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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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