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´╗┐Title: An Inquiry into the Nature and Progress of Rent, and the Principles by Which It is Regulated
Author: Malthus, T. R. (Thomas Robert), 1766-1834
Language: English
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*** Start of this Doctrine Publishing Corporation Digital Book "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,








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

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

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

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

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

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

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

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

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.


[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

[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

[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

[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.]

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