Journal of Architectural and Planning Research
9:4 (Winter, 1992)	321

True, the aristocrats rather than the capitalists captured the appreciation in value of lands
close to town, but neither class evidenced any willingness to share it with the proletariat.
Leasehold tenure served as a scapegoat for the grossly disparate distribution of wealth for
which the middle class elite shared responsibility with the landed aristocracy.

In Baltimore the leaseholders were more successful in their political onslaught. First they
achieved legislative reassurance that they would not lose their leaseholds through oversight or
inadvertence. Technical adjustments in the ground rent system provided for automatic
renewal.

Next, they demanded the privilege to pay off their perpetual indebtedness. The stakes were
high. During the period from 1870 to 1900 the market rate of interest on long term investment
declined steadily from 6% to 3%. Leaseholders were saddled with a fixed-rate obligation in a
period of declining interest (Homer, 1973: 314-316).

Although they were unable to obtain a payment privilege for pre-existing ground rents,
leaseholders convinced the legislature to guarantee a right of redemption on future rents. An
1884 statute guaranteed a prepayment privilege (following a fifteen year waiting period) to the
holders of all long term leases created thereafter; in 1888 the principal amount due was locked
in at the "capitalization of the rent reserved at the rate of six percentum." A $100 per year
ground rent, for example, could be redeemed for $1,667 (100/.06 = 1,667).

By the close of the century, redeemable ground rents were no more and no less, than "a
mortgage to secure a principal sum, the interest of which is placed in the form of an annual
rent" (Posnerv. Bayless, 1881).

CONCLUSION

We have observed how ground rents shaped the two cities. In eighteenth century Birmingham
ninety-nine year leases permitted the landed aristocracy to take the profit to be had from con-
verting their manors to city lots; Baltimore's gentry used long-.term leases to make their land
more marketable by providing liberal financing terms.

Come the nineteenth century, the system was adapted to promote the housing industry. In both
Birmingham and Baltimore slumlords rented the ground (long-term) under court yard
developments; they let the dwelling spaces (short-term) to the lumpenproletariat. The dif-
ference between ground rents paid and building rents received was their profit.

In Baltimore the ground rent system proved instrumental in lining the alleys with small dwell-
ing houses held by industrious workers on long-term subleaseholds. The reduction in size and
the pay-as-you-go financing made them affordable, and since the subleases were renewable
forever, they were the next best thing to fee simple ownership.

Later in the nineteenth century developers in both cities produced block rows of substantial
houses for tradesmen, artisans and manufacturers. The joint venturing associated with the
ground rent system promoted large scale development; the long term leases reduced the
financing cost and provided an organizational form which facilitated mass production.