inferior soils that the superior pay a rent, but it is because the superior pay a rent that the inferior are taken into occupation."

Lastly we may cite the opinion of the learned Judge, Mr. Justice Byles in the testimonial he gave us '—" I observe that in your economical writings you have assailed Ricardo's Theory of Rent. Fifty years ago I not only read Ricardo's book, but actually abridged it. Subsequent reflection and observation have convinced me that that theory is unsound, as indeed, is most of his book." We are happy to cite these testimonies all agreeing with our judgment.

6. We have seen that Anderson and Ricardo with his followers McCulloch and Mr. Mill all make Rent to arise from differences in the returns to Capital, either from difference of fertility, situation, or differences of Capital applied to the same soil. And unless there were these differences of returns, it is manifest from the extracts given from these writers, that according to their theory, there could be no such thing as rent. Now let us suppose some vast plains of illimitable extent on the earth's surface, all of uniform fertility, with markets thickly distributed over them so that their situation is uniform, and also equal amounts of capital expended on the soil; such as the plains of Bengal, or Lombardy, or such as the plains of South America along the Amazons might be. Now in such a country as this could not there be such a thing as Rent? According to the doctrine of Ricardo, McCulloch, and Mill, there could not be such a thing as Rent in such a country! The very statement of such doctrine is enough to call forth the amazement and ridicule of any practical man of business.

7. We have now to develope the Theory of Rent which is independent of differences of fertility, or differences of situation, or of differences of return to Capital.

First: What is the first thing necessary in order that Rent should arise?

It is that the relation of Landlord and Tenant should exist: Rent is the sum paid by one person to another for the use of land; hence unless the land is owned by one person and let to another, there can be no such thing as Rent.

1 Preface, p. xvi.

Secondly: From what does the possibility of Rent being paid arise?

It arises from this, that a few persons, especially with the assistance of horses, cattle, and agricultural implements can raise from the earth a very much larger amount of produce than is necessary for their own subsistence.

Thirdly Let us consider when, or under what circumstances, Rent will arise.

Let us suppose that there is a large tract of country belonging to a landlord, either the State, or a private person, and comprising many different kinds of soil of varying fertility.

Now suppose that any portion of this soil is parcelled out among families in such a way that each family has got only just exactly enough for its own subsistence. These placed on the better lands will of course require a smaller amount of land than these placed on inferior lands.

Now if the land were parcelled out in this way, it is manifest that these families could pay no rent for the land, because they have no surplus produce to pay, as rent.

Again, let us suppose the same land parcelled out among a number of families, each with a very much larger portion of land in their possession than is necessary for their subsistence. Then as each family would be able to maintain itself entirely on its own land, it is evident they could pay no rent, as there would be nobody to purchase any produce they might raise above their own wants. (Supposing that they did not export it to foreign markets.)

Supposing while the land is parcelled out in this way, a town springs up. Then of course the inhabitants of the town cannot raise food for themselves, and the tenants in the country would find it profitable to grow food to sell to the dwellers in the

town.

Of course when the town was very small the demand would be very small, and therefore the price low; and therefore it would only pay to bring in corn from the land nearest the town. But as the numbers in the town increased, the demand would increase, the price of the corn would increase, the rent of the land nearest the town would increase, and then it would pay to bring corn from the second zone of land. As the town continued to increase, the demand would still more increase, the

price would go higher still, the rent in the first and second zones would increase, and then it would pay to bring the corn from the third zone, and so on.

It is also clear that if there were only one centre of population, the price of the corn arising from the demand, would indicate the greatest cost that could be incurred in bringing the corn to market. And as this cost increased, there would be a zone from which it would just pay with ordinary profits to bring the corn to market, but which could pay no rent.

Now Ricardo says that it is the cost of producing the corn from this outmost zone which regulates the price of all the corn sold in the market.

We say it is manifestly exactly the reverse.-It is the price of the corn in the market which indicates the position of this

zone.

1

Ricardo says "When in the progress of society land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality."

We say it is exactly the reverse, and that it is—When rent commences on land of the first degree, land of the second degree will be taken into cultivation.

Ricardo says " When land of the third quality is taken into cultivation, rent immediately commences on the second. At the same time the rent of the first quality will rise."

We say it is exactly the reverse, and that it is-When in the progress of society the price of corn rises, the rents on the first and second qualities will rise, and then the third quality will be taken into cultivation.

Ricardo says "When land of an inferior quality is taken into cultivation, the exchangeable value of raw produce will rise, because more labour is required to produce it."

We say that the sentence should have been written thus"When the exchangeable value of raw produce rises, land of an inferior quality will be taken into cultivation, because more labour may be profitably employed to produce it."

Ricardo says "The value of corn is regulated by the quantity of labour bestowed on its production or that quality of land, or with that portion of capital, which pays no rent."

We say it is exactly the reverse and that-The value of corn 1 Principles, ch. ii., on Rent.

indicates the worst quality of land upon which labour may be bestowed without paying rent.

Ricardo says "That corn which is produced by the greatest quantity of labour, is the regulator of the price of corn."

We say it is exactly the reverse, and-That the price of corn indicates the greatest cost which will be employed in producing

corn.

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8. Now we have supposed only one centre of town population and under such circumstances rents would no doubt progressively diminish till they vanished. But what need of supposing only one centre of town population? Let us suppose that there are any number of towns and markets spread all over the country. Then of course these numerous towns will tend to equalize Rents all over the country; and like as in Lombardy, we may suppose them so nearly equally spread over the country that differences of situation are practically annihilated. We may also suppose that equal portions of Capital have been applied to the land: so that the circumstances of an indefinite extent of country are absolutely equal. Now as long as the circumstances of the different parts of the country are different, Ricardo, McCulloch and Mr. Mill allow that Rents may exist; but as soon as the circumstances are absolutely equal all over the countrythe possibility of there being such a thing as Rent ceases to exist!!

Now such is the logical conclusion of the Ricardo Theory of Rent! and we simply ask can such a doctrine be received by any sane man?

We, thus, by this means, eliminate differences of fertility, situation, or application of capital, from the Theory of Rent. What then are the circumstances under which Rent arises? They are these—

1. That the land must belong to a landlord, and be let to a

tenant.

2. That the tenant shall have in his possession a larger amount of land than is necessary for his own maintenance.

3. That the population in some parts of the country be collected in such dense masses that they cannot grow corn for their own subsistence on the land they occupy.

4. That the population in other parts of the country be

scattered so widely that they cannot consume the produce of the soil, but they may sell some of it to the town population.

Under such circumstances the tenants in the country can give their landlords a share of the profits made by selling the corn to the townspeople, and that share is called Rent.

9. Moreover the payment of Rent has no influence on the price of corn, because it is not part of the cost of production, but it is a share of the profits.

The proof of this will be an excellent example of the truth of the General Equation of Economics we established in a former chapter it will also well exemplify a principle of great importance in the Theory of Taxation.

In many foreign towns an octroi, or custom house, is placed at the gates, at which duties are levied on all articles of food brought into the town.

Now suppose A keeps a farm outside the town, and brings his produce to the market. He is charged an octroi duty at the gates. This duty is part of the cost of production, i. e., of placing the produce in the market for sale. Hence he will add the duty to the price of the article, and the townsmen must pay it. Hence of course a tax on the product will raise its price.

Now if A is the possessor of the farm by himself, he will reap all the profits made by it. If he has a partner B, the same quantity of produce is brought into the market; but A and B will share the profits between them. A, no doubt, will have a less profit than if he was sole owner of the farm. But it is quite evident that because A has a partner B, and must share the profits with him, that can have no effect on the price of the produce. For this reason-the same quantity is raised from the farm and offered in the market, and there is the same demand for it. Hence it is clear that a tax on the product raises the price of the product, but a share of the profits will not.

Now suppose A and B are landlord and tenant. Then the produce is raised and brought to market; and the tenant pays the landlord a stipulated share of the profits. That cannot have any effect on the price of the produce, because it neither alters the demand nor the supply. Hence the price of corn cannot be affected whether a single person produces it, or whether two do so in partnership. That is to say, it has no effect on the price of