. If good land existed in a quan tity much more abundant than the pro duction of food for an increasing popu lation required, or if capital could be indefinitely employed without a dimin ished return on the old land, there could be no rise of rent; for rent invariably proceeds from the employment of an additional quantity of labour with a pro portionally less return." Rent, according to the definition which has been given, consists of a surplus which remains after the capital expended in production has been replaced with or dinary profits. This surplus, which con stitutes rent, arises, as Mr. Ricardo asserts, from, and is in proportion to, the necessity for resorting to inferior soils or employing capital on the old soil with smaller re turns. To use the words of Mr. Mill " Rent is the difference between the return made to the more productive portions and that which is made to the least productive portion of capital employed upon the land." In a country containing, as every country does contain, land of various de grees of fertility, rent therefore will not be paid until the demands of an in creasing population have rendered it ne cessary to have recourse to the inferior soils. " Thus (continues Ricardo), sup pose land, Nos. I, 2, 3, to yield. with an equal employment of capital and labour, a net produce of 100, 90, and 80 quarters of corn. In a new country, where there is an abundance of fertile land compared with the population, and where therefore it is only necessary to cultivate No. 1, the whole net produce will belong to the cultivator, and will be the profits of the stock which he advances. As soon as population had so far increased as to make it necessary to cultivate No. 2, from which 90 quarters only can be obtained after supporting the labourers, rent would commence on No. 1; for either there must be two rates of profit on agriculture, or ten quarters, or the value of ten quarters, must be withdrawn from the produce of No. 1 for some other purpose. Whether the proprietor of the land or any other person cultivated No. 1, these ten quarters would equally constitute rent ; for the cultivator of No. 2 would get the same result with his capital, whether he culti vated No , paying ten quarters for rent, or continued to cultivate No. 2, paying no rent. In the same manner it might be shown, that when No. 3 is brought into cultivation, the rent of No. 2 must be ten quarters, or the of ten quar ters, whilst the rent of No. 1 would rise to twenty quarters. . . It often and indeed commonly happens that before Nos. 2 and 3, or the inferior lands, are cultivated, capital can be employed more productively on those lands which are already in cultivation. . . In such case, capital will be preft rably employed on the old land, and will equally create a rent; for rent is always the difference between the produce obtained by the em ployment of two equal quantities of capi tal and labour. If with a capital of 10001. a tenant obtain 100 quarters of wheat from his land, and by the employ ment of a second capital of 1000/. he obtain a further return of 85, his landlord would have the power, at the expiration of his lease, of obliging him to pay 15 quarters, or an equivalent value for addi tional rent; for there cannot be two rates of profit. If he is satisfied with a dimi nution of 15 quarters in the return for his second 1000/., it is because no employ ment more profitable can be found for it. . . . In this case, as well as in the other, the capital last employed pays no rent. For the greater productive powers of the first 15 quarters is paid for rent ; for the employment of the second 10001., no rent whatever is paid. If a third 10001. be employed on the same land, with a return of 75 quarters, rent will then be paid for the second 10001., and will be equal to the difference be tween the produce of these two, or 10 quarters ; and at the same time the rent of the first 10001. will rise from 15 to 25 quarters, whilst the last 10001. will pay no rent whatever." (Ricardo's Prin. of Pol. Econ.. 3rd. ed.) Another incident of rent, it is said, is this : that it does not form a part of the cost of production. Mr. MacCulloch has given the following explanation of this law in Note iii. of his edition of the " Wealth of Nations." " The price of raw produce," he remarks, " does not ex ceed the cost of production," including in that expression the ordinary profits of the producer's capital. " The aggregate price exceeds the aggregate cost of pro duction ; but this is because the cost of production is unequal. The price ex ceeds the lowest, but not the highest cost of production : and this highest cost, since it regulates the price of the whole, may be considered, without impro priety, as the cost of the whole, and the rent to be a peculiar privilege of favoured individuals." The circumstances which precede or accompany the cultivation of inferior lands or the employment of additional capital on the old lands are stated to be —1, an increase of population ; 2, the accumulation of capital ; 3, a rise in the exchangeable value of raw produce. The two first cause a fall in profits and wages, and a rising market-price of raw pro duce is a consequence of more labour or more capital being required to produce it, or of a deficient supply previous to its being produced. In a new country, the whole produce is divided between the capitalists and the labourers, and so long as fertile land is in abundance and may be had for an almost nominal price, nobody will pay a rent to a landlord, and profits and wages are maintained at a high rate. But capital accumulates and wages decrease ; and whenever agri culture has reached a state in which the returns of additional capital on the old lands are less than could be obtained from the inferior land, such inferior land will be cultivated, and if the profits of the capital employed on such inferior land were 20 per cent., while the old
lands yielded 30 per cent., a rent would arise equivalent to the difference, or 10 per cent. This, as well as any subse quent rise of rents, is caused by more capital being ready to be laid out on the old land, but which cannot be so employed without diminished returns, and this cir cumstance renders it more profitable to take fresh lands into cultivation, though of an inferior degree of fertility.
One of Professor Tucker's objections to the Ricardo theory of rent is directed against the assumption that " the means of subsistence are a fixed quantity, m near it, instead of its admitting of such gradations that a labourer may be sup ported by one-fifth of the soil once re quired for subsistence;" and he points to the Western states of the American Union, where a labourer can earn, in less than ten days, as much grain as he can consume in a year, and where conse quently a very high scale of diet is maintained, and he contrasts it with other countries in which the whole of the year's labour is necessary to earn sub sistence for the year, although the scale of diet is comparatively low. In the Atlantic states of the Union, as com pared with the Western states, the con trast is also very striking. This vary ing character of human subsistence, Professor Tucker contends, may be a cause of rent, without either an increase or decrease in the returns to capital. The very high rents paid in Ireland may be partly attributed to this cause. In the course of his objections to Mr. Ricardo's theory, Professor Tucker remarks :—" Land is a productive machine, which but a few possess, but whose produce none can dispense with, and for which there being more and more demanders, they must and will give more of their labour to obtain it. Rents, having once begun, continue to increase with the increase of population and the more frugal consumption to which it impels individuals." Mr. Mac Oulloch simply regards the adoption of a less costly food by the labourers as similar in its effects upon prices and rents to an improvement in agricul ture. Professor Tucker's further objec tions against the Ricardo theory consist in its ascribing "the progressive rise of raw produce and of rents to the greater amount of labour expended on the soil last cultivated, and not to the greater cheapness of all labour from the increase of population ;" and in its maintaining that " when raw produce rises, labour also rises " (p. 156). He concludes " that neither is a resort to soils of inferior quality, to lands more distant from market, nor different outlays of capital on the same lands, necessary either to the existence of rent, or to its progressive in crease ; but that it is caused solely by the increase of population, together with the capacity which the same soil possesses of supporting a greater number by reason of their resorting to a more frugal mode of subsistence" (p. 121). It should be observed, that Professor Tucker admits that " successive resorts to inferior soils, or outlays of fresh capital on old lands, keep pace with the rise of raw produce, and ordinarily afford a measure of the progress of rent, and of its different de grees, according to diversities of fertility, culture, or distance from market, but they are not the cause of its rise " (p. 113). Indeed, whatever may be the true theory of the causes and amount of rent in any given community, it may be very easily shown that the existence of soils varying in fertility is not a neces sary element to the existence of rent, while the limited amount of productive soil is a necessary element.
Advantages of position, such as a proxi mity to markets, may counterbalance the disadvantage of barrenness ; and land of this description, which, if it were further removed, would yield no rent, will, under these circumstances, produce a higher rent than more fertile lands situated at a distance from the same market. Land in the neighbourhood of towns yields a high rent, and a still i higher rent is paid for land in towns. The rent in each of these cases is regu lated either by the common principle that there cannot be two rates of profit, of which the case first mentioned is an instance ; or, as in the latter examples, it is determined by the limited extent of such land.
Restrictions on the importation of grain, by forcing the inferior soils into cultivation, undoubtedly tend directly to raise rents ; but no possible quantity of imported produce could have any mate. rifd effect in diminishing the total rents of the country. Importation necessarily implies the existence of high prices in the importing country : it has a tendency to equalise rather than to lower prices, as, by facilitating the exchange of manu factured goods for common food, popula tion is increased, and an increased de mand arises for other products of the soil besides bread corn. This has been the case in the territory of Genoa, where the soil, though of a sterile nature and unfit for the production of corn, yields a higher rent than the fertile corn-lands in the plains not far distant ; for the cost of production being low by means of the low price of imported food, land may be cultivated for various agricultural ob jects, and yield a rent which, if employed in the production of grain, would scarcely repay the cost of production. In a country which possesses superior manufacturing resources and capabilities, the exchange of manufactures for common food may therefore be a cause of rent without re sorting to inferior soils.