case, the tendency of such candi- dates was to make the objects of the Association more and more a main plank in their platform." And at this year's meeting the same chairman was able to announce, amid loud and prolonged applause, that " during the last year the Enfranchisement movement had received the support of the leaders of the Liberal party, and particularly of the leader of its leaders, Mr. Gladstone." So much for the progress of the movement hitherto throughout the constituencies. Within the House of Com- mons the zeal and activity of the chief supporters of Lease- hold Enfranchisement have been no less conspicuous, and date from a time when the Association itself had not PROS AND CONS. 5 come into existence. Every year since 1882 at least one Bill dealing with the matter has been brought in ; in one year two Bills were brought in, in another year three Bills. Most of these Bills — which have been altered greatly from year to year — have borne the name of Mr. Broadhurst, the first President of the Association, or of Mr. H. L. W. Lawson, the present President. Two of them, however, were of a less official stamp, and though both have long since been dropped, they possess some historical import- ance as having been introduced, one by a learned and gallant Conservative member, and the other by Lord Randolph Churchill. But Mr. Lawson's Leaseholders (Purchase of Fee Simple) Bill is the only one which is now before Parliament or with which we need concern ourselves at present. "The object of this Bill, "as we are told in a Memorandum prefixed to it, " is to carry out the recommendation of the Royal Commission on the Housing of the Working Classes in their Supplementary Report, viz. : — ' 'i'hat legislation favourable to the acquisition, on equitable terms, of the freehold interest on the part of the leaseholder would con- duce greatly to the improvement of the dwellings of the people of this country,' on the ground ' that the prevailing system of building-leases is conducive to bad building, to deterioration of property towards the close of the lease, and to a want of interest on the part of the occupier in the house he inhabits,' and that ' the system of building on leasehold land is a great cause of the many evils connected with over- crowding, unsanitary buildings, and excessive rents.' " Now before we proceed to examine in greater or less detail the various charges which these Commissioners brought against the building-lease system, it may be well to point out one remarkable circumstance in connection with their Supplementary Report. It has been shown more than once that this Report, from which I^rd Salisbury expressly 6 LEASEHOLD ENFRANCHLSEMEXT dissented and in which some of the most eminent members of the Commission — Sir Charles Dilke, Mr. Goschen, Lord Cross, and the then Bishop of Bedford — did not join, whether justified or not by the facts of the case, was certainly not justified by the evidence which had been given before the Commission. That evidence was no doubt directed to the evils caused by overcrowding, unsanitary buildings, and excessive rents. But from the beginning to the end of it no attempt was made to prove that the evils in question were attributable to one building system rather than another, and, as a matter of fact, some of the worst cases of overcrowding, etc., mentioned in the Commissioners' principal Report occurred on freehold land. It is obvious, therefore, that these obiter dicta of Cardinal Manning, Lord Carrington, and the rest, though worthy of all respect and consideration, do not form a very solid basis on which to found a drastic and far-reaching reform. That this was the general opinion among men of all parties seems indeed tolerably clear from the course which events subsequently took. Within a twelvemonth after the publi- cation of the Report of the Royal Commission, a debate arose in the House of Commons on an Irish Member's Bill for giving compensation for improvements to urban occu- piers, and Mr. Gladstone's Government thereupon consented to the appointment of a Select Committee of the House to inquire into " the terms of occupation and the compensation for improvements possessed by the occupiers of town houses and holdings in Great Britain and Ireland ; " and when the Committee were formall)- nominated a few weeks later, they were further directed to inquire into " the expediency of giving to leaseholders facilities for the purchase of the fee simple of their property." On the dissolution of Parliament in June 1886 the work of the Town Holdings Committee was brought to an abrupt end ; but the ten thousand questions and answers (relating principally to Ireland) to PROS AND CONS. 7 which they had devoted their fourteen sittings were reported in a Blue Book, and their recommendation that another Committee, with the same objects, should be ap- pointed in the approaching Parliament was adopted at the beginning of 1887. The new Committee, which took evidence on twenty-eight days from February to August, reported that evidence to the House in a second Blue Book ot over eight hundred pages, and similarly recommended that a Committee on the same subject should be appointed in the next Session of Parliament. In February of this year the Select Committee were accordingly re-appointed, and they took further evidence at thirty-one sittings. On the 31st of last July they reported this evidence in a third Blue Book, and, while desiring to take further evidence on another branch of their inquiry, they expressed a hope that it may not be necessary for them to call further witnesses as to the expediency of giving to leaseholders facilities for the purchase of the fee simple of their property, ^^'ith regard to Leasehold Enfranchisement, therefore, it would seem probable that we are now in possession of all the evidence on which the final Report of the Town Holdings Committee will be based, and we can at last decide how far the charges brought against the leasehold system by Mr. Broadhurst and his Association friends, and by Cardinal Manning and the nine other Royal Commissioners, have been substantiated by the opponents of that system or rebutted by its sup- porters. LEASEHOLD ENFRANCHISEMENT The first charge brought by the Royal Commissioners against " the prevailing system of building-leases " — by which we must understand the ordinary London lease of ninety-nine years or thereabouts — was that it led to bad building. This charge was repeated in general terms by several of the earlier witnesses called before the Town Holdings Committee. Mr. Charles Harrison, " the eminent London solicitor " (as his Association friends love to style him), said that his practical experience would certainly tend to confinn the Supplementary Report. Mr. Stockall, a Past Grand Master of the Manchester Unity of Oddfellows, said that in his opinion there was " a tendency " to build worse houses on leasehold than on freehold land. And Mr. Burr, of the Landed Estates Agency, Limited, said that a better class of house would be built on a freehold than on a ninety- nine years' term. On the othef hand there was an over- whelming mass of evidence to show that differences of tenure have little or nothing to do with the quality of build- ings. Thus — to confine ourselves to the testimony of dis interested or hostile witnesses — Mr. Yates, a builder who gave evidence against the leasehold system, said that he would make no difference at all in the class of building he put upon freehold and leasehold land ; one house would be a facsimile of the other. Mr. Brevitt, the town clerk of Wolverhampton, who gave evidence somewhat in favour of the freehold system, being asked whether the tenure of the land had much effect upon the character of the buildings on it, said, " We do not find it so in Wolverhampton." Mr. Clark, the secretary of the Leaseholds Enfranchisement Association in Devonport, asked by Mr. Rowlands what he thought was the effect of the leasehold system upon the classes of house, answered that he did not think there was PROS AND CONS. 9 much to choose between a freehold and a leasehold. Mr. Wallis, the Duke of Devonshire's Eastbourne agent, though he expressed a decided preference for freehold houses, said that " if a speculative builder can get hold of a piece of ground, and buy the fee out and out, and is allowed to run his course, he certainly will not put up anything better than he is obliged to ; " he will only satisfy the public require- ments, which are less stringent and effective than those of a lessor's surveyor would be. Mr. Josiah Thomas, city sur- veyor at Bristol, who gave evidence in support of the fee- farm system prevalent in that dirty and dilapidated city, said that, comparing the land let upon the ninety-nine years' system with land let upon the freehold perpetual ground-rent system, the character of the buildings, as re- garded their substantialness and otherwise, so far as his experience went, did not differ upon the two systems. Many other trustworthy witnesses gave evidence to the same effect. But though the question of freehold or leasehold tenure seems thus to be immaterial with regard to the original quality of a house, the Royal Commissioners may never- theless have been right in supposing that the leasehold system is conducive " to deterioration of property towards the close of the lease, and to a want of interest on the part of the occupier in the house he inhabits.'' How, then, does the evidence stand in respect of this second charge ? On the one hand Mr. Rhodes, of Beckenham, a member of the Leaseholds Enfranchisement Association, said, in reference to industrial property, that he would expect great advantages from the power of a lessee to enfranchise, because there would be the avoidance of the notorious " fag end of lease " proceedings. The evil, in his opinion, resided in the dual ownership, which must be a greater mischief at the end of a lease than during its currency. Mr. Harrison said the opinion he had formed was that the lO LEASEHOLD ENFRANCHISEMENT class of property built was worse on leasehold than on free- hold, notably from the fact of there being no fag end of leases or terms on freeholds as on leaseholds which allowed of property being rack-rented. He added that there are certain men who carry on a kind of business in purchasing fag ends of leases at a comparatively small price, and that these men could not live under a freehold system. And Mr. Benjamin Jones, the Honorary Secretary of the Parliamentary Committee of the Co-operative Union, said that he had seen some London houses and working- class dwellings at the fag end of leases, and that these were in his opinion wretched, it being nobody's interest to repair them if they could possibly help it, only so far as the ground landlord compelled them. On the other hand a number of witnesses gave evidence to the effect that the ground landlord had an unpleasant habit of compelling his lessees to repair. Thus, Mr. Cooper, a builder residing at Beckenham, complained somewhat bitterly of the dictation and interference by freeholders in the matter of repairs and in the enforcement of restrictive covenants. And Mr. Holmes, who came as a representative man from the Friendly Societies of London, while he alleged that a large number of lessees purposely neglected to keep their houses in repair, especially if they were men of no position, and that there were a number of people of no stability what- ever who purchased fag ends of leases for the purpose of making as much as they could out of them, at the same time expressed his conviction that, if it were possible for a lessee to buy the absolute fee simple of his house, it would save a lot of bother and interference on the part of the freeholder. And even where such interference has not been exercised and a house has consequently been suffered to fall into a state of disrepair, there would seem to be more hope for it on the leasehold than on the freehold system. Mr. Yates, whose evidence has already been referred to, PROS AND CONS. II said that in the case of worn-out property at the end of a lease the best thing the freeholder can possibly do is to pull it down or rebuild it, and that that was really about the history of a great deal of such property. According to Mr. Green, a working man employed at Woolwich Arsenal and an ardent advocate of Leasehold Enfranchisement, leases are usually forfeited three or four years before the end of them, and the ground landlord takes them over in whatever condition they may be in. Under the leasehold system, said Mr. Vigers, the surveyor to the Peabody Trus- tees, there is an end to dilapidations when the lease falls in ; the freeholder then comes into possession, and is able to deal with the property and get rid of those pest-places. Under the freehold system the dilapidations go on until the Board of Works, or some other local authority, steps in and clears the district at an enormous cost to the rate- payers. As to the rather vague charge which the Royal Com- missioners brought next — namely, that the system of building-leases is conducive to " a want of interest on the part of the occupier in the house he inhabits" — it is perhaps enough to say that the great bulk of occupiers are not and never will be lessees, but hold on weekly or monthly tenancies, and it makes no difference whatever to them whether the persons to whom they pay rent are freeholders or not. In the comparatively small class of occupying owners occupying leaseholders are, it is said, more numerous in proportion to the entire body of leaseholders than occupy- ing freeholders are in proportion to the entire body of free- holders. That thrifty working men feel at any rate no sort of abhorrence of leasehold houses and do not hesitate to invest their savings in them, is abundantly proved by the evidence of several well-informed witnesses. Thus, Mr. Stockall — who, though he will not pledge himself to the details of Mr. Lawson's Bill, is in favour of the principle of 12 LEASEHOLD ENFRANCHISEMENT Leasehold Enfranchisement — said that the leasehold system, in his opinion, rather stimulated the desire of the working classes to acquire their houses. What working men liked was seven or eight per cent, interest. Some years ago he himself belonged to a building society, and he was fortunate enough to draw a ballot and had ;^3oo lent him free of interest. With this money he purchased a small leasehold house. In ten years he paid the whole sum back, and he then sold the house for ;^ioo more than he had given for it. This, he said, could not possibly have happened if the house had been freehold. And though two or more Welsh witnesses bore testimony to the strong desire among the quarrymen to build their own houses, and said that building societies would, it was believed, charge a lower rate of interest for loans on freehold than on leasehold property, some exceedingly strong evidence to the contrary was given by Mr. Wintringham, of Great Grimsby, the solicitor and agent of Mr. Heneage. This gentleman, who declared him- self in favour of Leasehold Enfranchisement provided that the restrictive covenants could be maintained and fair terms were given to the freeholders, said that since i860 there have been built 989 houses on Mr. Heneage's estate. Of these about 350 are working men's houses with under jQ\2 a year rent. The leases are for ninety-nine years, and the ground-rent is twopence a square yard. The working men's houses have been built by companies formed of working men themselves, and now most of them occupy the houses them- selves. Out of the 989 houses, 223 are occupied by the actual lessees. In 1884 Mr. Heneage sent out a letter offering to enfranchise any part of his property on twenty- five years' purchase of the ground-rent ; but though the offer was considered a fair one, only thiny-two out of the holders of 989 leases applied. And yet, as Mr. Wintringham said, " when the building societies on Mr. Heneage's estate had cleared off their mortgages, they might have gone on a little PROS AND CONS. 13 bit longer contributing amongst themselves, and have bought the ground-rent and made the property freehold before they divided, but there is not one of them that has done that. They have kept it leasehold. We have on Mr. Heneage's estate perhaps a dozen of these societies, who have built their houses by contributions amongst themselves and borrowing. They have gone on contributing and then have paid off their mortgages, and have conveyed to each man his house, leasehold, whereas by remaining a few years longer they could have formed a fund and bought out the ground-rent and bought the freehold; but, as I say, they have none of them considered it worth while to do so." In Wolverhampton, on the other hand, where house pro- perty is held almost exclusively upon freehold tenure, there are from 1,500 to 2,000 property owners, and a year ago there were 16,607 houses ; so that, although the freehold system has always prevailed there, at least seven-eighths of the occupiers have abstained from purchasing their houses. Mr. Brevitt, who gave evidence on this point, thought indeed that where a working man is in a position to acquire property he would rather it was on freehold than on lease- hold tenure ; but he expressed a hope that he had not " con- veyed an impression to this effect upon the mind of the Committee, that the working men of Wolverhampton are anxious to become freeholders." And, apart from working men, there is ample and unquestionable evidence that lessees in general do not care to buy the freeholds subject to their leases. Mr. Edward Tewson, whose experience in this matter is perhaps unrivalled, said : " I have examined the books of my firm for the past ten years. I have taken out from those, because I do not think it is quite fair to intro- duce them in any inquiry like this, all the large ground-rents, those representing ^200, ^300, ^500, or p/J 1,000 a year, and I find that we have sold 182 ground-rents in the public market by auction ; of course, thrown open to everybody ; 14 LEASEHOLD ENFRANCHISEMENT the outside public and the lessee have all had notice of the sales, and I have found out of those 182 only 24 of the lessees have purchased their freehold properties." And not only do lessees seldom care to acquire " on equitable terms " the freehold interest in their holdings, but several instances were given to the Committee of a common desire among freeholders to become lessees. Mr. Vigers said he thought it an advantage to the trading classes to be able to get building-leases (which, by the way, Mr. Harrison " certainly would prohibit in future ") rather than to be forced to buy the freehold. " A man carrying on lousiness," said he, " in my experience, you never find very much overburdened with capital. He cannot afford to invest his money in his free- hold, and get only four or five per cent., when, if he brings his money into his business, he can make eight or ten per cent. ; and, practically, I can give examples of where men have been the freeholders of their land, built their trade establishments, and then sold the freehold ground-rent upon which it is built. I have two now for sale, where the man, being the freeholder of the land, spent very large sums of money in putting up his trade premises, and then he finds it better for him to get the money back into his business rather than to remain the freeholder. He sells the freehold right out, and then takes a lease for eighty years." And later on in his evidence Mr. Vigers referred to the case of the Holborn Viaduct, where " the people who put up the buildings bought the freehold, but since then they have all been transferred into leaseholds, and the Crown has bought up the ground-rents. Leases have been granted at fixed rents, and the Crown has bought those ground-rents ; so that every man who had the opportunity there, or the men who deal with the whole of that estate, had the opportunity of being freeholders, but it paid them better to sell their freeholds and turn them into leaseholds." Mr. Tewson said he had known numerous cases where owners of freehold PROS AND CONS. 1 5 land or trade premises had converted themselves into lessees for ninety-nine years, and he had known also, and had been concerned in, a great many cases in which an occupying free- holder had sold his property out and out, and had then become a lessee at a rack-rent, at a percentage upon the price realised. Mortgages, as he said, were liable to be called in, whereas the leases created could not be called in, and the lessee would not be required to pay the money back. And Mr. Garrard, the surveyor, said he had known many persons who wished to cover a site with a building come to him and say, " When I have put this building up, will you buy that ground-rent of me when it is secured ? "• — • thus making themselves leaseholders to enable them to build and to make a profit. Whatever, therefore, the Royal Com- missioners may have meant by ascribing to the system of building-leases " a want of interest on the part of the occu- pier in the house he inhabits," there can be no sort of doubt that occupiers who are able and willing to own their houses are not deterred from buying them because they are only leasehold, and that in many cases it pays such occupiers to remain leaseholders rather than to become freeholders, or even to become leaseholders rather than to remain free- holders. Let us now pass on to consider whether the Commissioners were right in their view that " the system of building on leasehold land is a great cause of the many evils connected with overcrowding, unsanitary buildings, and excessive rents." These evils were, of course, the very things which the Commissioners had been appointed to inquire into, and it will be remembered that at the time of their appointment a great and almost hysterical interest was taken in the subject by the general public and by many fashionable persons. With regard to overcrowding, however, little 1 6 LEASEHOLD ENFRANCHISEMENT evidence was given before the Town Holdings Committee, and such as was given does not help either side very much. The upshot of it seems to be that here again tenure makes hardly any difference. Mr. Howard Martin^ a London surveyor and land agent, said that some of the worst over- crowding is found in the freehold houses ; the sanitary authorities, not the ground landlords, are the proper people to prevent it. It would, in his opinion, be a most injurious interference with the liberty of the leaseholder that a ground landlord should have the power to dictate how many people should live in a house when it was built. Mr. Boodle, the solicitor and agent of the Duke of West- minster, Lord Northampton, and others, said that he thought there was more overcrowding in small freeholds than on large estates ; on small freehold estates there were more of the poorer classes living in single rooms than upon the estates of large owners. This evidence is perhaps a trifle vague. Yet on the whole Mr. Boodle was probably not far wrong when he said that " if a man hardens his heart, and treats his fellow-creatures like brute beasts, and crowds them in like pigs, this system of farming houses is the most remunerative thing possible. ... It is a thing that land- lords do their best to check ; but I think it would im- mensely increase under the facilities for acquiring separate freeholds." Unsanitary buildings are, of course, closely connected with overcrowding, and it would appear that the building- lease system has no more to do with the former than with the latter. Mr. Brevitt, who, as has already been men- tioned, rather advocates the freehold system, gave the Committee some interesting information respecting a " con- demned area " in Wolverhampton which some time ago was acquired by the Corporation under the Artizans Dwellings Acts. The whole, or practically the whole, of this area was held on ireehold tenure. " In that area there PROS AND CONS. 17 were 46 new houses. Medium and in good repair, 118; old and in good order, 78; old and dilapidated, 408. In ruins and condemned as unfit for human habitation, 54 ; and out of a total number of 704 houses in the area only 113 had ample area in accordance with the requirements of our local Act; houses with insufficient area, 591." "The sanitary defects," Mr. Brevitt added, " were such as to be irremediable except by some improvement scheme which would lead to the demolition of most of the houses with a view to a re-arrangement of dwellings and a reconstruction of streets within the area. Much of the property was totally unfit for human habitation, and so dilapidated as to become mere receptacles of offal and filth, giving rise to dangers of the most serious nature to the sanitary well- being of the borough." Mr. Martin said he thought that the existence of a landlord who would enforce the repairing covenants was a good thing for the occupiers. " If," he said, "the tenure makes any difi'erence at all, it makes a difference in that direction ; and in very many instances I found it had made that difference." And in the course of his evidence he referred to a large block of property between Catherine-street, Russell-street, and Drury-lane, east and west, and the Strand and Long-acre, north and south. The southern part of it lies off the Bedford estate, and a con- siderable part of it is freehold. "A very bad part of it,' said Mr. Martin, " is New Church-court. That is a place that was found to be in a most deplorable condition, so bad, in fact, that a large part of it has been shut up by the sani- tary authorities, so I am told. At any rate, the houses have been closed recently, since I first saw them. Of those houses most are freehold, some two or three are small lease- holds. Then there is Feathers-court, which is another court close by. Just north of these there are a great many courts — Duke's-court, Cross-court, Crown-court, Martlett's-court, and there are a great many other courts on the Bedford estate, B l8 LEASEHOLD ENFRANCHISEMENT and there is no apparent reason whatever why they should not be as bad as the courts I have just mentioned, except that they have been under the control of the ground land- lord's agents and surveyors. It is a particularly good case in point, because in Martlett's - court, curiously enough, there are four freeholds which happen to be in the middle of the leasehold houses, and any one walking down Martlett's- court could pick out those at once, because they are so much worse than the leaseholds adjoining." As an instance of well-managed tenement property Mr. Martin mentioned Albion-place, which is at the south-east corner of Clerken- well. This is leasehold property, with thirty years unex- pired, and stands, as he said, " in a particularly disad- vantageous position and surrounded by exceedingly bad property, and therefore situated in a district where it is difficult to get the best kind of tenants. Notwithstanding that, the whole of that Albion-place property is in a most excellent condition, and it is occupied by respectable tenants. The place itself, though a narrow one, is kept clean, and the houses are kept in good order. There is an instance of the superiority of the leasehold system." Mr. Martin said he did not know who the ground landlord of this property was : it was a small leasehold, not on one of the large estates. To his evidence, the importance and suggestiveness of which are manifest, may be added that of Mr. Forwood, the Secretary to the Admiralty, who said that so far as sound buildings and convenience for the public streets and sanitary and other purposes are concerned, the houses in Liverpool built upon leasehold land are, he thinks, better than those built upon freehold land. But though it seems hardly to have been argued before the Town Holdings Committee that the many evils con- nected with overcrowded and unsanitary buildings are due to the building-lease system, the theory that this system is responsible for " excessive rents " found favour with several PROS AND CONS. 19 of the witnesses. Mr. Rhodes, for example, said that the rents of industrial property must obviously be made higher by the fact that a sinking fund has to be provided in order to replace the lessee's capital. Mr. Cooper, the Beckenham builder, said that whereas he had to pay five per cent, for loans on leasehold land, he could borrow at four per cent, on freeholds ; and being asked who really paid the differ- ence between the four and the five per cent. — whether it was the builder, or the person to whom he let the house — he answered, " Of course I charge higher rent, because I have to pay more interest." And Mr. Yates, with reference to some property near London which he was developing on the freehold system, said that he could borrow capital on it at a lower rate of interest than on leasehold, and was able to let that property ten or twelve per cent, cheaper than he could have done if there had been two ownerships. He admitted, however, that if the property had been leasehold he could not have obtained ten per cent, more from the tenants, but would have been prevented from developing the land. Now it seems clear that, as Mr. Garrard said, the rent ultimately paid by the occupier is not directly affected by the question of tenure at all.. A working man, or any other man, will not pay a higher rent for a house because his landlord has to provide a sinking fund or has had to borrow on the house at five per cent. If Thomas Smith gets No. i for six shillings a week, then, sinking fund or no sinking fund, John Jones will not pay a penny more for No. 2. But, indeed, there is positive evidence that on the whole the leasehold system tends indirectly to make houses cheaper both for owners and for occupiers. Thus Mr. Spain, who manages three building estates for Lord and Lady Northbourne — the land on two of them being let on ninety-nine years' leases, and on the third being sold out and out to the builders — said that from his practical ac- (^uaintance with both systems he considered that the houses B 2 20 LEASEHOLD ENFRANCHISEMENT under the leasehold system were acquired at a cheaper rate than under the freehold, and that this might be accounted for by the fact that leasehold land was let at a ground-rent the capitalised value of which was low when compared with the price paid for the freehold. Mr. Simpson, a solicitor practising in Sheffield, who is " entirely in favour of the power being given to a lessee to enfranchise leaseholds," objects to the leasehold system mainly on the ground that it " encourages a larger amount of building " than the free- hold system, and therefore a town where the leasehold system prevails is more likely to be over-built than a town where the freehold system prevails. " Supposing," said Mr. Simpson, " in Sheffield land could only be obtained by persons acquiring the fee simple, I do not think there would be anything like the buildings in the town that there are now." The chaimian, Mr. Lewis Fr}-, thereupon asked him : " Do you think the towns, as a whole, and the popula- tion, would benefit by the change, or the reverse ? — The occupiers would benefit. " They would have to pay higher rents, would they not ? — They get houses at lower rents when there are many houses. " Under the leasehold system ? — Yes, no doubt. It is beneficial, I am sure, to the occupier, because there are more houses than tenants. " You mean the leasehold system in that way is bene- ficial to the occupiers ? — Yes, it is. " But I understand you to intimate that you think the character of the houses built is rather inferior? — Yes, I think the leasehold houses are rather inferior. " Freehold houses would cost more, and in that way the rent would have to be more, I suppose ? — Yes, it would have to be more ; there is no doubt about that." And Mr. William Mathews, of Birmingham, one of the PROS AND CONS. 21 best-known land agents and surveyors in the Midlands, after remarking that there were plenty of " jerry-builders " and " land jobbers " in that town, and that — though he does not think there is " the slightest difference in the quality of working men's houses built upon leasehold or freehold " — these builders and jobbers operated entirely upon leasehold land, went on to say that the leasehold system " encourages the building of a great number of small houses, and the fact of building a large number of small houses by increasing the supply has a tendency to decrease the rents." If builders of this description were excluded from the market, " the permanence of the houses might be improved," but " certainly rents would be raised by it. ... I think the poorer class of occupiers as a class are benefited by the most rapid production of the commodity which they require." III. We have now inquired one by one into the various charges which the Royal Commissioners brought against the pre- vailing system of building-leases, and have found that none of these charges has been proved, and that most if not all of them have been distinctly disproved, by the wit- nesses who gave evidence, on one side or the other, before the Town Holdings Committee. It remains for us to see how Mr. Lawson proposes to carry out the recommendation which the Royal Commissioners based on these unjust charges, how far his Bill itself is just, and who are likely to be benefited and who to be injured by this or any other scheme of Leasehold Enfranchisement. Now the recommendation of the Commissioners, it will be remembered, was " that legislation favourable to the 22 LEASEHOLD ENFRANCHISEMENT acquisition, on equitable terms, of the freehold interest on the part of the leaseholder would conduce greatly to the im- provement of the dwellings of the people of this country " ; and the Memorandum which is prefixed to the Bill, and which has been already referred to, states generally the method by which this end is to be attained. " The Bill," we are told, " affects all leases having a term of twenty years unexpired, as well as all leases for lives. Sub-leases are treated as leases for the purpose of enfranchisement. The initial process is, on the customary lines, to compel the lessor or lessors, by notice, to estimate the present value of their interests, and the lessee, wishing to enfranchise, to offer a counter-price, with a reference, if they cannot agree, to the county or other analogous court.* The capital sum or sums having been settled by agreement or by the court, power is given to those who were lessees, or their successors in title, to substitute a terminable or perpetual rent-charge for the capital payment, with the consent of the person or persons who had the reversionary interest. Covenants pro- viding for restraint on user can be enforced, either by the original lessor or by the local authority, which can also, under proper safeguards, release the property from certain kinds of covenants. Inquiry into title is regulated by sec- tion 2, Vendor and Purchaser Act, 1874, whilst the court has larger powers in cases of doubt or difficulty. Legal expenses are limited, and a scale of costs is provided." It may be worth while to add that the Bill applies only to demised buildings or land not exceeding three acres in ex- tent ; that a lessee is not to be entitled to exercise his right of enfranchisement in respect of part only of the premises demised by his lease, except where such part is the subject * Mr. Charles Harrison, whom the Daily News describes as "perhaps the first living authority on the subject " of London leases, in his e\adence before the Town Holdings Committee said that he did not think the county courts a fit and proper tribunal, PROS AND CONS. 23 of a separate tenancy ; that the purchase-money is to be " the sum which, in the opinion of the court, is the value of the present interests with the reversions in question ex- pectant upon the determination of the lease " ; and that " in taxing costs under this Act only one set of costs shall be allowed as payable by the lessee, except in cases where the court shall otherwise order." The first idea which must occur to everybody on reading and considering this Memorandum to the Bill or the Bill itself is that, rightly or wrongly, the scheme involves a gigantic and unparalleled interference with the principle of freedom of contract. The scope and extent of the measure are indeed almost incalculable. Mr. Mathews told the Committee that the value of the fee simple in possession of the property affected by the Bill is in Birmingham alone twenty-five millions of pounds. And Mr. Statter, a land agent and surveyor practising in Bury and Manchester, said that in twenty-six municipal boroughs in Lancashire the capital value of the property which would be subject to compulsory Leasehold Enfranchisement was a hundred and thirty-four millions. A precedent for such a statutory revo- lution in the relations of landlord and tenant has, it is true, been found to the satisfaction of some persons in the Acts relating to the enfranchisement of copyholds. Asked by Mr. Lawson whether he considered that the case of copy- holds and their enfranchisement was analogous to that of leaseholds, Mr. Harrison answered that he thought there was the strongest analogy between the two systems. " I regard," said he, " for all practical purposes, a term of years created by a lease, whether dependent upon life or for a fixed term, as identical, for the purposes of considering this Bill, with that of a copyhold tenant holding for lives." But, as was afterwards pointed out to him in the course of his examination, though compulsory enfranchisement of copy- holds applies where there is perpetuity, copyholds for lives 24 LEASEHOLD ENFRANCHISEMENT without a right of renewal — which are the only kind of copyholds really analogous to leaseholds — are expressly excepted from the Acts. It is obvious, moreover, that in the case of copyhold enfranchisement no violence is done to any contract ; for, as Mr. Elton said, " the contract is only imaginary, and is lost in the depths of time." In fact, all that copyhold enfranchisement did was to enable either lord or tenant to substitute a convenient for an inconvenient form of tenure, and there was no more interference with freedom of contract in that case than there was when tithes in coin were substituted for tithes in kind. But the precedent of copyhold enfranchisement was not the only string to Mr. Harrison's bow. Mr. Lawson put to him the following question : — " As you are aware, there has been a very great deal of vague talk, with reference to Leasehold Enfranchisement, about interference with contract. ... I dare say you can illustrate, as a lawyer, from your own very great practical knowledge, cases where the law does interfere with this sup- posed freedom of contract at the present time with regard to land ? " " Yes, certainly," said Mr. Harrison. " First of all, we may take the ordinary case, that of freeholder and tenant working copper furnace works ; they could not carry on their copper furnace works, however much they might like to do so, to the injury of their neighbours." This is truly a remarkable illustration, with which land- lord and tenant and freedom of contract have no more necessary connection than the Man in the Moon has. Nobody in the world would maintain that the police or the local authority or the High Court ought to be prevented from putting a stop to a public or private nuisance because it happened to be committed in pursuance of some con- tract. Mr. Harrison might as well have argued that it would be an interference with the freedom of contract if A were PROS AND CONS. 25 l^revcnted from killing B when C had promised to pay him a hundred pounds for the job. Several other illustra- tions — such as contracts by tenants to pay income-tax, a landlord agreeing to let a house at less than its rateable value, assessment not thereby reduced, &c. — were added by Mr. Harrison ; but as most of them are irrelevant, and none of them is quite to the point, it seems hardly worth while to discuss them. We may, perhaps, safely conclude that if Mr. Harrison has failed to find a precedent for Leasehold Enfranchisement, no precedent for it can be found. "x\h, but," say the Enfranchisers, " if it comes to talking about freedom of contract, where is the freedom of con- tract under the present leasehold system?" Indeed, Mr. Harrison went so far in this direction as to assert that in most parts of the metropolis freedom of contract is " quite a phrase ; " and as " a very strong instance " he mentioned the tyranny of Lord Craven's trustees, who insisted on the insertion of a clause in their building-agree- ments and leases to the effect that the lessees would " deliver up, for and during such time or times as the same may be required for that purpose, the whole or such part or parts of the premises hereby demised as is or are subject or liable to be taken for a pest-house, surgeon's house, burial- ground, or any or either of them, in the event of a plague happening during the term hereby granted." This " very strong instance " does not appear to constitute a particu- larly substantial sort of grievance. But, in truth, ample and incontrovertible evidence was given to show — what most people would naturally assume to be the case — that freedom of contract is not a mere phrase or anything like it ; that land in this country is not a monopoly ; that the competition between landowners is every bit as keen as it is betw^een builders ; and that even in London there is always plenty of freehold land to be bought by any one who is willing to pay the market price for it. Mr. Harrison 26 LEASEHOLD ENFRANCHISEMENT is able, no doubt, to point to many important towns in the North and the West of England where the system of building-leases is unknown or unpopular, and he says this circumstance shows that it is an artificial and unnatural system, which has been imposed on helpless Londoners by ecclesiastical and ducal monopolists. But surely such facts as that Sir John Ramsden found it expedient to obtain statutory powers enabling him to let his land at Huddersfield on long terms, or that the Corporation of Bristol, having tried in vain to let their Portishead estate on short terms, were obliged to get leave from the Treasury to grant it in fee, prove how difficult it is for any landowner to impose on the inhabitants of a place systems or tenures to which they are not accustomed. As Mr. Thomas, of Bristol, said, " In every town in England you find a different state of things exists. . . . It is possible to make a general law, but if there was any alteration in the law, whatever the alteration was, the people in some localities would have to be educated up to it." The reason why in London, Birmingham, and other large towns com- paratively short terms are prevalent is that the land there has, from an early date in the history of the development of those towns, commanded a very high price, and some system of hiring sites instead of buying them has become essential for the cheap production of houses. " In towns," said Mr. John Morley in the course of the debate which resulted in the appointment of the first Town Holdings Committee, " there are no limits fixed by nature. Houses are simply a matter of supply and demand." And that the London building system is not so unfair or confiscatory a thing as Mr. Harrison would have us believe is shown not only by the enormous fortunes which many of the chief London builders are known to have made, but also by the fact that shrewd men of business like Mr. Harrison him- self are in the habit of investing largely in leasehold houses. PROS AND CONS. 2^ IV. Assuming for the moment that some measure of Leasehold Enfranchisement is desirable in the interests of the pubhc, we may next proceed to inquire whether Mr. Lawson's Bill would do substantial justice as between lessors and lessees. In the first place, then, with regard to the length of term which should qualify a lessee for Enfranchisement, some of the strongest supporters of the principle of Leasehold Enfranchisement think twenty years an unduly short term. Mr. Simpson, indeed, would limit Enfranchisement to cases in which there were something like fifty or sixty years of the lease to run ; and Mr. Harrison said that, except in the case of a lease at a rack-rent or an improved ground-rent, he thought twenty years too short, because the reversion was then come within such a measurable and calculable distance of the end that it had ceased to be a matter of actuarial value. Against the opinions of these two lawyers, however, it is only fair to set the judg- ment of Mr. Parry, an estate agent and accountant at Bethesda, who said he would give yearly tenants the power to enfranchise, and even declared himself " in favour of compelling all landlords to sell their rights in all the cottages to everybody ; " and of Mr. Holmes, the Oddfellow and Forester, who maintained that every tenant and every occupier ought to have the right to acquire the freehold of the house he inhabited. But these extreme views must be regarded merely as pious opinions which have not yet been oflftcially sanctioned by the Enfranchisement Association. As to the provision for the costs of Enfranchisement — of which, as we have seen, only one set is to be allowed as payable by the lessee, except in cases where the court shall otherwise decide — Mr. Gregory, a solicitor of very great 28 LEASEHOLD ENFRANCHISEMENT experience and a member of Parliament for many years, showed in his evidence how unfairly such a provision would work. The chairman, Mr. Fry, having pointed out what the clause in question said on the subject, Mr. Gregory professed his inability to understand it. " Supposing," said he, " you have to deal with four parties, as I say, you have to deal with the owner of the reversion, you have to deal with the lessee for ninety-nine j'ears, you have to deal with the mortgagee of the owner, and you have to deal with the mortgagee of the lessee for ninety-nine years ; that is four different parties to deal wath. Are you only to pay one set of costs, to be divided amongst those four parties ? " " That is the inten- tion of the Bill," replied Mr. Lawson complacently ; " the Bill was drafted by Mr. Broadhurst, and that was Mr. Broadhurst's intention, I think." " I can hardly fancy the Legislature sanctioning that," said Mr. Gregory. " It does then come back exactly to what I say, that you are making parties pay for having their property taken away from them against their consent." And Mr. Josiah Thomas, who is by no means opposed to the general principle of Enfranchise- ment, in the evidence which he gave last April said he thought the costs should not be limited ; the man who put the machinery of the law in motion for the purpose of acquiring the fee should have to pay fair taxed costs. The absence of reciprocity is another point on which a good deal might be said. In the case of copyhold enfran- chisement, of course, either the lord or the tenant can compel the other to enfranchise ; but no similar provision is contemplated here. Mr. Harrison, indeed, said that he personally saw no objection to the insertion of a power enabling a landlord to buy up his tenant's interest com- pulsorily, though he would not give a landlord the right to compel his tenant to buy the reversion. And Mr. Parry said the same power that was given to the lessee he would also give to the landlord, and he would not object PROS AND CONS. 29 to being himself bought out by Lord Penrhyn upon a proper valuation of the property. But, as the chairman suggested, some little difficulty might arise if both parties wished to buy, and there can be no doubt that the rank and file of the Enfranchisers would be highly indignant at the insertion of any such mutual provision. What is sauce for the goose is not, in their opinion, sauce for the gander. * Another obvious objection to Mr. Lawson's Bill is that under it a landowner would get no compensation for com- pulsory sale nor for severance. On both these points the Bill differs from the Lands Clauses Act, although a rail- way company is never empowered to take land compul- sorily unless it has been proved that such taking will be for the benefit, not merely of the company itself, but of the public generally, and although the value of the remain- ing property of the landowner is often enormously en- hanced by the railway. Severance of a landowner's estate by carving out of it a number of detached freeholds could not under any circumstances enhance its value, and, as many of the witnesses before the Committee said, might greatly lessen its value. * Many of the Enfranchisers seem, indeed, to have httle sense of fair play or justice and no notion what a bargain means. Thus at one of the Association's annual meetings Mr. Broadhurst complained bitterly that although his house was then worth ten or twelve pounds less than it had been worth some years before, the ground-rent on it remained the same. " This," said he, " is a monstrous inequality, which ought to be reciified as soon as possible." And Mr. Hughes, of Holyhead, after telling the Committee that al a certain date many houses in the place had become vacant, was asked if the ground-rent had been rem tted in the case of those houses. " It did not,'" as Mr. Lawson put it, "make any difference to those landowners whether the town was developing steadily or whether there was a retrogres- sion. " It would be interesting to know whether, in the opinion of Messrs. Broadliurst and l^awson, the lessee of a considerable area which has lately reverted to Lord Cadogan and for which his lordship is said to have hitherto received an annual ground-rent of five pounds ought to have had his ground-rent increased from time to lime as the property rose in value. 30 LEASEHOLD ENFRANCHISEMENT Another and perhaps a still more vital and essential defect in Mr. Lawson's Bill, so far as fairness to the lessor is concerned, lies in the fact that the option of purchase which it proposes to confer upon lessees is to be unlimited in point of time. Mr. Cooper, of Beckenham, gave some remarkable evidence on this head. It appeared that he himself, as a builder, often gave his tenants a right to purchase their leases at any time during the first two or three years of their terms ; but if he were to give them a right to purchase during the whole of their fourteen or twenty-one years' leases, it would prevent him from selling the property to any one else. " I think," he said, " it would be detrimental " to have such a power on a tenant's part hanging over one's head throughout the lease. And being asked why he thought that such a right ought to be given to him as against his landlord, he answered frankly enough, " I admit I came here with selfish motives." Mr. Gregory put the point very plainly : " All the lessors that I have been concerned for, or that I have known, would decidedly have objected to a provision that enabled the other party to purchase at any time the property which was leased to him. You see what you are doing ; you are giving him the opportunity at any period for ninety-nine years " — seventy-nine rather — "that he chooses to select to buy out your freehold. It may be that money at one time is more favourable than it is at another, and that he can raise money at a cheaper rate ; he would take advantage of that ; buy at that time ; and then you must invest at a low rate of interest if you are to receive the money. Therefore it is clearly importing into the contract a condition, as I say, to the disadvantage of one party to the existing contract." Consequent upon this unlimited option to purchase, a general depreciation in ground-rents would inevitably ensue. "No one," said Mr. Mathews, " would buy ground-rents if he were subject to the possibility of their being taken from him, PROS AND CONS. 3 I and not only of their being taken from him, but of his having to go into court to discuss their value." And Mr. Martin said that a man would not be able readily to sell his ground-rent subject to the option. "People who buy ground-rents buy for permanent investment ; the process of buying costs something in the way of law, and they do not buy with the idea of having, perhaps, the next week to sell again." A lessee would thus be doubly favoured ; for the same measure which enabled him to force his landlord to sell would insure his being able to buy on exceptionally easy terms. There are several other points — some of them brought out in Mr. Mathews's evidence — on which the equity and justice of this Bill, as between lessee and reversioner, might without difficulty be impugned. But inasmuch as Colonel Hughes, the member for Woolwich, seems almost to have admitted that had his own abortive Enfranchisement Bill been quite fair it would have been quite unworkable, it is unnecessary and useless to discuss the subject further. V. Having thus seen that Mr. Lawson's Bill is not only grounded on unjust charges, but is in itself unjust, we must now go on to inquire whether it or some other measure of Leasehold Enfranchisement is not, after all, a necessity of the times. Eor of course things do occasionally come to such a pass that it is impossible to carry out some reform which is absolutely essential in the general interest without inflicting grievous hardship or injury on some particular class of people. And this may very well be the case with this question of enfranchising leaseholds, if the London 32 LEASEHOLD ENFRANCHISEMENT building-lease system is (as Mr. Lawson says it is) the real and true cause of much that disturbs and hampers trade and vitiates the life of the industrial classes of the metro- polis. What, then, would be the results of Leasehold En- franchisement, which the Royal Commissioners seemed to think might conduce greatly to the improvement of the dwellings of the people of this country ? Whom would it benefit, and whom would it injure ? Mr. Rhodes, who appears to have represented the Leaseholds Enfranchisement Association, Id the Committee that in advocating Leasehold Enfranchisement he really had in view the thousands of occupying leaseholders who exist throughout England. It can hardly, however, be pre- tended that any measure of this kind would primarily relieve or benefit occupiers. In a fashionable suburb like Becken ham, where Mr. Rhodes resides, the proportion of persons who might be affected by such a measure would of course be exceptionally large ; but it needs no expert evidence to prove — what, indeed, is the commonest of common know- ledge — that the vast majority of occupiers hold and will continue to hold on terms of less than twenty years. In fact, Mr. Rhodes himself stated that if any one thought the whole scheme of Leasehold Enfranchisement was to enable the tenant to become his own freeholder, nothing that the Association had put forward would warrant such an idea. And Mr. Johnson, the town clerk of Nottingham, an entirely disinterested witness, told the Committee that the tenants, the working men of Nottingham, were the last people there who could benefit by the Bill. That the working men themselves have begun to realise this is shown by many articles and letters which have been published from time to time in some of the more advanced Radical newspapers. Thus, a correspondent of the JVeekly Dispatch, who signed himself " A Workman," advocating a year ago the return to Parliament of men like a certain PROS AND CONS. 33 gentleman named R. Whitmore, wrote as follows : — " Here is a man who knows something of the condition of the work- ing classes and their needs. . . . He knows where 'the shoe pinches.' If the Liberals and Radicals who want our votes knew it as well, and acted accordingly, there would not be so much political apathy among the workmen of this metropolis. Leaseholds Enfranchisement has no charms for us." The Financial Reformer of last July expressed the opinion that " Leasehold Enfranchisement will not break the land monopoly. It may increase the number of landlords, but what is wanted is something that will break the power of landlordism." The Star, while admitting that " up to a point the Leasehold Enfranchisement agitation has been a very good thing," because " it has stirred the festering mud of the landlord and tenant system " and " has helped to awaken the capitalist middle-class man," says that there is not much more to be said for the movement and a good deal to be said against it. Justice, the organ of the Social Revolution, naturally regards the whole agitation as a mere fraud. "If Mr. Broadhurst," writes the editor, "ever imagined that his Bill would be of any service to the work- ing classes, the avidity with which large property owners seized and utilised the idea should have quickly undeceived him. As a matter of fact, the measure is entirely middle- class and reactionary. . . . Experience teaches us that the small property owner is the worst landlord, and the subletter the most harsh in exacting his rent. To compel freeholders to sell to leaseholders on the demand of the latter is to give encouragement to one of the most grinding classes in the community." On the other hand the St. Stephen's Revieiv, which is understood to be the mouthpiece of the Tory Democracy, says that " the Enfranchisement of Leases, with compulsory sale at Government valuations, is sure to become law. It is no party question ; but the Radicals intend to make it so. It is one of the planks of c 34 LEASEHOLD ENFRANCHISEMENT their platform. It ought to come from the Conservative side. Will not Lord Randolph Churchill adopt it, and de- vote his powerful advocacy to protecting the people against landlord rapacity ? . . . The accumulation of wealth beyond the wildest dreams cannot go on, and the Con- servative party should grapple with the question, and earn the undying gratitude of an oppressed people. This is no revolutionary proposal." Whether it was a revolutionary proposal or not, and whether the Sf. Stephen's Review was right or wrong in prophesying that Leasehold Enfranchisement will become law, there can be no doubt whatever that the people chiefly to be benefited by such a law would be not the occupiers, nor the rack-rented tradesmen whose " good-will " is said to be so often " confiscated " by their unscrupulous land- lords, but the much-abused lessees or middlemen. Even at W^oolwich, where the working men regularly employed at the Arsenal are said to hunger after freeholds, Colonel Hughes himself admitted that in respect of three-fourths of the houses working men would derive no advantage from his Bill. This, however, he said, was only what he in- tended. " The man who built the house, or who purchased the house, is the man I intend to get the benefit. He may be called ' builder,' or he may be called ' middleman,' but it is the man who puts his property upon another man's land that I want to be able to enfranchise." INIr. Josiah Thomas said that " the man who holds the rent, whom we call the rack-rent landlord, is the man who would enfran- chise." And Mr. Farrant, the Managing Director of the Artizans, Labourers, and General Dwellings Company, being asked who would benefit by Leasehold Enfranchise- ment, answered, " I think middlemen, who are largely interested in promoting to a considerable extent the move- ment for Leasehold Enfranchisement." And he added that the scheme had been promoted chiefly by these people PROS AND CONS. 35 for the benefit of themselves, and not for the benefit of the working classes, and that he knew a great many men who took a very active part in promoting Enfranchisement, and their favourite mode of investment was to get ground leases from large landlords, and improve the property and get very high rentals. He had heard some of them boast of getting ten and even twelve per cent. They were mem- bers, of the Leaseholds Enfranchisement Association. A smaller but more deserving class of persons likely to be benefited by Leasehold Enfranchisement was pointed out by Mr. Tewson, who said it would be an excellent thing for surveyors. " I believe that if you were to pass this Bill I should make a fortune, while I shall now go on slaving to the end of my days. I should want no other business if this Bill were carried." And Mr. Sargant, in his book on *' Ground- Rents and Building Leases," remarks that " the effect of the passing of any effective measure of Leasehold Enfranchisement would be to increase the mass of convey- ancing done by professional men. This increase would be most considerable during the first few years after the passing of any Act, but would, to a lesser extent, probably be per- manent, inasmuch as the length and difficulty of a freehold title are, as a rule, greater under the present law than those of a leasehold title." Beyond these three classes of persons — middlemen, surveyors, and conveyancers — and a sprinkling of occupying lessees. Leasehold Enfranchisement would apparently benefit nobody. C 2 36 LEASEHOLD ENFRANCHISEMENT VI. On the other hand, divers and numerous classes of persons can be named upon whom any scheme of Leasehold En- franchisement would inflict grievous and irreparable injury. That the great landowners in London and other large towns would be seriously prejudiced by such a measure goes of course without saying. Their estates would be taken from them bit by bit, they would receive inadequate compensa- tion for the bits taken, and only the deteriorating bits would be left on their hands. This arrangement will perhaps appear hardly fair to men who agree with Mr. Balfour that " even the rich are God's creatures and deserve the protection of the law." It must be admitted, however, that the average British elector cannot easily work himself or be worked by others up to a high pitch of enthusiasm in the cause of the very rich. Come what may, he is wont to argue, these millionaires will always have enough to live on. But even the average British elector might well fight shy of a movement which, as he must perceive plainly enough, could never be confined to an attack upon millionaires. For it is the greatest mistake in the world to imagine that this contest lies entirely or mainly between the great land- owners on the one side and the masses of the people on the other side. The masses of the people, as we have already seen, are not primarily or immediately interested in the issue ; and that Leasehold Enfranchisement would hit hard a large number of persons who are not and never will become great landowners is about as certain as anything can -be. Several of the witnesses called before the Town Holdings Committee gave evidence on this point. Mr. I\Lithews said he himself was a trustee for three children who had lost their parents. " The settled property in PROS AND CONS. 37 respect of which they are beneficiaries is a small building estate. It is let on twenty-five leases at ground-rents amounting in the aggregate to ^^154, or an average ot ;£^(i per lease. The shortest term has about forty years to run. Under a system of compulsory Enfranchisement the trustees might be obliged to appear before some tribunal in twenty-five inquiries, for the purpose of assessing the value of the ground-rent and reversion, and with no funds at their disposal to defend the interests of the beneficiaries. Then if they were bought out, and the cash paid, the trustees would have to pay the costs upon every re-investment of the purchase-money. There are a vast number of similar cases." And Mr. Statter said : "There is no class of security, in my opinion, that was by trustees and others so much sought after as well-secured grOund-rents ; " but he added that since this question has been agitated ground-rents in and around Manchester which used to realise twenty-five years' purchase without any difficulty are now selling for about twenty-two years' purchase. We all know, moreover, that in these days of low interest it is practically impossible for trustees to find any other four per cent, investment, so that the income of a trust fund which had been invested in freehold ground-rents would on Enfranchisement be considerably reduced. Charitable and other public trusts would, of course, suffer equally with private trusts, and the mischief in their case would be far more conspicuous and widespread. Mr. Bourne, the Duke of Bedford's London agent, re- ferred in his evidence to the case of the Harper Charity, which has its property in London but its well-known school at Bedford. This school, said Mr. Bourne, "has an average income of about ^^20,000 a year from London property, chiefly from ground-rents, or what we may call repairing rents. The whole scheme of education there is based upon that income. The scholarships are fixed upon it ; the masterships, and all the educational advantages, are 38 LEASEHOLD ENFRANCHISEMENT based upon having that income. Now what is the result ? I have no hesitation in saying that if this compulsory Leasehold Enfranchisement scheme ever became law; if ever such a catastrophe as that arrived, this would happen to the charity : that instead of having, first of all, their regular income of ;;^2o,ooo a year, it would begin to fluctuate from the very first year of the passing of the law, and gradually, and probably in the course of five or ten years, or whatever it might be, that income would drop down from ;^2o,ooo to ;^i 5,000. The whole of the charity would be disorganised ; the scholarships would disappear ; the masterships would have to be reduced ; the whole scheme of education that is carried on at that public school would have to be changed ; and simply for what ? Not for the benefit of the community; the community would be harmed by it ; but for the benefit of some two or three or four hundred lessees in London, who would put that additional ;;^5,ooo into their pockets, instead of its going into the pockets of the charity." And Mr. Mathews calculated that King Edward's School, Birmingham, with which he has been connected for twenty-five years, and which has a present rental of about ;^3o,ooo a year, would lose about ^^9,000 a year if Leasehold Enfranchisement were carried. " I believe," he said, " that the whole of the future educational culture of Birmingham depends upon the preservation of the real property of King Edward's School." Three other Birmingham charities — the Mason Science College, the Mason Orphanage, and Lench's Trust — would all, he said, be affected in a similar way, though not to so great an extent as the free school : so would several of the Oxford colleges and some of the London hospitals. The future usefulness of all these institutions would be very largely curtailed by Leasehold Enfranchise- ment. And, apart altogether from public or private trusts, a PROS AND CONS. 39 great many thrifty and provident but not particularly wealthy people have been accustomed to invest in well-secured ground-rents, and these persons would suffer at least as much as the Dukes from the proposed legislation. Speak- ing of the investors in ground-rents Mr. Gregory said : " They are people of all classes, and I may say generally that the investors in these ground-rents are a very meri- torious class. They forego large interest during the current lease. They invest in these ground-rents as provisions for their families. A gentleman came to me the other day, one of my old constituents, a tradesman of Brighton, who had a good deal of property. He had been a prudent man, and he said, I do not know what is to come to us ; I have been foregoing my income for the purpose of making pro- vision for my family, and I have done it by means of these ground-rents. I have looked to the reversion ; is that to be taken away from us ? He had been a very Liberal politician too." And Mr. Tewson mentioned a case of his own which had occurred seven or eight years before. " I bought freehold ground-rents of ;^36 a year for my own investment, for which I gave ;j^5,ooo. They had nearly thirty years to run, and I am satisfied for the thirty years to receive something less than three-quarters per cent, for my money, knowing that that property is coming into reversion and will benefit my family after me ; and that is the case with scores and hundreds of investors in like manner." Yet the Leasehold Enfranchisers, who would put a stop to this sort of thing, have the assurance to pretend that their scheme is designed to encourage thrift. Another class of people who would be injured and even ruined by Leasehold Enfranchisement are the small builders possessing little or no capital. These men, as Mr. Garrard said, " would be entirely swept out if they were obliged to buy the fee simple." If builders were prevented from taking the land on an annual payment, Mr. Josiah Thomas said, 40 LEASEHOLD ENFRANCHISEMENT " it would Stop the building altogether." Even Mr. Cooper admitted that it "would tend to stop the building business." And Mr. Edward St. Aubyn, Lord St. Levan's brother and agent, gave an excellent illustration of this tendency. Lord St. Levan, he said, has decided to sell the existing leases on his estate where the lessees will buy, and to offer the land on freehold tenure. A practical difficulty has arisen, how- ever, because the builders, as a rule, ask for and prefer to build on leasehold tenure. " I can give many examples," said Mr. St. Aubyn, " but one in particular occurs to me with regard to one of the principal builders. He recently offered to build six of the best class of villas, costing at least ;2^2,ooo each, but he told me that he would have nothing to do with the scheme if he had to purchase the freehold. He is now erecting the houses on terms which he has accepted for leasehold tenure." Nor would the small builders be the only people to come to grief. As everybody knows, When merchants break, o'erthrown Like nine-pins, they strike others down. And it is manifest that the ruin of these builders would mean the ruin of thousands of men whom they employ or who supply them with materials, and that the general public — especially the poorer classes — would suffer con- siderably from the increase in the rents which the decrease in the supply of houses would infallibly produce. This, moreover, is not the only or the most direct way in which Leasehold Enfranchisement would injure the working classes. Representatives of the three principal London Companies for supplying artizans' dwellings ex- pressed an unanimous opinion that on freehold land in the centre of London it is impossible to build working men's houses which will pay ; and Mr. Mathews said that " you cannot erect artizans' dwellings on any land which is worth more than is. a yard." But what cannot be done on a PROS AND CONS. 4 1 purely commercial basis, and what the poorer ratepayers naturally do not like to see done by means ot the rates, " the bloated ground landlords of London " have in many cases done at their own cost. For instance, Mr. Farrant said that his Company (the Artizans, Labourers, and General Dwellings Company) had taken from Lord Port- man, on lease for ninety years, about an acre of land at Lisson Grove, at a ground-rent of 2d. a superficial foot, the market value of the land for other purposes being about 6d. a foot. They proposed to spend about ;!^4o,ooo on the buildings, and to provide about 700 living rooms ; and they expected to be able to let the rooms at an average of 2s. 3d. a room. Such rents would be impossible if the market price were paid for the land, and if it belonged to a number of freeholders there would be no chance of getting the land for less than the market price. " There is no hope at all," said Mr. Farrant, "for building artizans' dwellings at popular prices except through the great landlords." Mr. Gatliff, the Secretary of the Metropolitan Association for Improving the Dwellings of the Industrious Classes, agreed that the thing cannot be done on strict commercial principles. Mr. Moore, the Secretary of the Improved Industrial Dwellings Company, said that in his opinion the effect of a system of Leasehold Enfranchisement on a Company hke his would be that they would be wholly unable to obtain sites for the erection of working-class dwellings ; for they would have to pay the small owners the full value of their interests, and that value would no doubt be prohibitive. With reference to nine blocks of dwellings which his Company were then erecting on the Duke of Westminster's land near Oxford Street, and which would accommodate about 2,000 people, Mr. Moore said that ii the Company had had to deal with a large number of separate owners it would have been utterly impossible to carry out any such scheme with- out statutory powers, and statutory powers would have c* 42 LEASEHOLD ENFRANCHISEMENT made it so expensive that they could not possibly have done it. And it must not be supposed that this active and self-sacrificing interest in the housing of the working classes is confined to the great landowners of London. Mr. Statter, the agent for Lord Derby's Bury estate, said that his lordship had lor many years refused to allow an artizan's house to be built on less than about 125 square yards of land, and that this regulation had been subsequently adopted by the authorities of the town, their by-laws being drawn on the principle that a given quantity of land should be devoted to each house. And Mr. St. Aubyn mentioned a case at Devonport in which Lord St. Levan, with the help of the compulsory powers possessed by the Corpora- tion of the town, had carried out a scheme for the erection of artizans' dwellings at a cost to himself 01 ;;^8,ooo and a saving to the ratepayers of ;^20,ooo. The site, which he had let at exceptionally low ground-rents, was a large area of four or five acres, and the houses accommodated over 1,000 people. That ratepayers in general must be injured by any measure which would prevent the execution of public improve- ments, or would throw the cost of them upon the rates, little evidence is required to prove. Yet there can be no doubt that improvement schemes, which cost the ratepayers such enormous sums when they are carried out by public bodies armed with compulsory powers, are frequently carried out by individual or corporate landowners at their own expense. "When a ninety-nine years' lease falls in," said Mr. Gar- rard, "there is a great advantage to all concerned in carrying out improvements by re-arranging the streets and rebuilding houses that are, at the present moment, unsuited to the district." And he mentioned an instance which had occurred within his own experience in the neighbourhood of the PROS AND CONS. 43 City-road. The property in question comprised about 750 cottages, many private houses, and some business premises. "The greater number of the cottages were worn out and un- healthy, upwards of 600 were removed, the streets widened and improved, and healthy dwellings erected to accom- modate as many persons as were residing on the property before their removal." And Mr. Statter said that if a measure for compulsory Leasehold Enfranchisement were passed, " legislation must necessarily take place to enable the authorities of the various towns to possess themselves of such properties as would be requisite for the improvement of the towns. They are not called upon to pay for this as far as Bury is concerned, because we " — Lord Derby's re- presentatives — " attempt to promote the interests of the town of Bury by sacrificing these properties instead of calling upon the ratepayers to pay for them." Of course, as he explained subsequently, " the more the town of Bury or any other town improves, the better it is for the owners of property. What I meant to say was this : that instead of compelling the tow-n to spend their money and the money of the ratepayers in doing these things, he throws down the property himselt, opens the new streets and roads and arterial communications, instead of compelling the authori- ties of the place to buy it at the expense 01 the ratepayers." The real force of the argument lies in this very fact that we have not to appeal merely to the generosity or public spirit of the great landowners, but that, as the late Mr. Edward Bailey, one of the trustees of the Portland Maryle- bone estate, put it, in such matters " a liberal policy in the long run is a wise policy." " It was a considerable benefit to the town, and a benefit 01 course to the property," said Mr. Mathews of an improvement which he effected a few years ago on some land belonging to King Edward's School, Birmingham. This land was three or four acres in extent, and he had " cleared the entire site, cut a new street across 44 LEASEHOLD ENFRANCHISEMENT it, and widened and improved the existing one." This im- provement could not possibly have been carried out had several of the houses been enfranchised, and it certainly would not have been carried out by the Town Council. A similar improvement on the London Estate of Rugby School, in " a very insanitary slum known as Little Ormond-yard," was mentioned by Mr. Martin in his evidence. Not only individual or corporate landowners acting pri- marily in their own interests, but municipal Corporations acting solely for the benefit of the inhabitants of their several towns, would be seriously hampered and prejudiced by any measure of Leasehold Enfranchisement. Mr. Johnson said that at Nottingham the system of ninety- nine years' leases oftentimes enabled the Corporation to carry out public improvements when the leases fell in. " I have an instance before me now," he said, " where leases fell in. We prescribed a new building line, and compelled a certain class of property to be erected there, and so improved the street. We have done it in several instances." "We are waiting now," he added, "for a lease to fall in in about seven years of two very long streets — Canal-street and another street — and then we shall make a very large town improvement as soon as those leases fall in. That town improvement would have had to be carried out under a Provisional Order, the land taken com- pulsorily under the Lands Clauses Consolidation Acts, and would have cost us such a sum oi money that we should not have presumed to touch it." And he said that the feeling in the Corporation was quite against Parliament en- franchising corporate property, " especially in view of the fact that we should hand down greatly reduced rentals to our successors. If over twenty-five years ago, for instance, our estate had been sold and turned into Consols, we should have a less income from our estate. Instead of that we have three times the income we then had from it, because PROS AND CONS. 45 we are gaining for the good of the community all the in- creased value of the estate." Leasehold Enfranchisement, he maintained, " would be a very grave injustice to us as a corporation. We should be burdened with the Freeman's Estate, for instance, to the amount of twopence or three- pence in the ^ in the rates, instead of receiving ;^4o,ooo or ;^5o,ooo from it ; instead of receiving that sum, it would be gone." Mr. Mathews said that the Town Council of Birmingham had expended a million and a half in purchasing a freehold site in the centre of the town, and had made a very important street through it. A large portion of the site they had let upon leases for seventy-five years. If the Town Council were to be compelled to sell it all to different lessees, " of course it would entirely destroy the future financial success of the scheme, the properties being acquired for the purpose of rendering the Town Council landowners (at least, that is one of the effects of the proceeding), and of getting the advantage of the ulti- mate increment of value." And Mr. Forwood, who has propounded a scheme whereby the Corporation of Liver- pool would fifty-three years hence come into a property worth twelve millions and a half and all the rates of the city would thereupon cease, said that if a Leasehold En- franchisement Act were passed their property would prac- tically "disappear and fritter away." "I am," he said, " strongly an advocate of the Corporation owning property. I see advantages from it in the past and would like to con- tinue it. . . . The Enfranchisement of leaseholds is for the benefit of the leaseholders who are there, and to the detri- ment of thousands of the poorer ratepayers, to whom the rates are of very serious consequence." 46 LEASEHOLD ENFRANCHISEMENT VII. It would be easy to enumerate several other classes of people whom this or any scheme of Leasehold Enfranchise- ment must necessarily injure, but perhaps enough has already been said to show that the inevitable evils which would result from such a measure are infinitely greater than any advantages which could possibly be claimed for it. Let it not be supposed, however, that the Enfranchisers have little or nothing to say for themselves. On the contrary, they have a wonderful collection of arguments and assertions adapted for use on every emergency and calcu- lated to conciliate every kind of audience. Readers of Pope's letters will remember one of them in which he said that everybody valued him, but everybody for a different reason : one for his adherence to the Catholic faith, another for his neglect of Popish superstition ; one for his good behaviour, another for his whimsicalities ; Mr. Titcomb for his pretty atheistical jests, Mr. Car}'ll for his moral and Christian sentences ; Mrs. Teresa for his reflections on Mrs. Patty, Mrs. Patty for his reflections on Mrs. Teresa. In much the same way the cause of Leasehold Enfranchisement is made to appeal to all sorts and conditions of men for all sorts of inconsistent reasons. Addressing a Tory Democratic audience, Messrs. Broadhurst and Reid can expose the iniquities of house farmers and lament " the want of control by landowners who have granted long leases ; " or, passing on to an assemblage of Radical working men, they can denounce a system which " confers upon landlords a degree of authority and a right of interference in regard to the homes of the people which is unendurable in a free country." Mr. James Piatt, who has written treatises on most subjects and has made a great number of reckless state- PROS AND CONS. 47 ments on the subject of landlords and tenants, can summon the reformer to do battle with " this unjust system, the relic of a defunct feudalism, when men were serfs " ; the Daily News can with equal ease arouse our indignation at a mushroom growth of which the first living authority on the subject cannot find a single instance earlier than the year 1783. The travelled cosmopolitan is reminded that, though building-leases are well known in Paris, they have no existence in Spain or Servia, in Roumania or in Russia ; while the insular, old-fashioned Briton is urged to shake oft" the trammels of a system which, as an American gentleman said at the recent meeting of the British Association, is developing insidiously in the United States, and which, we suppose, is for that very reason unfit for the loyal subjects of Queen Victoria. Moreover, if consistent arguments and definite facts fail them, the Enfranchisers always have prejudice and senti- ment to fall back upon ; and sentiment and prejudice will carry people a tolerably long distance nowadays. The philanthropists and the middlemen — the persons who sign Supplementary Reports and the persons who, as Mr. Tewson says, " are running about now hoping that they may be enabled to make fortunes if this Bill passes " — are wont to point to the poverty, the squalor, the vice, and the crime which abound in every great city, and, with conscious or unconscious ingenuity, to connect them with the practice of building houses on the leasehold system. Occupying lessees are, of course, only too glad to hear that the salvation of the country depends on the passing of a Bill which will in all probability take money out of other people's pockets and put it into theirs. Amiable enthusiasts, who have never learned or have forgotten How small, of all that human hearts endure, That part which laws or kings can cause or cure, 48 LEASEHOLD ENFRANCHISEMENT and who are inclined to regard the State and the statute- book as the universal remedy for the ills of life, naturally join in an agitation which promises to confer innumerable benefits on mankind. If ever it occurs to any one of them to question the justice or the expediency of so violent and wholesale an upsetting of contracts as Leasehold Enfran- chisement would involve, his doubts are at once removed by some vague but well-sounding cant about " public policy." " We base our demand," says Mr. Howard Evans, " upon the simple proposition that the terminable leasehold system is contrary to public policy. Everything turns upon that. If we cannot prove it, we have no case ; if we do prove it, our case is impregnable." Be it so. The believers in laisser-faire will be quite content to meet Mr. Evans on that ground. Only let him bear in mind that, as Sir George Jessel said in one of his remarkable judgments, "if there is one thing more than another which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting. . . . You have this paramount public policy to consider — that you are not lightly to interfere with this freedom of contract." Much of the strength of the Enfranchisement agitation springs, no doubt, from sentimental ideas associated with freeholds and freeholders. In our day, as in the Psalmist's, imaginative people like to think that their houses shall con- tinue for ever and that their dwelling-places shall endure from one generation to another. Mr. Evans says " there is something sacred in a house which is the permanent memorial of the father's or grandfather's thought and self- denial." " To sell the old home, which the son or grandson saw the old man buying shilling by shilling, would be almost an act of fihal impiety." If this be so, filial impiety must be terribly on the increase at the present time. It has been deliberately encouraged by the Legislature, and in truth it often seems difficult to avoid it — particularly in cases where PROS AND CONS. 49 the son or grandson has to share the old man's savings with a number of inconvenient brothers and sisters. Perhaps, however, Mr. Evans is imbued with the ancient freehold notions respecting the rights of primogeniture. Be that as it may, most of this tall talk about the family house which descends from father to son through countless generations has an uncommonly hollow ring about it at this time of day. Look at the freehold cities and towns of England. What percentage of houses there remain in the same families for ninety-nine years ? What percentage of families remain in the same place during that period ? One great difficulty in dealing with these Enfranchisers is that you never know how far they really think and mean what they say. " My dear friend," said Johnson to Boswell, " clear your mind of cant. You may talk as other people do. But don't think foolishly." Mr. Lawson, indeed, must certainly have had his tongue in his cheek when he suggested that the leasehold system was responsible for the depression of trade and for the lives of the industrial classes being vitiated. But Mr. Evans seems to be as serious and as solemn as a judge when he quotes Isaiah and declares in effect that he looks forward to the time when every English- man shall be his own jerry-builder and his own Gilbey. No arguments, no facts, no evidence will influence men who have arrived at this stage of fanaticism. What Mr. Evans says of the estate lawyers we must be content to say of him and his friends — " We never hoped that these gentlemen would be on our side." But, as Mr. Morley told the House of Commons, though political economy may be in exile, common sense still survives among the bulk of the people of this country. And the more regard they have for common sense, the less attention will they pay to the advocates of Leasehold Enfranchisement. London : Printed by Cassell & Company, Limited, La Belle Sauvage, E.C. UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. MOV»- 1958 RECEIVED OCT 14 1958 Malr. toon D«»>' 1 6 1959 ID m ^^^ h^^^^ REnPW^^^^Gl v<:A ^ OlSCHAR JAN Form L9-2oM-9,'47(A5618)444 UN1VEK81TY OF CALIFORNU AT LOS ANGELES r T»r> A DV 5699 AA 000 959 968 9