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+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: 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
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