Nature and Progress of Rent
Thomas Malthus

Edited by Charles Aldarondo Aldarondo


_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

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

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

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

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

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

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

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

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 manufactures.

When a machine in manufactures is invented, which will
produce more finished work with less labour and capital than
before, if there be no patent, or as soon as the patent is over,
a sufficient number of such machines may be made to supply the
whole demand, and to supersede entirely the use of all the old
machinery. The natural consequence is, that the price is reduced
to the price of production from the best machinery, and if the
price were to be depressed lower, the whole of the commodity
would be withdrawn from the market.

The machines which produce corn and raw materials on the
contrary, are the gifts of nature, not the works of man; and we
find, by experience, that these gifts have very different
qualities and powers. The most fertile lands of a country, those
which, like the best machinery in manufactures, yield the
greatest products with the least labour and capital, are never
found sufficient to supply the effective demand of an increasing
population. The price of raw produce, therefore, naturally rises
till it becomes sufficiently high to pay the cost of raising it
with inferior machines, and by a more expensive process; and, as
there cannot be two prices for corn of the same quality, all the
other machines, the working of which requires less capital
compared with the produce, must yield rents in proportion to
their goodness.

Every extensive country may thus be considered as possessing
a gradation of machines for the production of corn and raw
materials, including in this gradation not only all the various
qualities of poor land, of which every large territory has
generally an abundance, but the inferior machinery which may be
said to be employed when good land is further and further forced
for additional produce. As the price of raw produce continues to
rise, these inferior machines are successively called into
action; and, as the price of raw produce continues to fall, they
are successively thrown out of action. The illustration here used
serves to show at once the necessity of the actual price of corn
to the actual produce, and the different effect which would
attend a great reduction in the price of any particular
manufacture, and a great reduction in the price of raw produce.

I hope to be excused for dwelling a little, and presenting to
the reader in various forms the doctrine, that corn in reference
to the quantity actually produced is sold at its necessary price
like manufactures, because I consider it as a truth of the
highest importance, which has been entirely overlooked by the
Economists, by Adam Smith, and all those writers who have
represented raw produce as selling always at a monopoly price.

Adam Smith has very clearly explained in what manner the
progress of wealth and improvement tends to raise the price of
cattle, poultry, the materials of clothing and lodging, the most
useful minerals, etc., etc. compared with corn; but he has not
entered into the explanation of the natural causes which tend to
determine the price of corn. He has left the reader, indeed, to
conclude, that he considers the price of corn as determined only
by the state of the mines which at the time supply the
circulating medium of the commercial world. But this is a cause
obviously inadequate to account for the actual differences in the
price of grain, observable in countries at no great distance from
each other, and at nearly the same distance from the mines.

I entirely agree with him, that it is of great use to inquire
into the causes of high price; as, from the result of such
inquiry, it may turn out, that the very circumstance of which we
complain, may be the necessary consequence and the most certain
sign of increasing wealth and prosperity. But, of all inquiries
of this kind, none surely can be so important, or so generally
interesting, as an inquiry into the causes which affect the price
of corn, and which occasion the differences in this price, so
observable in different countries.

I have no hesitation in stating that, independently of
irregularities in the currency of a country,(13) and other
temporary and accidental circumstances, the cause of the high
comparative money price of corn is its high comparative real
price, or the greater quantity of capital and labour which must
be employed to produce it: and that the reason why the real price
of corn is higher and continually rising in countries which are
already rich, and still advancing in prosperity and population,
is to be found in the necessity of resorting constantly to poorer
land - to machines which require a greater expenditure to work
them - and which consequently occasion each fresh addition to the
raw produce of the country to be purchased at a greater cost - in
short, it is to be found in the important truth that corn, in a
progressive country, is sold at the price necessary to yield the
actual supply; and that, as this supply becomes more and more
difficult, the price rises in proportion.(14)

The price of corn, as determined by these causes, will of
course be greatly modified by other circumstances; by direct and
indirect taxation; by improvements in the modes of cultivation;
by the saving of labour on the land; and particularly by the
importations of foreign corn. The latter cause, indeed, may do
away, in a considerable degree, the usual effects of great wealth
on the price of corn; and this wealth will then show itself in a
different form.

Let us suppose seven or eight large countries not very
distant from each other, and not very differently situated with
regard to the mines. Let us suppose further, that neither their
soils nor their skill in agriculture are essentially unlike; that
their currencies are in a natural state; their taxes nothing; and
that every trade is free, except the trade in corn. Let us now
suppose one of them very greatly to increase in capital and
manufacturing skill above the rest, and to become in consequence
much more rich and populous. I should say, that this great
comparative increase of riches could not possibly take place,
without a great comparative advance in the price of raw produce;
and that such advance of price would, under the circumstances
supposed, be the natural sign and absolutely necessary
consequence, of the increased wealth and population of the
country in question.

Let us now suppose the same countries to have the most
perfect freedom of intercourse in corn, and the expenses of
freight, etc. to be quite inconsiderable. And let us still
suppose one of them to increase very greatly above the rest, in
manufacturing capital and skill, in wealth and population. I
should then say, that as the importation of corn would prevent
any great difference in the price of raw produce, it would
prevent any great difference in the quantity of capital laid out
upon the land, and the quantity of corn obtained from it; that,
consequently, the great increase of wealth could not take place
without a great dependence on the other nations for corn; and
that this dependence, under the circumstances supposed, would be
the natural sign, and absolutely necessary consequence of the
increased wealth and population of the country in question.

These I consider as the two alternatives necessarily
belonging to a great comparative increase of wealth; and the
supposition here made will, with proper restrictions, apply to
the state of Europe.

In Europe, the expenses attending the carriage of corn are
often considerable. They form a natural barrier to importation;
and even the country which habitually depends upon foreign corn,
must have the price of its raw produce considerably higher than
the general level. Practically, also, the prices of raw produce,
in the different countries of Europe, will be variously modified
by very different soils, very different degrees of taxation, and
very different degrees of improvement in the science of
agriculture. Heavy taxation, and a poor soil, may occasion a high
comparative price of raw produce, or a considerable dependence on
other countries, without great wealth and population; while great
improvements in agriculture and a good soil may keep the price of
produce low, and the country independent of foreign corn, in
spite of considerable wealth. But the principles laid down are
the general principles on the subject; and in applying them to
any particular case, the particular circumstances of such case
must always be taken into consideration.

With regard to improvements in agriculture, which in similar
soils is the great cause which retards the advance of price
compared with the advance of produce; although they are sometimes
very powerful, they are rarely found sufficient to balance the
necessity of applying to poorer land, or inferior machines. In
this respect, raw produce is essentially different from

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

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

The reader will observe in what manner I have guarded the
proposition. I am well aware, and indeed have myself stated in
another place, that the price of provisions often rises, without
a proportionate rise of labour: but this cannot possibly happen
for any length of time, if the demand for labour continues
increasing at the same rate, and the habits of the labourer are
not altered, either with regard to prudence, or the quantity of
work which he is disposed to perform.

The peculiar evil to be apprehended is, that the high money
price of labour may diminish the demand for it; and that it has
this tendency will be readily allowed, particularly as it tends
to increase the prices of exportable commodities. But repeated
experience has shown us that such tendencies are continually
counterbalanced, and more than counterbalanced by other
circumstances. And we have witnessed, in our own country, a
greater and more rapid extension of foreign commerce, than
perhaps was ever known, under the apparent disadvantage of a very
great increase in the price of corn and labour, compared with the
prices of surrounding countries.

On the other hand, instances everywhere abound of a very low
money price of labour, totally failing to produce an increasing
demand for it. And among the labouring classes of different
countries, none certainly are so wretched as those, where the
demand for labour, and the population are stationary, and yet the
prices of provisions extremely low, compared with manufactures
and foreign commodities. However low they may be, it is certain,
that under such circumstances, no more will fall to the share of
the labourer than is necessary just to maintain the actual
population; and his condition will be depressed, not only by the
stationary demand for labour, but by the additional evil of being
able to command but a small portion of manufactures or foreign
commodities, with the little surplus which he may possess. If,
for instance, under a stationary population, we suppose, that in
average families two thirds of the wages estimated in corn are
spent in necessary provisions, it will make a great difference in
the condition of the poor, whether the remaining one third will
command few or many conveniencies and comforts; and almost
invariably, the higher is the price of corn, the more indulgences
will a given surplus purchase.

The high or low price of provisions, therefore, in any
country is evidently a most uncertain criterion of the state of
the poor in that country. Their condition obviously depends upon
other more powerful causes; and it is probably true, that it is
as frequently good. or perhaps more frequently so, in countries
where corn is high, than where it is low.

At the same time it should be observed, that the high price
of corn, occasioned by the difficulty of procuring it, may be
considered as the ultimate check to the indefinite progress of a
country in wealth and population. And, although the actual
progress of countries be subject to great variations in their
rate of movement, both from external and internal causes, and it
would be rash to say that a state which is well peopled and
proceeding rather slowly at present, may not proceed rapidly
forty years hence; yet it must be owned, that the chances of a
future rapid progress are diminished by the high prices of corn
and labour, compared with other countries.

It is, therefore, of great importance, that these prices
should be increased as little as possible artificially, that is,
by taxation. But every tax which falls upon agricultural capital
tends to check the application of such capital, to the bringing
of fresh land under cultivation, and the improvement of the old.
It was shown, in a former part of this inquiry, that before such
application of capital could take place, the price of produce,
compared with the instruments of production, must rise
sufficiently to pay the farmer. But, if the increasing difficulties
to be overcome are aggravated by taxation, it is necessary,
that before the proposed improvements are undertaken, the
price should rise sufficiently, not only to pay the farmer,
but also the government. And every tax, which falls on
agricultural capital, either prevents a proposed improvement, or
causes it to be purchased at a higher price.

When new leases are let, these taxes are generally thrown off
upon the landlord. The farmer so makes his bargain, or ought so
to make it, as to leave himself, after every expense has been
paid, the average profits of agricultural stock in the actual
circumstances of the country, whatever they may be, and in
whatever manner they may have been affected by taxes,
particularly by so general a one as the property tax. The farmer,
therefore, by paying a less rent to his landlord on the renewal
of his lease, is relieved from any peculiar pressure, and may go
on in the common routine of cultivation with the common profits.
But his encouragement to lay out fresh capital in improvements is
by no means restored by his new bargain. This encouragement must
depend, both with regard to the farmer and the landlord himself,
exclusively on the price of produce, compared with the price of
the instruments of production; and, if the price of these
instruments have been raised by taxation, no diminution of rent
can give relief. It is, in fact, a question, in which rent is not
concerned. And, with a view to progressive improvements, it may
be safely asserted, that the total abolition of rents would be
less effectual than the removal of taxes which fall upon
agricultural capital.

I believe it to be the prevailing opinion, that the greatest
expense of growing corn in this country is almost exclusively
owing to the weight of taxation. Of the tendency of many of our
taxes to increase the expenses of cultivation and the price of
corn, I feel no doubt; but the reader will see from the course of
argument pursued in this inquiry, that I think a part of this
price, and perhaps no inconsiderable part, arises from a cause
which lies deeper, and is in fact the necessary result of the
great superiority of our wealth and population, compared with the
quality of our natural soil and the extent of our territory.

This is a cause which can only be essentially mitigated by
the habitual importation of foreign corn, and a diminished
cultivation of it at home. The policy of such a system has been
discussed in another place; but, of course, every relief from
taxation must tend, under any system, to make the price of corn
less high, and importation less necessary.

In the progress of a country towards a high state of
improvement, the positive wealth of the landlord ought, upon the
principles which have been laid down, gradually to increase;
although his relative condition and influence in society will
probably rather diminish, owing to the increasing number and
wealth of those who live upon a still more important surplus(18)
- the profits of stock.

The progressive fall, with few exceptions, in the value of
the precious metals throughout Europe; the still greater fall,
which has occurred in the richest countries, together with the
increase of produce which has been obtained from the soil, must
all conduce to make the landlord expect an increase of rents on
the renewal of his leases. But, in reletting his farms, he is
liable to fall into two errors, which are almost equally
prejudicial to his own interests, and to those of his country.

In the first place, he may be induced, by the immediate
prospect of an exorbitant rent, offered by farmers bidding
against each other, to let his land to a tenant without
sufficient capital to cultivate it in the best way, and make the
necessary improvements upon it. This is undoubtedly a most
short-sighted policy, the bad effects of which have been strongly
noticed by the most intelligent land surveyors in the evidence
lately brought before Parliament; and have been particularly
remarkable in Ireland, where the imprudence of the landlords in
this respect, combined, perhaps, with some real difficulty of
finding substantial tenants, has aggravated the discontents of
the country, and thrown the most serious obstacles in the way of
an improved system of cultivation. The consequence of this error
is the certain loss of all that future source of rent to the
landlord, and wealth to the country, which arises from increase
of produce.

The second error to which the landlord is liable, is that of
mistaking a mere temporary rise of prices, for a rise of
sufficient duration to warrant an increase of rents. It
frequently happens, that a scarcity of one or two years, or an
unusual demand arising from any other cause, may raise the price
of raw produce to a height, at which it cannot be maintained. And
the farmers, who take land under the influence of such prices,
will, in the return of a more natural state of things, probably
break, and leave their farms in a ruined and exhausted state.
These short periods of high price are of great importance in
generating capital upon the land, if the farmers are allowed to
have the advantage of them; but, if they are grasped at
prematurely by the landlord, capital is destroyed, instead of
being accumulated; and both the landlord and the country incur a
loss, instead of gaining a benefit.

A similar caution is necessary in raising rents, even when
the rise of prices seems as if it would be permanent. In the
progress of prices and rents, rent ought always to be a little
behind; not only to afford the means of ascertaining whether the
rise be temporary or permanent, but even in the latter case, to
give a little time for the accumulation of capital on the land,
of which the landholder is sure to feel the full benefit in the

There is no just reason to believe, that if the lands were to
give the whole of their rents to their tenants, corn would be
more plentiful and cheaper. If the view of the subject, taken in
the preceding inquiry, be correct, the last additions made to our
home produce are sold at the cost of production, and the same
quantity could not be produced from our own soil at a less price,
even without rent. The effect of transferring all rents to
tenants, would be merely the turning them into gentlemen, and
tempting them to cultivate their farms under the superintendence
of careless and uninterested bailiffs, instead of the vigilant
eye of a master, who is deterred from carelessness by the fear of
ruin, and stimulated to exertion by the hope of a competence. The
most numerous instances of successful industry, and well-directed
knowledge, have been found among those who have paid a fair rent
for their lands; who have embarked the whole of their capital in
their undertaking; and who feel it their duty to watch over it
with unceasing care, and add to it whenever it is possible. But
when this laudable spirit prevails among a tenantry, it is of the
very utmost importance to the progress of riches, and the
permanent increase of rents, that it should have the power as
well as the will to accumulate; and an interval of advancing
prices, not immediately followed by a proportionate rise of
rents, furnishes the most effective powers of this kind. These
intervals of advancing prices, when not succeeded by retrograde
movements, most powerfully contribute to the progress of national
wealth. And practically I should say, that when once a character
of industry and economy has been established, temporary high
profits are a more frequent and powerful source of accumulation,
than either an increased spirit of saving, or any other cause
that can be named.(19) It is the only cause which seems capable
of accounting for the prodigious accumulation among individuals,
which must have taken place in this country during the last
twenty years, and which has left us with a greatly increased
capital, notwithstanding our vast annual destruction of stock,
for so long a period.

Among the temporary causes of high price, which may sometimes
mislead the landlord, it is necessary to notice irregularities in
the currency. When they are likely to be of short duration, they
must be treated by the landlord in the same manner as years of
unusual demand. But when they continue so long as they have done
in this country, it is impossible for the landlord to do
otherwise than proportion his rent accordingly, and take the
chance of being obliged to lessen it again, on the return of the
currency to its natural state.

The present fall in the price of bullion, and the improved
state of our exchanges, proves, in my opinion, that a much
greater part of the difference between gold and paper was owing
to commercial causes, and a peculiar demand for bullion than was
supposed by many persons; but they by no means prove that the
issue of paper did not allow of a higher rise of prices than
could be permanently maintained. Already a retrograde movement,
not exclusively occasioned by the importations of corn, has been
sensibly felt; and it must go somewhat further before we can
return to payments in specie. Those who let their lands during
the period of the greatest difference between notes and bullion,
must probably lower them, whichever system may be adopted with
regard to the trade in corn. These retrograde movements are
always unfortunate; and high rents, partly occasioned by causes
of this kind, greatly embarrass the regular march of prices, and
confound the calculations both of the farmer and landlord.

With the cautions here noticed in letting farms, the landlord
may fairly look forward to a gradual and permanent increase of
rents; and, in general, not only to an increase proportioned to
the rise in the price of produce, but to a still further
increase, arising from an increase in the quantity of produce.

If in taking rents, which are equally fair for the landlord
and tenant, it is found that in successive lettings they do not
rise rather more than in proportion to the price of produce, it
will generally be owing to heavy taxation.

Though it is by no means true, as stated by the Economists,
that all taxes fall on the net rents of the landlords, yet it is
certainly true that they are more frequently taxed both
indirectly as well as directly, and have less power of relieving
themselves, than any other order of the state. And as they pay,
as they certainly do, many of the taxes which fall on the capital
of the farmer and the wages of the labourer, as well as those
directly imposed on themselves; they must necessarily feel it in
the diminution of that portion of the whole produce, which under
other circumstances would have fallen to their share. But the
degree in which the different classes of society are affected by
taxes, is in itself a copious subject, belonging to the general
principles of taxation, and deserves a separate inquiry.


1. I cannot, however, agree with him in thinking that all land
which yields food must necessarily yield rent. The land which is
successively taken into cultivation in improving countries, may
only pay profits and labour. A fair profit on the stock employed,
including, of course, the payment of labour, will always be a
sufficient inducement to cultivate.

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.

3. Vol. I. p. 49.

4. Vol IV. p. 134.

5. Vol. III. p. 272.

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

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.

8. Vol. iv. p. 35.

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.

10. According to the calculations of Mr Colquhoun, the value of
our trade, foreign and domestic, and of our manufactures,
exclusive of raw materials, is nearly equal to the gross value
derived from the land. In no other large country probably is this
the case. P. Colquhoun, Treatise on the wealth, power, and
resources of the British Empire, 2nd ed. (1815), p. 96. The whole
annual produce is estimated at about 430 millions, and the
products of agriculture at about 216 millions.

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, 1812) and General Report, 4 vols. (Edinburgh, 1814)
not long since published--works replete with the most useful
and interesting information on agricultural subjects.

12. See Evidence before the House of Lords, given in by Arthur
Young. p. 66.

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.

14. It will be observed, that l 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.

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 vet 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

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.

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.

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.

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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