SECTION CLII.. The Theory of Rent. [continued.]

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 to be 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]

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.]

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 that A. 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's theory 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 Thus Hamilton, Reports to the Congress on the Manufactures of the United States, 1793, and Canard, Principes, sec. 5. Per contra, compare Turgot's view, supra, § 42, note 1. Even Locke, 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. Similarly Sir D. North, Discourse upon Trade, 1791, with his parallel of landlord and stocklord.]