Chapter 21

The leaders of the Conservative Party, when confronted with this situation, determined that their duty, in accordance with the spirit of the Act of Union, demanded some use of the resources of a joint exchequer for ministration to the peculiar needs of Ireland. They decided that the credit of the State should be employed to effect the abolition of dual-ownership by converting the occupiers of Irish farms into owners of the soil. Let it be granted that this policy had been advocated by John Bright and enshrined in the Land Law Acts of 1870 and 1881. It must be added that these pious intentions remained a "dead letter" until adequate machinery for giving them effect was provided by the Land Purchase Acts, commonly called the Ashbourne Acts, of 1885 and 1889. The method pursued was as follows. Any individual landlord could agree with any individual tenant on the price which he would accept for the extinction of his interest in that tenant's holding. The State facilitated the transaction by advancing that amount to the landlord in _cash_ whenever the holding offered sufficient security, and accepting from the tenant an undertaking to pay an instalment of £4 a year for every £100 advanced over a period of forty-nine years. The instalment comprised £3 for interest, 2_s._ 6_d._ for expenses, and 17_s._ 6_d._ for sinking fund. The loan from the exchequer was secured against individual failures to pay by the realisable value of the holdings.

The salient features in this procedure were that the landlord received cash and that the tenant paid interest at the then existing rate on Consols, viz. 3 per cent. Both these features are important. A payment in cash, or its equivalent, is preferable for such transactions to a payment in stock, with a fluctuating value, because, if the stock appreciates the landlord gets more than he bargained for, and this, by arousing the suspicions of other would-be tenant-purchasers, produces a disinclination on their part to buy. Again, if the stock depreciates, the landlord cannot carry out contemplated redemptions of mortgages on his property, and this produces a disinclination on the part of other landlords to sell. In the second place it is difficult to persuade Irish tenants that the State is assisting them if they, the poor, are asked to pay higher interest for the State's credit than the State pays for the credit of the rich. The chief defect in this procedure lay in its restriction to separate bargains in respect of single holdings. It made a patchwork, whereas the untoward results of the historic and economic causes on which I have touched demanded the wholesale treatment of convenient areas.

Under these Acts, in the course of six years, more than 27,000 tenants became owners by virtue of advances which amounted to over £10,000,000. The largest number of applications for purchase in any one year was 6,195 for £2,271,569 in 1887, and the average price for all the holdings bought under these Acts was £396.

When the sums provided by the Ashbourne Acts were exhausted, Mr. Arthur Balfour carried the Act of 1891, subsequently amended by the Act of 1896. Under these Acts the landlord was paid in stock instead of cash. The tenant still paid an instalment of £4, which was, ultimately, divided into £1 5_s._ for sinking fund and £2 15_s._ for interest. This large sinking fund, £1 5_s._ instead of 17_s._ 6_d._, was retained after interest had been reduced to the rate on Consols, 2-3/4 per cent., chiefly to avoid a discrepancy in the total of annual instalments as between purchasers under the Act of 1891 and purchasers under the Ashbourne Acts. Difficulties were feared if the earlier purchasers were to pay £4 and the later purchasers only £3 15_s._ for each £100 advanced, so the spare five shillings was put in the sinking fund. This speculative difficulty was afterwards discounted in order to deal with one of a more practical character. Under Mr. Gladstone's Land Law Act of 1881, which dealt with rent-fixing, statutory rents were revised every fifteen years, and the second term rents, beginning in 1896, seemed certain to reveal considerable reductions on the rents payable during the first period. It was felt that the security for the earlier advances would be endangered if rents throughout Ireland fell below the level of the purchase-instalments, and that purchase would be retarded if the purchaser did not obtain immediate relief by agreeing to buy. To meet this practical difficulty Mr. Gerald Balfour, in 1896, permitted the purchaser to write off the amount repaid by sinking fund during the first and two successive periods of ten years. These "decadal reductions" were optional. If the purchaser forewent them he paid £4 per £100, and extinguished his debt in 42-1/2 years. If he availed himself of them he paid £3 8_s. 7d._ per £100 after the first ten years, and continued to pay, with two further reductions in prospect, till the debt was extinguished in a period undefined, but estimated at about 72-1/2 years. But this privilege was made retrospective, so that purchasers under the Ashbourne Acts could also reduce their instalments of £4 to £3 11_s. 10d._

The salient features in the procedure of the Acts of 1891 and 1896 were that, (1) the landlord was paid in stock instead of cash. But owing to the rise in the value of gilt-edged securities, Irish Land Stock, with a face value of £100, became at one moment worth as much as £114; (2) the purchaser's interest was at 2-3/4 per cent. _i.e._ the existing rate on Consols; but (3) his instalment, prospectively fined down by decadal reductions, enabled him to offer an acceptable price and yet pay far less to the State, by way of instalment, after purchase than was due to his landlord, by way of rent, before purchase. The operation of purchase was still confined, almost wholly, to single bargains. But in Mr. Arthur Balfour's Act of 1891 a new departure was authorised which, after development in Mr. Gerald Balfour's Act of 1896, has led to important and far-reaching consequences. The Congested Districts Board was established to deal with scheduled areas in the West of Ireland that comprised a large number of holdings at once too limited in area, and too poor in soil, for any one of them to support a family by farming or to afford security to the State, under existing facilities for purchase, in the event of the occupier wishing to become the owner. A select committee of the House of Commons, so long ago as in 1878 (No. 249, pp. 4 and 5), when Disraeli was Prime Minister, had recommended that a properly constituted body should be empowered to purchase, not single farms, but whole estates, and to re-sell them after amalgamating, enlarging, and re-distributing what are now called "uneconomic" holdings. Provisions to this end had been inserted in earlier Acts, but, in the absence of administrative machinery and financial resources, they remained abortive. It had for long been evident that the small, impoverished holdings, which had supported a dense population before the famine, stood in need of fundamental remodelling if they were to support even a largely reduced population. The efforts made by wealthy Irish landlords in this direction were arrested by the Land Law Act of 1870 and rendered impossible by the Land Law Act of 1881. With the Purchase Acts of 1891 and 1896 a beginning was made.

Another feature must be noted. In addition to the value of any one holding, as a security against individual failure, a further security was provided against the risk of a combined refusal to repay. The Exchequer was empowered to retain grants due for various purposes in Ireland and to recoup itself in proportion to the defalcation in any county. It should be added that individual failures have been rare to the point of insignificance, and that no combined refusal has been attempted, or advocated, even during periods of agricultural unrest.

Under the Acts of 1891 and 1896 in the course of just over twelve years more than 44,000 tenants became owners by virtue of advances which amounted to over £13,000,000. Here we must note that the success of these Acts coincided with, and depended on, a rise in the price of gilt-edged securities. The number of applications rose from 1503 in the year ending March 31, 1896, to 6911 in the year ending March 31, 1900. But, with the fall in the price of stock, land purchase showed signs of coming to a standstill. By 1902 it was evident that new legislation was needed, and in the next year the Irish Land Act of 1903 was carried.

The Irish Land Act of 1903 was not, as some suggest, a short cut to the millennium, evolved on the spur of the moment, and translated into fantastic finance. It had two bases, the one practical, the other moral. In the first place, it was founded on the ripe experience garnered during eighteen years from the operation of preceding purchase Acts. In the second place, it was founded on the historic agreement spontaneously arrived at in 1902 by accredited representatives of Irish landlords and tenants. They resolved that dual ownership ought to be abolished throughout Ireland, and that this primary policy should be accompanied by effective remedies for the uneconomic conditions prevalent in the West, but existing elsewhere, though sporadically, to a limited extent. This agreement, in itself unprecedented, was rendered the more remarkable by the fact that the signatories assumed the responsibility of telling the Government how the first object could be achieved. They advised that landlords could not be expected to sell, as a class, unless the price paid to them in cash would yield from sound securities 90 per cent. of their income in terms of a rent that had been twice revised under the Land Law Act of 1881; and that tenants could not be expected to buy, as a class, unless their instalments due to the Treasury after purchase were from 15 per cent. to 25 per cent. less than such rents so revised. They invited the Government to give effect to that agreement. The Government accepted and, in the Act of 1903, tendered the costly but, under the circumstances, not extravagant _imprimatur_ of the Treasury on a political treaty thenceforward to be binding on all three contracting parties: landlords, tenants, and the State. The Nationalist members, as spokesmen for the tenants, and the representatives of the landlords, subscribed to the provisions offered, and the reports of the Estates Commissioners prove that these have been fulfilled so exactly that, in the case of second term rents, landlords and tenants have obtained average incomes and reductions that differ only by a decimal from the mean advocated at the Conference.

The objects of the Irish Land Act were, in conformity with the conclusions of the Conference, to abolish dual ownership rapidly and, at the same time, to deal systematically with "agricultural slums." Its salient features fall under four heads.

A. _State assistance to voluntary bargaining._ For this purpose it was provided that (1) cash payments should be resumed to the landlords; (2) that the tenants' instalments should be £3 5_s._ for each £100 advanced, divided into £2 15_s._ (2-3/4 per cent.) for interest and 10_s._ for sinking fund. This was not, as the able and well-informed special correspondent of the _Times_ suggests (February 9, 1912) a sudden departure from an instalment of £4. "Decadal reductions" under the Act of 1896 had, as I have said, diminished the instalments of purchasers under the Act of 1891 to £3 8_s. 7d._ after ten years with further prospective diminutions, and subjected the instalments of purchasers under earlier Acts to a similar process. A wholesale expansion of purchase was impossible unless would-be purchasers were offered terms comparable to those accorded to their predecessors. For this reason the tenantry of Ireland were offered repayment at £3 5_s._ per £100 for a period of about 62 years, in lieu, under the Act of 1896, of repayment at £3 8_s. 9d._, with further reductions, for about 72-1/2 years, and their representatives accepted the offer. They would certainly have refused, and rightly, the offer substituted by Mr. Birrell in the Act of 1909, viz. an instalment of £3 10_s._ with the same sinking fund--10_s._--and interest increased to £3. The third feature to be noted under this head is, that the terms agreed to by representatives of landlords and tenants at the conference could not be ratified unless the State added some help by way of cash to the assistance of its credit. It was agreed by all parties that £12,000,000 should be available to bridge the gap, at the rate of 12 per cent. on the amount advanced, with the right to revise that rate after five years, but _only for the purpose of extending the bonus_--as it was called--_to all future transactions_. It was an integral part of a solemn covenant that the bonus should not be diverted to any object other than the abolition of dual ownership and the remedy of "congestion."

B. _The substitution of speedy purchase for dilatory litigation._ To all members of the Conference of 1902 and of the House of Commons in 1903, with, I believe, the exception of Mr. Dillon, who was away in America while the Conference sat, it was evident that, if dual ownership was to be abolished, our choice was confined to two courses. We could, on the one hand, pursue, under the guise of purchase, the metaphysical and costly distinctions between landlord-right and tenant-right, which Mr. Gladstone had established under the guise of rent-fixing; or else, as the only alternative, we had "to cut the cackle" and get to business. Under this head the House of Commons--Mr. Dillon ingeminating dissent--decided in so far as landlords and tenants were concerned, two things: (1) It was agreed that where the tenant-purchaser's instalment, after purchase, was substantially less than his statutory rent revised at great cost--£140,000 a year for Land Courts--then, in those cases the State needed not to inquire at further cost and delay into either its own security in the holding, or the metaphysical distinction between value due to the landlord's ownership of the soil and value due to the tenant's improvement of the soil. This close approximation to unanimity will not surprise those who grasp that every landlord and tenant was to make a voluntary bargain on precisely those terms which the representatives of their classes had combined to obtain from the State. The alternative method of delay and litigation had been further discounted, for everybody except Mr. Dillon, by the fact that in the classic case--_Adams_ v. _Dunseath_--tried out in accordance with Mr. Gladstone's panacea, Adams, after repeated lawsuits, improved his financial position by an infinitesimal sum per annum without becoming an owner of his farm. It was also agreed that the Estates Commissioners appointed to administer the Act, should be administrative officials under the Government, and not amateur judges. This was essential, not only to substitute cheap speed for costly delay, but also to ensure that the benefits offered by the State should not be absorbed, say, in the rich province of Leinster to the detriment of the poorer province of Connaught, or--for who knows what may happen in Ireland?--absorbed in the Home Rule province of Connaught to the detriment of the Unionist province of Ulster.

C. _Dealing with Estates as a whole instead of with single holdings._ This process, till then applied tentatively in the congested districts of the West, became the general method throughout Ireland, and was assisted by the provision of working capital for carrying out necessary amalgamations and improvements before resale.

D. _Increase in the 'borrowing power and funds of the Congested Districts Board,_ for the purpose of dealing systematically with "agricultural slums."

The features of the Irish Land Act (1903), founded, as they were, on experience and the consent of all parties concerned, became widely popular in Ireland. But, by Mr. Birrell's Act of 1909, they were all distorted or destroyed. A solemn treaty, framed in the interest of Ireland, was torn up to deck with its tatters the triumph of Mr. Dillon's unholy alliance with the British Treasury. The effect of this betrayal on the prospects of Irish agriculture will appear from a recital of the changes made by Mr. Birrell's Act, followed by a comparison of the results obtained under the two Acts. From that comparison I shall proceed to an examination of the reasons alleged for the breach of faith, and a statement of the Unionist party's pledge to continue their policy of 1903. I shall then conclude by inviting all who care for Ireland to weigh the prospects of Irish Agriculture under the Union against its prospects under Home Rule.

_Changes made by the Act of _1909.--(1) Instead of cash payments landlords are to receive stock at three per cent. issued on a falling market, and this stock cannot appreciate because, owing to the embarrassment of Irish estates, about half of each issue must be thrown back on the market for the redemption of mortgages; a result fatal to land purchase and detrimental to the credit of the State. (2) Instead of paying £3 5_s._ per £100, tenants are to pay £3 10_s._ without any reduction in the period of repayment. The sinking fund remains at 10_s._ and the interest £3 is, for the first time since land purchase was attempted, placed at a higher rate than in the preceding Purchase Act, whilst the whole instalment of £3 10_s._ is raised, not only above the rate of the Act of 1903, but also above the rates, diminished by decadal reductions, of purchasers under still earlier Acts. This again, in view of these reductions and of periodic revisions of _rent_ under the Land Law Act of 1881, is fatal to purchase. (3) The bonus of £12,000,000--on the application of which all parties agreed in 1903--was diverted from the unanimous policy of that year and brought in aid of Mr. Dillon's hobby, which all parties then rejected. Mr. Dillon is at liberty to rejoice over the ruin of one landlord more than over the salvation of 99,000 tenants. The laws of lunacy do not, and ought not to, touch him. But there is no reason why taxpayers should minister to his peculiar pleasure, with the result of postponing indefinitely any settlement of the Irish land question. (4) By reverting to inspection for security delay is substituted for speed, and speed is necessary in the conclusion of bargains that are themselves the result of prolonged negotiations; the more so when, as now, owing to the substitution of stock for cash, the seller cannot know what his bargain will turn out to be; and the buyer, owing to the block in agreements under the Act of 1903, cannot know when his bargain will take effect. In most cases it will not do so for from six to eight years, which must be added to the period of repayment, although his instalment has been increased. (5) The reversion to attempts at defining the metaphysical rights of the landlords and tenants revives the social poison of litigation of which, in 1903, every one but Mr. Dillon was weary. (6) The revival of litigation in respect of single holdings defeats the policy of dealing with convenient areas. (7) By transforming the Estates Commissioners, much I imagine to their disgust, from administrative officers into amateur judges, a further premium is put on litigation and delay, whilst the interests of one province as against the interests of another, are left without protection from the State. (8) Although more than half the holdings of Ireland are valued at less than £10 a year, a presumption is created that all holdings below that value are to be deemed "uneconomic." The whole of Connaught with the counties of Donegal and Kerry and part of County Cork are branded as "congested," and the Board, charged with conducting purchase in that area, is swollen to unmanageable size, whilst three commissioners are held sufficient for the rest of Ireland, which is twice as large.

To these eight changes, all inimical, and, as I believe, fatal to the abolition of dual ownership, two have been added of a more insidious effect. Compulsion has been adopted. This of itself checks voluntary purchase. It kills it when, as under this Act, compulsory purchases are to be paid for in cash and voluntary purchases in depreciated stock. Finally, the Act contemplates diverting the resources, applied under the treaty of 1903 to the abolition of dual ownership and the remedy of congestion, to a new purpose, for which Ireland can make no special claim. I mean the creation, over all Ireland, of new tenancies, to be sold to new men, who have never suffered from dual ownership or uneconomic conditions, and may be presumed to be ignorant of farming. This new policy amounts to a repeal of the policy sanctioned by all, viz. of giving special State aid to meet the peculiar needs of Ireland.

_A comparison of the results obtained under the Acts of_ 1903 _and_ 1909.--In order to gauge the respective efficacy of these two Acts for the purpose of abolishing dual ownership, it is necessary to distinguish between applications for purchase, and advances actually made in respect of completed transactions. The applications exhibit the comparative popularity and convenience of the two Acts. The advances exhibit only the readiness of the Government to proceed with purchase. They pertain to the financial, rather than the political, aspect of the problem, and may be examined later together with the reasons alleged for the delay of its solution. The fact of the delay appears from the following figures:--