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HAVING in a former number' endeavored to explain the difference between Adam Smith and Mr. Ricardo on the subject of Value, we proceed to the consideration of their different views respecting Rent, Profits, and Wages.

According to Dr. Smith, Rent owes its existence to the absolute fertility of the soil, or its power, either natural or acquired, of yielding more food than is required to maintain the labor employed upon it, and to afford the cultivator the ordinary profits of stock, whatever their rate is, at the time being. "Land," says he, "in almost any situation, produces a greater quantity of food than what is sufficient to maintain all the labor necessary for bringing it to market, in the most liberal way in which that labor is ever maintained. The surplus too is always more than sufficient to replace the stock which employed that labor, together with its profits. Something, therefore, always remains for a Rent to the landlord."

Mr. Ricardo professes on this subject to have adopted the opinions of Mr. Malthus. In his tract on the "Profits of Stock," published in 1815, he says (page 11), " In all that I have said concerning the origin and progress of Rent, I have briefly repeated, and endeavored to elucidate the principles which Mr. Malthus has so ably laid down on the same subject, in his Inquiry into the nature and progress of Rent,' a work abounding in original ideas, which are useful, not only as they regard Rent, but as connected with the question of taxation, perhaps the most difficult and intricate of all the subjects on which Political Economy_treats ;" and in the preface to his work on the Principles of Political Economy he notices Mr. Malthus as having been the first to give to the world the true theory of Rent.

Now the causes of Rent as stated by Mr. Malthus are the three following, viz.:

See Pamphleteer, No. XLVI, page 517.

1st, 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.

2dly, That quantity 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,

3dly, The comparative scarcity of the most fertile land.

Mr. Ricardo, however, in his explanation of the subject omits the two first of these causes, and dwells solely on the last. Rent, he conceives to be entirely a question of relative fertility. When a country is first occupied, the best lands, or those most advantageously situated, are first cultivated, and as soon as the increasing demand for food renders it necessary to have recourse to land of a secondary quality or less advantageously situated, or, what comes to the same thing, when an additional capital on the best land yields a smaller proportionate return; such land, or the first portion of capital bestowed upon it, yields a Rent equal to the difference; and when land of a third quality is taken into cultivation, the secondary quality yields a Rent, and the first a higher Rent than before, and so on, all lands, excepting the last cultivated, yielding more or less rent in proportion to the excess of their produce above that last.

This account of the matter is undoubtedly very plain and simple, and appears, on the first view of it, plausible enough; but that diversity of soil alone is insufficient to account for the existence of Rent, will appear from the following short argument.

Let it be supposed that the fertility of the best soils were lowered, and that of the worst raised so as to make the whole of an uniform quality, while the total quantity of corn produced remained the same. In this case, its price would also remain the same, and it is obvious the only difference would be, that instead of some lands yielding a great Rent, and some little or none, the whole would now yield an uniform and moderate Rent. But, if Mr. Ricardo's doctrine were true, all Rent would at once disappear and vanish away.

It is impossible then to ascribe Rent solely to relative fertility, or the difference between the worst and best lands in cultivation, since on the supposition of there being no such difference, Rent would still exist. It will however be readily allowed that gradation of soil is the reason why Rent appears at a much earlier period of cultivation than would otherwise be the case. If there were two countries of equal size and extent, the one having the whole of its soil of an uniform and high fertility, and the other a portion of its lands only, of the best quality, and the rest inferior

in various degrees, Rent would appear in the latter at the time that the secondary sort of land was taken into cultivation, while in the former no Rent would be paid until the whole surface of the country were fully occupied and cultivated. Eventually, however, it would yield a much greater Rent than the other, and be capable of supporting a much larger population.

The argument therefore shows that relative fertility is not a necessary condition of Rent, though it serves to explain why the cultivated parts of a country not fully peopled (such for instance as America) will usually yield some Rent, notwithstanding it may contain large tracts of unappropriated land which are to be had almost for nothing.

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We cannot then agree with Mr. Malthus that the comparative scarcity of the most fertile soils is one of the causes of Rent; still less with Mr. Ricardo that it is the sole cause.' The only necessary conditions of Rent appear to be the absolute fertility of the soil, the quality noticed by Adam Smith, and the limitation of its quantity. Unless it were capable of producing more than sufficient to maintain those who were employed in cultivating its surface, it is obvious it could never yield the smallest Rent or net produce of any kind. If, on the other hand, it were unlimited in extent, no one would pay for the use of it. It is consequently the fertility of the land combined with its comparative scarcity which gives to its proprietors the enjoyment, as it were, of a species of monopoly by which they are enabled to reserve to themselves a share of its produce. This share will be greater or less in proportion as its fertility, natural or acquired, is such as to make it yield either much or little beyond what is sufficient to replace the stock employed upon it, together with its ordinary profits.

But in order to ascertain what this excess is, we must first know what it is that determines the rate of profit. Now Mr. Ricardo conceived that profits depended on the state of the land, and that the necessity of resorting to poorer soils as a country increased in population was the specific cause of their fall, while Adam Smith considered the rate of profits to be determined by the relative scarcity or abundance of capital compared with the demand for it, and the means of employing it.

If by the expression comparative scarcity of the most fertile land, is to be understood its scarcity compared with the demand for its produce and the wants of an increasing population, it is undoubtedly in this sense a cause of Rent, but this is not the sense given it by Mr. Ricardo. He has stated Rent to be owing to the inferior fertility of some soils as compared with others, or to the diminishing returns of successive capitals upon the same land.

That the rate of profit, however, can never exceed what the fertility of the soil will allow, is a proposition which is almost self-evident. It is quite clear that the excess of what is produced over and above the maintenance of the cultivators, on the supposition of their share being the smallest possible, is a limit beyond which profits can never pass.

The maximum, then, of profit on the land, including rent, or its total net produce is bounded by the productive power of the soil, and if the laborers' share never varied, this net produce would be always the same on the same land. This however is not the case. Although the average quantity produced may be nearly the same for a considerable length of time, that is, while the produce of a given number of men may vary but little, the share, which goes to the laborer, may vary very considerably. The worst land cultivated at the present time does not appear, by all accounts, to be inferior in quality to that which was taken into cultivation at the time of the high prices of 1810 and 1811, yet during that period it yielded very high profits, while latterly it has yielded but small returns for the capital employed on it; a fact which indisputably proves that the present low rate of profit is not to be attributed to the bad quality of the soil, but entirely to the different distribution of its produce. This indeed is in perfect accordance with Mr. Ricardo's more general, and as it appears to us, more correct proposition, that profits depend upon the proportion of the whole produce which goes to the laborer. Now applying this rule to the case before us, we shall find that at the earlier period above referred to, a smaller proportion of produce was absorbed by the laborer, and that consequently profits were high, while latterly a larger proportion has been taken up in the payment of wages, and that consequently profits have been low; the reason of at one time a smaller and at another time a larger share of the produce going to the laborer, being in the one case its scarcity, and in the other its plentifulness compared with the demand for it, or its being at the former period of a higher value or dearer, and at the latter of a lower value or cheaper, in the sense in which those terms are usually understood.

After all, then, the proportion between the demand and supply, which determines the value, is also the regulating principle of profit, since it determines in all cases the proportion which goes to the laborer, and consequently what remains for profit. The cultivation of land too, like every other occupation, is taken up or relinquished, because it either will or will not yield the average rate of profit as determined by the state of the demand and supply; and in supposing this rate to depend on the quality of the worst soil in cultivation, Mr. Ricardo seems to have put the cart before the horse, or mistaken the effect for the cause.

The separation of rent from profits in the progress of society will then take place as follows. The cultivable lands of every country being limited in extent, food has a continual tendency to rise, from the increase of population. The rise in the value of food alters its distribution, reducing the share which goes to the laborer, and augmenting profits; but this extra profit must soon become rent, otherwise agricultural profit would be above the general level, and at the same time that rent is separated, inferior soils which would not before yield the ordinary profit, may be cultivated with advantage. If the share which went to the laborers never varied nor exceeded what was strictly necessary for their maintenance, Mr. Ricardo's doctrine would be well-founded, because in that case the resorting to inferior soils could operate in no other way than in diminishing profits. But it is found by experience that in the early periods of cultivation, the great plenty of food compared with the population, in other words its low value, gives to the laborer the command of a very large quantity, as is the case in America, and the diminution of the laborer's share, which is occasioned by the gradual rise of its value from the con. tinued increase of population, enables inferior soils to be cultivated without any fall of prófits. It is only when wages are at their lowest point that the cultivation of worse land is necessarily attended by a fall of profits; but this is a state of things of which no country has as yet furnished us the example, and until we do arrive at it, we must continue to think with Adam Smith, that it is the accumulation of capital beyond the means of employing it at the previous rate of profits, whatever that may be, which is the specific. cause of their fall; and in this view of the subject we think our great master completely borne out by the well known fact, that in those periods of our history when accumulation has been either retarded by a war or accelerated by a peace, profits have risen or fallen accordingly.

On the subject of wages, Mr. Ricardo seems to have agreed with Adam Smith that they were regulated by the demand and supply of capital compared with labor; but he supposed that under the same circumstances of fertility they could vary but little, (which we have already shown to be contrary to experience) and that whenever they did so vary, it was owing to the greater or less demand for labor; whereas, according to the principles of Adam Smith, the variation in the quantity of wages is the consequence of the greater or less abundance of capital and commodities, and not of any alteration in the value of labor itself. That this is really the true state of the case is, we think, sufficiently proved by the striking fact that the demand for labor has almost invariably been the greatest when the laborer's share has been the least and vice versa. During the war, although wages were

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