This sum would be available as follows:—
| For landlord’s rent or interest on purchase money £240,000 at 4 per cent., | £9,600 |
| For sinking fund (30 years), | 4,400 |
| For such purposes as are elsewhere defrayed out of rates, | 50,000 |
| £64,000 |
It is now important to inquire whether £50,000 will suffice for the municipal needs of Garden City.
CHAPTER IV.
THE REVENUE OF GARDEN CITY—GENERAL OBSERVATIONS ON ITS EXPENDITURE.
Before entering upon the question which presented itself at the conclusion of the last chapter—that of endeavouring to ascertain whether the estimated net available income of Garden City (£50,000 per annum) would be sufficient for its municipal needs, I will very shortly state how it is proposed to raise the money required for commencing operations. The money would be borrowed on “B” debentures,[9] and would be secured by a charge upon the “rate-rent,” subject, of course, to the payment of interest and sinking fund in respect of the “A” debentures on which the purchase money of the estate is raised. It is, perhaps, superfluous to remark that, though in the case of the land purchase it might be requisite to raise the whole, or at least some very considerable part of the purchase money before possession would be given of the estate, or operations upon it commenced, yet in regard to public works to be carried out upon the estate, the case is quite different, and it would be by no means necessary or advisable to defer the commencement of operations until the whole sum which might be ultimately required should be raised. Probably no town was ever built on such onerous conditions as would be involved in the raising at the outset of such a very considerable sum as would defray the cost of all its public works; and though the circumstances under which Garden City is to be built may be unique, there is, as will by and by be seen, not only no need for making an exception of the town in respect of initial capital, but quite exceptional reasons will become more and more apparent which make the overlaying of the enterprise with superabundant capital altogether unnecessary, and therefore inexpedient; although, of course, there must be a sufficient sum to enable all real economies to be readily effected.
Perhaps it may be well in this connection to draw a distinction as to the amount of capital required between the case of the building of a town and the building, let us say, of a large iron bridge across an estuary. In the case of the bridge it is highly expedient to raise the entire sum required before commencing operations, for the simple reason that the bridge is not a bridge until the last rivet is driven home, nor, until its entire completion and its connection with the railways or roadways at either end, has it any revenue-earning power. Except, therefore, on the assumption that it is to be fully completed, it offers very little security for the capital sunk upon it. Hence it would be very natural for those who are asked to invest to say, “We will not put any money into this enterprise until you show us that you can get enough to complete it.” But the money which it is proposed to raise for the development of Garden City site leads to speedy results. It is to be expended upon roads, schools, etc. These works will be carried out with due regard to the number of lots which have been let to tenants, who undertake to build as from a certain date; and, therefore, the money expended will very soon begin to yield a return in the shape of a rate-rent, representing, in reality, a greatly-improved ground-rent; when those who have advanced money on the “B” debentures will have a really first-class security, and further sums should be easily obtainable, and at a reduced rate of interest. Again, it is an important part of the project that each ward, or one-sixth part of the city, should be in some sense a complete town by itself, and thus the school buildings might serve, in the earlier stages, not only as schools, but as places for religious worship, for concerts, for libraries, and for meetings of various kinds, so that all outlay on expensive municipal and other buildings might be deferred until the later stages of the enterprise. Work, too, would be practically completed in one ward before commencing on another, and the operations in the various wards would be taken up in due and proper sequence, so that those portions of the town site on which building operations were not in progress would also be a source of revenue, either as allotments, cow-pastures, or, perhaps, as brickfields.
Let us now deal with the subject immediately before us. Will the principles on which Garden City is to be built have any bearing on the effectiveness of its municipal expenditure? In other words, will a given revenue yield greater results than under ordinary conditions? These questions will be answered in the affirmative. It will be shown that, pound for pound, money will be more effectively spent than elsewhere, and that there will be many great and obvious economies which cannot be expressed in figures with much accuracy, but which would certainly represent in the aggregate a very large sum.
The first great economy to be noticed is that the item of “landlord’s rent,” which, under ordinary conditions, largely enters into municipal expenditure, will, in Garden City, scarcely enter at all. Thus, all well-ordered towns require administrative buildings, schools, swimming baths, libraries, parks; and the sites which these and other corporate undertakings occupy are usually purchased. In such cases the money necessary for the purchase of the sites is generally borrowed on the security of the rates; and thus it is that a very considerable part of the total rates levied by a municipality are ordinarily applied, not to productive works, but either to what we have termed “landlord’s rent,” in the shape of interest on money borrowed to effect the purchase, or to the provision of a sinking fund in payment of the purchase money of the land so acquired, which is landlord’s rent in a capitalised form.