Estate Capital: the Contribution of Landownership to Agricultural Finance

Abstract

This book is based on the results of four surveys of agricultural estates which have been carried out, with the assistance of American “ conditional aid ” funds, by the Department of Estate Management at Cambridge University. The surveys covered altogether about 5½ million acres of land, but most of the information given relates to a selected sub-sample covering about 1½ million acres. As his title implies, Dr. Denman is mainly interested in the provision of capital for estate purposes, and the adequacy of estate incomes to finance improvements is the theme of his central chapters. Further chapters analyse the motives which induce landlords to retain ownership of estates and spend money on improvements, and those which in other cases restrain them from such expenditure or from seeking to enlarge their rental revenues. Other subjects dealt with include the influence of estate duty and tax rebates and the special position of charity estates. The legal and institutional framework in which agricultural estates are obliged to operate is a matter of considerable public importance, and Dr. Denman's book is to be welcomed as an attempt to throw some light on an obscure subject. His findings make up a picture of which it is in many ways difficult to make economic sense. The habit of running agricultural estates as a rich gentleman's pastime evidently still persists, but alongside the old-fashioned motives responsible for it we now have to reckon with the oddities of the taxation system and the effects of legal control of tenure and of the law relating to rent arbitration. The book suffers, however, from certain weaknesses. Among them are the author's fondness for obscure terminology and a reluctance to present facts directly which at times make both his text and his tables difficult to follow. It appears for example that half the tenanted estates in his sub-sample have no net income. But this fact is not directly stated: it has to be inferred from a table which classifies the estates according to the degree of their “ competence ” to meet their average improvement expenditure out of their incomes. It dawns on the reader, as he ponders the meaning of this classification, that total “ incompetence ” must imply a zero or negative income; but he has to wait for two chapters before Dr. Denman's own words confirm his inference. It might be supposed that the level of actual improvement expenditure on different estates would bear some relation to the degree of their competence in Dr. Denman's sense. It is shown, however, that the wholly incompetent estates, which must have relied on external funds for the whole of their improvement expenditure, actually spent substantially more on improvements than the partially or wholly competent ones. Improvement expenditure, of course, yields some return in increased income, but its amount is not estimated. A substantial minority even among the partially or wholly incompetent estates seem to make some improvements for which no interest payment is asked for. The major shortcoming of the book is that it is planned as a discussion of the particular topics the author happens to be interested in, illustrated by selected figures drawn from the surveys, and does not attempt a systematic report on them or a full tabulation of their results. But the surveys must have yielded a great deal of valuable information bearing on the economics of landownership under contemporary conditions, and those who wish to study this subject will regret that Dr. Denman has not put more of it into his book.