The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Translator's Note
• Where and Why Public Ownership Has Failed
• Book I: Public and Private Trading Operations
• Chapter I: Two Precepts
• Chapter II: The Three Mainsprings of Human Action
• Chapter III: Determining Motives of Private As Against Public Enterprises
• Chapter IV: Government and Municipal Trading Operations
• Book II: Financial Results of Government and Municipal Ownership
• Chapter I: Bookkeeping In State and Municipal Trading Enterprises
• Chapter II: The Belgian State Railroads
• Chapter III: Prussian Railroads
• Chapter IV: State Railways of Austria and Hungary
• Chapter V: Italian Railways
• Chapter VII: Railways of New Zealand
• Chapter VIII: Government Railroads In France
• Chapter IX: Public Vs. Private Operation
• Chapter X: The Holy Cities of Municipal Operation
• Chapter XI: Operation of Gas and Electricity In the United Kingdom
• Chapter XII: Tramways In Great Britain
• Chapter XIII: Housing of the Working Classes and Public Ownership In Great Britain
• Chapter XIV: Housing of the Working Classes On the Continent
• Chapter XV: Government Control of Food Supplies
• Chapter XVI: Victims of Government Ownership
• Chapter XVII: Charges, Debts and Credit
• Chapter XVIII: Fictitious Profits
• Chapter XIX: Fiscal Monopolies
• Chapter XX: The Alcohol Monopoly In Switzerland and Russia
• Chapter XXI: Financial Disorder
• Chapter XXII: The Purchase Price
• Chapter XXIII: Delusions of Profit and the Life Insurance Monopoly In Italy
• Chapter XXIV: The Fiscal Mines of the Saar District
• Chapter XXV: Public Versus Private Enterprise
• Book III: Administrative Results
• Chapter I: Administrative Results
• Chapter II: The Safety of Travelers Upon State and Private Railway Lines
• Chapter III: Disorders, Delays and Errors
• Chapter IV: Official Conservatism
• Chapter V: Labor
• Chapter VI: The Consumer
• Chapter VII: Programs of Organization and Regulation
• Book IV: Political and Social Consequences of Public Operation
• Chapter I: Socialist Programs and the Facts
• Chapter II: Bluff
• Chapter III: Results of Experience
• Chapter IV: The State a Dishonest Man
• Chapter V: Corruption
• Chapter VI: Nationalization of Public Utilities and the Foundation of Great Fortunes
• Chapter VII: Disintegrating Character of Public Operation
• Appendix %u201ca%u201d: Alcoholism In Russia
• Appendix %u201cb%u201d: the Financial Year In Australia
• Appendix %u201cc%u201d: the Shortcomings of the Telephone In England

CHAPTER XIII

HOUSING OF THE WORKING CLASSES AND PUBLIC OWNERSHIP IN GREAT BRITAIN

In a bill introduced by M. Siegfried, and passed by the French Chamber of Deputies, on the 22nd of April, 1912, as also in a similar bill providing for the condemnation of property for sanitary reasons, introduced by M. Honnorat, reference was duly made to the example of England by a citation of the Housing of the Working Classes Act of August 18, 1890.

By this act local governments are authorized to demolish houses adjudged unsanitary, providing compensation therefor, it is true, but with deductions in the amounts allowed, based upon the different degrees of existing overcrowding and lack of sanitation. Later the legislators made up their minds that they were not doing their duty by simply putting the inmates of such houses into the street in order to improve their condition. Therefore, they proceeded to authorize the towns to construct and even to manage houses for the working classes, granting them a right of condemnation in order to procure the necessary land. If the towns failed to provide as many lodgings as they had destroyed, or if they were not provided until a long time afterward, so much the worse for those who had been dispossessed.

The energy in this direction of the London County Council is pointed to with admiration and enthusiasm by all interventionalists.

According to its report of October 7, 1911, the London County Council had carried out altogether 35 plans of expropriation and reconstruction from 1893 to March 11, 1911. It had demolished buildings containing nearly 23,000 rooms, occupied by 42,000 persons, and furnished rooming houses occupied by about 3,000 people, or in all 45,000 tenants. It had constructed buildings aggregating 6,428 rooms, 2,519 cottages, and three lodging houses with 1,849 bedrooms for single men. Counting 2 persons to a room in these houses the Council had thus lodged 51,836 persons.

During the period mentioned a capital of £2,879,000 ($14,021,000) had been invested in these undertakings, bringing in a gross income of £207,340 ($1,009,700). Interest and sinking fund charges on a 60 years' basis absorb 49.60 per cent. of the receipts. The expenses of management, including repairs (7.52 per cent.), taxes, water, light, etc., represent 39.78 per cent. of the gross receipts, uncollectible rents, 0.19 per cent., and losses on worthless paper 9.51 per cent. Thus, we dispose of 99.08 per cent. of the gross receipts, and reach the following imposing result:

“This gigantic housing undertaking is entirely self-supporting, without resourse to the general resources of the budget. It even yields profits which vary from £500 to about £1,100.”

But all the expenses for these municipal lodgings were not charged to the municipal lodgings account, as the following fact shows:

When the London County Council paid £200,000 ($974,000) for the site of the Reid brewery, it entered the property on the housing account at £45,000, and charged the remaining £155,000 to the general improvement account.1

For the year ending March 31, 1911, the total expense for condemnation and construction was £2,015,833, and the income £1,876; that is to say, less than nothing. With the addition of £120,242 for administration costs, the deficiency of revenue is £3,950, which, of course, more than absorbs the small surplus noted above.2

All right, say the advocates of municipalization. Business is bad, from the financial point of view, but, from the standpoint of sanitation, a service has been rendered for which too high a price could not be paid.

Out of a population of 4,537,000 people the London County Council has dispossessed about 45,000 individuals. It has housed 51,856. It has not created new homes; it has only brought about displacements. For it is scarcely probable that the victims of these forcible evictions occupy the new or reconstructed municipal lodging houses.

In the report of the Commission of the Municipal Council of Paris, on the subject of cheap housing, M. Rousselle and his collaborators say:

“We can testify to the fact that for several years the mortality due to tuberculosis, which in Paris is still 34 out of every 1,000 inhabitants, has fallen in London from 60 to 19 inhabitants per thousand. This outcome is owing in large measure to the work undertaken by the London County Council, a work which this single result would serve to justify, if such justification were necessary.”

In other words the London County Council moves 1 per cent. of the population and the mortality from tuberculosis immediately drops 66 per cent.

This result is truly miraculous, but the most striking feature of the whole statement is the tremendous disproportion between given cause and effect.

In connection with municipal housing in Plymouth The Municipal Year Book1 gives the following data:

This reduction equals, we may add, 325 lives saved annually.

Now, the Council of Plymouth has constructed:

Without overcrowding, not more than two persons can well be counted to a room. This gives us 1,740 inhabitants housed out of a population of more than 125,000. It is a little difficult to see how the housing of 1,740 people can possibly save the lives of 323 persons each year.

At Birmingham buildings were demolished under pretext of sanitation, but the land was not used to build new houses for the working classes.

Mr. J. S. Nettleford, president of the Housing Committee of Birmingham, testified, in 1905, that the rents of the houses on Ryder and Lawrence streets were far above the means of the unfortunate tenants dispossessed by the improvement committee. The result of these improvements has therefore been the taxation of the many for the benefit of a few individuals, “a detestable commercial operation.”

The Estate Committee published accounts in which there was no mention whatever made of the value of the land upon which the houses were built. But a little note appeared at the bottom of the page, saying that the credit balance was equal to a ground rent of x per yard. At the conference of June 7, 1901, a councillor demanded the price of the land; where-upon it was found that an investigation would be necessary in order to discover it. Mr. Nettleford1 quotes the results obtained from this investigation:

Birmingham does not appear to have kept up the experiment.

Glasgow (802,000 inhabitants) commenced razing buildings in 1866. Naturally, it soon found itself saddled with an over-supply of land which the authorities were anxious to sell at exorbitant prices. As no purchasers were to be found under such conditions the corporation decided, about 1888, to build on its own account.

Instead of houses designed for workingmen the corporation constructed types of buildings more in keeping with the costly sites on which they were to be built. On May 31, 1905, the net cost of these structures amounted to £1,244,033 ($6,058,440), while the value of the lands and of the buildings was estimated at £923,165 ($4,495,800). A deficit of £320,868 ($1,562,640) was the final result. Fifty thousand people were driven out of the slums, but the city did not furnish them with lodgings. Instead, it constructed imposing houses and shops. Moreover, while awaiting the destruction of the condemned buildings, the improvement trust continued to rent the most unsanitary of these buildings.

In 1911 the net result of the whole movement was 2,149 lodgings for the families of the laboring classes. The income from them is £25,000 ($121,750), which allows a payment of 3 ¼ per cent. interest and one-third of the amortization.

Liverpool has 759,000 inhabitants. It has constructed buildings representing a total of 2,686 lodgings. Condemnation and reconstruction have cost £1,000,000. In 1909 the net income was £21,711, or 2.17 per cent. The losses on worthless paper amounted to 6.74 per cent. Taking into account repairs, costs of administration, etc., the city of Liverpool collects 1 ½d per pound sterling invested.

In Manchester (865,900 inhabitants) the financial results have been similar to those of Liverpool. Between 1845 and 1905 the city has rented 7,432 houses, 3,334 having been reopened after being renovated. The net income in 1910–1911 was £7,262 or 3.80 per cent. on a capital investment of £189,366. After deducting interest and sinking fund there is a loss of one penny per pound.

Leicester (227,242 inhabitants) has constructed two buildings, containing 42 apartments.

Richmond (36,493 inhabitants) has built 135 houses, which are bringing in £2,455 annually to offset an outlay of £38,683.

Folkstone (36,000 inhabitants) constructed 50 houses and then stopped.

At Sheffield the corporation bought a three-mile tract of land on the side of a hill, in the neighborhood of very valuable real estate. It was said that the object of certain municipal councillors was to play a good joke on the owners of this property. In the end the city was not only forced to buy more land, in order to construct a roundabout road, but, by an order of the King's Bench Division, it had also to pay a considerable indemnity to the aforesaid proprietors for the depreciation in value of their property.

Salford (231,380 inhabitants) has displayed very great activity along the direction of housing the working classes; 2,236 houses have been declared unfit for habitation, and 2,982 others have been reconstructed. In addition to these efforts, one building containing 69 apartments, 405 four-room houses, 134 with five rooms each, 95 with 6 rooms, or in all 703 lodgings, have been provided. Then a cheap hotel, with 285 rooms, and a building containing 32 shops have been also built. The average rent is 1 shilling 4 pence per week, while in the rest of the city 5s and 5s 9d are paid for a 4-room lodging.

But since the motives which actuate committees appointed to select tenants may be of various kinds and more or less complex, it is customary for such bodies to favor tenants who are willing to offer a higher rent.

Here we have the sketch of the great municipal work of cheap housing in Great Britain. The London County Council has evicted 45,000 persons and lodged 51,000. Fortunately there are still a few individuals or private groups who construct houses, otherwise the 4,486,000 inhabitants of the city of London, for whom municipal lodgings are not provided, would be condemned to dwell in the open air.

But the action of the London County Council has at least brought about one result, for, since 1889, no more great associations are being formed in London for promoting public housing.

But has any service been rendered to the people by this attempt to paralyze private initiative?

“Every house which is built by public authority,” says Mr. Nettleford, “prevents the construction of at least four houses which would have been built by individuals,” and he cites striking examples from Birmingham.

“The partisans of municipalization conduct you,” says Edwin Cannon, “past thousands of houses, lodging tens of thousands of inhabitants, to a half dozen houses built at a loss by the municipality and then say to you solemnly: ‘Private initiative is weak’; when all the time the facts are demonstrating the strength of private and the weakness of municipal initiative.”1

When the inhabitants of the slums do not go to live in the municipal houses the advocates of Municipal Socialism say: “But they can occupy the lodgings left vacant by those who do come to live in them.”

The dispossessed are simply driven from hovel to hovel; they are not housed.1

Lord Rosebery, in a speech delivered at Shoreditch, at the ceremony of the opening of the workmen's houses, said: “You have lodged 300 families, but you have dislodged many more. That seems to me a droll way to house the poor.”

Socialists are acknowledging the defeat of the movement. Bernard Shaw, however, while pointing out the practical impossibility of establishing municipal lodgings, concludes that the only solution to the problem is the municipalization of the soil.

[1]The Times (London), October 21, 1902.

[2]Municipal Year Book, 1912, page 752.

[1]Municipal Year Book, 1912, page 775.

[1]A Housing Policy.

[1]The Economic Outlook.

[1]Boverat, Le Socialisme Municipal en Angleterre et les Résultats Financiers.