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The Treasury As Developer-Capitalist? British New Town Building in the 1950s

Published online by Cambridge University Press:  03 March 2009

Carol E. Heim
Carol E. Heim
Affiliation:
The author is Associate Professor of Economics. University of Massachusetts. Amherst. MA 01003 and currently a Fellow at the Center for Advanced Study in the Behavioral Sciences, Stanford, CA94305.
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Abstract

In the 1950s the British Treasury made an unusual departure from its traditional effort to minimize government spending, arguing that publicly funded development corporations rather than private developers should build town centers in New Towns so as to reap returns from property development. Often associated with frontier growth, development gain is partly created by the state and can only emerge and be realized with the passage of time and the evolution of expectations. Divisions within the state kept Treasury officials from fully securing a greater public role in New Town center building.

Type
Articles
Information
The Journal of Economic History , Volume 50 , Issue 4 , December 1990 , pp. 903 - 924
Copyright
Copyright © The Economic History Association 1990

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References

1 The history of Treasury control and its practice in the 1950s are discussed in Beer, Samuel H., Treasury Control: The Coordination of Financial and Economic Policy in Great Britain (2nd edn., Oxford, 1957):Google ScholarBridges, Lord. The Treasury (London. 1964):Google ScholarBrittan, Samuel, Steering the Economy: The Role of the Treasury (rev. edn.. Harmondsworth. 1971):Google ScholarJennings, Sir Ivor, Cabinet Government (2nd edn., Cambridge. 1951):Google ScholarMacKenzie, W. J. M. and Grove, J. W., Central Administration in Britain (London. 1957):Google Scholar and Roseveare, Henry. The Treasury: The Evolution of a British Institution (London, 1969)Google Scholar.

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18 PRO HLG 90/344. “Private Investment in Town Centre Shopping Development,” memo by N.T.2. Oct. 1954Google Scholar.

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23 PRO HLG 90/344. W. J. Reynolds (A.G.D.III) to Mr. Rogerson. 27.4.55. Differences within the Treasury and MHLG. as well as between them and other departments. on New Towns policy underscore the importance of not treating the state as a single-minded, indivisible institution. For an examination of this theme in the case of regional policy. see Heim, Carol E.. “Government Research Establishments. State Capacity. and Distribution of Industry Policy in Britain.” Regional Studies. 22 (10. 1988). pp. 375–86CrossRefGoogle Scholar.

24 Cullingworth. New Towns Policy. 149–51: Hansard (Commons). 5th ser.. vol. 535, 10 December. 1954. col. 1323Google Scholar.

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32 The term “developer-capitalist” is used by Feagin and others to refer to a distinctive type of capitalist engaged in a variety of economic and political activities associated with property development. See Feagin, Joe R.. “Sunbelt Metropolis and Development Capital: Houston in the Era of Late Capitalism.” in Sawers, Larry and Tabb, William K.. eds.. Sunbelt/Snowbeh: Urban Development and Regional Restructuring (Oxford. 1984). pp. 99–127.Google Scholar While sharing with other capitalists a basic drive toward accumulation, developer-capitalists should be analyzed as a specific institutional form. For further discussion, see Heim, Carol E.. “External Spheres and the Theory of Capitalist Development.” Social Concept. 3 (12. 1986). pp. 3–42Google Scholar.

33 Lichfield, Economics of Planned Development. p. 130. 137.Google Scholar In Housing Policy and Economic Power (London. 1983). Michael Ball characterizes the development process as a struggle between landowners and housebuilders over the conversion of development gain into land rent or land price. The outcome depends upon the contemporary balance of power between landowners and builders, and the planning system is one arena for this struggle. See pp. 115–16. 127–29. 143–55. 232–37Google Scholar.

34 See Tella, Guido di. “The Economics of the Frontier.” in Kindleberger, Charles and Tella, Guido di. eds., Economics in the Long View: Essays in Honour of W. W. Rostow. Vol. 1: Models and Methodology (New York. 1982):Google ScholarHaeger, John D.. The Investment Frontier: New York Businessmen and the Economic Development of the Old Northwest (Albany. 1981):Google ScholarHeim, . “External Spheres”: Smith, Neil and Williams, Peter. Gentrificalion of the City (Boston. 1986)Google Scholar.

35 For examples of such active interventions by developers, see Feagin, . “Sunbelt Metropolis and Development Capital: Haeger. The Investment Frontier: Gavin Wright. Old South. New South: Revolutions in the Southern Economy since the Civil War (New York. 1986):Google Scholar and Zukin, Sharon, Loft Living: Culture and Capital in Urban Change (Baltimore. 1982). The theoretical issues raised by the concept of development gain go beyond the scope of this article, but I plan to explore them in more detail elsewhereGoogle Scholar.

36 Howard, Ebenezer. Garden Cities of To-morrow (rev. edn.. Eastbourne. 1985). Ray Thomas argues in his Introduction to this edition that Howard saw the new towns as a means of redistributing income and wealth from landlords in old cities to residents of both new towns and old citiesGoogle Scholar.

37 George, Henry. Progress and Poverty (New York. 1880).Google Scholar and The Irish Land Question (New York, 1881):Google ScholarLawrence, Elwood P.. Henry George in the British Isles (East Lansing. 1957);Google ScholarParker, H. Ronald. “The History of Compensation and Betterment since 1900,” in Hall, Peter. ed., Land Values (London. 1965). pp. 53–72:Google ScholarCullingworth, J. B.. Environmental Planning 1939–1969, Vol. IV: Land Values. Compensation and Betterment (London. 1980):Google ScholarCox, Andrew. Adversary Politics and Land: The Conflict over Land and Property Policy in Post-War Britain (Cambridge, 1984):CrossRefGoogle ScholarBall, . Housing Policy and Economic Power: Balchin, Paul N. and Bull, Gregory H.. Regional and Urban Economics (London. 1987). pp. 205–9.Google Scholar Particularly when the state is actively involved in its creation. it might be thought that the origin of development gain lies in “positive externalities,” But development gain can exist, and be appropriated by developer-capitalists, even when negative externalities result—for example, when private development takes the form of unplanned urban sprawl. It is a share of the economy’s value-surplus, which is theoretically significant because its generation and distribution affect the overall accumulation process in a capitalist economy. The standard economic category that comes closer to grasping part of what underlies development gain is rather “external economies” as described by Scitovsky, Tibor. “Two Concepts of External Economies.” Journal of Political Economy, 62 (04 1954). pp. 143–51CrossRefGoogle Scholar.

38 PRO HLG 81/13, Uthwatt Committee. “Second Statement on Behalf of the Land Agents’s Society (Incorporated by Royal Charter),” May 1941Google Scholar.

39 Cullingworth, Land Values, pp. 14–60. 85–138: Cox. Adversary Politics and Land, pp. 82–102: Lichfield, Economics of Planned Development. P. 314: Hansard (Lords). 5th ser., vol. 165, 16 November 1949, cols. 713–66: Town and Country Planning 1943–51. pp. 12–13. The 100 percent development charge was repealed by the Conservatives in the 1953 Town and Country Planning ActGoogle Scholar.

40 Thirteenth Report. Summary of Recommendations. pp. xlv–xlvi. See also Thirteenth Report, “New Towns in England (NTI),” pp. 5–6. Minutes of Evidence. 21.11.73. pp. 121–22, and Minutes of Evidence. 21.5.75. p. 795Google Scholar.

41 PRO HLG 90/344. C. A. C. Turner (Chief Executive. Crawley Development Corporation) to M. M. Dobbie (MHLG). 4.8.54: PRO HLG 90/344. “Investment in new town centres,” paper prepared by W. J. Reynolds (A.G.D.III. MHLG). c. August 1955: PRO HLG 116/28. F. F. Turnbull (Treasury) to F. L. Edwards (MHLG). 25.4.58Google Scholar.

42 PRO HLG 90/354, [P. R.] Baldwin (Treasury) to J. Rogerson (MHLG). 28.1.57. See Cullingworth, New Towns Policy. pp. 316–40. for a detailed account of the discussions on future ownership of the New TownsGoogle Scholar.

43 Aldridge, Meryl, The British New Towns: A Programme without a Policy (London, 1979), p. 103;Google ScholarTurok, Ivan, “Public Investment and Privatisation in the New Towns: A Financial Assessment of Bracknell,” Environment and Planning A (forthcoming. 1990): National Audit Office, Report by the Comptroller and Auditor General. Department of the Environment: Financial Reconstruction of New Towns in England. HC 339 (London. 1987). p. 3Google Scholar.

44 PRO HLG 90/344. “Investment in new town centres.” paper prepared by Reynolds, W. J. (A.G.D.III. MHLG). c. August 1955Google Scholar.

45 Engerman, Stanley L.. “Some Economic Issues Relating to Railroad Subsidies and the Evolution of Land Grants.” this Journal 32 (06 1972). p. 457Google Scholar.

46 Cullingworth, New Towns Policy. p. 121Google Scholar.

47 Ibid., pp. 147, 316: Brittan. Steering the Economy. pp. 200–3: PRO T 266/119. Capital issues Committee. “Total Number of Applications Considered by Committee and Chairman.” table for 1945–1955.

48 Marriott, The Properly Boom. p. 64Google Scholar.

49 PRO HLG 90/344. W. J. Reynolds (A.G.D.III. MHLG) to Mr. Rogerson. 27.4.55Google Scholar.

50 Cullingworth, New Towns Policy. pp. 162–63Google Scholar.

51 PRO HLG 90/344. W. J. Reynolds (A.G.D.III) to A.G.. 16.11.55Google Scholar.

52 PRO HLG 116/28. F. L. Edwards to Mr. Waddell and Secretary, “New Town Accounts,” 26.4.57Google Scholar.

53 Reports of the Development Corporations for the Period Ended 31st March, 1954 (P.P. 1953–1954, xvii). p. 52:Google ScholarPollard, Sidney. The Development of the British Economy: Third Edition, 1914–1980 (London, 1983), P. 410:Google ScholarSmyth, Hedley. Properly Companies and the Construction Industry in Britain (Cambridge. 1985). pp. 135–36. The Wilson Committee, which decided the form of accounts, argued that New Town development should be treated as an integrated whole and that the measure of success should be the total value created. Its immediate aim was to avoid pressure to reduce rents on profitable accounts, instead allowing commercial and industrial development to subsidize housing. See PRO T 227/146. “Report of the Committee on Form of Annual Accounts and other Related Matters [Wilson Report].” 5.10.51: PRO T 233/763,Google Scholar R. H. Wilson to Wilfred Sir Eady (Treasury), 31.1.52; Thomas, Ray. “The 1972 Housing Finance Act and the Demise of the New Town and Local Authority Housing Programmes.” Urban Law and Policy. 5 (06 1982). pp. 107–27Google Scholar.

54 PRO HLG 90/354, “Capital for New Towns.” n.d. but marked “Note handed to me by Sir Herbert Brittain,” 6.6.56. See also Crossman’s comments on Sharp and the centrally controlled relationship she sought between NTDCs and the Ministry of Housing, in Crossman, Richard, The Diaries of a Cabinet Minister. vol. 1: Minister of Housing, 1964–66 (London. 1975). pp. 66. 127, 463–64Google Scholar.

55 PRO HLG 90/344, John H. West (Chief Estates Officer. Basildon Development Corporation) to D. L. Syme (MHLG). 10.8.56Google Scholar.

56 PRO HLG 90/344. John H. West (Chief Estates Officer. Basildon) to J. Rogerson (MHLG). 17.8.55. Property development may provide unique opportunities for capitalists to create or control the market they then will serve. Weiss, Marc. in The Rise of the Community Builders: The American Real Estate Industry and Urban Land Planning (New York. 1987). provides a very interesting account of how large developers in the United States actively shaped demand for their product, and sought to maintain its value. Practices they used, such as deed restrictions imposed on lot and home purchasers, later were incorporated into planning legislation. Restrictions sought by private developers included building and yard standards, specification of house paint colors, and non-Caucasian racial exclusionGoogle Scholar.

57 PRO HLG 90/344. F. L. Edwards (MHLG) to F. F. Turnbull (Treasury). 2.1.56Google Scholar.

58 On developmental investment in the U.S. case, see Goodrich, Carter. Government Promotion of American Canals and Railroads, 1800–1890 (New York. 1960)Google Scholar.

59 Turok, “Public Investment and Privatisation in the New Towns”: National Audit Office, Department of the Environment: Disposal of New Town Assets. p. 8Google Scholar.