In the case of 2d class land—In the case of 11th class land—feet,per cent.per cent. of the gross yield.Of 5005542.9Of 80052½39½Of 16004834Of 240043.826
[150-2]The English are very fond of assuming that the worst land for the time being under cultivation pays no rent. (Ricardo, Principles, II, 2.) This fact is frequently obscured by the aggregation into one economic whole of land that pays no rent and land that is able to pay rent. (John Stuart Mill, Principles, II, ch. 16, § 3.) True it is that there is a great deal of land which cannot be farmed out, but which can be used only by its owners. CompareSalfeld, in the Landwirthsch. Centralb., 1871, II, 182 ff. On land near Wetzlar which, notwithstanding the high price of land in the neighborhood, could not be farmed out at auction, because no one was desirous to lease it, and which was therefore turned over to the highest bidder for the preceding piece, seeStöckhardt, Zeitschr. für deutsche Landwirthe, 1861, 237. Where, however, all the land has its own proprietors, the competition of farmers may easily produce a rent for the worst land. It is a matter of complete indifference to the theory of rent, whether the worst land when possessed only by right of occupation or used as pasturage for cattle previous to its cultivation, had value or not. CompareNebenius, Oeff. Credit, I, 29;Hermann, Staatswirthsch. Unters., 170 seq.
[150-3]The analogous gradation in mining may make this clearer.
[150-4]Ricardoillustrated this by the following example. An uncultivated tract of country is settled by a small colony. As long as there is here an excess of land of the best quality, and everyone may take possession of it without paying anything therefor, no rent of the land which is merely occupied is possible. But if all the first class land is under cultivation—land which perhaps with the employment of a small amount of capital yields 5 quarters an acre per annum; and the increasing population necessitates the cultivation of land of the second class, which with the same outlay of capital yields only 4 quarters an acre per annum, there arises a rent of 1 quarter an acre per annum for land of the first class. For the price, 4 quarters is now high enough to cover the cost of production per acre, and it must be a matter of complete indifference (complete indifference?) to a new comer whether he obtains 5 quarters from land of the first class as a farmer and pays out 1 quarter, or whether he harvests 4 quarters from second class land as proprietor. If there is a further increase of population, so that land of the third class also, which yields only 3 quarters per acre per annum, must be brought under cultivation, the price of corn rises again because the cost of production has now to be covered by three quarters. Land of the first class now pays a rent of 2 quarters and second class land of 1 quarter. (Ch. 2.)
[150-5]von Thünen, der isolirte Staat, II, I, 179, estimates that a bed of manure 1/3 of an inch thick on an acre of ground, increases the production by ½; that a second ½ inch of manure increases the yield only by a + of 5/8 corn; the third of ¼ corn, etc.Geyeris of opinion that, in Saxony, land of the average quality will yield a gross product of 60 thalers per acre, and 14 thalers net product per acre, in case it is managed with the greatest intelligence and the employment of a large amount of capital; when managed in a very ordinary way, it would yield 20 thalers gross, and 7½ thalers net product.Thünengives the following formula determining when it is more advantageous to cultivate the old land with moreintensiveness(higher farming) than to begin the cultivation of new: As long as p -aq is less than √ap, so long is an increase of the outlay of capital on the same land more profitable than the cultivation of new land, andvice versa. Here p = aggregate product obtained by a workman in a year from the amount of capital used by him; a = sum of his necessary yearly wants;a= the interest per annum of a capital = p; q = the amount of capital given to assist the individual workman.
[150-6]Ricardohad, in every case in which outlay of capital and labor of different degrees of productiveness had to be used on the same land, to suppose a price of the products = the cost of the least productive outlay. See the tables inRicardo'swork, On the Influence of a low Price of Corn on the Profits of Stock, 1815, 14 seq.Schmoller, on the other hand, rightly applies the principle of united costs of production in as far as the usual amount of profit of the producer is added to the cost of the commodity with the highest cost of production. Mittheilungen des Landwirthsch. Instituts zu Halle, 1865, 128. Comparesupra, §§ 106, 110.
SECTION CLI.
THEORY OF RENT.—LAND FAVORABLY SITUATED.
The favorable situation of a piece of land operates, in almost every politico-economical respect, in the same manner as its fertility.[151-1]If a market, to be fully supplied, needs to be fed from a circuit of ten miles, the price must be sufficient to make good not only the other cost of production but the freight over ten miles. Here, therefore, all producers living nearer to the market, who have to make a smaller outlay for transportation and yet obtain the same market price for their produce, makea profit exactly corresponding to the advantage of their situation.[151-2]
The situation of individual pieces of land relatively to farm buildings, etc., operates in a similar way.[151-3]
[151-1]L'éloignement équivaut à la stérilité.(J. B. Say.) If we imagine withA. Walkeran entirely uncultivated country, equally fertile in every part, settled only on the coast, and divided into shares of equal breadth, equally accessible at all points, so that every settler has unlimited space to extend his possessions from the coast into the interior, the shares situated in the middle of the coast strip would be most eagerly sought after; since in its vicinity, prospectively, all the institutions of the country would come together. The colonist, therefore, who should obtain that share as his, would, unquestionably, be in a condition to pay a price for this preference, that is a rent. (Science of Wealth, 296.)
[151-2]It is a consequence both of their difference of situation and of their fertility that in the Himalaya the farmers low down on the sides pay 50 per cent. of the gross product as farm-rent, and higher up, 20 per cent. less. (Ritter, Erdkunde, III, 878.) Both influences may be traced most accurately in East Friesland, and in similar places: marsh land, sandy land, heath land, and high moorland.
Its situation influences especially the money rent of land, and its quality the amount of produce. (McCulloch, Principles, III, 5.)
[151-3]We need only mention the hauling of the crops and of manure. According to the instructions of the royal Saxon commission, above mentioned, the cost is assumed to be 10 per cent. higher for a distance of 250 rods, and 20 per cent. higher for a distance of 500 rods.
SECTION CLII.
THE THEORY OF RENT.(CONTINUED.)
From what we have said, it follows that the rent of the land of a country is equal at least to the sum of all the differences between the product of the least productive portions of capital which have been necessarily laid out in the cultivation of the soil and the product of the other portions more productively laid out by other husbandmen. It may rise higher than this on account of a coalition among landowners or immoderate competition among farmers, who may thereby be forced to surrender a portion of their wages and interest on capital to the former; but it can never lastingly fall below this amount. If the landowners themselves were to surrender all claim to rent, the price of agricultural products would not sink if the market was kept fully supplied; and the excess obtained from the better land over and above the cost of production would go, but only in the nature of a gift, to the farmers, corn dealers and individual consumers.[152-1]Normal rent is not tobe explained by any mysterious or peculiar productiveness[152-2]of the land that yields it, but on the contrary, by the fact that even material forces unexhaustible in themselves, but which can be productive only in combination with given parcels of land, uniformly oppose even successively greater difficulties to every successive and additional improvement.[152-3]
Moreover, the capital which becomes a part of the land to such an extent that it cannot be separated from it, and perhaps not even distinguished from it at sight, such for instance as has been laid out for purposes of drainage or in the purchase of material intended to modify the nature of the soil, partakes of the character of the land itself, and its yield obeys the laws of rent. How frequently it happens that such improvements made by the farmer without the least assistance from the owner of the land permanently contribute to an increase of the rent. (§ 181.)[152-4]
[152-1]CompareJ. Anderson, An Inquiry into the Nature of the Corn Laws, 1777. Extracts from the same in the Edinburgh Review, LIV, 91 ff. On the other hand,Buchanan, on Adam Smith, IV, 134, thinks that rent arises exclusively from the monopoly of the owners, and that without it the price of corn would be lower. It is certain, however, that if the land of a country be considered as one great piece of property, and under one great system of husbandry, the products of the soil might be offered permanently at a price corresponding to the average cost of production, on the better and worse pieces of land. (Umpfenback, N. Oek., 191.)
[152-2]Malthus, On the Policy of restricting the Importation of foreign Corn, 1815. Additions, 1817, to the Essay on the Principle of Population, III, ch. 8-12; Principles, 217 ff.
[152-3]Ricardosays that if air, water, elasticity and steam were of different qualities, and might be made objects of exclusive possession; and that if each kind could be had only in a moderate supply, they would, like land, produce a rent, according as they were brought into use, one kind after another. In the class of natural forces, also, the possession of a secret of production or of inimitable skill, or a legal right to its exclusive use, may produce something similar to rent. (Senior, Outlines, 91.)Hermann, Staatswirthsch. Unters., 163 ff., had already laid the foundation of this doctrine, and earlier yet,Canard,17 seq., andHufeland. I, 303 ff. Seesupra, § 120. Hencev. Mangoldtuses the word rent to designate all rarity-premiums.John Stuart Mill, III, ch. 5, 4.Schäfflespeaks of the universal existence of a surplus; that is, of the factor of rent (Nat. Oek., I, Aufl., 140 ff.), and has recently developed this into a theory thoroughly systematic and detailed. (Nationalökonomische Theorie der ausschliessenden Absatzverhältnisse, 1867.)
According to him, rent is "the premium paid for the most economic course taken in the interest of society in general;" and hence he finds rent as much in superior labor and in a very advantageous outlay of capital. Yet he grants, that "exclusive custom (Kundschaft) on the basis of natural advantages occurs only in the case of land-rent." (59.) And even granting that he is right, that no rent is by itself forever secure (74 seq.), and that much rent is a premium paid for a search after and the appropriation of the best land, divination of the best situations, etc. (60 ff., 74 ff.), there still remains the great difference between rent and the extra income from labor and capital; that here the very transitory nature of the substratum, or basis, and the personal merit of the recipient, is the rule, while in the former case it is a rare exception. Willingly, therefore, as I recognize the possibility and fruitfulness of Schäffle's way of conceiving this subject (the latter, especially, for monographic purposes), I prefer, so far as the entire system is concerned, the keeping apart of the three branches of income corresponding to the three factors of production as has been usual since Adam Smith's time.
[152-4]John Stuart Mill, ch. 16, § 5. An example inFawcett, Manual, 149 seq. This explains many objections to Ricardo's laws, which are the result of misconception. Thus, for instance, inSchmalz, Staatswirthschaftslehre, I, 81, Quarterly Review, XXXVI, 412 ff.Bastiat, Harmonies économiques, ch. 9, where rent is considered the interest on the capital laid out in bringing land under cultivation and improving it. If, however, we imagine an island to emerge suddenly from the waves in the vicinity of Naples, in consequence of an earthquake, no one can doubt that its land would sell at a very high rate and pay a very good rent. And yet no capital or labor has been laid out on it. A similar lesson is taught by the fact, that, in Scotland, rocks which are covered twice a day by the waves are leased for the sake of the sea-weed left on them. (Adam Smith, Wealth of Nations, I, ch. 11.) Also by the fact, that in Poulopinang, a cavity in which many edible swallows' nests are found, pays £500 a year rent. (Geogr. Ephemeriden, Oct., 1805, 134.) However,Bastiat, abstractly speaking, is right when he says, that every one by the importation of agricultural products from quarters which pay no rent, and still more by emigrating thither, may deprive the owners of land of the tribute imminent in rent.
But how would it be if the cost of transportation and emigration amounted to more than the rent? The case theoretically so important, in which all the land in the world is supposed to have been appropriated as private property, this writer, generally so lucid, treats in a surprisingly blind way (275 ff). It is remarkable thatA. Walker, Science of Wealth, spite of his prejudices in favor of Bastiat's doctrines on the gratuitous nature of all natural forces, nevertheless follows, essentially,Ricardo'stheory of rent, 294 ff.
A much more vulgar error yet is, that rent is the result of the capacity of the capital employed in the purchase of the land to produce some interest ThusHamilton, Reports to the Congress on the Manufactures of the United States, 1793, andCanard, Principes, sec. 5. Percontra, compareTurgot'sview,supra, § 42, note 1. EvenLocke, Considerations on the Lowering of Interest, Works, II, 17 ff., maintained the closest parallel between rent and interest to be possible, with this difference only, that money was all of a kind but pieces of land of different degrees of fertility. SimilarlySir D. North, Discourse upon Trade, 1791, with his parallel of landlord and stocklord.
SECTION CLIII.
THEORY OF RENT.(CONTINUED.)
Ricardo says that rent can never, not even in the slightest degree, constitute an element in the price of corn. This is certainly not a very happy way of expressing the truth, that a high rent is not the cause, but the effect, of a relatively high price of corn.[153-1]Ricardo would have been nearer right had he said that rent was not a component part of the price of every portion of the supply of corn brought to market.
Is rent an addition to national income? Ricardo (ch. 31) answers this question in the negative, and says that it takes from the consumers what it gives to the owners of the land, and that it increases only the value in exchange of the national wealth.[153-2]It is evident that as thus stated, the question is not properly put. Neither interest on capital nor wages are anyaddition to a nation's income, but, like rent, only forms of trade, by means of which that income is distributed among the individuals constituting the nation. (§ 201.)
The special kind of product obtained from a piece of land influences its rent only in so far as the growth of that kind of product is exclusively confined either by nature, privilege or prejudice to certain land.[153-3]Adam Smith is of opinion that the rent of agricultural land is ordinarily (!) one-third of the gross product; that of coal mines, from one tenth to a maximum of one-fifth; of good lead and tin mines, one sixth (with the dues paid the state of twenty-one and two-thirds per cent.); of Peruvian silver mines, scarcely one-tenth; of gold mines, one-twentieth. And he thinks that rent grows less certain for every succeeding article.[153-4]
So far as this is based on facts, it may be explained as follows: The greater capacity an article has for transportation from one place to another, the less important is advantage of situation, which is generally one of the chief elements of rent. The more indispensable the commodity is, the more readily is the consumer induced to pay a price for it greater than the cost of production; that is, to pay a rent. This again is enhanced by the difficulty of the preservation of the commodity. Lastly, the more it is a mere product of nature,[153-5]the more difficult it is to simultaneously employ several portions of capital of different grades of productiveness in its production.
[153-1]To be met with in this form even inAdam Smith, Wealth of Nations, I, ch. 11, pr.John Stuart Mill, Principles II, ch. 16, § 6, thus states the matter: "Whoever cultivates land, paying a rent for it, gets in return for his rent an instrument of superior power to other instruments of the same kind for which no rent is paid. The superiority of the instrument is in exact proportion to the rent paid for it." According tov. Jacob, Grundsätze der Nat. Oek., I, 187, rent constitutes a much larger portion of the price of commodities than is generally supposed, in as much as wages depend so largely on the price of the means of subsistence. Per contra,Baudrillart, Manuel, 391 ff., who maintains that rent is practically insignificant.
[153-2]SimilarlyBuchanan, loc. cit., andSismondi, Richesse commerciale, I, 49. Compare contra,Malthus, Inquiry into the Nature and Progress of Rent, 15. I would call attentionen passantto the absurdity that there may be an increase in the value in exchange of a nation's entire resources without any increase in its value in use. (Supra, § 8.)
[153-3]ThusAdam Smithremarks that corn fields and rice fields pay very different rents, because it is not always possible to convert one into the other. (Wealth of Nat., I, ch. 11, 1.) Compare the tabular statistical view of the rent of land used for vineyards, gardens, meadows, pasturages, wood and farming purposes, inRau, Lehrbuch, I, § 218. For a general theory of the rent of wooded land, seeHermann, Staatsw. Unters., 177 ff.; of vineyards, 181 seq.
[153-4]Adam Smith, Wealth of Nat., I, ch. 11, 3.
[153-5]It is hereby rendered akin to those low stages of civilization in which no rent is paid.
SECTION CLIV.
THEORY OF RENT.(CONTINUED.)
As the purchase of a piece of land[154-1]is no more and no less than its exchange against a portion of capital in the shape of money,[154-2]its purchase price depends generally on the amount it will rent for as compared with the interest on the capital to be given in exchange for it. The rate of interest remaining the same, it rises and falls with its rent. Andvice versa, the rent remaining the same it rises and falls inversely as the rate of interest.[154-3]A rise in the price of land is not always a proof of the growing wealth of a people. It may proceed from a depreciation of the value of money, or from a decrease of the rate of interest caused by a decline in the number of loans which can be advantageously placed.
It is frequently said, that the price paid for land is greater than the money-capital which yields an equal revenue.[154-4]This, abstraction made of proletarian distress prices for small parcels of land and of the political and social privileges of landowners, is accounted for by the assumed greater security of the latter,[154-5]which, however, fares ill enough in war times, and times of political disturbance. The fact itself is found to exist, I think, only in economically progressive times, when confidence prevails, and it is based on the pretty certain prospect that the rate of interest will decline, while rents will rise.[154-6]
It has been observed in Belgium, that the medium farm rent of land, in quarters remarkable for any economic peculiarity whatever, pays an interest lower, as compared with the purchase money, in proportion as the country about is more thickly populated, and as its husbandry is carried on by farmers instead of by owners.[154-7]This phenomenon is doubtless correlated with these others, that the conditions just named are pretty regularly attendant on a high state of civilization, and that advanced civilization is attended uniformly by a decline in the rate of interest. (175).[154-8]
[154-1]In every day language, people say of a man who has purchased a piece of land, that he "put" as much capital as is equal to the purchase price "into his land;" or "laid out on it" as much. But this mode of expression is as inaccurate as is this other: "the sun is rising," or "the sun has gone down."
[154-2]Macleod, who is not fond of the natural mode of expression, maintains that the purchase price of a piece of land is equal to the discounted value of the sum of the values of all the future products to be obtained from the land. (Elements, 75.)
[154-3]C:i::L:r in which C = the capital, i = its interest, L = the piece of land, and r = its rent.
[154-4]There are traces to be found of the fact among the ancient Greeks, that the farm-rent of landed estates paid a smaller interest on the purchase money than was otherwise usual in the country.Isaeus de Hagn., 42;Salmasius, De Modo Usur., 848.
[154-5]Thus evenNorthandLocke, loc. cit.;Cantillon, Nature du Commerce, 294.
[154-6]CompareList, Werke II, 173. In Belgium, farm-rent perhectarewas, in 1830 = 57.25 francs, in 1835 = 62.78, in 1840 = 70.44, in 1846 = 74.50, on an average. This was at the rate of from 2.62 to 2.80, or an average of 2.67 per cent. on the purchase money. If to this we add the increase in the rise of land between 1830 and 1846, divided by 16, the yearly revenue rises from 2.67 to 3.91 per cent., that is pretty nearly the rate of interest on hypothecation, and is higher or lower in the different provinces, as the former is higher or lower. (Heuschling, Résumé du Récensement général de 1846, 89.) In France, land paid but from 2 to 3 per cent. on the purchase money; but both rents and the price of land have doubled between 1794 and 1844. (Journal des Econ., IX, 208.)
[154-7]Moreover, whole countries may, because of their great natural advantages, possess, so far as the commerce of the entire world is concerned, something analogous[TN 4]to rent. Thus, for instance, North America, although here, this world-rent finds expression in the national height of the wages of labor and of the rate of interest, (v. Bernhardi, Versuch einer Kritik der Gründe welche für grosses und kleines Grundeigenthum angeführt werden, 1848, 294.)
[154-8]Writers as old asCulpeper, A Tract against the high Rate of Usurie, 1623, andSir J. Child, Discourse of Trade, p. 22 of the French translation, observed the connection existing between a low rate of interest, national wealth and a flourishing state of commerce on the one hand, and a high price of the necessaries of life and of land in the other.Sir W. Pettywould estimate the rent of land as follows: If a calf pasturing in an open meadow gains as much flesh in a given time as is equal to the cost of the food of 50 men for a day, and a workman, on the same land, in the same time, produces food for 60 men, the rent of the land must be 50, and the rate of wages 10. (Political Anatomy of Ireland, 62 seq.; compare 54.) Besides, he accounts for the height of rents by the density of the population exclusively, and he would prefer to see both increasead infinitum. (Several Essays on Political Arithmetic, 147 ff.)
The germs of theRicardolaw of rent, inBoisguillebert: the price of corn determines how far the cultivation may be extended; by manuring the land, as much corn as desired may be obtained, provided the cost of production is covered. (Traité des Grains, II, ch. 2 ff.) There is a foreshowing of the same law in the Physiocratic view that only in the production of raw material is there a real excess over and above the cost—produit net. CompareQuesnay, Probl., économique, 177 ff. Sur les travaux des artisans. (Daire.)Auxiron, Principes de tout Gouvernement, 1776, I, 126.Adam Smithcame very near to the true principle in the case of coal mines, but was hindered reaching it in other cases by the false assumption that certain kinds of agricultural production always yield a rent, while others do so only under certain circumstances. Besides he always considered the interest of capital fixed in the soil; buildings, for instance, as part of the rent. (Wealth of Nat., I, ch. 11.) CompareHume'sLetter to Adam Smith;Burton'sLife and Correspondence of Hume, II, 486;von Thünen, Isolirter Staat., I, 15 ff.
The most immediate predecessors ofRicardo, Principles, 2, 3, 24, 31, areAnderson(§ 152);West, Essay on the Application of Capital to Land, 1815, andMalthus, Inquiry into the Nature and Progress of Rent, 1815. See § 152. It is wonderful how a theory which, in 1777, remained almost untouched, was in 1815 etc., attacked and defended with the greatest zeal, because it then affected the differences between the moneyed and landed interest. YetRicardodid not take into account at all the rent-creating influence of the situation of land in relation to the market, as well as to the "farm-office" (dem Wirthschaftshofe). The influence of the system of husbandry on rent, first thoroughly treated byvon Thünen, loc. cit. What has recently been urged againstRicardoby, for instance,J. B. Say, Traité, II, ch. 9;Sismondi, N. P., III, ch. 12;Jones, Essay on the Distribution of Wealth, 1831 (see Edinburg Review, LIV), bears evidence either of a misunderstanding of the great thinker, or else contains only modifications of some individual abstract propositions of his, stated perhaps too strictly. In judgingRicardo, it must not be forgotten, that it was not his intention to write a text-book on the science of Political Economy, but only to communicate to those versed in it the result of his researches, in as brief a manner as possible. Hence he writes so frequently making certain assumptions; and his words are to be extended to other cases only after due consideration, or rather re-written to suit the changed case.
Baumstarkvery correctly says: "Rent rises, not because new capital has been invested, but when the circumstances of trade make a new addition to capital possible." (Volkswirthschaftliche Erläuterungen über Ricardo's System, 1838, 567.)Fuoco'sNuova Teoria della Rendita, Saggi economici, No. 1, is nothing but an Italian version of the doctrines of Malthus and Ricardo. The greater number of anti-Ricardo theories of rent have originated from the rapid and apparently unlimited growth of national husbandry in recent times. Thus it is a fundamental thought inRodbertus, Sociale Briefe, 1851, No. 3, that an increase of the price of corn need not attend an increase of population, either uniformly or necessarily. According toCarey, The Past, the Present and the Future, ch. 1, 1848, the most fertile land is last brought under cultivation, because it is covered with swamps, forests, etc.; and because it offers greater resistance to the work of the agriculturist, by reason of its luxurious vegetation. The more elevated lands are first cultivated which present fewer obstacles to cultivation on account of their dryness, their thinner crust, etc. Carey generalizes this and thinks he has reversed theRicardolaw of rent! He overlooks entirely thatRicardospeaks only of the original powers of the soil. Now a swampy land which must be dried at the expense of a great deal of labor, possesses less of these original powers than a sandy soil which may be sown immediately. SeeCarey, Essay on the Rate of Wages, 232 ff., and the lengthy exposition of the same doctrine rank with inexact natural science and unhistorical history in the same author's Principles of Social Science, 1858, vol. I.
There is this much truth, however, in Carey's error that, with increasing economic progress, the superiority not only of situation, relatively to the market, but also of natural fertility, may of itself go over to other lands. Thus, for instance, the ancient Slaves used clay soil everywhere as pasturage, and cultivated the sandy soil, because their pick-axes could overcome the resistance only of the latter.Langethal, Geschicte der deutschen Landw., II, 66;Waitz, Schlesw. Holstein, Gesch., I, 17. Similarly in Australia:Hearne, Plutology, 1864. Compare,Roscher, Nationalökonomik des Ackerbaues, § 34. The word fertility should not be taken too exclusively in its present agricultural sense. In a lower stage of civilization, the facility of military defense or theut fons, ut nemus placuit—Tacit., Germ., 16—may have more weight.
The chief difference in the theories of rent consists in this: whether rent is considered a result of production or only of distribution, and an equalization of gain. CompareBehrens, Krit. Dogmengeschichte der Grundrente, 1868, 48.
SECTION CLV.
HISTORY OF RENT.
In poor nations, and in those in a low stage of civilization,especially where the population is sparse, rent is wont to be low. In Turkistan, land is valued according to the capitalinvested in its irrigation.[155-1]In the interior of Buenos Ayres, at the beginning of the nineteenth century, landed estates were paid for in proportion to the magnitude of the live stock on them, so that it seemed, at least, as if the land was given for nothing, or simply thrown in with the purchase. And only a short time since, an English acre in the same country, fifteenleguasfrom the capital, was worth from three to four pence, and at a distance of fiftyleguas, only two pence.[155-2]In Russia, also, not long since, the valuation of landed estates was made, not in proportion to the superficies, but according to the number of souls, that is, of male serfs, aremnantsuggestive of the previous situation when no rent was paid.[155-3]Where, in relatively uncivilized medieval times, instances of the farming out or leasing of land occur, farm-rents are so small that their payment can only be considered as a mere recognition of the owner's continuing right of property.
Under these circumstances, it is natural that great landowners, especially in the lower stages of civilization, should exert an especially great influence; and that their low tenants (Hintersassen) are more dependent in proportion to the want of capital and the absence of trade. Hence, these are wont to make up for the smallness of their rent by great honors paidto their landlords, and great services, especially military service.[155-4]Besides, the lords of the manor, in almost every medieval period, have used their influence with the government to cut down the wages of labor by serfdom and other similar institutions, and the rate of interest on capital by prohibiting interest, by usury laws, etc.; and thus, in both ways, to artificially increase their own share of the national income.
[155-1]A. Burnes, Reise nach Bukhara, II, 238.
[155-2]W. Maccann, Two Thousand Miles Ride through the Argentine Provinces, London, 1853, I, 20; II, 143. Ausland, 1843, No. 140. Frisian ancient documents in which parcels of land are described asterræ 20 animalium, 48 animalium, etc.Lacomblet, Urkundenbuch, I, 27.Kindlinger, Münster Beitr., I, Urkundenbuch, 24.
[155-3]The custom began to be more usual in Russia also to say "so manydessjatinesand the peasantry belonging thereto." This was especially so in the case of very fertile land, as for instance in Orel. Seev. Haxthausen, Studien, II, 510. Formerly the bank loaned only 250 per soul, afterwards up to 300 R. Bco. (II, 81). Spite of thisv. Haxthausenthinks that rent would be illusory, in Russia, in case agriculture was carried on with hired workmen. (I, Vorrede, XIII.)Carey'sremark, "every one is familiar with the fact that farms sell for little more than the value of the improvements," may be true of the United States (The Past, Present and Future, 60.)
[155-4]This condition of things continued in the highlands of Scotland until the suppression of the revolt of 1745. The celebrated Cameron of Lochiel took the field with 800 tenants, although the rent of the land was scarcely £500. (Senior, Three Lectures on the Rate of Wages, 45.) "Poor 12,000 pound sterling per annum nearly subverted the constitution of these kingdoms!" (Pennant.)
SECTION CLVI.
INFLUENCE OF ADVANCING CIVILIZATION ON RENT.
Advancing civilization contributes in three different ways to raise rents.[156-1]The growth of population necessitates either a moreintensiveagriculture (higher farming), or causes it to extend over less fertile parcels of land, or parcels less advantageously situated.[156-2]If the growth of population be attended by an increase of capital, this happens in a still higher degree. The people now consume, if not more, at least wheat of finer quality, more and better fed live stock; the consequence of which is, that the demands made on the land are increased. Lastly, if the population be gradually concentrated in large cities, this fact also must contribute to raise rents, because it requires a multitude of costly transportations of agricultural produce and so increases the cost of production (upto the time of consumption) on the less advantageously situated land.[156-3][156-4]
As most of the symptoms of a higher civilization become apparent earliest, and in the most striking manner, in large cities, so also a rise in rents is first felt in them. The building of houses may be considered as the mostintensiveof all cultivation of land and that which is most firmly fixed to the soil.[156-5]Rent has nowhere an unsurpassable maximum any more than a necessary minimum.
[156-1]Jung, Lehrbuch der Cameralpraxis, 1790, 182, has so little idea of this that he is of opinion that farm-rent must grow ever smaller.
[156-2]According toSchmoller, in the Mittheilungen des landwirthschaftlich. Instituts zu Halle, 1865, 112 seq., the average farm-rent of the Prussian domains permorgen, and the population to the square mile, amounted:
District.1849.1864.1849.1858.Thalers.Populationper sq. mi.Königsberg,0.731.1620762298Gumbinnen,0.590.7620592249Danzig,1.021.5126562926Marienwerder,0.631.0619442135Posen,0.691.0727892857Bromberg,0.691.1021162322Stettin,1.071.7323552614Cöslin,0.831.3017351940Stralsund,0.951.5023472549Breslau,1.191.4547335034Liegnitz,1.171.7536763763Oppeln,0.861.2039734433Potsdam,1.081.5933173640Frankfort,1.292.0024462660Magdeburg,2.312.9832903508Werseburg,2.353.0339344270Erfurt,2.042.5556215735Münster,....2.0331923299Minden,2.482.6248414808
Compare the review of rents in the states of the Zollverein, inv. Viehbahn, Statistik, II, 979. It is difficult[TN 5]to compare different countries with one another in this respect, because it is seldom certain whether the word rent means exactly the same thing in them. Besides, it should not be overlooked, how difficult it is to ascertain what rent, in the strict sense of the term, as used byRicardo, is.
[156-3]Moreover, the rise of rents, in so far as it depends on the greater cost of transportation to a growing market, becomes progressively slower. The concentric circles about that point increase in a greater ratio than the radii.
[156-4]As to the history of rents in England, a comparison of the years from 1480 to 1484, with the most recent times, shows that the amount of rent estimated in money in agricultural districts, where no very great "improvements" have been made, have increased as 1 to 80-100, while the price of wheat has increased 12-fold and wages 10-fold. (Rogers, in the Statist. Journal, 1864, 77.) According toHume, History of England, ch. 33, it seems that rents under Henry VIII. were only 1/10 of those usually paid in his time, while the price of commodities was only ¼ of the modern.Davenant, Works, II, 217, 221, estimates the aggregate rent of land, houses and mines, at the beginning of the seventeenth century, at £6,000,000; about 1698, at £14,000,000; capitalized respectively at £72,000,000 and £252,000,000. About 1714,J. Bellers, Proposals for Employing the Poor, puts it at £15,000,000; about 1726,Erasm. Phillips, State of the Nation in Respect to Commerce etc., at £20,000,000; about 1771,A. Young, at £16,000,000; about 1800,Beeke, Observations on the Income-Tax, at £20,000,000; about 1804,Wakefield, Essay on Political Economy, at £28,000,000; about 1838,McCulloch, Statist., I, 535, at £29,500,000. The poor tax in England and Wales, in 1841, was on a valuation of £32,655,000. (Porter, Progress, VI, 2, 614); 1864-5, the annual value of lands, £46,403,853 (Stat. Journal, 1869.) Moreover, the income from houses, railroads, etc. (real property other than lands), increased very much more than that received from pieces of farming land; between 1845 and 1864-5, the former by 392.8 per cent., and the latter by 27.9 per cent. (Hildebrand'sJahrbb., 1869, II, 383 seq.); and the income tax of 1857 on £47,109,000. There was a still more rapid growth of rent in Scotland. In 1770, it was only £1,000,000-1,200,000: in 1795, £2,000,000; in 1842, £5,586,000. (McCulloch, I, 576, ff.) In Ireland, about 1776, it was only $900,000, according toPetty. (Political Anatomy of Ireland, I, 113.)A. Youngassumed it to be £6,000,000 in 1778;Newenham, View of Ireland, about 1808, £15,000,000. In many parts of the Rosendale Forest in Lancashire, the land is leased by the ell, at £121, and even at £131 per acre; i. e., more than the whole forest of 15,300 acres was rented for in the time of James I. In many of the moorland portions of Lancashire, rent has risen in 150 years, 1,500 and even 3,000 per cent. (Edinburg Rev., 1843, Febr., 223.)
The amount of rents in Prussia,Krugassumed to be in 1804, 50,000,000 thalers, andvon Viebahn, Zollverein Statistik, II, 974, in 1862, 116,500,000 thalers.Lavergneassumed the rents of France after 1850 to be 1,600,000,000 francs (Revue des deux Mondes, Mars, 1868); andDutot, Journal des Economistes, Juin, 1870, in 1870, at 2,000,000,000. In Norway, the capitalized value of all the land was assessed at 13,000,000,000 thalers in specie, in 1665; in 1802, at 25,500,000; in 1839, at 64,000,000 thalers.Blom, Statistik von Norwegen, I, 145. The older such estimates are, the more unreliable they are.
[156-5]In Paris, in 1834, the squaretoise= 37 sq. feet, in the Rue Richelieu and Rue St. Honoré, cost 1,500 to 2,000 francs; in Rue neuve Vivienne, 2,500 to 3,500 francs; in 1857, from 200 to 500 francs per square meter, = 10 sq. feet, was very usual. (Wolowski.) Before the gates of Paris, the rent amounted to as high as 250 francs perhectare; at Fontainebleau, to only from 30 to 40. (Journal des Economistes, Mars, 1856, 337.) In Market Square, Philadelphia, land was worth from 3,000 to 4,000 francs per sq.toise, and in Wall Street, New York, about 4,000 francs. (M. Chevalier, Letters sur l'Amérique, 1836, I, 355.) In St. Petersburg, after 6 years, the house frequently falls to the owner of the area. (Storch.byRau, I, 248 f.) In Manchester, the Custom House area cost from 10 to 12 pounds sterling per square yard; in the center of the city, as high of £40, that is, nearly £200,000 per acre. In Liverpool, in the neighborhood of the Exchange and of Town Hall, the cost is from 30 to 40 pounds sterling. (Athenæum, Dec. 4, 1852.) In London, a corner building on London street, erected for £70,000, with only three front windows, pays a rental of £22,000. (Allg. Zeitung, 1 Febr., 1866.) The villa at Misenum—a very beautiful location—which the mother of the Gracchi bought for about 5,000 thalers, came into the possession of L. Lucullus, consul in the year B. C. 74, for about 33 times as much.Mommsen, Römisch. Gesch., II, 382.
SECTION CLVII.
HISTORY OF RENT.—IMPROVEMENTS IN THE ART OF AGRICULTURE.
Improvements in the art of agriculture which are confined to individual husbandmen leave rent unaffected. They do not perceptibly lower the price of agricultural products, and only effect an increase of the reward of enterprise which is entirely personal to the more skillful producers and does not attach to the ground itself.
But how is it when these improvements become general throughout the country? If population and consumption remain unchanged, the supply of agricultural products will exceed the demand. This would compel farmers, if there be no avenue open to exports, to curtail their production. The least fertile and most disadvantageously situated parcels of land will be abandoned to a greater or less extent, and the least productive capital devoted to agriculture, withdrawn. In this way, rent goes down both relatively and absolutely, although the owners of land may be able to partially cover their loss by the gain which results to them as consumers and capitalists.[157-1](§ 186). After a time, however, and as a consequenceof the diminished price of corn, population and consumption will increase, and entail an extension of agriculture and a consequent rise in rents.[157-2]If it, relatively speaking, reaches the same point as before, it still is absolutely much greater than before. Let us suppose that there are three classesof land of equal extent in a country, which for an equal outlay of capital produce 100,000, 80,000 and 70,000 bushels yearly. The rent of the land here would be equal to at least 40,000 bushels. If the yield of production now doubles, while the demand for agricultural products also doubles, the aggregate harvest will be 200,000 + 160,000 + 140,000 bushels, and consequently rent will have risen to at least 80,000 bushels. But this increase of rent has injured no one. If the population increases in a less degree than the productiveness of the land, the consumer may, to a certain extent, gain largely, and the landowner better his condition. However, great agricultural improvements spread so gradually over a country, that, as a rule, the demand for agricultural products can keep pace with the increased supply. But even in this case, that transitory absolute decline of rent may be avoided; and it cannot be claimed universally, as it is by many who are satisfied with mumbling Ricardo's words after him, that an increase of rent is possible only by an enhancement of the price of the products of the soil. Where the development of a people's economy is a normal one, the rent of land is wont to increase gradually, but at the same time to constitute a diminishing quota of the entire national income.[157-3]
Improvements in milling,[157-4]and in the instruments of transportation[157-5]adapted to agricultural products, and the introduction of cheaper[157-6]food, have the same effect as improvements of agricultural production. All such steps in advance render an increase in population, or in the nation's resources, possible without any corresponding increase in the amount paid to landowners as tribute money.[157-7]
The foregoing facts furnish us the data necessary to decide what influence permanent soil improvements have on the rent of land.[157-8]The improved parcels of land now grow more fertile. Their rentability also increases, while that of the others becomes not only relatively but absolutely less, if the demand remains unaltered. The whole is as if capital had been transformed into fertile land, and this added to the improved land.
[157-1]Since it has seemed absurd to many writers to say that an improvement in the art of agriculture may cause rents to decline (compareMalthus, Principles, I, ch. 3, 8),John Stuart Mill, Principles, IV, ch. 3, § 4, prefers to put the question thus: whether the landowner is not injured by the improvement of the estates of other people, although his own is included in the improvement. CompareDavenant, Works, I, 361. And so the long agricultural crisis through which Germany passed at the beginning of the third decade of this century was produced mainly by the great impulse given to agriculture (Thaer,Schuerzetc.), while population did not keep pace with it. Similarly, at the same time, in England,McCulloch, Stat., I, 557 ff. Of course, the less fertile pieces of land declined even relatively most in price. From 1654 to 1663, Switzerland experienced a severe agricultural crisis, attended with oppressive cheapness of corn, a great decline in the price of land, innumerable cases of insolvency, revolts of the peasantry, emigration, etc. (Meyer von Knonau, Handbuch d. schweiz. Gesch., II, 43.) The Swiss had, precisely during the Thirty Years' War which spared them, so extensively developed their agricultural interests, that now that other countries began to compete with them, they could not find a market large enough for their products. For English instances of similar "agricultural distress" in the seventeenth and eighteenth centuries, seeChild, Discourse on Trade, 73, 124 seq.;Temple, Observations upon the U. P., ch. 6;Tooke, History of Prices, I, 23 seq., 42. Even where there have been no technic improvements, a series of unusually good harvests may have the same results, of which there are many instances scattered throughTooke'sfirst volume.
There is great importance attached in England to the difference between those agricultural reforms which save land and those which effect a saving in capital and labor. The latter, it is said, decrease the money rent of the landowner by depreciating the price of corn, but leave the corn-rent unaltered. The former, on the other hand, decrease the rent both in money and corn, but the money rent in a higher degree. (Ricardo, Principles, ch. 2;J. S. Mill, Principles, IV, ch. 3, 4.)
[157-2]When the demand for products of the soil which minister to luxury, such as fat meat, milk, vegetables, is increasing, a greater cheapness of the necessary wheat may raise rent, for the reason that lands are now cultivated which were not formerly tillable. Thus, there is now land in Lancashire which could not formerly be planted with corn, because the laborers would have consumed more than the harvest yielded. Since the large imports of the means of subsistence from Ireland these lands have been transformed into artificial meadows, gardens, etc. (Torrens, The Budget, 180 ff.) CompareAdam Smith, I, 257, ed. Bas.Banfieldwould misuse these facts to overturn the theory of Ricardo. (Organization of Industry, 1848, 49 ff.)
[157-3]The French testamentary tax was on an amount,