CONVERSATION XII.

ON REVENUE DERIVED FROM PROPERTY IN LAND.

RENT THE EFFECT, NOT THE CAUSE, OF THE HIGH PRICE OF AGRICULTURAL PRODUCE.-CAUSES OF

RENT; 1. THE FERTILITY OF THE EARTH; 2. DIVERSITY OF SOIL AND SITUATION REQUIRING DIFFERENT DEGREES OF EXPENSE TO RAISE SIMILAR PRODUCE. ORIGIN OF RENT. RENT INCREASES POSITIVELY IN A PROGRESSIVE COUNTRY, AND DIMINISHES RELATIVELY.-HIGH PRICE OF RAW PRODUCE NECESSARY TO PROPORTION THE DEMAND TO THE SUPPLY.

I

CAROLINE.

HAVE been reflecting much upon the subject of revenue, Mrs. B.; but I cannot comprehend how farmers can afford to pay their rent if they do not make more than the usual profits of capital. I had imagined that they began by raising greater produce from the same capital than merchants or

manufacturers, but that the deduction of their rent eventually reduced their profits below those of other branches of industry.

MRS. B.

You were right in the first part of your conjecture; but how did you account for the folly of farmers in choosing a mode of employing their capital which, after payment of their rent, yielded them less than the usual rate of profit?

CAROLINE.

I believe that I did not consider that point. I had some vague idea of the superior security of landed property; and then I thought they might. be influenced by the pleasures of a country life.

MRS. B.

Vague ideas will not enable us to trace inferences with accuracy, and to guard against them we should avoid the use of vague and indeterminate expressions. For instance-when you speak of the security of landed property being advantageous to a farmer, you do not consider that in the capacity of farmer a man possesses no landed property; he rents his farm; if he purchases it, he is a landed proprietor as well as a farmer. It is not therefore the security of landed property which is beneficial to a

farmer, but the security or small risk in the raising and disposing of his crops.

A farmer, when he reckons his profits, takes his rent into consideration; he calculates upon making so much by the produce of his farm as will enable him to pay his rent besides the usual profits of his capital; he must expect therefore to sell his crops ́so as to afford that profit, otherwise he would not engage in the concern. Farmers then really produce more by the cultivation of land than the usual rate of profit; but they are not greater gainers by it, because the surplus is paid to the landlord in the form of rent.

CAROLINE.

So then they are obliged to sell their produce at a higher price than they would otherwise do, in order to pay their rent; and every poor labourer who eats bread contributes towards the maintenance of an idle landlord?

MRS. B.

You may spare your censure, for rent does not increase the price of the produce of land. It is because agricultural produce sells for more than it cost to produce, that the farmer pays a rent. Rent is therefore the effect and not the cause of the high price of agricultural produce.

CAROLINE.

That is very extraordinary! If landed proprietors exact a rent for their farms, how can farmers afford to pay it, unless they sell their crops at a higher price for that purpose?

MRS. B.

A landlord cannot exact what a tenant is not willing to give; the contract between them is voluntary on both sides. If the produce of the farm can be sold for such a price as will repay the farmer the usual rate of profit on the capital employed, and yet leave a surplus, farmers will be found who will willingly pay that surplus to the landlord for the use of his land.

CAROLINE.

But if the profits of agriculture are not the effect of rent, why are they not reduced by competition, and brought down to the usual rate of profit? Why does not additional capital flow into that channel, and by increasing the supply of agricultural produce reduce its price?

MRS. B.

Agriculture is not, like manufactures, susceptible of an unlimited augmentation of supply. If hats and shoes are scarce, and sell at extraordinarily high prices, a greater number of men will set

increasing the quantity of those commodities reduce their price. But land being limited in extent, farmers cannot with equal facility increase the quantity of corn and cattle. It might however be done to a very considerable extent by improvements in hnsbandry, and bringing new lands into cultivation. But to whatever extent this were accomplished, it would not have the effect of permanently diminishing the price of those commodities which constitute the necessaries of life, because population would increase in the same proportion, and the additional quantity of subsistence would be required to maintain the additional number of people; so that there would remain (after allowing a short period for the increase of population) the same relative proportion between the supply and the demand of the necessaries of life, and, consequently, no permanent reduction of price would take place. The necessaries of life therefore differ in this respect from all other commodities; if hats or shoes increase in plenty they fall in price, but the necessaries of life have the peculiar property of creating a demand in proportion to the augmentation of the supply.

CAROLINE.

So that the country no sooner produces the bread than it produces the mouths to eat it.