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+The Project Gutenberg Etext of Nature and Progress of Rent, by Thomas Malthus
+#4 in our series by Thomas Malthus
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+Title: Nature and Progress of Rent
+
+Author: Thomas Malthus
+
+Release Date: August, 2003 [Etext# 4336]
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+[This file was first posted on January 11, 2002]
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+Edited by Charles Aldarondo Aldarondo @yahoo.com
+
+
+
+
+AN
+INQUIRY
+INTO
+THE NATURE AND PROGRESS
+OF
+RENT,
+AND THE
+PRINCIPLES BY WHICH IT IS REGULATED.
+
+BY
+THE REV. T. R. MALTHUS,
+_Professor of History and Political Economy In the East India College,
+Hertfordshire_
+
+LONDON:
+PRINTED FOR JOHN MURRAY, ALBEMARLE STREET.
+1815.
+
+
+
+
+
+
+Advertisement
+
+
+
+
+
+The following tract contains the substance of some notes on
+rent, which, with others on different subjects relating to
+political economy, I have collected in the course of my
+professional duties at the East India College. It has been my
+intention, at some time or other, to put them in a form for
+publication; and the very near connection of the subject of the
+present inquiry, with the topics immediately under discussion,
+has induced me to hasten its appearance at the present moment. It
+is the duty of those who have any means of contributing to the
+public stock of knowledge, not only to do so, but to do it at the
+time when it is most likely to be useful. If the nature of the
+disquisition should appear to the reader hardly to suit the form
+of a pamphlet, my apology must be, that it was not originally
+intended for so ephemeral a shape.
+
+
+
+
+
+
+RENT, &c.
+
+
+
+
+
+The rent of land is a portion of the national revenue, which
+has always been considered as of very high importance.
+
+According to Adam Smith, it is one of the three original
+sources of wealth, on which the three great divisions of society
+are supported.
+
+By the Economists it is so pre-eminently distinguished, that
+it is considered as exclusively entitled to the name of riches,
+and the sole fund which is capable of supporting the taxes of the
+state, and on which they ultimately fall.
+
+And it has, perhaps, a particular claim to our attention at
+the present moment, on account of the discussions which are going
+on respecting the corn laws, and the effects of rent on the price
+of raw produce, and the progress of agricultural improvement.
+
+The rent of land may be defined to be that portion of the
+value of the whole produce which remains to the owner of the
+land, after all the outgoings belonging to its cultivation, of
+whatever kind, have been paid, including the profits of the
+capital employed, estimated according to the usual and ordinary
+rate of the profits of agricultural stock at the time being.
+
+It sometimes happens, that from accidental and temporary
+circumstances, the farmer pays more, or less, than this; but this
+is the point towards which the actual rents paid are constantly
+gravitating, and which is therefore always referred to when the
+term is used in a general sense.
+
+The immediate cause of rent is obviously the excess of price
+above the cost of production at which raw produce sells in the
+market.
+
+The first object therefore which presents itself for inquiry,
+is the cause or causes of the high price of raw produce.
+
+After very careful and repeated revisions of the subject, I
+do not find myself able to agree entirely in the view taken of
+it, either by Adam Smith, or the Economists; and still less, by
+some more modern writers.
+
+Almost all these writers appear to me to consider rent as too
+nearly resembling in its nature, and the laws by which it is
+governed, the excess of price above the cost of production, which
+is the characteristic of a monopoly.
+
+Adam Smith, though in some parts of the eleventh chapter of
+his first book he contemplates rent quite in its true light,(1)
+and has interspersed through his work more just observations on
+the subject than any other writer, has not explained the most
+essential cause of the high price of raw produce with sufficient
+distinctness, though he often touches on it; and by applying
+occasionally the term monopoly to the rent of land, without
+stopping to mark its more radical peculiarities, he leaves the
+reader without a definite impression of the real difference
+between the cause of the high price of the necessaries of life,
+and of monopolized commodities.
+
+Some of the views which the Economists have taken of the
+nature of rent appear to me, in like manner, to be quite just;
+but they have mixed them with so much error, and have drawn such
+preposterous and contradictory conclusions from them, that what
+is true in their doctrines, has been obscured and lost in the
+mass of superincumbent error, and has in consequence produced
+little effect. Their great practical conclusion, namely, the
+propriety of taxing exclusively the net rents of the landlords,
+evidently depends upon their considering these rents as
+completely disposable, like that excess of price above the cost
+of production which distinguishes a common monopoly.
+
+M. Say, in his valuable treatise on political economy, in
+which he has explained with great clearness many points which
+have not been sufficiently developed by Adam Smith, has not
+treated the subject of rent in a manner entirely satisfactory. In
+speaking of the different natural agents which, as well as the
+land, co-operate with the labours of man, he observes,
+'Heureusement personne n'a pu dire le vent et le soleil
+m'appartiennent, et le service qu'ils rendent doit m'etre
+paye.'(2) And, though he acknowledges that, for obvious reasons,
+property in land is necessary, yet he evidently considers rent as
+almost exclusively owing to such appropriation, and to external
+demand.
+
+In the excellent work of M. de Sismondi, De la richesse
+commerciale, he says in a note on the subject of rent, 'Cette
+partie de la rente fonciere est celle que les Economistes ont
+decoree du nom du produit net comme etant le seul fruit du
+travail qui aj outat quelquechose a la richesse nationale. On
+pourrait au contraire soutenir contre eux, que c'est la seule
+partie du produit du travail, dont la valeur soit purement
+nominale, et n'ait rien de reelle: c'est en effet le resultat de
+l'augmentation de prix qu'obtient un vendeur en vertu de son
+privilege, sans que la chose vendue en vaille reellement
+d'avantage.'(3) The prevailing opinions among the more modern
+writers in our own country, have appeared to me to incline
+towards a similar view of the subject; and, not to multiply
+citations, I shall only add, that in a very respectable edition
+of the Wealth of nations, lately published by Mr Buchanan, of
+Edinburgh, the idea of monopoly is pushed still further. And
+while former writers, though they considered rent as governed by
+the laws of monopoly, were still of opinion that this monopoly in
+the case of land was necessary and useful, Mr Buchanan sometimes
+speaks of it even as prejudicial, and as depriving the consumer
+of what it gives to the landlord.
+
+In treating of productive and unproductive labour in the last
+volume, he observes,(4) that, 'The net surplus by which the
+Economists estimate the utility of agriculture, plainly arises
+from the high price of its produce, which, however advantageous
+to the landlord who receives it, is surely no advantage to the
+consumer who pays it. Were the produce of agriculture to be sold
+for a lower price, the same net surplus would not remain, after
+defraying the expenses of cultivation; but agriculture would be
+still equally productive to the general stock; and the only
+difference would be, that as the landlord was formerly enriched
+by the high price, at the expense of the community, the community
+would now profit by the low price at the expense of the landlord.
+The high price in which the rent or net surplus originates, while
+it enriches the landlord who has the produce of agriculture to
+sell, diminishes in the same proportion the wealth of those who
+are its purchasers; and on this account it is quite inaccurate to
+consider the landlord's rent as a clear addition to the national
+wealth.' In other parts of his work he uses the same, or even
+stronger language, and in a note on the subject of taxes, he
+speaks of the high price of the produce of land as advantageous
+to those who receive it, it but proportionably injurious to those
+who pay it. 'In this view,' he adds, 'it can form no general
+addition to the stock of the community, as the net surplus in
+question is nothing more than a revenue transferred from one
+class to another, and from the mere circumstance of its thus
+changing hands, it is clear that no fund can arise out of which
+to pay taxes. The revenue which pays for the produce of land
+exists already in the hands of those who purchase that produce;
+and, if the price of subsistence were lower, it would still
+remain in their hands, where it would be just as available for
+taxation, as when by a higher price it is transferred to the
+landed proprietor.'(5)
+
+That there are some circumstances connected with rent, which
+have an affinity to a natural monopoly, will he readily allowed.
+The extent of the earth itself is limited, and cannot be enlarged
+by human demand. And the inequality of soils occasions, even at
+an early period of society a comparative scarcity of the best
+lands; and so far is undoubtedly one of the causes of rent
+properly so called. On this account, perhaps, the term partial
+monopoly might be fairly applicable. But the scarcity of land,
+thus implied, is by no means alone sufficient to produce the
+effects observed. And a more accurate investigation of the
+subject will show us how essentially different the high price of
+raw produce is, both in its nature and origin, and the laws by
+which it is governed, from the high price of a common monopoly.
+
+The causes of the high price of raw produce may be stated to
+be three.
+
+First, and mainly, that quality of the earth, by which it can
+be made to yield a greater portion of the necessaries of life
+than is required for the maintenance of the persons employed on
+the land.
+
+Secondly, that quality peculiar to the necessaries of life of
+being able to create their own demand, or to raise up a number of
+demanders in proportion to the quantity of necessaries produced.
+
+And, thirdly, the comparative scarcity of the most fertile
+land.
+
+The qualities of the soil and of its products, here noticed
+as the primary causes of the high price of raw produce, are the
+gifts of nature to man. They are quite unconnected with monopoly,
+and yet are so absolutely essential to the existence of rent,
+that without them, no degree of scarcity or monopoly could have
+occasioned that excess of the price of raw produce, above the
+cost of production, which shows itself in this form.
+
+If, for instance, the soil of the earth had been such, that,
+however well directed might have been the industry of man, he
+could not have produced from it more than was barely sufficient
+to maintain those, whose labour and attention were necessary to
+its products; though, in this case, food and raw materials would
+have been evidently scarcer than at present, and the land might
+have been, in the same manner, monopolized by particular owners;
+vet it is quite clear, that neither rent, nor any essential
+surplus produce of the land in the form of high profits, could
+have existed.
+
+It is equally clear, that if the necessaries of life the most
+important products of land - had not the property of creating an
+increase of demand proportioned to their increased quantity, such
+increased quantity would occasion a fall in their exchangeable
+value. However abundant might be the produce of a country, its
+population might remain stationary And this abundance, without a
+proportionate demand, and with a very high corn price of labour,
+which would naturally take place under these circumstances, might
+reduce the price of raw produce, like the price of manufactures,
+to the cost of production.
+
+It has been sometimes argued, that it is mistaking the
+principle of population, to imagine, that the increase of food,
+or of raw produce alone, can occasion a proportionate increase of
+population. This is no doubt true; but it must be allowed, as has
+been justly observed by Adam Smith, that 'when food is provided,
+it is comparatively easy to find the necessary clothing and
+lodging. And it should always be recollected, that land does not
+produce one commodity alone, but in addition to that most
+indispensable of all commodities - food - it produces also the
+materials for the other necessaries of life; and the labour
+required to work up these materials is of course never excluded
+from the consideration.(6)
+
+It is, therefore, strictly true, that land produces the
+necessaries of life, produces food, materials, and labour,
+produces the means by which, and by which alone, an increase of
+people may be brought into being, and supported. In this respect
+it is fundamentally different from every other kind of machine
+known to man; and it is natural to suppose, that it should be
+attended with some peculiar effects.
+
+If the cotton machinery, in this country, were to go on
+increasing at its present rate, or even much faster; but instead
+of producing one particular sort of substance which may be used
+for some parts of dress and furniture, etc. had the qualities of
+land, and could yield what, with the assistance of a little
+labour, economy, and skill, could furnish food, clothing, and
+lodging, in such proportions as to create an increase of
+population equal to the increased supply of these necessaries;
+the demand for the products of such improved machinery would
+continue in excess above the cost of production, and this excess
+would no longer exclusively belong to the machinery of the
+land.(7)
+
+There is a radical difference in the cause of a demand for
+those objects which are strictly necessary to the support of
+human life, and a demand for all other commodities. In all other
+commodities the demand is exterior to, and independent of, the
+production itself; and in the case of a monopoly, whether natural
+or artificial, the excess of price is in proportion to the
+smallness of the supply compared with the demand, while this
+demand is comparatively unlimited. In the case of strict
+necessaries, the existence and increase of the demand, or of the
+number of demanders, must depend upon the existence and increase
+of these necessaries themselves; and the excess of their price
+above the cost of their production must depend upon, and is
+permanently limited by, the excess of their quantity above the
+quantity necessary to maintain the labour required to produce
+them; without which excess of quantity no demand could have
+existed, according to the laws of nature, for more than was
+necessary to support the producers.
+
+It has been stated, in the new edition of the Wealth of
+nations, that the cause of the high price of raw produce is, that
+such price is required to proportion the consumption to the
+supply.(8) This is also true, but it affords no solution of the
+point in question. We still want to know why the consumption and
+supply are such as to make the price so greatly exceed the cost
+of production, and the main cause is evidently the fertility of
+the earth in producing the necessaries of life. Diminish this
+plenty, diminish the fertility of the soil, and the excess will
+diminish; diminish it still further, and it will disappear. The
+cause of the high price of the necessaries of life above the cost
+of production, is to be found in their abundance, rather than
+their scarcity; and is not only essentially different from the
+high price occasioned by artificial monopolies, but from the high
+price of those peculiar products of the earth, not connected with
+food, which may be called natural and necessary monopolies.
+
+The produce of certain vineyards in France, which, from the
+peculiarity of their soil and situation, exclusively yield wine
+of a certain flavour, is sold of course at a price very far
+exceeding the cost of production. And this is owing to the
+greatness of the competition for such wine, compared with the
+scantiness of its supply; which confines the use of it to so
+small a number of persons, that they are able, and rather than go
+without it, willing, to give an excessively high price. But if
+the fertility of these lands were increased, so as very
+considerably to increase the produce, this produce might so fall
+in value as to diminish most essentially the excess of its price
+above the cost of production. While, on the other hand, if the
+vineyards were to become less productive, this excess might
+increase to almost any extent.
+
+The obvious cause of these effects is, that in all
+monopolies, properly so called, whether natural or artificial,
+the demand is exterior to, and independent of, the production
+itself. The number of persons who might have a taste for scarce
+wines, and would be desirous of entering into a competition for
+the purchase of them, might increase almost indefinitely, while
+the produce itself was decreasing; and its price, therefore,
+would have no other limit than the numbers, powers, and caprices,
+of the competitors for it.
+
+In the production of the necessaries of life, on the
+contrary, the demand is dependent upon the produce itself; and
+the effects are, in consequence, widely different. In this case,
+it is physically impossible that the number of demanders should
+increase, while the quantity of produce diminishes, as the
+demanders only exist by means of this produce. The fertility of
+soil, and consequent abundance of produce from a certain quantity
+of land, which, in the former case, diminished the excess of
+price above the cost of production, is, in the present case, the
+specific cause of such excess; and the diminished fertility,
+which in the former case might increase the price to almost any
+excess above the cost of production, may be safely asserted to be
+the sole cause which could permanently maintain the necessaries
+of life at a price not exceeding the cost of production.
+
+Is it, then, possible to consider the price of the
+necessaries of life as regulated upon the principle of a common
+monopoly? Is it possible, with M. de Sismondi, to regard rent as
+the sole produce of labour, which has a value purely nominal, and
+the mere result of that augmentation of price which a seller
+obtains in consequence of a peculiar privilege; or, with Mr
+Buchanan, to consider it as no addition to the national wealth,
+but merely as a transfer of value, advantageous only to the
+landlords, and proportionately injurious to the consumers?
+
+Is it not, on the contrary, a clear indication of a most
+inestimable quality in the soil, which God has bestowed on man -
+the quality of being able to maintain more persons than are
+necessary to work it? Is it not a part, and we shall see further
+on that it is an absolutely necessary part, of that surplus
+produce from the land,(9) which has been justly stated to be the
+source of all power and enjoyment; and without which, in fact,
+there would be no cities, no military or naval force, no arts, no
+learning, none of the finer manufactures, none of the
+conveniences and luxuries of foreign countries, and none of that
+cultivated and polished society, which not only elevates and
+dignifies individuals, but which extends its beneficial influence
+through the whole mass of the people?
+
+In the early periods of society, or more remarkably perhaps,
+when the knowledge and capital of an old society are employed
+upon fresh and fertile land, this surplus produce, this bountiful
+gift of providence, shows itself chiefly in extraordinary high
+profits, and extraordinary high wages, and appears but little in
+the shape of rent. While fertile land is in abundance, and may be
+had by whoever asks for it, nobody of course will pay a rent to a
+landlord. But it is not consistent with the laws of nature, and
+the limits and quality of the earth, that this state of things
+should continue. Diversities of soil and situation must
+necessarily exist in all countries. All land cannot be the most
+fertile: all situations cannot be the nearest to navigable rivers
+and markets. But the accumulation of capital beyond the means of
+employing it on land of the greatest natural fertility, and the
+greatest advantage of situation, must necessarily lower profits;
+while the tendency of population to increase beyond the means of
+subsistence must, after a certain time, lower the wages of
+labour.
+
+The expense of production will thus be diminished, but the
+value of the produce, that is, the quantity of labour, and of the
+other products of labour besides corn, which it can command,
+instead of diminishing, will be increased. There will be an
+increasing number of people demanding subsistence, and ready to
+offer their services in any way in which they can be useful. The
+exchangeable value of food will, therefore, be in excess above
+the cost of production, including in this cost the full profits
+of the stock employed upon the land, according to the actual rate
+of profits, at the time being. And this excess is rent.
+
+Nor is it possible that these rents should permanently remain
+as parts of the profits of stock, or of the wages of labour. If
+such an accumulation were to take place, as decidedly to lower
+the general profits of stock, and, consequently, the expenses of
+cultivation, so as to make it answer to cultivate poorer land;
+the cultivators of the richer land, if they paid no rent, would
+cease to be mere farmers, or persons living upon the profits of
+agricultural stock. They would unite the characters of farmers
+and landlords - a union by no means uncommon; but which does not
+alter, in any degree, the nature of rent, or its essential
+separation from profits. If the general profits of stock were 20
+per cent and particular portions of land would yield 30 per cent
+on the capital employed, 10 per cent of the 30 would obviously be
+rent, by whomsoever received.
+
+It happens, indeed, sometimes, that from bad government,
+extravagant habits, and a faulty constitution of society, the
+accumulation of capital is stopped, while fertile land is in
+considerable plenty, in which case profits may continue
+permanently very high; but even in this case wages must
+necessarily fall, which by reducing the expenses of cultivation
+must occasion rents. There is nothing so absolutely unavoidable
+in the progress of society as the fall of wages, that is such a
+fall as, combined with the habits of the labouring classes, will
+regulate the progress of population according to the means of
+subsistence. And when, from the want of an increase of capital,
+the increase of produce is checked, and the means of subsistence
+come to a stand, the wages of labour must necessarily fall so
+low, as only just to maintain the existing population, and to
+prevent any increase.
+
+We observe in consequence, that in all those countries, such
+as Poland, where, from the want of accumulation, the profits of
+stock remain very high, and the progress of cultivation either
+proceeds very slowly, or is entirely stopped, the wages of labour
+are extremely low. And this cheapness of labour, by diminishing
+the expenses of cultivation, as far as labour is concerned,
+counteracts the effects of the high profits of stock, and
+generally leaves a larger rent to the landlord than in those
+countries, such as America, where, by a rapid accumulation of
+stock, which can still find advantageous employment, and a great
+demand for labour, which is accompanied by an adequate increase
+of produce and population, profits cannot be low, and labour for
+some considerable time remains very high.
+
+It may be laid down, therefore, as an incontrovertible truth,
+that as a nation reaches any considerable degree of wealth, and
+any considerable fullness of population, which of course cannot
+take place without a great fall both in the profits of stock and
+the wages of labour, the separation of rents, as a kind of
+fixture upon lands of a certain quality, is a law as invariable
+as the action of the principle of gravity. And that rents are
+neither a mere nominal value, nor a value unnecessarily and
+injuriously transferred from one set of people to another; but a
+most real and essential part of the whole value of the national
+property, and placed by the laws of nature where they are, on the
+land, by whomsoever possessed, whether the landlord, the crown,
+or the actual cultivator.
+
+Rent then has been traced to the same common nature with that
+general surplus from the land, which is the result of certain
+qualities of the soil and its products; and it has been found to
+commence its separation from profits, as soon as profits and
+wages fall, owing to the comparative scarcity of fertile land in
+the natural progress of a country towards wealth and population.
+
+Having examined the nature and origin of rent, it remains for
+us to consider the laws by which it is governed, and by which its
+increase or decrease is regulated.
+
+When capital has accumulated, and labour fallen on the most
+eligible lands of a country, other lands less favourably
+circumstanced with respect to fertility or situation, may be
+occupied with advantage. The expenses of cultivation, including
+profits, having fallen, poorer land, or land more distant from
+markets, though yielding at first no rent, may fully repay these
+expenses, and fully answer to the cultivator. And again, when
+either the profits of stock or the wages of labour, or both, have
+still further fallen, land still poorer, or still less favourably
+situated, may be taken into cultivation. And, at every step, it
+is clear, that if the price of produce does not fall, the rents
+of land will rise. And the price of produce will not fall, as
+long as the industry and ingenuity of the labouring classes,
+assisted by the capitals of those not employed upon the land, can
+find something to give in exchange to the cultivators and
+landlords, which will stimulate them to continue undiminished
+their agricultural exertions, and maintain their increasing
+excess of produce.
+
+In tracing more particularly the laws which govern the rise
+and fall of rents, the main causes which diminish the expenses of
+cultivation, or reduce the cost of the instruments of production,
+compared with the price of produce, require to be more
+specifically enumerated. The principal of these seem to be four:
+first, such an accumulation of capital as will lower the profits
+of stock; secondly, such an increase of population as will lower
+the wages of labour; thirdly, such agricultural improvements, or
+such increase of exertions, as will diminish the number of
+labourers necessary to produce a given effect; and fourthly, such
+an increase in the price of agricultural produce, from increased
+demand, as without nominally lowering the expense of production,
+will increase the difference between this expense and the price
+of produce.
+
+The operation of the three first causes in lowering the
+expenses of cultivation, compared with the price of produce, are
+quite obvious; the fourth requires a few further observations.
+
+If a great and continued demand should arise among
+surrounding nations for the raw produce of a particular country,
+the price of this produce would of course rise considerably; and
+the expenses of cultivation, rising only slowly and gradually to
+the same proportion, the price of produce might for a long time
+keep so much ahead, as to give a prodigious stimulus to
+improvement, and encourage the employment of much capital in
+bringing fresh land under cultivation, and rendering the old much
+more productive.
+
+Nor would the effect be essentially different in a country
+which continued to feed its own people, if instead of a demand
+for its raw produce, there was the same increasing demand for its
+manufactures. These manufactures, if from such a demand the value
+of their amount in foreign countries was greatly to increase,
+would bring back a great increase of value in return, which
+increase of value could not fail to increase the value of the raw
+produce. The demand for agricultural as well as manufactured
+produce would be augmented; and a considerable stimulus, though
+not perhaps to the same extent as in the last case, would be
+given to every kind of improvement on the land.
+
+A similar effect would be produced by the introduction of new
+machinery, and a more judicious division of labour in
+manufactures. It almost always happens in this case, not only
+that the quantity of manufactures is very greatly increased, but
+that the value of the whole mass is augmented, from the great
+extension of the demand for them, occasioned by their cheapness.
+We see, in consequence, that in all rich manufacturing and
+commercial countries, the value of manufactured and commercial
+products bears a very high proportion to the raw products;(10)
+whereas, in comparatively poor countries, without much internal
+trade and foreign commerce, the value of their raw produce
+constitutes almost the whole of their wealth. If we suppose the
+wages of labour so to rise with the rise of produce, as to give
+the labourer the same command of the means of subsistence as
+before, yet if he is able to purchase a greater quantity of other
+necessaries and conveniencies, both foreign and domestic, with
+the price of a given quantity of corn, he may be equally well
+fed, clothed, and lodged, and population may be equally
+encouraged, although the wages of labour may not rise so high in
+proportion as the price of produce.
+
+And even when the price of labour does really rise in
+proportion to the price of produce, which is a very rare case,
+and can only happen when the demand for labour precedes, or is at
+least quite contemporary with the demand for produce; it is so
+impossible that all the other outgoings in which capital is
+expended, should rise precisely in the same proportion, and at
+the same time, such as compositions for tithes, parish rates,
+taxes, manure, and the fixed capital accumulated under the former
+low prices, that a period of some continuance can scarcely fail
+to occur, when the difference between the price of produce and
+the cost of production is increased.
+
+In some of these cases, the increase in the price of
+agricultural produce, compared with the cost of the instruments
+of production, appears from what has been said to be only
+temporary; and in these instances it will often give a
+considerable stimulus to cultivation, by an increase of
+agricultural profits, without showing itself much in the shape of
+rent. It hardly ever fails, however, to increase rent ultimately.
+The increased capital, which is employed in consequence of the
+opportunity of making great temporary profits, can seldom if ever
+be entirely removed from the land, at the expiration of the
+current leases; and, on the renewal of these leases, the landlord
+feels the benefit of it in the increase of his rents.
+
+Whenever then, by the operation of the four causes above
+mentioned, the difference between the price of produce and the
+cost of the instruments of production increases, the rents of
+land will rise.
+
+It is, however, not necessary that all these four causes
+should operate at the same time; it is only necessary that the
+difference here mentioned should increase. If, for instance, the
+price of produce were to rise, while the wages of labour, and the
+price of the other branches of capital did not rise in
+proportion, and at the same time improved modes of agriculture
+were coming into general use, it is evident that this difference
+might be increased, although the profits of agricultural stock
+were not only undiminished, but were to rise decidedly higher.
+
+Of the great additional quantity of capital employed upon the
+land in this country, during the last twenty years, by far the
+greater part is supposed to have been generated on the soil, and
+not to have been brought from commerce or manufactures. And it
+was unquestionably the high profits of agricultural stock,
+occasioned by improvements in the modes of agriculture, and by
+the constant rise of prices, followed only slowly by a
+proportionate rise in the different branches of capital, that
+afforded the means of so rapid and so advantageous an
+accumulation.
+
+In this case cultivation has been extended, and rents have
+risen, although one of the instruments of production, capital,
+has been dearer.
+
+In the same manner a fall of profits and improvements in
+agriculture, or even one of them separately, might raise rents,
+notwithstanding a rise of wages.
+
+It may be laid down then as a general truth, that rents
+naturally rise as the difference between the price of produce and
+the cost of the instruments of production increases.
+
+It is further evident, that no fresh land can be taken into
+cultivation till rents have risen, or would allow of a rise upon
+what is already cultivated.
+
+Land of an inferior quality requires a great quantity of
+capital to make it yield a given produce; and, if the actual
+price of this produce be not such as fully to compensate the cost
+of production, including the existing rate of profits, the land
+must remain uncultivated. It matters not whether this
+compensation is effected by an increase in the money price of raw
+produce, without a proportionate increase in the money price of
+the instruments of production, or by a decrease in the price of
+the instruments of production, without a proportionate decrease
+in the price of produce. What is absolutely necessary, is a
+greater relative cheapness of the instruments of production, to
+make up for the quantity of them required to obtain a given
+produce from poor land.
+
+But whenever, by the operation of one or more of the causes
+before mentioned, the instruments of production become cheaper,
+and the difference between the price of produce and the expenses
+of cultivation increases, rents naturally rise. It follows
+therefore as a direct and necessary consequence, that it can
+never answer to take fresh land of a poorer quality into
+cultivation, till rents have risen or would allow of a rise, on
+what is already cultivated.
+
+It is equally true, that without the same tendency to a rise
+of rents, occasioned by the operation of the same causes, it
+cannot answer to lay out fresh capital in the improvement of old
+land - at least upon the supposition, that each farm is already
+furnished with as much capital as can be laid out to advantage,
+according to the actual rate of profits.
+
+It is only necessary to state this proposition to make its
+truth appear. It certainly may happen, and I fear it happens
+frequently, that farmers are not provided with all the capital
+which could be employed upon their farms, at the actual rate of
+agricultural profits. But supposing they are so provided, it
+implies distinctly, that more could not be applied without loss,
+till, by the operation of one or more of the causes above
+enumerated, rents had tended to rise.
+
+It appears then, that the power of extending cultivation and
+increasing produce, both by the cultivation of fresh land and the
+improvement of the old, depends entirely upon the existence of
+such prices, compared with the expense of production, as would
+raise rents in the actual state of cultivation.
+
+But though cultivation cannot be extended, and the produce of
+the country increased, but in such a state of things as would
+allow of a rise of rents, yet it is of importance to remark, that
+this rise of rents will be by no means in proportion to the
+extension of cultivation, or the increase of produce. Every
+relative fall in the price of the instruments of production, may
+allow of the employment of a considerable quantity of additional
+capital; and when either new land is taken into cultivation, or
+the old improved, the increase of produce may be considerable,
+though the increase of rents be trifling. We see, in consequence,
+that in the progress of a country towards a high state of
+cultivation, the quantity of capital employed upon the land, and
+the quantity of produce yielded by it, bears a constantly
+increasing proportion to the amount of rents, unless
+counterbalanced by extraordinary improvements in the modes of
+cultivation.(11)
+
+According to the returns lately made to the Board of
+Agriculture, the average proportion which rent bears to the value
+of the whole produce, seems not to exceed one fifth;(12) whereas
+formerly, when there was less capital employed, and less value
+produced, the proportion amounted to one fourth, one third, or
+even two fifths. Still, however, the numerical difference between
+the price of produce and the expenses of cultivation, increases
+with the progress of improvement; and though the landlord has a
+less share of the whole produce, yet this less share, from the
+very great increase of the produce, yields a larger quantity, and
+gives him a greater command of corn and labour. If the produce of
+land be represented by the number six, and the landlord has one
+fourth of it, his share will be represented by one and a half. If
+the produce of land be as ten, and the landlord has one fifth of
+it, his share will be represented by two. In the latter case,
+therefore, though the proportion of the landlord's share to the
+whole produce is greatly diminished, his real rent, independently
+of nominal price, will be increased in the proportion of from
+three to four. And in general, in all cases of increasing
+produce, if the landlord's share of this produce do not diminish
+in the same proportion, which though it often happens during the
+currency of leases, rarely or never happens on the renewal of
+them, the real rents of land must rise.
+
+We see then, that a progressive rise of rents seems to be
+necessarily connected with the progressive cultivation of new
+land, and the progressive improvement of the old: and that this
+rise is the natural and necessary consequence of the operation of
+four causes, which are the most certain indications of increasing
+prosperity and wealth - namely, the accumulation of capital, the
+increase of population, improvements in agriculture, and the high
+price of raw produce, occasioned by the extension of our
+manufactures and commerce.
+
+On the other hand, it will appear, that a fall of rents is as
+necessarily connected with the throwing of inferior land out of
+cultivation, and the continued deterioration of the land of a
+superior quality; and that it is the natural and necessary
+consequence of causes, which are the certain indications of
+poverty and decline, namely, diminished capital, diminished
+population, a bad system of cultivation, and the low price of raw
+produce.
+
+If it be true, that cultivation cannot be extended but under
+such a state of prices, compared with the expenses of production,
+as will allow of an increase of rents, it follows naturally that
+under such a state of relative prices as will occasion a fall of
+rents, cultivation must decline. If the instruments of production
+become dearer, compared with the price of produce, it is a
+certain sign that they are relatively scarce; and in all those
+cases where a large quantity of them is required, as in the
+cultivation of poor land, the means of procuring them will be
+deficient, and the land will be thrown out of employment.
+
+It appeared, that in the progress of cultivation and of
+increasing rents, it was not necessary that all the instruments
+of production should fall in price at the same time; and that the
+difference between the price of produce and the expense of
+cultivation might increase, although either the profits of stock
+or the wages of labour might be higher, instead of lower.
+
+In the same manner, when the produce of a country is
+declining, and rents are falling, it is not necessary that all
+the instruments of production should be dearer. In a declining or
+stationary country, one most important instrument of production
+is always cheap, namely, labour; but this cheapness of labour
+does not counterbalance the disadvantages arising from the
+dearness of capital; a bad system of culture; and, above all, a
+fall in the price of raw produce, greater than in the price of
+the other branches of expenditure, which, in addition to labour,
+are necessary to cultivation.
+
+It has appeared also, that in the progress of cultivation and
+of increasing rents, rent, though greater in positive amount,
+bears a less, and lesser proportion to the quantity of capital
+employed upon the land, and the quantity of produce derived from
+it. According to the same principle, when produce diminishes and
+rents fall, though the amount of rent will always be less, the
+proportion which it bears to capital and produce will always be
+greater. And, as in the former case, the diminished proportion of
+rent was owing to the necessity of yearly taking fresh land of an
+inferior quality into cultivation, and proceeding in the
+improvement of old land, when it would return only the common
+profits of stock, with little or no rent; so, in the latter case,
+the high proportion of rent is owing to the impossibility of
+obtaining produce, whenever a great expenditure is required, and
+the necessity of employing the reduced capital of the country, in
+the exclusive cultivation of its richest lands.
+
+In proportion, therefore, as the relative state of prices is
+such as to occasion a progressive fall of rents, more and more
+lands will be gradually thrown out of cultivation, the remainder
+will be worse cultivated, and the diminution of produce will
+proceed still faster than the diminution of rents.
+
+If the doctrine here laid down, respecting the laws which
+govern the rise and fall of rents, be near the truth, the
+doctrine which maintains that, if the produce of agriculture were
+sold at such a price as to yield less net surplus, agriculture
+would be equally productive to the general stock, must be very
+far from the truth.
+
+With regard to my own conviction, indeed, I feel no sort of
+doubt that if, under the impression that the high price of raw
+produce, which occasions rent, is as injurious to the consumer as
+it is advantageous to the landlord, a rich and improved nation
+were determined by law, to lower the price of produce, till no
+surplus in the shape of rent anywhere remained; it would
+inevitably throw not only all the poor land, but all, except the
+very best land, out of cultivation, and probably reduce its
+produce and population to less than one tenth of their former
+amount.
+
+From the preceding account of the progress of rent, it
+follows, that the actual state of the natural rent of land is
+necessary to the actual produce; and that the price of produce,
+in every progressive country, must be just about equal to the
+cost of production on land of the poorest quality actually in
+use; or to the cost of raising additional produce on old land,
+which yields only the usual returns of agricultural stock with
+little or no rent.
+
+It is quite obvious that the price cannot be less; or such
+land would not be cultivated, nor such capital employed. Nor can
+it ever much exceed this price, because the poor land
+progressively taken into cultivation, yields at first little or
+no rent; and because it will always answer to any farmer who can
+command capital, to lay it out on his land, if the additional
+produce resulting from it will fully repay the profits of his
+stock, although it yields nothing to his landlord.
+
+It follows then, that the price of raw produce, in reference
+to the whole quantity raised, is sold at the natural or necessary
+price, that is, at the price necessary to obtain the actual
+amount of produce, although by far the largest part is sold at a
+price very much above that which is necessary to its production,
+owing to this part being produced at less expense, while its
+exchangeable value remains undiminished.
+
+The difference between the price of corn and the price of
+manufactures, with regard to natural or necessary price, is this;
+that if the price of any manufacture were essentially depressed,
+the whole manufacture would be entirely destroyed; whereas, if
+the price of corn were essentially depressed, the quantity of it
+only would be diminished. There would be some machinery in the
+country still capable of sending the commodity to market at the
+reduced price.
+
+The earth has been sometimes compared to a vast machine,
+presented by nature to man for the production of food and raw
+materials; but, to make the resemblance more just, as far as they
+admit of comparison, we should consider the soil as a present to
+man of a great number of machines, all susceptible of continued
+improvement by the application of capital to them, but yet of
+very different original qualities and powers.
+
+This great inequality in the powers of the machinery employed
+in procuring raw produce, forms one of the most remarkable
+features which distinguishes the machinery of the land from the
+machinery employed in manufactures.
+
+When a machine in manufactures is invented, which will
+produce more finished work with less labour and capital than
+before, if there be no patent, or as soon as the patent is over,
+a sufficient number of such machines may be made to supply the
+whole demand, and to supersede entirely the use of all the old
+machinery. The natural consequence is, that the price is reduced
+to the price of production from the best machinery, and if the
+price were to be depressed lower, the whole of the commodity
+would be withdrawn from the market.
+
+The machines which produce corn and raw materials on the
+contrary, are the gifts of nature, not the works of man; and we
+find, by experience, that these gifts have very different
+qualities and powers. The most fertile lands of a country, those
+which, like the best machinery in manufactures, yield the
+greatest products with the least labour and capital, are never
+found sufficient to supply the effective demand of an increasing
+population. The price of raw produce, therefore, naturally rises
+till it becomes sufficiently high to pay the cost of raising it
+with inferior machines, and by a more expensive process; and, as
+there cannot be two prices for corn of the same quality, all the
+other machines, the working of which requires less capital
+compared with the produce, must yield rents in proportion to
+their goodness.
+
+Every extensive country may thus be considered as possessing
+a gradation of machines for the production of corn and raw
+materials, including in this gradation not only all the various
+qualities of poor land, of which every large territory has
+generally an abundance, but the inferior machinery which may be
+said to be employed when good land is further and further forced
+for additional produce. As the price of raw produce continues to
+rise, these inferior machines are successively called into
+action; and, as the price of raw produce continues to fall, they
+are successively thrown out of action. The illustration here used
+serves to show at once the necessity of the actual price of corn
+to the actual produce, and the different effect which would
+attend a great reduction in the price of any particular
+manufacture, and a great reduction in the price of raw produce.
+
+I hope to be excused for dwelling a little, and presenting to
+the reader in various forms the doctrine, that corn in reference
+to the quantity actually produced is sold at its necessary price
+like manufactures, because I consider it as a truth of the
+highest importance, which has been entirely overlooked by the
+Economists, by Adam Smith, and all those writers who have
+represented raw produce as selling always at a monopoly price.
+
+Adam Smith has very clearly explained in what manner the
+progress of wealth and improvement tends to raise the price of
+cattle, poultry, the materials of clothing and lodging, the most
+useful minerals, etc., etc. compared with corn; but he has not
+entered into the explanation of the natural causes which tend to
+determine the price of corn. He has left the reader, indeed, to
+conclude, that he considers the price of corn as determined only
+by the state of the mines which at the time supply the
+circulating medium of the commercial world. But this is a cause
+obviously inadequate to account for the actual differences in the
+price of grain, observable in countries at no great distance from
+each other, and at nearly the same distance from the mines.
+
+I entirely agree with him, that it is of great use to inquire
+into the causes of high price; as, from the result of such
+inquiry, it may turn out, that the very circumstance of which we
+complain, may be the necessary consequence and the most certain
+sign of increasing wealth and prosperity. But, of all inquiries
+of this kind, none surely can be so important, or so generally
+interesting, as an inquiry into the causes which affect the price
+of corn, and which occasion the differences in this price, so
+observable in different countries.
+
+I have no hesitation in stating that, independently of
+irregularities in the currency of a country,(13) and other
+temporary and accidental circumstances, the cause of the high
+comparative money price of corn is its high comparative real
+price, or the greater quantity of capital and labour which must
+be employed to produce it: and that the reason why the real price
+of corn is higher and continually rising in countries which are
+already rich, and still advancing in prosperity and population,
+is to be found in the necessity of resorting constantly to poorer
+land - to machines which require a greater expenditure to work
+them - and which consequently occasion each fresh addition to the
+raw produce of the country to be purchased at a greater cost - in
+short, it is to be found in the important truth that corn, in a
+progressive country, is sold at the price necessary to yield the
+actual supply; and that, as this supply becomes more and more
+difficult, the price rises in proportion.(14)
+
+The price of corn, as determined by these causes, will of
+course be greatly modified by other circumstances; by direct and
+indirect taxation; by improvements in the modes of cultivation;
+by the saving of labour on the land; and particularly by the
+importations of foreign corn. The latter cause, indeed, may do
+away, in a considerable degree, the usual effects of great wealth
+on the price of corn; and this wealth will then show itself in a
+different form.
+
+Let us suppose seven or eight large countries not very
+distant from each other, and not very differently situated with
+regard to the mines. Let us suppose further, that neither their
+soils nor their skill in agriculture are essentially unlike; that
+their currencies are in a natural state; their taxes nothing; and
+that every trade is free, except the trade in corn. Let us now
+suppose one of them very greatly to increase in capital and
+manufacturing skill above the rest, and to become in consequence
+much more rich and populous. I should say, that this great
+comparative increase of riches could not possibly take place,
+without a great comparative advance in the price of raw produce;
+and that such advance of price would, under the circumstances
+supposed, be the natural sign and absolutely necessary
+consequence, of the increased wealth and population of the
+country in question.
+
+Let us now suppose the same countries to have the most
+perfect freedom of intercourse in corn, and the expenses of
+freight, etc. to be quite inconsiderable. And let us still
+suppose one of them to increase very greatly above the rest, in
+manufacturing capital and skill, in wealth and population. I
+should then say, that as the importation of corn would prevent
+any great difference in the price of raw produce, it would
+prevent any great difference in the quantity of capital laid out
+upon the land, and the quantity of corn obtained from it; that,
+consequently, the great increase of wealth could not take place
+without a great dependence on the other nations for corn; and
+that this dependence, under the circumstances supposed, would be
+the natural sign, and absolutely necessary consequence of the
+increased wealth and population of the country in question.
+
+These I consider as the two alternatives necessarily
+belonging to a great comparative increase of wealth; and the
+supposition here made will, with proper restrictions, apply to
+the state of Europe.
+
+In Europe, the expenses attending the carriage of corn are
+often considerable. They form a natural barrier to importation;
+and even the country which habitually depends upon foreign corn,
+must have the price of its raw produce considerably higher than
+the general level. Practically, also, the prices of raw produce,
+in the different countries of Europe, will be variously modified
+by very different soils, very different degrees of taxation, and
+very different degrees of improvement in the science of
+agriculture. Heavy taxation, and a poor soil, may occasion a high
+comparative price of raw produce, or a considerable dependence on
+other countries, without great wealth and population; while great
+improvements in agriculture and a good soil may keep the price of
+produce low, and the country independent of foreign corn, in
+spite of considerable wealth. But the principles laid down are
+the general principles on the subject; and in applying them to
+any particular case, the particular circumstances of such case
+must always be taken into consideration.
+
+With regard to improvements in agriculture, which in similar
+soils is the great cause which retards the advance of price
+compared with the advance of produce; although they are sometimes
+very powerful, they are rarely found sufficient to balance the
+necessity of applying to poorer land, or inferior machines. In
+this respect, raw produce is essentially different from
+manufactures.
+
+The real price of manufactures, the quantity of labour and
+capital necessary to produce a given quantity of them, is almost
+constantly diminishing; while the quantity of labour and capital,
+necessary to procure the last addition that has been made to the
+raw produce of a rich and advancing country, is almost constantly
+increasing. We see in consequence, that in spite of continued
+improvements in agriculture, the money price of corn is ceteris
+paribus the highest in the richest countries, while in spite of
+this high price of corn, and consequent high price of labour, the
+money price of manufactures still continues lower than in poorer
+countries.
+
+I cannot then agree with Adam Smith, in thinking that the low
+value of gold and silver is no proof of the wealth and
+flourishing state of the country, where it takes place. Nothing
+of course can be inferred from it, taken absolutely, except the
+abundance of the mines; but taken relatively, or in comparison
+with the state of other countries, much may be inferred from it.
+If we are to measure the value of the precious metals in
+different countries, and at different periods in the same
+country, by the price of corn and labour, which appears to me to
+be the nearest practical approximation that can be adopted (and
+in fact corn is the measure used by Adam Smith himself), it
+appears to me to follow, that in countries which have a frequent
+commercial intercourse with each other, which are nearly at the
+same distance from the mines, and are not essentially different
+in soil; there is no more certain sign, or more necessary
+consequence of superiority of wealth, than the low value of the
+precious metals, or the high price of raw produce.(15)
+
+It is of importance to ascertain this point; that we may not
+complain of one of the most certain proofs of the prosperous
+condition of a country.
+
+It is not of course meant to be asserted, that the high price
+of raw produce is, separately taken, advantageous to the
+consumer; but that it is the necessary concomitant of superior
+and increasing wealth, and that one of them cannot be had without
+the other.(16)
+
+With regard to the labouring classes of society, whose
+interests as consumers may be supposed to be most nearly
+concerned, it is a very short-sighted view of the subject, which
+contemplates, with alarm, the high price of corn as certainly
+injurious to them. The essentials to their well being are their
+own prudential habits, and the increasing demand for labour. And
+I do not scruple distinctly to affirm, that under similar habits,
+and a similar demand for labour, the high price of corn, when it
+has had time to produce its natural effects, so far from being a
+disadvantage to them, is a positive and unquestionable advantage.
+To supply the same demand for labour, the necessary price of
+production must be paid, and they must be able to command the
+same quantities of the necessaries of life, whether they are high
+or low in price.(17) But if they are able to command the same
+quantity of necessaries, and receive a money price for their
+labour, proportioned to their advanced price, there is no doubt
+that, with regard to all the objects of convenience and comfort,
+which do not rise in proportion to corn (and there are many such
+consumed by the poor), their condition will be most decidedly
+improved.
+
+The reader will observe in what manner I have guarded the
+proposition. I am well aware, and indeed have myself stated in
+another place, that the price of provisions often rises, without
+a proportionate rise of labour: but this cannot possibly happen
+for any length of time, if the demand for labour continues
+increasing at the same rate, and the habits of the labourer are
+not altered, either with regard to prudence, or the quantity of
+work which he is disposed to perform.
+
+The peculiar evil to be apprehended is, that the high money
+price of labour may diminish the demand for it; and that it has
+this tendency will be readily allowed, particularly as it tends
+to increase the prices of exportable commodities. But repeated
+experience has shown us that such tendencies are continually
+counterbalanced, and more than counterbalanced by other
+circumstances. And we have witnessed, in our own country, a
+greater and more rapid extension of foreign commerce, than
+perhaps was ever known, under the apparent disadvantage of a very
+great increase in the price of corn and labour, compared with the
+prices of surrounding countries.
+
+On the other hand, instances everywhere abound of a very low
+money price of labour, totally failing to produce an increasing
+demand for it. And among the labouring classes of different
+countries, none certainly are so wretched as those, where the
+demand for labour, and the population are stationary, and yet the
+prices of provisions extremely low, compared with manufactures
+and foreign commodities. However low they may be, it is certain,
+that under such circumstances, no more will fall to the share of
+the labourer than is necessary just to maintain the actual
+population; and his condition will be depressed, not only by the
+stationary demand for labour, but by the additional evil of being
+able to command but a small portion of manufactures or foreign
+commodities, with the little surplus which he may possess. If,
+for instance, under a stationary population, we suppose, that in
+average families two thirds of the wages estimated in corn are
+spent in necessary provisions, it will make a great difference in
+the condition of the poor, whether the remaining one third will
+command few or many conveniencies and comforts; and almost
+invariably, the higher is the price of corn, the more indulgences
+will a given surplus purchase.
+
+The high or low price of provisions, therefore, in any
+country is evidently a most uncertain criterion of the state of
+the poor in that country. Their condition obviously depends upon
+other more powerful causes; and it is probably true, that it is
+as frequently good. or perhaps more frequently so, in countries
+where corn is high, than where it is low.
+
+ At the same time it should be observed, that the high price
+of corn, occasioned by the difficulty of procuring it, may be
+considered as the ultimate check to the indefinite progress of a
+country in wealth and population. And, although the actual
+progress of countries be subject to great variations in their
+rate of movement, both from external and internal causes, and it
+would be rash to say that a state which is well peopled and
+proceeding rather slowly at present, may not proceed rapidly
+forty years hence; yet it must be owned, that the chances of a
+future rapid progress are diminished by the high prices of corn
+and labour, compared with other countries.
+
+It is, therefore, of great importance, that these prices
+should be increased as little as possible artificially, that is,
+by taxation. But every tax which falls upon agricultural capital
+tends to check the application of such capital, to the bringing
+of fresh land under cultivation, and the improvement of the old.
+It was shown, in a former part of this inquiry, that before such
+application of capital could take place, the price of produce,
+compared with the instruments of production, must rise
+sufficiently to pay the farmer. But, if the increasing difficulties
+to be overcome are aggravated by taxation, it is necessary,
+that before the proposed improvements are undertaken, the 
+price should rise sufficiently, not only to pay the farmer,
+but also the government. And every tax, which falls on
+agricultural capital, either prevents a proposed improvement, or
+causes it to be purchased at a higher price.
+
+When new leases are let, these taxes are generally thrown off
+upon the landlord. The farmer so makes his bargain, or ought so
+to make it, as to leave himself, after every expense has been
+paid, the average profits of agricultural stock in the actual
+circumstances of the country, whatever they may be, and in
+whatever manner they may have been affected by taxes,
+particularly by so general a one as the property tax. The farmer,
+therefore, by paying a less rent to his landlord on the renewal
+of his lease, is relieved from any peculiar pressure, and may go
+on in the common routine of cultivation with the common profits.
+But his encouragement to lay out fresh capital in improvements is
+by no means restored by his new bargain. This encouragement must
+depend, both with regard to the farmer and the landlord himself,
+exclusively on the price of produce, compared with the price of
+the instruments of production; and, if the price of these
+instruments have been raised by taxation, no diminution of rent
+can give relief. It is, in fact, a question, in which rent is not
+concerned. And, with a view to progressive improvements, it may
+be safely asserted, that the total abolition of rents would be
+less effectual than the removal of taxes which fall upon
+agricultural capital.
+
+I believe it to be the prevailing opinion, that the greatest
+expense of growing corn in this country is almost exclusively
+owing to the weight of taxation. Of the tendency of many of our
+taxes to increase the expenses of cultivation and the price of
+corn, I feel no doubt; but the reader will see from the course of
+argument pursued in this inquiry, that I think a part of this
+price, and perhaps no inconsiderable part, arises from a cause
+which lies deeper, and is in fact the necessary result of the
+great superiority of our wealth and population, compared with the
+quality of our natural soil and the extent of our territory.
+
+This is a cause which can only be essentially mitigated by
+the habitual importation of foreign corn, and a diminished
+cultivation of it at home. The policy of such a system has been
+discussed in another place; but, of course, every relief from
+taxation must tend, under any system, to make the price of corn
+less high, and importation less necessary.
+
+In the progress of a country towards a high state of
+improvement, the positive wealth of the landlord ought, upon the
+principles which have been laid down, gradually to increase;
+although his relative condition and influence in society will
+probably rather diminish, owing to the increasing number and
+wealth of those who live upon a still more important surplus(18)
+- the profits of stock.
+
+The progressive fall, with few exceptions, in the value of
+the precious metals throughout Europe; the still greater fall,
+which has occurred in the richest countries, together with the
+increase of produce which has been obtained from the soil, must
+all conduce to make the landlord expect an increase of rents on
+the renewal of his leases. But, in reletting his farms, he is
+liable to fall into two errors, which are almost equally
+prejudicial to his own interests, and to those of his country.
+
+In the first place, he may be induced, by the immediate
+prospect of an exorbitant rent, offered by farmers bidding
+against each other, to let his land to a tenant without
+sufficient capital to cultivate it in the best way, and make the
+necessary improvements upon it. This is undoubtedly a most
+short-sighted policy, the bad effects of which have been strongly
+noticed by the most intelligent land surveyors in the evidence
+lately brought before Parliament; and have been particularly
+remarkable in Ireland, where the imprudence of the landlords in
+this respect, combined, perhaps, with some real difficulty of
+finding substantial tenants, has aggravated the discontents of
+the country, and thrown the most serious obstacles in the way of
+an improved system of cultivation. The consequence of this error
+is the certain loss of all that future source of rent to the
+landlord, and wealth to the country, which arises from increase
+of produce.
+
+The second error to which the landlord is liable, is that of
+mistaking a mere temporary rise of prices, for a rise of
+sufficient duration to warrant an increase of rents. It
+frequently happens, that a scarcity of one or two years, or an
+unusual demand arising from any other cause, may raise the price
+of raw produce to a height, at which it cannot be maintained. And
+the farmers, who take land under the influence of such prices,
+will, in the return of a more natural state of things, probably
+break, and leave their farms in a ruined and exhausted state.
+These short periods of high price are of great importance in
+generating capital upon the land, if the farmers are allowed to
+have the advantage of them; but, if they are grasped at
+prematurely by the landlord, capital is destroyed, instead of
+being accumulated; and both the landlord and the country incur a
+loss, instead of gaining a benefit.
+
+A similar caution is necessary in raising rents, even when
+the rise of prices seems as if it would be permanent. In the
+progress of prices and rents, rent ought always to be a little
+behind; not only to afford the means of ascertaining whether the
+rise be temporary or permanent, but even in the latter case, to
+give a little time for the accumulation of capital on the land,
+of which the landholder is sure to feel the full benefit in the
+end.
+
+There is no just reason to believe, that if the lands were to
+give the whole of their rents to their tenants, corn would be
+more plentiful and cheaper. If the view of the subject, taken in
+the preceding inquiry, be correct, the last additions made to our
+home produce are sold at the cost of production, and the same
+quantity could not be produced from our own soil at a less price,
+even without rent. The effect of transferring all rents to
+tenants, would be merely the turning them into gentlemen, and
+tempting them to cultivate their farms under the superintendence
+of careless and uninterested bailiffs, instead of the vigilant
+eye of a master, who is deterred from carelessness by the fear of
+ruin, and stimulated to exertion by the hope of a competence. The
+most numerous instances of successful industry, and well-directed
+knowledge, have been found among those who have paid a fair rent
+for their lands; who have embarked the whole of their capital in
+their undertaking; and who feel it their duty to watch over it
+with unceasing care, and add to it whenever it is possible. But
+when this laudable spirit prevails among a tenantry, it is of the
+very utmost importance to the progress of riches, and the
+permanent increase of rents, that it should have the power as
+well as the will to accumulate; and an interval of advancing
+prices, not immediately followed by a proportionate rise of
+rents, furnishes the most effective powers of this kind. These
+intervals of advancing prices, when not succeeded by retrograde
+movements, most powerfully contribute to the progress of national
+wealth. And practically I should say, that when once a character
+of industry and economy has been established, temporary high
+profits are a more frequent and powerful source of accumulation,
+than either an increased spirit of saving, or any other cause
+that can be named.(19) It is the only cause which seems capable
+of accounting for the prodigious accumulation among individuals,
+which must have taken place in this country during the last
+twenty years, and which has left us with a greatly increased
+capital, notwithstanding our vast annual destruction of stock,
+for so long a period.
+
+Among the temporary causes of high price, which may sometimes
+mislead the landlord, it is necessary to notice irregularities in
+the currency. When they are likely to be of short duration, they
+must be treated by the landlord in the same manner as years of
+unusual demand. But when they continue so long as they have done
+in this country, it is impossible for the landlord to do
+otherwise than proportion his rent accordingly, and take the
+chance of being obliged to lessen it again, on the return of the
+currency to its natural state.
+
+The present fall in the price of bullion, and the improved
+state of our exchanges, proves, in my opinion, that a much
+greater part of the difference between gold and paper was owing
+to commercial causes, and a peculiar demand for bullion than was
+supposed by many persons; but they by no means prove that the
+issue of paper did not allow of a higher rise of prices than
+could be permanently maintained. Already a retrograde movement,
+not exclusively occasioned by the importations of corn, has been
+sensibly felt; and it must go somewhat further before we can
+return to payments in specie. Those who let their lands during
+the period of the greatest difference between notes and bullion,
+must probably lower them, whichever system may be adopted with
+regard to the trade in corn. These retrograde movements are
+always unfortunate; and high rents, partly occasioned by causes
+of this kind, greatly embarrass the regular march of prices, and
+confound the calculations both of the farmer and landlord.
+
+With the cautions here noticed in letting farms, the landlord
+may fairly look forward to a gradual and permanent increase of
+rents; and, in general, not only to an increase proportioned to
+the rise in the price of produce, but to a still further
+increase, arising from an increase in the quantity of produce.
+
+If in taking rents, which are equally fair for the landlord
+and tenant, it is found that in successive lettings they do not
+rise rather more than in proportion to the price of produce, it
+will generally be owing to heavy taxation.
+
+Though it is by no means true, as stated by the Economists,
+that all taxes fall on the net rents of the landlords, yet it is
+certainly true that they are more frequently taxed both
+indirectly as well as directly, and have less power of relieving
+themselves, than any other order of the state. And as they pay,
+as they certainly do, many of the taxes which fall on the capital
+of the farmer and the wages of the labourer, as well as those
+directly imposed on themselves; they must necessarily feel it in
+the diminution of that portion of the whole produce, which under
+other circumstances would have fallen to their share. But the
+degree in which the different classes of society are affected by
+taxes, is in itself a copious subject, belonging to the general
+principles of taxation, and deserves a separate inquiry.
+
+NOTES:
+
+1. I cannot, however, agree with him in thinking that all land
+which yields food must necessarily yield rent. The land which is
+successively taken into cultivation in improving countries, may
+only pay profits and labour. A fair profit on the stock employed,
+including, of course, the payment of labour, will always be a
+sufficient inducement to cultivate.
+
+2. Vol II. p. 124. Of this work a new and much improved edition 
+has lately been published, which is highly worthy the attention
+of all those who take an interest in these subjects.
+
+3. Vol. I. p. 49.
+
+4. Vol IV. p. 134.
+
+5. Vol. III. p. 272.
+
+6. It is, however, certain, that if either these materials be
+wanting, or the skill and capital necessary to work them up be
+prevented from forming, owing to the insecurity of property, to
+any other cause, the cultivators will soon slacken in their
+exertions, and the motives to accumulate and to increase their
+produce, will greatly diminish. But in this case there will be a
+very slack demand for labour; and, whatever may be the nominal
+cheapness of provisions, the labourer will not really be able to
+command such a portion of the necessaries of life, including, of
+course, clothing, lodging, etc. as will occasion an increase of
+population.
+
+7. I have supposed some check to the supply of the cotton
+machinery in this case. If there was no check whatever, the
+effects wold show themselves in excessive profits and excessive
+wages, without an excess above the cost of production.
+
+8. Vol. iv. p. 35.
+
+9. The more general surplus here alluded to is meant to include
+the profits of the farmer, as well as the rents of the landlord;
+and, therefore, includes the whole fund for the support of those
+who are not directly employed upon the land. Profits are, in
+reality, a surplus, as they are in no respect proportioned (as
+intimated by the Economists) to the wants and necessities of the
+owners of capital. But they take a different course in the
+progress of society from rents, and it is necessary, in general,
+to keep them quite separate.
+
+10. According to the calculations of Mr Colquhoun, the value of
+our trade, foreign and domestic, and of our manufactures,
+exclusive of raw materials, is nearly equal to the gross value
+derived from the land. In no other large country probably is this
+the case. P. Colquhoun, Treatise on the wealth, power, and
+resources of the British Empire, 2nd ed. (1815), p. 96. The whole
+annual produce is estimated at about 430 millions, and the
+products of agriculture at about 216 millions.
+
+11. To the honour of Scotch cultivators, it should be observed,
+that they have applied their capitals so very skilfully and
+economically, that at the same time that they have prodigiously
+increased the produce, they have increase the landlord's
+proportion ot it. The difference between the landlord's share of
+the produce in Scotland and in England is quite extraordinary--
+much greater than can be accounted for, either by the natural
+soil or the absence of tithes and poor's rates. See Sir John
+Sinclair's valuable An account of husbandry in Scotland
+(Edinburgh, 1812) and General Report, 4 vols. (Edinburgh, 1814)
+not long since published--works replete with the most useful
+and interesting information on agricultural subjects.
+
+12. See Evidence before the House of Lords, given in by Arthur 
+Young. p. 66.
+
+13. In all our discussions we should endeavour, as well as we
+can, to separate that part of high price, which arises from
+excess of currency, from that part, which is natural, and arises
+from permanent causes. In the whole course of this argument, it
+is particularly necessary to do this.
+
+14. It will be observed, that l have said in a progressive
+country; that is, in a country which requires yearly the
+employment of a greater capital on the land, to support an
+increasing population. If there were no question about fresh
+capital, or an increase of people, and all the land were good, it
+would not then be true that corn must be sold at its necessary
+price. The actual price might be diminished; and if the rents of
+land were diminished in proportion. the cultivation might go on
+as before, and the same quantity be produced. It very rarely
+happens, however, that all the lands of a country actually
+occupied are good, and yield a good net rent. And in all cases, a
+fall of prices must destroy agricultural capital during the
+currency of leases; and on their renewal there would not be the
+same power of production.
+
+15. This conclusion may appear to contradict the doctrine of the
+level of the precious metals. And so it does, if by level be
+meant level of value estimated in the usual way. I consider the
+doctrine, indeed, as quite unsupported by facts, and the
+comparison of the precious metals to water perfectly inaccurate.
+The precious metals are always tending to a state of rest, or
+such a state of things as to make their movement unnecessary. But
+when this state of rest has been nearly attained, and the
+exchanges of all countries are nearly at par, the value of the
+precious metals in different countries, estimated in corn and
+labour, or the mass of commodities, is very far indeed from being
+the same. To be convinced of this, it is only necessary to look
+at England, France, Poland, Russia, and India, when the exchanges
+are at par. That Adam Smith. who proposes labour as the true
+measure of value at all times and in all places, could look
+around him, and vet say that the precious metals were always the
+highest in value in the richest countries, has always appeared to
+me most unlike his usual attention to found his theories on
+facts.
+
+16. Even upon the system of importation, in the actual state and
+situation of the countries of Europe, higher prices must
+accompany superior and increasing wealth.
+
+17. We must not be so far deceived by the evidence before
+Parliament, relating to the want of connection between the prices
+of corn and of labour, as to suppose that they are really
+independent of each other. The price of the necessaries of life
+is, in fact, the cost of producing labour. The supply cannot
+proceed, if it be not paid; and though there will always be a
+little latitude, owing to some variations of industry and habits,
+and the distance of time between the encouragement to population
+and the period of the results appearing in the markets: yet it is
+a still greater error, to suppose the price of labour unconnected
+with the price of corn, than to suppose that the price of corn
+immediately and completely regulates it. Corn and labour rarely
+march quite abreast; but there is an obvious limit, beyond which
+they cannot be separated. With regard to the unusual exertions
+made by the labouring classes in periods of dearness, which
+produce the fall of wages noticed in the evidence, they are most
+meritorious in the individuals, and certainly favour the growth
+of capital. But no man of humanity could wish to see them
+constant and unremitted. They are most admirable as a temporary
+relief; but if they were constantly in action, effects of a
+similar kind would result from them, as from the population of a
+country being pushed to the very extreme limits of its food.
+There would be no resources in a scarcity. I own I do not see,
+with pleasure, the great extension of the practice of task work.
+To work really hard during twelve or fourteen hours in the day,
+for any length of time, is too much for a human being. Some
+intervals of ease are necessary to health and happiness: and the
+occasional abuse of such intervals is no valid argument against
+their use.
+
+18. I have hinted before, in a note, that profits may, without
+impropriety, be called a surplus. But, whether surplus or not,
+they are the most important source of wealth, as they are, beyond
+all question, the main source of accumulation.
+
+19. Adam Smith notices the bad effects of high profits on the
+habits of the capitalist. They may perhaps sometimes occasion
+extravagance; but generally, I should say, that extravagant
+habits were a more frequent cause of a scarcity of capital and
+high profits, than high profits of extravagant habits.
+
+
+
+
+
+End of Project Gutenberg's Nature and Progress of Rent, by Thomas Malthus
+
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