Chapter X: Section CLIII: Theory of Rent. (continued.)

Ricardo says that rent can never, not even in the slightest degree, constitute an element in the price of corn. This is certainly not a very happy way of expressing the truth, that a high rent is not the cause, but the effect, of a relatively high price of corn.[153-1] Ricardo would have been nearer right had he said that rent was not a component part of the price of every portion of the supply of corn brought to market.

Is rent an addition to national income? Ricardo (ch. 31) answers this question in the negative, and says that it takes from the consumers what it gives to the owners of the land, and that it increases only the value in exchange of the national wealth.[153-2] It is evident that as thus stated, the question is not properly put. Neither interest on capital nor wages are any addition to a nation's income, but, like rent, only forms of trade, by means of which that income is distributed among the individuals constituting the nation. (§ 201.)

The special kind of product obtained from a piece of land influences its rent only in so far as the growth of that kind of product is exclusively confined either by nature, privilege or prejudice to certain land.[153-3] Adam Smith is of opinion that the rent of agricultural land is ordinarily (!) one-third of the gross product; that of coal mines, from one tenth to a maximum of one-fifth; of good lead and tin mines, one sixth (with the dues paid the state of twenty-one and two-thirds per cent.); of Peruvian silver mines, scarcely one-tenth; of gold mines, one-twentieth. And he thinks that rent grows less certain for every succeeding article.[153-4]

So far as this is based on facts, it may be explained as follows: The greater capacity an article has for transportation from one place to another, the less important is advantage of situation, which is generally one of the chief elements of rent. The more indispensable the commodity is, the more readily is the consumer induced to pay a price for it greater than the cost of production; that is, to pay a rent. This again is enhanced by the difficulty of the preservation of the commodity. Lastly, the more it is a mere product of nature,[153-5] the more difficult it is to simultaneously employ several portions of capital of different grades of productiveness in its production.

[Footnote 153-1: To be met with in this form even in _Adam Smith_,
Wealth of Nations, I, ch. 11, pr. _John Stuart Mill_, Principles
II, ch. 16, § 6, thus states the matter: "Whoever cultivates land,
paying a rent for it, gets in return for his rent an instrument of
superior power to other instruments of the same kind for which no
rent is paid. The superiority of the instrument is in exact
proportion to the rent paid for it." According to _v. Jacob_,
Grundsätze der Nat. Oek., I, 187, rent constitutes a much larger
portion of the price of commodities than is generally supposed, in
as much as wages depend so largely on the price of the means of
subsistence. Per contra, _Baudrillart_, Manuel, 391 ff., who
maintains that rent is practically insignificant.]

[Footnote 153-2: Similarly _Buchanan_, loc. cit., and _Sismondi_,
Richesse commerciale, I, 49. Compare contra, _Malthus_, Inquiry
into the Nature and Progress of Rent, 15. I would call attention
_en passant_ to the absurdity that there may be an increase in the
value in exchange of a nation's entire resources without any
increase in its value in use. (_Supra_, § 8.)]

[Footnote 153-3: Thus _Adam Smith_ remarks that corn fields and
rice fields pay very different rents, because it is not always
possible to convert one into the other. (Wealth of Nat., I, ch. 11,
1.) Compare the tabular statistical view of the rent of land used
for vineyards, gardens, meadows, pasturages, wood and farming
purposes, in _Rau_, Lehrbuch, I, § 218. For a general theory of the
rent of wooded land, see _Hermann_, Staatsw. Unters., 177 ff.; of
vineyards, 181 seq.]

[Footnote 153-4: _Adam Smith_, Wealth of Nat., I, ch. 11, 3.]

[Footnote 153-5: It is hereby rendered akin to those low stages of
civilization in which no rent is paid.]