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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/4336-h.zip b/4336-h.zip Binary files differnew file mode 100644 index 0000000..5b529bd --- /dev/null +++ b/4336-h.zip diff --git a/4336-h/4336-h.htm b/4336-h/4336-h.htm new file mode 100644 index 0000000..3d66831 --- /dev/null +++ b/4336-h/4336-h.htm @@ -0,0 +1,2066 @@ +<?xml version="1.0" encoding="us-ascii"?> + +<!DOCTYPE html + PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" + "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd" > + +<html xmlns="http://www.w3.org/1999/xhtml" lang="en"> + <head> + <title> + An Inquiry Into the Nature and Progress of Rent, by The Rev. T. R. Malthus + </title> + <style type="text/css" xml:space="preserve"> + + body { margin:5%; background:#faebd0; text-align:justify} + P { text-indent: 1em; margin-top: .25em; margin-bottom: .25em; } + H1,H2,H3,H4,H5,H6 { text-align: center; margin-left: 15%; margin-right: 15%; } + hr { width: 50%; text-align: center;} + .foot { margin-left: 20%; margin-right: 20%; text-align: justify; text-indent: -3em; font-size: 90%; } + blockquote {font-size: 97%; font-style: italic; margin-left: 10%; margin-right: 10%;} + .mynote {background-color: #DDE; color: #000; padding: .5em; margin-left: 10%; margin-right: 10%; font-family: sans-serif; font-size: 95%;} + .toc { margin-left: 10%; margin-bottom: .75em;} + .toc2 { margin-left: 20%;} + div.fig { display:block; margin:0 auto; text-align:center; } + div.middle { margin-left: 20%; margin-right: 20%; text-align: justify; } + .figleft {float: left; margin-left: 0%; margin-right: 1%;} + .figright {float: right; margin-right: 0%; margin-left: 1%;} + .pagenum {display:inline; font-size: 70%; font-style:normal; + margin: 0; padding: 0; position: absolute; right: 1%; + text-align: right;} + pre { font-style: italic; font-size: 90%; margin-left: 10%;} + +</style> + </head> + <body> +<pre xml:space="preserve"> + +The Project Gutenberg EBook of Nature and Progress of Rent, by Thomas Malthus + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Nature and Progress of Rent + +Author: Thomas Malthus + +Release Date: January 12, 2010 [EBook #4336] +Last Updated: February 6, 2013 + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK NATURE AND PROGRESS OF RENT *** + + + + +Produced by Charles Aldarondo, and David Widger + + + + + + +</pre> + <p> + <br /><br /> + </p> + <h1> + AN INQUIRY INTO THE NATURE AND PROGRESS OF RENT + </h1> + <h2> + AND THE PRINCIPLES BY WHICH IT IS REGULATED. + </h2> + <p> + <br /> + </p> + <h2> + By The Rev. T. R. Malthus + </h2> + <h4> + <i>Professor of History and Political Economy <br />In the East India + College, Hertfordshire</i> + </h4> + <p> + <br /><br /> + </p> + <h5> + LONDON: <br /> <br /> PRINTED FOR JOHN MURRAY, ALBEMARLE STREET. <br /> <br /> + 1815. + </h5> + <p> + <br /> <br /> + </p> + <hr /> + <p> + <br /> <br /> + </p> + <table summary="" style="margin-right: auto; margin-left: auto"> + <tr> + <td> + <p class="toc"> + <a href="#link2H_4_0001"> Advertisement </a> + </p> + <br /> + <p class="toc"> + <a href="#link2H_4_0002"> <b>RENT &c.</b> </a> + </p> + <br /> + <p class="toc"> + <a href="#link2H_FOOT"> FOOTNOTES </a> + </p> + </td> + </tr> + </table> + <p> + <br /> <br /> + </p> + <hr /> + <p> + <br /> <br /> <a name="link2H_4_0001" id="link2H_4_0001"> + <!-- H2 anchor --> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + Advertisement + </h2> + <p> + 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. + </p> + <p> + <br /> <br /> + </p> + <hr /> + <p> + <br /> <br /> <a name="link2H_4_0002" id="link2H_4_0002"> + <!-- H2 anchor --> </a> + </p> + <h1> + RENT &c. + </h1> + <p> + <br /> + </p> + <p> + The rent of land is a portion of the national revenue, which has always + been considered as of very high importance. + </p> + <p> + According to Adam Smith, it is one of the three original sources of + wealth, on which the three great divisions of society are supported. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + The immediate cause of rent is obviously the excess of price above the + cost of production at which raw produce sells in the market. + </p> + <p> + The first object therefore which presents itself for inquiry, is the cause + or causes of the high price of raw produce. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + Adam Smith, though in some parts of the eleventh chapter of his first book + he contemplates rent quite in its true light, <a href="#linknote-1" + name="linknoteref-1" id="linknoteref-1">1</a> 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. + </p> + <p> + 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. + </p> + <p> + 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.' <a + href="#linknote-2" name="linknoteref-2" id="linknoteref-2">2</a> 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. + </p> + <p> + 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.' <a href="#linknote-3" + name="linknoteref-3" id="linknoteref-3">3</a> 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. + </p> + <p> + In treating of productive and unproductive labour in the last volume, he + observes, <a href="#linknote-4" name="linknoteref-4" id="linknoteref-4">4</a> + 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.' <a href="#linknote-5" name="linknoteref-5" + id="linknoteref-5">5</a> + </p> + <p> + That there are some circumstances connected with rent, which have an + affinity to a natural monopoly, will be 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. + </p> + <p> + The causes of the high price of raw produce may be stated to be three. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + And, thirdly, the comparative scarcity of the most fertile land. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-6" name="linknoteref-6" + id="linknoteref-6">6</a> + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-7" name="linknoteref-7" + id="linknoteref-7">7</a> + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-8" + name="linknoteref-8" id="linknoteref-8">8</a> 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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? + </p> + <p> + 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, <a href="#linknote-9" + name="linknoteref-9" id="linknoteref-9">9</a> 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? + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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; <a href="#linknote-10" + name="linknoteref-10" id="linknoteref-10">10</a> 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + In this case cultivation has been extended, and rents have risen, although + one of the instruments of production, capital, has been dearer. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + <a href="#linknote-11" name="linknoteref-11" id="linknoteref-11">11</a> + </p> + <p> + 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; <a href="#linknote-12" name="linknoteref-12" + id="linknoteref-12">12</a> 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + I have no hesitation in stating that, independently of irregularities in + the currency of a country, <a href="#linknote-13" name="linknoteref-13" + id="linknoteref-13">13</a> 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. <a + href="#linknote-14" name="linknoteref-14" id="linknoteref-14">14</a> + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-15" name="linknoteref-15" + id="linknoteref-15">15</a> + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-16" + name="linknoteref-16" id="linknoteref-16">16</a> + </p> + <p> + 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. <a + href="#linknote-17" name="linknoteref-17" id="linknoteref-17">17</a> 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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 <a href="#linknote-18" name="linknoteref-18" id="linknoteref-18">18</a> + —the profits of stock. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. <a href="#linknote-19" name="linknoteref-19" id="linknoteref-19">19</a> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + 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. + </p> + <p> + <a name="link2H_FOOT" id="link2H_FOOT"> + <!-- H2 anchor --> </a> + </p> + <div style="height: 4em;"> + <br /><br /><br /><br /> + </div> + <h2> + FOOTNOTES: + </h2> + <p> + <a name="linknote-1" id="linknote-1"> + <!-- Note --></a> + </p> + <p class="foot"> + 1 (<a href="#linknoteref-1">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-2" id="linknote-2"> + <!-- Note --></a> + </p> + <p class="foot"> + 2 (<a href="#linknoteref-2">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-3" id="linknote-3"> + <!-- Note --></a> + </p> + <p class="foot"> + 3 (<a href="#linknoteref-3">return</a>)<br /> [ Vol. I. p. 49.] + </p> + <p> + <a name="linknote-4" id="linknote-4"> + <!-- Note --></a> + </p> + <p class="foot"> + 4 (<a href="#linknoteref-4">return</a>)<br /> [ Vol IV. p. 134.] + </p> + <p> + <a name="linknote-5" id="linknote-5"> + <!-- Note --></a> + </p> + <p class="foot"> + 5 (<a href="#linknoteref-5">return</a>)<br /> [ Vol. III. p. 272.] + </p> + <p> + <a name="linknote-6" id="linknote-6"> + <!-- Note --></a> + </p> + <p class="foot"> + 6 (<a href="#linknoteref-6">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-7" id="linknote-7"> + <!-- Note --></a> + </p> + <p class="foot"> + 7 (<a href="#linknoteref-7">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-8" id="linknote-8"> + <!-- Note --></a> + </p> + <p class="foot"> + 8 (<a href="#linknoteref-8">return</a>)<br /> [ Vol. iv. p. 35.] + </p> + <p> + <a name="linknote-9" id="linknote-9"> + <!-- Note --></a> + </p> + <p class="foot"> + 9 (<a href="#linknoteref-9">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-10" id="linknote-10"> + <!-- Note --></a> + </p> + <p class="foot"> + 10 (<a href="#linknoteref-10">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-11" id="linknote-11"> + <!-- Note --></a> + </p> + <p class="foot"> + 11 (<a href="#linknoteref-11">return</a>)<br /> [ 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) not long since published—works + replete with the most useful and interesting information on agricultural + subjects.] + </p> + <p> + <a name="linknote-12" id="linknote-12"> + <!-- Note --></a> + </p> + <p class="foot"> + 12 (<a href="#linknoteref-12">return</a>)<br /> [ See Evidence before the + House of Lords, given in by Arthur Young. p. 66.] + </p> + <p> + <a name="linknote-13" id="linknote-13"> + <!-- Note --></a> + </p> + <p class="foot"> + 13 (<a href="#linknoteref-13">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-14" id="linknote-14"> + <!-- Note --></a> + </p> + <p class="foot"> + 14 (<a href="#linknoteref-14">return</a>)<br /> [ It will be observed, that + I 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.] + </p> + <p> + <a name="linknote-15" id="linknote-15"> + <!-- Note --></a> + </p> + <p class="foot"> + 15 (<a href="#linknoteref-15">return</a>)<br /> [ 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 yet 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.] + </p> + <p> + <a name="linknote-16" id="linknote-16"> + <!-- Note --></a> + </p> + <p class="foot"> + 16 (<a href="#linknoteref-16">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-17" id="linknote-17"> + <!-- Note --></a> + </p> + <p class="foot"> + 17 (<a href="#linknoteref-17">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-18" id="linknote-18"> + <!-- Note --></a> + </p> + <p class="foot"> + 18 (<a href="#linknoteref-18">return</a>)<br /> [ 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.] + </p> + <p> + <a name="linknote-19" id="linknote-19"> + <!-- Note --></a> + </p> + <p class="foot"> + 19 (<a href="#linknoteref-19">return</a>)<br /> [ 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.] + </p> + <p> + <br /> <br /> + </p> + <hr /> + <p> + <br /> <br /> + </p> +<pre xml:space="preserve"> + + + + + +End of Project Gutenberg's Nature and Progress of Rent, by Thomas Malthus + +*** END OF THIS PROJECT GUTENBERG EBOOK NATURE AND PROGRESS OF RENT *** + +***** This file should be named 4336-h.htm or 4336-h.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/4/3/3/4336/ + +Produced by Charles Aldarondo Aldarondo, and David Widger + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Nature and Progress of Rent + +Author: Thomas Malthus + +Release Date: August, 2003 [Etext# 4336] +Posting Date: January 12, 2010 + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK NATURE AND PROGRESS OF RENT *** + + + + +Produced by Charles Aldarondo Aldarondo + + + + + +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. + + +Contents: + + Advertisement + + Rent + + + + +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 be 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. + + + + + + +FOOTNOTES: + +[Footnote 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.] + +[Footnote 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.] + +[Footnote 3: Vol. I. p. 49.] + +[Footnote 4: Vol IV. p. 134.] + +[Footnote 5: Vol. III. p. 272.] + +[Footnote 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.] + +[Footnote 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.] + +[Footnote 8: Vol. iv. p. 35.] + +[Footnote 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.] + +[Footnote 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.] + +[Footnote 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) not long since published--works replete with +the most useful and interesting information on agricultural subjects.] + +[Footnote 12: See Evidence before the House of Lords, given in by Arthur +Young. p. 66.] + +[Footnote 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.] + +[Footnote 14: It will be observed, that I 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.] + +[Footnote 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 yet 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.] + +[Footnote 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.] + +[Footnote 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.] + +[Footnote 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.] + +[Footnote 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 + +*** END OF THIS PROJECT GUTENBERG EBOOK NATURE AND PROGRESS OF RENT *** + +***** This file should be named 4336.txt or 4336.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/4/3/3/4336/ + +Produced by Charles Aldarondo Aldarondo + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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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 + diff --git a/old/nprnt10.zip b/old/nprnt10.zip Binary files differnew file mode 100644 index 0000000..5a27891 --- /dev/null +++ b/old/nprnt10.zip |