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SIX LECTUEES
ON
POLITICAL ECONOMY.
©ambviUgc :
PKINTED BY C. J. CLAY. M.A.
AT THE UNIVERSITY PRESP.
SIX LECTURES
o>'
POLITICAL ECONOMY
DELIVERED AT CAMBRIDGE IN
MICHAELMAS TERM, 1861
BY
W. WHEWELL, D.D.
MASTER OF TRINITY COLLEGE.
CAMBRIDGE :
PRINTED AT THE UNIVERSITY PRESS.
1862.
TO
HIS ROYAL HIGHNESS
THE PRINCE OF WALES.
Sir,
I loas deeply sensible of the honour of having
to deliver the folloiving Lectures to your Roycd High-
7iess, hy the direction of your illustrious Father, ujyon
whose virtues and wisdom I look hack with a vene-
ratio7i ivhich I cannot express.
It ivas a high gratif cation to one to have your
Royal Highness s attention given to these Lectures with
that intelligence and punctucdity ivhich your Royal
Highness gave to all your University occupations.
As the matter of the Lectuo^es requires 7xpeated
thought, I have wished, for my oion satisfaction at
least, to put it in a more permanent form than a
spoken lecture.
vi DEDICATION.
If it had 2^^eased our Almighty Father to spare
to us a little longer your great and good 2^ct'i"ent, his
wisdom might have selected for your Royal Highness s
further consideration what is best ivorth notice in what
I have said. I venture to hope that the great Problems
ivhich I have had to deal ivith in Lectures V. and
VI. — namely, the nature of the recent agricidtural pro-
gress of England, and the chayiges ivhich are taking
pilace in the other loarts of the vast British Empire —
must be regarded by your Royal Highness with in-
terest, even if the solutions ivhich I have given of those
problems be i7icom2)lete.
With a firm confidence that the destinies of this
Land and of this Empire, so far as they depend upon
your Royal Highness s goodness of heart and willing-
ness to listen to enlightened counsels, are fidl of the
brightest promise, and with prayers that your Royal
Highness may long enjoy the happiness of which yoi{
have now the near prospect,
I have the honour to be
Your Royal Highnesss
Most faithful and devoted Servant,
W. WHEWELL.
PREFACE.
THE following Lectures were delivered at the re-
quest of one of the wisest and best fathers
who have ever lived, for the instruction of a son on
whose education he bestowed much careful thought :
and indeed that education was a matter of national
as well as of family concern. He kindly judged that»
I could deliver a short course of Lectures on Political
Economy which might forward his purpose : and I
willingly undertook the task, rendered acceptable by
the prospect of submitting to him afterwards the
purport of what I had said in the Lectures ; and of
having the gratification and the advantage of hearing
his remarks, instructive and interesting as they always
were. This satisfaction I was not permitted to enjoy.
The Allwise Disposer did not allow the father to see
with his earthly eyes the completion of his well-de-
vised plans for his son's education : though I doubt
not that those plans will bear their fruit in national
blessings.
viii PREFACE.
The scheme of the following Lectures will, I hope,
carry wdth it its own excuse. It seemed to me unwise
on such an occasion to aim at any originality beyond
that which selects the best passages of writers of ac-
knowledged authority and weighs them against one
another. And though the extracts given in the earlier
of the following Lectures may by some be thought
lightly of, as being common-places, they are common-
places which young men of rank, such as those to
whom these Lectures were addressed, ought to know,
and which they were not likely to learn unless tliey
were brought before them in some such way as this.
The later extracts and the reflexions which I have
added to them will be found, I think, to contain
views of which the imj^ortance is now only begin-
ning to be duly felt.
Trinity Lodge,
Dec. 1 8, 1862.
The following are the editions of books which are principally
I'eferred to in the followins Lectures :
-'o
Smith's Wealth of Nations, edited with Notes by J. R. M'Culloch.
5th edition, 1859.
J. R. M^Culloch, Art. Political Economy in the Encyclopcedia
Britannica, recast, and in 1825 published as Principles of Political
Econoray ; and in several subsequent editions.
Malthus, On Definitions in Political Economy. 183 1.
Ricardo, Pi-inciples of Political Economy and Taxation. 1817.
Chalmers's Political Economy, in connexion with the Moral State
and Prospects of Society. 1S32.
Harriet Martineau, Illustrations of Political Economy. 1832, &c.
Senior, Appendix to Whately's Elements of Logic. 1848.
Travers Twiss, View of the Progress of Political Economy. 1847.
Jones, On Wealth and Taxation: Part I. Rent. 1831.
John Stuart Mill, Principles of Political Economy. 1848.
De Lavergne, Essai sur I'Economie Rurale de 1' AngleteiTe. 1858.
F. Bastiat, Essays on Political Economy, (English Translation.
1853)-
CONTENTS.
LECTUEE I.
PAGE
Of the Propriety of cei'tain Terms employed in Political Eco-
nomy .......... I
What is Wealth] 2
Is the distinction of Pi-oductive and Unproductive Labour a
solid distinction] ........ 5
LECTURE 11.
The Components of Price are Wages, Profit,
Exceptions to the above . . . .
Fixed and Cii'culating Capital
Rent
20
26
28
LECTURE IIL
Difi'erent Effects of Fixed and Circulating Capital on Price
Profits are not the result of Labour
Ai'e Profits justifiable ?
Mercantile Price is meant
Natural Price and Market Price .
Value in Use and Value in Exchange
Demand and Supply
32
34
40
42
44
46
48
LECTURE IV.
Pent .......
Rent under Different Circumstances
Pasture and Tillage ....
Doctrine of Rent .....
53
55
57
60
Xll
CONTENTS.
LECTURE V.
The Doctrine of Rent .......
Recent Rise of Rents in England, how prochiced
Ricardian Doctrine .......
True Cavise : Auxiliary Capital .....
France and England .......
Proportion of Agricultural and Non-agi'icultural Population
Different Kinds of Rent ......
Competition and Custom ......
Serfs and Metavers .......
PAGE
62
65
67
70
74
76
78
81
LECTURE VL
Transitions of Forms of Rent.
Transition from Metayer Rents . . ...
83
Progress of England .......
85
State of France ........
87
Transition from Serf Rents ......
89
Transition from Ryot Rents. .....
92
Transition from Cottier Rents .....
95
Ireland . . . . . . . . .
97
The Future
102
LECTURES
ON
POLITICAL ECONOMY.
LECTURE I.
Of the P^'opriety of certain Terms emj^loi/ed in Political
Economy.
MY object in these Lectures on Political Economy
will be to explain the opinions which have been
delivered on some of the leading questions belonging
to the subject by successive eminent writers, and to
decide among these. I propound no system of my own.
If I can make my hearers know, understand, and esti-
mate some of the most striking and more imj^ortant
passages of the best writers on Political Econom}^, this
will be the best instruction which I can give on the
subject. And I may add, that these important passages
— standard and classical passages we may call them —
are important in literature as well as in Political Eco-
nomy; so that a person versed in English literature
is expected to know such specimens of our eminent
authors.
Some of these questions are questions of Definition
— questions whether this or that is the proper Defi-
1
2 rROPRIETY OF TERMS. [Lect. I.
nition of certain words. Other sciences as well as Po-
litical Economy have had such controversies in the
course of their history; and you may think perhaps
that such questions are of little consequence, since they
are questions of words only. You ask, may we not de-
fine our terms as we please ? No : for we must define
our terms so as to be able to assert True Propositions.
The science of Political Economy does not rest upon
Definitions. It rests upon facts. But facts are to be
described in a general manner — that is, by means of
general terms. And these terms should be well chosen,
so as to enable us to assert true Proi^ositions. If our
Definitions do this, they are not bad, merely because
the boundary cases are perplexing.
What is Wealth f
We cannot do better than besfin with Adam Smith's
Wealth of Nations. It is a book on which all subse-
quent books on Political Economy rest. And it is a
book full of actual facts, and not of mere hypothetical
cases.
Now speaking of the Wealth of Nations, what do
we mean by Wealth ? What is iho, Definition of it ?
We will see what Mr Malthus says (Malthus, Def.
in Polit. Econ. p. lo) :
" In adverting to the terms and definitions of Adam
Smith, in his Wealth of Nations, I think it will be
found that he has less frequently and less strikingly
deviated from the rules above laid down, and that he
has more constantly and uniformly kept in view the
paramount object of explaining in the most intclligilJe
Lect. I.] WEALTH. 3
manner tlie causes of the wealth of nations^ according
to the ordinary acceptation of the expression, than any
of the subsequent writers in the Science^ who have
essentially differed from him. His faults in this respect
are not so much that he has often fallen into the com-
mon error, of usinsf terras in a different sense from that
in which they are ordinarily applied in society, but
that he is sometimes deficient in the precision of his
definitions ; and does not always, when adopted, adhere
to them with sufi&cient strictness.
''His definition of wealth, for instance, is not suffi-
ciently accurate ; nor does he adhere to it with sufficient
uniformity: yet it cannot be doubted that he means by
the term generally the material products which are
necessary, useful, and agreeable to man, and are not
furnished by nature in unlimited abundance ; and I own
I feel quite convinced that it is in this sense in which
it is most generally understood in society, and in which
it may be most usefully applied, in explaining the
causes of the wealth of nations."
On the same subject we have Mr Senior's remarks,
which occur in an Appendix to Dr Whately's Logic.
" Wealth.- — Lord Lauderdale has defined wealth to
be 'all that man desires.' MrMalthus, 'those material
objects which are necessary, useful, or agreeable.'
Adam Smith confines the term to that portion of
the results of land and labour which is capable of
beinof accumulated. The French Economists, to the
net produce of land. Mr M^'CuUoch and Mr Storch,
to those material products which have exchangeable
value : according to Colonel Torrens, it consists of
articles which possess utility and are produced by
1 — 2
4 PROPRIETY OF TERMS. [Lect. I.
some portion of voluntary effort. M. Say divides
wealth into natural and social, and applies the latter
to whatever is susceptible of exchange. It will be
observed that the principal difference between those
definitions consists in the admission or rejection of
the qualifications ^exchangeable' and 'material.'"
As Mr Senior says, one main point is, whether
wealth shall include what is not material. On this
point Mr Malthus says {Def. p. 71) :
" Mr M'^Culloch, in the Article on Political Eco-
nomy, which he published in the Encyclopedia Britan-
nica, had excluded these kinds of gratification [imma-
terial kinds] from his definition of wealth, and had given
such reasons for this exclusion, as would fully have
convinced me of its propriety, if I had not been con-
vinced before. He observes that, ' if Political Economy
were to embrace a discussion of the production and
distribution of all that is useful and aofreeable, it would
include within itself every other science ; and the best
Encyclopaedia would really be the best treatise on Po-
litical Economy. Good health is useful and delightful,
and therefore, on this hypothesis, the science of wealth
ought to comprehend the science of medicine : civil
and religious liberty are highly useful, and therefore
the science of wealth must comprehend the science
of politics : good acting is agreeable, and therefore,
to be complete, the science of wealth nmst embrace
a discussion of the principles of the histrionic art ;
and so on. Such definitions are obviously worse than
useless. They can have no effect but to generate
confused and perplexed notions respecting the objects
and limits of the science, and to prevent the student
Lect. I.] PRODUCTIVE AXD UXPRODUCTIVE. 5
ever acquiring a clear and distinct idea of the inquiries
in which he is engaged."
The question thus occurs, Do ministers of rehgion,
education, justice ; also poets, actors, physicians, add
to the wealth of a country ?
This question has more commonly been discussed
with reference to Smith's distinction of prof^z^c^i've and
unproductive labour, which we shall therefore consider.
Is the distinction of p)'^oductive and unproductive
labour a solid distinction f
Smith says (TF. N. p. 145) :
*' There is one sort of labour which adds to the
value of the subject upon which it is bestowed ; there
is another which has no such effect. The former,
as it produces a value, may be called productive,
the latter unproductive labour. Thus the labour of
a manufacturer adds generally to the value of the
materials which he works upon, that of his own main-
tenance, and of his master's profit. The labour of a
menial servant, on the contrary, adds to the value of
nothinoc. Thouo^h the manufacturer has his wao-es
advanced to him by his master, he in reality costs
him no expense, the value of those wages being gene-
rally restored, together with a profit, in the improved
value of the subject upon which his labour is be-
stowed ; but the maintenance of a menial servant
never is restored. A man grows rich by employing
a multitude of manufacturers ; he grows poor by em-
ploying a multitude of menial servants. The labour
of the latter, however, has its value, and deserves
6 rnOPRIETY OF TERMS. [Lect. I.
its reward as well as that of the former ; but the
labour of the manufacturer fixes and realises itself in
some particular subject or vendible commodity, which
lasts for some time at least after that labour is past.
It is, as it were, a certain quantity of labour stocked
and stored up, to be employed, if necessary, upon
some other occasion. That subject, or, what is the
same thing, the price of that subject, can afterwards,
if necessary, put into motion a quantity of labour
equal to that which had originally produced it. The
labour of the menial servant, on the contrary, does
not fix, or realise, itself into any particular subject or
vendible commodity. His services generally perish in
the very instant of their performance, and seldom
* leave any trace or value behind them, for which an
equal quantity of service could afterwards be procured."
The distinction of productive and unproductive
labour has been impugned by Mr M^Culloch : but on
a large scale it is well founded, whatever perplexities
there may be in doubtful cases. The leading proposi-
tion on this subject is that which Smith asserts : " A
man grows rich by employing a multitude of manu-
facturers : he grows poor by employing a multitude
of menial servants." The former are called productive,
the latter unproductive labourers : and all labourers
belong to the one or the other as they can best be
classed with the one or the other.
I will take Mr Malthus's account of the character
and general eflfect of the two kinds of labour :
*'Let us suppose two fertile countries with the
same population and produce, in one of which it was
the pride and pleasure of the landlords to employ their
Lect. I.] PRODUCTIVE AXD UNPRODUCTIVE. 7
rents chiefly in maintaining menial servants and follow-
ers, and, in the other, chiefly in the purchase of manu-
factures and the products of foreign commerce. It is
evident that the different results would be nearly what
I described in speaking of the consequences of the
definition of the economists. In the country, where
the tastes and habits of the landlords led them to
prefer material conveniences and luxuries, there would,
in the first place, be in all probability a much better
division of landed property ; secondly, supposing the
same agricultural capital, there would be a very much
greater quantity of manufacturing and mercantile capi-
tal ; and thirdly, the structure of society would be
totally different. In the one country, there would be
a large body of persons living upon the profits of
capital ; in the other, comparatively a very small one :
in the one there would be a large middle class of
society ; in the other the society would be divided
almost entirely between a few great landlords and
their menials and dependents : in the one country good
houses, good furniture, good clothes, and good car-
riages would be in comparative abundance ; while in
the other, these conveniences would be confined to a
very few.
^'Now I would ask, whether it would not be the
grossest violation of all common language, and all
common feelings and apprehensions, to say that the
two countries were equally rich."
But what are the grounds on which it is alleged
that there is no essential difference between productive
and unproductive labour ? They are such as these.
(Malth. Def, p. 75.) " Mr M*=Culloch has discovered
8 PROPRIETY OF TERMS. [Lect. I.
that there is a resemblance between the end accom-
plished by the menial servant or dependent and by
the manufacturer or agriculturist." He says, ^' the end
of all human labour is the same : that is, to increase
the sum of necessaries, comforts and enjoyment, and it
must be left to the judgment of every one to determine
what proportion of the comforts he will have in the
shape of menial services, and what in the shape of
natural products."
Undoubtedly, But the question with us, as Poli-
tical Economists, is not whether men shall employ
one kind of labour or another ; but, what is the effect
of their choice on the wealth of a country ? That the
same end is answered does not make it useless to
classify the means. It is not because a resemblance
may be discovered among the means, that we are to
identify all such means.
Mr Malthus well observes, to this effect :
" Mr M^'CuUoch might unquestionably discover some
7'esemhlance between the salt and the meat which it
seasons : they both contribute, when used in proper
proportions, to compose a palatable and nutritive meal,
and in general we may leave it to the taste and dis-
cretion of the individual to determine these propor-
tions; but are we on that account to confound the two
substances together, and to affirm that they are equally
nutritive ? Are we to define and apply our terms in
such a way as to make it follow from our statements
that if the individual were to compound his repast
of half salt and half meat, it would equally conduce
to Ills health and strength."
Further, tlic matter is thus argued :
Lect. L] productive AND UNPRODUCTIVE. 9
"Mr M'^CuUoc]! states, that a taste for the gra-
tifications derived from the unproductive labourers
of Adam Smith, 'has exactly the same effect upon,
national wealth as a taste for tobacco, champagne, or
any other luxury.'" "This," says Mr Malthus, "may
be directly denied unless we define wealth in such a
manner as will entitle us to say that the enjoyments
derived by a few gi-eat landlords, from the parade of
menial servants and followers, will tell as effectually in
an estimate of wealth as a large mass of manufacturers
and foreign commodities. But when M. Chaptal
endeavoured to estimate the wealth of France, and
Mr Colquhoun that of England, we do not find the
value of these enjoyments computed in any of their
tables. And certainly if wealth means what it is un-
derstood to mean in common conversation, and in the
lansfuao'e of the hig-hest authorities in the science of
Political Economy, no efifects on national wealth can
or will be more distinct than those which result from a
taste for material conveniences and luxuries, and a
taste for menial servants and followers. The exchansfe
of the ordinary products of land for manufactures,
tobacco, and champagne, necessarily generates capital;
and the more such exchanges prevail, the more do
those advantages prevail which result from the growth
of capital and a better structure of society ; while an
exchange of necessaries for menial services, beyond a
certain limited amount, obviously tends to check the
growth of capital, and, if pushed to a considerable
extent, to prevent accumulation entirely, and to keep
a country permanently in a semi-barbarous state."
Dr Travers Twiss, in his View of the Pi^ogress of
10 PROPRIETY OF TERMS. [Lect. I.
Political Economy, states and criticises the opinions of
writers on this subject. He thus gives an account of
Mr Malthus's doctrine on this subject.
Mr Malthus, to avoid the prejudice which prevails
against what is called unproductive labour, had pro-
posed to call such labour j^^f'soncd services. Dr Twiss
remarks,
" Labour then, he" [Mr Malthus] says, " may be
distinguished into two kinds, 2'>^^ocluctive labour, and
perso7ial services, meaning by iwodiictive labour, that
labour M'hich is so directly productive of material
wealth, as to be capable of estimation in the quantity
or value of the object produced, which object is capable
of being transferred without the presence of the pro-
ducer; and meaning hj personal services, that kind of
labour or industry, which however highly useful and
important some of it may be, and however much it
may conduce indirectly, to the j^roduction and security
of material wealth, does not realise itself on any object
which can be valued and transferred without the pre-
sence of the person performing such service, and can-
not therefore be made to enter into an estimate of
national wealth."
" This," says Dr Twiss, "■ though differing in name,
is essentially the doctrine of Adam Smith."
Mr Senior puts the distinction very ingeniously
{Ency. Metrop. art. Polit. Econ.)\
" It appears to us," he writes, '^ that the distinc-
tions that have been attempted to be drawn between
productive and unproductive labourers, or between
the producers of material and inunatcrial products, or
between commodities or services, rest on differences
Lect. I.] PRODUCTIVE AND UNPRODUCTIVE. II
existing not in the things themselves, but in the mode
in which they attract our attention. In those cases
in which our attention is principally called, not to the
act of occasioning the alteration, but to the result of
that act, to the thing (as) altered, economists have
termed the person who occasioned that alteration a
productive labourer, or the producer of a commodity
or material produced. Where on the other hand, our
attention is principally called, not to the thing (as)
altered, but to the act of occasioning the alteration,
economists have termed the person occasioning the
alteration an unproductive labourer, and his exertions,
services, or immaterial products. A shoemaker alters
leather and thread and wax into a pair of shoes. A
shoe-black alters a dirty pair of shoes into a clean
23air, In the first case, our attention is called princi-
pally to the thing as altered. The shoemaker, therefore,
is said to make or produce shoes. In the case of the
shoe-black, our attention is called principally to the act
as performed. He is not said to make or produce the
commodity, clean shoes, but to perform the service of
cleaning them. In each case, there is of course an act
and a result; but in the one case our attention is
called principally to the act; in the other, to the
result."
"It might have been perhaps more correct," says
Dr Twiss, " to have represented the shoe-black as
altering blacking and dirty shoes into clean shoes. If
the shoe-black is a private servant, he is simply an
instrument of his master to assist him in the consump-
tion of blacking, which consumption takes place, not
when it is applied to the boot^ for a clean boot is of
12 PEOrPJETY OF TERMS. [Lect. I.
more value than a dirty boot, but when the boot is
soiled afresh. The master, therefore, really consumes
the blacking, and the servant assists him. On the
other hand, the shoe-black may keep a stall, as is fre-
quently seen in the streets of Paris, and his services
may be at the command of the public : in this case he
is a trader, and supplies clean shoes in exchange for
dirty shoes and money."
Dr Twiss, who praises and apparently adopts this
view, applies it in a particular case in a manner which,
I think, is quite indefensible. He says (p. 177),
"The first machine of Newcomen (constructed in
1765) required the most unremitting attention on tlie
part of the person whose business it was to close and
open incessantly certain cocks (robinets), by which at
one moment the steam was admitted into the C3dinder,
at another, a jet of cold water entered to condense it.
It happened on a particular occasion that whilst a boy
named Humphrey Potter was thus employed, his com-
rades, who were at play, excited him so much by their
cries, that he found himself at last unable to resist
the temptation to join them. But the task imposed
upon him was one which he could not venture to
abandon for a single minute. The excitement of the
moment, however, kindled in him a spark of genius,
and suggested to him certain relations between the
parts of the machine, which he had before not ob-
served. Of the two cocks, one required to be opened
at the moment when the balance rod, which Newcomen
first introduced, completed its descending oscillation,
and to be closed at the conclusion of its ascendinij
oscillation. The operations of the second cock were
Lect. I.] PRODUCTIVE AND UNPRODUCTIVE. 13
just the reverse. There was thus a necessaiy depend-
ence between the movements of the balance-rod and
the opening and shutting of the two cocks, and it
occurred to Potter that the balance-rod might be made
to communicate the necessary motion to the other parts
of the machine. He at once attached cords from the
handles of the cocks to certain parts of the balance-rod,
and found that the tightening and loosening of these
cords, with every ascending and descending oscillation,
would produce the same effect that he hitherto pro-
duced with his hand. For the first time the steam-
engine worked by itself, without any further care than
that of feeding the furnace with coals. More compli-
cated constructions were soon adopted to replace the
simple contrivance of the child; but the origin of them
all was owing to the mere longings of a boy to join
his playfellows."
He adds, "According to Adam Smith's division,
this boy would be classed under the head of unpro-
ductive labourers." But according to Adam Smith's
doctrine this boy must certainly be ranked among pro-
ductive labourers. He was employed in working a
machine; and was just as much a productive labourer
as the draiu-hoy who pulls the sheds of a loom, or as
the weaver who sits and works at the loom.
We are carefully to remember that unproductive
as applied to labourers is not a term of reproach or
condemnation. The standard passage on the subject
is this (Smith's Wecdth of Nations, p. 146) :
" The labour of some of the most respectable orders
in the society is, like that of menial servants, un-
productive of any value, and does not fix or realize
14 PROPRIETY OF TERMS. [Lect. I.
itself in any permanent subject or vendible commodity
which endures after that labour is past, and for which
an equal quantity of labour could afterwards be pro-
cured. The sovereign, for example, M^th all the officers
both of justice and war who serve under him, the whole
army and navy, are unproductive labourers. They
are the servants of the public, and are maintained by
a part of the annual produce of the industry of other
people. Their service, how honourable, how useful,
or how necessary soever, produces nothing for which
an equal quantity of service can afterwards be pro-
cured. The protection, security, and defence of the
commonwealth, the effect of their labour this year, will
not purchase its protection, security, and defence for
the year to come. In the same class must be ranked,
some both of the gravest and most important, and
some of the most frivolous professions ; churchmen,
lawyers, physicians, men of letters of all kinds ;
players, buffoons, musicians, opera -singers, opera-
dancers, &c. The labour of the meanest of these has
a certain value, regulated by the very same principles
which regulate that of every other sort of labour; and
that of the noblest and most useful produces nothing
which could afterwards purchase or procure an equal
quantity of labour. Like the declamation of the actor,
the harangue of the orator, or the tune of the musi-
cian, the work of all of them perishes in the very in-
stant of its production."
Hence the indi conation with which Dr Chalmers re-
jects this term is really uncalled for. In his Political
Economy, his chapter xi. is '' On the distinction made
by Economists between Productive and Unproductive
Lect. I.] PRODUCTIVE AXD UNPRODUCTIVE. 1 5
Labour." He there speaks of the disparagement thus
laid on ecclesiastics and many other orders of men whose
services are indispensable : but there is really no dispa-
ragement intended. He says that it has been recom-
mended as the best policy of a government to abridge
and economize to the uttermost in the maintenance of
unproductive labourers. But this has not been re-
commended by any wise political economists.
Mr Malthus, as I have said, proposes to use the
term personal services instead of unproductive labour.
But there is no occasion for such a change, and it
would not be convenient.
Mr J. S. Mill has an Essay on the terms produc-
tive and unjiroductive labour which is judicious. He
says :
" The end to which all labour and all expenditure
are directed, is two-fold. Sometimes it is enjoyment
immediately ; the fulfilment of those desires, the grati-
fication of which is wished for on its own account.
Whenever labour or expense is not incurred imme-
diately for the sake of enjoyment, and is yet not
absolutely wasted, it must be incurred for the purpose
of enjoyment indirectly or mediately ; by either rej)air-
ing and perpetuating, or adding to the permanent
sources of enjoyment.
"Sources of enjoyment may be accumulated and
stored up ; enjoyment itself cannot. The wealth of
a country consists of the sum total of the permanent
sources of enjoyment, whether material or immaterial,
contained in it : and labour or expenditure which tends
to augment or to keep up these permanent sources,
should, we conceive, be termed productive.
1 6 PROPRIETY OF TERMS. [Lect. I.
'' Labour which is employed for the purpose of
directly affording enjoyment, such as the labour of
a performer on a musical instrument, we term unpro-
ductive labour. Whatever is consumed by such a
performer, we consider as unproductively consumed :
the accumulated total of the sources of enjoyment
which the nation possesses, is diminished by the
amount of what he has consumed ; whereas, if it had
been given to him in exchange for his services in pro-
ducing food or clothing, the total of the permanent
sources of enjoyment in the country might have been
not diminished, but increased.
''The performer on a musical instrument then is,
so far as respects that act, not a productive, but an
unproductive labourer. But what shall we say of the
w^orkman who made the musical instrument ? He,
most persons would say, is a productive labourer;
and with reason ; because the musical instrument is
a permanent source of enjoyment, which does not be-
gin and end with the enjoying, and therefore admits
of beinof acccumulated.
"The skill of a tailor, and the implements he em-
ploys, contribute in the same way to the convenience
of him who wears the coat, namely, a remote way :
it is the coat itself which contributes immediately.
The skill of Madame Pasta, and the building and
decorations which aid the effect of her performance,
contribute in the same way to the enjoyment of the
audience, namely, an immediate way, without any
intermediate instrumentality. The building and de-
corations are consumed unproductively, and Madame
Pasta labours and consumes unproductively ; for the
Lect. I.] PRODUCTIVE AND UXPRODUCTIVE., IJ
building is used and worn out, and Madame Pasta
performs, immediately for the spectator's enjoyment,
and without leaving, as a consequence of the per-
formance, any permanent result possessing exchange-
able value : consequently the epithet unproductive must
be equally applied to the gradual wearing out of the
bricks and mortar, the nightly consumption of the
more perishable ^properties' of the theatre, the la-
bours of Madame Pasta in acting, and of the orchestra
in playing. But notwithstanding this, the architect
who built the theatre was a productive labourer; so
were the producers of the perishable articles ; so were
those who constructed the musical instruments; and
so, we must be permitted to add, were those who
instructed the musicians, and all persons who, by the
instructions which they may have given to Madame
Pasta, contributed to the formation of her talent. All
these persons contributed to the enjoyment of the
audience in the same way, viz. in the production
of a 'permanent source of enjoyment.
"The difference between this case, and the case
of the cotton-spinner already adverted to, is this. The
spinning-jenny, and the skill of the cotton-spinner,
are not only the result of productive labour, but are
themselves productively consumed. The musical in-
strument and the skill of the musician are equally
the result of productive labour, but are themselves
unproductively consumed."
Miss Martineau, in her Tale, Life in the Wilds,
one of her Tales entitled Illustrations of Political
Economy, describes a party of persons who, in a set-
tlement near the Cape of Good Hope, are deprived
2
1 8 TROTEIETY OF TERMS. [Lect. I.
of all tlielr possessions by an onslaught of Caffres, and
have to begin life afresh, without tools, capital, or
social organization. There is an instructive account
given of the manner in which tools and capital are
gradually acquired : and of the manner in which
the wages of labour are paid. And in this case, be-
sides the productive labourers, there is found a need
for a minister of religion and a governor, and these
are also paid, though unproductive labourers ; lyroduc-
tive meaning, as Miss Martineau says, productive of
wealth.
There is nothing unusual in this arbitrary limita-
tion of the meaning of a phrase. 'The Quarterly'
means the Quarterly Review. With us in Cambridge
Hhe Long' means the Long Vacation. In architec-
ture, the ^Decorated style' means that in which the
windows are decorated with tracery. The tenacity with
which some writers have urged that that labour cannot
be properly c?Jled unproductive which produces enjoy-
ment, involves a rejection of the ordinary usages of
lanficuao^e.
Nor is it true that because all the kinds of labour
tend to the same end they need to be classed together,
though Dr Twiss urges this argument. He says :
"The first link of a chain-cable is just as instru-
mental as the last link in holding a ship by its anchor ;
and so each individual, who forms a link in the great
chain of operations of human labour, however far
remote his place may be from that of the person out
of whose hands the product issues, in its finished
state of preparation for the consumer, as he has in
his place contributed a share of that general result,
Lect. I] PRODUCTIVE AXD UNPRODUCTIVE. 1 9
seems justly entitled to be considered a productive
labourer equally with the last workman."
But to this we reply, that a cable may be of dif-
ferent materials and have different properties in one
part and another. If the cable be half an iron chain
and half a hempen rope, shall we be forbidden to
examine the different properties of iron chain and
hempen rope because the first link of one and the
last fathom of the other are equally instrumental in
holding a ship to its anchor ?
I conceive therefore, that, as I have said, Dr
Twiss's argument is of no force, and the distinction
of productive and unproductive labour remains a fun-
damental point in Political Economy.
20 COMPOXEXTS OF PRICE.
LECTURE 11.
The Components of Price are Wages, Profit, Rent.
ALL things which man uses are the results of
labour. Take for example the objects before and
about us — the table, the table-cloth, the ink-stand, the
window, the carpet, the fire-irons, the gold watch —
we can easily trace the processes of human labour by
which these became what they are.
All these things have their j^n'ce. Upon what
does their price depend ? The Price of any article
involves three elements, Wages, Profits, Pent. This
is one of the cardinal points and foundation stones of
Smith's doctrines.
He teaches (B. i. c. vi.), as we have said, that all
things which man needs or desires is provided by labour.
And that at first, all thus produced belongs to the
labourer; and what he gets for it is his wages. But
when men have capital or stoch on which they can sup-
port others while they labour (that is, have food, cloth-
ing, &c.), or have the command of these by raising
money, they set others to work, and charge the labour
with a profit in the price of what thoy produce. Further,
the production of many things requires land; and when
the land has all been appropriated, 7xnt is demanded
for it. Now land has everywhere been appropriated in
Lect. II.] WAGES, PROFITS, REXT. 2 1
a very early stage of society. For instance, in New
Zealand the claim to property in land is as technical
and as obstinately urged as in England.
(Smith, W. N. p. 22.) "As soon as stock has accu-
mulated in the hands of particular persons, some of them
will naturally employ it in setting to work industrious
people, whom they will supply with materials and sub-
sistence, in order to make a profit by the sale of their
work, or by what their labour adds to the value of the
materials. In exchanging the complete manufacture
either for money, for labour, or for other goods, over and
above what may be sufficient to pay the price of the ma-
terials and the wao^es of the workmen, something must
be given for the profits of the undertaker of the work,
who hazards his stock in this adventure. The value
which the workmen add to the materials, therefore,
resolves itself in this case into two parts, of which the
one pays their wages, the other the profits of their
employer upon the whole stock of materials and wages
which he advanced. He could have no interest to
employ them, unless he expected from the sale of their
work somethino" more than what was sufficient to
replace his stock to him : and he could have no in-
terest to employ a great stock rather than a small one,
unless his profits were to bear some proportion to the
extent of his stock.
" The profits of stock, it may perhaps be thought,
are only a different name for the wages of a parti-
cular sort of labour, the labour of inspection and
direction. They are however altogether different, are
regulated by quite different principles, and bear no
proportion to the quantity, the hardship, and the in-
22 COMPONENTS OF PRICE. [Lect. II.
genulty of this supposed labour of inspection and direc-
tion. Tliey are regulated altogether by the value of
the stock employed, and are greater or smaller in pro-
portion to the extent of this stock. Let us suppose,
for example, that in some particular place, where the
common annual profits of manufacturing stock are ten
per cent, there are two different manufactures, in each
of which twenty workmen are employed at the rate
of fifteen pounds a year each, or at the expense of
three hundred a year in each manufactory. Let us
suppose too that the coarse materials annually wrought
up in the one cost only seven hundred pounds, while
the finer materials in the other cost seven thousand.
The capital annually employed in the one will in this
case amount only to one thousand pounds; whereas
that employed in the other will amount to seven thou-
sand three hundred pounds. At the rate of ten per
cent., therefore, the undertaker of the one will expect
a yearly profit of about one hundred pounds only;
while that of the other will expect about seven hun-
dred and thirty pounds. But though their profits are
so very different, their labour of inspection and direc-
tion may be either altogether or very nearly the same.
In many great works, almost the whole labour of this
kind is committed to some principal clerk. His wages
properly express the value of this labour of inspec-
tion and direction. Though in settling them some re-
gard is had commonly, not only to his labour and
skill, but to the trust which is reposed in him, yet they
never bear any regular proportion to the capital of
which he oversees the management ; and the owner
of this capital, though he is thus discharged of almost
Lect. II.] WAGES, FROFITS, RENT. 23
all labour, stiU expects that his profits shall bear a
regular proportion to his capital. In the price of com-
modities, therefore, the profits of stock constitute a
component part altogether diflferent from the wages
of labour, and regulated by quite different prin-
ciples.
" In this state of things, the whole produce of
labour does not always belong to the labourer. He
must in most cases share it with the owner of the
stock which employs him. Neither is the quantity of
labour commonly employed in acquiring or producing
any commodity the only circumstance which can regu-
late the quantity which it ought commonly to purchase,
command, or exchange, for. An additional quantity,
it is evident, must be due for the profits of the stock
which advanced the wages and furnished the materials
of that labour.
" As soon as the land of any country has all be-
come private property, the landlords, like all other
men, love to reap where they never sowed, and demand
a rent even for its natural produce. The wood of the
forest, the grass of the field, and all the natural fruits
of the earth which, when land was in common, cost
the labourer only the trouble of gathering them, come,
even to him, to have an additional price fixed u23on
them. He must then pay for the licence to gather
them ; and must give up to the landlord a portion of
what his labour either collects or produces. This jDor-
tion, or, what comes to the same thing, the price of
this portion, constitutes the rent of land, and in the
price of the greater part of the commodities makes
a third component part."
24 COMPONENTS OF PRICE. [Lect. II.
Thus Wages, Profits, Rent, are the three component
parts of Price.
At first it might appear as if there were a fourth
element of Price ; namely, Materials. Thus the table,
besides the wages of the journeyman and the profit
of the master cabinet-maker, cost also the price of the
wood. But then, of what does the price of the wood
consist ? of the Pent of the Land on which it grows;
the Profit of the landlord for leaving it to grow ; and
the Wages of the woodman who cut it down. And
thus Price is reduced to Wages, Profits and Pent.
Wages, as we have said, is the reward of labour.
Profits is the reward of abstinence : — of the abstinence
of the master cabinet-maker, who employed his money
to pay a journeyman carpenter, instead of spending it
in eating, drinking, clothes, &c. Pent is a monopoly,
but a necessary and inevitable monopoly, for land
must be appropriated; and always has been appro-
priated, as we have said.
Smith gives an example to illustrate the manner
in which the three elements of price show themselves
(p. 20) :
" In the price of corn, for example, one part pays
the rent of the landlord, another pays the wages or
maintenance of the labourers and labouring cattle em-
ployed in jDroducing it, and the third pays the profit
of the farmer. These three parts seem either imme-
diately or ultimately to make up the whole price of
corn. A fourth part, it may perhaps be thouglit, is
necessary for replacing the stock of the flirmer, or for
compensating the wear and tear of his labouring cattle,
and other instruments of husbandry. But it must be
Lect. II.] WAGES, PROFITS, RENT. 25
considered that the price of any instrument of hus-
bandry, such as a labouring horse, is itself made up
of the same three parts ; the rent of the land upon
which he is reared, the labour of tending and rearing
him, and the profits of the farmer who advances both
the rent of this land and the wages of this labour.
Though the price of the corn, therefore, may pay the
price as well as the maintenance of the horse, the
whole price still resolves itself either immediately or
ultimately into the same three parts of rent, of labour,
and profit.
" In the jDrice of flour or meal, we must add to
the price of the corn the profits of the miller and
the wages of his servants ; in the price of bread, the
profits of the baker and the wages of his servants ;
in the price of both, the labour of transporting the
corn from the house of the farmer to that of the miller,
and from that of the miller to that of the baker, to-
gether with the profits of those who advance the
wages of that labour.
*'The price of flax resolves itself into the same
three parts as that of corn. In the price of linen
we must add to this price the wages of the flax-
dresser, of the spinner, of the weaver, of the bleacher,
&c., together with the profits of their respective em-
ployers.
"As any particular commodity comes to be more
manufactured, that part of the price which resolves
itself into wages and profit, comes to be greater in
proportion to that which resolves itself into rest. In
the progress of the manufacture, not only the number
of profits increase, but every subsequent profit is greater
26 COMrONEXTS OF PRICE. [Lect. II.
than tlie foregoing ; because tlie capital wliicli from
it is derived must always be greater. The capital
which employs the weaver, for example, must be great-
er than that which employs the spinners, because it
not only replaces that capital Avith its profits, but
pays, besides, the wages of the weavers ; and the
profits must always bear some proportion to the
capital."
There are however exceptions to the proposition
that these three elements of price always exist.
Exceptions to the above. (Smith, p. 23.)
" Even in the most improved societies, there are
always a few commodities of which the price resolves
itself into tivo parts only, the wages of labour, and
the profits of stock ; and a still smaller number, in
which it consists altogether in the wages of labour.
In the price of sea-fish, for example, one part pays
the labour of the fishermen, and the other the profits
of the capital employed in the fishery. Rent very
seldom makes any part of it, though it does some-
times, as I shall shew hereafter. It is otherwise, at
least through the greater part of Europe, in river
fisheries. A salmon-fishery pays a rent ; and rent,
though it cannot well be called the rent of land,
makes a part of the price of a salmon as well as
wages and profit. In some parts of Scotland a few
poor people make a trade of gathering, along the sea-
shore, those little variegated stones commonly known
by the name of Scotch Pebbles. The price which
is paid to them by the stone-cutter is altogether the
Lect. II.] WAGES', PROFITS, EEXT. 2^
ivages of their labour; neither rent not profit make
any part of it."
Again, there are cases in which the three elements,
or two of them, are liable to be confounded.
" A gentleman who farms a part of his own estate,
after paying the expense of cultivation, should gain
both the rent of the landlord and the profit of the
farmer. He is apt to denominate his whole gain,
profit, and thus confounds rent with profit, at least
in common language. The greater part of our North
American and West Indian planters are in this situa-
tion. They farm, the greater part of them, their own
estates, and accordingly we seldom hear of the rent
of a plantation, but frequently of its profits.
" Common farmers seldom employ any overseer to
direct the general operations of the farm. They gene-
rally, too, work a good deal with their own hands, as
ploughmen, harrowers, &c. What remains of the crop
after paying the rent, therefore, should not only replace
to them their stock employed in cultivation, together
with its ordinary profits, but pay them the wages
which are due to them, both as labourers and over-
seers. Whatever remains, however, after paying the
rent and keeping up the stock, is called j^rojit. But
ivages evidently make a part of it. The farmer, by
having these wages, must necessarily gain them.
Wages, therefore, are in this case confounded with
profit.
"An independent manufacturer, who has stock
enough both to purchase materials, and to maintain
himself till he can carry his work to market, should
gain both the wages of a journeyman who works under
28 COMPOXEJTS OF PRICE. [Lect. II.
a master, and the profit which that master makes by
the sale of the journeyman's work. His whole gains,
however, are commonly called profit, and wages are, in
this case too, confounded with profit.
'^ A gardener who cultivates his own garden with
his own hands, unites in his own person the three dif-
ferent characters of landlord, farmer, and labourer. His
produce, therefore, should pay him the rent of the first,
the profit of the second, and the wages of the third.
The whole however is commonly considered as the
earnings of his labour. Both rent and profit are, in
this case, confounded with wages."
And thus the three elements of Price are Wages,
Profits, and Rent ; and these exist, with few exceptions,
in all cases, though sometimes two of them may be
confounded.
Fixed and Circulating Capital.
Capital is farther distinguished as Fixed Capital
and Circulating Capital.
(Smith, p. 120.) "There are two different waj's in
which the capital of a merchant may be employed so as
to yield a profit to its employer.
"First, It may be employed in raising, manu-
facturing, or purchasing goods, and selling them again
with a profit. The capital employed in this manner
yields no revenue or profit to its employer wiiile it
either remains in his possession, or continues in the
same shape. The goods of the merchant yield him no
revenue or profit till he sells them for money, and the
money yields him as little till it is again exchanged for
Lect. II.] WAGES, PROFITS, RENT. 29
goods. His capital is continually going from him in
one shape and returning to him in another, and it is
only by means of such circulation, or successive ex-
changes, that it can yield him any profit. Such capitals
therefore may very properly be called Circulating Capi-
tals.
'' Secondly, It may be employed in the improvement
of land, in the purchase of useful machines, and instru-
ments of trade, or in such-like things as yield a reve-
nue or profit without changing masters, or circulating
any further. Such capitals therefore may very pro-
perly be called Fixed Capitals.
^'Difierent occupations require very different pro-
portions between the fixed and circulating capitals em-
ployed in them.
^' The capital of a merchant, for example, is alto-
gether a circulating capital. He has occasion for no
machines or instruments of trade, unless his shop or
warehouse be considered as such.
" Some part of the capital of every master, artificer,
or manufacturer, must be fixed in the instruments of
his trade. This part however is very small in some
and very great in others. A master tailor requires no
other instruments of trade but a parcel of needles.
Those of a master shoemaker are a little, though but
a very little more expensive. Those of the weaver rise
a good deal above those of tha shoemaker. The far
greater part of the capital of all such master artificers,
however, is circulated either in the wages of their
workmen, or in the price of their materials, and repaid
with a profit by the price of the work.
" In other works a much greater fixed capital is
30 COMrOXEXTS OF PRICE. [Lect. II.
required. In a gi'eat Iron-work, for example, the fur-
nace for melting the ore, the forge, the slitt-mill, are
instruments of trade which cannot be erected without
a very great expense. In coal-works and mines of
every kind, the machinery necessary, both for drawing
out the water and for other purposes, is frequently still
more expensive.
'^That part of the capital of the farmer w^hicli is
employed in the instruments of agriculture, is a fixed,
that which is employed in the wages and maintenance
of his labouring servants, is a circulating capital. He
makes a profit of the one by keeping it in his own pos-
session, and of the other by parting with it. The price
or value of his labouring cattle is a fixed capital in the
same manner as that of the instruments of husbandry ;
their maintenance is a circulating capital, in the same
manner as that of the labouring servants. The farmer
makes his profit by keeping the labouring cattle, and
by parting with their maintenance. Both the price
and the maintenance of the cattle, which are bought in,
and fattened, not for labour, but for sale, are a circu-
lating capital. The farmer makes his profit by parting
with them. A flock of sheep, or a herd of cattle, that
in a breeding country is bought in neither for labour
nor for sale, but in order to make a profit by their
wool, by their milk, and by their increase, is a fixed
capital. Their profit is made by keeping them. Their
maintenance is circulating capital. The profit is made
by parting with it, and it comes back with both its
own profit, and the i'>rofit uj^on the whole price of the
cattle, in the price of the wool, the milk, and the
increase. The whole value of the seed, too, is properly
Lect. II.] WAGES, PROFITS, RENT. 31
a fixed capital. Though it goes backwards and for-
wards between the ground and the granary, it never
changes masters, and therefore does not properly circu-
late. The farmer makes his profit not by its sale, but
by its increase."
S2 EFFECTS OF CAPITAL ON PRICE.
LECTURE III.
Different effects of Fixed and Circulating Capital
on Price.
\\
TE have seen that the price of everything depends
on three elements, Wages, Rent, Cajiital : and
the Capital is either Fixed, as Machinery, or Circu-
lating, as Wages and Materials. Fixed capital how-
ever is not absolutely fixed. All machines, for instance,
wear out in the course of time, and must be replaced
as that time expires. And according to the length
of time which any article of Fixed Capital lasts, the
effect of that portion of Capital or Price is different.
We will take examples.
A Tailor may be taken as an example of a producer
who has little Fixed Capital, He requires only needles,
thread, a shop-board and his goose.
A Linen Manufacturer (who both spins and weaves)
has much Fixed Capital, as Spinning. Jennies, Looms,
&c, ; probably Steam Engines.
Suppose the Tailor pays annually, to lo men, £500
in wages, and pays £500 for materials (cloth) : suppose
profits to be ten per cent, and he makes 100 suits
of clothes, what is the price of each suit ?
Lect. III.] EFFECTS OF CAPITAL OX PRICE. 33
Wages with Profits... 550
Materials with Profits 550
IIOO
This gives 100 suits at £11 each.
Suppose the Linen-Manufacturer pays annually
to 10 men £500 in wages; and pays £100 for ma-
terials (flax) : and has machinery worth £400 which
lasts 10 years: and produces 1000 shirts a year.
What is the price of each shirt ?
The obvious calculation is :
£.
Wages with profits 550
Materials with profits 110
To replace £400 in 10 years 40
700
This gives 1000 shirts at £^:^ or 14s.
But this calculation is not right. The fixed capital
must be replaced ivitli Profits, as well as the circulating
capital. And we must ask what annuity to continue
for 10 years, is worth £400 present value. The
answer is, £64.
Hence to determine the price :
£.
Wages ^vith Profits 55o
Materials with Profits no
To replace £400 in 10 years with Profits 64
724
This gives 1000 shirts at £'724 per shirt, which
is 14*485., or 14s. ()d. nearly.
And if any of the elements change, — number of
labourers, rate of wages, rate of profits, duration of
3
34 PEOFITS NOT THE RESULT OF LABOUR. [Lect. III.
Fixed Capital, — we can calculate the effect upon price
in the same manner as in these examples.
The mode of calculating the effect of Fixed Capital,
by considering the sum needed to replace it as the
present value of an annuity, is plainly right. To replace
a Fixed Capital of £400 which is exhausted in 10
years, an annual payment of £40 in each future year
will suffice. But the Manufacturer will not give this £40
at present except he can have it returned with profit: and
for that purpose not £40, but £64 a year is requisite.
This correction of the mode of calculating the result
of Fixed Capital was, I believe, first introduced by
Mr Ricardo, in his Principles of Political Economy
published in 181 7.
Profits are not the result of Labour.
In his Principles of Political Economy, Mr Ricardo
maintained that commodities universally exchange for
each other according to the quantity of labour worked
up in them.
Mr M^'Culloch attempted further to support this
assertion, by maintaining that what are commonly
called Profits may be called Labour ; and thus he held
that Profits and Labour are not distinct elements of
Price.
Upon this Mr Mai thus observes {Def p. 100),
" There is nothing that may not be proved by a new
definition. A composition of flour, milk, suet, and stones
is a plum-pudding ; if by stones be meant plums. Upon
this principle, Mr M^'Culloch undertakes to show, that
commodities do really exchange with each other ac-
Lect. Ill] PROFITS NOT THE RESULT OF LxiBOUR. 35
cording to tlie quantity of labour employed upon them ;
and it must be acknowledged, that in the instances
which he has chosen he has not been deterred by
apparent difficulties. He has taken the bull by the
horns. The cases are nearly as strong as that of the
plum-pudding.
'' They are the two following — namely, that the in-
crease of value which a cask of wine acquires, by being
kept a certain number of years untouched in a cellar,
is occasioned by the increased quantity of labour em-
ployed upon it ; and that an oak-tree of a hundred
years' growth, worth £25, which may not have been
touched by man, beast, or machine for a century,
derives its whole value from labour.
"Mr M'^CuUoch acknowledges that Mr Hicardo
w^as inclined to modify his grand principle, that the
exchangeable value of commodities depended on the
quantity of labour required for their production, so
far as to allow that the additional exchangeable value
that is sometimes given to commodities, by keeping
them after they have been purchased or produced
until they become fit to be used, was not to be con-
sidered as an effect of labour, but as an equivalent
for the profits which the capital laid out on the com-
modities would have yielded had it been actually em-
ployed. This was looking at the subject in the true
point of view, and showing that he would not get
out of the difficulty by changing the meaning of the
term labour; but Mr M*^Culloch says —
"'I confess, however, notwithstanding the hesita-
tion I cannot but feel in differing from so great an
authority, that I see no good reason for making this
3-^2
36 PROFITS NOT TUE RESULT OF LABOUR. [Lect. III.
exception. Suppose, to illustrate the principle, that
a cask of new wine, which cost £50, is put into a
cellar, and that at the end of twelve months it is
worth £55, the question is, whether ought the £5 of
additional value s^iven to the wine to be considered
as a compensation for the time the £50 worth of
capital has been locked up, or ought it to be considered
as the value of additional labour actually laid out on
the wine. I think that it ought to be considered in
the latter point of view, and for this, as it appears
to me a most satisfactory and conclusive reason, that
if we keep a commodity, as a cask of wine which
has not arrived at maturity, and on which therefore
a change or effect is to he 'produced, it will be possessed
of additional value at the year's end; whereas, had
we kept a cask of wine which had cdready arrived
at maturity, and on which no beneficial or desirable
effect could be produced for a hundred or a thousand
years, it would not have been worth a single additional
fart] ling. This seems to prove incontrovertibly that
the additional value acquired by the wine during the
period it has been kept in the cellar is not a compen-
sation or return for time, but for the effect or change
that has been produced on it. Time cannot of itself
produce any effect, it merely affords space for really
efficient causes to operate ; and it is therefore clear,
that it can have nothing^ to do with the value.'
'' On this passage it should be remarked, in the
first place, that the question stated in it is not the
main question in reference to the new meaning which
Mr M'^CuIlocli must give to the term labour, in
order to make out his proposition. He acknowledges
Lect. III.] PROFITS Is^OT THE RESULT OF LABOUR. 37
that the increased value acquired by the wine is either
owing to the operation of nature during the year in
improving its quahty, or to the profits acquired by
the capitaHst for being deprived for a year from using
his capital of £50 in any other way. But in either
case Mr M'^Culloch's language is quite unwarranted.
When he uses the expression, 'additional labour
actuallif laid out upon the ivine,' who could possibly
imagine that, instead of meaning human labour, he
meant the processes carried on by nature in the cask
of wine during the time that it is kept ? This is at
once giving an entirely new meaning to the term
labour.
" But, further, it is most justly stated by Mr
Bicardo, that when the powers of nature can be called
into action in unlimited abundance, she always works
gratis; and her processes never add to the value,
though they may add very greatly to the utility of the
objects to which they are applied.
" This truth is also fully adopted and strongly stated
by Mr M^Culloch himself 'All the rude products
(he says) and all the productive powers and capacities
of nature are gratuitously offered to man. Nature is
not niggardly or parsimonious ; she neither demands
nor receives an equivalent for her favours. An object
which it does not require any portion of labour to
appropriate or to adapt to our use may be of the
very highest utility, but as it is the free gift of nature,
it is utterly impossible it can be possessed of the
smallest value.' Consequently, as the processes which
are carrying on in the cask of wine, while it is kept,
are unquestionably the free gift of nature, and are
38 PROFITS NOT THE RESULT OF LABOUR. [Lect. III.
at the service of all who want them, it is utterly
impossible, even if their effects were ten times greater
than they are, that they should add in the smallest
degree to the price of the wine. It is, no doubt,
perfectly true, as stated by Mr M^'Culloch, that if
wine were not improved by keeping, it would not
be worth a single additional farthing after being kept
a hundred or even a thousand years. But this proves
nothing but that, in that case, no one would ever
think of keeping wine longer than was absolutely
necessary for its convenient sale or convenient con-
sumption.
'• The improvement which wine derives from keep-
ing is unquestionably the cause of its being kept ;
but when on this account the wine-merchant has kept
his wine, the additional price wdiich he is enabled to
put upon it is regulated upon principles totally distinct
from the average degree of improvement which the
wine acquires. It is regulated exclusively, as stated
by Mr Kicardo, by the average profits which the
capital engaged in keeping the wine would have
yielded if it had been actively employed ; and that
this is the regulating principle of the additional price,
and not the degree of improvement, is quite certain :
because it would be universally allowed that if, in
the case supposed by Mr M'^Culloch, the ordinary
rate of profits had been 20 per cent., instead of 10
per cent., a cask of new wine, worth £50, after it
had been kept a year, would have been increased in
value £10 instead of £5, although the processes of
nature and the improvement of the wine were pre-
cisely the same in the two cases ; and there cannot be
Lect. hi.] FEOFITS XOT THE RESULT OF LABOUR. 39
the least doubt, as I said before, that if the quaHty
of wine, by a year's keeping, were ordinarily improved
in a degree ten times as great as at present, the prices
of wines would not be raised ; because, if they were
so raised, all wine-merchants who sold kept wines
would be making greater profits than other dealers.
''Nothing then can be clearer than that the ad-
ditional value of the kept wine is derived from the
additional amount of profits of which it is composed,
■determined by the time for which the capital was
advanced and the ordinary rate of profits.
"The value of the oak-tree of a hundred years'
growth is derived, in a very considerable degree, from
the same cause ; though, in rich and cultivated countries,
where alone it could be worth £25, rent would neces-
sarily form a part of this value.
" If the number of acorns necessary on an average
to rear one good oak were planted by the hand of man,
they would be planted on appropriated land ; and as
land is limited in quantity, the powers of vegetation
in the land cannot be called into action by every one
who is in possession of acorns, in the same way as
the improving operations of nature may be called into
action by every person who possesses a cask of wine.
But setting this part of the value aside, and supposing
the acorns to be planted at a certain expense, it is
quite clear, that almost the whole of the remaining
value would be derived from the compound interest
or profits upon the advances of the labour required
for the first planting of the acorns, and the subse-
quent protection of the young trees. A much larger
part, therefore, of the final value of the tree than
40 ARE PROFITS JUSTIFIABLE? [Lect. III.
of the final value of the wine would be omnsf to
profits.
" Now, if we were to compare an oak-tree, worth
£25, with a quantity of hardware [for instance, axes,]
worth the same sum, the value of which was chiefly
made up of human labour ; and as the reason why
these two objects were of the same value, were to state
that the same quantity of labour had been worked up
in them — we should obviously state a direct falsity,
according to the common usaofe of lanofuasre : and no-
thing could make the statement true, but the magical
influence of a new meaning given to the term labour.
But to make labour mean profits, or fermentation, or
vegetation, or rent, appears to me quite as unwar-
rantable as to make stones mean plums.''
Are Projits justijiablef
We have had in England a controversy, What is
Profit 1 as we have just seen. In France there has
been a controversy, AVhether there ought to be Profits ?
Whether capital ought to be allowed to bring Profit
to its owner ? It has been maintained by the socialists
that the Profit of capital is a thing which is wrong and
against nature.
(Bastiat, p. 3.) ''It is thus that the democratic
Socialist, There, expresses himself:
" ' The revolution will alwaj^s have to be recom-
menced, so long as we occupy ourselves with conse-
quences only, without having the logick or the courage
to attack the principle itself. This principle is capital,
Lect. III.] ARE PROFITS JUSTIFIABLE ? 4 1
false property, interest, and usury, which by the old
regime, is made to weigh upon labour.
"^ ' Ever since the aristocrats invented the incredible
fiction, that capital possesses the power of repi'oducing
itself, the workers have been at the mercy of the idle.
" ' At the end of a year, will you find an additional
crown in a bag of one hundred sliillings ? At the end
of fourteen years, will your shilling have doubled in
your bag ?
" ' Will a work of industry or of skill produce
another, at the end of fourteen years ?
" ' Let us begin, then, by demolishing this fatal
fiction.'
''I have quoted the above," Bastiat says, ''merely
for the sake of establishing the fact, that many persons
consider the productiveness of capital a false, a fatal, and
an iniquitous principle. But quotations are superfluous ;
it is well known that the people attribute their suf-
ferings to what they call the traffching in man hy man.
" In fact, the phrase, tyranny of capital, has become
proverbial."
Bastiat argues against this doctrine with great
force and ingenuity. To us the matter will seem to
need no argument. A man who has capital will not
give the use of it for nothing. And no one would
accumulate capital if he was to get nothing by it.
Bastiat gives a curious illustration of this.
(Bastiat, p. 45.) "A friend of mine, commissioned
to make enquiry into Parisian industry, has assured
me that the manufacturers have revealed to him a very
striking fact, which proves, better than any reasoning
can, how much insecurity and uncertainty injure the
42 MERCANTILE PRICE IS MEANT. [Lect. III.
formation of capital. It was remarked, that during the
most distressing period, the popular expenses of mere
fancy had not diminished. The small theatres, the
fighting lists, the public-houses, and tobacco depots,
were as much frequented as in prosperous times. In
the inquiry, the operatives themselves explained this
phenomenon thus: — 'What is the use of pinching ?
Who knows what will happen to us ? Who knows
that interest will not be abolished? Who knows but
that the State will become a universal and m-atuitous
lender, and that it will wish to annihilate all the fruits
that we might expect from our savings?' Well! I
say, that if such ideas could prevail during two single
years, it would be enough to turn our beautiful France
into a Turkey — misery would become general and en-
demic, and, most assuredly, the poor would be the first
upon whom it would fall."
Mercantile Pi^ice is meant.
I return to the subject of Price.
Price, as I have said, depends on three elements ;
Wages, Profits, and Pent. The Price here spoken of
is what may be called Mercantile Price.
Mr Mill notices this duly according to its impor-
tance {Pol. Econ. pp. 519, 521), he says:
" I must give warning, once for all, that the cases I
contemplate are those in which value and prices are de-
termined by competition alone. In so far only as they
are thus determined, can they be reduced to any as-
signable law. The buyers must be supposed as stu-
Lect. III.] MERCANTILE PRICE IS MEANj. 43
dious to buy cheap, as the sellers to sell dear. The
values and prices, therefore, to which our conclusions
apply, are mercantile values and prices ; such prices as
are quoted in price-currents ; prices in the wholesale
markets, in which buying as well as selling is a matter
of business ; in which the buyers take pains to know,
and generally do know, the lowest price at which an
article of a given quality can be obtained, and in which,
therefore, the axiom is true, that there cannot be, for
the same article, of the same quality, two prices in the
same market. Our propositions will be true in a much
more qualified sense, of retail prices ; the prices paid in
shops, for articles of personal consumption. For such
things there often are not merely two, but many prices
in different shops, or even in the same shop ; habit and
accident have as much to do in the matter as general
causes. Purchases for private use, even by people in
business, are not always made on business principles :
the feelings which come into play in the operation of
getting and that of spending their income, are often
extremely different. Either from indolence, or insou-
ciance, or because people think it fine to pay and ask
no questions, three-fourths of those who can afford it,
give much higher prices than necessary for the things
they consume; while the poor often do the same from
ignorance and defect of judgment, want of time for
searching and making enquiry, and not unfrequently
from coercion, open or disguised. For these reasons,
retail prices do not follow with all the regularity which
might be expected, the action of the causes which de-
termine wholesale prices. The influence of those causes
is ultimately felt in the retail markets, and is the real
44 NATURAL PRICE AND MARKET PRICE. [Lect. III.
source of such variations in retail prices as are of a
general and permanent character. But there is no
regular or exact correspondence. Shoes of equally good
quality are sold in different shops at prices which differ
considerably; and the price of leather may fall without
causing the richer class of buyers to pay less for shoes.
Nevertheless, shoes do sometimes fall in price ; and
when they do, the cause is always some such general
circumstance as the cheapening of leather ; and when
leather is cheapened, even if no difference shows itself
in shops frequented by rich people, the artisan and the
labourer generally get their shoes cheaper, and there is
a visible diminution in the contract prices at which
shoes are delivered for the supply of a workhouse or of
a regiment. In all reasoning about prices the proviso
must be understood, ' sui^posing all parties to take care
of their own interest.' Inattention to these distinc-
tions has led to improper applications of the abstract
principles of political economy, and still oftener to an
undue discrediting of those principles through their
being compared with a different sort of facts from those
which they contemplate, or which can fairly be ex-
pected to accord with them."
Natural Price and Market Price,
But e^'en the prices determined by competition do
not agree steadily with the results of such calculations
as we have made. Such calculations give the natural
price of commodities : and to this natural price the
actual price constantly tends, and never can be far
Lect. III.] SATrBAL PRICE AXD MARKET PRICE. 45
above or far below it. But for a time the marlcet price
mav be above or below the natural price.
So Smith (B. i. c. vii.) :
''The market-price of every particular commodity
is regulated by the proportion between the quantity
which is actuallv brouofht to market, and the demand
of those who are willing to pay the natural price of the
commodity, or the whole value of the rent, labour,
and profit, which must be paid in order to bring it
thither. Such people may be called the efi'ectual de-
manders. and their demand the effectual demand; since
it mav be sufficient to effectuate the bringing' of the
commodity to market. It is different fi-om the abso-
lute demand. A very poor man may be said in some
sense to have a demand for a coach and six ; he might
like to have it ; but his demand is not an effectual
demand, as the commodity can never be brought to
market in order to satisf\'' it.
'•'When the quantitv of anv commoditv which is
brought to market falls short of the effectual demand,
all those who are willing to pay the whole value of the
rent, wages, and profit, which must be paid in order
to bring it thither, cannot be supphed with the quan-
titv which thev want. Bather than want it altogether,
some of them will be willing to give more. A compe-
tition will immediatelv beoin amonof them, and the
market-price will rise more or less above the natural
price, according as either the greatness of the defi-
ciency, or the wealth and wanton luxuiy of the compe-
titors, happen to animate more or less the eagerness
of the competition. Among competitors of equal wealth
and luxurv. the same deficiencv will o-enerally occa-
46 VALUE IX USE [Lect. III.
sion a more or less eager competition, according as the
acquisition of tlie commodity happens to be of more
or less importance to them. Hence the exorbitant
price of the necessaries of life during the blockade of a
town or in a famine."
On the other hand, ''When the quantity brought to
market exceeds the effectual demand, it cannot be all
sold to those who are willing to pay the whole value of
the rent, wages, and profit, which must be paid in
order to bring it thither. Some part must be sold to
those who are willing to pay less, and the low price
which they give for it must reduce the price of the
whole. The market-price will sink more or less below
the natural price, according as the greatness of the
excess increases more or less the competition of the
seller, or according as it happens to be more or less
important to them to get immediately rid of the com-
modity. The same excess in the importation of perish-
able will occasion a much greater competition than in
that of durable commodities ; in the importation of
oranges, for example, than in that of old iron."'
Value in Use and Value in Exchange.
In connection wnth this, we must take another dis-
tinction made by Smith.
Dr Adam Smith distinguishes two kinds of value ;
the one arising from utility, the other from what can
be obtained in exchange. He says, " The word valuer
it is to be observed, has two different meanings ; it
sometimes expresses the utility of some particular
object, and sometimes the power of purchasing other
Lect. III.] AXD VALUE IJ EXCHANGE. 47
goods whicli the possession of that object conveys.
The one may be called value in use, the other value
in exchange. The things which have the greatest value
in use, have frequently little or no value in exchange ;
and, on the contrary, those that have the greatest value
in exchange, have frequently little or no value in use.
Nothing is more useful than water, but it will purchase
scarce anything; scarce anything can be had in ex-
change for it. A diamond, on the contrary, has scarce
any value in use, but a very great quantity of other
goods may frequently be had in exchange for it.
" Nature works for us gratuitously ; and when she
supplies us with articles in such abundance, that no
labour is required to procure them, those articles, how-
ever useful they may be, have not exchangeable value :
but no sooner does the labour of man become neces-
sary to procure us the enjoyments of any commodity,
than that commodity acquires a value; either a price
is paid for it in money, or other things are given in
exchange for it. Light, air, and water are the free
and bountiful gifts of nature, but if a man constructs a
lamp, we must pay for the light it diffuses ; if we are
indebted to his labours for a ventilator, or even a fan,
we pay for the air they procure us ; and when water is
conveyed through pipes into our houses, raised by
pumps, or brought to us in any manner by the art of
man, a price is paid for it.
" Utility may therefore be considered as the sole
cause of value in use, whilst value in exchange may be
produced by any circumstance which renders the pos-
session of an object so difficult of attainment, and at
the same time so desirable, that men are willing to
48 DEMAND AND SUPPLY. [Lect. III.
give something in exchange for it. Thus not only
utility but beauty, curiosity, fashion, rarity, and many
other qualities may create exchangeable value ; and
it is to this value that, in political economy, we chiefly
confine our attention."
Demand and SiLpphj.
Price, that is Market Price, as has been said, de-
pends upon Demand and Supply. In ^Yhat manner,
by what law does it so depend ? If the supply increase,
in what proportion will the price fall ? If the supply
diminish, in what proportion will the price rise ?
"With a view to answer this question commodities
have been divided into three classes.
(i) Those of which the supply cannot be increased
at all — ancient statues, pictures, special wines, as Jo-
hannisburg.
In these the price depends entirely on the demand.
As an example we may take what Mr Mill quotes,
p. 523 ••
" This topic is happily illustrated by Mr De Quin-
cey. 'Walk into almost any possible shop, buy the
first article you see; what will determine its price?
In ninety-nine cases out of a hundred, simply the ele-
ment D — difficulty of attainment. The other element,
U, or intrinsic utility, will be perfectly inoperative.
Let the thing (measured by its uses) be, for your pur-
poses, worth ten guineas, so that you would rather
give ten guineas than lose it; yet, if the difficulty of
producing it be only worth one guinea, one guinea
Lect. TIL] DEMAND AXD SUPPLY. 49
is the price which it will bear. But still not the
less, though U is inoperative, can U be supposed
absent ? By no possibility ; for if it had been absent,
assuredly you would not have bought the article
even at the lowest price, U acts upon you, though
it does not act upon the price. On the other hand,
in the hundredth case, we will suppose the circum-
stances reversed : you are on Lake Superior in a
steam-boat, making your way to an unsettled region
800 miles ahead of civilization, and consciously with
no chance at all of purchasing any luxury whatso-
ever, Httle luxury or big luxury, for the space of ten
years to come. One fellow passenger, whom you will
part with before sunset, has a powerful musical-snuff-
box : knowing by experience the power of such a
toy over your own feelings, the magic with which
at times it lulls your agitations of mind, you are
vehemently desirous to purchase it. In the hour of
leaving London you had forgot to do so ; here is a
final chance. But the owner, aware of your situation
not less than yourself, is determined to operate by a
strain pushed to the very uttermost upon U, upon the
intrinsic worth of the article in your individual estimate
for your individual purposes. He will not hear of D
as any controlling power or mitigating agency in the
case ; and finally, although at six guineas a-piece in
London or Paris you might have loaded a waggon with
such boxes, you pay sixty rather than lose it when
the last knell of the clock has sounded, which summons
you to buy now or to forfeit for ever. Here, as before,
only one element is operative : before it was D, now
it is U. But after all, D was not absent, though
4
50 WHAT DETERMINES PRICE ? [Lect. III.
inoperative. The inertness of D allowed U to put
forth its total effect. The practical compression of D
being withdrawn, U springs up, like water in a pump,
when released from the pressure of air. Yet still that
D was present in your thoughts, though the price was
otherwise regulated, is evident ; both because U and
D must co-exist in order to found any case of exchange
value whatever, and because undeniably you take into
very particular consideration this D, the extreme diffi-
culty of attainment (which here is the greatest possible,
viz. an impossibihty) before you consent to have the
price racked up to U. The special D has vanished ;
but it is replaced in your thoughts by an unlimited D ,
Undoubtedly you have submitted to U in extremity as
the regulating force of the price; but it was under a
sense of D's latent presence. Yet D is so far from
exerting any positive force, that the retirement of D
from all agency whatever on the price — this it is which
creates as it were a perfect vacuum, and through
that vacuum U rushes up to its highest and ultimate
gradation.
^^This case, in which the value is wholly regu-
lated by the necessities or desires of the purchaser, is
the case of strict and absolute monopoly ; in which,
the article desired being only obtainable from one
person, he can exact any equivalent, short of the point
at which no purchaser could be found. But it is not
a necessary consequence, even of complete monopoly,
that the value should be forced up to this ultimate
limit : as will be seen when we have considered the law
of value in so far as depending on the other element,
difficulty of attainment."
Lect. Ill] DEMAND AND SUPPLY. 51
(2) The second class is commodities susceptible of
indefinite multiplication, as linens, woollens, cottons,
axes, watches.
In these the market-price tends rapidly to the
natural price : and yet there may be great derange-
ment, as for instance if the supply of material, as
cotton, should fail for a time.
(3) The third class is commodities susceptible of
multiplication by increased expense, that is, by in-
creased labour. Of these corn is the type, and for us,
the most important.
If the supply of corn be diminished, how much is
the price increased ?
The statement generally given on this subject is
that made by Sir W. Davenant, and quoted by Mr
Tooke in his book. On High and Low Prices.
The statement is this : that
a deficiency in the crop of -^, x%, A, t^. 1^,
raises the price
respectively.
3 8 16 28 45 .
10^ 10^ 10> 10' 10 >
Which amounts to this : that when the
supply is 10 9 8 7 6 5,
the price is 10 13 18 26 38 55.
Of course nothing like mathematical exactness or
absolute steadiness can be looked for in such cases. And
moreover the effect of the importation of corn is set
aside. If the above numbers were to be made the basis
of a mathematical rule, it would be found that the
4 — 2
52 WHAT DETERMINES PRICE? [Lect. III.
price varies inversely as the square of the supply ; or
rather in a higher ratio.
But this part of Political Economy is not so far
advanced in the establishment of general rules, that
we can apply mathematical calculation to it with any
advantage. To do so would only give a false impres-
sion of the certainty and exactness of our results.
RENT, 53
LECTURE IV.
Rent.
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. ()-], speaks as follows :
"Rent, it is to be observed, therefore, enters into
the composition of the price of commodities in a differ-
ent 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 oider to bring a par-
ticular 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 funda-
mental principle that land almost everywhere can pro-
duce more food than is expended in raising the produce
and replacing the stock. Something therefore always
remains for rent to the Landlord.
54 RENT. [Lect. IV.
He then takes examples (Smithy pp. d-j — 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 tend-
ing 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 both 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, what-
ever 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 dis-
tant land to market. A greater quantity of labour,
therefore, must be maintained out of it ; and the sur-
plus, from which are drawn both the profit of the far-
mer 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 pro-
portion of this diminished surplus, therefore, must
belong to the landlord.
'' Good roads, canals, and navignble rivers, by di-
Lect. IV.] UNDER DIFFERENT CIRCUMSTANCES. 55
minishing 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 ac-
count tbe greatest of all improvements. They encourage
the cultivation of the remote, which must always be the
most extensive circle of the country. They are advan-
tageous to the town, by breaking down the monopoly
of the country in its neighbourhood. They are advan-
tageous 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 manage-
ment, 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 exten-
sion of the turnpike-roads into the remoter counties.
Those remoter counties, they pretended, from the cheap-
ness 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 re-
placing 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
56 RENT. [Lect. IV.
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 spe-
cies of food, bread and butcher's meat, are very differ-
ent 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 ster-
ling) was forty or fifty years ago the ordinary price of an
ox, chosen from a herd of two or three hundred. He
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 compe-
tition changes its direction, and the price of butcher's
meat becomes greater than the price of bread.
''By the extension besides of cultivation, the un-
improved wilds become insufficient to supply the de-
mand for butcher's meat. A great part of the culti-
Leot. IV.] PASTURE AND TILLAGE. 57
vated lands must be employed in rearing and fattening
cattle, of which the price, therefore, must be sufficient
to pay, not only the labour necessary for tending
them, but the rent which the landlord and the profit
which the farmer could have drawn from such land
employed in tillage. The cattle bred upon the most
uncultivated moors, when brought to the same market,
are, in proportion to their weight or goodness, sold
at the same price as those which are reared upon
the most improved land. The proprietors of those
moors profit by it, and raise the rent of their land in
proportion to the price of their cattle. It is not more
than a century ago, that in many parts of the high-
lands of Scotland butcher's meat was as cheap, or
cheaper, than even bread made of oatmeal. The union
opened the market of England to the highland cattle.
Their ordinary price is at present about three times
greater than at the beginning of the century, and the
rents of many highland^ estates have been tripled and
quadrupled in the same time. In almost every part
of Great Britain, a pound of the best butcher's meat
is, in the present times, generally worth more than two
pounds of the best white bread ; and in plentiful years
it is sometimes worth three or four pounds.
" It is thus that in the progress of improvement,
the rent and profit of unimproved pasture come to be
regulated in some measure by the rent and profit of
what is improved, and these again by the rent and
profit of corn. Corn is an annual crop ; butcher's meat
a crop which requires four or five years to grow. As
an acre of land, therefore, will produce a much smaller
quantity of the one species of food than of the othei', the
58 RENT. [Lect. IV.
inferiority of the quantity must be compensated by
the superiority of the price. If it was more than
compensated, more corn land would be turned into
pasture ; and if it was not compensated, part of what
was in pasture would be brought back into corn.
"This equality, however, between the rent and
profit of grass and those of corn, of the land of which
the immediate produce is food for cattle, and of that
of which the immediate produce is food for men, must
be understood to take place only through the greater
part of the improved lands of a great country. In
some particular local situations it is quite otherwise,
and the rent and profit of grass are much superior
to what can be made by corn.
"Thus in the neighbourhood of a great town the
demand for milk and for forage to horses frequently
contribute, together with the high price of butcher's
meat, to raise the value of grass above what may be
called its natural proportion to that of corn. This
local advantage, it is evident, cannot be communicated
to the lands at a distance.
" Particular circumstances have sometimes rendered
some countries so populous, that the whole territory,
like the lands in the neighbourhood of a great town,
has not been sufficient to produce both the grass and
the corn necessary for the subsistence of their inha-
bitants. Their lands, therefore, have been principally
emjDloyed in the production of grass, the more bulky
commodity, and which cannot be so easily brought
from a great distance ; and corn, the food of the great
body of the people, has been chiefly imported from
foreign countries. Holland is at present in this situa-
Lect. IV.] PASTURE AND TILLAGE. 59
tion, and a considerable part of ancient Italy seems
to have been so during the prosperity of the Komans.
To feed [cattle] well, old Cato said, as we are told by
Cicero, was the first and most profitable thing in the
management of a private estate ; to feed tolerably well,
the second ; and to feed ill, the third. To plough, he
ranked only in the fourth place of profit and advantage.
Tillage, indeed, in that part of ancient Italy, which lay
in the neighbourhood of Home, must have been very
much discouraged by the distributions of corn, which
were frequently made to the people, either gratuitously,
or at a very low price. This corn was brought from
the conquered provinces, of which several, instead of
taxes, were obliged to furnish a tenth part of their
produce at a stated price, about sixpence a peck, to
the Republic. The low price at which this corn was
distributed to the people must necessarily have sunk
the price of what could be brought to the Roman
market from Latium, or the ancient territory of Rome,
and must have discouraged its cultivation in that
country.
"In an open country too, of which the principal
produce is corn, a well-inclosed piece of grass will fre-
quently rent higher than any cornfield in its neigh-
bourhood. It is convenient for the maintenance of the
cattle employed in the cultivation of the corn, and its
high rent is, in this case, not so properly paid from the
value of its own produce, as from that of the corn lands
which are cultivated by means of it. It is likely to
fall, if ever the neighbouring lands are completely in-
closed. The present high rent of inclosed land in Scot-
land seems owing to the scarcity of inclosure, and will
6o EEXT. [Lect. IV.
probably last no longer than that scarcity. The advan-
tage of inclosure is greater for pasture than for corn.
It saves the labour of guarding the cattle, which feed
better too when they are not liable to be disturbed by
their keeper or his dog.
^'But where there is no local advantage of this
kind, the rent and profit of corn, or whatever else is
the common vegetable food of the people, must natu-
rally regulate, upon the land which is fit for producing
it, the rent and profit of pasture.
" The use of the artificial grasses, of turnips, carrots,
cabbages, and the other expedients which have been
fallen upon to make an equal quantity of land feed a
greater number of cattle than when in natural grass,
should somewhat reduce, it might be expected, the
superiority which, in an improved country, the price of
butcher's meat naturally has over that of bread. It
seems accordingly to have done so ; and there is some
reason for believing that, at least in the London market,
the price of butcher's meat, in proportion to the price
of bread, is a good deal lower in the present times than
it was in the beginning of the last century."
Thus Rent is the result of the monopoly of the
Land in a certain way.
But the operation of this monopoly according to
the progress of a country in wealth and population,
and also in skill, may be followed into some further
propositions : and these propositions compose what
has in more recent times been called the Doctrine
of Rent.
Tiic Doctrine of Bent is briefly this : that the
Bent of land is the payment for the excess of
Lect. IV.] DGCTRIXE OF REXT. 6i
value of the better land over the poorest land which
can be cultivated without loss.
This Doctrine is regarded as a very important
point in Political Economy. Mr Mill says that this
Doctrine of Rent is the Pons Asinoomm of Political
Economy : — that is, like the celebrated fourth Pro2;)o-
sition of Euclid's Elements, it affords a test whether
the student has a capacity for understandino- demon-
strative reasoning on the subject which is placed before
him.
On the history of this doctrine Mr M'^CuUoch
speaks as follows :
''The theory of rent was first promulgated and
satisfactorily established in a tract on the corn laws
published in 1777, by Dr James Anderson, a native
of Hermandston in Midlothian. Anderson was at the
period referred to, extensively engaged in farmino- in
Aberdeenshire ; but having removed to London in
1797, he edited various publications, and among others,
'Observations in Agriculture, and Natural History,
&c.,' in which he gave a clear and able exposition
of the nature, origin, and progress of rent. But not-
withstanding these repeated publications, it does not
appear that his profound and important disquisitions
attracted any attention. And so completely were they
forgotten that when Sir Edward West and Mr
Malthus pubHshed their tracts on rent, in 181 5, they
were universally regarded as the real authors of the
theory. There is, we believe, no question as to their
originality ; but it may well be doubted whetlier they
succeeded in explaining the theory as well as it had
been explained about forty years before."
62 DOCTRINE OF RENT.
LECTURE V.
The Doctrine of Rent.
THE doctrine of Kent spoken of in the last Lecture,
must now be more fully explained, as I have said ;
it may be briefly stated thus : The Kent of land is the
payment for the excess of the value of the j^roduce of
the better land over the poorest cultivated land : the
poorest being that kind of land which just pays for
being cultivated.
Let A be the best land : (best as being most fertile,
nearest the market, or for the like reasons). And let
the produce of it under the usual cultivation be «£i2
per acre per annum on the average.
Let B be next best land, and let its produce be £io
per acre ; and suppose this produce just pays the ex-
pense of cultivation.
Let C be still inferior land, which under the like
cultivation yields only £8 per acre.
Therefore the land C does not pay the expense of
cultivation, and no one will with a view to profit,
bestow upon it the expense of cultivation.
The land B may be cultivated with a view to profit,
by a person who can have it rent-free : by the pro-
prietor for instance.
The land A may be cultivated with a view to profit
by any one, paying for it a rent of £2 an acre. When
Lect. v.]
DOCTRINE OF RENT.
63
he has paid that rent, his profits will still be the usual
profits of stock.
This is necessarily the origin and measure of Rent :
for the proprietor of A will not allow any one to
cultivate it on lower terms, since he can obtain those
terms.
A person who thus rents land and cultivates it
with a view to obtaining the profits of his stock, is a
Farmer. The Rents now spoken of are Farmer's
Rents.
1
Produce =12
Rent ... = 2
Produce =10
Rent ... =
Produce = 8
Uncultivated.
This diagram may represent the kinds of land :
A,B, C the different kinds yielding different values
of produce, in consequence, as has been said, of being
more fertile, nearer to the market, or other causes.
Recent Rise of Rents in England, how produced f
The main importance of the Doctrine of Rent,
is in the views to which it leads respecting the causes
and the effects of a rise or fall of rents.
Suppose that the price of oorn (or other produce
of the land,) increases, and that the expense of culti-
64
CA USE OF RTSE OF REXTS.
[Lect. V.
vating the land remains the same. Suppose this in-
crease of price to be one fourth of the original price.
Then the value of the produce of A will be in-
creased by J : instead of 12, it will be 12 + 3 or 15.
The value of the produce of B will be increased also
by J : instead of 10 it will be 10 + 2^ or 12^.
And as the expense of cultivation is still only 10
as before, there will be in this case, besides the ordi-
nary profit of stock, an extra profit of 2^, which the
farmer of B can afford to pay to the proprietor ; and
w^hich the proprietor w^ill demand as the rent of B.
In this case the value of the produce of C will
also be increased by one-fourth : instead of 8 it will
be 10. And as the expense of cultivating C with the
usual profits is 10, a person can afibrd to cultivate C,
paying no rent.
In this case C, which was not cultivated before, is
cultivated now in consequence of the increased price of
corn. This increased price may be supposed to arise
from the increased demand occasioned by an increased
population. The increased produce arising from the cul-
tivation of C will provide for the increased population.
This new state of things may be represented by this
diagram,
Produce =15
Rent ... = 5
-^ Produce =12^
Rent ... = 2\
_, Produce =10
Rent ... =
Lect. v.] RICARDIAN DOCTRINE OF RENT. 65
In this case, Rents increase in consequence of com
havinor become dearer.
Mr Ricardo assumed that this was the general
case : — that a rise of rents is always accompanied by
an increased price of corn, in consequence of the ne-
cessity of obtaining corn from inferior soils : as in the
above case, in consequence of the increase of population
it was necessary to obtain corn from the land C, as
well as from the land A and B.
Mr Ricardo asserted that the interest of the
landlord (which is the rise of rents), is opposed to
the interest of the consumers of produce (which is
cheap prices).
It will be my business to show that this proposition
is altoof ether erroneous.
That cause which Mr Ricardo assumes as the
general cause of the rise of rents is not the general
cause, if it ever operate : and is not the cause of the
rise which has taken place in England in modern
times.
I will first prove that this is not the cause which
has operated, and then I will endeavour to show what
is the cause which has produced the effect.
This, then, is the proposition to which I first invite
your attention.
The rise of rents in England in recent times has
not resulted from the Ricardian cause, the rise of
prices of produce in consequence of the increased diffi-
culty of production.
To prove this, I shall prove that when rents rise
from the Ricardian cause, (the increased difficulty of
5
66 RWARDIAN DOVTRINE [Lect. V.
production), the whole rent must necessarily become a
larger fraction of the produce.
Thus, in the case which we have taken, the produce
of an acre of the lands A, B, C, is respectively 12, 10,
and 8. And, if we suppose the quantity of each quality
of land to be equal, (a supposition made merely at first
to simplify the reasoning,) when C is not cultivated, the
produce is as 12 + 10 = 22, and the rent as 2. The
rent is ^ the produce.
When C is cultivated, the produce is as 1 5 + 1 2^
+ 10 = 374, and the rent is as 5 + 24 = 74. The rent
is ^ the produce.
Thus in this case the rent increases from 2 to 7|^,
and it is at the latter stage \ of the produce, having at
the former been -^. It is a larger portion of the
whole at the last than at the first.
The numbers in this case result from the supposition
that the quantities of each of the kinds of land. A, B,
C, are equal.
But the general result, that the rent is a greater
portion of the produce at the latter stage than at the
former, does not depend on any supposition as to quan-
tities. It will be the same, whatever be the quantities
of different kinds of land.
For each kind of land will have the rent a greater
fraction at the latter stage than at the former ; and
therefore all the fractions at the latter stage, multiplied
by their quantities, and added together, must be greater
than at the former stage.
But in the progress of agriculture in England
during the present century, it is allowed, by all who
lect. v.] of rise of rents. . 67
have attended to the subject, that though the amount
of rent has increased, the rent is now a smaller fraction
of the gross produce than it was formerly. The rent
was in former times one third of the gross produce.
It is now one fourth, or one fifth.
How is this to be explained ?
The same result follows if we compare England and
France ; for France, in matters of agriculture, may
be regarded as representing England at an earlier
stage.
Thus M. Lavergne, who has studied the causes of
the superiority of England to France, and pubhshed
liis results {L'Economie Rurale de VAngleteiTe, 3rd
Ed. 1858, p. 98), states the gross produce of a hectare
in France to be 100, and the rent 30 ; in England the
gross produce for the same quantity of land is 250, and
the rent is 75. The rent in the former case is -j^, in
the latter it is still -^, though the actual amount of the
rent is more than doubled.
Again I ask, how is this to be explained? It ap-
pears to me to be one of the most important problems
in Political Economy ; both as to its bearing upon the
Doctrine of Rent, and as to its bearing upon the na-
ture of agricultural progress. How is it to be solved ?
The only solution must be this : that the nature of
agricultural progress in these cases is not that which is
supposed in the theory as stated by Ricardo ; namely,
the increased difficulty and expense of raising produce
from land ; or, as it is also expressed, the extension of
cultivation to inferior soils.
But if it is not that, what is it ?
I reply, it is the use of Auxiliary Capital; that is,
5—2
68 RISE OF RENTS [Lect. V.
capital employed in machines, (ploughs, carts, &c.)
manure, draining, working cattle, and all other contri-
vances by which the agricultural labour of man is
assisted.
Such capital is emj)loyed to a very large extent in
England. It appears (Jones, On Rent, p. 223), from
various returns made at different times to the Board of
Agriculture, that the whole capital agriculturally em-
ployed is to that applied to the support of labourers, as
5 to I : that is, there is foui^ times as much auxiliary
capital used as there is of capital applied to the main-
tenance of labour and directly in tillage. In France,
the auxiliary capital used does not amount (as appears
from Count Chaptal's statement) to more than twice
that applied to maintain rustic labour. In other
European countries the quantity of auxiliary capital is
probably much less.
Now, how will this auxiliary capital affect the
question of rent ?
In this way. The capital thus employed is to a
certain extent, fixed capital : that is, it lasts a certain
number of years, and requires to be replaced only after
that time. Thus a capital of £60 which wears out in
10 years may be replaced by a return of £6 a year.
Or rather, a capital of £50 which wears out in 10
years may be replaced with profits by a return of £6 a
year. Now, what will be the effect of such a capital
on Kents ?
This capital (£50 an acre) will not be employed,
unless it will produce a return of £6 an acre. It
must therefore increase the produce to at least that
amount.
Lect. v.] FROM AUXILIARY CAPITAL. 69
Suppose, as before, three qualities of land
ABC
of which the produce is
20 15 10, respectively.
The gross produce is here 20 + 15 + 10 = 45,
and the rent is 10 + 5 = 15,
and as 15 is one third of 45, the rent is J of the gross
produce.
Let now the capital (say £50 an acre) be applied,
and let the produce now become greater than it was
for ^ B C
by 876,
A and B thus still retaining their superiority over C :
the produce now is
ABC
28 22 16.
The gross produce is now 28 + 22 + 16 = 66^
and the rent is 12 + 6 = 18,
the rent is ^ of the produce, which is 3^; a smaller
fraction than before, though the rent itself has in-
creased from 15 to 18.
Let us make a supposition of a still larger increase
of produce by the application of capital. The produce
without the capital being as before,
for ABC
20 15 10.
Let the addition resulting from the application of
capital be
16 15 14:
70 RISE OF RENTS [Lect. V.
the produce will now be
36 30 24.
Tlie gross produce is 90,
the rent is 12 + 6 = 18,
and 18 is J of 90; so that in this case, though the rent
is increased from 15 to 18, it is, as a fraction of the
produce, diminished from one third to one fifth.
We here suppose that the produce of the land C,
which was 10 before the application of the capital, is
24 with the capital. The amount 10 corresponds to
the wages of labour, and 14 is required to replace the
capital with profits.
M. Lavergne gives the following estimate of the
distribution of the produce for an English and for a
French hectare, (Ec. Bur. p. 98) ;
England :— Rent 75
Wages 60
Farmer's profits 40
Accessory expenses ... 50
Taxes 25
250
France: — Rent 30
Wages 50
Farmer's profits 10
Accessory expenses 5
Taxes 5
100
Lect. v.] FROM AUXILIARY CAPITAL. 71
Here the Accessory Expenses are the return which
is requisite to replace the AuxiUary Capital. As we
see, he makes them 10 times as great in England as
in France.
We see that while the farmer in England pays 75
in wages, he requires 90 for his profits, and for keeping
up his stock.
Since his profits are estimated at 40, we may esti-
mate his capital at 400, which is more than 4 times
what he pays in wages ; as I have said that those who
judge from facts have estimated it.
But all these numbers are hypothetical, and intro-
duced merely for the sake of illustrating by example
my proposition. The proposition is this : that rents
may increase not only by the extension of cultivation
to poorer soils ; but also by the improvement of
methods of culture ; and that the increase of produce
and of rents in England has arisen from such improve-
ment, much more than from the extension of culture to
worse soils.
Further, this improvement of the methods of cul-
ture has involved the application of a great amount of
capital, as auxiliary to the labour of man in cultivation.
We know such an apphcation of capital to have
taken place ; and the proof that this is the real case
is found in the fact, that the rent has become a smaller
portion of the gross produce.
I hope I have now given a solution of the Pro-
blem : How it has come to pass, that while rents have
increased in England, the rent has become a smaller
fraction of the produce. It is demonstrable, as you
have seen, that this cannot arise from the cause
72 CAUSE OF RISE OF RENTS [Lect. V.
asserted by Mr Ricardo and Mr M'^Culloch to be the
sole and universal source of an increase of rents.
But it may be asked, bow did the proposition
which I am combating — that the increase of rent arises
universally from the extension of cultivation to inferior
soils, or to the same soil with inferior returns — obtain
such a hold on the minds of eminent Political Econo-
mists ?
To this I reply, that this happens because this
proposition was an ingenious deduction from the doc-
trine of rent on a certain hypothesis ; namely on the
hypothesis of a constantly decreasing return to agri-
cultural labour ; and in consequence of the ingenuity
of the deduction, the doctrine and the hypothesis were
accepted as proving each other.
The doctrine of rent, that rent is the excess of the
produce of good soils over the worst soils, or over
the worst remunerated capital, was received, as we
have seen, with great admiration. The hypothesis,
that successive equal doses of labour or of capital
produce diminishing results, was accepted as most
simple. Perhaps it was suggested by a vague notion
of the effect of labour employed in digging the soil.
If the produce of a given field be increased by one
man's digging over the soil, it may perhaps be further
increased by two men who may pulverize the soil still
further : but it is not likely that the second man's
labour will produce an addition equal to tbe first.
But there seems to be no reason whatever to
suppose that this is the rule of the general case.
Additional labour, and additional capital, may be em-
ployed upon land, and the result may be no additional
Lect. v.] in ENGLAXD. 7
n
produce. But also additional labour and additional
capital, in other ways, may be emj)loyed so as to give
additional produce to an extent of which we cannot
prescribe the limits beforehand. The great point in
such cases is to discover how this may be done. The
result depends upon agricultural skill and inventive-
ness, and may be great or may be small. Though the
law of decreasing productiveness to additional labour
and capital had been laid down with great confidence,
there seems to be no ground for asserting it as a law
of the progress of agriculture. The great improve-
ments in agriculture, improved machines, manures,
drainage, do not appear to have followed this law.
The improvements in agriculture have not consisted
in trying more and more to squeeze from a given plot
of ground the utmost crop that it can produce of one
kind, but in introducing new kinds of food for animals,
as turnips into the sandy soils of Norfolk, and artificial
grasses of all kinds, and in making one part of the
farm play into the hands of another, so as to feed
an increased number of cattle, and yet to have an
increased breadth of cereal crops. There have been
improvements too in all agricultural machinery : new
manures : new and improved modes of draining : and
many other improvements. In these ways the produce
of the land has been increased, and additional capital
has been employed upon it : but there is no ground
whatever for saying that each additional equal dose
of capital so applied has produced smaller results.
To make improvements in agriculture must depend,
as I have said, upon inventive skill : and it is the
skill which has been brought out in this pursuit in
74 PROPORTIOX OF AGRICVLTVRAL [Lect. V.
England which has been the cause of the agricultural
progress of England ; and this has been the reward
of the care, study, and enterprize bestowed upon the
subject. That this, and not the decreasing fertility
of soils, is the cause of the increase of rents in En-
gland, is shown, as I have said, by the fact that the
rent though greater absolutely, is a less fraction of the
whole produce.
Proposition of agricultural and non-agricultural
Population.
Besides the proportion which rent bears to produce,
there is another larofe fact in the condition of Enofland,
which proves, in the most conclusive manner, that the
course of events by which England has come into its
present condition, has been an increase in the produc-
tive powers of its agriculture, such as has placed it in
advance of other countries : in advance of France, and
of other countries probably still more.
This fact is, the proportion of the non-agricultural
to the agricultural population. In England the non-
ao-riculturists are double the number of the asfricul-
turists. In England, 4 cultivators of the soil produce
sustenance for 8 besides themselves ; that is, for 1 2 per-
sons altogether.
But in France before the Eevohition, the cultivators
were to the non-cultivators as 4 to i : that is, 4 culti-
vators produced sustenance for 5 persons.
Perhaps now in France the cultivators are to the
whole population as 2 to 3 . Ilcncc 4 cultivators pro-
Lect. y.] AXD NOX-AGRICULTURAL POPULATION. 75
duce sustenance for 6 persons. Thus the productive
powers of the agricultural population are in England
double of what they are in France.
What is the manner of the increase of the non-
agricultural classes ? Plainly the employment of Aux-
iliary Capital brings many of them into being. The
Auxiliary Capital is employed in supporting those who
are not directly engaged in agriculture, but in other
ways auxiliary to agriculture : for instance, the machine-
maker, who makes ploughs and carts, and now, thrash-
ing and winnowing machines worked by steam-
engines : — the brick-maker who makes draining tiles : —
the sailor who brings guano from afar: — and many
others. It is reckoned, as I have said, that (Jones,
p. 232) the agi^iculturists, in using the results of such
auxiliaries, employ 4 times as much capital as they ex-
pend in wages.
Hence, if wages be as 10, the whole capital em-
ployed must be as 50 ; and if the farmer's profit on his
capital be 10 per cent., which is a reasonable rate,
the farmer's income will be 5 ; that is, half the whole
amount of the wages which he pays to his labourers.
Mr Jones, from whom I mainly take these details,
has traced into other results the effects of the employ-
ment of auxiliary capital. On this point of the great
income of the capitalists employed in agriculture, he
observes, (p. 233) :
""While the revenue of the capitalists equals only
one tenth that of the labourers, they form no promi-
nent part of the community, and indeed must usually
be peasants or labourers themselves. But a mass of
profits equal to or exceeding one-half the wages of
76 DIFFERENT KINDS OF RENT. [Lect. V.
[agricultural] labour (wliich mass exists in England)
naturally converts the class receiving it into a nume-
rous and varied body. Their influence in a community
in wliich they are the direct employers of almost all the
labourers, becomes very considerable; and what is in
some respects of more importance, such a rich and nu-
merous body of capitalists, — as, descending from the
higher ranks they approach the body of labourers by
various gradations till they almost mingle with them —
form a species of moral conductors by which the habits
and feelings of the upper and middling classes are
communicated downwards, and act more or less power-
fully upon those of the very lowest ranks of the com-
munity."
The above views of the efiect of Auxihary Capital
on Kent are borrowed from a very able and original
work on Rent, published in 1831, by Mr Richard Jones,
who was subsequently Professor of Political Economy
at Haileybury College. So far as I know, he was the
first person who solved the problem which we have
been considering ; how Rents become absolutely larf^er
and yet a smaller part of the produce.
Different hinds of Rent.
All that has been said applies only to Farmers
rents ; that is, rents paid to a landlord by a capitalist
who employs labourers. The capitalist employs his
capital for Profit ; and the rate of profit is determined
by competition with other capitalists. If he could not
Lect. v.] kinds of rent. -^
get iliis profit by farming, he would remove his capital
to some other employment.
But this fact thus assumed — that capitalists can re-
move their capital from farming, and will do so, if
farming does not pay — is not generally true ; — is, in
fact, true only in England and a few districts else-
where. Nor is it true that the land is cultivated by
capitalists employing others to labour, selling their
produce and living upon the proceeds. Over the
greater part of the earth's surface, cultivation is carried
on by persons who raise their subsistence from the soil,
and pay a portion to the owner of the soil. In this
case the payments to the owner of the soil — rents, that
is — are determined not by competition, but by custom.
And thus, in fact, land has been held, and rent has
been paid, on very different principles from that which
we have described. According to the mode of holding
the cultivators have been classed as Metayers, Serfs,
Ryots, Cottiers.
These are thus characterized by Mr Jones, who in-
troduced this classification into Political Economy.
The Metayer is a peasant tenant, extracting his
own wages and subsistence from the soil. He pays a
jpToduce rent to the owner of the land. The landlord
supplies him with stock.
This mode of tenure prevails largely in France and
Italy, and was the common tenure among the Greeks
and Romans : {Metayers = Medietaini).
Serf rents are labour rents : that is, the owner of
the land sets aside a portion of the land for cultivation
by the peasant and leaves him to extract his own
subsistence from it ; and he exacts as a rent for the
78 KINDS OF RE XT. [Lect. Y.
land, thus given to the cultivator, a certain quantity of
labour to be employed on the remainder of the estate,
for the benefit of the lord.
These rents have prevailed on a larger scale in
Eastern Europe — in Pussia, Hungary, Poland, Livonia
and Esthonia, and in Germany. There are, or were
lately, remnants of them in the Scottish highlands,
(Jones, p. 45).
Ryot rents are produce rents paid by a labourer
raising his own wages from the soil, to the sovereign,
as the proprietor of the soil, (Jones, p. 109).
They are peculiar to Asia, India, Persia, Turkey;
probably exist in China.
Cottier rents are rents contracted to be paid in
money by peasant tenants, extracting their own sub-
sistence from the soil. They exist in Ireland.
Mr Mill, who has borrowed Mr Jones's classification
in the main, puts Ryot rents and Cottier rents in the
same chapter : but the differences between the two are
important, as we shall see.
Mr Mill has an excellent chapter in which he shows
how the difference between Farmers' rents and other
rents depends on the difference between Competition
and Custom, as the general rule of economical pro-
ceedings {Polit. Econ. p. 282).
"Under the rule of individual property, the divi-
sion of the produce is the result of two determining
agencies: Competition, and Custom. It is important
to ascertain the amount of influence which belongs to
each of these causes, and in what manner the operation
of one is modified by the other.
" Political economists generally, and English politi-
Lect. v.] COMPETITIOX AND CUSTOM. 79
cal economists above others, are accustomed to lay
almost exclusive stress upon the first of these agencies ;
to exaggerate the effect of competition, and take into
little account the other, and conflicting principle. They
are apt to express themselves as if they thought that
competition actually does, in all cases, whatever it can
be shewn to be the tendency of competition to do.
This is partly intelligible, if we consider that only
through the principle of competition has political eco-
nomy any pretension to the character of a science. So
far as rents, profits, wages, prices, are determined by
competition, laws may be assigned for them."
And this applies especially to the tenure of land,
(p. 285):
"The relations, more especially, between the land-
owner and the cultivator, and the payments made by
the latter to the former, are, in all states of society but
the most modern, determined by the usage of the coun-
try. Never until late times have the conditions of the
occupancy of land been (as a general rule) an affair of
competition. The occupier for the time has very com-
monly been considered to have a right to retain his
holding, while he fulfils the customary requirements;
and has thus become, in a certain sense, a co-proprietor
of the soil. Even where the holder has not acquired
this fixity of tenure, the terms of occupation have often
been fixed and invariable.
" In India, for example, and other Asiatic commu-
nities similarly constituted, the rj^ots, or peasant-
farmers, are not regarded as tenants at will, or even as
tenants by virtue of a lease. In most villages there
are indeed some ryots on this precarious footing, con-
8o RYOTS. [Lect. V.
sisting of those, or the descendants of those, who have
settled in the place at a known and comparatively re-
cent period : but all who are looked upon as descendants
or representatives of the original inhabitants, are
thought entitled to retain their land, as long as they
pay the customary rents. What these customary rents
are, or ought to be, has indeed, in most cases, become a
matter of obscurity ; usurpation, tyranny, and foreign
conquest having to a great degree obliterated the evi-
dences of them. But when an old and purely Hindoo
principality falls under the dominion of the British
Government, or the management of its officers, and
when the details of the revenue system come to be in-
quired into, it is often found that although the demands
of the great landholder, the State, have been swelled
by fiscal rapacity until all limit is practically lost sight
of, it has yet been thought necessary to have a distinct
name and a separate pretext for each increase of exac-
tion ; so that the demand has sometimes come to con-
sist of thirty or forty different items, in addition to the
nominal rent. This circuitous mode of increasing the
payments assuredly would not have been resorted to,
if there had been an acknowledged right in the landlord
to increase the rent. Its adoption is a proof that there
was once an effective limitation, a real customary rent ;
and that the understood right of the ryot to the land,
so long as he paid rent according to custom, was at
some time or other more than nominal. The British
Government of India always simplifies the tenure by
consolidating the various assessments into one, thus
making the rent nominally as well as really an arbi-
trary thing, or at least a matter of specific agreement :
Lect. v.] SEBFS. 8 1
but it scrupulously respects the right of the ryot to the
land, though it seldom leaves him much more than a
bare subsistence.
*' In modern Europe the cultivators have gradually
emerged from a state of personal slavery. The bar-
barian conquerors of the Western empire found that
the easiest mode of managing their conquests would be
to leave the land in the hands in which they found
it, and to save themselves a labour so uncongenial as
the superintendence of troops of slaves, by allowing the
slaves to retain in a certain deg^ree the control of their
own actions, under an obligation to furnish the lord
with provisions and labour. A common expedient was
to assiofn to the serf, for his exclusive use, as much
land as was thought sufficient for his support, and to
make him work on the other lands of his lord whenever
required. By degrees these indefinite obligations were
transformed into a definite one, of supplying a fixed
quantity of provisions or a fixed quantity of labour :
and as the lords, in time, became inclined to employ
their income in the purchase of luxuries rather than in
the maintenance of retainers, the payments in kind
were commuted for payments in money. Each con-
cession, at first voluntary, and revocable at pleasure,
gradually acquired the force of custom, and was at last
recognised and enforced by the tribunals. In this
manner the serfs progressively rose into a free tenantry,
who held their land in perpetuity on fixed conditions.
The conditions were sometimes very onerous, and the
people very miserable. But their obligations were de-
termined by the usage or law of the country, and not
by competition.
6
82 METAYERS. [Lect. V.
''Where the cultivators had never been, strictly
speaking, in personal bondage, or after they had ceased
to be so, the exigencies of a poor and little advanced
society gave rise to another arrangement, which in
some parts of Europe, even highly improved parts, has
been found sufficiently advantageous to be continued
to the present day. I speak of the metayer system.
Under this, the land is divided, in small farms, among
single families, the landlord generally supplying the
stock which the agricultural system of the country is
considered to require, and receiving, in lieu of rent and
profit, a fixed proportion of the produce. This pro-
portion, which is generally paid in kind, is usually, (as
is implied in the words 7netayer, mezzaiuolo, and medie-
tarius,) one-half. There are places, however, such as
the rich volcanic soil of the Province of Naples, where
the landlord takes two-thirds, and yet the cultivator by
means of an excellent agriculture contrives to live.
But whether the proportion is two-thirds or one-half,
it is a fixed proportion ; not variable from farm to farm,
or from tenant to tenant. The custom of the country
is the universal rule ; nobody thinks of raising or
lowering rents, or of letting land on other than the cus-
tomary conditions. Competition, as a regulator of
rent, has no existence."
A7.VZ>^ OF RENT. 83
LECTURE VI.
TEANSITIONS OF FORMS OF RENTS.
Transition from Metayer Rents.
I WILL resume what has just been said.
The Doctrine of Kent as delivered by modern
economists, has been considered as the most re-
markable example of reasoning on such subjects.
But this doctrine applies only to Farmers' Kents ;
now Farmers' Hents are the sums paid for the use
of the Land by capitalists farming for Profit: it being
implied that profits are determined by competition; and
that if the farmers do not make such an amount
of profit they will remove their capital to some other
employment. But these conditions are not generally
verified in countries as they exist actually. The
cultivator is not a capitalist, and the stock employed
upon the land is not moveable. Taking the surface
of the earth at large, the conditions on W'hich the
cultivator holds it are different in different countries ;
but Farmers' Bents exist nowhere except in England
and a few regions elsewhere. Taking the actual con-
ditions of culture, it appears that tenants may be
divided, as I said before, into four classes ; Metayers,
Serfs, Byots, and Cottiers, in addition to Farmers.
6—2
84 INDUCTIVE POLITICAL ECONOMY. [Lect. YI.
It may be observed that we have, in this new view
of the subject, an example of the inductive method
appUed to Pohtical Economy, in distinction from the
deductive method, which is that of Hicardo and his
school. Their method consists in taking definitions,
and reasoning downwards from them, as is done in geo-
metry ; and thus, as Mill says, we come to pro-
positions which, like those of geometry, require an
aptitude for such reasoning in the student. We take
the definition of Rent, that it is what is paid by a
capitalist for the use of the land, and we come to
the proposition that Rent is the excess of good soils
above the worst. In the other method we beo-in not
from definitions, but from facts. We take the facts
as we find them in the various countries of the globe :
we classify these facts ; and having so classified them,
we see what propositions can be truly asserted con-
cerning;' each class. And this method is the more
"useful, because the truths to which we are thus led
are those which are characteristic of the social and
political condition of each people; of the I'elations of
ranks : and of the means and chances of chano-e and
progress. I will mention a few such propositions
mainly as examples. The work of Mr Jones on
Rent to which I have already referred, is occupied
almost entirely with the consideration of such subjects.
Next to Farmers' Rents, which occupy the soil
of England, we may consider Metayer Rents, which
occupy a large part of the soil of France and Italy.
The usual form of such rents is, as the name implies,
that the proprietor and the cultivator divide the pro-
duce equaUj. A French gentleman who came from
Lect. yi.] metayer rents. 85
a Metayer part of France gave me a very definite
image of this eqnal division. He said that the pro-
duce was every year garnered by the cultivator into
two barns, locked up there with two keys, and then
the proprietor took which key he chose, the cultivator
taking the other, each being thus put in possession
of his half of the harvest.
Countries in a state of Metayerage are commonly
far less rich and populous th^n countries where Farmers'
rents prevail : but the* difference is not a difference
which can be remedied by any alteration in the sys-
tem. The system itself depends upon the general
state of wealth and population in the country. M, de
Lavergne has pointed out with great precision the
difference of France and England in this respect :
and has made a remark which appears to be of the
highest importance, following Arthur Young : namely :
that the progress of agriculture from the system of
metayerage to the system of farmers depends on the
existence of a Market {debouches) for agricultural
produce. He says (p. 166) :
"Beginning with the reign of Queen Anne,
England visibly gets the start of France in industry
and commerce ; that is to say, in everything, for
progress in these respects includes all other progress.
After the American war, when the nation, afflicted at
the loss of its principal colony, threw itself back upon
itself to find compensation in its own resources, the
vigour of its advance was quite without parallel. Then
appears Adam Smith, who in an important work,
examines the cause of the wealth and greatness of
nations. Then appeared great inventors, as Arkwright
86 PROGRESS OF ENGLAND. [Lect. YI.
and Watt, who are as it were the instruments of
Adam Smith, to reaUze his theories in the practice
of industry. Then appears WilHam Pitt, who carries
the same spirit into the administration of pubUc
affairs. Finally there appear Arthur Young and
Bakewell, who apply the new ideas to agriculture.
"The system of Arthur Young is very simple.
It is comprized in a single word, of which Adam Smith
had recently fixed the meaning — a market. Till that
time the English cultivators, like those of the conti-
nent, had worked but little with a view to a market.
The greater part of agricultural produce had been
consumed upon the spot by the producers themselves :
and though more was sold in England than elsewhere,
the idea of the market was not that which governed
the process of production. Arthur Young is the first
who made the English agriculturists understand the
growing importance of a market, that is, of the sale
of agricultural produce to a non-agricultural popula-
tion. This non-agricultural population, till that time
small, began to grow into importance ; and since then,
thanks to the expansion of industry and commerce,
the multiplication of their population is become im-
mense."
M. de Lavergne then notices the enormous pro-
gress which the use of steam has produced in England,
especially in Lancashire and the West Riding of
Yorkshire: — cotton at Manchester, iron at Sheffield,
wool at Leeds, commerce at Liverpool. He notices
the wealth arising from the coal-fields. '^ Under these
circumstances," he says, " the population of Great Bri-
tain rose between 1801 and 1851 from 10 millions to 21.
Lect. VI.] STATE OF FRAXCE. 87
The population of Lancashire and of the "West Riding
was tripled. France in no instance shews anything
like this: in the same interval it increased only by
a quarter [a third]. It advanced from 27 millions
to 36. The most populous departments, those du
Rhone and du Nord, have only two inhabitants per
hectare,
" If we pass into the departments of France which
are most backward, those du Centre and du ]Midi, what
do we find there ? A thin population reaching at most
to the third of the English population, one inhabitant
for two hectares, instead of three inhabitants. And this
population is almost exclusively agricultural. Few or
no cities : few or no manufactures : trade only so much
as is strictly requisite for the narrow needs of the in-
habitants : the centres of consumption being far asun-
der and the means of communication dear and difficult,
the expenses of transport would absorb the whole value
of the produce. Here the cultivator can find little or
nothing to sell. For what purpose then does he la-
bour ? To feed himself and his master with the pro-
duce. The master shares the produce in kind, and
consumes his part. If it is wheat or wine, the master
and the metayer eat wheat and drink wine. If it is
rye, sarrasin, potatoes, master and metayer eat rye,
sarrasin, and potatoes. Wool and hemp are shared in
like manner, and serve to make the coarse stuffs in
which the two partners alike are dressed. If besides
this there are a few lean sheep in the sheds, a few
calves suckled with difficulty by cows exhausted with
labour, and to which the milk is grudged, these they
sell to pay the taxes.
88 STATE OF FRAXCE. [Lect. VI.
" This system," he goes on to say, '' has been much
blamed : but it is really the only possible system there,
where there are no markets. In such a country as
this, agriculture cannot be a profession, a speculation,
a trade. In order to speculate a man must sell, and
he cannot sell when he finds no one to buy. When I
say no one, it is to push the supposition to an extreme
point, Avhich it seldom reaches in fact. In France,
even in the most secluded cantons, there are always
some small number of buyers : sometimes a tenth,
sometimes a fifth, sometimes a fourth, of that popula-
tion which lives solely on agriculture. And in propor-
tion as the number of these consumers increases, the
condition of the cultivator improves ; except it happens
that he himself supplies the income of these customers
under the form of legal dues, or interest of loans, which
happens at least in some instances. But the tenth, the
fifth, even the fourth, is not enough to furnish a suffi-
cient market ; especially if this part of the population
also is composed of producers, that is, of tradesmen and
manufacturers.
"In this case the cultivator must grow food, in
order to live. So long as the population is thin, this
may be done ; but when population increases, the want
of subsistence is felt.
'' But let us now pass to the part of France which
is most populous and most industrious, that of the
Western North. We find there not exactly the coun-
terpart of the English population ; we find an inhabitant
for each hectare, instead of il (as in England) : but
this is already the double of what we had elsewhere ;
and of this population, one half applies itself to trade.
Lect. VI.] TRANSITION FROM SERF RENTS. 89
manufactures, and the liberal professions. "What is
esjDecially called the country is not more populous than
in the centre, and the South ; but in addition to the
population we find cities numerous, rich, the seats of
manufacturers ; and among these, the largest and most
opulent of them all, Paris. There is in this region a
large trade in agricultural produce. On all sides, the
grain, the wines, the cattle, the wools, the fowls, the
eggs, the milk, stream from the country to the towns,
which pay with their manufactures for what they pur-
chase. When we reach this stage, farmers' rents be-
come possible, and are found paid in fact : this is the
true cause of farmers' rents. The existence of such
rents is an infallible indication of an economical situa-
tion, where the sale of produce is the rule, and where
consequently cultivation can become a trade."
And thus the transition from metayer rents to
farmers' rents depends upon the existence of a regular
market. And as the author says, that which was pre-
viously a series of problems, is perfectly explained.
M. de Lavergne traces the consequence of this view
into various interesting details : but for these I have
not time. I will turn to another transition from one
form of Kent to another. For these transitions mark
the great steps in the progress of each nation, and are
really far more important than the greatest events in
their history, as history is commonly narrated.
Transition from Serf Rents.
Serf rents are, as I have said, the rents jDaid in
labour to the owner of the soil by a peasant who is
90 TEAXSITIOJ FROM SERF REXTS. [Lect. YI.
allowed to raise his own subsistence by labouring on
the soil. They prevail now in Kussia and in the eastern
part of Europe. But previously they existed over the
whole of Europe : they existed in England. How
were they got rid of in England? When did this
great event take place. I will give you Mr Jones's
account of this change, (p. 40) :
''Thirteen hundred years have elapsed since the
final establishment of the Saxons. Eight hundred of
these had passed away, and the Normans had been for
two centuries settled here, and a very large proportion
of the body of cultivators was still precisely in the
situation of the Russian serf During the next three
hundred, the unlimited labour rents paid by the villeins
for the lands allotted to them were gradually com-
muted for definite services, still payable in kind ; and
they had a legal right to the hereditary occupation of
their copyholds. Two hundred years have barely
elapsed since the change to this extent became quite
universal, or since the personal bondage of the villeins
ceased to exist among us. The last claim of villeinage
recorded in our courts was in the 15th of James I.,
1618. Instances probably existed some time after this.
The ultimate cessation of the rio-ht to demand their
stipulated services in kind has been since brought
about, silently and imperceptibly, not by positive law ;
for, when other personal services were abolished at the
Restoration, those of copyholders were excepted and
reserved."
Mr Jones goes on to say that throughout Ger-
many, similar changes are taking place : though they
are perfected perhaps nowhere, and in some large dis-
Lect. YI.] TRAXSITION IN RUSSIA. 9 1
tricts they exhibit themselves in very backward stages.
AVe have heard lately that great changes in the con-
dition of the Serfs are aimed at in Kussia, The
Emperor, we are told, has taken large steps for the
emancipation of his Serfs. But such aims and such
measures are far from new in Russia. Mr Jones
describes these aims and attempts (p. 63) :
"A wish to extend the authority and protection
of the general government over the mass of cultivators
and to increase their efficiency, and through that the
wealth and financial resources of the state, has led the
different sovereigns always to co-operate, and often to
take the lead, in putting an end to the personal de-
pendence of the serf, and modifying the terms of his
tenure. To these reasons of the sovereigns and land-
lords, dictated by obvious self-interest, we must add
other motives which do honor to their characters and
to the age, the existence of which it would be a mere
affectation of hard-hearted wisdom to doubt; namely,
a paternal desire on the part of sovereigns to elevate
the condition and increase the comforts of the most
numerous class of the human beinofs committed to their
charge ; and a philanthropic dislike on the part of the
proprietors to be surrounded by a race of wretched
dependents, whose degradation and misery reflect dis-
credit on themselves. These feelings have produced
the fermentation on the subject of labour rents, which
is at this moment working throughout the large divi-
sion of Europe in which they prevail. From the crown
lands in Russia, through Poland, Hungary, and Ger-
man}^, there have been within the last century, or are
now, plans and schemes on foot, either at once or
92 TRAXSITIOX FROM RYOT RENTS. [Lect. VI.
gradually to get rid of the tenure, or greatly to modify
its effects and improve its character ; and if tlie wishes
or the authority of the state, or of the proprietors, could
abolish the system, and substitute a better in its place,
it would vanish from the face of Europe. The actual
poverty of the serfs, however, and the degradation of
their habits of industry, present an insurmountable
obstacle to any general change which is to be complete
and sudden. In their imperfect civilization and half-
savage carelessness, the necessity originated which
forced proprietors themselves to raise the produce on
which their families were to subsist. That necessity
has not ceased; the tenantry are not yet ripe — in some
instances not riper than they were a thousand years
ago — to be entrusted with the responsibility of raising
and paying produce rents. But as the past progress
and actual circumstances of different districts are found
unlike, so their capacity for present change differs in
kind and degree."
It must be for future years to determine whether
the attempts made in our time to accelerate this change
are effectual; and what is the result of the effort at
so sfreat a social revolution.
Transition from Bijot Bents.
Another kind of peasant rent prevails in Asia, and
especially in India, called, as I have said, Ryot rents ;
Ryot being the name for the cultivator. These rents
are a iDvodace rent, paid to the sovereign as proprietor
of the soil. Mr Jones says (p. 138) :
''There is nothing mischievous in direct effect of
Lect. VI.] EYOT RENTS. 93
ryot rents. They are usually moderate ; and when
restricted to a tenth, or even a sixth, fifth, or fourth
of the produce, if collected peacefully and fairly, they
become a species of land-tax, and leave the tenant a
beneficial hereditary estate. It is from their indirect
effects therefore, and from the form of government in
"vvhich they originate, and which they serve to per-
petuate, that they are full of evil, and are found in
practice more hopelessly destructive of the property
and progress of the people than any form of the rela-
tion of landlord and tenant known to us.
^'The proprietary rights of the sovereign, and his
large and practically indefinite interest in the produce,
prevent the formation of any really independent body
on the land. By the distribution of the rents, which
his territory produces, the monarch maintains the most
influential portion of the remaining population in the
character of civil or military officers. There remain
only the inhabitants of the towns to interpose a check
to his power ; but the majority of these are fed by the
expenditure of the sovereign or his servants. We
shall have a fitter opportunity to point out how
completely the prosperity or rather the existence of
the towns of Asia, proceeds from the local expendi-
ture of the government. As the citizens are thus
destitute from their position of real strength, so the
Asiatic sovereigns, having no body of powerful privi-
leged landed proprietors to contend with, have not had
the motives which the European monarchs had to
nurse and foster the towns into engines of political in-
fluence, and the citizens are proverbially the most help-
less and prostrate of the slaves of Asia. There exists,
94 KTOT RENTS. [Lect. VI.
therefore, nothing in the society beneath him which can
modify the power of a sovereign who is the supreme
proprietor of a territory cultivated by a population of
ryot jDeasants. All that there is of real strength in
such a population, looks to him as the sole source, not
merely of protection, but of subsistence ; he is by his
position and necessarily a despot. But the results of
Asiatic despotism have ever been the same : while it is
strong it is delegated, and its power abused by its
agents; when feeble and declining, that power is vio-
lently shared by its inferiors, and its stolen authority
yet more abused. In its strength and in its weakness
it is alike destructive of the industry and wealth of its
subjects, and all the arts of peace ; and it is this which
makes that peculiar system of rents particularly objec-
tionable and calamitous to the countries in which it
prevails."
The land-tax in this system is in practice arbitrary,
and thence oppressive. Mr Mill relates (i. 379) how
the English rulers when they succeeded to the powers
of the previous sovereigns attempted to remedy this
oppression. They wished to found a class of great
landlords, that India might prosper as England has
prospered under her landlords. For this purpose they
pitched upon a set of tax-gatherers called Zemindars.
But this plan seems to have failed. It seems now, says
Mr Jones (p. 118), to be generally admitted that the
claims of the Zemindars were overrated, and that if
something less had been done for them and something
more for the security and independence of the Ryots,
the settlement, without being less just or generous,
would have been more expedient.
Lect. VI.] TRAXSITIOX FR02I COTTIER REXTS. 95
But the system of cultivation in India seems on
the point of undergoing a great change from causes
extraneous to the ryot system. The Governor-General
has instituted, it is recently stated, a system of grants
of the unoccupied land, on terms which make the
grantees independent cultivators. The unoccupied land
is wide and fertile, and thus a race of cultivators may
arise whose condition will be free from the evils of
the ryot tenure. This however belongs to the Poli-
tical Economy of the Future.
Transition from Cottier Rents.
I now take another case.
Ireland is cultivated in a great measure by Cottiers.
Mr Mill has put these in the same chapter as the
ryots of India. At this I marvel much ; for he has
himself pointed out the broad differences which exist
between the two systems. He truly states that in
India the payments have been regulated by custom;
in Ireland by competition ; a vast difference, of which he
himself has forcibly pointed out the importance. Add
to this that in India the owner of the land is the
sovereign ; in Ireland a private person. And we may
add further — what is also a very important feature —
that the rent is contracted to be paid in money, not
in produce; and therefore does not vary with the
amount of the crops. And this last circumstance espe-
cially has great importance in the progress of the
country in which these systems are found.
Kyot rents have no tendency to change ; they have
existed in India from the time of the Greeks : probably
96 TRANSITION FROM COTTIER RENTS. [Lect. VI.
much lonofer. The Cottiers' rents of Ireland offer re-
markable faciHties for change; Mr Jones says (p. 152):
"The principal advantage the cottier derives from
his form of tenure is the great facility with which, when
circumstances are favourable to him, he changes alto-
gether his condition in society. In serf, metayer, or
ryot countries extensive changes must take place in
the whole framework of society before the peasants be-
come capitalists and independent farmers. The serf
has many stages to go through before he arrives at
this point, and we have seen how hard it is to ad-
vance one step. The metayer too must become the
owner of the stock on his farm, and be able to under-
take to pay a money-rent. Both changes take plc;ce
slowly and with difficulty, especially the last, the
substitution of money-rents, which supposes a con-
siderable previous improvement in the internal com-
merce of the nation, and is ordinarily the result, not
the commencement of improvement in the condition
of the cultivators. But the cottier is already the
owner of his own stock ; he exists in a society in which
the power of paying money-rents is already established.
If he thrives in his occupation, there is nothing to
prevent his enlarging his holding, increasing his stock,
and becoming a capitalist, and a farmer in the proper
sense of tlie word. It is pleasing to hear the resident
Irish landlords, who have taken some pains and made
some sacrifices to improve the character and condition
of their tenantry, bearing their testimony to this fact,
and stating the rapidity with which some of the
cottiers have, under their auspices, acquired stock and
become small farmers. Most of the countries occupied
Lect. VI.] IRELAND. 97
by Metayers, Serfs, and Ryots, will probably contain
a similar race of tenantry for some ages. If the events
of the last half century are favourable to Ireland, her
Cottiers are likely to disappear, and to be merged
into a very different race of cultivators. This facility
for gliding out of their actual condition to a higher
and a better, is an advantage, and a very great ad-
vantage, of the cottier over the other systems of
peasant rents, and atones for some of its gloomier
features."
This auspicious anticipation has been wonderfully
verified since Mr Jones wrote. Circumstances in the
recent history of Ireland, most disastrous in their first
aspect, have done much to break up the system of
cottier tenure and to introduce a better kind of culti-
vation. The Famine and the Exodus, the Poor
Law and the Encumbered Estate Act, have produced
a wonderful chano^e in the condition of Ireland. I will
read from a valuable article in the Edinburgh Review,
for 1857, an account of the manner in w^hich the
cottier system was affected by these events.
The Poor Law had been introduced into Ireland
in 1840 : but had not been brought face to face with
the needs of the people till the famine in 1847. In
that year it was modified so as to shake the cottier
system.
Ed. Rev. p. no : "The Poor Law of 1847 provided
for the problem of emancipating the soil from the cottier
system. The Acts of 1838 and 1844 had probably
had this object in view ; for they had charged the Irish
landlords with the entire poor-rate in respect of the
smaller class of holdings ; and this naturally tended to
7
98 IRELAND. [Lect. VI.
the consolidation of farms. But the Act of 1847 went
much further ; it refused relief altogether to occupiers
of more than a quarter of a statute acre ; and thus, by
basing the right of public charity upon giving up the
larger portion of their land, it forced off the Irish
cottiers in masses from the soil, and left it free for
a new race of agriculturists. The poorest of the
cottiers abandoned their buildings for the workhouses,
from which, however, the large majority of them
have since emerged, while those among them who
had still any residue of property, commenced that
strange and unparalleled emigration, which has sent
Irish energies to a hopeful field, and has opened the
land of Ireland for a better system. The law which
did this was stern, but it was not unjust, and no
one can deny the good it has accomplished."
The Encumbered Estates Act operated in the same
direction.
Ed. Rev. p. T16 : "A law which ^ freed the land of
Ireland from all checks on alienation, which broke down
the equity mode of transfer, with its jealous impedi-
ments to jDuisne creditors, its fearful delays, its ruinous
expense, and its cumbrous and unsatisfactory procedure,
and which, besides, offered every security to purchasers,
would necessarily, under any circumstances whatever,
have brought a great many estates to the market.
But passing at a time when the equity courts were
crowded with embarrassed estates, when the ruin
occasioned by the famine, and the poor-rates, and
the panic resulting from the repeal of the corn -laws,
and the lowness of prices, had made all creditors on
real property in Ireland extremely anxious to realize
Lect. VI.] JRELAXD. 99
their securities, it operated to an extent well nigh
inconceivable. In a period of less than eight years,
the Irish Encumbered Estates Commission has dealt
with landed property representing a net rental of up-
wards of £1,450,000 sterling, and covering an area
of more than four million one hundred thousand acres.
A Court of Justice, sitting^ in a remote corner of
Dublin, has peaceably changed the ownership of a
larger mass of land that probably passed under
Cromwell's confiscations. Of the vast district brouo-ht
within its grasp, about six-sevenths, containing three
millions five hundred thousand acres, with a rental
of one milHon two hundred and thirty thousand
pounds sterling, has been sold and transferred, lea vino-
a residue of six hundred thousand acres of the yearly
value of two hundred and twenty thousand pounds
sterling still undisposed of. The encumbrances upon
the estates already sold, and which hitherto had been
pent up in the courts of equity or left in the hands
of ruined inheritors reached the extraordinary sum
of thirty-six millions sterling, or upwards of twenty-
four years' purchase upon the net rental. This single
fact shews the state of landed bankruptcy that existed
in Ireland, and is an ample justification of the law."
And again, p. 119:
'' The good done to Ireland by this important sta-
tute, and its vast results, are beyond all question.
Large tracts of land, which hitherto had no real pro-
prietors, v/hich were either in the hands of Chancery
receivers, or of inheritors sunk in debt, on which a lease
could not be made, nor a secure tenure be obtained,
and which, accordingly, were invariably the receptacles
100 IRELAND. [Lect. VI.
of the worst specimens of the cottier tenantry, have
now fallen into the hands of owners who can use them
for all the purposes of property. On a great portion
of the surface of Ireland there is no longer an impene-
trable barrier to natural farming tenures, and to the
legitimate conditions of a real agriculture. Even the
breaking up of the large properties into small estates
has been of advantage ; for it has tended to extend the
area of the farmer by reducing the size of private de-
mesnes; it has stimulated provident and industrious
habits, by opening the land-market to small capitalists ;
and probably it has considerably encouraged the in-
vestment of money in the improvement of the soil.
In a word, a great breadth of Ireland has now been
set free, and is subjected to more civilizing influences.
The evidences of this most salutary chango are perfectly
clear in every part of the country. Moderate man-
sions, neat farmhouses, and good farm buildings, rising
from among trim corn fields and pastures, — the true
proofs of a substantial agricultural middle class, — are
now to be met with, and that not unfrequently on
estates which had long been mouldering in Chancery
ruin. As regards this point, however, we prefer to
cite a single example to making any general state-
ments.
*' In the years 1852, 1853, Mr Allan Pollok, of Glas-
gow, purchased estates in the county of Galway, under
the Encumbered Estates Act, for which he gave
£230,000. He has since expended £150,000 on them
in fitting them with proper appliances for agriculture.
In the year 1852 there were 100 acres of green crops
on his lands, and in the year 1856 there were 2000
Lect. VI.] IRELAND. 10 1
acres of green crops, and 3000 of corn. If the im-
provements effected by other purchasers under the
Encumbered Estates Act, even remotely approach the
changes accomplished by Mr Pollok, there can be no
doubt that the wealth of Ireland will be increased in
an extraordinary degree."
The general results are thus stated :
" These laws have wrought a complete revolution in
Irish agriculture; have transferred the soil from pauper
cottiers to real farmers; have caused an evident im-
provement in every species of husbandry ; have brought
capital in large quantities to a hopeful field for invest-
ment; have planted in the land a numerous small pro-
prietary, and have settled the true conditions of Irish
prosperity. A few figures will demonstrate these re-
sults. In the year 1841, the farms in Ireland, exceed-
ing thirty acres in area, were in the proportion of seven
to the hundred; at the close of 1855 they had increased
to more than 26 per cent., and occupied upwards of
three-fourths of the country. In the year 1841, there
were about six and a quarter millions of acres out of
cultivation; in the year 1855 only four million eight
hundred and ninety thousand. In 1847, 727,000 acres
of Ireland were under a green crop; in 1855, the num-
ber had nearly doubled. In 1841, the livestock of Ire-
land was valued at £19,400,000. In 1855, at the same
rates, it had reached thirty three millions and a half.
The averaofe circulation of all the banks of Ireland was
in 1850 four millions and a half; at the close of 1855,
it had almost increased a third. Lastly, while the Irish
excise duties of 1850, amounted to £1,400,000, those
of 1856, are £2,600,000. It may, we think, be stated,
102 IRELAND. [Lect. VI.
that so rapid and happy and economical a revolution,
so quick a transition from a sinking and perilous, to a
hopeful and flourishing landed system, is without a
parallel in history. The foundations of Irish prosperity
have at length been laid in reformed modes of owning
and occupying the soil; and there can be no doubt but
that they will support a superstructure of general
welfare."
One remark I will make in concluding^ this brief
view. We live in an eventful age. That is a reflexion
which every one is ready to make; every one ready to
assent to. But there is a further reflexion sucjofested
by w^hat I liave been saying. Besides and beyond the
events which make the age appear eventful to common
observers — war and peace — revolutions of states and
dynasties — the rise and fall of kingdoms and empires,
republics and federations — events which shake the
ground with their earthquake, and fill the air with
their thunder; beside and beyond these, there are
events taking place, noiseless and almost imperceptible
— advancinor like veo'etation over a desert, or summer
over the woods and fields — events of far more conse-
quence than all that comes with convulsion and tumult
— events which will by the political economist of the
future be regarded as far more important than any
political events — happier than any restoration, more
glorious than any revolution : — the events of the decay
and extinction — to be replaced by something better —
in short, the Euthanasia — of Metayer Bents in France,
Serf Bents in Bussia, Byot Bents in India, and Cot-
tier Bents in Ireland.
CAMBRIDGE :
PKINTED AT THE UNIVEKSITT PRESS.
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