Professional Documents
Culture Documents
1984 - The Development of Capitalism in Housing Provision
1984 - The Development of Capitalism in Housing Provision
provision
by Michael Ball
Much has been written on the history of working-class housing to rent in the
nineteenth century.' Explanations for the dominance of this housing tenure
generally centre on the low level of wages in relation to housing costs, and on the
attractiveness of this type of investment for the relatively small amounts of money
capital available to the petty bourgeoisie. It is frequently not realized, however,
that private landlordism was predominantly part of an historically specific structure
of housing provision which also involved particular types of landownership, house-
building and finance as well as private landlordism. The main features of this form
of housing provision in Britain emerged during the early years of the nineteenth
century. The object of this paper is to elaborate the major social relations in-
volved in that structure of provision and to explain how they arose.
A central theme of the argument will be that there were major changes in the
class relations involved in housing production. Capitalism came to dominate house-
building in the form of the speculative housebuilder, and the emerging dominance
of the speculative housebuilder and the private landlord were mutually reinforcing
processes: each party profited from the existence of the other. The form, however,
that speculative building took was influenced by the existing nature of landowner-
ship, and a highly inefficient building industry was the result. Inevitably the work-
ing class ended up paying the price: as consumers faced with high housing costs
and as building workers subordinated to capital in an industry where the extraction
of absolute surplus value was paramount for profitability.
It will be argued that the economic interests of the landowners and capitalists
who came to dominate this structure of provision were the main determinants of
its form. The breakdown of guild production eventually enabled them to out-
manoeuvre an independent craft workforce and reduce them to wage labourers.
Much emphasis, therefore, will be placed on the economic interests of the various
agents involved in housing provision and on how those interests interrelated. Some
explanation, consequently, will have to be given as to how those interests were
formed and how they could be given expression. This requires movement away from
'For the British experience see Merrett (1979), Gauldie (1974), Chapman (1971) and Wohl
(1977).
146 The development of capitalism in housing provision
2Dobb’s work (1963) still remains one of the best books on the development of capitalism.
See also Hobsbawm (1969), Foster (1974) and Leeson (1979).
‘Chalkin (1974) is the key text on developments in provincial England during the eighteenth
and early nineteenth centuries. Summerson’s book (1978 edition) on Georgkn London
originally published in 1945 still remains the most important book on London Postgate (1923)
is also still the best source on the development of the building unions. References for other
sources of data are given in the relevant footnotes.
Michael Ball 147
2 Nineteenth-century
-
,-,
capitalist housing Landowner
provision
I,i”f””J [ T I FJ
-- - 1 1 4 r14r]
-...IT’GZ]
developer builder owner
(or landlord)
building
workers
provision that arose, it is not possible to discuss each agency in the order that
they temporally intervene in that form of housing provision. Instead, for ease
of explanation, they will be considered in the following order: estate developer,
house owner, speculative builder and building worker, and finally landowner.
There is a danger when trying to explain changes in class relations of forcing
many divergent and complex variations in those relations into a narrow and formal-
istic structure. It should be emphasized, therefore, that what is classified as
‘capitalist housing provision’ in Figure 1 is not the only form in which housing was
provided in nineteenth-century Britain. Dominance is neither meant to imply
exclusiveness nor even necessarily the majority form of provision. This structure
was instead the form of housing provision that set the pace and direction of change
during the nineteenth century. Its collapse, moreover, at the beginning of the
twentieth century was the starting point for the long, slow decline of private
landlordism in Britain.
For similar reasons, it is not possible to put precise dates on its emergence as
the dominant housing form. London tended to set the pace for the rest of the
country, so in different towns and regions a wide divergence in the dates of changes
in housing provision would have occurred. It does seem clear, however, that
capitalist housing provision triumphed at roughly the same time as the emergence
of the capitalist contracting system in the non-housing sectors of the construction
industry. Its broad framework subsequently lasted throughout the nineteenth
century but there were important changes in some of the elements, especially
concerning finance (e.g. the rise of the permanent building societies and the
financier solicitor) and in relation to speculative housebuilders (who got bigger
and started to own a lot of houses). But none of these subsequent changes Wiu
be dealt with here.
148 The development of capitalism ip1 housing provision
Like virtually all urban craft activities in the Middle Ages, building work was
organized upon the basis of feudal craft guilds. Each trade had its own guild con-
sisting of masters, journeymen and apprentices. Numbers were limited through
apprenticeship and in most trades by restricting operatives to working in one
town only. The activities of the masters were circumscribed by rules concerning
employment, methods of production, the quality of work done and its price.
Masters thereby had limits placed on their ability to subordinate other workers
in the trade and on the potential size of their profits. In this way permanent
employment was virtually assured, and wage differences kept within narrow bounds.
In Edinburgh, for example, in 1500,journeymen were being paid 9d a day, only Id
less than their masters (quoted in Postgate, 1923).
Anyone wishing to have building work undertaken would make separate arrange-
ments with each craft. This type of building organization did not require the detailed
specification and drawings usual in modern building nor did the type of building
contract exist that is now generally associated with such prebuilding calculation.
Instead, clients would specify their basic requirements and the materials and
style in which the structure should be built. Each craft would then apply its long
established work practices, techniques and details of design to the buildmg pro-
cess. These guild practices produced a rigid division of labour within the building
process and left little possibility of coordination between trades. The clients them-
selves generally took on the task of supervision and coordination.
Guilds were in no sense an idyllic form of organization of the building process.
The hierarchy within trades of masters, journeymen and apprentices obviously
placed the masters in a strong position. Apprentices’ labour was, for instance,
completely unpaid. Conflicts between building guilds and within the guilds them-
selves were frequent.4 The dissolution of the building guilds is the story of the
development of capitalism in the building industry. This took two fairly distinctive
paths: the growth of the building contractor, associated particularly with large-
scale public works projects and private industrial developments, and the rise of the
speculative housebuilder.
The division between contracting and speculative building was not total, each
type of building enterprise dabbled in the other activity where feasible and profit-
able. Even so, there was (and is) a clear distinction between the two types of
building activity. They arose for different reasons and produced separate organ-
izational structures and paths of development (e.g. the former has always had a
far more unionized workforce). The rise of the building contractor, or Victorian
master builder, is better documented than that of the speculative builder (cf.
4Leeson (1979) gives a detailed description of the feudal guild system and of the transform-
ation that took place within the guilds, especially the increasing distance between masters
and journeymen and the growing control exerted by a ruling stratum of merchants over guilds.
On the plight of apprentices,especially parish apprentices, see George (1966).
Michael Ball 149
Kingsford, 1973; Cooney, 1955; Clarke, 1980) and will not be considered in detail
here.’
Under feudalism buildings generally did not take the commodity form, instead
they were consumed directly as use-values by the commissioning agency. Public
buildings were the mainstay of the building trades but even houses would usually
be commissioned by the intending occupier. For capitalist relations to develop in
housing provision, therefore, housing consumption had to become widespread in
the commodity form through either its purchase or by renting.
Housing provided as a commodity does not necessarily imply the existence of
capitalist provision. Houses have been bought and sold for thousands of years.
Housing in the commodity form is not unique to any particular mode of produc-
tion but depends simply on the possibility of commodity exchange, no matter
how simple or h i t e d . Housing provision in the commodity form, however, only
became generalized with the separation of home and workplace associated with
the development of capitalism. Domestic life and labour were at the same time
redefined to centre on the reproduction of the nuclear family; a new role that
required far more living space than had previous lifestyles.6
Under feudalism, most agricultural labourers built their own dwellings; in-
variably they were rudimentary wood, stone and mud structures. Producers in
urban areas generally lived at their master’s workplace and home. Domestic space
for virtually all social grades was limited; the ‘home’ was not the centre of life.
As late as the eighteenth century in London, for example, even the shopkeeper
or well-to-do artisan would live only in one or two rooms, renting out extra space
if they had any (George, 1966, 103).
The first social groups t o face housing provision in the commodity form as the
norm were at the social extremes: the urban poor and the well-to-do. For the
poor, casual or no employment, increasingly common with the decline of feudalism
in the larger towns like London, obviously made living at the workplace impossible.
Housing for them could be found only by renting low quality accommodation or
by squatting. Bad speculative building and slum lardlordism provided the former,
and successive laws attempted to stop the latter. (One notorious late eighteenth-
century slum builder in London went under the incongruous title of the Hedger
of the Dog and Duck in St George’s Fields!)
At the other social extreme, the stabilization of the Court in London, the
breakdown of the patronage system of great feudal lords housing large retinues
of lesser nobles and fellow travellers, and an increasing surfeit of noble siblings
made propertyless by not being the first-born male heir, led to a rising demand
for fashionable London accommodation. By the seventeenth and eighteenth
centuries, the Court, its functionaries and the lesser nobility were providing a
growing market for speculative developments; as, furthermore, did the fashionable
spa and seaside towns in the latter half of the eighteenth century. At the same
’On present day differences between contracting and speculative building see Ball (1980).
6Cowley (1979, chapter 2) gives a good description of the transformation of domestic life
and its impact on housing with the development of capitalism.
150 m e development of capitalism in housing provision
I1 Estate development
particularly in London, exceedingly wealthy and often keen to profit from the
development of their estates. With certain exceptions, however, the original land-
owners would lease land to an intermediary, a speculative estate developer, even
though they knew the developer invariably took the lion’s share of the profits.
Estate developers were well known and involved in substantial schemes by the
middle of the seventeenth century; approaches by developers to landowners in
London in the wake of the Great Fire of 1666 were not seen, for example, as a
new innovation. Yet in no sense was their existence necessary for housebuilding;
some landowners or, more frequently, builders undertook the development role
particularly on smaller schemes. There were nonetheless important economic
reasons for the developers’ existence.
The estate developer determined the type of development that would take
place and its timing; laying out the street pattern, subdividing the land into plots,
and broadly determining the type of housing to be constructed. Where the land
was leasehold, the nature of the development would be determined by negotiat-
ing a building agreement with the landowner or an agent of the landowner. The
developers in such cases profited through improved ground rents by being able to
sublet building plots at a higher rent than that paid to the landowner. They could
then hold on to the improved ground rents as an investment or alternatively sell
them to get immediate revenue.
The aim of the estate developer was to profit out of the development gain
generated in the provision of new housing. But more was required to realize this
development gain than simply obtaining possession of the land through purchase
or a building agreement. Successful development actually had to occur. This
generally involved the developer in.far more than just a formal subdivision of the
land into building plots. Someone had to be persuaded to build the houses and
someone had ultimately to be prepared to pay a high price to live in them. The
result was that the developer had to undertake a considerable amount of building
work through site preparation, and p’ossibly through housebuilding itself, The
distinction between estate developer and builder is consequently blurred. There
is nonetheless a fairly clear distinction between those who were mainly involved
in development and undertook only that building work essential to realize the
development gain, and those who built primarily to make a profit out of build-
ing itself. Many of the most famous large-scale speculative housebuilders, includ-
ing Barbon, Burton and even Cubitt, were estate developers predominantly rather
than housebuilders.
Whilst estate developers were capitalists, production relations were not necessarily
so. As developers were profiting out of the development gain, not from production,
non-capitalist relations in production were feasible. The precise activities a developer
had to undertake to make a profit did not result from the physical requirements
of house construction but from the contemporary social relations involved in
housing provision. In other words, they depended on the other social agents in
existence at that point in time, the builders, landowners, building owners and
financiers, and on the economic relations faced by each of them. These social
152 The development of capitalism in housing provision
agents changed. Prior to the nineteenth century capitalist builders were virtually
non-existent, for example, so selling plots to such builders was hardly an option
for earlier developers.
Estate development was undoubtedly the most profitable aspect of house-
building. Rates of return of 300 or 400% were common. One developer in 1808, for
example, hoped to make a profit of &80000 by developing some land in Liverpool
purchased for only 210000 (quoted in Chalkin, 1974, 152). But large amounts of
capital were required, and the project might fail, so those with money had to be
persuaded to invest it. The size of the capital required effectively excluded most
of those directly in the building industry. A well developed network of financial
institutions did not exist; large sums of money could be raised but it had t o be done
on the basis of personal contact with the wealthy. Funds were obtained locally or
from the patronage of wealthy associates. In provincial towns development tended,
therefore, to be a part-time activity of wealthy locals - aristocrats, gentry or
tradespeople. In London, professional speculators were also involved. Courtiers,
soldiers and officials were common speculative developers in seventeenth and
eighteenth-century London; to compensate for their lack of building knowledge,
they would hire the services of a master craftsman, surveyor or self-appointed
architect, or form consortia with such a specialist in their midst (Chalkin, 1974;
Summerson, 1978, chapter 3).
Barbon’s activities at the end of the seventeenth century illustrate the nature
of these development operations, and the size that they could attain (see Summer-
son, 1978, chapter 3). He developed on a grand scale, laying out on occasions
&200000; arguing that large projects produced the greatest development profit.
Often he encountered opposition to his schemes, such as over the Red Lion Square
development in Holborn. So subterfuge was a necessary element in his business,
not only with recalcitrant property owners but also in acquiring credit. He would
build houses only when the plot could not be let.
A contemporary account summarizes Barbon’s system:
He was the inventor o f this new method of building by casting of ground into streets and
small houses, and to augment their number with as little front as possible, and selling the
ground workmen by so much per foot front, and what he could not sell build himself.
This has made ground .rents high for the sake of mortgaging, and others following his
steps have refined and improved upon it, and made a super foetation of houses about
London.’
Control over the design of structures erected by the small builders to whom
plots were let had to be maintained to give the development a coherence that
would enable it to sell. ContFol over the quality of the work done was not so
important, most potential purchasers or occupiers would be ignorant of such
shortcomings. Image rather than structural quality was the selling point. Skimped
work and a cheap finish were therefore part-and-parcel of Barbon’s developments.
‘R. North, Autobiography, quoted both in Summerson (1978, 45) and George (1966, 88).
Summerson argues that Barbon was not the inventor of the method but developed existing
methods on an unprecedented scale.
Michael Ball 15 3
He could also make additional profits by extending materials and cheap ornamen-
tation to builders on credit; this had the additional advantage of aiding the overall
uniformity of the development.
This general pattern was followed by many other developers throughout the
eighteenth century and into the nineteenth. Burton, another exceptionally large-
scale developer, operated in a similar way in the early nineteenth century, although
by then he had a different sort of builder to whom to lease the plots - the capitalist
builder. He built on a large part of the Bedford Estate in Bloomsbury, and was, in
all, involved in virtually 22 millions worth of housing development (Summerson,
1978, chapter 12).
The magnitude of the money that had to be advanced and the risks incurred
had an important influence on the developers’ actions. They wanted to minimize
the capital advanced commensuate with the maximum development gain. The
risk involved in these ventures can be seen from the fate of Burton, who lost his
fortune from previous speculations in the development of St Leonards-on-Sea,
Sussex. Every attempt was made to reduce the risk, or failing that, the amount of
capital at stake.
A certain minimum number of activities had to be undertaken by the developer.
Site works could be particularly expensive. In Georgian London, for example,
roads had to be raised to the height of the intended basements. Considerable
capital, therefore, had to be sunk into site preparation. Although per dwelling
the outlay was fairly small for working-class dwellings, reflecting the level of
amenities provided, it could still be substantial for the development as a whole.
These costs, of course, rose with higher quality structures: one developer in Bristol
spent ‘an immense sum’ of possibly 220 000 in 1791 on site costs (Chalkin, 1974,
149, fn.28).
This necessary outlay on building work did not have to involve the developer
directly in building and in the extra capital costs of setting up a building enterprise.
The work could be done by others. The early developers effectively had no choice
given the contemporary structure of the industry. But even later developers might
still prefer to let out this work unless they could ensure continuity of work, and
there were few who operated on that scale. The virtually unavoidable obligation
of developers to d o some building work consequently did not produce pressures
to transform the contemporary organization of the building industry.
Estate developers were faced with further unavoidable capital expenditure.
Freehold purchase of land required money, or where land was leased a rent had to
be paid. Leases would minimize the expense, especially as landlords usually agreed
to only a peppercorn rent during the period of development with rent charges
rising steeply after the initial years of the lease. The other major expense was the
loan of credit or materials to builders taking plots. This was essential to encourage
speedy development. In all, the initial investment was high and, as the develop-
ment would take a number of years to sell and build, the money had to be invested
for a long period. The more slowly the houses on the development were sold, the
lower the return. And there was always the fear that the project might fail completely.
154 The development of capitalism in housing provision
111 Houseowners
could be purchased complete from a speculative builder or, alternatively, the owner
could become involved directly in the building process. In the latter case, the
whole development function could be instigated or, more commonly, the owner
would lease plots of land from a developer and h r e craft workers to complete a
few dwellings.
Less capital was required in this part of the housebuilding process and, once
houses were let, the rental income was steady and dependable. As an asset, rented
housing could be sold and the money capital realized more or less at any con-
venient time. As a steady, long-term investment it attracted those with relatively
small sums of money to invest. Their capital could have been derived from profits
in other activities, a bequest, or savings; unsuited, because of its size, nature, and
the desire for a steady income, to being invested in certain other potential outlets.
Investment in trade or industry, for instance, needed minimum sums that were too
large for these small investors, and such ventures were often highly risky. The
absence of a well-developed national financial network left local rented housing
as invariably the best investment for them: either through mortgages or direct
ownershp. In this way a quite wide stratum of social groups were brought into
housing investment.
This pattern of investment in rented housing continued, as is well known,
throughout the nineteenth century. Complicated subleases enabled many small
capitals to be involved, particularly where rents and, therefore, house prices were
high. As late as 1910, contemporary writers were tallung of the frequent existence
of five or six ‘interests’ in one house (for example, in Bright, 1910).
The capital involved in housing ownership consequently had special charac-
teristics. It small size and localized nature, however, should not engender an image
of a surfeit of potential owners being forced to accept low rates of return. There is
little to indicate permanent excess of capital in this sphere. Booms and slumps
occurred and with them the rate of return varied, but, even so, the average rate
of return was still high especially with the gearing effect described above. House
owners invested capital in housing because it was profitable and not for want of any
other alternative. The alternatives open to such investors did increase, however,
during the nineteenth century but they only became of paramount importance with
the crisis of profitability of housing landlordism at the end of that century.
This argument might seem surprising in view of the frequently stated position
that private landlordism collapsed at the beginning of the twentieth century be-
cause the petty bourgeoisie were freed from the constraints of investing in rented
property by the growth of financial intermediaries like building societies and
insurance companies, which offered higher returns than those achieved in private
renting. Bowley (1944) is the prime source for this position.
In fact, this argument originated with the Land Enquiry Committee of 1914
explicitly set up by Lloyd George to support the interests of small capitals against
those of the great landlords. It is hardly surprising that this Committee should
feel that housing landlords had been hard done by. What actually appears to have
happened was that new investment in working-class housing to rent had ceased to
156 The development of capitalism in housing provision
be profitable in the decade prior to 1914 because of hgh construction and land
costs compared with feasible rents (given the level of working-class incomes).
Potential new capital, therefore, was diverted out of rental housing into other
areas. But this does not mean that returns on existing investments were low. If
anythng they would rise because of the housing shortage generated by the collapse
of new investment. In no sense, however, could t h s particular set of events be
shown to indicate that returns on investing in housing to rent had always previously
been low as the ‘trapped-through-lack-of-alternatives’ thesis would imply.
This issue of rates of return from house ownership is also of importance when
considering the early industrial capitalists who rented housing to their workforces.
Primarily such investment would be determined by the nature of their production
processes. One objective was to attract and retain a good quality, stable labour
force, especially workers with skills in short supply. Company housing also aided
the creation of a healthy, passive workforce. Where the location of works was
determined by sources of power in areas with small indigenous populations,
capitalists had little option but to provide some form of shelter for their work-
force (e.g. the housing associated with Arkwright’s works in the Derbyshire Dales;
Hoskins, 1970, 215-22). At the same time, however, housing was a profitable
outlet for their surplus money capital. In early capitalist enterprises, the capital
requirements of the factories might not be sufficient to absorb all the profits
made, particularly in boom years. Like others interested in house ownership,
early industrial capitalists were attracted by the steady return and the ability to
sell up at a reasonable price when necessary; factors met more readily by owner-
ship than by speculation.
Some industriahsts became substantial house owners and remained so as long
as it was advantageous either for the reproduction of labour power or as an invest-
ment. In later years, these attractions waned. Financially housing became less
attractive as progressively more capital had to be ploughed back into industrial
accumulation.’ But even when it was directed towards housing, this important
source of finance went into mortgages or ownership; spheres which did not directly
influence the relations of production in building.
What differentiates the house owners of the eighteenth and early nineteenth
centuries from their later counterparts was their tendency to be involved in dwelling
production. Frequently the owner would hire craft workers to construct dwellings
for subsequent letting. The practice of house owners organizing the actual
‘Bedale (1980) found in Oldham that, as late as 1854, by far the majority of the owners of
rented accommodation whose occupation could be traced were factory owners. In later years
this proportion fell dramatically although industrialists remained substantial landowners in the
area.
Michael Ball 15 7
construction process virtually ceased after the 1820s, instead they bought ready
made houses from a speculative b ~ i l d e r . ~
The principal reason for this distinction does not result from a greater speculative
zeal among earlier housing landlords compared with the caution of their Victorian
successors. It arises instead from the dominance of capitalism in housebuilding in
the latter period, which was not the case for the earlier years. Once this dominance
existed, the purchase of completed dwellings from speculative builders became
almost the only option. T h s change occurred because of inherent contradictions
in the old system of building. Building went through a fundamental transition
during this period, and it is the conditions which created that transition, and the
nature of the capitalist enterprises that eventually emerged which must now be
considered.
The breakdown of the guild system in building gradually proceeded through
all the restrictions imposed by guild practices. Minimal resistance was encountered
with some of them, particularly where building work took place outside of the
old urban guild strongholds as inevitably it did with urban expansion. The City
guilds of London, for example, had little say over what went on in the building
up of the West End or other areas outside of the City limits. As with other crafts:
political and legal pressures swung nationally against the guild statutes; they were
an impediment to developing capitalism. Some builders, especially presumably
the more affluent masters, were also keen to join in the profits from urban develop-
ment which guild practices made impossible. There were many regional variations,
however, in the speed of guild dissolution; invariably London led the way. The
distinctive social structure in Scotland meant that it had a-very different path of
development with guilds lasting longer and then a sharp transition to capitalist
organization (cf. Thompson, 1968).
The most important line of defence for craft workers involved limitations on
the availability of their skill. As long as apprenticeship restrictions remained in
force and demand was high, so that workers could negotiate the conditions under
which their skills would be involved in the building process, little resistance would
be put up to the loss of guild restraints. And wages of craft building workers in
the eighteenth century were comparatively good, according to most experts (cf.
Postgate, 1923; Summerson, 1978).
Work could now be undertaken in two ways. One way was for a worker to work
directly for a client as a handicraft worker complete with the necessary hand tools
for the production process. To all appearances this is a classic example of simple
commodity production. Alternatively, craft workers could get involved in
speculative building. Here, they needed capital, and the emergence of capitalist
relations of production begins.
9Data, of course, are not available to make detailed pronouncements about this type of build-
ing nor about the precise date of its demise. It was undoubtedly important prior to the third
decade of the nineteenth century (see Chalkin, 1974, chapter 7), whereas virtually no reference
is made to it in the literature concerning the later years of the nineteenth century. It most
probably disappeared at an earlier date in London than elsewhere, partially because of the
activities of the large-scale developers like Burton and partially because speculative house
building grew up faster there.
158 The development of capitalism in housing provision
Estate developers found these smaller speculative builders useful, as the pre-
vious section argued. Onto them could be off-loaded some of the risk and the
capital required, These builders would, moreover, be chronically undercapitalized
and consequently unequal business associates, particularly if the developer lent
them money or materials. So the developer could negotiate good terms. And they
relieved the estate developer of many management functions and of the need to
have much knowledge about building (as long as the developer was not too worried
about the quality of the building work).
Bricklaying and carpentry were the trades most heavily used in housebuilding,
and members of those trades dominated the trend of skilled building workers
becoming speculators in their own right. Minimal amounts of capital were re-
quired for small speculations, as long as the completed dwellings could be sold
quickly. And everything was done to keep that capital to a minimum. Work was
subcontracted to other crafts rather than instigating capital consuming direct
employment.
Payment for this work was frequently made after the disposal of the com-
pleted house or, alternatively, complex systems of (‘blood for blood’) barter of
equivalent labour times on each other’s speculative ventures formed the means of
payment. London builders tended to build only the outer shell of the structure
(and the basic internal carpentry) until a purchaser was found; who could then
have the building finished off to their taste, once their cash was forthcoming.
Land costs were also minimized by building agreements which stipulated only
peppercorn rents during the construction period. In this way, land costs would
only become effective once the builder had assigned the lease to the purchaser
(Summerson, 1978,77-79; Olson, 1979, 159).”
The housebuilding venture by craft builders was highly speculative even though
the capital might be small, any miscalculation on the selling price or the working
capital required could spell disaster for those building on credit.” Yet, on the
other hand, the high profits possible made the risk of debtor’s jail worthwhile
to a large number of craftworkers.
‘OThe capitalist speculative builders of the 1830s could also reduce their outlays by taking
advantage of the remnants of the system as shown in this contemporary account of 1834.
‘A builder makes up the carcass, the house being just tiled in. He then lets them for an
additional ground rent to mechanics, chiefly carpenters, bricklayers and plasterers. He will
give them a hundred deals and a proportionate quantity of lime to begin with. The carpenter
then agrees with the bricklayer and plasterer that each shall do the work of the other, and
with their reciprocal labour and their savings they finish the house (quoted in George, 1966,
90).
“Contemporary eighteenth century accounts put the capital needed to set up as a master
builder at &lo0or over four years income for a contemporary foreman bricklayer. Summerson
suggests, however, that far less capital was required for speculative building: ‘any clown of a
bricklayer with a guinea or two in his pocket could plunge into the speculative business’
(Summerson, 1978, 78). But the necessity of access to capital cannot be lightly dismissed.
For it is crucial to the initial differentiation of the workforce into capitalists and workers.
Capital was not only required to instigate one speculative venture but also to sustain and
expand the operation. The risk of failure is obviously less if more than one house is built or
if creditors can be fended off with total or partial payment from a capital fund. Unless the
guinea or two could be turncd into a much larger sum, the ‘clown of a bricklayer’ would
soon return to being a bricklayer, a clown or something even worse.
Michael Ball 159
When many similar independent craft workers exist, potential clients can shop
around to get the best price for undertaking a particular piece of work. Craft
workers in effect have to compete with each bther, and normal rates for specific
types of building work evolve. Exchange is, therefore, based upon socially necessary
labour time in the form of value.13
When such social relations prevailed, speculative builders were just one potential
client for the craft worker. As they could not control the labour process or the
conditions under which workers entered it, these speculative builders had to pay
the full value of building a house. As craft workers themselves this payment would
have been partially for their own labour. Nevertheless, the value of a house
represented a cost to them, so they could not make a profit on their capital from it.
Neither could the estate developers have derived their profits from production,
nor could surplus profits from building have paid the ground landlord's rent.
Housing was, therefore, only produced if it could be sold at a price well above its
value. The need for surplus profits to pay the speculative builders, developers and
ground landlords restricted the supply of housing and raised its price above that
resulting from production alone.
The increase in the price of any individual house produced in this way would,
of course, have varied enormously. The type of house, its location, the state of the
market and a whole host of other factors would have influenced the magnitude
of the price mark-up. The exact effect of these factors, moreover, would not have
been known prior to building, which is precisely why housebuilding was such a
speculative activity.
Two general conclusions regarding housing ground rent (or urban rent) can be
derived from this discussion. The first, and most important, is that ground rent
does not have to be seen as a deduction from builders' profits. This obviously did
not happen in the situation described above and it implies that the effect of rent
on the building industry is more complex than just a reduction in potential profit.
A corollary of this point is the second general conclusion: that difference in the
ground rent paid on different structures need bear no relation to differences in
the cost of producing those structures. These points might seem obvious but they
have important implications for the way in which rent relations are analy~ed.'~
If house owners did not purchase their houses from speculative builders, they had
'"he actual price any client has to pay will, of course, vary with the state of the market.
If more building work is required than there are workers to do it the market price will be
bid up, and vice versa. Such short-term fluctuations do not alter the central point concerning
the absence of surplus value in production.
I4They relate, of course, to the theoretical validity of transposing Marx's categories of dif-
ferential and absolute rent from an industrial to an urban context. 'Urban' here, following
common usage, is being treated as synonymous with 'housing'. This is a suspect transposition
but it does have the advantage of distinguishing the rent accruing to a ground landlord from
that to a housing landlord, part of which is payment for capital.
Michael Ball 16 1
to make arrangements with the individual craft operatives. This was, of course,
the old guild way of doing things, except that the craft workers were by now
independent artisans. When compared with speculative purchase, owners could
impose their wishes upon house design, and they avoided having to pay the specu-
lative budder’s profit.
This system, however, had its problems for owners as the roles of coordination
and supervision rcsted on them. Constructing a house could be a time-consuming
and expensive process, particularly for those with little knowledge of building as
was the case with most owners. Cost control was especially difficult. The final
cost of a house would not be known a t the start of building as numerous construc-
tion problems might arise. Detailed coordination of the various trades and delivery
of materials might additionally prove an almost insuperable problem for the in-
experienced owner; and delays all added to costs. Owners had, moreover, to take
at faith the craft workers’ skdl and honesty. The temptation to skimp work for
the ingenuous client must have been considerable. The overall management role
taken by the owner also necessitated a knowledge of what trades and materials
were required. This was fairly straightforward for simple structures but more
complicated designs were beyond the scope of such a relationship between owners
and producers.
As a result of these problems, intermediaries developed between the owner and
producer. Owners began to employ surveyors, or self-nominated members of the
rising profession of architecture, to take over the role of design and coordination
when large or imposing structures were required. Acting as the owner’s agents,
these professionals would then deal with the craft workers. For more simple build-
ing projects, like most housing to let, architects and surveyors were unnecessary.
Instead the situation gradually arose of one craft worker agreeing to oversee the
activities of the others. A Lancashire carpenter in 1744, for example, was paid
an additional 10s 6d per week to superintend the other trades to prevent the
owner from being defrauded (cited in Chalkin, 1974,194).
Problems between house owners and producers in the form of organization
of production consequently caused that form to change. But what took its place
cannot simply be deducted from these developments. Speculative housebuilding
under capitalist relations of production eventually took over in the mass provision
of housing. The specific conditions necessary for that dominance had nevertheless
to exist in order for that to occur, and they extended well beyond the problems
of the old system. But, even in relation to the latter, capitalist speculative building
could only ever come to dominance if the problems of the old type of organization
could be overcome in this way. Yet, most importantly, speculative building also
had to be cheap enough for owners to contemplate such direct purchase as the
alternative, and still provide the builder with a profit.
Initially, the cost difference could not have been much, but even so direct
purchase had its advantages. Speculative housing entirely avoided the construction
management problems of the owner. The completed dwelling could be inspected
before purchase and the price was known. Skimped work might pass unnoticed but
162 The development of capitalism in housing provision
"Man gives a detailed exposition of the changes in the labour process that can be achieved
in this way in Cupital, volume I, chapters 13 and 14.
Michael Ball 163
‘6Postgate highlights the situation of painters whose craft position was virtually destroyed
after 1830. ‘With the incursion of labourers came the growth of the idea - largely false -
that painting could generally only be done during the summer and during the winter the painter
must be idle. The result was the casualization of the trade as a whole: a certain percentage
of painters, attached usually to the large firms, remained craftsmen fairly sure of employment,
but for the rest the trade became assimilated, both in pay and personnel, to general labouring’
(Postgate, 1923, 237). Tilers were affected in a similar way but, here, it was the result of the
incursion of unskilled tiling subcontractors (Postgate, 1923,115).
164 The development of capitalism in housing provision
This increased workload far outstripped the capacity of the old craft system.
The houses of the rich, church building and the 'quality' public buildings would
have absorbed much of the craft labourers available, except during slump years.
The labour shortage was reflected in wage rates. Considerable regional variations
existed but the boom of the early 1790s led to wages increases of 40 to loo%,
and wages rose substantially again during the boom years from 1800 to 1812.
There is evidence that the rise was greater for craft workers than for labourer^.'^
Building costs were rocketing and high profits induced speculative builders and
contractors to substitute unskilled workers for skilled wherever possible. Fully
stretched craft workers would not compete in terms of rates and failure to dilute
would have meant missing the profitable bandwaggon.
The simple nature of much of the new building work made this possible. Cheap
housing required little or no s k d , and whatever was required could be derived from
the speculative builders' own trades when they were craft workers. Similarly,
much of the public works activity made it possible to rely on unskilled labour.
Roads, docks and canals obviously required much labouring, but the repetitive
tasks of a number of the trades could also be given to unskdled workers to pick
up as they went along.
Evidence of such dilution is scant but the temptation must have been great,
and the cost savings considerable as the great influx of the unemployed made
labourers easy t o hire. Postgate suggests that the apprenticeship system and working
rule practices virtually collapsed during the years of the Napoleonic Wars. This
would indicate dilution on a massive scale. He quotes a contemporary leaflet by
masons in Manchester who complained bitterly that anyone could turn their hand
to masonry in the past few years. Contemporary speculative building profers
further indications of such practices. Building regulations outside of London were
virtually absent and scamped, shoddy building was the norm for working-class
housing. Jerry-building of small houses hardly requires much skill of the craft
kind.'*
Craft workers had little chance to fight against the gradual imposition of
capitalist relations of production and the dilution of craft skilis. Political repression
of workers' organizations via the Combination Acts made organized resistance
difficult, and the possibility of obtaining well paid employment anyhow would
have weakened their inclination to fight, as would the temptation of becoming
small capitalists themselves. But what finally subordinated the independent craft
worker was the cyclical nature of the building industry, with boom periods being
rapidly superseded by dramatic slumps and extensive bankruptcies. During booms
credit was freely accessible, many craft workers would be tempted to speculate
on such easy money or to work for a master for high wages. But during the slumps,
'7Chalkin (1974, 221-22) quotes the situation in Manchester, for example, wtere carpenters'
and bricklayers' wages rose from 18s per week in 1793 to 25s and 22s 6d respectively in the
1810s. But their labourers' wages rose from only 13s 6d to 15s 9d.
"Chalkin (1974, 224) notes that the price of higher quality, larger dwellings rose faster than
for smaller ones. This difference presumably reflects the greater use of craft labour and good
materials in the former, and dilution and jerry-building in the latter.
Michael Ball 165
many of the speculators would be pauperized by the sudden recall of credit during
the inevitable financial panic. Work would become scarce and rates cut. As capitalist
builders gradually increased in relative importance, they would become the major
source of employment. For they had the ability to set the rates for building work,
both because of their superior (in the sense of cheaper) organization of the labour
process and through their exploitative role in relation t o their workforce.
Independent craft workers would have difficulty competing with such rates, and
would be forced to join the capitalists’ workforce or starve.
There were two notable slump periods from the late 1780s t o the 1820s. The
first lasted for almost seven years after the financial panic of 1793, and it had
been preceded by the biggest building boom of the eighteenth century. The second
was in 1814-16 after a decade of expansion (Chalkin, 1974, part 4; Parry Lewis,
1965, chapter 2). In both slump periods, many speculators were brought down
and distress in the building trades rose. Postgate suggests that it was during this
era that building employment and wages firmly joined the trade cycle; with the
slump in 1816 bringing building operatives’ wages down to starvation level.
By the 183Os, capitalism in building had triumphed. In housing most work was
undertaken by speculative builders. For other building projects work would be
let to a main contractor - a capitalist master builder. In either speculative building
or contracting, work might be sublet but such subcontracting was more a form of
wage payment than an expression of the existence of independent craft workers as
under the old system. It reflected the casualization of building employment.
Capitalist organization had different effects in contracting and speculative
building, resulting from the different economic structures faced by each. Contract-
ing had a different path of development from speculative building. For one thing,
it was never dominated by merchant capital.” Its role in the breakdown of the
old craft system was, however, similar and complementary to that of speculative
buildmg. It was, all the same, different from speculative building in a number of
crucial respects. Land and speculation in land did not enter the circuit of capital
of the contractor, the contractor’s client was known before work started, and
many projects were on a very large scale. Contractors were able to derive the
economic advantages of large-scale organization, and also of direct and continuous
employment of operatives, when competing with the old craft system. Such charac-
teristics as these were, on the other hand, often fatal in the speculative builders’
operations of this era.
W Landowners
This discussion of the development of capitalism has so far neglected the question
of landownership. At first sight this omission might seem a reasonable one.
19Cooney (1955) gives four types of organization of building fiim through which the guild
system evolved into that of the capitalist contractor.
166 The development of capitalism in housing provision
Landowners were just the receivers of rent, and therefore a drain on the potential
profits of capitalists in building, rather than a driving force in producing change.
Such Ricardian passivity on the part of the landowner is, however, only half true
and as a description of their role it raises more questions than it answers.
Landowners were in a peculiarly advantageous position with regard to housing
development in that they had a monopoly control over land and access to large
sums of money: the two key requirements for development. Even during the period
of the rise of capitalism in Britain, land was still the major indicator of wealth.
As late as 1812 a contemporary estimate claimed that 45% of the wealth in Britain
was represented by land holdings, and a further 10% by dwellings.20 Many of the
landowners whose land was developed for housing consequently were exceedingly
wealthy.
By hiring managers and building workers, landowners could have controlled
the building process, and by hiring housing managers, they could have become the
housing landlords. All the profit from housing development would then have
accrued to them. But instead, in virtually every case, landowners opted for a rent
role alone. They spent considerable effort in encouraging the operations of de-
velopers and builders on their estates, and in doing so enabled these speculators to
take much of the profit from development. Landowners opted for the structural role
of rent receivers because it suited their economic interests. The reasons for this
must now be explored.
Landownership was the economic basis for a distinct class with its own ideology.
At the summit were the landed aristocracy followed by the gentry and squirearchy.
Even during the nineteenth century landownership was a necessary passport to the
peak of the social pyramid, and to political power; a position that was not funda-
mentally altered until the end of the nineteenth century. Land was, consequently,
not to be treated as a mere economic asset, held solely on the basis of the capitalist
criterion of profitability. Even capitalists, when they had made it, would often
purchase landed estates for the social prestige they conferred; although they had to
buy at prices that gave a very poor financial return.21
Landowners were subject to strong social pressures on how they should behave.
Paramount in the ideology of the proper lifestyle was the notion of the gentleman.
Involvement in trade and industry was frowned upon, and landownership created
the economic conditions which made such an ideology possible. Direct economic
involvement in the economy was not necessary to maintain the class situation of
landowners. Landownership had been the economic basis for the existence of the
ruling class under feudalism. Feudal nobles, then, had consumed the surplus product
of agricultural labourers by virtue of their control over land. Unlike capitalists who
have to reinvest capital to maintain accumulation and so remain as capitalists,
2oP.Colquhoun, Trearise on rhe population, wealth, power and resources of the Brirish Empire,
1815, London, quoted in Bemis (1936).
"Thompson (1963, chapter 2) discusses the land acquisition activities of a number of these
erstwhile magnates.
Michael Ball 167
appropriation of the economic surplus by controlling the supply of land did not
necessitate an active economic role in the reproduction of that surplus. Land-
ownership retained that peculiar characteristic even after the advent of ground
rent paid by capitalists. Rent receivers simply had to consume. And by the
eighteenth century the English landed aristocracy had taken the notions of leisure
and conspicuous consumption to an extreme.
Ideology therefore played an important part in limiting the role of the land-
owner in the building process. But its importance should not be exaggerated. The
ideology relating to landownership was primarily centred on country estates whereas
urban land was seen principally as an important source of revenue. Agricultural
crises, for example, and their effect on rent rolls could be partially offset by urban
development. The need for additional revenue to finance the rising costs of aristo-
cratic lifestyles could also be satisfied by urban development ventures. The seventh
Duke of Devonsfure paid off the millions of debt left by his predecessor, for
example, by the development of Barrow-in-Furness and Buxton Spa (Hobsbawm,
1969, 107). Ideology could be tempered by expediency. Economic necessity in
fact led to the total rejection of the importance of the gentlemanly lifestyle with
the collapse of its economic base in the early years of this century.
Way before this collapse, however, noble lords were taking a careful and close
interest in their urban estates. The agents of the Dukes of Bedford, for instance,
kept strict control over the development of their Bloomsbury estate, and designs
had to be personally approved by the Duke (Hobhouse, 1971, chapter 4). Lord
Southampton had, in the seventeenth century, been aware of the need for care-
fully planned development and well drawn up building leases. Lord Burlington
went so far as actually to be involved in the production process, by producing
designs for buildings on his estates. The dividing line between leisure and industry
was ideologically speaking far less clear, therefore, in estate development. The
most important vestiges of that ideology could, however, be maintained by the use
of the short building lease. In this way economic interest and ideology did not have
to come into conflict.
There was, nonetheless, another non-economic constraint upon landowner’s
operations. It resulted from the legal restrictions imposed upon land sales and
land use. Land law under feudalism had developed to reflect the economic
importance of land. It was designed to maintain the basis of feudal ecopomic
wealth against the threat of short-term expediency; its purpose was not simply
to protect the interests of an individual in whom ownership was designated but
to maintain the class situation of a wider group, ‘the aristocratic family’. Land
law had developed from this feudal base in a piecemeal fashion for centuries, so
that by the eighteenth century it was a mass of complex and confusing statutes.
Primogeniture, entail, restrictive covenants, substantial family charges including
payments to dowagers, all placed restrictions on the activities of the landowner.
It was not the case, however, that such legal restrictions were simply a feudal
remnant. The restrictions had, on the contrary, increased throughout the seven-
teenth and eighteenth centuries as the landed class strove to protect their economic
168 The development of capitalism in housing provision
base against the increasing exchange orientation of the economy and the growing
power of the bourgeoisie. This was even still the case for much of the nineteenth
century. The concentration of landownershp was increasing in the eighteenth
century and it continued up to the 1870s. The landed class had distinct economic
interests, land was a source of revenue in a way totally different from the profit
received by the capitalist, Legal devices such as strict settlement, which prevented
heirs from breaking up estates, were a part of the mechanisms protecting those
economic interests. In 1848, for example, it was estimated that over two-thirds
of the country’s land was held under strict settlement. Landowners in the
eighteenth and nineteenth centuries were consequently not interested in land law
reforms, it was only when their economic situation changed at the end of the
nineteenth century that opposition to reform by landowners ceased.
A number of devices existed in the eighteenth and nineteenth centuries by
which urban development could take place in situations where strict settlement
of the estate would seem to forbid it. In the first place, the English system of
settlement only allowed land to be tied up for a maximum of three generations
(via the eldest male heir) rather than in perpetuity. It was, moreover, common to
resettle the property each generation on the marriage of the eldest son, when the
terms of the settlement could be redrawn. At these times some land could be
freed from the general restrictions, especially if it had a development potential
which could not be achieved within the confines of the settlement.22
Where settlement could not be redrafted recourse could be made to the courts
or, when necessary, to Acts of Parliament for the removal of restrictions. These
procedures were a nuisance more than anything else. There were, for example, a
spate of bills through Parliament to break entail after the 1760s: a Private Act
cost between ;El50and WOO,a small sum for large developments (Chalkin, 1974,
70-71). The need for recourse to law to break entail did not generally have a
fundamental influence on whether land was developed on a freehold or leasehold
basis. Building leases often needed Acts to break settlement as well as did the
outright sale of the freehold. The choice between freehold sale and leasehold rent-
ing lay far more with economic factors.
Whilst legal restrictions were effective in maintaining the concentration of land-
ownership, they did not, therefore, generally restrict the possibility of housing
development. Settlement was a mutual, if not always harmonious, arrangement
between members of landed families rather than an external limitation on their
economic interests. Restrictions on land disposal or its use must have proved irk-
some for some landowners, but land law mainly influenced the nature of the hous-
ing development process not its extent. And it did this primarily because land-
ownership in many parts of the country was concentrated in the hands of a small
number of wealthy owners, rather than because of the additional legal restrictions
placed on that ownership.
*‘See Thompson (1963, chapter 3) and Spring (1957). Spring gives a detailed description of the
working of the system in the nineteenth century, where he concludes that, ‘Too much, in short,
can be made of the restrictions of family settlement’ (p. 484).
Michael Ball 169
a3The Committee on Town Holdings, 1888, which came out strongly in favour of the landed
interest in the face of agitation for leasehold enfranchisement, suggested that ‘landowners have
neither the means, the knowledge, nor the inclination to erect houses on their land . . .’ (its
report, p. 18). Much of the discussion of the position of the landowner in housing development
unfortunately can only be derived from literature relating to the nineteenth and early twentieth
centuries. By this time the role of the landowner had become an important political issue.
The principles which such documents discuss, however, relate to the general nature of land-
ownership in Britain prior to the first world war, and as such have considerable relevance to
the operations of landowners in seventeenth and eighteenth century housing development.
170 The development of capitalism in housing provision
the long-term rise in property rents and values, gains which were unlikely to affect
contemporary selling prices for land.%
Freehold sales also restricted the number of potential purchasers, and therefore
the land’s selling price, as many possible buyers, such as builders, had insufficient
capital to buy freehold but enough for leasehold. For the same reason, leases
avoided the constraint upon development that would have been imposed by the
higher cost to the builder of freehold sites. Ground rent need not be imposed at all
upon the builder, but solely on the final user of the dwelling, by charging only
peppercorn rents during the development phase. The absence of an efficient market
in loan-capital for would-be land purchasers was, in effect, compounding the
advantages of leasehold. For it created a situation where arbitrage did not equate
the effective present value of the return from leasehold rents with freehold selling
prices. Landowners quite simply got a bad deal from selling freehold.
The leasehold system was not the perfect solution for everyone involved in
building provision. Estate developers and builders did benefit from the reduction
in capital outlay but this advantage could be outweighed by covenants that limited
what they could build. The owner might insist that a type of development be
undertaken that was not ideal for the site, or stipulate structures that maintained
the character of the wider locality but limited the potential development gain from
the specific Site. Covenants also ensured that building would take place within a
few years at most. Builders might consequently be obliged to build at a time when
market conditions would have suggested otherwise.
Leases also increased the cost of finance when compared with freehold, as the
ground rent always represented the first charge on the property. Leaseholds were
consequently regarded as poorer security for mortgages and other loans. Borrowing
was made difficult and, when successful, higher rates of interest had to be paid,
with stringent powers of foreclosure and sale (see Committee on Town Holdings,
1888, 7; Land Enquiry Committee, 1914, 411). This affected borrowing by the
final purchaser as well as the builder, thereby limiting the potential market for
leasehold houses. Widespread owner occupation would have been difficult under
the leasehold system, which was, therefore, very much tied to housing for rent.
The prime losers from leaseholds were the house owners and users. They were
faced with the reversion of the lease with, at least in the early years, little reduction
in rent as compared with freehold (for the reasons given above). Sinking funds had
to be charged to recoup the capital cost when the building reverted to the landlord.
Any change of use, improvement or extension required the landlord’s permission
and the payment of a heavy fine or premium. In this way the landowner could
UThe effect of such long-term gains from property were well known to Victorian investors as
well as to landowners. Insurance companies were already investing upon this basis, as well as
trustees and others ‘satisfied with investments which provide, but a small present income,
but which are gradually growing in value’ (Committee on Town Holdings, 1888, 118). The
Committee also cites the case of an individual who was prepared to invest in property at a
current return of less than 0.75% ‘knowing that “the property is coming into reversion, and
will benefit my family after me”’ (p. 119).
Michael Ball 17 1
recoup some of the enhanced land value well before the lease expired. One of the
worst features of the leasehold system was argued to be the lack of incentive
for building owners to maintain their property, especially when the lease had
only a short term to run. Sublessees would rack-rent such property to the poor
at exorbitant rents. This led the Royal Commission on the Housing of the Working
Class in 1885 to blame leaseholding for some of the worst features of the housing
problem.2s
The leasehold system was not universal in eighteenth and nineteenth-century
Britain. Leaseholds were concentrated in the major industrial areas, with some
areas having long leases of 999 years whilst others had short leases of less than
100 years (the 99 year ‘London’ lease being the most common). Explanations for
the geographical variations range from local custom according to a Manchester
landowner in 1782,26 through the relative cost of land according to the Town
Holdings Committee of 1888, to monopolistic imposition by combines of land-
owners, according to Lloyd George’s Land Enquiry Committee in 1914.
The high cost of land undoubtedly encouraged leasehold. Short leases, as has
already been argued, virtually removed the cost of land for the builder. But other
systems of deferred or perpetual payment also lowered costs. In many areas, pay-
ment for long leases or freehold was commuted to a perpetual yearly payment
called a chief-rent. This was the practice in the Manchester District in the late
eighteenth century, for example, although it still kept land costs above the short-
lease equivalent and raised house rents as a consequence (Chalkin, 1974, 247).
Where the demand for development land was comparatively low, and many
owners were trying to attract builders, landowners had difficulty imposing short
leaseholds. A mid Victorian landowner in Huddersfield, for example, had been
granting 99 year leases on building plots for a number of years when competition
from neighbouring landowners forced him t o procure another Act of Parliament
enabling him t o sell freehold (Committee on Town Holdings, 1888, 42). Further
evidence of the importance of market power is the fact that in freehold areas
landowners were frequently expected to d o much of the initial site work and
estate layout. Landowners could only impose short leases and derive their un-
doubted benefits when the demand for development land was high and a sufficient
number of owners in the locality were prepared to exert their monopoly control
over land. It is consequently hardly surprising that the short lease came to be
called the London lease for London exhibited these characteristics most clearly.
In summary, landowners in the eighteenth and nineteenth centuries had good
reasons for the economic place they occupied in the structure of housing provision,
particularly if they could let land on a short building lease. Staying as a rent
receiver, and shunning the profit from development and building made good
economic sense, given the contemporary nature of speculative housebuilding.
*’The system of building on leasehold land is a great cause of many evils connected with over-
crowding, insanitary buildings and excessive rents’ Royal Commission on the Housing of the
Working Classes, Supplementary Report, 1884.
%Quoted inchalkin (1974,97-98).
172 The development of capitalism in housing provision
But, by remaining solely as landowners, they were faced with the problem of
attracting developers and builders.
The main incentive to developers was the gain that could be made through sub-
leasing a site at an improved ground rent. The landowner consequently had to
forego much of the initial development gain to attract developers and builders.
Other expenses might also be necessary to set development in progress, such as,
on some of the infrastructure. And the restrictions imposed within the lease might
have to be far weaker than the owner would have preferred, particularly in terms
of building quality. A report made around 1800 to Governors of the Foundling
Hospital of the progress of the development of their estate in London presents
the owner’s dilemma succinctly:
Those who build for their own occupation may reasonably expect such Buildings as we
fear is not practicable to obtain from speculative Builders for however prudent or desir-
able it may be to restrain and regdate the conduct of the work by Agreements founded
on the most minute description of the dimensions and quality of every part of the Build-
ing yet experience has shewn that such restrictions would materially impede the letting
of the ground (quoted in Summerson, 1978, 169).
In no sense could the landowner dictate all the terms to the builder. There was
more to speculative building than the enhancement of ground rent.
It is sometimes argued that the specific nature of the building industry is to a great
extent determined by physical factors alone, so that there are only a certain
number of ways of organizing the building process and that very little can change
over the years. Organizational differences become of secondary importance and an
essential continuum of small-scale, craft-based production is seen as the inevitable
result. The transition t o capitalism discussed here cannot, however, be seen in
such a light. There was a fundamental break in the organization of the industry
from precapitalist to capitalist production. Both organizational forms coexisted
for a number of years, and ascendant capitalism did not produce any dramatic
changes in building techniques. But this factor has to be explained rather than
treated as technologically inevitable.
The structure of capitalist housebuilding was, on the other hand, not a simple
imposition of a particular set of social relations. The precise relationship between
each agent evolved as a result of the preexisting social relations in building and the
desire for profit. The specific separation, for example, of the activities necessary
for housing provision can only be explained in this way. The separation between
landowner, developer, builder and landlord was not simply the result of a specializ-
ation in technical function but arose because of differences in their resepective
economic interests. In this, the attempt to minimize the risks involved in speculation
were crucial. It led landowners to remain as rent receivers; estate developers to
avoid as much capital outlay on building as possible; the actual housebuilders to
Michael Ball 113
which only broke down when it no longer maximized the development gain. The
existence of endless rows of terraced housing and the supposed intrinsic English
taste for living in low-rise houses consequently have their origins more in the
operations of the eighteenth and nineteenth-century speculative housebuilders
than in any innate Anglo-Saxon characteristic.
The widespread use of building leases in areas of high demand from the middle
of the seventeenth century until after the first world war also made it difficult
to speculate in development land. Landowners, by using building leases, were in
effect only making land available on the condition that it was developed almost
immediately; or that if a delay in development occurred for some reason it would
not profit the developer at the expense of the owner. So speculation by developers
and builders had to be in housing development and not land alone.
The most obvious way in which landownership affects housing provision is
through the need to pay rent for the use of land. It is commonly argued that it is
the magnitude of land rent that is one of the central reasons for the existence of
the housing problem (cf. Pollard, 1975). Rent is undoubtedly important, but the
precise way in which such rents relate to the provision of housing needs to be
specified. For many builders in the late eighteenth and early-nineteenth centuries,
ground rent was not their central problem. Land rents did increase rapidly with
rises in urban populations associated with the industrial revolution. Land prices and
the fines payable on some building leases rose threefold or more between the
1770s and 1820s on the fringes of most urban areas (Chalkin, 1974, 141). But
even when bought by the builder, land was usually only 10-15% of the initial
outlay, and when leased it was minimal. More important than the magnitude of
rent was the existence of rent and the form taken by t h s mechanism of economic
gain by landed property. As was argued above, the structure of landownership
in eighteenth and nineteenth-century Britain had an important influence on the
structure of housing provision, and on what was built.
For everyone in the housing provision process the price at which a hoyse could
be sold (or let) was paramount, but it varied considerably over time and between
developments. This is precisely the reason why housing development was a specu-
lative venture. Rent influenced the final selling price, yet the magnitude of the
selling price also determined the speculative profit made by the builder. Rent
and housebuilding were consequently linked via the selling price of houses.
The early nineteenth-century housebuilders were not particularly efficient,
and their later counterparts in that century had little success in transforming
the methods and cost of production. The high cost of new housing, however,
made already existing housing exceedingly profitable. It put a very effective con-
straint upon the supply of housing at rents which most workers could afford.
Rents on existing houses could rocket, and workers could be packed into appalling
conditions, in the knowledge that with minimal state intervention little alternative
existed.
The very structure of the housing provision created by landowners, namely
speculative housebuilding of the type described, vindicated those same landowners’
Michael Ball 175
attitude to ground rent - do not hold back the operations of developers on your
estates too much, wait for the longer term gains. The production process engendered
by speculative housebuilders made sure that those longer term gains were realized.
IX References
Parry Lewis, J. 1965: Building cycles and Britain’s economic growth. London:
Macmillan.
Pollard, S. 1975: Review of Chalkin (1974). Urban Snrdies 12,349-51.
Postgate,R. 1923: The builder’s history. London: The Labour Publishing Co.
Spring, D. 1957: English landownerslup in the nineteenth century: a critical note.
Economic Hisror?,Review 10,472-84.
Summerson, J. 1978: Georgian London. Harmondsworth: Penguin.
Thompson, F. 1963: English landed society in the nineteenth centuty. London:
Routledge and Kegan Paul.
1968: Chartered surveyors. London: Routledge and Kegan Paul.
Wohl, A . 1977: The eternal slum. London: Edward Arnold.
La provisidn de viviendas para la clase trabajadora en Gran Bretaaa durante el siglo diecinueve
era principalmente d e viviendas particulares para alquilar. Las razones de su existencia y su
desaparicidn posterior se basan principalmente en la clase de 10s propietarios de las viviendas
(primordialmente pequen"os burgueses) y en hs luchas de la clase obrera sobre la poltica de
viviendas del estado. Aun reconociendo la importancia des estas relaciones entre clases, esta
ponencia arguye que es necesario considera el grupo m i s amplio de clases involucradas en toda
la estructura de provisidn de viviendas antes de poder dar una explicacidn adecuada de la
propiedad privada. Hay que examinar cspecialmente, 10s papeles jugados por 10s terratenientes,
el capital productor y la proletarianizacidn de la mano de obra de la industria de construccidn.
La evolucidn de la estructura de la provisidn de viviendas a1 principio del siglo diecinueve se
estudia examinando el papel de 10s diversos agentes sociales en la sustitucidn de formas pre-
capitalistas por viviendas capiialistas. Estos agentes eran el propietario, el terrateniente, el
urbanbador, el especulador y el trabajador en la industria de la construccidn. Se arguye que la
forma especial del desarrollo del capitalismo en la industria de construccidn de viviendas, la
construccidn especulativa, es esencial para poder comprender pro qud las viviendas para alquiiar
finalmente tuvieron tal importancia.