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Section I.—: Of the Nature and Causes of Rent. - Thomas Robert Malthus, Principles of Political Economy 
Principles of Political Economy (London: W. Pickering, 1836).
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Of the Nature and Causes of Rent.
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 capital 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.
Rent then being the excess of the value of the whole produce, or if estimated in money, the excess of the price of the whole produce, above what is necessary to pay the wages of the labour and the profits of the capital employed in cultivation, the first object which presents itself for inquiry, is, the cause or causes of this excess of price.
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 of the school of M. Quesnay; 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, that excess of price above the cost of production, which is the characteristic of a common monopoly.
Adam Smith, though in some parts of the eleventh chapter of his first book he contemplates rent quite in its true light,* 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 ordinary excess of the price of raw produce above its cost of production 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 this excess in the price of the necessaries of life, and in common monopolized commodities.
Some of the views which the Economists of the school of Quesnay have taken of the nature of rent appear to me also, to be quite just; but they have mixed them with so much error, and have drawn such unwarranted inferences from them, that what is true in their doctrines has produced little effect. Their great practical conclusion, namely, the propriety of taxing exclusively the neat rents of the landlords, evidently depends upon their considering these rents not only as completely disposeable, like that excess of price above the cost of production, which distinguishes a common monopoly, but also that every indirect tax operates as a deduction from neat rents in proportion to its amount.
M. Say, in his valuable Treatise on Political Economy, in which he has explained with great clearness many points not 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’être payé.”* 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 demand.
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 foncière est celle que les Economistes ont décorée du nom du produit net, comme étant le seul fruit du travail qui ajoutât quelque chose à la richesse nationale. On pourroit, 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 réelle: c’est en effet le résultat de l’augmentation de prix qu’obtient un vendeur en vertu de son privilège, sans que la chose vendue en vaille réellement davantage.”†
The prevailing opinions among the 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, published by Mr. Buchanan, of Edinburgh, the idea of monopoly is pushed still farther. And, while former writers, though they considered rent as governed entirely 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, that,* “The neat surplus by which the Economistes 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 neat 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 will now profit by the low price, at the expense of the landlord. The high price in which the rent or neat 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 this 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, 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 neat 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.”*
That there are some circumstances connected with rent, which have a strong affinity to a natural monopoly, will be readily allowed. The extent of the earth itself is limited, and cannot be enlarged by human demand. The inequality of soil occasions, even at an early period of society, a comparative scarcity of the best lands; and this scarcity is undoubtedly one of the causes of rent properly so called. On this account, perhaps the term partial monopoly may be fairly applicable to it. 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 different the ordinary excess of the price of raw produce above its cost of production 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 ordinary excess of the price of raw produce above the costs of production, may be stated to be three.
First, and mainly, That quality of the soil, by which it can be made to yield a greater quantity 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, when properly distributed, of creating their own demand, or of raising up a number of demanders in proportion to the quantity of necessaries produced.
And, thirdly, The comparative scarcity of fertile land, either natural or artificial.
The quality of the soil here noticed as the primary cause of the excess in the price of raw produce above the costs of its production, is the gift of nature to man. It is quite unconnected with monopoly, and yet is so absolutely essential to the existence of rent, that without it no degree of scarcity or monopoly could have occasioned an excess of the price of raw produce above what was necessary for the payment of wages and profits.
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 obtain 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; yet it is quite clear, that neither rent nor any essential surplus produce of the land in the form of high profits and high wages could have existed.
On the other hand, it will be allowed, that in whatever way the produce of a given portion of land may be actually divided, whether the whole is distributed to the labourers and capitalists, or a part is awarded to a landlord, the power of such land to yield rent is exactly proportioned to its natural or acquired fertility, or to the general surplus which it can be made to produce beyond what is strictly necessary to support the labour and keep up the capital employed upon it. If this surplus be as 1, 2, 3, 4, or 5, then its power of yielding a rent will be as 1, 2, 3, 4, or 5: and no degree of monopoly—no possible increase of external demand can essentially alter these different powers.
But if no rent can exist without this surplus, and if the power of particular soils to pay rent be proportioned to this surplus, it follows that this surplus from the land, arising from its fertility, must evidently be considered as the foundation or main cause of all rent.
Still however, this surplus, necessary and important as it is, would not be sure of possessing a value which would enable it to command a proportionate quantity of labour and other commodities, if it had not a power of raising up a population to consume it, and, by the articles produced in return, of creating an effective demand for it.
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 articles—food, it produces the materials for clothing, lodging, and firing.†
It is therefore strictly true, that land produces the necessaries of life—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 the use of it should be attended with some peculiar effects.
If an active and industrious family were possessed of a certain portion of land, which they could cultivate so as to make it yield food, and the materials of clothing, lodging, and firing not only for themselves but for five other families, it follows, from the principles of population, that, if they properly distributed their surplus produce, they would soon be able to command the labour of five other families, and the value of their landed produce would soon be worth five times as much as the value of the labour which had been employed in raising it. But if, instead of a portion of land which would yield all the necessaries of life, they possessed only, in addition to the means of their own support, a machine which would produce hats or coats for fifty people besides themselves, no efforts which they could make would enable them to ensure a demand for these hats or coats, and give them in return a command over a quantity of labour considerably greater than their fabrication had cost. For a long time, and by possibility for ever, the machine might be of no more value than that which would result from its making hats or coats for the family. Its further powers might be absolutely thrown away from the want of demand; and even when, from external causes totally independent of any efforts of their own, a population had risen to demand the fifty hats, other similar machines might be made, and the value of the hats in the command of labour and other commodities might permanently exceed but very little the value of the labour employed in making them.
After the new cotton machinery had been introduced into this country, a hundred yards of muslin of a certain quality would not probably command so much labour as twenty-five yards would before; because the supply had increased in a greater degree than the demand, and there was no longer a demand for the whole quantity produced at the same price. But after great improvements in agriculture have been adopted upon a limited tract of land, a quarter of wheat will in a short time command just as much labour as before; because the increased produce, occasioned by the improvements in cultivation, if properly distributed, is found to create a demand proportioned to the supply, which must still be limited; and the value of corn is thus prevented from falling like the value of muslins.
Thus the fertility of the land gives the power of yielding a rent, by yielding a surplus quantity of necessaries beyond the wants of the cultivators; and the peculiar quality belonging to the necessaries of life, when properly distributed, tends strongly and constantly to give a value to this surplus by raising up a population to demand it.
These qualities of the soil and of its products have been, as might be expected, strongly insisted upon by the Economists in different parts of their works; and they are evidently admitted as truths by Adam Smith, in those passages of the Wealth of Nations, in which he approaches the nearest to their doctrines. But modern writers have in general been disposed to overlook them, and to consider rent as regulated upon the principles of a common monopoly, although the distinction is of great importance, and appears obvious and striking in almost any instance that we can take.
If the fertility of the mines of the precious metals all over the world were diminished one half, it will be allowed that, as population and wealth do not necessarily depend upon gold and silver, such an event might not only be consistent with an undiminished amount of population and wealth, but with a considerable increase of both. In this case however it is quite certain that the rents, profits, and wages paid at the different mines in the world might not only not be diminished, but might be considerably increased. But if the fertility of all the lands in the world were to be diminished one half;* inasmuch as population and wealth strictly depend upon the quantity of the necessaries of life which the soil affords, it is quite obvious that a great part of the population and wealth of the world would be destroyed, and with it a great part of the effective demand for necessaries. The largest portion of the lands in most improved countries would be thrown completely out of cultivation, and wages, profits, and rents, particularly the latter, would be greatly diminished on all the rest. There is hardly any land in this country employed in producing corn, which yields a rent equal in value to the wages of the labour and the profits of the stock necessary to its cultivation. If this be so, then, in the case supposed, the quantity of produce being only the half of what was before obtained by the same labour and profits, it may be doubted whether any land in England could be kept in tillage.
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, including ordinary profits. 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 common monopolies, 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 on the produce itself, and the effects are therefore widely different. In this case it is physically impossible that, beyond a certain narrow limit, the number of demanders should increase, while the quantity of produce diminishes, since the demanders can only exist by means of the produce.
In all common monopolies, an excess of the value of the produce above the value of the labour and ordinary profits required to obtain it, may be created solely by external demand, and a scanty supply. In the partial monopoly of the land which produces necessaries, such an excess can only be permanently created by the fertility of the soil.
In common monopolies, and all productions except necessaries, the laws of nature do very little towards proportioning their value in exchange to their value in use. The same quantity of grapes or cottons might, under different circumstances, be worth permanently three or three hundred days labour. In the production of the necessaries of life alone, the laws of nature are constantly at work to regulate their exchangeable value according to their value in use; and though from the great difference of external circumstances, and particularly the greater plenty or scarcity of land, this is seldom or never fully effected; yet the exchangeable value of a given quantity of necessaries always tends to approximate towards the value of the quantity of labour which it can maintain in such a manner as to support at least a stationary population, or in other words, to its value in use.
In all common monopolies, the price of the produce, and consequently the excess of price above the cost of production, may increase without any definite bounds. In the partial monopoly of the land which produces necessaries, the excess of their price above the cost of production is subjected to an impassable limit. This limit is the surplus of necessaries which the land can be made to yield beyond the lowest wants of the cultivators, and is strictly dependent upon the natural or acquired fertility of the soil. Increase this fertility, the limit will be enlarged, and the land may be made to yield a high rent; diminish it, the limit will be contracted, and a high rent will become impossible; diminish it still further, the limit will coincide with the cost of production, and all rent will disappear.
In short, in the one case, the power of the produce to exceed in price the cost of the production depends upon the degree of the monopoly, and of the external demand, in the other, this power depends entirely upon the degree of fertility, natural or acquired. This is surely a broad and striking distinction.*
Is it, then, possible to consider the ordinary excess of the price of the necessaries of life above their costs of production 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 proportionably injurious to the consumers?†
Must we not, on the contrary, allow that rent is the natural result 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 farther on that it is an absolutely necessary part, of that general surplus produce from the land, 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?*
[* ] I cannot, however, agree with him in thinking that all land which yields food must necessarily yield rent. The land covered with wood which is successively taken into cultivation in new colonies for the production of food, may only pay profits and labour. A fair profit on the capital employed, including, of course, the payment of labour, will always be a sufficient inducement to cultivate. But, practically, the cases are very rare, where land is to be had by any body who chooses to take it, and it is true perhaps universally, that all appropriated land which yields food in its natural state, yields a rent, whether cultivated or uncultivated.
[* ] Vol. ii. p. 124, 2nd edit. In his 5th edition, vol. ii. p. 346, he describes the subject anew, but he does not seize the right view of it. He still considers the price of the produce of land which occasions rent too much as the result of a common monopoly.
[† ] Vol. i. p. 49. M. de Sismondi, in his later work, Nouveaux Principes d’Economie Politique, has given a different and more correct view of rent.
[* ] Vol. iv. p. 134.
[* ] Vol. iii. p. 212.
[* ] Book I. c. xi. p. 255, 6th edit.
[† ] 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 or 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 whole body of labourers will not really be able to command such a portion of the necessaries of life, including, of course, clothing, lodging, &c. as will occasion an increase of population.
[* ] Mr. Ricardo has supposed a case (p. 490, third edit.) of a diminution of fertility of one-tenth, and he thinks that it would increase rents by pushing capital upon less fertile land. I think, on the contrary, that in any well cultivated country it could not fail to lower rents, by occasioning the withdrawing of capital from the poorest soils. If the last land before in use would do but little more than pay the necessary labour, and a profit of 10 per cent. upon the capital employed, a diminution of a tenth part of the gross produce would certainly render many poor soils no longer worth cultivating, and would therefore reduce rents.
[* ] Mr. Ricardo observes, (p. 492, third edit.) in answer to this passage, that, “given the high price, rent must be high in proportion to abundance and not scarcity,” whether in peculiar vineyards or on common corn lands. But this is begging the whole of the question. The price cannot be given. By the force of external demand and diminished supply the produce of an acre of Champaigne grapes might permanently command fifty times the labour that had been employed in cultivating it; but, supposing the labourers employed in cultivation to live upon the corn they produce, no possible increase of external demand or diminution of supply could ever enable the produce of an acre of corn to command permanently so many labourers as it would support: because in that case the labourer would be absolutely without the means of supporting a family, and keeping up the population.
[* ] Yet this distinction does not appear to Mr. Ricardo to be well founded! c. xxxi. p. 492, 3rd edit.
[† ] It is extraordinary that Mr. Ricardo (p. 486) should have sanctioned these statements of M. Sismondi and Mr. Buchanan. Strictly, according to his own theory, the price of corn is always a natural or necessary price, and, independent of agricultural improvements, the natural and necessary condition of an increased supply of produce. In what sense then can he agree with these writers in saying, that it is like that of a common monopoly, or advantageous only to the landlords, and proportionably injurious to the consumers?
[* ] After what had been said and written on the subject of rent, I confess I was a good deal surprised that Colonel Perronet Thompson should come forward with a pamphlet, entitled “The True Theory of Rent, in opposition to Mr. Ricardo and others,” and should state that the simple cause of rent is every where the same as that which gives rise to the rent of the vineyard which produces Tokay. The statement is the more remarkable in Colonel Thompson, as in the course of his pamphlet he acknowledges the truth of the main results of the new theory; which are,
First, That in a progressive country with gradations of soil, which is the state of almost every known country, the actual average price of corn is a necessary price, or the price necessary to obtain the actual amount of the home supply under the existing state of agricultural skill, and existing value of money.
Secondly, That no degree of monopoly could make land which produces the food on which the people live yield a rent, if it did not yield a greater produce than was sufficient to support the cultivators.
Thirdly, That the ordinary price of corn is so strictly limited that it cannot by possibility continue so high as to prevent the ordinary money wages of the labouring classes from purchasing more corn than is required to support the individuals actually employed.
Now, it is unquestionably true, First, that the price of Tokay is not a necessary price. The same quantity would be produced, although the price were considerably lower. Secondly, That neither the purchasers of Tokay, nor the cultivators of it, live upon the produce. And Thirdly, That there is no limit to the price of Tokay, but the tastes and fortunes of a few opulent individuals.
How then can it possibly be said with truth, that the simple cause of rent is every where the same as that which gives rise to the rent of the vineyard which produces Tokay; and how entirely inapplicable is a reference to Tokay as an illustration of the true theory of rent.
With regard to the grand fallacy on which Colonel Thompson dwells so much, it is obvious that the incautious language in which the new doctrine of rent has been sometimes announced, does not affect its substance. The errors arising from this cause had been pointed out in the first edition of this work long before Colonel Thompson entered upon the question.