One reason why, in treating of the distribution of wealth, it is necessary to distinguish land from other sorts of capital, and rent from profit, is because they are subject to quite different laws in regard to variations in their values, laws which impel those variations in a directly contrary direction in the progress of society,-the value of land and the amount of rent being found uniformly to increase in consequence of the increase of population and wealth; whereas under the same circumstances, and after a certain progress has been made, the value of capital and the amount or rate of profit is found as uniformly to decrease.

When, therefore, capital is sunk upon the land in such a manner as that it cannot be removed from it, it is then perfectly identified with the land, and the revenue arising from it is properly rent, as partaking of the same nature, and being subject to precisely the same laws and vicissitudes with rent. But the capital which is employed in the ordinary cultivation of the land, and which can be removed from it either annually or in the course of a few years' rotation of crops, retains all the character of ordinary mercantile capital, and its revenue is profit.*

From the following note, inserted at the end of his chapter on "Poor-Rates," it plainly appears that Mr Ricardo had himself discovered the faultiness of his definition of rent at that period of his work. "In a former part of this work," Mr Ricardo here says, "I have noticed the difference between rent, properly so called, and the remuneration paid to the landlord under that name, for the advantages which the expenditure of his capital has procured to his tenant; but I did not perhaps sufficiently distinguish the difference which would arise from the different modes in which this capital might be applied. As a part of this capital, when once expended in the improvement of a farm, is inseparably amalgamated with the land, and tends to increase its productive powers, the remuneration paid to the landlord for its use is strictly of the nature of rent, and is subject to all the laws of rent. Whether the improvement be made at the expense of the landlord or the tenant, it will not be undertaken in the first in

And, in like manner, a capital reserved in money,-as, for example, a mortgage over an estate-produces interest; but a capital invested absolutely in land produces rent; as may be seen when the mortgagee has foreclosed, and the estate is given up to him; his revenue is then converted into rent, and becomes subject to all the laws and accidents which regulate and influence the value of the land and the amount of its revenue.

I conclude this section then with affirming, as I think I may be fully warranted to do, that rent is the price paid, not merely "for the use of the original and indestructible powers of the soil," but for the use of the land as it is, in its actual condition and circumstances.

stance, unless there is a strong probability that the return will at least be equal to the profit that can be made by the disposition of any other equal capital; but when once made, the return obtained will ever after be wholly of the nature of rent, and will be subject to all the variations of rent. Some of these expenses, however, only give advantages to the land for a limited period, and do not add permanently to its productive powers; being bestowed on buildings, and other perishable improvements, they require to be constantly renewed, and therefore do not obtain for the landlord any permanent addition to his real rent."-Principles of Pol. Econ. p. 326; second edition.

Here we see that Mr Ricardo had, at the advanced part of his work, where we find the above note, studied himself fairly out of his theory; but why then did he not return back and cancel what he found to be erroneous and insufficient? The concessions made in this note constitute a complete renunciation in substance of the definition of rent he had previously given. As, however, that renunciation was not made in express terms, and as the definition itself continues still to be adhered to by Mr Ricardo's followers, even in the face of the above renunciation, it was necessary to expose its fallacy and insufficiency somewhat more at large than had previously been done, and at the same time to vindicate the soundness of Dr Smith's definition, both of which objects have, I trust, been sufficiently accomplished in the present section.

SECTION II.

OF THE CIRCUMSTANCES WHICH REGULATE THE AMOUNT OF RENT AT ANY PARTICULAR TIME OR PLACE.

WE come now to inquire into the circumstances which regulate the amount of rent at any particular time or place, or which cause it to be higher or lower at any one time or in any one place than another.

And here, in approaching this question, it is most obvious to remark, (though the circumstance has been the least noticed or attended to of any,) that the highness or lowness of the rent of any portion of land will depend chiefly on the populousness or otherwise of the place, country, or neighbourhood, where it is situated; that is to say, the rent of land will be high where it is thickly-peopled, and low where it is thinly-peopled, and the contrary.

The riches or poverty of the population, and the fertility or barrenness of the land, are also circumstances which add necessarily to the highness or lowness of rent.

High rent is owing therefore to three circumstances:-(1.) To the populousness of the neighbourhood where it is situated; (2.) To the riches and industry of the population; and (3.) To the natural fertility of the land itself. Low rent, again, is owing to the three opposite circumstances,—namely, (1.) To the smallness of the number of inhabitants in proportion to the extent of ground they occupy; (2.) To their poverty; and (3.) To the comparative barrenness of the land itself.

"The rent of land," says Dr Smith, "not only varies with its fertility, whatever be its produce, but with its situation, whatever be its fertility. Land in the neighbourhood of a town gives a greater rent than land equally fertile in a distant part of the country. Though it may cost no more labour to cultivate the one than the other, it must always cost more to bring the produce of the distant land to market. A greater

quantity of labour, therefore, must be maintained out of it; and the surplus, from which are drawn both the profit of the farmer and the rent of the landlord, must be diminished. But in remote parts of the country the rate of profits, as has already been shown, is generally higher than in the neighbourhood of a large town. A smaller proportion of this diminished surplus, therefore, must belong to the landlord."*

Local position therefore, in regard to nearness to or distance from the towns or masses of the population, is a circumstance of the very first consideration in the question of rent; insomuch that a piece of land perfectly barren,-even a bare rock in the centre of those masses,-will give a high rent, whilst the most fertile field, if removed very far from them, will give none at all.

And yet the rent of land has been described by the Ricardo economists as depending entirely on the difference of its qualities, or fertility, in different fields or parts, to the exclusion of every other consideration. But if this were so, why is it that the rent of land of the same quality is higher in the neighbourhood of London, and Manchester, and Edinburgh, and Glasgow, and the other great towns of England and Scotland, than it is at a distance from them? -Or why is the rent of land of the same, or even of inferior quality, higher in Great Britain than in America, and in America than in New Holland or Van Diemen's Land?— Nevertheless the Ricardo economists must have a new and great discovery, and a theory quite simple, whether dame Nature will or no.

In the discussion of this question indeed some slight notice is commonly taken, and some transient reference made, even by the Ricardo economists, to local position as affecting rent; but the consideration is only stated to be at once

• Wealth of Nations, book i. chap. 11.

thrown aside and neglected; every thing being immediately and constantly afterwards ascribed to difference of fertility exclusively.

Thus, in his chapter on rent, Mr Ricardo takes a slight notice in the outset of the former circumstance; but he immediately dismisses from his thoughts all farther consideration of it, and leaves it wholly behind him, dwelling constantly afterwards on the latter circumstance, and ascribing to it exclusively the entire influence in regulating rent throughout his whole subsequent reasonings.

In the chapter just mentioned, Mr Ricardo observes," If all land had the same properties, if it were boundless in quantity and uniform in quality, no charge could be made for its use, unless where it possessed peculiar advantages of situation. It is only, then, because land is not boundless 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."

Here we have the effect of local situation acknowledged for once plainly and distinctly enough. But this is all that is ever done by Mr Ricardo ;-he here stops short at once, and, dismissing the consideration for ever from his thoughts, proceeds immediately on the instant, and in the very next succeeding sentence, as if no such acknowledgment had ever escaped his lips!" When in the progress of society," he immediately continues, "land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality, and the amount of that rent will depend on the difference in the quality of these two portions of land."+

Here we observe the consideration of local position dismissed at once with contempt, and find ourselves called upon

• Principles of Political Economy, chap. 2.

+ Ibid.