The Framework of Home Rule

by Erskine Childers

2. The Ashbourne Act of 1885 was the first successful measure of the kind. Five millions were advanced under it, and five millions more under an extending Act of 1887. Next came the Act of 1891, empowering the loan of thirty-three millions, followed by the amending and simplifying Act of 1896. These Acts form a body of legislation by themselves, of which I need refer only to a few salient characteristics. They were all alike in settling the tenant's annuity (in lieu of rent) at 4 per cent, on the purchase money, though the proportions allocated to interest and sinking-fund varied. Under the first two Acts the period for final redemption of his loan by the tenant was forty-nine years, under the third forty-two years, though this period was extended to seventy years if the tenant availed himself of decadal reductions in the annuity, proportionate to the capital paid off by the sinking-fund.

The average price of the holdings sold under these Acts represented seventeen and a half years' purchase, and the tenant's great inducement to buy was that, by the aid of cheap State credit, the annuity he paid, even over so short a period as forty-nine years, represented a reduction of more than 20 per cent, on his existing judicial rent.

Under the first Act, that of 1885, the landlord received the purchase money in cash, under the other two, in guaranteed 3 per cent, or 2| per cent, stock, an arrangement which suited him very well as long as Government stocks maintained the high level which they reached in the period preceding the South African War. With the heavy fall in stocks during and after the war, purchase came to a standstill. The net result of the operations under the Acts of 1885 to 1896 was that close upon twenty-four million pounds were advanced to 72,000 tenants, occupying about two and a half million acres, out of the total of 18,739,644 acres which constitute the agricultural area of Ireland.

3. Once begun, purchase had to be continued, if for no other reason than that a purchasing tenant paid in annuity a substantially lower sum than the non-purchasing judicial tenant paid in rent, with the additional, if distant, prospect of an absolute fee-simple in the future.

Mr. Wyndham, acting on the recommendation of a friendly Conference between landlords and tenants, took the bull by the horns in 1903, and carried the great Land Act of that year. Under the Wyndham Act the system of cash payment to the landlord, dropped since 1891, was resumed, on a basis calculated to give a selling landlord a sum which, invested in gilt-edged 3 or 3¼ per cent. stocks, would yield him as much as the second term judicial rents on the holdings sold, less 10 per cent., representing his former cost of collection; while the annuity payable by the tenant in lieu of rent was reduced from 4 to 3¼ per cent., of which 2½ per cent, was interest on the purchase money advanced, and ½ per cent, was sinking-fund. This reduction involved an extension of the period of redemption from forty-nine to sixty-eight and a half years. The annuity was calculated to represent an average reduction of from 15 to 25 per cent, on second-term judicial rents. Since the gross income of the landlord was to be reduced only by 10 per cent. on a basis of 3 per cent. investments, while the annual payment by the tenant was to be reduced by an average of 20 per cent., clearly there was a gap to be filled up, and this gap was filled by a State bonus to the selling landlord of 12 per cent, on the purchase money, a bonus which went wholly to him personally, clear of all reversionary rights under settlements. A sum of twelve millions altogether was to be expended on the bonus.

In addition to direct sales between landlord and tenant through the Estates Commissioners, large powers were also given both to the Land Commission and the Congested Districts Board for the purchase and resale of certain classes of estates—land in congested districts, untenanted land, etc.

The Act was enormously popular. The landlord, in view of the manifold insecurities of land tenure in Ireland, made an excellent bargain, and the tenant, tempted by the immediate transformation of his rent into an annuity of reduced amount, ignored the extension by twenty years of the period of redemption, and was willing to agree at high prices for the purchase of his land. The average price of land sold rose from the seventeen and a half years' purchase under the old Acts to over twenty years' purchase, and the soil of Ireland rapidly began to change hands. But the Act broke down on finance, as adapted to what were then estimated as the requirements of the purchase operation. The estimate for the total sum required was one hundred millions, and the purchase money was to be raised by successive issues of 2¾ per cent. Guaranteed Land Stock. Sums needed from time to time for payment of the landlord's bonus were also raised by stock, and were placed to an account known as the Land Purchase Aid Fund.

Now, any loss on flotation, due to stock being issued at a discount, was to be borne, in the first instance, by the Ireland Development Grant,[155] and, if and when that was exhausted, by the ratepayers of Ireland through deduction from the grants in aid of Local Taxation.[156] The stock, like all Government stocks at that period, fell heavily from the first, and in 1908 the point was reached when further issues would have entailed a heavy loss payable out of Irish rates, growing ultimately, as it was calculated, to an annual charge of more than half a million. The infliction of such a burden upon the ratepayers of Ireland was felt to be inequitable. Ireland was not responsible for the evils which necessitated purchase, and even if she were, the ratepayers were not the right persons to be mulcted. Meanwhile, purchase was at a complete standstill.

4. This serious situation led to Mr. Birrell's Land Act of 1909, which was based upon the Report of a Treasury Committee which sat in the previous year.[157] The problem was twofold: (a) how to deal with future agreements to purchase, between landlord and tenant;(6) how to deal with agreements to purchase pending under the Act of 1903, but as yet uncompleted.

(a) With regard to future agreements, there are four main points:(1) The old policy of payment in stock, instead of in cash, is reverted to, and the stock is a 3 per cent. stock.