An Inquiry into the Nature and Progress of Rent,
and the Principles by which it is regulated
Thomas Robert Malthus
[1815 / Part 1 of 2]
Professor of History and Political Economy
In the East India College, Hertfordshire London, Printed for John
Murray, Albemarle Street |
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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.
The rent of land is a portion of the national revenue, which has
always been considered as of very high importance.
According to Adam Smith, it is one of the three original sources
of wealth, on which the three great divisions of society are
supported.
By the Economists it is so pre-eminently distinguished, that it
is considered as exclusively entitled to the name of riches, and the
sole fund which is capable of supporting the taxes of the state, and
on which they ultimately fall.
And it has, perhaps, a particular claim to our attention at the
present moment, on account of the discussions which are going on
respecting the corn laws, and the effects of rent on the price of
raw produce, and the progress of agricultural improvement.
The rent of land may be defined to be that portion of the value
of the whole produce which remains to the owner of the land, after
all the outgoings belonging to its cultivation, of whatever kind,
have been paid, including the profits of the capital employed,
estimated according to the usual and ordinary rate of the profits of
agricultural stock at the time being.
It sometimes happens, that from accidental and temporary
circumstances, the farmer pays more, or less, than this; but this is
the point towards which the actual rents paid are constantly
gravitating, and which is therefore always referred to when the term
is used in a general sense.
The immediate cause of rent is obviously the excess of price
above the cost of production at which raw produce sells in the
market.
The first object therefore which presents itself for inquiry, is
the cause or causes of the high price of raw produce.
After very careful and repeated revisions of the subject, I do
not find myself able to agree entirely in the view taken of it,
either by Adam Smith, or the Economists; and still less, by some
more modern writers.
Almost all these writers appear to me to consider rent as too
nearly resembling in its nature, and the laws by which it is
governed, the excess of price above the cost of production, which is
the characteristic of a monopoly.
Adam Smith, though in some parts of the eleventh chapter of his
first book he contemplates rent quite in its true light,(1*) and has
interspersed through his work more just observations on the subject
than any other writer, has not explained the most essential cause of
the high price of raw produce with sufficient distinctness, though
he often touches on it; and by applying occasionally the term
monopoly to the rent of land, without stopping to mark its more
radical peculiarities, he leaves the reader without a definite
impression of the real difference between the cause of the high
price of the necessaries of life, and of monopolized commodities.
Some of the views which the Economists have taken of the nature
of rent appear to me, in like manner, to be quite just; but they
have mixed them with so much error, and have drawn such preposterous
and contradictory conclusions from them, that what is true in their
doctrines, has been obscured and lost in the mass of superincumbent
error, and has in consequence produced little effect. Their great
practical conclusion, namely, the propriety of taxing exclusively
the net rents of the landlords, evidently depends upon their
considering these rents as completely disposable, like that excess
of price above the cost of production which distinguishes a common
monopoly.
M. Say, in his valuable treatise on political economy, in which
he has explained with great clearness many points which have not
been sufficiently developed by Adam Smith, has not treated the
subject of rent in a manner entirely satisfactory. In speaking of
the different natural agents which, as well as the land, co-operate
with the labours of man, he observes, 'Heureusement personne n'a pu
dire le vent et le soleil m'appartiennent, et le service qu'ils
rendent doit m'etre paye.'(2*) And, though he acknowledges that, for
obvious reasons, property in land is necessary, yet he evidently
considers rent as almost exclusively owing to such appropriation,
and to external demand.
In the excellent work of M. de Sismondi, De la richesse
commerciale, he says in a note on the subject of rent, 'Cette partie
de la rente fonciere est celle que les Economistes ont decoree du
nom du produit net comme etant le seul fruit du travail qui aj outat
quelquechose a la richesse nationale. On pourrait au contraire
soutenir contre eux, que c'est la seule partie du produit du
travail, dont la valeur soit purement nominale, et n'ait rien de
reelle: c'est en effet le resultat de l'augmentation de prix
qu'obtient un vendeur en vertu de son privilege, sans que la chose
vendue en vaille reellement d'avantage.'(3*) The prevailing opinions
among the more modern writers in our own country, have appeared to
me to incline towards a similar view of the subject; and, not to
multiply citations, I shall only add, that in a very respectable
edition of the Wealth of nations, lately published by Mr Buchanan,
of Edinburgh, the idea of monopoly is pushed still further. And
while former writers, though they considered rent as governed by the
laws of monopoly, were still of opinion that this monopoly in the
case of land was necessary and useful, Mr Buchanan sometimes speaks
of it even as prejudicial, and as depriving the consumer of what it
gives to the landlord.
In treating of productive and unproductive labour in the last
volume, he observes,(4*) that, 'The net surplus by which the
Economists estimate the utility of agriculture, plainly arises from
the high price of its produce, which, however advantageous to the
landlord who receives it, is surely no advantage to the consumer who
pays it. Were the produce of agriculture to be sold for a lower
price, the same net surplus would not remain, after defraying the
expenses of cultivation; but agriculture would be still equally
productive to the general stock; and the only difference would be,
that as the landlord was formerly enriched by the high price, at the
expense of the community, the community would now profit by the low
price at the expense of the landlord. The high price in which the
rent or net surplus originates, while it enriches the landlord who
has the produce of agriculture to sell, diminishes in the same
proportion the wealth of those who are its purchasers; and on this
account it is quite inaccurate to consider the landlord's rent as a
clear addition to the national wealth.' In other parts of his work
he uses the same, or even stronger language, and in a note on the
subject of taxes, he speaks of the high price of the produce of land
as advantageous to those who receive it, it but proportionably
injurious to those who pay it. 'In this view,' he adds, 'it can form
no general addition to the stock of the community, as the net
surplus in question is nothing more than a revenue transferred from
one class to another, and from the mere circumstance of its thus
changing hands, it is clear that no fund can arise out of which to
pay taxes. The revenue which pays for the produce of land exists
already in the hands of those who purchase that produce; and, if the
price of subsistence were lower, it would still remain in their
hands, where it would be just as available for taxation, as when by
a higher price it is transferred to the landed proprietor.'(5*)
That there are some circumstances connected with rent, which have
an affinity to a natural monopoly, will he readily allowed. The
extent of the earth itself is limited, and cannot be enlarged by
human demand. And the inequality of soils occasions, even at an
early period of society a comparative scarcity of the best lands;
and so far is undoubtedly one of the causes of rent properly so
called. On this account, perhaps, the term partial monopoly might be
fairly applicable. But the scarcity of land, thus implied, is by no
means alone sufficient to produce the effects observed. And a more
accurate investigation of the subject will show us how essentially
different the high price of raw produce is, both in its nature and
origin, and the laws by which it is governed, from the high price of
a common monopoly.
The causes of the high price of raw produce may be stated to be
three.
First, and mainly, that quality of the earth, by which it can be
made to yield a greater portion of the necessaries of life than is
required for the maintenance of the persons employed on the land.
Secondly, that quality peculiar to the necessaries of life of
being able to create their own demand, or to raise up a number of
demanders in proportion to the quantity of necessaries produced.
And, thirdly, the comparative scarcity of the most fertile land.
The qualities of the soil and of its products, here noticed as
the primary causes of the high price of raw produce, are the gifts
of nature to man. They are quite unconnected with monopoly, and yet
are so absolutely essential to the existence of rent, that without
them, no degree of scarcity or monopoly could have occasioned that
excess of the price of raw produce, above the cost of production,
which shows itself in this form.
If, for instance, the soil of the earth had been such, that,
however well directed might have been the industry of man, he could
not have produced from it more than was barely sufficient to
maintain those, whose labour and attention were necessary to its
products; though, in this case, food and raw materials would have
been evidently scarcer than at present, and the land might have
been, in the same manner, monopolized by particular owners; vet it
is quite clear, that neither rent, nor any essential surplus produce
of the land in the form of high profits, could have existed.
It is equally clear, that if the necessaries of life the most
important products of land - had not the property of creating an
increase of demand proportioned to their increased quantity, such
increased quantity would occasion a fall in their exchangeable
value. However abundant might be the produce of a country, its
population might remain stationary And this abundance, without a
proportionate demand, and with a very high corn price of labour,
which would naturally take place under these circumstances, might
reduce the price of raw produce, like the price of manufactures, to
the cost of production.
It has been sometimes argued, that it is mistaking the principle
of population, to imagine, that the increase of food, or of raw
produce alone, can occasion a proportionate increase of population.
This is no doubt true; but it must be allowed, as has been justly
observed by Adam Smith, that 'when food is provided, it is
comparatively easy to find the necessary clothing and lodging., And
it should always be recollected, that land does not produce one
commodity alone, but in addition to that most indispensable of all
commodities - food - it produces also the materials for the other
necessaries of life; and the labour required to work up these
materials is of course never excluded from the consideration.(6*)
It is, therefore, strictly true, that land produces the
necessaries of life, produces food, materials, and labour, produces
the means by which, and by which alone, an increase of people may be
brought into being, and supported. In this respect it is
fundamentally different from every other kind of machine known to
man; and it is natural to suppose, that it should be attended with
some peculiar effects.
If the cotton machinery, in this country, were to go on
increasing at its present rate, or even much faster; but instead of
producing one particular sort of substance which may be used for
some parts of dress and furniture, etc. had the qualities of land,
and could yield what, with the assistance of a little labour,
economy, and skill, could furnish food, clothing, and lodging, in
such proportions as to create an increase of population equal to the
increased supply of these necessaries; the demand for the products
of such improved machinery would continue in excess above the cost
of production, and this excess would no longer exclusively belong to
the machinery of the land.(7*)
There is a radical difference in the cause of a demand for those
objects which are strictly necessary to the support of human life,
and a demand for all other commodities. In all other commodities the
demand is exterior to, and independent of, the production itself;
and in the case of a monopoly, whether natural or artificial, the
excess of price is in proportion to the smallness of the supply
compared with the demand, while this demand is comparatively
unlimited. In the case of strict necessaries, the existence and
increase of the demand, or of the number of demanders, must depend
upon the existence and increase of these necessaries themselves; and
the excess of their price above the cost of their production must
depend upon, and is permanently limited by, the excess of their
quantity above the quantity necessary to maintain the labour
required to produce them; without which excess of quantity no demand
could have existed, according to the laws of nature, for more than
was necessary to support the producers.
It has been stated, in the new edition of the Wealth of nations,
that the cause of the high price of raw produce is, that such price
is required to proportion the consumption to the supply.(8*) This is
also true, but it affords no solution of the point in question. We
still want to know why the consumption and supply are such as to
make the price so greatly exceed the cost of production, and the
main cause is evidently the fertility of the earth in producing the
necessaries of life. Diminish this plenty, diminish the fertility of
the soil, and the excess will diminish; diminish it still further,
and it will disappear. The cause of the high price of the
necessaries of life above the cost of production, is to be found in
their abundance, rather than their scarcity; and is not only
essentially different from the high price occasioned by artificial
monopolies, but from the high price of those peculiar products of
the earth, not connected with food, which may be called natural and
necessary monopolies.
The produce of certain vineyards in France, which, from the
peculiarity of their soil and situation, exclusively yield wine of a
certain flavour, is sold of course at a price very far exceeding the
cost of production. And this is owing to the greatness of the
competition for such wine, compared with the scantiness of its
supply; which confines the use of it to so small a number of
persons, that they are able, and rather than go without it, willing,
to give an excessively high price. But if the fertility of these
lands were increased, so as very considerably to increase the
produce, this produce might so fall in value as to diminish most
essentially the excess of its price above the cost of production.
While, on the other hand, if the vineyards were to become less
productive, this excess might increase to almost any extent.
The obvious cause of these effects is, that in all monopolies,
properly so called, whether natural or artificial, the demand is
exterior to, and independent of, the production itself. The number
of persons who might have a taste for scarce wines, and would be
desirous of entering into a competition for the purchase of them,
might increase almost indefinitely, while the produce itself was
decreasing; and its price, therefore, would have no other limit than
the numbers, powers, and caprices, of the competitors for it.
In the production of the necessaries of life, on the contrary,
the demand is dependent upon the produce itself; and the effects
are, in consequence, widely different. In this case, it is
physically impossible that the number of demanders should increase,
while the quantity of produce diminishes, as the demanders only
exist by means of this produce. The fertility of soil, and
consequent abundance of produce from a certain quantity of land,
which, in the former case, diminished the excess of price above the
cost of production, is, in the present case, the specific cause of
such excess; and the diminished fertility, which in the former case
might increase the price to almost any excess above the cost of
production, may be safely asserted to be the sole cause which could
permanently maintain the necessaries of life at a price not
exceeding the cost of production.
Is it, then, possible to consider the price of the necessaries of
life as regulated upon the principle of a common monopoly? Is it
possible, with M. de Sismondi, to regard rent as the sole produce of
labour, which has a value purely nominal, and the mere result of
that augmentation of price which a seller obtains in consequence of
a peculiar privilege; or, with Mr Buchanan, to consider it as no
addition to the national wealth, but merely as a transfer of value,
advantageous only to the landlords, and proportionately injurious to
the consumers?
Is it not, on the contrary, a clear indication of a most
inestimable quality in the soil, which God has bestowed on man - the
quality of being able to maintain more persons than are necessary to
work it? Is it not a part, and we shall see further on that it is an
absolutely necessary part, of that surplus produce from the
land,(9*) which has been justly stated to be the source of all power
and enjoyment; and without which, in fact, there would be no cities,
no military or naval force, no arts, no learning, none of the finer
manufactures, none of the conveniences and luxuries of foreign
countries, and none of that cultivated and polished society, which
not only elevates and dignifies individuals, but which extends its
beneficial influence through the whole mass of the people?
In the early periods of society, or more remarkably perhaps, when
the knowledge and capital of an old society are employed upon fresh
and fertile land, this surplus produce, this bountiful gift of
providence, shows itself chiefly in extraordinary high profits, and
extraordinary high wages, and appears but little in the shape of
rent. While fertile land is in abundance, and may be had by whoever
asks for it, nobody of course will pay a rent to a landlord. But it
is not consistent with the laws of nature, and the limits and
quality of the earth, that this state of things should continue.
Diversities of soil and situation must necessarily exist in all
countries. All land cannot be the most fertile: all situations
cannot be the nearest to navigable rivers and markets. But the
accumulation of capital beyond the means of employing it on land of
the greatest natural fertility, and the greatest advantage of
situation, must necessarily lower profits; while the tendency of
population to increase beyond the means of subsistence must, after a
certain time, lower the wages of labour.
The expense of production will thus be diminished, but the value
of the produce, that is, the quantity of labour, and of the other
products of labour besides corn, which it can command, instead of
diminishing, will be increased. There will be an increasing number
of people demanding subsistence, and ready to offer their services
in any way in which they can be useful. The exchangeable value of
food will, therefore, be in excess above the cost of production,
including in this cost the full profits of the stock employed upon
the land, according to the actual rate of profits, at the time
being. And this excess is rent.
Nor is it possible that these rents should permanently remain as
parts of the profits of stock, or of the wages of labour. If such an
accumulation were to take place, as decidedly to lower the general
profits of stock, and, consequently, the expenses of cultivation, so
as to make it answer to cultivate poorer land; the cultivators of
the richer land, if they paid no rent, would cease to be mere
farmers, or persons living upon the profits of agricultural stock.
They would unite the characters of farmers and landlords - a union
by no means uncommon; but which does not alter, in any degree, the
nature of rent, or its essential separation from profits. If the
general profits of stock were 20 per cent and particular portions of
land would yield 30 per cent on the capital employed, 10 per cent of
the 30 would obviously be rent, by whomsoever received.
It happens, indeed, sometimes, that from bad government,
extravagant habits, and a faulty constitution of society, the
accumulation of capital is stopped, while fertile land is in
considerable plenty, in which case profits may continue permanently
very high; but even in this case wages must necessarily fall, which
by reducing the expenses of cultivation must occasion rents. There
is nothing so absolutely unavoidable in the progress of society as
the fall of wages, that is such a fall as, combined with the habits
of the labouring classes, will regulate the progress of population
according to the means of subsistence. And when, from the want of an
increase of capital, the increase of produce is checked, and the
means of subsistence come to a stand, the wages of labour must
necessarily fall so low, as only just to maintain the existing
population, and to prevent any increase.
We observe in consequence, that in all those countries, such as
Poland, where, from the want of accumulation, the profits of stock
remain very high, and the progress of cultivation either proceeds
very slowly, or is entirely stopped, the wages of labour are
extremely low. And this cheapness of labour, by diminishing the
expenses of cultivation, as far as labour is concerned, counteracts
the effects of the high profits of stock, and generally leaves a
larger rent to the landlord than in those countries, such as
America, where, by a rapid accumulation of stock, which can still
find advantageous employment, and a great demand for labour, which
is accompanied by an adequate increase of produce and population,
profits cannot be low, and labour for some considerable time remains
very high.
It may be laid down, therefore, as an incontrovertible truth,
that as a nation reaches any considerable degree of wealth, and any
considerable fullness of population, which of course cannot take
place without a great fall both in the profits of stock and the
wages of labour, the separation of rents, as a kind of fixture upon
lands of a certain quality, is a law as invariable as the action of
the principle of gravity. And that rents are neither a mere nominal
value, nor a value unnecessarily and injuriously transferred from
one set of people to another; but a most real and essential part of
the whole value of the national property, and placed by the laws of
nature where they are, on the land, by whomsoever possessed, whether
the landlord, the crown, or the actual cultivator.
Rent then has been traced to the same common nature with that
general surplus from the land, which is the result of certain
qualities of the soil and its products; and it has been found to
commence its separation from profits, as soon as profits and wages
fall, owing to the comparative scarcity of fertile land in the
natural progress of a country towards wealth and population.
Having examined the nature and origin of rent, it remains for us
to consider the laws by which it is governed, and by which its
increase or decrease is regulated.
When capital has accumulated, and labour fallen on the most
eligible lands of a country, other lands less favourably
circumstanced with respect to fertility or situation, may be
occupied with advantage. The expenses of cultivation, including
profits, having fallen, poorer land, or land more distant from
markets, though yielding at first no rent, may fully repay these
expenses, and fully answer to the cultivator. And again, when either
the profits of stock or the wages of labour, or both, have still
further fallen, land still poorer, or still less favourably
situated, may be taken into cultivation. And, at every step, it is
clear, that if the price of produce does not fall, the rents of land
will rise. And the price of produce will not fall, as long as the
industry and ingenuity of the labouring classes, assisted by the
capitals of those not employed upon the land, can find something to
give in exchange to the cultivators and landlords, which will
stimulate them to continue undiminished their agricultural
exertions, and maintain their increasing excess of produce.
In tracing more particularly the laws which govern the rise and
fall of rents, the main causes which diminish the expenses of
cultivation, or reduce the cost of the instruments of production,
compared with the price of produce, require to be more specifically
enumerated. The principal of these seem to be four: first, such an
accumulation of capital as will lower the profits of stock;
secondly, such an increase of population as will lower the wages of
labour; thirdly, such agricultural improvements, or such increase of
exertions, as will diminish the number of labourers necessary to
produce a given effect; and fourthly, such an increase in the price
of agricultural produce, from increased demand, as without nominally
lowering the expense of production, will increase the difference
between this expense and the price of produce.
The operation of the three first causes in lowering the expenses
of cultivation, compared with the price of produce, are quite
obvious; the fourth requires a few further observations.
If a great and continued demand should arise among surrounding
nations for the raw produce of a particular country, the price of
this produce would of course rise considerably; and the expenses of
cultivation, rising only slowly and gradually to the same
proportion, the price of produce might for a long time keep so much
ahead, as to give a prodigious stimulus to improvement, and
encourage the employment of much capital in bringing fresh land
under cultivation, and rendering the old much more productive.
Nor would the effect be essentially different in a country which
continued to feed its own people, if instead of a demand for its raw
produce, there was the same increasing demand for its manufactures.
These manufactures, if from such a demand the value of their amount
in foreign countries was greatly to increase, would bring back a
great increase of value in return, which increase of value could not
fail to increase the value of the raw produce. The demand for
agricultural as well as manufactured produce would be augmented; and
a considerable stimulus, though not perhaps to the same extent as in
the last case, would be given to every kind of improvement on the
land.
A similar effect would be produced by the introduction of new
machinery, and a more judicious division of labour in manufactures.
It almost always happens in this case, not only that the quantity of
manufactures is very greatly increased, but that the value of the
whole mass is augmented, from the great extension of the demand for
them, occasioned by their cheapness. We see, in consequence, that in
all rich manufacturing and commercial countries, the value of
manufactured and commercial products bears a very high proportion to
the raw products;(10*) whereas, in comparatively poor countries,
without much internal trade and foreign commerce, the value of their
raw produce constitutes almost the whole of their wealth. If we
suppose the wages of labour so to rise with the rise of produce, as
to give the labourer the same command of the means of subsistence as
before, yet if he is able to purchase a greater quantity of other
necessaries and conveniencies, both foreign and domestic, with the
price of a given quantity of corn, he may be equally well fed,
clothed, and lodged, and population may be equally encouraged,
although the wages of labour may not rise so high in proportion as
the price of produce.
And even when the price of labour does really rise in proportion
to the price of produce, which is a very rare case, and can only
happen when the demand for labour precedes, or is at least quite
contemporary with the demand for produce; it is so impossible that
all the other outgoings in which capital is expended, should rise
precisely in the same proportion, and at the same time, such as
compositions for tithes, parish rates, taxes, manure, and the fixed
capital accumulated under the former low prices, that a period of
some continuance can scarcely fail to occur, when the difference
between the price of produce and the cost of production is
increased.
In some of these cases, the increase in the price of agricultural
produce, compared with the cost of the instruments of production,
appears from what has been said to be only temporary; and in these
instances it will often give a considerable stimulus to cultivation,
by an increase of agricultural profits, without showing itself much
in the shape of rent. It hardly ever fails, however, to increase
rent ultimately. The increased capital, which is employed in
consequence of the opportunity of making great temporary profits,
can seldom if ever be entirely removed from the land, at the
expiration of the current leases; and, on the renewal of these
leases, the landlord feels the benefit of it in the increase of his
rents.
Whenever then, by the operation of the four causes above
mentioned, the difference between the price of produce and the cost
of the instruments of production increases, the rents of land will
rise.
It is, however, not necessary that all these four causes should
operate at the same time; it is only necessary that the difference
here mentioned should increase. If, for instance, the price of
produce were to rise, while the wages of labour, and the price of
the other branches of capital did not rise in proportion, and at the
same time improved modes of agriculture were coming into general
use, it is evident that this difference might be increased, although
the profits of agricultural stock were not only undiminished, but
were to rise decidedly higher.
Of the great additional quantity of capital employed upon the
land in this country, during the last twenty years, by far the
greater part is supposed to have been generated on the soil, and not
to have been brought from commerce or manufactures. And it was
unquestionably the high profits of agricultural stock, occasioned by
improvements in the modes of agriculture, and by the constant rise
of prices, followed only slowly by a proportionate rise in the
different branches of capital, that afforded the means of so rapid
and so advantageous an accumulation.
In this case cultivation has been extended, and rents have risen,
although one of the instruments of production, capital, has been
dearer.
In the same manner a fall of profits and improvements in
agriculture, or even one of them separately, might raise rents,
notwithstanding a rise of wages.
It may be laid down then as a general truth, that rents naturally
rise as the difference between the price of produce and the cost of
the instruments of production increases.
It is further evident, that no fresh land can be taken into
cultivation till rents have risen, or would allow of a rise upon
what is already cultivated.
Land of an inferior quality requires a great quantity of capital
to make it yield a given produce; and, if the actual price of this
produce be not such as fully to compensate the cost of production,
including the existing rate of profits, the land must remain
uncultivated. It matters not whether this compensation is effected
by an increase in the money price of raw produce, without a
proportionate increase in the money price of the instruments of
production, or by a decrease in the price of the instruments of
production, without a proportionate decrease in the price of
produce. What is absolutely necessary, is a greater relative
cheapness of the instruments of production, to make up for the
quantity of them required to obtain a given produce from poor land.
But whenever, by the operation of one or more of the causes
before mentioned, the instruments of production become cheaper, and
the difference between the price of produce and the expenses of
cultivation increases, rents naturally rise. It follows therefore as
a direct and necessary consequence, that it can never answer to take
fresh land of a poorer quality into cultivation, till rents have
risen or would allow of a rise, on what is already cultivated.
It is equally true, that without the same tendency to a rise of
rents, occasioned by the operation of the same causes, it cannot
answer to lay out fresh capital in the improvement of old land - at
least upon the supposition, that each farm is already furnished with
as much capital as can be laid out to advantage, according to the
actual rate of profits.
It is only necessary to state this proposition to make its truth
appear. It certainly may happen, and I fear it happens frequently,
that farmers are not provided with all the capital which could be
employed upon their farms, at the actual rate of agricultural
profits. But supposing they are so provided, it implies distinctly,
that more could not be applied without loss, till, by the operation
of one or more of the causes above enumerated, rents had tended to
rise.
It appears then, that the power of extending cultivation and
increasing produce, both by the cultivation of fresh land and the
improvement of the old, depends entirely upon the existence of such
prices, compared with the expense of production, as would raise
rents in the actual state of cultivation.
But though cultivation cannot be extended, and the produce of the
country increased, but in such a state of things as would allow of a
rise of rents, yet it is of importance to remark, that this rise of
rents will be by no means in proportion to the extension of
cultivation, or the increase of produce. Every relative fall in the
price of the instruments of production, may allow of the employment
of a considerable quantity of additional capital; and when either
new land is taken into cultivation, or the old improved, the
increase of produce may be considerable, though the increase of
rents be trifling. We see, in consequence, that in the progress of a
country towards a high state of cultivation, the quantity of capital
employed upon the land, and the quantity of produce yielded by it,
bears a constantly increasing proportion to the amount of rents,
unless counterbalanced by extraordinary improvements in the modes of
cultivation.(11*)
According to the returns lately made to the Board of Agriculture,
the average proportion which rent bears to the value of the whole
produce, seems not to exceed one fifth;(12*) whereas formerly, when
there was less capital employed, and less value produced, the
proportion amounted to one fourth, one third, or even two fifths.
Still, however, the numerical difference between the price of
produce and the expenses of cultivation, increases with the progress
of improvement; and though the landlord has a less share of the
whole produce, yet this less share, from the very great increase of
the produce, yields a larger quantity, and gives him a greater
command of corn and labour. If the produce of land be represented by
the number six, and the landlord has one fourth of it, his share
will be represented by one and a half. If the produce of land be as
ten, and the landlord has one fifth of it, his share will be
represented by two. In the latter case, therefore, though the
proportion of the landlord's share to the whole produce is greatly
diminished, his real rent, independently of nominal price, will be
increased in the proportion of from three to four. And in general,
in all cases of increasing produce, if the landlord's share of this
produce do not diminish in the same proportion, which though it
often happens during the currency of leases, rarely or never happens
on the renewal of them, the real rents of land must rise.
We see then, that a progressive rise of rents seems to be
necessarily connected with the progressive cultivation of new land,
and the progressive improvement of the old: and that this rise is
the natural and necessary consequence of the operation of four
causes, which are the most certain indications of increasing
prosperity and wealth - namely, the accumulation of capital, the
increase of population, improvements in agriculture, and the high
price of raw produce, occasioned by the extension of our
manufactures and commerce.
On the other hand, it will appear, that a fall of rents is as
necessarily connected with the throwing of inferior land out of
cultivation, and the continued deterioration of the land of a
superior quality; and that it is the natural and necessary
consequence of causes, which are the certain indications of poverty
and decline, namely, diminished capital, diminished population, a
bad system of cultivation, and the low price of raw produce.
If it be true, that cultivation cannot be extended but under such
a state of prices, compared with the expenses of production, as will
allow of an increase of rents, it follows naturally that under such
a state of relative prices as will occasion a fall of rents,
cultivation must decline. If the instruments of production become
dearer, compared with the price of produce, it is a certain sign
that they are relatively scarce; and in all those cases where a
large quantity of them is required, as in the cultivation of poor
land, the means of procuring them will be deficient, and the land
will be thrown out of employment.
It appeared, that in the progress of cultivation and of
increasing rents, it was not necessary that all the instruments of
production should fall in price at the same time; and that the
difference between the price of produce and the expense of
cultivation might increase, although either the profits of stock or
the wages of labour might be higher, instead of lower.
In the same manner, when the produce of a country is declining,
and rents are falling, it is not necessary that all the instruments
of production should be dearer. In a declining or stationary
country, one most important instrument of production is always
cheap, namely, labour; but this cheapness of labour does not
counterbalance the disadvantages arising from the dearness of
capital; a bad system of culture; and, above all, a fall in the
price of raw produce, greater than in the price of the other
branches of expenditure, which, in addition to labour, are necessary
to cultivation.
It has appeared also, that in the progress of cultivation and of
increasing rents, rent, though greater in positive amount, bears a
less, and lesser proportion to the quantity of capital employed upon
the land, and the quantity of produce derived from it. According to
the same principle, when produce diminishes and rents fall, though
the amount of rent will always be less, the proportion which it
bears to capital and produce will always be greater. And, as in the
former case, the diminished proportion of rent was owing to the
necessity of yearly taking fresh land of an inferior quality into
cultivation, and proceeding in the improvement of old land, when it
would return only the common profits of stock, with little or no
rent; so, in the latter case, the high proportion of rent is owing
to the impossibility of obtaining produce, whenever a great
expenditure is required, and the necessity of employing the reduced
capital of the country, in the exclusive cultivation of its richest
lands.
In proportion, therefore, as the relative state of prices is such
as to occasion a progressive fall of rents, more and more lands will
be gradually thrown out of cultivation, the remainder will be worse
cultivated, and the diminution of produce will proceed still faster
than the diminution of rents.
If the doctrine here laid down, respecting the laws which govern
the rise and fall of rents, be near the truth, the doctrine which
maintains that, if the produce of agriculture were sold at such a
price as to yield less net surplus, agriculture would be equally
productive to the general stock, must be very far from the truth.
With regard to my own conviction, indeed, I feel no sort of doubt
that if, under the impression that the high price of raw produce,
which occasions rent, is as injurious to the consumer as it is
advantageous to the landlord, a rich and improved nation were
determined by law, to lower the price of produce, till no surplus in
the shape of rent anywhere remained; it would inevitably throw not
only all the poor land, but all, except the very best land, out of
cultivation, and probably reduce its produce and population to less
than one tenth of their former amount.
From the preceding account of the progress of rent, it follows,
that the actual state of the natural rent of land is necessary to
the actual produce; and that the price of produce, in every
progressive country, must be just about equal to the cost of
production on land of the poorest quality actually in use; or to the
cost of raising additional produce on old land, which yields only
the usual returns of agricultural stock with little or no rent.
It is quite obvious that the price cannot be less; or such land
would not be cultivated, nor such capital employed. Nor can it ever
much exceed this price, because the poor land progressively taken
into cultivation, yields at first little or no rent; and because it
will always answer to any farmer who can command capital, to lay it
out on his land, if the additional produce resulting from it will
fully repay the profits of his stock, although it yields nothing to
his landlord.
It follows then, that the price of raw produce, in reference to
the whole quantity raised, is sold at the natural or necessary
price, that is, at the price necessary to obtain the actual amount
of produce, although by far the largest part is sold at a price very
much above that which is necessary to its production, owing to this
part being produced at less expense, while its exchangeable value
remains undiminished.
The difference between the price of corn and the price of
manufactures, with regard to natural or necessary price, is this;
that if the price of any manufacture were essentially depressed, the
whole manufacture would be entirely destroyed; whereas, if the price
of corn were essentially depressed, the quantity of it only would be
diminished. There would be some machinery in the country still
capable of sending the commodity to market at the reduced price.