Russel Wallace : Alfred Russell Wallace (sic)
Sir,--Permit me to correct an important error in the rough calculations of the comparative increase of the incomes of landlords and the rest of the public, which I gave in my letter on "Land Nationalization" in your issue of February 3. I carelessly added and subtracted percentages of the different elements of value dealt with, a process which is altogether unsound. The following is, I think, a clearer way of presenting the figures:--
(1). Value of Land and Houses.
(2). Value of Agricultural Land.
Deducting (2) from (1) we have--
(3). Value of House Property.
To estimate how much of this last increase is due to the increased value of ground rents and how much to new buildings (less old ones destroyed or depreciated) is difficult. We must remember that the greater part of the new land built over has increased in value (and proportionately in rental) from, say, £30-£50, as agricultural land, to £500-£1,000 as building land, while in all large cities ground rents have been raised as leases fell in, often in a still greater proportion, and a large number of the new houses merely replace old ones pulled down. Besides this, a large area of land not yet built over has been sold at building prices. I think, therefore, we shall not be far wrong in considering that the increased rental value of the new houses over the old is about 20 millions, while the increase of the ground rents, together with that of land sold for building, is the remaining 23 millions. This will make the increase in the value of the land of the country 40 millions instead of 42½ millions as I brought it out before; but of course the whole thing is a round estimate, for the purpose of clearing our ideas on the subject rather than with any pretence of an exactness which the data do not admit of.
Your correspondent "J. E. S." has pointed out that in all general estimates of national income many incomes are reckoned twice or three times over, and this will perhaps balance the increase of the incomes of those classes below the reach of the income tax, and which I was therefore not able to include in my estimate of the incomes from which the increased ground rents and other charges is a deduction. I would also add that the general rise in many items which are now an essential part of every one's expenditure--as the increase of travelling expenses in all businesses and professions--forms another important deduction from the apparent increase of the incomes of the people.
--I am, Sir, your obedient servant,