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Contents

List of figures x
Preface xiv
Organization of this book xvii

1 Introduction to real estate development and finance 1

What is real estate? 1
What determines value? 2
Learning from history 5
The two big questions in real estate development 19
The supply side of the equation 21
The demand side of the equation 26
Demand and supply in a changing technological landscape 27
Financial factors 28
Building the team 31

2 An introduction to financial analysis 36

Risk and reward 36
Pro formas 47
Cautions 61

3 Model building and real estate development 64

Models and decision making 64
Modeling human behavior: models are rational, people are not 86
Conclusions 87

4 An introduction to financial modeling 91

Introduction 91
Applying theory to practice 96
Case study: multifamily development – the value of forecasting 99
Summary and conclusion 111
viii Contents
5 Market analysis 113
Market analysis: supply, demand, and geography 113
Market studies and the real estate development process 115
Market research: basic principles and techniques 118
Population projection and cohort models 121
Demand, affordability, and residential development 126
Case study: a condo apartment development 129
Creating a marketing program 134
Retail 135
Commercial office space 136
Summary and conclusion 138

6 The planning process 140

Introduction 140
Case study: inner-city development project 156

7 Real estate and the law 169

Introduction 169
Foundations and principles of private property 170
The law and real estates: statutes, common law, and regulations 171
Collective ownership of property 173
Right of use 174
Forms of ownership 177
Ownership and the investment community 181
Real estate transactions, agents, and brokers 185
Construction loans 188
Real estate closings, land title, and registration 191
Leases 193
Construction contracts 196

8 Design and construction 202

A team of experts 202
Site planning, massing, and space planning 202
Mastering the art and science of construction 204
Technology and the modern building 204
Building from the ground up 205
Structural systems: concrete, steel, or wood 221
Historic restoration and preservation projects 226
Heating, cooling, and other building systems 227
Managing the design process 229
 Contents ix
9 Project management 234
Introduction: why do I need project management skills? 234
Time, budget, and performance 235
Project management defined 235
Application of project management to real estate development 238

Index 264
Figures

Chapter 1
1.1 San Francisco S&P/Case-Shiller US national home price index,
1987–2017 (Jan 2000 = 100) 3
2.1 Vancouver average residential sale prices, 1977–2016 4
3.1 Calgary unemployment, WTI price, 1987–2018 6
4.1 WTI oil prices, home prices, and unemployment, 1999–2015 7
5.1 Houston, WTI index, sales of single family homes, unemployment rate
index, 2004–14 (2005 = 100) 8
6.1 Detroit population, 1880–2010 9
7.1 Detroit unemployment rates, 1989–2015 9
8.1 Detroit property values, 1950–2012 10
9.1 Detroit debt vs revenue, 1959–2014, in billions of dollars 10
10.1 Detroit labor force employment, unemployment, manufacturing sector
1990–2016 11
11.1 Employees per vehicle produced index, 1990–2013. (2006 =100) 11
12.1 Detroit S&P/Case-Shiller US national home price index, 1990–2016 13
13.1 Pittsburgh per capita GDP, 2005–14 (2007 = 100) 14
14.1 Total real gross domestic product for Pittsburgh, PA (MSA), millions of dol-
lars, annual, not seasonally adjusted 15
15.1 Pittsburgh employment by sector, 1990–2017 (1,000s) 16
16.1 Pittsburgh median home sales price, 2000–17 16
17.1 San Francisco median sales prices by year, 2008–18 17
18.1 San Francisco and Pittsburgh average rent for a one-bedroom apartment,
2010–17 18
19.1 Cost of living in selected American and Canadian cities 19

Chapter 2
1.2 Inflation rate and short-term interest rates in Argentina, 2012–16 37
2.2 Interest rates and inflation in US, 1972–2015 38
3.2 Daily treasury yield curve rates, 2016 39
4.2 Normal yield curve 40
5.2 Prime rate, 1955–2018 41
6.2 XYZ apartments cash flow statement 49
 Figures xi
7.2 Mortgage payment calculations with Microsoft Excel: (a) calculations;
(b) Excel formulas 54
8.2 ABC apartment pro forma 55
9.2 Tax tables, Canada and the US 57
10.2 Leverage and ROE 58
11.2 XYZ apartments balance sheet 60

Chapter 3
1.3 Home purchase price as a function of income 67
2.3 Home purchase price as a function of income: second order 69
3.3 Real estate price as a function of interior area 71
4.3 Population growth 75
5.3 Markov housing model 76
6.3 Bid–rent function 79
7.3 Hierarchical arrangement of cities with an undifferentiated landscape 80
8.3 Impact of distance to the CBD on property values 81

Chapter 4
1.4 Calculation of NPV and IRR for a $500,000 investment 95
2.4 FV of $1 million growing at a compound rate of 3% vs 4% 97
3.4 Difference between two cases: (a) continuous growth of 4% and (b) growth
of 4% interrupted by four years of 0 growth (years 5–8) 98
4.4 Scenario 1: business as usual 100
5.4 Scenario 2: optimistic projection 102
6.4 Scenario 3: level property values 103
7.4 Scenario 4: sudden decline in property values 104
8.4 Scenario 5: sudden decline in property values with no recovery 106
9.4 Scenario 6: reinvestment in the property from excess cash flow 107
10.4 Scenario 7: negative return 109
11.4 Scenario 7: negative return, accompanied by a reduction of mortgage rates 110

Chapter 5
1.5 Crude oil prices (WTI), 1976–2017 114
2.5 Oil prices (WTI), vacancy in Calgary office space, 2003–16 115
3.5 Cohort analysis using Microsoft Excel 124
4.5 Births and net migration, 1962–2012. US 125
5.5 Population growth, birth, and death rates in Japan, 1960–2015 125
6.5 Demand and supply curves for housing 127
7.5 Neighborhood and city population by cohort and sex 131
8.5 Family size for the neighborhood and the city 132
9.5 Market projection of residual demand 133

Chapter 6
1.6 FAR calculation for a four-story building on a 50 × 200 ft. lot 145
2.6 Case study: proposed site for development 157
xii Figures
3.6 Case study: condo development 158
4.6 Case study: townhouse development 158
5.6 Case study: multifamily flats 159
6.6 Three development options: condos (42 units), townhouses (10 units), and
apartment flats (18 units) 160
7.6 Three development options: condos (33 units), townhouses (10 units), and
apartment flats (18 units) 161

Chapter 7
1.7 Protection of civil rights within Canada and the US 171
2.7 Court system in (a) the US and (b) Canada 172
3.7 Joint tenancy with right to survivorship 179
4.7 S&P Case-Shiller US national home prices index, 1987–2017 189
5.7 US prime rate, 1955–2018 190

Chapter 8
1.8 Column footing calculations 207
2.8 Typical spread column footing, reinforced concrete column footing, and
continuous footing for supporting a wall 208
3.8 Matt foundations 209
4.8 Pile foundation design 209
5.8 Cast in place pile 210
6.8 Pressurized caisson, cross-section 211
7.8 Structural frame with dead and live loadings 212
8.8 Typical design for a reinforced concrete beam 213
9.8 Wilkinson Mill, Pawtucket, RI, built between 1810 and 1811 215
10.8 Toronto-Dominion Centre, Ludwig Mies van der Rohe with John B. Parkin
Associates and German & Hamann 216
11.8 John Hancock Building, 2018 218
12.8 X-Bracing, steel frame construction, Auckland, NZ, 2018 219
13.8 Modern housing framing 222
14.8 The world’s ten tallest concrete structures 224
15.8 Energy consumption estimates by sector, 1949–2011 (Trillion Btu) 228

Chapter 9
1.9 Differences between process and project management: basic components 236
2.9 Project management process: life cycles of project management 237
3.9 Network diagram 245
4.9 Network node defined 245
5.9 Network node, early start, early finish 245
6.9 Network node, early start, early finish; removal of cabinets, countertops,
and old floor 246
7.9 Network analysis using Microsoft Project showing all the tasks for a
kitchen renovation 246
 Figures xiii
8.9 Network diagram: installing new subfloor, plumbing, and electrical all begin
on the same date 247
9.9 Network diagram: plumbing and electrical begin after the new subfloor is
completed 248
10.9 Kitchen renovation: start/end with a lag of one day 248
11.9 (a) Finish to finish 249
11.9 (b) Finish to finish with a lag period of three days 249
12.9 Start to start 250
13.9 Gantt chart: kitchen renovation 251
14.9 Gantt chart: renovation of a historic commercial building 253
15.9 Resource allocation in Microsoft Project 254
16.9 Renovation of a historic commercial building, resource allocation 254
17.9 Renovation of a historic commercial building, critical path, baseline 1 255
18.9 Renovation of a historic commercial building, critical path, baseline 2 256
19.9 Renovation of a historic commercial building, projected costs for baseline 1
and 2 257
20.9 Earned value 258
21.9 Renovation of a historic commercial building: updating the work
completed on the old roof membrane removal (75%) 259
22.9 Renovation of a historic commercial building: work completed to date 260
23.9 Renovation of a historic commercial building: actual costs vs budget by
each worker 261
Preface

Cities are in a constant state of demolition and rebuilding. Within an urban landscape,
we discover buildings and structures from every period in its history. Even in cities that
were only established a hundred years ago, we will find a history marked by periods of
development followed by periods of decline or characterized by little or no activity. In
general, the time before and after World War I had periods of heightened activity
marked by the construction of the first skyscrapers in America. This era was followed by
the Great Depression and World War II, when construction was on hold for several dec-
ades. Today, many cities are finding new uses for buildings that have sat vacant and idle
for decades. Though we may come to appreciate the history of an individual building by
taking a tour suggested by an architectural guide, we may learn very little about the pro-
cess responsible for its planning, financing, design, and construction.
An appreciation of the complexity of building in the 21st century is essential to under-
standing the role of the private sector in our cities. First and foremost, we must acknow-
ledge that real estate development is an investment. Like other investments, real estate
development must compete for capital, offering rates of return commensurate with its
risk. However, unlike other asset classes, it is fixed in space. It cannot be relocated to
a new location if market conditions change or if the demand for space is better in
another city. In addition, real estate is a long-term investment. Profitability in some cases
can be determined only when the building is sold after many years have passed. Creating
a successful plan requires knowledge of accepted financial practices. For a project to be
built, investors and lending institutions will first subject projects to numerous financial
tests. These financial metrics are used to determine the creditworthiness of any proposed
project. Projects must be able to generate sufficient cash flow to pay the expenses, make
loan commitments, and have reserves for unexpected expenditures. Underlying these pro-
jections are assumptions made about population growth and employment opportunities.
In translating these numbers into future demand, consideration must be given to the scale
of the development. Competition from existing and proposed developments, access to
transportation, and proximity to retail, social, and recreational services should all be con-
sidered in the evaluation of any project. Real estate development is designed to meet the
need for space in specific markets: residential, commercial, retail, industrial, hospitality,
health care, and government services. The economic environment may change over the
life of the project. If the plan is to sell the project in 10 or 15 years, it cannot be prede-
termined whether the market will have appreciated significantly to generate a reasonable
rate of return after all the positive and negative cash flows are tallied. For those investing
in real estate, the rewards must be commensurate with their risk. Subject to local supply
 Preface xv
and demand for space, rents can vary, tax rates can increase, borrowing costs can
change, and utilities and other costs can increase. In being prudent, it is important to
consider both the best and worst case scenarios. If there is a significant probability that
we may not achieve our expected rate of return, then the proposal will need to be revised
to secure financing.
In preparing development plans, the role of government is an important factor to
understand. At the federal level, taxation, banking, and securities practices can have
a critical bearing on the financial outlook for a project. At the local and state levels, con-
trols over land use constrain the type and physical form of the development. Municipal
zoning restricts not only what can be built, but also how it will be built. Though it is
always possible to apply for a variance that allows a building to be taller or to have
fewer parking spaces than required, there are no guarantees that an application for
a variance will be approved. Legal constraints in the forms of easements and covenants
can also shape the direction of development. For example, there may be the need to
adhere to architectural guidelines, preserve views or guarantee access through the prop-
erty for adjacent property owners. In some cities, regulations may require developers to
set aside a percentage of residential units in a development for “affordable housing” or
to pay an additional fee. Projects located along waterways and coastlines will have to
abide by local state and federal regulations. Within all these constraints, architects work-
ing closely with engineers and contractors must develop plans that satisfy the basic
space and budget requirements. Once plans are approved, it is important to understand
how project management principles are used in the construction of the actual physical
asset. This book cannot address in detail the design and execution of each type of devel-
opment: multifamily, commercial, industrial, recreational, hotels, and resorts. However, it
can provide the reader with an overview of real estate development from inception to
completion.
This book provides a basic understanding of the principles and tools used by profes-
sionals in creating, reviewing, and managing real estate development proposals. Concepts
are introduced that are needed to determine the risks and rewards associated with any
investment. In analyzing the details of any proposal, it is also important to have an
understanding of the basic elements of a balance sheet and profit-and-loss statement. In
analyzing financial statements, borrowing rates, debt level, vacancy factors, expense
ratios, depreciation, and tax rates can ultimately impact the financial feasibility of
a project. Return on equity, current ratio, and debt coverage are a few of the metrics
used when reviewing a pro forma. When projects are evaluated over their lifetimes, the
application of discounted cash flows becomes an important tool. Financial functions
available in popular spreadsheet programs makes it convenient to calculate net present
value and internal rate of return for a series of project cash flows. An important tool in
decision making, we can compare different scenarios for a particular site. In determining
the most appropriate design for a particular site, we can apply the concept known to all
appraisers of real property as “highest and best use”. In applying this concept, we must
consider the value of the land separately from that of any building. In addition, we can
use statistical and spatial models to help us to understand how proximity to centers of
commerce influence value. Having an appreciation for these concepts will also give us
insight into how properties are valued by taxing authorities and appraisers.
This book has been designed for anyone interested in real estate development. In
teaching a course on real estate development and finance to students with backgrounds
in business, planning, architecture, and engineering, it has been challenging to find
xvi Preface
a single book that is comprehensive and affordable. Though there are monographs that
are excellent textbooks for the student pursuing a degree in business, finding a book that
can serve as either an introductory text or as a primary for those interested in an over-
view of real estate development and finance is difficult. Real estate development touches
on many subjects: finance, urban modeling, urban planning, architecture, construction,
and project management. For students in planning, architecture, and engineering, this
book should provide an overview of the subject. It is my hope that the book will also
give practitioners and students alike the necessary background to understand the develop-
ment process as it relates to their profession. For the investor who wants to become
better acquainted with the unique aspects of real estate investments, this book should
also serve as a useful introduction.
For those who desire a more in-depth knowledge of the subject, the bibliography at
the end of each chapter offers suggested readings in finance, mortgage lending, and real
estate sales and marketing.
Organization of this book

Chapter 1 focuses on the forces of supply and demand in the context of a dynamic market-
place. In taking a case study approach, it is possible to understand how cities change and
respond to economic, technological, social, and political forces. It is the developer who
seizes opportunity who is successful. Development proposals, if they are to become a reality,
will demand a plan developed by a team of experts. Ultimately, financial backing must be
secured and the required approval by regulatory bodies granted.
Chapter 2 considers the application of risk and reward to our understanding of real
estate investment. In measuring return, consideration must be given to both the appreci-
ation and the cash flow generated over its lifetime. In addition, portfolio management
demands an understanding of volatility. In real estate, like other financial assets, we can
only estimate a range for future returns. In this chapter, there is an emphasis on under-
standing the basic components of a balance sheet and profit-and-loss statement. It is par-
ticularly important to understand how leverage and borrowing rates impact the financial
metrics used to assess the creditworthiness of an investment.
Chapter 3 first begins with a discussion of modeling and its value, and then considers
how modeling techniques can be used in real estate development projects. Like other
financial assets, we can use various modeling techniques to help us to estimate the value
of an existing property. In addition, explorations of various spatial modeling techniques
can help us to appreciate the importance of location in the appraisal of a property’s
value. In real estate development, two questions emerge in most modeling discussions.
The first question, simply stated, is: what is the most profitable development for an exist-
ing location? The second question addresses the issue of location: where would be the
best spot for a particular proposed enterprise? The modeling techniques presented in this
chapter can help us to answer both these questions.
In Chapter 4, financial modeling is introduced as a tool for testing the feasibility of pro-
posed projects. Capitalization rates, discounted cash flows, net present value, and internal
rate of return are important to the financial analysis of a real estate development proposal. If
we are acquiring property for an investment fund, we need a basis for choosing between
several prospective projects for our portfolio. Often, these projects extend over many years,
each project with different costs and revenue streams. Financial models can be useful tools
in evaluating the potential success of a real estate development project under a number of
potential scenarios. In a case study on a residential development project, best, worst, and
expected case scenarios are tested against possible changes to the underlying assumptions
for a projection. Though, in the short term, we expect businesses to proceed as usual, sudden
changes in the economy can impact the success or failure of a project in the long term.
xviii Organization of this book
Chapter 5 provides an overview of an approach to developing market research needed to
evaluate a project and provide direction in the details of its design. Gauging the forces of
supply and demand will be helpful in determining the market for new projects. In determin-
ing the size of this “residual demand”, estimates for population growth, family formation,
and new development are important. Understanding how population projections are made
using cohort analysis can help in defining the market for a particular segment of the residen-
tial housing market. In determining this demand, issues of affordability become an important
consideration. In this chapter, a case study focusing on a condo apartment development high-
lights the factors to be considered in a market study of future demand. Though the focus of
this chapter is on residential development, a brief discussion is given on developing
a marketing study for retail and commercial space.
Chapter 6 considers the planning process. All development projects fall under the aus-
pices of one or several jurisdictions. For a project to be successful, getting to the stage
at which development and building permits are granted can be both time-consuming and
costly. Though every jurisdiction has different rules, understanding the roles played by
zoning, area redevelopment plans, area structure plans, master plans, planned unit devel-
opments, direct controls, and architectural and historical guidelines can aid in the plan-
ning process. A case study on multifamily development provides the reader with an
example of how the theory works in practice.
Chapter 7 presents an overview of the legal aspects of real estate. All aspects of devel-
opment, from acquisition, through construction, to leasing and management, have a legal
component. Issues of land ownership, property rights, property transfer, and land registra-
tion will provide a basic understanding of the issues that need to be considered when the
property is sold or purchased. Issues of tax, liability, and ownership will need to be con-
sidered in selecting the most appropriate form of ownership for a particular business
enterprise. Although tax considerations are always critical to this decision, liability
exposure must also be weighed in making this judgment. Loans are an integral part of
most real estate development projects. In this chapter, the mechanics of mortgages and
construction loans are presented in relation to real estate development. This chapter also
reviews the basic elements of a lease and considers the issue of tenant and landlord
rights. For investment properties, leases are critical to the success of the rental property.
They dictate rents and the rights and responsibilities of the tenant and landlord. Finally,
a note about construction contracts: even for small projects, a contract will be required
for building and repairing a new building.
At some point in the development process, something will be built or renovated.
Chapter 8 provides a primary on the design and construction process. In creating
a building, a team of experts are assembled to create the architectural, structural, and
heating, ventilation, and air conditioning (HVAC) systems for a building. In reviewing
the design process, a number of constraints shape the architectural solution for any pro-
ject. Zoning places constraints on the size and shape of buildings. Geotechnical consider-
ations place constraints on the foundation design and ultimately on the design of the
superstructure. Decisions must be based on the most appropriate structural system –
wood, concrete or steel – given the intended use and budget. This chapter provides
a brief review of each building system, providing the reader with an introduction to
each. Unlike the building of the past, today’s modern edifices incorporate a myriad of
new technologies, including heating, cooling, electrical, plumbing, elevators, and commu-
nication. In closing, Chapter 8 discusses the role of design software (building informa-
tion modeling, or BIM,) as a critical component in managing this design process.
 Organization of this book xix
Chapter 9 examines project management techniques, which are critical to a successful
real estate development. Keeping a project on track in time and on budget, as well as
managing performance, are key when applying project management principles to the pro-
cess of design, bidding, and construction, as are the tasks of budgeting, scheduling, and
resource management. In this chapter, a review of project management terminology
serves as a basis for a discussion of network analysis. Network analysis gives the man-
ager a tool for monitoring the progress of any project. Using network analysis to keep
projects on track is an important skill for those involved in real estate development. Pro-
ject management software, with its Gantt charts, budgets, and resourcing tools, offers
a solution for managing any real estate development project. The case study of renovat-
ing an office building demonstrates the use of Microsoft Project, a popular project man-
agement application, and the importance of employing these tools to manage
a successful real estate development.
This book would not have been written without sabbatical leave from the University
of Calgary. To my wife, Elizabeth E. Dickson, whose editorial efforts were critical to the
success of this book, I will always be indebted. A careful and thoughtful reader of the
manuscript, her suggestions on all aspects of the work were greatly appreciated. Without
her help throughout the process of preparing and completing the manuscript, this book
would not have been possible. I greatly appreciate the comments and thoughts of Tang
Lee, colleague, and long-time friend at the University of Calgary, on Chapter 8, “Design
and Construction”. And I offer special thanks to everyone at Routledge who worked on
this project.
1 Introduction to real estate
development and finance

What is real estate?

Real estate is simply defined as “property consisting of land and the buildings”.1 How-
ever, real estate is much more than a community’s building stock, having impact on
much of our everyday life. We must have places in which to live, work, shop, and
spend our recreational time. Only through the collective action of landowners, develop-
ers, investors, real estate agents, lawyers, government officials, city planners, design
professionals, general contractors, and the trades have we been able to create our
homes, towns, villages, and cities. This chapter focuses on the processes responsible
for creating the homes we live in, the retail stores we frequent, and the places in which
we do our business.
Today, many of us earn our livelihood in ways that are connected to the real estate
industry. For developers, investors, financial institutions, insurance companies, and pen-
sion funds, real estate is at the core of operations. Through the coordinated actions of
financial officers, appraisers, accountants, analysts, and numerous trade and design pro-
fessionals is created the architecture associated with contemporary life. Architects and
engineers are responsible for the design of buildings that must satisfy the needs of
society. Planners and government officials who are charged with looking after the
public good must attend to the requirements of zoning, use, and public transit. Though
often viewed by the developer as an obstacle during the development process, planning
seeks to maximize benefits for both the community and the developer by creating effi-
cient land use plans. It would serve no one’s interest to have a noxious industrial facil-
ity located in a residential neighborhood. In our modern age, utilities, communication,
and transportation infrastructures are all part of a critical infrastructure that makes
a development project viable. The general contractor orchestrates the many trades that
build and maintain our city’s infrastructure. Plumbers, electricians, carpenters, roofers,
metal workers, heavy equipment operators, and a host of other technically skilled indi-
viduals are responsible for the construction and maintenance of residential commercial,
governmental, and industrial buildings. Creating a market for these developments
requires the efforts of leasing agents and real estate brokers who are working on behalf
of owners and their tenants. Lawyers and accountants consider the financial and legal
aspects of real estate, sales, and development. But the impact of development goes
beyond the mere creation of architectural space. Carpet, furniture, appliances, and
lighting fixtures must also be purchased to make an architectural space functional.
Once the spaces are completed, those who are employed in our offices and places of
work contribute collectively to the gross domestic product (GDP) of a country. In fact,
2 Introduction
over the lifetime of a commercial building, the actual cost of construction represents
only 2% of all cash flow generated based on a lifecycle cost analysis.2 Over 90% is
spent on salaries, while the remaining balance is spent on maintenance and utilities.
From the outset, we must acknowledge that bringing a project to a successful conclu-
sion is far from a simple process. Often, the motivations of stakeholders may appear to
be at cross-purposes. For the developer, maximizing profit may be central, while for the
financial institutions providing the capital, reducing the risk of failure may be of key
concern. For the architect, having an award-winning design celebrated in a leading publi-
cation may be as important as seeing the building constructed. For the urban planner,
satisfying the requirements of regulations and policy is foremost. For the contractor, fin-
ishing on time and on budget may place them at odds with other individuals who have
less of a sense of urgency. This could include the planners, elected officials, approving
authorities, and financial institutions who work on their own timelines. Ultimately, it is
the entrepreneurial activity of the developer that is at the center of this process in the US
and most industrialized nations.
Without the developer, the responsibility of building our cities and towns falls on gov-
ernment. In China and countries with a large government involvement in the develop-
ment process, the role of creating a country’s infrastructure is given to bureaucrats and
governmental design professionals. In these cases, the government acts as the developer,
designer, and contractor. Because the motivations are sometimes political, the construc-
tion of unoccupied cities has occurred with little purpose other than keeping the con-
struction industry engaged and their employees busy. In the US and Canada, the private
sector is largely responsible for the construction of residential, commercial, and industrial
space. The exception is where the government acts as the client. In cities with
a significant government presence, real estate development can be critical to the eco-
nomic development of the region. In more recent years, private–public partnerships
(PPPs, 3Ps or P3) have been employed to design and build large-scale public projects.
These projects can include public works such as hospitals and prisons, but a PPP can
also be used on modest-sized projects such as affordable housing. The goal with these
PPPs is to foster innovative solutions to financing and building public works projects.

What determines value?

Real estate, unlike other investment assets, is fixed in space and time, and it cannot be
moved or assigned to a new location. Real estate agents often refer to this obvious fea-
ture of real estate in terms everyone will know: “location, location, location…” For these
reasons, whether we purchase a home, a rental property, a vacant lot, or a farm on the
edge of the metropolitan center, the location is what we are buying. Anyone looking for
a home in the city or suburbs, a piece of property on which to build a summer home, or
a condo in the inner city appreciates the role the setting plays in determining its value.
We may buy a home because of the quality of the school district or its proximity to
shopping and employment opportunities. A neighborhood with older trees and less traffic
will only increase the value of the property. If we are lucky enough to acquire a vacation
property, being adjacent to the beach or a lake will increase its premium over other
homes a few miles, or even a few blocks, away. A city apartment or condo with a view
of anything other than a brick wall or dumpster will exact a premium. Likewise, homes
located along busy noisy streets, in areas with industrial pollution, little shopping, high crime,
and poor schools, will have a lower resale price or, in some cases, almost no value at all.
 Introduction 3
When we finally make the decision to purchase a home, our hope is that property
values will continue to increase. Without this hope, you might choose to rent and
avoid the hassles of home repairs and maintenance. However, in markets in which
rents and property values are moving up in lockstep, buying can also help stabilize
housing costs by avoiding paying inflated rents in the future. We buy for a variety
of reasons other than minimizing cost. We may want to express our personal design
values. We may also desire to renovate and decorate to meet our personal needs
and preferences in ways not allowed under our lease. For example, landlords gener-
ally do not appreciate any deviation from the standard beige color scheme in their
rental units. We may want to live in a community with shared values or send chil-
dren to a specific school. In some markets, rental properties may not even exist that
can satisfy our requirements.
In locales that have been experiencing a rapid increase in prices over a sustained
period, the need to get into a market quickly, before being priced out completely, will be
a strong incentive to a potential purchaser. The opportunity for gain has not escaped
anyone buying into the housing markets of Vancouver, San Francisco, and the East Bay
area. Over the last 30 years, the values have averaged over 7% a year, even accounting
for the declines in 2001 and 20063 (Figures 1.1 and 2.1). For those who are priced out
of such markets, their only alternative may be to commute longer distances or to accept
housing of a poorer quality in a less desirable neighborhood. A political issue in many
cities, mayors and councils have been forced to act to dampen price increases through

160.0

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0.0
Mar/89
Mar/90

Mar/98
Mar/99
Mar/00

Mar/08
Mar/09

Mar/18
Mar/86
Mar/87
Mar/88

Mar/91
Mar/92
Mar/93
Mar/94
Mar/95
Mar/96
Mar/97

Mar/01
Mar/02
Mar/03
Mar/04
Mar/05
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Mar/07

Mar/10
Mar/11
Mar/12
Mar/13
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Mar/17

Figure 1.1 San Francisco S&P/Case-Shiller US national home price index, 1987– 2017 (Jan 2000 = 100).
Data Source: Federal Reserve Economic Data, https://fred.stlouisfed.org; for house prices in 2015, see www.
paragon-re.com/trend/san-francisco-home-prices-market-trends-news
4 Introduction

$2,000,000

$1,800,000

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
1975 1985 1995 2005 2015

Figure 2.1 Vancouver average residential sale prices, 1977–2016.

Data Source: CMHC, 2017, www.vancitybuzz.com/2015/11/real-estate-vancouver-october/; www.paragon-re.
com/trend/3-recessions-2-bubbles-and-a-baby

a variety of measures including rent control and tax policy. In Vancouver, where prices
grew by over 30.1% in 2016,4 the city council passed measures to increase tax to 15%
when a buyer is not Canadian. However, the effort of making Vancouver real estate
affordable by discouraging foreign investment may have come too late. With an average
price of CAN$1.58 million for a single family home, it is doubtful that this measure will
make home properties affordable any time in the near future. However, some were lucky
enough to buy their home 20 or 30 years ago, and now have the prospect of selling and
receiving a windfall. This encourages others to speculate that this could happen to them.
In a sense, we are all speculators with the hope that someday we might benefit from
such an auspicious decision.
Though very few of us may be able to benefit from a rapid increase in real estate
value, we may still hope that someday we will be able borrow against our equity. Home
equity can be used to finance a child’s college education or an unexpected medical
expense, or, perhaps later in life, to help make retirement more comfortable. Even if the
property does not increase in value, paying down the mortgage will allow us to borrow
back the money in the form of a home equity loan. If we own a rental property, we can
borrow against the property or sell and reinvest our capital gains. However, estimating
future value is a tricky exercise. We can model property values using mathematical
Another random document with
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death from which she wished to save that father’s brother. The duke
was civil and compassionate, but would make no promise. In fact, it
was resolved that the younger brother of the Earl of Derwentwater
should die, lying as he did under the guilt of double rebellion. ‘If I am
to die,’ said Radcliffe, splenetically, ‘Lord Morton ought to be
executed at Paris, on the same day.’ Morton was a gossiping tourist,
who, being in Brittany, made some idle reflections on the defences of
Port L’Orient in a private letter, which the French postal authorities
took the liberty to open. This brought the writer into some difficulty in
France, but as no harm was meant, Lord Morton suffered none.
The ever-to-be-amused public were not left without TO
diversity of grim entertainment between the KENNINGTON
condemnation of Radcliffe and the execution of his COMMON.
sentence. On Friday, November 28th, there was the
strangling (with the other repulsive atrocities), of five political
prisoners, on Kennington Common, in the morning, and the revival of
a play (which had years before been condemned because of the
political opinions of the author), in the evening. In the morning, two
sledges stood ready for the dragging of eight prisoners from the New
Prison, Southwark, to the gallows, disembowelling block, and fire, on
the Common. This was not an unfrequent spectacle; and on this
occasion, as on others, there was, without cowardly feeling, a certain
dilatoriness on the part of the patients, who never knew what five
minutes might not bring forth. Sir John Wedderburn, indeed, went
into the foremost sledge, with calm readiness, and Governor (of
Carlisle) Hamilton stept in beside him. Captain Bradshaw stood
apart, hoping not to be called upon. There was a little stir at the gate
which attracted feverish attention on the part of the patients.—‘Is
there any news for me?’ asked Bradshaw, nervously. ‘Yes,’ replied a
frank official, ‘the Sheriff is come and waits for you!’ Bradshaw had
hoped for a reprieve; but hope quenched, the poor fellow said he
was ready. Another Manchester Captain, Leath, was equally ready
but was not inclined to put himself forward. Captain Wood, after the
halter was loosely hung for him around his neck, called for wine,
which was supplied with alacrity by the prison drawers. When it was
served round, the captain drank to the health of the rightful king,
James III. Most lucky audacity was this for Lindsay, a fellow officer
from Manchester, bound for Kennington. While the wine was being
drunk, Lindsay was ‘haltering,’ as the reporters called it. He was nice
about the look of the rope, but just as he was being courteously
invited to get in and be hanged, a reprieve came for him, which
saved his life. Two other doomed rebels, for whom that day was to
be their last, had been reprieved earlier in the morning, and that was
why the puzzled spectators, on the way or at the place of sacrifice,
were put off with five judicial murders when they had promised
themselves eight.
In the evening, the play which was to tempt the CIBBER’S
town was a revival of Cibber’s ‘Refusal, or the Ladies’ ‘REFUSAL.’
Philosophy.’ It had not been acted for a quarter of a
century (1721), when it had failed through the opposition of the
Jacobites, who damned the comedy, by way of revenge for the satire
which Cibber had heaped on the Nonjurors. Now, the play went
triumphantly. No one dared,—when the hangman was breathless
with over-work, and the headsman was looking to the edge of his
axe, for the ultimate disposal of Jacobites,—to openly avow himself
of a way of thinking which, put into action, sent men to the block or
the gallows. All that could be done in a hostile spirit was done,
nevertheless. The Jacks accused Cibber of having stolen his plot
from predecessors equally felonious; but they could not deny that the
play was a good play; and they asserted, in order to annoy the Whig
adaptor, that the Witling of Theophilus Cibber was a finer touch of art
than that of his father in the same part.
On the 8th of December, Charles Radcliffe closed EXECUTION
the bloody tragedies of the year, with his own. He OF
came from the Tower like a man purified in spirit, RADCLIFFE.
prepared to meet the inevitable with dignity. They who
had denied his right to call himself a peer, allowed him to die by the
method practised with offenders of such high quality. The only bit of
bathos in the scene on the scaffold was when the poor gentleman
knelt by the side of the block, to pray. Two warders approached him,
who took off his wig, and then covered his head with a white skull
cap. His head was struck off at a blow, except, say the detail-loving
newspapers, ‘a bit of skin which was cut through in two chops.’ The
individual most to be pitied on that December morning was
Radcliffe’s young son, prisoner in the Tower, who was still believed
by many to be the brother of the young Chevalier.
There was another prisoner there whose life was in peril; namely
Simon, Lord Lovat. The progress up to London of Lovat and of the
witnesses to be produced against him was regularly reported. There
was one of the latter who hardly knew whether he was to be traitor or
witness, Mr. Murray of Boughton. The following describes how he
appeared on his arrival at Newcastle, and is a sample of similar
bulletins. ‘July 17th. On Thursday Afternoon, arrived here in a Coach
under the Care of Lieutenant Colonel Cockayne, escorted by a Party
of Dragoons, John Murray, Esq., of Boughton, the Pretenders
Secretary, and yesterday Morning he proceeded to London. He
seem’d exceedingly dejected and looked very pale.’
The London papers sketched in similar light LOVAT’S
touches the progress of Lovat. In or on the same PROGRESS.
carriage in which he sat were other Frasers, his
servants or retainers who, as he knew, were about to testify against
him, and whose company rendered him extremely irritable. The
whole were under cavalry escort, travelling to London, only by day.
On the morning Lovat left his inn at Northampton, the landlady was
not there to bid him farewell. The old gallant enquired for her. He
was told that she was unavoidably absent. ‘I have kissed,’ said he,
‘every one of my hostesses throughout the journey; and am sorry to
miss my Northampton landlady. No matter! I will salute her on my
way back!’ On Lovat’s arrival at St. Albans, Hogarth left London, for
what purpose is explained in part of the following advertisement,
which appears in the papers under the date of Thursday, August
28th. ‘This day is published, price one shilling, a whole length print of
Simon Lord Lovat, drawn from the life and etch’d in Aqua fortis, by
Mr. Hogarth. To be had at the Golden Head, in Leicester Fields, and
at the Print shops. Where also may be had a Print of Mr. Garrick in
the character of Richard III., in the first scene, price 7s. 6d.’
On the day on which the above advertisement HOGARTH’S
appeared, the Rev. Mr. Harris enclosed one of the PORTRAIT OF
sketches of Lovat in a letter to Mrs. Harris, written in LOVAT.
Grosvenor Square, in which he says:—‘Pray excuse my sending you
such a very grotesque figure as the enclosed. It is really an exact
resemblance of the person it was done for—Lord Lovat—as those
who are well acquainted with him assure me; and, as you see, it is
neatly enough etched. Hogarth took the pains to go to St. Albans,
the evening that Lord Lovat came thither in his way from Scotland to
the Tower, on purpose to get a fair view of his Lordship before he
was locked up; and this he obtained with a greater ease than could
well be expected; for, in sending in his name and the errand he came
about, the old lord, far from displeased, immediately had him in,
gave him a salute and made him sit down and sup with him, and
talked a good deal very facetiously, so that Hogarth had all the
leisure and opportunity he could possibly wish to have, to take off his
features and countenance. The portrait you have may be considered
as an original. The old lord is represented in the very attitude he was
in while telling Hogarth and the company some of his adventures.’
The old roystering Lovelace who kissed his ARRIVAL AT
hostesses on his way up, and talked of saluting them THE TOWER.
on his way back, was so infirm that to descend from
his carriage he leaned heavily on the shoulders of two stout men,
who put their arms round his back to keep him from falling. As he
crossed Tower Hill he came suddenly on the partly dismantled
scaffold on which the two lords had recently suffered; and he was
heard to mutter something as to his perception of the way it was
intended he should go. But, on being lifted from the carriage, he said
to the lieutenant, ‘If I were younger and stronger, you would find it
difficult to keep me here.’—‘We have kept much younger men here,’
was the reply. ‘Yes,’ rejoined Lovat, ‘but they were inexperienced;
they had not broke so many gaols as I have.’ The first news
circulated in London after Murray, the Chevalier’s ex-secretary, had
passed into the same prison, was that he had given information
where a box of papers, belonging to the Pretender, was buried, near
Inverness. A couple of king’s messengers riding briskly towards the
great North Road were taken to be those charged with unearthing
the important deposit.
 Of the two prisoners,—one was eager to save his life by giving all
the information required of him. The other, equally eager, pleaded his
innocence, his age, and his debility; but apart from declaring that he
was a loyal subject, and that he willingly had no share in the
rebellion, although his son had, he remained obstinately mute to all
questioning, or he answered the grave queries with senile banter.
Murray yielded at the first pressure. As early as REBELS AND
July, Walpole speaks of him as having made ‘ample WITNESSES.
confessions, which led to the arrest of the Earl of
Traquair and Dr. Barry; and to the issuing of warrants for the
apprehension of other persons whom Murray’s information had put in
peril. Walpole believed that the Ministry had little trustworthy
knowledge of the springs and conduct of the rebellion, till Murray sat
down in the Tower and furnished them with genuine intelligence.
While he and Lord Lovat were travelling slowly by land to the
Tower, traitors were coming up, by sea, to depose against him, or
any other, by whose conviction they might purchase safety. The
‘General Advertiser’ announced the arrival in London (from a ship in
the river) of six and twenty ‘Scotch rebels,’ who were conducted to
the Plaisterer’s Corner, St. Margaret’s Lane, Westminster, where
they were kept under a strong military guard. ‘They are brought up,’
says the above paper, ‘as evidences for the king. Several of them
are young. Some have plaids on; others in waistcoats and bonnets,
and upon the whole make a most despicable and wretched figure.’
Meanwhile Lovat struggled hard for the life he affected to despise,
and which he tried to persuade his accusers was not worth the
taking. He kept them at bay, for months, by his pleas; and he
vehemently declared his innocence of every one of the seven heads
of accusation brought against him,—of every one of which he was
certainly guilty. Towards the close of December, he was arraigned at
the bar of the House of Lords. There is no better condensation of
what took place than that furnished by Walpole, on Christmas Day,
1746:—‘Old Lovat has been brought to the bar of the House of
Lords. He is far from having those abilities for which he has been so
cried up. He saw Mr. Pelham at a distance, and called to him, and
asked him, if it were worth while to make all this fuss to take off a
grey head fourscore years old. He complained of his estate being
seized and kept from him. Lord Granville took up this complaint very
strongly, and insisted on having it enquired into. Lord Bath went
farther and, as some people think, intended the duke; but I believe
he only aimed at the Duke of Newcastle.... They made a rule to order
the old creature the profits of his estate till his conviction. He is to put
in his answer on the 13th of January.’
In the meantime, the papers reported that there TILBURY
were nearly four hundred Scottish rebels cooped up FORT.
in Tilbury Fort. Watermen’s arms were weary with
rowing boats full of Londoners down to the fort, to visit the wretched
captives, or to stare at the fort which held them in. Most of them
were transported to the Plantations. There was a sanguinary feeling
against all such offenders. The last words in the ‘General Advertiser’
for December 31st, 1746, are contained in the two concluding lines
of a poem, signed ‘Williamite,’ and which are to the following
charitable effect:—
A righteous God, with awful hands,
In justice, Blood for Blood demands.
At the same time a print was selling which represented ‘Temple
Bar, the City Golgotha,’ with three heads on the spikes,—allegorical
devils, rebel flags, &c.,—and more ‘blood for blood’ doggrel
intimating that the naughty sons of Britain might there see ‘what is
rebellion’s due.’
The idea of altogether sacrificing Charles Edward FRENCH IDEA.
was as distasteful to his numberless friends in
France, as it was to the English Jacobites. One of the most singular
of the French suggestions for a definite arrangement was made to
this effect, in some of the French papers, namely:—that George II.
should withdraw to his electorate of Hanover, taking his eldest son
and heir with him; renouncing the English crown for himself and
successors, of the elder line, for ever;—that the Chevalier de St.
George should remain as he was;—that the Prince Charles Edward
should be made King of Scotland and Ireland;—and that the Duke of
Cumberland should, as King of England, reign in London. It was a
thoroughly French idea,—making a partition of the United Kingdom,
and establishing the duke in the metropolis to reign over a powerless
fragment of it,—a Roi de Cocagne! Both political parties laughed at it
in their several houses of entertainment.
The Prince of Wales, himself, was something of a Jacobite; but he
was a Jacobite for no other reason, probably, than because his
brother, the Duke of Cumberland, had crushed the Jacobite cause. It
is due to the Prince, however, to notice that he once solemnly
expressed his sympathy when the Princess, his wife, had just
mentioned, ‘with some appearance of censure,’ the conduct of Lady
Margaret Macdonald, who harboured and concealed Prince Charles
when, in the extremity of peril, he threw himself on her protection.
‘And would not you, Madam,’ enquired Prince Frederick, ‘have done
the same, in the same circumstances? I am sure,—I hope in God,—
you would.’ Hogg relates this incident in the introduction to his
‘Jacobite Relics,’ and it does honour to the prince, himself,—who
used at least to profess fraternal affection, if not political sympathy,
by standing at an open window at St. James’s overlooking the Park,
with his arm round the Duke of Cumberland’s neck.
Frederick, however, was not a jot more acceptable A LONDON
to the Jacobites, because he was on bad terms with ELECTOR’S
the king, and that he refrained from paying any other WIT.
compliment than the above-named one to the Duke of
Cumberland, on his victory at Culloden. The prince invariably came
off, more or less hurt, whenever he engaged personally in politics.
When his sedan-chair maker refused to vote for the prince’s friend,
Lord Trentham, a messenger from his royal highness’s household
looked in upon the elector, and bluntly said, ‘I am going to bid
another person make his royal highness a chair!’ ‘With all my heart!’
replied the chair maker, ‘I don’t care what they make him, so they
don’t make him a throne!’ Again, on that day which all Tories kept as
an anniversary of crime and sorrow, the 30th of January,—‘the
martyrdom of King Charles,’ the prince entered a room where his
sister Amelia was being tended by her waiting woman, Miss Russell,
who was a great grand-daughter of Oliver Cromwell. Frederick said
to this lady, sportively, ‘Shame, Miss Russell, why have you not been
to Church, humbling yourself, for the sins on this day committed by
your ancestors?’ To which she replied, ‘Sir: I am a descendant of the
great Oliver Cromwell. It is humiliation sufficient to be employed, as I
am, in pinning up your sister’s tail!’
During the early months of 1747, the Londoners TRIAL OF
waited with impatience for the trial of Lord Lovat. The LOVAT.
old rebel had exhausted every means of delay. The
time of trial came at last. On the 9th of March, Lovat was taken from
the Tower to Westminster Hall. An immense crowd lined the whole
way, and the people were the reverse of sympathetic. One woman
looked into his coach, and said: ‘You ugly old dog, don’t you think
you will have that frightful head cut off?’ He replied, ‘You ugly old
——, I believe I shall!’ Lovat was carried through the hall in a sedan-
chair, and to a private room, in men’s arms. Mr. Thomas Harris,
writing of the trial next day, from Lincoln’s Inn, says:—‘It was the
largest and finest assembly I ever saw: the House of Commons on
one side; ladies of quality on the other, and inferior spectators
without number, at both ends.’—After much pantomimic ceremony
on the part of officials, Lovat, having been brought in, knelt (as he is
described to have done on each of the nine days of the trial). On
each occasion Lord Hardwicke solemnly said to him, ‘My Lord Lovat,
your Lordship may rise.’ On the opening day, the prosecuting
managers of the impeachment sent up by the Commons, ‘went at
him,’ at dreary, merciless, length. After them, the prosecuting
counsel opened savagely upon him, especially Murray, the Solicitor-
General, whose chief witness was his own Jacobite brother, and who
was himself suspected of having drunk the Pretender’s health on his
knees. Lovat lost no opportunity of saving his life. He
SCENE IN
pitifully alluded to his having to rise by 4 o’clock, in WESTMINSTE
order to be at Westminster by 9. He spoke of his R HALL.
frequent fainting fits; he often asked leave to retire,
and, in short, he so exasperated the Lord High Steward as to make
that official grow peevish, and to wrathfully advise Lord Lovat to keep
his temper. When the Attorney-General called his first witness,
Chevis of Murtoun, the lawyer described him, with solemn
facetiousness, as being as near a neighbour as man could be to
Lovat, but as far apart from him as was possible in thought and
action. Lovat protested against the legal competency of the witness,
he being Lovat’s tenant and vassal. Hours were spent over this
objection, and the old lord wearied the clerk, whom he called upon to
read ancient Acts of Parliament, from beginning to end. The protest
was disallowed; and the witness having been asked if he owed Lovat
money, and if a verdict of guilty might help him not to pay it,
emphatically declared that he owed Lovat nothing. He then went into
a long array of evidence, sufficient to have beheaded Lovat many
times over, as a traitor to the reigning family, and indeed no faithful
servant of the family desiring to reign. The traitor himself laughed
when this witness quoted a ballad in English, which Lovat had
composed, ‘in Erse’:—
When young Charley does come over,
There will be blows and blood good store.
‘When,’ said the witness, ‘I refused a commission offered me by the
Pretender, Lord Lovat told me I was guilty of High Treason.’ Further,
Lovat had drunk ‘Confusion to the White Horse and the whole
generation of them;’ and had cursed both the Reformation and the
Revolution. Lovat retorted by showing that this not disinterested
witness was a loyal man living at the expense of Government. ‘He is
trying to hang an old man to save himself,’ said Lovat. This was
warmly denied, but Lovat was right in the implication.
Lovat’s secretary, Fraser, was a dangerous FATHER AND
witness. He proved that, by Lord Lovat’s order, he, SON.
the secretary, wrote to Lord Loudon (in the service of
George II.) informing him that he was unable to keep his son out of
the rebellion, and another letter to the Pretender that, though unable
to go himself to help to restore the Stuarts, he had sent his eldest
son to their standard. It was shown that the son was disgusted at his
father’s double-dealing, and only yielded to him at last (in joining the
army of Charles Edward), on the ground that he was bound to obey
his sire and the chief of the clan Fraser. Undoubtedly, the attempt to
save himself by the sacrificing of his son, was the blackest spot in
Lovat’s mean, black, and cruel character. According to Walpole, ‘he
told’ Williamson, the Lieutenant of the Tower, ‘We will hang my eldest
son and then my second shall marry your niece!’
Fraser after Fraser gave adverse evidence. Lovat THE
maintained that they were compelled to speak against FRASERS.
him. One of them confessed, with much simplicity,
that he lived and boarded at a messenger’s house; but that he had
no orders to say what he had said. ‘I am free: I walk in the Park or
about Kensington; I go at night to take a glass,’—but he allowed that
the messenger went with him. One or two witnesses had very short
memories, or said what they could for their feudal superior. Another,
Walker, spoke to the anger of Lovat’s son, on being driven into
rebellion. ‘The Master of Lovat took his bonnet and threw it on the
floor. He threw the white cockade on the fire, and damned the
cockade, &c.’ Lord Lovat, on the other hand, had sworn he would
seize the cattle and plaids of all the Frasers who refused to rise, and
would burn their houses. One of these adverse Frasers, being hard
pressed by Lovat, allowed that he expected to escape punishment,
for his evidence, but that he had not been promised a pardon. ‘If,’
said he, ‘I give evidence, in any case it should be the truth; and,’ he
added, with a composure so comic that it might well have disturbed
the august solemnity, ‘if the truth were such as I should not care to
disclose, I would declare positively I would give no evidence at all.’
Another witness, a Lieutenant Campbell, in the king’s service, but
who had been a prisoner in the power of the Jacobites, being
questioned as to a conversation he had had with Lovat, made the
amusingly illogical remark, ‘As I did not expect to be called as a
witness, so I do not remember what passed on that occasion.’ The
lieutenant did, however, recollect one thing, namely, that Lovat had
said that his son had gone into the rebellion, but that he himself was
a very loyal person. A second officer, Sir Everard Falconer, secretary
to the Duke of Cumberland (and very recently married to Miss
Churchill, daughter of the old general), stated that he had been sent
by the duke to converse with Lovat, and he repeated the loyal
assertions that the prisoner had made. ‘Will your Lordship put any
question to Sir Everard?’ asked the Lord High Steward, of Lovat. ‘I
have only,’ replied Lovat, ‘to wish him joy of his young wife.’
 The most important witness of all was, of course,
MURRAY OF
Mr. Murray, of Boughton, late secretary to the young BOUGHTON.
Chevalier, and, only a day or two before, a prisoner in
the King’s Bench, from which he had been discharged. In the course
of his answers, Murray said he had been ‘directed’ to give a narrative
of the springs and progress of the late rebellion,—when he came to
be examined at the Bar of the High Court of Justice, where he was
then standing. ‘Directed?’ exclaimed the Earl of Cholmondely, ‘who
directed you?’ The Lord High Steward and the Earl of Chesterfield
protested they had not heard the word ‘directed’ used by the witness.
There was a wish to have the matter cleared up, and Murray then
said, ‘Some days after my examination in the Tower, by the
honourable Committee of the House of Commons, a gentleman,
who, I believe was their secretary, came to me to take a further
examination; and to ask me as to any other matter that had occurred
since my last examination. Some days after that, he told me I should
be called here before your Lordships, upon the trial of my Lord
Lovat, and that at the same time, it would be expected that I should
give an account of the rise and progress of the Rebellion in general.’
The above shows pretty clearly how the weak MURRAY’S
natures of prisoners in the Tower were dealt with, in EVIDENCE.
order to get evidence by which they would destroy at
once the life of a confederate and their own honour. Murray did what
he was ‘directed’ or ‘expected’ to do, without passion but with some
sense of pain and shame. The whole rise and course of the
insurrection may be found in his testimony; he was prepared for the
questions, equally so with the answers he gave to them; and his
evidence is of importance for a proper understanding of the
outbreak. Some merit was made of his ‘voluntary surrender,’ but
Lord Talbot, quite in Lovat’s interest, roughly asked if Murray had
really intended to surrender himself at the time he became a prisoner
to the Royal forces. The poor man truthfully answered that ‘it was not
then my intention particularly to surrender myself’;—adding, ‘it was
not my intention till I saw the dragoons;’—but that he had never
since attempted to escape.—‘Have you ever taken the Oaths of
Allegiance and Fidelity to the King?’ asked Lord Talbot. He never
had. ‘Did you ever take such Oaths to anybody else?’ Murray let
drop a murmured ‘No’; and then Sir William Yonge,
CROSS
one of the Managers for the Commons, came to his EXAMINATION.
help, with the expression of a hope that the king’s
witness should not be obliged to answer questions that tended to
accuse himself of High Treason. To which Lord Talbot replied that the
gentleman had already confessed himself guilty of that crime. Lord
Talbot then asked Murray if he was a voluntary evidence. Murray
requested him to explain what he meant by those two words. ‘Are
you here?’ said Talbot, ‘in hopes of a pardon? And if you had been
pardoned, would you now be here as a witness at all?’ The Attorney-
General came to the rescue. It was an improper question, he said,
resting upon the supposition of a fact which had not happened. Lord
Talbot insisted: he asked Murray, ‘Do you believe your life depends
upon the conformity of the evidence you shall give on this trial, with
former examinations which you have undergone?’ There was a fight
over this matter, but a lull came in the fray, and then Murray spoke
with a certain dignity, and said: ‘I am upon my oath and obliged to tell
the truth; and I say that possibly and very probably, had I been in
another situation of life, I should not have appeared before your
Lordships as a witness against the noble Lord at the Bar.’ There was
a touch of mournful sarcasm in Murray’s truthful answer, which
escaped Lord Talbot, for he remarked: ‘I am extremely well satisfied
with the gentleman’s answer; and it gives me a much better opinion
of his evidence than I had before.’
The conclusion of the protracted affair was that
THE VERDICT.
Lovat was pronounced guilty by the unanimous
verdict of 117 peers. He made no defence by which he could profit;
and when he spoke in arrest of judgment, he said little to the
purpose. There was a sorry sort of humour in one or two of his
remarks. He had suffered in this trial by two Murrays, he said, by the
bitter evidence of one, and the fatal eloquence of another, by which
he was hurried into eternity. Nevertheless, though the eloquence had
been employed against him, he had listened to it with pleasure. ‘I
had great need of my friend Murray’s eloquence for half an hour,
myself; then, it would have been altogether agreeable to me!’ In
whatever he himself had done, there was, he said, really no
malicious intention. If he had not been ill-used by the Government in
London, there would have been no rebellion in the Frasers’ country.
George I. had been his ‘dear master;’ for George II. he had the
greatest respect. He hoped the Lords would intercede to procure for
him the royal mercy. The Commons had been severe against him, let
them now be merciful. Nothing of this availed Lovat. The peevish
Lord Hardwicke called him to order; and then, with a calm
satisfaction, pronounced the horrible sentence which told a traitor
how he should die. Lovat put a good face on this bad matter.—‘God
bless you all!’ he said, ‘I bid you an everlasting farewell.’ And then,
with a grim humour, he remarked:—‘We shall not meet all in the
same place again, I am quite sure of that!’ He afterwards desired, if
he must die, that it should be in the old style of the Scottish nobility,
—by the Maiden.
While this tragic drama was in progress, there
GENTLEMAN
arose a report in the coffee-houses of a Jacobite plot. HARRY.
It came in this way. At the March sessions of the Old
Bailey, a young highwayman, named Henry Simms, was the only
offender who was capitally convicted. ‘If it hadn’t been for me,’ said
the handsome highwayman, ‘you would have had a kind of maiden
assize; so, you might as well let me go!’ As the judges differed from
him, he pointed to some dear friends in the body of the court, and
remarked, ‘Here are half a dozen of gentlemen who deserve hanging
quite as much as I do.’ The Bench did not doubt it, but the remark
did not profit Gentleman Harry, himself, as the young women and
aspiring boys on the suburban roads called him. But Mr. Simms was
a man of resources. As he sat over his punch in Newgate, he
bethought himself of a means of escape. He knew, he said, of a
hellish Jacobite plot to murder the king and upset the Happy
Establishment. Grave ministers went down to Newgate and listened
to information which was directed against several eminent persons.
Harry, however, lacked the genius of Titus Oates; and besides, the
people in power were not in want of a plot; the information would not
‘hold water.’ The usual countless mob of savages saw him ‘go off’ at
Tyburn; and then eagerly looked forward to the expected grander
display on Tower Hill. But Lovat and his friends spared no pains to
postpone that display altogether.
 The Scots made a national question of it. The Duke of Argyle
especially exerted himself to get the sentence commuted for one of
perpetual imprisonment. This was accounted for by Mr. Harris
(Malmesbury Correspondence), in the following manner: ‘The Duke
owes Lord Lovat a good turn for letting the world know how active
his Grace was in serving the Government in 1715, and for some
panegyric which the Duke is not a little pleased with.’
In the Tower, Lovat mingled seriousness and buffoonery together.
But this was natural to him. There was no excitement about him, nor
affectation. He naturally talked much about himself; but he had
leisure and self-possession to converse with his visitors on other
topics besides himself. Only two or three days before his execution
he was talking with two Scottish landed proprietors. The subject was
the Jurisdiction Bill. ‘You ought to be against the Bill,’ said Lovat; ‘the
increase of your estates by that Bill will not give you such an interest
at Court as the power did which you are thereby to be deprived of.’
The interest of his own friends at Court was gone.
On April the 2nd, the Sheriffs of London received THE DEATH
the ‘death warrant’ from the Duke of Newcastle for WARRANT.
Lovat’s execution. At the same time, a verbal
message was sent expressing the duke’s expectation that the
decapitated head should be held up, and denounced as that of a
traitor, at the four corners of the scaffold.
On the 9th, the hour had come and the old man EXECUTION.
was there to meet it. It is due to him to say that he
died like a man, therein exemplifying a remark made by Sir Dudley
Carleton, on a similar occurrence, ‘So much easier is it for a man to
die well than to live well.’ Lovat was very long over his toilet, from
infirm habit, and he complained of the pain and trouble it gave him to
hobble down the steps from his room, in order to have his head
struck off his shoulders. On the scaffold, he gazed round him and
wondered at the thousands who had assembled to see such a
melancholy sight. He quoted Latin lines, as if they illustrated a
patriotism or virtue which he had never possessed or practised. He
would have touched the edge of the axe, but the headsman would
not consent till the Sheriffs gave their sanction. With, or apart from all
this, ‘he died,’ says Walpole, ‘without passion, affectation,
buffoonery, or timidity. His behaviour was natural and intrepid.’
Walpole adds, ‘He professed himself a Jansenist.’ Other accounts
say, ‘a Papist,’ which is a Jansenist and something more. ‘He made
no speech; but sat down a little while in a chair on the scaffold, and
talked to the people round him. He said, he was glad to suffer for his
country, dulce est pro patriâ mori; that he did not know how, but that
he had always loved it, Nescio quâ natale solum, &c.; that he had
never swerved from his principles, (!) and that this was the character
of his family who had been gentlemen for 500 years! He lay down
quietly, gave the sign soon, and was despatched at a blow. I believe
it will strike some terror into the Highlands, when they hear there is
any power great enough to bring so potent a tyrant to the block. A
scaffold fell down and killed several persons; one, a man that had
ridden post from Salisbury the day before to see the ceremony; and
a woman was taken up dead with a live child in her arms.’ This
scaffold consisted of several tiers which were occupied by at least a
thousand spectators. It was built out from the Ship, at the corner of
Barking alley. About a dozen people were killed at the first crash,
which also wounded many who died in hospital. The master-
carpenter who erected it, had so little thought of its instability, that he
established a bar and tap beneath it. He was joyously serving out
liquors to as joyous customers, when down came the fabric and
overwhelmed them all. The carpenter was among the killed.
The head was not held up nor its late owner GEORGE
denounced as a traitor. The Duke of Newcastle was SELWYN.
displeased at the omission, but the Sheriffs justified
themselves on the ground that the custom had not been observed at
the execution of Lord Balmerino, and that the duke had not
authorised them to act, in writing. A sample of the levity of the time is
furnished in the accounts of the crowds that flocked to the trial as
they might have done to some gay spectacle; and an example of its
callousness may be found in what Walpole calls, ‘an excessive good
story of George Selwyn.’ ‘Some women were scolding him for going
to see the execution, and asked him how he could be such a
barbarian to see the head cut off?’ “Nay,” says he, “if that be such a
crime, I am sure I have made amends, for I went to see it sewed on
again!” When he was at the undertaker’s, Stephenson’s in the
Strand, as soon as they had stitched him together, and were going to
put the body into the coffin, George, in my Lord Chancellor’s voice,
said, “My Lord Lovat, your Lordship may rise.”’
Lovat had expressed a passionate desire to be
LOVAT’S
buried in his native country, under the shadow of its BODY.
hills, his clansmen paying the last duty to their chief,
and the women of the tribe keening their death-song on the way to
the grave. The Duke of Newcastle consented. The evening before
the day appointed for leaving the Tower, a coachman drove a hearse
about the court of the prison, ‘before my Lord Traquair’s dungeon,’
says Walpole, ‘which could be no agreeable sight, it might to Lord
Cromartie, who is above the chair.’ Walpole treats Lord Traquair with
the most scathing contempt, as if he were both coward and traitor,
ready to purchase life at any cost. After all, Lovat’s body never left
the Tower. ‘The Duke of Newcastle,’ writes Walpole to Conway, 16th
April, on which night London was all sky-rockets and bonfires for last
year’s victory, ‘has burst ten yards of breeches-strings, about the
body, which was to be sent into Scotland; but it seems it is
customary for vast numbers to rise, to attend the most trivial burial.
The Duke, who is always at least as much frightened at doing right
as at doing wrong, was three days before he got courage enough to
order the burying in the Tower.’
Lovat’s trial brought about a change in the law. On the 5th of May,
Sir William Yonge, in the House of Commons, brought in a good-
natured Bill, without opposition, ‘to allow council to prisoners on
impeachment for treason, as they have on indictments. It hurt
everybody at old Lovat’s trial, all guilty as he was, to see an old
wretch worried by the first lawyers in England, without any
assistance, but his own unpractised defence. This was a point
struggled for in King William’s reign, as a privilege and dignity
inherent in the Commons—that the accused by them should have no
assistance of council. How reasonable that men chosen by their
fellow-subjects for the defence of their fellow-subjects should have
rights detrimental to the good of the people whom they are to
protect. Thank God! we are a better-natured age, and have
relinquished this savage principle with a good grace.’ So wrote
Walpole in Arlington Street.
After Lovat’s death, the friends of the Happy Establishment
ceased to have fears for the stability of the happiness or for that of
the establishment. Walpole declined thenceforth to entertain any
idea of Pretender, young or old, unless either of them got south of
Derby. When Charles Edward ‘could not get to London with all the
advantages which the ministry had smoothed for him, how could he
ever meet more concurring circumstances?’ Meanwhile, the ‘Duke’s
Head,’ as a sign, had taken place of Admiral Vernon’s in and about
the metropolis, as Vernon’s had of the illustrious Jacobite’s—the
Duke of Ormond.
There was in Piccadilly an inn, whose loyal host, THE WHITE
Williams, had set up the then very loyal sign of ‘The HORSE,
White Horse’ (of Hanover). While Lovat’s trial was PICCADILLY.
proceeding, that Whig Boniface had reason to know
that the Jacobites were not so thoroughly stamped out as they
seemed to be. Williams attended an anniversary dinner of the
Electors of Westminster, who supported ‘the good old cause.’ He
was observed to be taking notes of the toasts and speeches, and he
was severely beaten and ejected. He laid an information against this
Jacobite gathering, and he described one of the treasonable
practices thus:—‘On the King’s health being drunk, every man held a
glass of water in his left hand, and waved a glass of wine over it with
the right.’ A Committee of the House of Commons made so foolish
an affair of it as to be unable to draw up a ‘Report.’ If the enquiry had
extended three years back, Walpole thinks, ‘Lords Sandwich and
Grenville of the Admiralty would have made an admirable figure as
dictators of some of the most Jacobite toasts that ever were
invented. Lord Donerail ... plagued Lyttelton to death with pressing
him to enquire into the healths of the year ’43.’
On the first anniversary of Culloden, the JACOBITE
celebration of the day was as universally joyous as TOASTS.
when the news of the victory first reached town. The
papers speak of a ‘numerous and splendid appearance of nobility,’ at
St. James’s; of foreign ministers and native gentry, eager to pay their
compliments to his Majesty on this occasion. At night, London was in
a blaze of bonfires and illuminations. At the same time, in houses
where Jacobites met, they drank the very enigmatical toast, ‘The
three W’s,’ and talked of a private manifesto of the Chevalier to his
faithful supporters, which stated that the late attempt was an essay,
which would be followed in due time by an expedition made with an
irresistible force. But there were also Jacobites who ‘mourned
Fifteen renewed in Forty-five,’ and whose sentiments were
subsequently expressed by Churchill’s Jockey in the ‘Prophecy of
Famine’:—
Full sorely may we all lament that day,
For all were losers in the deadly fray.
Five brothers had I on the Scottish plains,
Well do’st thou know were none more hopeful swains:
Five brothers there I lost in manhood’s pride;
Two in the field, and three on gibbets died.
Ah! silly swains to follow war’s alarms;
Ah, what hath shepherd life to do with arms?
There was still an untried rebel peer in the Tower, THE EARL OF
the Earl of Traquair. He bore the royal name of TRAQUAIR.
Charles Stuart, and had some drops of the Stuart blood in his veins.
Captured in 1746, he had seen the arrival of Lovat at, and also his
departure from, the Tower. Soon after the latter event, there was
some talk of impeaching the earl; but this was held to be idle talk
when the earl was seen enjoying the liberty of the Tower—walking in
one of the courts with his friends. Whether he had rendered any
service to Government, to be deserving of this favour and
subsequent immunity, is not known. Walpole, when Lovat’s trial was
going on, said, ‘It is much expected that Lord Traquair, who is a great
coward, will give ample information of the whole plot.’ However, it is
certain that many Jacobites were pardoned without any such
baseness being exacted from them. Sir Hector Maclean and half-a-
dozen other semi-liberated rebels were to be seen going about
London, with a messenger attending on them. Other messengers,
however, were often sudden and unwelcome visitors in private
houses, in search for treasonable papers and traitorous persons.
Gentleman Harry’s idea of a plot was said, in loyal coffee-houses, to
be a reality; and the quidnuncs there were quite sure that money
was going into the Highlands from France, and small bodies of
Frenchmen were also being sent thither, and capable Scottish and
English sergeants were now and then disappearing. The only
ostensible steps taken by the Government was to make a new army-
regulation, namely, that the 3rd (Scottish) regiment of Foot Guards,
and all other regiments, bearing the name Scottish, should
henceforward be called English, and ‘the drums to beat none but
English marches.’
Therewith came a doubtful sort of pardoning to PLOTTING
about a thousand rebels cooped up in vessels on the AND
Thames, or in prisons ashore. They, and some PARDONING.
Southwark prisoners who had been condemned to
death, were compelled to suffer transportation to the American
Plantations. ‘They will be transported for life,’ the papers tell their
readers, ‘let them be of what quality and condition soever.’
There was one Jacobite prisoner in Newgate who ÆNEAS
was disinclined to live in durance, to take his trial, or MACDONALD.
to be hanged after it or transported without it. This
was Æneas or Angus Macdonald, known as the Pretender’s Banker.
He had surrendered soon after Culloden, and was lodged in
Newgate. Seeing the death-like aspect of things, Macdonald got two
friends to call upon him, one evening. There was nothing strange in
such a visit. Newgate was like a huge hotel, open at all hours, where
turnkeys acted as footmen who introduced visitors. Young Mr.
Ackerman, the keeper’s son, received Mr. Macdonald’s friends. As
soon as he had opened the wicket, behind which the prisoner was
standing, they knocked Ackerman down, and as he was attempting
to rise, they flung handfuls of snuff into his face. He succeeded in
getting on his legs, but, when he could open his eyes, the captive
and his friends had disappeared. Alarm was given; young Ackerman
led the pursuit, and he came up with Macdonald in an adjacent
street. Æneas faced his pursuer as if to quietly surrender, but as
soon as Ackerman came near, he flung a cloud of snuff into his face.
The gaoler struck him down with his keys and broke his collarbone.
When Macdonald was again within the prison walls, he politely
apologised for the trouble he had given. Mr. Ackerman quite as
politely begged him not to think of it, ‘but, you see, Sir,’ he added, ‘I
am bound to take care it does not happen again,’ and clapping a
heavy suit of irons on the prisoner’s limbs, he stapled and screwed
the banker down to the floor, sending the surgeon to him to look to
his collarbone.
The banker’s trial was put off from time to time, THE
between July and December. The public in general COUNTESS
were beginning to doubt its ever coming on at all; and OF
the autumn seemed dull to people now long used to DERWENTWAT
ER.
excitement, when London suddenly heard that
Charles Radcliffe’s widow, with a son and two daughters, had arrived
in London, and had taken a mansion in, then highly fashionable,
Golden Square. She was a Countess (of Newburgh), in her own
right; but, of course, the gentry with Jacobite sympathies, who called
on her, recognised her as Countess of Derwentwater. This arrival in
Golden Square may have had some influence on a demonstration at
Westminster Abbey. For years, on the anniversary of that rather un-
English king and canonized saint, Edward the Confessor, groups of
Roman Catholics were accustomed to gather round his shrine,
kneeling in prayer. ‘Last Tuesday,’ says the ‘Penny Post,’ ‘being the
anniversary of Edward the Confessor, the tombs were shut in
Westminster Abbey, by order of the Dean and Chapter, to prevent
the great concourse of Roman Catholics, who always repair there on
that day. Notwithstanding which, most of them were kneeling all the
day at the gates, paying their devotions to that Saint.’
This incident having passed out of discussion, the trial of
Macdonald was looked for. When it did come on, in December, at St.
Margaret’s, Southwark, it disappointed the amateurs of executions,
and delighted the Jacobites. The prisoner’s main plea was that he
was French, and was legally at Culloden. The jury found that he was
not French, but was a Scotch rebel. He was sentenced to death; but
the whole thing was a solemn farce, the sentence was not carried
out; and we shall presently see wherefore he was immediately