Howardian economics and the future of London

by Ray Thomas

If the capacity of today’s mass media to personalise ideas had existing in the first half of the 20th century, it is not difficult to imagine the epithets that would have been used of Ebenezer Howard. They would have called him a tired-of-London suburbanite, the scourge of the landlords, a communist utopian, the enemy of property owning democracy, a transmogrified land-taxer, a greenhorn developer, and, more thoughtfully, a municipal anti-capitalist.

Had Howard become the subject of media attention and been awarded such a public personality it is difficult to imagine how so many of his ideas could have been effectively suppressed. The lack of any mention of Howard’s name in the three Reports of the New Towns Committee of 1946 symbolises that suppression. The Final Report lists more than fifty government reports relevant to the development of new towns. It is as if the Committee did not want to cite any non-government literature relating to the new town in case it was contaminated by Howard’s ideas.

Why were Howard’s ideas not acknowledged? Why was Howard so influential in spite of the lack of acknowledgement? What is so dangerous about Howard’s ideas?

Attractions of the garden city ideas

A short answer to these questions is that Howard wrote about urban economics, but his book became popular because it was seen as being about planning. The Garden City became a symbol of his ideas. The supporting rationalities took second place and were forgotten, or never learned, by many supporters of the new towns movement.

The process began at the beginning of the century with a change from Howard’s original title Tomorrow: the peaceful path to real reform published in 1898, to Garden Cities of Tomorrow published in 1902. Sir Theodore Chambers gave some emphasis to Howard’s economic ideas in his introduction to the third edition published in 1922. But Howard’s economic ideas later became dissociated from the new towns movement.

Lewis Mumford, who wrote an introduction entitled Modern Planning for the fourth edition published in 1946, discusses the wide range of Howard’s ideas, and mentions the links to the economist Henry George and to the land reformer Thomas Spence, but characterises Howard as "a sociologist and statesman" and focuses his discussion on residential densities. The preface to the 1946 Edition written by F J Osborn concentrates on Howard the man and the practical expression of Howard’s ideas in the building of Letchworth. The 1946 edition, reprinted in 1970 and 1974, omitted two diagrams crucial to Howard’s economic ideas (see F.J.Osborn, 1971).

One of these diagrams ‘The Vanishing Point of Landlord’s Rent’ summarised the idea of rent-rate – the system by which new Garden City Corporations would achieve financial viability and in the long run provide welfare services – such as old age pensions. The other diagram ‘Group of Slumless Smokeless Cities’ expressed Howard vision that there would not be just one or two new towns, but a network of new towns. A network of new towns would be the normal form of urban development – replacing the pattern of big city dominance.

The capitalist component

Howard’s ideas combined capitalist and communist components. The capitalist component is the idea of large-scale comprehensive development on low cost land. The first stage was to assemble the land for development. The high cost of urban land required the land to be developed was outside the city, and that the land could therefore be acquired at ex-urban prices i.e. at agricultural land price levels. But development implies the creation of urban land values.

Within the land area assembled the development would not be piecemeal according to the usual pattern of urban development. Nor would development take into account the cost of individual plots of land. The development would be planned as a whole so to maximise benefits for the whole area. Howard in advocating this approach was anticipating the strategy that would be adopted by any commercial property company that had acquired a large site.

Half a century later in 1951 the Wilson Committee on The Form of Annual Accounts of the new town development corporations took up this component of Howard’s ideas with enthusiasm:

The detailed plans of development are governed by a Master Plan in which housing, industry, town centre, open spaces and social services must fit harmoniously together, and the total value created will normally be greater than the sum of separate parts. A small-scale if imperfect analogy is provided by the accounting for civil engineering projects which take several years to complete, such as a bridge. The bridge is an integrated affair. There is no point in attempting an exact account for each span of the bridge separately. No single span is more important than the other, and in any case the total cost will contain many important items of expenditure such as planning and preparatory works, including flood precautions, which cannot be really identified with any of the spans individually. The achievement of each particular town must be judged ultimately by reference to the values created over a long period, when the fruits of policy and development have really begun to show, and not by individual pieces or individual periods of development. (Wilson, 1951, p 5-6).

The Wilson Report is notable for three reasons - as a modest extension of Howard’s economic ideas, as the only official endorsement of Howard’s economic ideas, and for the fact that it was not published. The Wilson Report determined the form of accounts of the new town development corporations, but remained hidden in the Minstry of Town and Country Planning and its successors until the 1980s (see Thomas, 1996a)

The ‘communist’ component

Howard demonstrated his anti-capitalist ideas by proposing both that the new towns would compete with the cities and the land in new towns would be publicly owned. The Garden City Company itself would be both the developer and the landlord. The "rate-rent" paid by employers and residents would support local services such as schools and libraries. There would be no need for a separate taxation system to support such services. Howard made detailed calculation to show that such facilities could be supported by levels of rate-rent in Garden City, which would be affordable by all members of the population. Peter Hall characterised Howard’s ideas as the creation of a local welfare state.

In contrast to Garden city the resident of historic cities have to pay rates and rent. Tenants get services in return for rates. But the rents which landlords receive reflect property values. These property values are not created by landlords, but are products of the unearned increment of urban development - or what later came to be called betterment. Like Henry George, Howard was filled with outrage at the inequalities that characterised major cities.

George’s solution was a tax on land values. But Howard, like a good capitalist, believed in competition. A system of new towns would destroy the private landlord in the city by successful competition. There would not be just one Garden City, but a network of new towns. Property values in London and other historic cities would fall in the face of mass migration to a better environment and lower rents in the new towns. Howard wrote with relish at the prospect that a system of new towns would bankrupt property owners in London:

First, notice that ground values will fall enormously! Of course, so long as the 121 square miles of the 58,000 square miles of England exercise a magnetic attraction so great as to draw to it one-fifth of the population, who compete fiercely with each other to occupy the land within that small area, so will that land have a monopoly price. But de-magnetise that people, convince large numbers of them that they can better their condition in every way by migrating elsewhere, and what becomes of that monopoly value? Its spell is broken, and the great bubble bursts.

.. imagine the population of London falling, and falling rapidly; the migrating people establishing themselves where rents are extremely low, and where their work is in easy walking distance of their homes! Obviously house-property in London would fall in rental value, and fall enormously. Slum property would sink to zero, and the whole working population will move into houses of a class quite above those which they can now afford to occupy.

.. those wretched slums will be pulled down, and their sites occupied by parks, recreation grounds, and allotment gardens. And this change .. will be effected not at the expense of the ratepayers, but almost entirely at the expense of the landlord class .. it will probably be achieved by the voluntary action of the landowners, compelled by a Nemesis from whom there is no escape, to make some restitution for the great injustices which they have so long committed.

.. The displacement of capital will, no doubt, be enormous but the implacement of labour will be yet greater. A few may be made comparatively poor, but the many will be made comparatively rich – a very healthy change, the slight evils attending which society will be well able to mitigate. (Howard, 1985 Edition, p 116-118).

Not seen as relevant

Howard’s economic ideas were ignored in the immediate post-war period because they were not seen as relevant to the political situation at that time. London was seen as overcrowded, but not as a honeypot. Further, it was believed that the 1947 Planning Act would so change the situation that Howard’s economic ideas would no longer be crucial.

Osborn’s Preface of the 1946 edition of Howard’s book does not comment on Howard’s economic ideas beyond saying that "a national system of Compensation and Betterment-collection would modify Howard’s basis of Garden City Finance"(p 24). This is a reference to the Uthwatt Report of 1942 on Compensation and Betterment, and to the impending Planning Act of 1947 that attempted to nationalise development rights.

Had the 1947 Act achieved its intended purposes Howard’s economic ideas may well have been made marginal to the development of the new towns programme. But the economic ideas that inspired the 1947 Act proved to be much less robust than Howardian theory. Howard’s theory triumphed in the new towns (see Thomas 1996a and 1996b). But the 1947 Planning Act did not succeed in its purposes with regard to the nationalisation of property rights, and neither did its many successors - as is chronicled and explained in Cullingworth’s official history (Cullingworth, 1984).

The index to the 1946 Edition of Garden Cities does not include the terms landlord or unearned increment. The term landlord is central to understanding Howard’s ideas with regard to the situation both in London and for the new towns. The index of the 1946 edition does, anachronistically, include the term compensation and betterment and lists fifteen pages as including references to the phrase. The first two of the pages listed relate to Osborn’s mention of Uthwatt in the Preface mentioned above, but the references to the other thirteen pages are an imputation of later and different ideas on part of Howard’s text.

The 1985 edition includes a new introduction that aims to do justice to Howard’s economic ideas. But the index references, perhaps through inertia, are unchanged. Many readers must be mystified to find that the index item compensation and betterment includes reference to pages 116-119 (quoted in Box above). Neither of the words compensation or betterment appear on these pages – nor on any other page of Howard’s book. Howard uses the phrase ‘unearned increment’ not betterment, and compensation for landlords, as is evident from the quotation in the Box, is antithetical to Howard’s ideas.

Political acceptability may also have been a factor in separating Howard’s ideas from the new towns programme. The final chapter of a PEP study on London’s new towns followed Howard’s ideas in including a final chapter on the future of London (Thomas, 1969). This study is reproduced the New Towns Record CD-ROM (Burton, 1996). But the chapter on London was omitted. Is it that the idea that new towns might affect the structure of London, as also expressed in Howard’s diagram of the group of slumless smokeless cities, is considered too revolutionary to be discussed?

One member of the new towns movement, a Member of Parliament for many years, wrote with astonishment at the content of an Open University text on the new towns. He claimed that he had never been told that Howard favoured a redistribution of wealth and income from landlords to new towns. The implication seemed to be that had he known this he would not have given the new towns his support.

The inner city problem

Making Howard’s ideas palatable by ignoring the radical economic strands has clouded the theory of normal urban growth implicit in Howard’s economic writings. Howard identified the ‘inner city problem’ a half-century or more ahead of the time it became a problem to be commonly found on political or social agendas. The symptom is the concentration of poor people in inner city areas. The diagnosis is that the poor are trapped by their circumstances and cannot move from the city to areas, which would give them a better life.

Howard argued that the crucial component was the journey to work. The poor could not afford to move beyond walking distance from their places of employment. "The rents now paid for the working population of London .. represent each year a larger and larger proportion of income, while the cost of moving to and from work, continually increasing often represents in time and money a very considerable tax" (p 117)

At the time Howard was writing the internal combustion engine had yet to make an impact. Few could afford the cost of rail transport and the dominant mode of transport was walking. Kellet, in his study of the impact of the railways, quotes Charles Booth ‘It is only the man whose position is assured who can treat railway or tramfares as regular item in his daily budget’ and reports that "at the turn of the century there cannot have been, on the most generous estimate, more than 250,000 commuters by rail out of a population touching on six and a half million" (Kellet, 1969, p 95).

The development of bus transport in the interwar period and the growth of car ownership and use in the post-war period transformed the journey to work situation. But the problem as identified by Howard remains. Under the normal urban growth processes members of higher income groups can afford to buy suburban or exurban homes and commute. The higher their income the greater the distance they can afford to commute. But members of lower income groups, because of the combination of housing and journey to work costs, cannot afford to move from the inner city area.

Howardian theory indicates that the normal urban growth process produce the opposite of what later came to be called ‘self-contained and balanced communities’. Unplanned urban growth in capitalist societies can be expected to result in ever-increasing scale in social segregation. Howardian theory hypothesises that the inner city problem is essentially the geographical manifestation of inequality in society.

Inflation in property values

Howard’s perception of the importance of property values would have made it easy for him to understand the reasons for the failure of the attempts to nationalise development rights. The growth of local authority housing, rather than the planning system, diminished the role of the private landlord. The growth of owner occupation continued the process. Neither local authority housing, nor the increase in owner occupation threatened property values. The planning system, far from capturing unearned increment or betterment, has turned out to be a system for distributing betterment among owner-occupiers.

The popularity of owner occupation makes inflation in property values socially desired. Wage inflation is seen as a danger signal, but house price inflation is seen as an indicator of confidence in the future. It has become widely accepted that increases in house prices are to be welcomed as an index of prosperity and indicator of buoyancy in the economy. For the past half century, house prices have been most consistent component of Britains inflation. House prices have risen in line with money incomes - well above the average rate of inflation.

Moderate inflation suits existing owner-occupiers and middle England. The value of their investments steadily increases. But the young and propertyless are disadvantaged. Put in this wider context Howardian economic theory shows how the planning system helps to maintaining inequalities of wealth and the strength of the class structure in Britain. Small wonder Howard’s economic ideas have been suppressed.

References:

Burton, Tony and Joyce Hartley (Eds) (1996) The New Town Record CD-ROM, The Planning Exchange, Glasgow.

Cullingworth, Barry (1984) Land values, compensation and betterment, HMSO.

Howard, Ebenezer (1898) To-morrow: A Peaceful Path to Real Reform, Sonnenschien.

Howard, Ebenezer (1946) Garden Cities of To-Morrow, Faber & Faber.

Howard, Ebenezer (1985) Garden Cities of To-morrow, Attic Books.

Kellett, John R. (1969) The Impact of Railways on Victorian Cities. Routledge.

Osborn, Frederick J (1971) ‘The History of Howard’s Social Cities’, Town and Country Planning, December, pp 539-545.

Thomas, Ray (1969) London’s New Towns: A study of self-contained and balanced communities, PEP, London.

Thomas, Ray (1996a) and ‘The economics of the new town programme’ in Burton & Hartley The New Towns Record CD-ROM.

Thomas, Ray (1996b) ‘The economics of the new towns revisited’ Town & Country Planning, November, pp 305-308.

Wilson, Reginald (Chairman) (1951) Report of the Committee on Form of Annual Accounts, (typescript), Ministry of Housing and Local Government.

Ray Thomas is Research Fellow in the Faculty of Social Sciences at the Open University and in the Centre for New Town Development Studies in De MontUse of uninitialized value in concatenation (.) or string at E:\listplex\SYSTEM\SCRIPTS\filearea.cgi line 451, line 298. fort University in Milton Keynes.