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Sect. 2.

BOOK I. mentation of the rents of a country cultivated by Chap. vii. capitalists, but when the distinct power and mode of operation of each are once understood, their Increase of joint action will be easily calculated.

Farmers'

Rents.

On the Progress and Effects of a Rise of Rents from an Increase of Produce, caused by the Use of more Capital in Cultivation.

In thinly peopled and rude countries, the quantity of labor and capital employed in the cultivation of the soil, is usually small when compared with the extent of ground occupied. Wide natural pastures on which a few cattle pick up a precarious living, ploughed lands worked to exhaustion, and then carelessly rested, rude implements, scanty buildings, deficient fencing and draining, these circumstances all mark the agriculture of Poland or Hungary, and very many other countries, now, as they did that of England in other days. As the numbers and skill of the people increase, the modes of cultivation and the face of the country change: the districts devoted to forests or rough pasturage shrink, the ground is either converted into rich meadows, or ploughed up, and made, by a judicious rotation of crops, to combine with and strengthen the general system of the farmer. The portion of the old cultivated lands once devoted to leys and fallows is carefully attended to, becomes less in extent, and has its productiveness increased by being made to bear green crops while resting from corn. While this change is in progress, the cattle main

Chap. vii.
Sect. 2.

tained for draft or slaughter multiply rapidly: better BOOK I. and more numerous implements, drains, fences and buildings make their appearance: all, and perhaps more than all, the labor and capital which once Farmers loosely occupied 500 acres, are now concentrated for Rents. the more complete tillage of 100.

We have to examine what must be the effects of this progressive increase of capital on the surplus profits or rents realized on each portion of the soil.

Corn may be selling either at a monopoly price, that is, at a price which more than pays the costs and profits of those who grow it under the least favourable circumstances; or at such a price as will only repay their common profits. Let us first consider it, as selling at a monopoly price. Then, abstracting from all difference of fertility in the soils cultivated, the rent will consist of that portion of the price of the produce, which exceeds the cost of production, and the ordinary rate of profit on that cost. Let 10 per cent. be the ordinary rate of profit. If the corn produced on any spot of land by £100. sold for £115., the rent would be £5. If in the progress of improvement the capital employed on the same land were doubled, and the produce doubled, then £200. would yield £230., and £220. being capital and profits, the surplus, or £10., would be rent, and the rent will be doubled. If corn, then, is at a monopoly price, increased produce obtained by increased capital (prices remaining the same) may increase the rents, in portion to the increased capital laid out.

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Such a case as this, though very unusual, may occur; and therefore must not be omitted. In small

Increase of

Chap. vii.

Sect. 2.

Increase of

Farmers'
Rents.

BOOK I. communities corn may be constantly at a monopoly price. It is so probably in the Isle of Jersey, where there is always a pressing demand for raw produce, which in war kept up rents to £14. per English acre, and in peace to £6. or £7. In larger countries too, though possessing much uncultivated soil, corn may, for a long period of time, be at a monopoly price, provided the increase of population keeps steadily ahead of the increase of tillage.

It must be confessed, however, that a continuous monopoly price of corn is a circumstance which, though not impossible, is very unusual in countries of considerable extent and great variety of soil. In such countries, if the produce of the soils in cultivation sells for more than will realize the usual rate of profit on the capital employed, other lands are cultivated; or more capital laid out on the old lands, till the cultivator finds he can barely get the ordinary profit on his outlay. Then, of course, tillage will stop, and in such countries, therefore, corn is usually sold at a price, not more than sufficient to replace the capital employed under the least favorable circumstances, and the ordinary rate of profit on it: and the rent paid on the better soils is then measured by the excess of their produce over that of the poorest soil cultivated by similar capitals. If A be a soil which produces to a quantity of capital (n) 10 quarters, and pays the ordinary profits on stock; then B, if to the same capital (n) it yields 12 quarters, will have the price of two quarters as surplus profits, and will pay it as rent. Let us suppose a country then, possessing gradations of soil, increasing in fertility from

Book I.

Chap. vii.
Sect. 2.

Increase of

A to Z, of which A returns to £100. £110., and the others progressively to Z, more than £110. This will represent the real position of the soils cultivated in such extensive countries. In the progress of num- Farmers' bers, of wealth and knowledge, let us suppose a rude Rents. and unskilful mode of cultivation gradually giving place to a better; and additional capital and labor accumulating for the more complete culture of every class of soil and then let us observe what would be the necessary effects upon rents (or surplus profits) of this general accumulation of capital, in the cultivation of soils of unequal goodness.

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Let A have been formerly cultivated with £100. yielding annually £110., £10. being the ordinary profits on stock and B with £100. yielding £115.: and C with £100. yielding £120.: and so on to Z. As all above £110. on each would be surplus profits, or rent, the rent of B would be £5., and that of C £10., &c. &c. In some indefinite time let each of these qualities of soil be cultivated with a capital of £200., and their relative fertility remaining as before, let their produce be proportionably increased, A will produce £220., B £230., C£240. All above £220. on each will now be surplus profits, or rent. The rent of B, therefore, will have become £10., that of C£20. That is, the rent of each will have doubled. It is in this manner that the increasing amount of capital employed on the land of an improving country necessarily elevates rents (or the surplus profits) on all the better soils; and this quite independently of alterations, either in the relative fertility of the soils cultivated, or in the amount of produce obtained

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BOOK I. by the application of given quantities of capital to the inferior soils.

Chap. vii.
Sect. 2.

Farmers'

Rents.

It may be suggested, perhaps, that though we Increase of admit the additional capital employed on the worst soil, to yield the same profit as that with which it was originally cultivated, (a circumstance of which we shall presently examine the probability), still it is not probable that the better lands will yield a larger produce to the additional capital used, exactly proportioned to the superiority of their original fertility. This may be so, and a rise of rents will still take place, but it will be different in

amount.

They yielded to the first £100. laid out as capital, 4 £110., B £115., C £120. Let them yield to the second, A £110., B £113., C £118. All above £110. of the additional produce will be rent, B will then pay £3. additional rent, C £8. The relative fertility of the different soils will be changed. The superiority of the better soils will have become less, if considered relatively to the whole mass of capital now employed on each; but still rents will rise generally not so much, however, it will be observed, as if the relative fertility of the various soils, after the additional outlay on all, remained precisely the same. It is probable,

that in most instances the actual rise will accord with the first calculation; and that the several additions will be proportioned to the original goodness of the soils. If B and C had a certain superiority over 4, when cultivated in rough pastures, corn crops, and fallows, then when the pasture and fallows of each

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