Dotted about the estate are seen various charitable and philanthropic institutions. These are not under the control of the municipality, but are supported and managed by various public-spirited people who have been invited by the municipality to establish these institutions in an open healthy district, and on land let to them at a pepper-corn rent, it occurring to the authorities that they can the better afford to be thus generous, as the spending power of these institutions greatly benefits the whole community. Besides, as those persons who migrate to the town are among its most energetic and resourceful members, it is but just and right that their more helpless brethren should be able to enjoy the benefits of an experiment which is designed for humanity at large.
CHAPTER II.
THE REVENUE OF GARDEN CITY, AND HOW IT IS OBTAINED—THE AGRICULTURAL ESTATE.
Amongst the essential differences between Garden City and other municipalities, one of the chief is its method of raising its revenue. Its entire revenue is derived from rents; and one of the purposes of this work is to show that the rents which may very reasonably be expected from the various tenants on the estate will be amply sufficient, if paid into the coffers of Garden City, (a) to pay the interest on the money with which the estate is purchased, (b) to provide a sinking-fund for the purpose of paying off the principal, (c) to construct and maintain all such works as are usually constructed and maintained by municipal and other local authorities out of rates compulsorily levied, and (d) (after redemption of debentures) to provide a large surplus for other purposes, such as old-age pensions or insurance against accident and sickness.
Perhaps no difference between town and country is more noticeable than the difference in the rent charged for the use of the soil. Thus, while in some parts of London the rent is equal to £30,000 an acre, £4 an acre is an extremely high rent for agricultural land. This enormous difference of rental value is, of course, almost entirely due to the presence in the one case and the absence in the other of a large population; and, as it cannot be attributed to the action of any particular individuals, it is frequently spoken of as the “unearned increment,” i.e., unearned by the landlord, though a more correct term would be “collectively-earned increment.”
The presence of a considerable population thus giving a greatly additional value to the soil, it is obvious that a migration of population on any considerable scale to any particular area will be certainly attended with a corresponding rise in the value of the land so settled upon, and it is also obvious that such increment of value may, with some foresight and pre-arrangement, become the property of the migrating people.
Such foresight and pre-arrangement, never before exercised in an effective manner, are displayed conspicuously in the case of Garden City, where the land, as we have seen, is vested in trustees, who hold it in trust (after payment of the debentures) for the whole community, so that the entire increment of value gradually created becomes the property of the municipality, with the effect that though rents may rise, and even rise considerably, such rise in rent will not become the property of private individuals, but will be applied in relief of rates. It is this arrangement which will be seen to give Garden City much of its magnetic power.
The site of Garden City we have taken to be worth at the time of its purchase £40 an acre, or £240,000. The purchase money may be assumed to represent 30 years’ purchase, and on this basis the annual rent paid by the former tenants was £8,000. If, therefore, there was a population of 1,000 persons upon the estate at the time of the purchase, then each man, woman, and child was contributing towards this rent-roll an average sum of £8 per annum. But the population of Garden City, including its agricultural land, is, when completed, 32,000, and the estate has cost them a sum on which they pay an annual charge by way of interest of £9,600. Thus, while before the experiment was initiated, 1,000 persons out of their united earnings contributed £8,000 a year, or £8 a head, on the completion of the town 32,000 persons out of their united earnings will contribute £9,600 a year, or an average of 6s. a head.
This sum of 6s. per head per annum is all the rent, strictly speaking, which the inhabitants of Garden City will ever be called upon to pay; for it is all the rent which they pay away, any further sum they pay being a contribution towards their rates.
Let us now suppose that each person, besides contributing annually 6s. a head, contributes an average annual sum of £1 14s., or £2 in all. In that case two things may be noticed. First, each person will be paying for ground rent and rates only one-fourth of the sum which each person before the purchase paid in ground-rent alone; and, secondly, the Board of Management, after the payment of interest on the debentures, will receive an annual sum of £54,400, which, as will be presently shown, would, after providing a sinking fund (of £4,400), defray all those costs, charges, and expenses which are usually met by local taxation.