agriculture, owing to the manner in which nature cooperated with human effort, that the proceeds of the crop were always sufficient to leave a surplus after replacing capital with the ordinary profit. The least consideration, however, will show that this explanation fails to solve the difficulty; since whatever be the fertility of the soil and the abundance of the crop, it will depend upon the price at which the latter is sold, whether the proceeds of its sale shall leave a surplus value or not. The question, therefore, still remains-what are the causes which determine the price of agricultural produce? And how does it happen that this price is sufficient, not only to cover cost of production with average profits, but also to yield a permanent surplus value in the shape of rent? The answer to this question involves the solution of the problem.

The only answer which Adam Smith gave to it was to this effect, that the demand for human food was always, and the demand for other kinds of agricultural produce was generally, so great, that these could command in the market a price which was more than sufficient to indemnify the farmer, and that the surplus value naturally went to the landlord. This, however, still left the problem unsolved, and moreover implied an incorrect view of the laws of value; since, in the case of a commodity like corn, which may be produced in any quantity required, the price at which it sells does not, except during short intervals, depend on the extent of the demand for it, but on the cost of

its production. An increase in the demand for a manufactured article, e. g. generally leads, as soon as the supply has had time to adjust itself to the change, to a fall in the price, owing to the circumstance that manufactured articles are generally produced at less cost when produced on a large scale. The demand for cotton goods has probably been decupled in the course of the last half century, but this has simply resulted in a decupled supply produced at a cheaper cost and sold at a proportionately lower price. How does it happen then, that the demand for human food does not operate in the same way? If, indeed, food were a strictly monopolized article, if only a limited quantity of it could be produced, we might understand how an increase of demand for it might permanently keep up its price above the cost of its production. But though land be a strictly monopolized article (at least in all old countries), food is not so, since the quantity of food which may be raised from a limited area of land, though not infinite, is indefinite; and the maximum has never yet been reached, or nearly reached, in any country, and probably never will. The question, therefore, again recurs-how does it happen that the increased demand for food does not operate in the same way as the increased demand for clothes, or shoes, or hats, or other manufactured articles? How does it happen that the price permanently remains at such a point as to leave a permanent surplus value over and above what is requisite to pay cost of production with the usual profit? This is a question

which Adam Smith failed to answer; and he consequently failed to solve the problem of rent.

The first writer who gave the true answer to this question was, I believe, Dr. Anderson, in a work published in 1777; but it remained for Ricardo fully to perceive the importance of the principle involved, and to trace its influence in its various bearings on the laws of the production and distribution of wealth.

The answer to the question is as follows :

Agricultural produce is raised at different costs, owing to the different degrees of fertility of different soils; owing also to this, that even of that corn which is raised on the same soil, the whole is not raised at the same cost. Now, in order that that portion of the general crop of the country which is raised at greatest expense be raised-that is to say, in order to induce the cultivation of inferior lands and the forcing of superior lands up to such a point as shall secure to the community the quantity of food required for its consumption, the price of agricultural produce must rise at least sufficiently high to indemnify with the usual profits the farmer for this—the least productive-portion of his outlay. If the price were not sufficient for this, the farmer would withdraw his capital from the production of that portion of his crop which is raised at greatest expense, and would invest it in some other business in which he had a fair prospect of average profits.* Now there

* It will perhaps be said that the farmer would not withdraw his capital under the circumstances; that, being liable to his landlord for

are never two prices for the same article in the same market. It is nothing to the consumer what may be the cost at which the article is raised he simply looks to getting what he requires as cheaply as he can. If, therefore, the price of agricultural produce be such as to cover with ordinary profits the cost of that 3 portion of the general crop which is raised at greatest expense-and I have shown that it must be this at least-it will be more than sufficient to cover with ordinary profits the cost of that portion which is raised at less expense. There will, therefore, be on all that portion a surplus value over and above what is sufficient to replace the capital of the farmer with the usual profit; and this surplus value is the precise phenomenon of rent which it is the object of the theory to account for.

Such briefly is the theory of rent as expounded by Ricardo, "the pons asinorum of Political Economy,"

his rent, he will get the most he can out of his land, whatever be the price of agricultural produce. I hold, however, that a capitalist farmer (and it is only to such that the reasoning applies) would certainly do nothing of the kind. If he have made a bad bargain, and undertaken to pay rent for land of such indifferent quality, that the produce at the current prices will not replace his capital with the ordinary profits, it will be much better for him to put up, once for all, with the first loss, to allow his land to lie waste, and to turn his capital into some employment in which it will yield him ordinary profits, than to continue throwing good money after bad by farming at a loss. And this is practically what every farmer does whose lease comprises lands too poor for profitable cultivation. He simply does not cultivate such land. Instead of employing his surplus capital in the unprofitable cultivation of such portions of his farm, he allows them to lie waste, and invests his spare cash in railway stock, in the funds, or in some other undertaking which promises average profits.

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as Mr. J. S. Mill calls it. When you have thoroughly mastered this principle, you will find that you have the key to the most important problems of the production and distribution of wealth. The doctrine, however, is one which is peculiarly liable to misconception; it has been, and, I regret to say, is still the subject of much controversy. It may be well, therefore, to state more fully the grounds on which it rests, and to point to some of the consequences to which it leads.

In the first place, what are the assumptions on which the theory of rent is founded? It assumes, first, that of the whole agricultural produce of the country, those portions which in the market are on an average sold at the same price are not all on an average raised at the same cost; and secondly, that the price at which the whole crop sells is regulated by the cost of producing that portion which is produced at greatest expense. If these two points be granted, the existence of a "surplus value" is a logical necessity which it is impossible to evade; and if we take, further, into account the motives which actuate men in the pursuit of wealth, we shall see that it is equally a logical necessity, that this "surplus value" should go, as "rent," to the proprietor of the soil. sideration will make this evident. If corn be raised at different costs, and if the price be such as to cover with ordinary profits the cost of the most costly portion, it must be more than sufficient to cover with ordinary profits the cost of the less costly portion. In the case, therefore, of all agricultural produce

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