Front Page Titles (by Subject) Section V.—: On the Dependance of the actual Quantity of Produce obtained from the Land, upon the existing Prices of Produce, and existing Rents, under the same Agricultural Skill and the same Value of Money. - Principles of Political Economy
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Section V.—: On the Dependance of the actual Quantity of Produce obtained from the Land, upon the existing Prices of Produce, and existing Rents, under the same Agricultural Skill and the same Value of Money. - Thomas Robert Malthus, Principles of Political Economy 
Principles of Political Economy (London: W. Pickering, 1836).
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On the Dependance of the actual Quantity of Produce obtained from the Land, upon the existing Prices of Produce, and existing Rents, under the same Agricultural Skill and the same Value of Money.
From the preceding account of the progress of rent, it follows that the actual amount of the natural rent of land in the actual state of agricultural skill, is, with very little drawback, necessary to the actual produce; and that the price of corn in every progressive country, must be just about equal to the cost of production on land of the poorest quality actually in use, with the addition of the rent it would yield in its natural state; or to the cost of raising additional produce on old land, which additional produce yields only the usual returns of agricultural capital with no rent.
It is quite obvious that under the existing value of money, the price cannot be less;* or such land would not be cultivated, nor such capital employed. Nor can it ever much exceed this price, because it will always answer to the landlord to continue letting poorer and poorer lands, as long as he can get any thing more than they will pay in their natural state; and because it will always answer to any farmer who can command capital, to lay it out on his land, if the additional produce resulting from it will fully repay the profits of his capital, although it yields nothing to his landlord.
It follows then, that corn, in a cultivated and improving country, is sold nearly at its necessary price, that is, at the price necessary to obtain the actual amount of produce if no rents were paid; although by far the largest part is sold at a price much above that which is neccessary to its production without rent, owing to this part being produced at less expense, while its price remains undiminished.
The difference between the price of corn and the price of manufactures, with regard to natural or necessary price, is this; that if the price of any manufacture were essentially depressed, the whole manufacture would be entirely destroyed; whereas, if the price of corn were equally depressed, the quantity of it only would be diminished. There would be some machinery in the country still capable of sending the commodity to market at the reduced price.
The earth has been sometimes compared to a vast machine, presented by nature to man for the production of food and raw materials; but, to make the resemblance more just, as far as they admit of comparison, we should consider the soil as a present to man of a great number of machines, all susceptible of continued improvement by the application of capital to them, but yet of very different original qualities and powers.
This great inequality in the powers of the machinery employed in obtaining raw produce, forms the most remakable feature which distinguishes the machinery of the land from the machinery employed in manufactures.
When a machine in manufactures is invented, which will produce more finished work with less expenditure than before, if there be no patent, or as soon as the patent has expired, a sufficient number of such machines may be made to supply the whole demand, and to supersede entirely the use of all the old machinery. The natural consequence is, that the price is reduced to the price of production from the best machinery, and if the price were to be depressed lower, the whole of the commodity would be withdrawn from the market.
The machines which produce corn and raw materials, on the contrary, are the gifts of nature, not the works of man; and we find, by experience, that these gifts have very different qualities and powers. The most fertile and best situated lands of a country, those which, like the best machinery in manufactures, yield the greatest products with the least expenditure, are never found sufficient, owing to the second main cause of rent before stated, to supply the effectual demand of an increasing population. The price of raw produce, therefore, naturally increases till it answers to pay the cost of raising it with inferior machines, and by a more expensive process; and, as there cannot be two prices for corn of the same quality, all the other machines, the working of which requires less expenditure compared with the produce, must yield rents in proportion to their goodness.
Every extensive country may thus be considered as possessing a gradation of machines for the production of corn and raw materials, including in this gradation not only all the various qualities of poor land, of which every large territory has generally an abundance, but the inferior machinery which may be said to be employed when good land is further and further forced for additional produce. As the price of raw produce continues to rise, these inferior machines are successively called into action; and as the price of raw produce continues to fall, they are successively thrown out of action. The illustration here used serves to show at once the necessity of the existing price of corn to the existing produce, in the actual state of most of the countries with which we are acquainted, and the different effect which would attend a great reduction in the price of any particular manufacture, and a great reduction in the price of raw produce.
We must not, however, draw too large inferences from this gradation of machinery on the land. It is what actually exists in almost all countries, and accounts very clearly for the origin and progress of rent, while land still remains in considerable plenty. But such a gradation is not strictly necessary, either to the original formation, or the subsequent regular rise of rents. All that is necessary to produce these effects, is, the existence of the two first causes of rent formerly mentioned, with the addition of limited territory, or a scarcity of fertile land.
Whatever may be the qualities of any commodity, it is well known that it can have no exchangeable value, if it exists in a great excess above the wants of those who are to use it. But such are the qualities of the necessaries of life that, in a limited territory, and under ordinary circumstances, they cannot if properly distributed be permanently in excess; and if all the land of this country were precisely equal in quality, and all as rich, as the best, there cannot be the slightest doubt, that after the whole of the land had been taken into cultivation, both the profits of stock, and the real wages of labour, would go on diminishing till profits had been reduced to what was necessary to keep up the actual capital, and the wages to what was necessary to keep up the actual population, while the rents would be high, just in proportion to the fertility of the soil natural or acquired, and the mass of rents very much greater than at present.
Nor would the effect be essentially different, if the capital which could be employed with advantage upon such fertile soil were extremely limited, so that no further outlay were required for it than what was wanted for ploughing and sowing. Still there can be no doubt that capital and population might go on increasing in other employments, till both the profits of capital and the wages of labour had so fallen as to come nearly to a stand, and rents had reached the limits prescribed by the powers of the soil, and the habits of the people.
In these cases it is obvious that the rents are not regulated by the gradations of the soil, or the different products of capital on the same land; and that it is an incorrect inference from the theory of rent to conclude with Mr. Ricardo, that “It is only because land is of different qualities with respect to its productive powers, and because in the progress of population, land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of it.”*
There is another inference which has been drawn from the theory of rent, which involves an error of much greater importance, and should therefore be very carefully guarded against.
In the progress of cultivation, as poorer and poorer land is taken into tillage, without improvements in agriculture, the rate of profits must be limited in amount by the powers of the soil last cultivated, as will be shewn more fully in a subsequent chapter. It has been inferred from this, that when land is successively thrown out of cultivation, the rate of profits will be high in proportion to the superior natural fertility of the land which will then be the least fertile in cultivation.
If land yielded no rent whatever in its natural state, whether it were poor or fertile, then the whole produce being divided between profits and wages, and the corn wages of labour being supposed to remain nearly the same, the inference would be just. But the premises are not such as are here supposed. In a civilized and appropriated country uncultivated land always yields a rent in proportion to its natural power of feeding cattle or growing wood; and of course, when land has been thrown out of tillage, particularly if this has been occasioned by the importation of cheaper corn from other countries, and consequently without a diminution of population, the last land so thrown out may yield a moderate rent in pasture, though considerably less than before. As was said in the preceding section, rent will diminish, but probably not so much in proportion either as the capital employed on the land, or the produce derived from it. No landlord will allow his land to be cultivated by a tillage farmer paying little or no rent, when by laying it down to pasture, and saving much yearly expenditure of capital upon it, he can obtain a greater rent. Consequently, as the produce of the worst lands actually cultivated can never be wholly divided between profits and wages, the state of such land or its degree of fertility cannot regulate the rate of profits upon it.
If to the effect of the cause here noticed we add its natural consequence, viz. a rise in the value of money, and a greater fall of corn than of foreign commodities, taxed commodities and probably of labour and working cattle, it is obvious that permanent difficulties may be thrown in the way of cultivation, and that richer land may not yield superior profits. The higher rent paid for the last land employed in tillage, together with the greater expense of the materials of capital compared with the price of produce, may fully counterbalance, or even more than counterbalance, the difference of natural fertility.
With regard to the capital which the tenant may lay out on his farm in obtaining more produce without paying additional rent for it, the rate of its returns must obviously conform itself to the general rate of profits determined by other causes. It must always follow, but can never lead or regulate. It is true that when the price of corn had settled itself, there would be some corn produced on the old cultivated land, the cost of producing which without rent would be just about equal to such price. But it is quite certain that if instead of laying out so much additional capital on the lands in tillage, the capitalists could have obtained the untilled land without rents, the price of corn would not have risen so high, or have required so much labour and other capital to produce the actual quantity; and consequently the rents of such lands clearly add to the price of corn, and form a part of the costs of production.
It should be added, that in the regular progress of a country towards general cultivation and improvement, and in a natural state of things, it may fairly be presumed, that if the last land taken into cultivation be rich, capital is scarce, and profits will then certainly be high; but if land be thrown out of cultivation on account of means being found of obtaining corn cheaper elsewhere, no such inference is justifiable. On the contrary, capital may be abundant, compared with the demand for corn and commodities, in which case and during the time that such abundance lasts, whatever may be the state of the land, profits must be low. These are all points of great practical consequence which have been much overlooked. The doctrine of the gradations of soils is a most important one, but in drawing practical conclusions from it, great care should be taken to apply it correctly.
It will be observed, that the rents paid for what the land will produce in its natural state, though they make a difference in the questions relating to profits and the component parts of price, do not invalidate the important doctrine that, in countries in their usual state with gradations of soil, corn is sold nearly at its natural or necessary price, that is, at the price necessary to bring the actual quantity to market. This price must on an average be at the least equal to the costs of its production on the worst land actually cultivated, together with the rent of such land in its natural state: because, if it falls in any degree below this, the cultivator of such land will not be able to pay the landlord so high a rent as he could obtain from the land without cultivation, and consequently the land will be left uncultivated, and the produce will be diminished. In progressive countries, however, this rent is trifling, and the price of corn is little more than is necessary to pay the wages of the labour and the profits of the capital required to obtain it. But in the case of land being thrown out of cultivation under an abundance of capital and labour, the rent of the worst land cultivated for corn might by no means be trifling. Still however the actual price of the corn under the same value of money would be necessary to obtain the actual home supply, because if the farmers paid no rents, it would not answer to them to produce corn which would not yield so profitable a return as the products of rough pasture, or land in copse wood, or plantations.
I hope to be excused for presenting to the reader in various forms the doctrine, that corn, in reference to the quantity actually produced is sold at nearly its necessary price, like manufactures; because I consider it as a truth of high importance, which has been entirely overlooked by the Economists, by Adam Smith, and by all those writers who have represented raw produce as selling always at a monopoly price.
[* ] The reader will be aware from what was said in the last chapter, that, though in speaking of the relation between the price of the produce and its money cost at any given time, money is always a correct measure; yet that in speaking of the price of the produce without such reference, it is necessary that the existing value of money should be expressed, or understood; and I trust that the reader will allow of the latter, when the meaning is clear from the context. As I measure the value of money by labour, the price of the produce under the existing value of money is exactly equivalent to the expression value of the produce. In reality it may be said, that in the natural and ordinary state of things, it is the actual value of the produce, or its actual power of commanding labour, which is necessary to the supply of the actual produce. In these cases it might be better at once to use the term value instead of price; but I fear it would not yet be so readily understood.
[* ] Principles of Political Economy, ch. ii. p. 54. This passage was taken from the first edition. It is altered in the second and third; but not sufficiently to make it true. In the third, (p. 56) the passage is as follows: “It is only then because land is not unlimited in quantity and uniform in quality, and because in the progress of population land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of it.” Now it is quite obvious, as stated above, that if land as fertile as the best were merely limited in quantity, without being different in quality, it would, in the progress of population, yield altogether a much higher rent than the same quantity of land would with gradations of soil.