We have spoken of Wages and of Profits.We have now to speak of Rent.
Rent is what is paid for the use of Land.Rent is an element of price in a different way from Wages and Profits.
Smith, p.67, speaks as follows:
"Rent, it is to be observed, therefore, enters into the composition of the price of commodities in a different way from wages and profit.High or low wages and profit are the causes of high or low price; high or low rent is the effect of it.It is because high or low wages and profit must be paid in order to bring a particular commodity to market, that its price is high or low.But it is because its price is high or low, a great deal more, or very little more, or no more, than what is sufficient to pay those wages and profit, that it affords a high.rent, or a low rent, or no rent at all."Smith's view of the gradations of rent in different kinds of land is excellent.He begins from the fundamental principle that land almost everywhere can produce more food than is expended in raising the produce and replacing the stock.Something therefore always remains for rent to the Landlord.
He then takes examples (Smith, pp.67-69)"The most desert moors in Norway and Scotland produce some sort of pasture for cattle, of which the milk and the increase are always more than sufficient, not only to maintain all the labour necessary for tending them, and to pay the ordinary profit to the farmer or owner of the herd or flock, but to afford some small rent to the landlord.The rent increases in proportion to the goodness of the pasture.The same extent of ground not only maintains a greater number of cattle, but as they are brought within a smaller compass, less labour becomes requisite to tend them, and to collect their produce.
The landlord gains 1)0th ways; by the increase of the produce, and by the diminution of the labour which must be maintained upon it.
The rent of land 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 shewn, is generally higher than in the neighbourhood of a large town.
A smaller proportion of this diminished surplus, therefore, must belong to the landlord.
Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon a level with those in the neighbourhood of the town.They are upon that account the greatest of all improvements.They encourage the cultivation of the remote, which must always be the most extensive circle of the country.
They are advantageous to the town, by breaking down the monopoly of the country in its neighbourhood.They are advantageous even to that part of the country.Though they introduce some rival commodities into the old market, they open many new markets to its produce.Monopoly, besides, is a great enemy to good management, which can never be universally established, but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self-defence.It is not more than fifty years ago, that some of the counties in the neighbourhood of London petitioned the Parliament against the extension of the turnpike-roads into the remoter counties.Those remoter counties, they pretended, from the cheapness of labour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation.Their rents, however, have risen, and their cultivation has been improved since that time.
"A cornfield of moderate fertility produces a.much greater quantity of food for man, than the best pasture of equal extent.Though its cultivation requires much more labour, yet the surplus which remains, after replacing the seed, and maintaining all that labour, is likewise much greater.If a pound of butcher's meat, therefore, was never supposed to be worth more than a pound of bread, this greater surplus would every where be of greater value, and constitute a greater fund, both for the profit of the farmer and the rent of the landlord.It seems to have done so universally in the rude beginnings of agriculture.
"But the relative values of these two different species of food, bread and butcher's meat, are very different in the different periods of agriculture.
In its rude beginnings the unimproved wilds, which then occupy the far greater part of the country, are all abandoned to cattle.There is more butcher's meat than bread, and bread, therefore, is the food for which there is the greatest competition, and which consequently brings the greatest price.At Buenos Ayres, we are told by Ulloa, four reals (one-and-twenty pence half penny sterling) was forty or fifty years ago the ordinary price of an ox, chosen from a herd of two or three hundred.lie says nothing of the price of bread, probably because he found nothing remarkable about it.An ox there, he says, costs little more than the labour of catching him.But corn can nowhere be raised without a great deal of labour; and in a country which lies upon the river Plate, at that time the direct road from Europe to the silver mines of Potosi, the money price of labour could not be very cheap.It is otherwise when cultivation is extended over the greater part of the country.There is then more bread than butcher's meat.
The competition changes its direction, and the price of butcher's meat becomes greater than the price of bread.
