Land reform in Taiwan is being carried out in three steps: the first is the 37.5 per cent rent limitation program; the second, the sale of public lands; the third, the establishment of owner-farmers. The ultimate goal is to realize the ideal of land-to-the-tiller. In carrying out this policy, the measures adopted are of a peaceful and gradual, not of a violent or radical nature. In other words, land reform in Taiwan is a natural outcome of social progress, and not the result of a social revolution through bloodshed.
Land reform in Taiwan began with the introduction of the 37.5 per cent rent limitation program in 1949. The benefits conferred by that program on the tenants at large are many and far-reaching. Here we need only mention the two most outstanding: reduction of the amount of rent and security of tenure.
1. Reduction of the Amount of Rent:
The 37.5 per cent rent limitation means the limitation of the rental rate on leased farm to a maximum of 37.5 per cent of the total annual main crop yield. The total annual yield here does not mean the actual annual yield on the farm; it refers to the standard amount of yield fixed on the basis of the productivity grade of the land at the time of lease. Such standard amount was determined by the Rent Reduction Committee in the localities according to the actual conditions of the moment. As long as the lease remains in force, this standard amount is not subject to change. As a result of the reform, not only the customary amount of rent is reduced and the tenants are directly and substantially benefited, but also the increased product from the land resulting from the tenants' extra efforts (such as the increasing use of fertilizers, improvement in farming practice, etc.) is fully enjoyed by the tenants themselves, because the standard amount—the base for rent calculation—is fixed and not subject to change. In other words, the 37.5 per cent rent limitation program clearly sets up a standard for the division of the farm income between landlord and tenant. It defines a maximum legal amount of rent for the landlord and confers upon the tenant the right to enjoy the increased farm product resulting from his extra labor and investment. As a result of this, the tenants' interest in increasing production is greatly enhanced. During the past few years the increased agricultural production in Taiwan may be attributed to several factors, such as the increasing use of fertilizers, the improvement in farming practice, etc. But the strong impetus given by the 37.5 per cent rent limitation program should not be ignored. In fact, the tenants have benefited even more from the increase in production than from the mere limitation of rent.
2. Security of Tenure:
After the implementation of the 37.5 per cent rent limitation program, the tenants are protected against eviction and compulsory termination of lease. Eviction is the free ousting of the tenant by the landlord. Lease termination is the giving-up of the leased farm by the tenant under pressure exerted by the landlord. Since the landlord is given no chance to evict the tenant or to terminate the lease, the tenant's right to, use the land during the tenure is adequately protected. To put it in another way: the 37.5 per cent rent limitation program has drawn a clear-cut line between the right of land ownership and the right of land use. The former belongs to he landlord and the latter to the tenant. In selling the land, the landlord can now only transfer his right of ownership, but not the right of use. Formerly, the right of land ownership was understood in its broader sense to include the right of use. Now it is confined to a narrower sense. As a result, the price of land on lease has declined throughout the Province.
In rural areas in Taiwan at present, there prevails apparently two different prices on farm land of the same grade: one for land under owner-cultivation and the other for land cultivated by tenants. The latter price often amounts to only 2/3 of the former. The price of owner-cultivated land is the price for land owned by an owner-farmer who enjoys the right to use it. In buying this kind of land, the purchaser at once obtains the right of use, so that the price must be higher. On the other hand, the land cultivated by a tenant can command only a lower price, because the right of use enjoyed by him is legally protected. As the purchaser cannot cultivate this kind of land when he has bought it, its price is naturally much lower. From this, it is clear that the right to use the land as legally vested in the hands of the tenant has become a part of the value of the land. It is a privilege enjoyed by the tenant as a result of the 37.5 per cent rent limitation program.
The 37.5 per cent rent limitation program has frozen the landlord's returns from land investment through the fixing of a maximum of the rental rate and those landlords who have hitherto depended on rent for their living are no longer as much interested in owning land as formerly. Moreover with the tenure of lease adequately protected and the right of ownership rigidly restricted, the price of lands under tenancy tends to decline progressively. This makes the landlord willing to give up his land. On the other hand, the reduction of rent and the increase in farm income have raised the tenant farmer's ability to purchase land. The increasing number of land purchases by tenant farmers in Taiwan during the last few years is clear evidence of this trend. It is estimated that, during the period from 1949 to December 1952, there were 35,165 tenant farmers who purchased 20,108 chia of land under tenancy. Of this acreage, 773 chia were purchased in 1949, 3,355 chia in 1950, 5,885 chia in 1951, and 10,093 chia in 1952. These figures show how rapidly the tenants have acquired the ownership of land.
II. The Land-to-the-Tiller Program
The above developments following the 37.5 per cent rent limitation program in Taiwan have paved the way for launching further land reform, which consists in assisting the tenants to acquire their land. If this program were introduced before the limitation of rent, it would most probably result in failure. Because the price of land would then be high, the landlord would be reluctant to give up his land, and the tenant farmer would be too poor to purchase it. In this sense, the land reform in Taiwan—from rent limitation to land-to-the-tiller stage—represents a logical and natural development. As to the sale of public land, it is only a prelude to the land-to-the-tiller program; it serves to demonstrate the Government's determination in land reform by itself setting an example through the sale of public land under tenancy to its present tenants.
The legislation relating to the last phase of land reform in Taiwan was first embodied in a bill for the establishment of owner-farmers, which was approved by the Taiwan Provincial Government on August 13, 1952. Its title was changed to the Land-to-the-Tiller Draft Act when the Executive Yuan approved it on November 12, 1952. After two months of debate in the Legislative Yuan, the draft was approved and enacted on January 20 of this year into "The Land-to-the-Tiller Act," The whole process has taken more than one year. On June 15, 1951, the Taiwan Provincial Government invited a number of land experts and others to discuss the land reform program. It was in that conference that a detailed study was made of the legislative principles of the program, such as the procedure of purchase, the amount of land the landowners are to be allowed to retain, the fixing of the purchase price, the method of payment, and the problem of re-sale. The general opinion then was that the sale of public land and the general classification of land ownership should be conducted and completed before the program was to be started. If these preliminary tasks were not successfully completed before hand, it would be extremely difficult to initiate the program. To sell the public land and to classify the land holdings became the two major tasks to which the energy of the land workers was devoted during the past year.
Up to the present, two sales of public land have been completed. The first sale started in July 1951, and the second in May, 1952. Up to the end of 1952, a total of 54,000 chia has been sold to 106,000 tenant purchasers. In other words, 106,000 owner-farmers or part-owners have been established through the sale of public land as a prelude to the land-to-the-tiller program.
With the technical and financial assistance of the Joint Commission on Rural Reconstruction, the classification of land ownership was started in September 1951. After eight months of hard work without the benefit of any precedent, the whole classification work was completed in April 1952. The number of land record cards and ownership record cards completed totalled more than 5,000,000. Two thousand eight hundred persons were employed for the task and approximately NT$4,000,000 were expended on it. On the basis of the above data, the land-to-the-tiller bill was planned and drafted. It was submitted by the Provincial Land Bureau to the Provincial Government for consideration in May, 1952.
As stated above, the ultimate objective of land reform in Taiwan is the realization of the land-to-the-tiller policy, which is one of Dr. Sun Yat-sen's teachings. This policy has long been established as a plank in the platform of the Kuomintang. On July 24, 1952, after the publication of the draft bill, the Central Reform Committee of the Kuomintang convened a meeting presided over by President Chiang Kai-shek. In that meeting, it was decided that beginning from January 1953, the land-to-the-tiller policy should be carried out in Taiwan to realize Dr. Sun Yat-sen's teaching at an early date. This decision, while signifying the determination of the party in power, also obligated Kuomintang members in the Government and Legislature to give wholehearted support to the program and put it into effect. It represents a decisive step taken by the supreme organ of the Kuomintang in realizing Dr. Sun Yat-sen's Principle of People's Livelihood. Undoubtedly, this step will win both the unanimous approval of the Chinese people and the approbation of public opinion in other democratic countries.
III. Main Points of the Land-to-the-Tiller Act
The main points of the Land-to-the-Tiller Act are as follows:
1. Amount of Land to be Retained by the Landlord:
As the land reform measures adopted in Taiwan are of a peaceful and gradual nature, the Act allows landlords to retain a part of their tenanted land. The criteria of retention are as follows:
(a) Each landlord may retain three chia of medium-grade paddy field or 6 chia of medium-grade dry land.
(b) Joint landowners who are old and infirm, or orphans, widows, or disabled, and have to depend on incomes from Ian d to support themselves; as well as individual landowners who become joint owners by act of succession who share the joint ownership with husband or wife, or brother(s), or sister(s), may also each retain, upon Government approval, 3 chia of medium-grade paddy field or 6 chia of medium-grade dry land.
(c) The amount of land to be retained by ancestral worship bodies and religious institutions may be twice as much as that to, be retained by the individual landlord.
In Taiwan privately-cultivated land. Of this total, 414,000 chia are cultivated by owners and 256,000 chia by tenants. According to the criterion of Section (a) above, the total amount of land to be retained by landlords is estimated at 77,000 chia and land available for purchase by the Government amounts to 179,000, chia or 70 per cent of the total tenanted land. As to the amount of land that may be retained by the landlords according to the criteria of Sections (b) and (c) above, the figures can hardly be estimated before applications are made by the owners concerned to the Government and before the latter takes action on it.
2. Purchase Price:
The purchase price is fixed at 250 per cent of the total annual main crop yield, which is, in turn, determined by the standard approved and adopted under the rent limitation program. The same criterion is also adopted by the Government in selling public land. According to data obtained from surveys, the price of land usually amounts to 7 times the annual rental, i. e. 7 times the 37.5 per cent of the total annual main crop yield, or 262.5 per cent of the same. That is why we say that the price of land is roughly two and a half times the total annual main crop yield.
The price of tenanted land in Taiwan has been steadily declining since the rent limitation program was implemented. This downward trend has become more persistent after the publication of the draft bill. The current land price is generally below 250 per cent of the total annual main crop yield. However, since the purchase price is to be paid in 20 semi-annual instalments and the financial burden (including interest and land tax) on the part of tenant purchasers may not exceed that now borne by tenants under the 37.5 per rent limitation program, the criterion by which the purchase price is fixed under the Act seems to be just and reasonable.
3. Payment:
The purchase price is to be period 70 per cent in land bonds in kind and 30 per cent in Government enterprise stockshares. With the total acreage to be purchased estimated at 179,000 chia, the purchase price would amount to NT$2,000,000,000 according to the market price. That portion to be paid for in bonds, according to the Regulations Governing the Issuance of Land Bonds in Kind in Taiwan, is about NT$1,400,000,000. The remaining NT$600,000,000 is to be paid in Government enterprise stockshares.
The land bonds are expressed in terms of rice or sweet potato, to be redeemable in 10 years, bearing an interest of 4 per cent per annum. Being based on commodities, they are not influenced by changes in the value of the currency and their own value is always pre served. In this respect, the land reform in Taiwan differs from that in Japan. In the latter country, the payment was expressed and effected in bonds issued in Japanese yen. As a result, the Japanese landlords suffered great losses in consequence of monetary inflation. This particular provision of our Land-to-the-Tiller Act expressly aims at removing the landlord's fear of any possible inflation. Although we have every confidence in the value of the New Taiwan Currency, it is a praise worthy provision in giving additional protection to the interests of the landlord.
The sale of Government enterprises as a means to pay for the land thus purchased from the landlord serves two purposes: to develop the spirit of free enterprise by encouraging the private operation of industry on the one hand, and to promote the policy of industrialization by transferring investment from land to industry on the other. It is understood that the Government will offer the following five corporations for sale: The Taiwan Agriculture and Forestry Development Corporation, the Taiwan Industrial & Mining Corporation, the Taiwan Fertilizer Company, the Taiwan Paper & Pulp Corporation, and the Taiwan Cement Company.
4. Payment of the Land Price by the Tenant-Purchasers:
The sales price of the land shall be the same as the purchase price, plus an interest of 4 per cent per annum. The price, together with interest, shall be paid in kind in 20 semi-annual equal instalments, beginning, from the season in which the land is purchased. In principle, the annual aggregate burden to be borne by the tenant-purchasers (purchase price, land tax, etc.) shall not exceed that presently borne by a tenant under the 37.5 per cent rent limitation program. Actually, the annual instalment of the purchase price amounts to 25 per cont of the total annual main crop yield, the interest amounts to five per cent, and the land tax, surtax, water charge, and household tax amount to about 10 per cent (in the case of the 8th-grade paddy fields). Taken together, the annual aggregate burden borne by a tenant-purchaser amounts to 40 per cent of the total annual main crop yield of the land. This financial burden approximates to that presently borne by the tenant farmer in the case of medium grade land where the 37.5 per cent rental plus the water charge and household tax usually amount to 40 per cent of the total annual main crop yield on the average.
5. Acreage Limitation of Purchases by Tenant Purchasers:
In principle, the acreage under lease a tenant may purchase depends on his ability to till it. This means that there is to be no limitation on the size of land to be purchased if the purchaser has the ability to till it.
As to whether those landlords who have their land tilled by hired laborers are to be considered as owner-cultivators, the Act imposes certain restrictions. The Act provides that in the case of landlords who do not till the land themselves or who have the land tilled largely by hired laborers, their land, except that portion cultivated by themselves, shall be regarded as tenanted land and be purchased. This provision makes it impossible for any landlord to pose as an owner-cultivator under false pretenses on the one hand and to prevent the concentration of land ownership on the other.
Again, if a landowner who has, in addition to the land he has leased to others, other pieces of land owned and tilled by himself, shall there be any limitation on the amount of land he can retain out of what he has leased to others? According to the Act, if a landlord has, in addition to the land he leases to others, other pieces of land owned and tilled by himself, he can retain his tenanted land up to a point where the acreage under retention plus the acreage under his own cultivation is just equal to the maximum which a landlord is entitled to retain. However, if the acreage of land under his own cultivation exceeds that maximum, he shall not be allowed to retain any portion of the land he has leased to others.