RENT

(Lat. reditus; Fr. fermage, lover des terres.) In Political Economy, and in ordinary language, the sum paid by the farmers or le ees of lands to the landlords. In order to acquire clear and correct ideas with respect to the nature and origin of rent, it is nece ary to discriminate between the sources whence it usually arises; that is, between the portion paid for the use of the natural and inherent powers of the soil, and the portion paid for the use of the buildings, fences, drains, roads, and other improvements made upon the soil. Two farms may be naturally of about equal goodne , and equally well situated; but if little or no capital have been laid out on the one, while a great deal has been judiciously laid out on the other, they will let for very different sums. It is usual, no doubt, to cla all sums derived from land, whatever may be their origin, under the common name of rent; but it is obviously nece ary, in an inquiry of this sort, to distinguish between the 1041 RENT. sums paid for the use of the land, and those paid for the use of the improvements, if there be any, made upon it. Landlords are, for the most part, capitalists as well as owners of the soil; and the sums paid to them by their tenants for the use of the capital expended upon the soil, though included under the term rent, are substantially and in fact profits, and depend wholly on the circumstances by which they are governed. Rent really, therefore, consists of that portion of the gro sum paid fir latid, that is, paid for the use of the natural and inherent powers of the soil, or that would be paid for the land sujyposing it to be in a stale of nature, and without any improvement upon it. The owners of the soil receive this portion of their gro income not because they are capitalists, but because they are landlords. And we shall now briefly endeavour to exhibit the origin of this payment, or of rent, in the scientific and restricted sense of the term. Origin of Rent — On the first settling of any country abounding in large tracts of unappropriated land, rent, in the sense now explained, is unknown; and for this obvious reason, that no person will pay rent for what may be procured in unlimited quantities for nothing. In such countries, rent only begins to appear when the best of the unappropriated lands have become private property, and been occupied. Suppose, however, this comes to be the case; and that the population has increased, so that the demand for raw produce can no longer be supplied by the culture of the best lands: under these circumstances, it is plain either that population must become stationary, or that the price of raw produce must rise so as to enable inferior lands to be cultivated. No advance short of this will procure another bushel of corn; and competition will not, as will be immediately seen, allow prices to rise permanently above this level. Under the circumstances supposed, the inhabitants have but one alternative. If they pay a price sufficient to cover the expense of cultivating secondary lands, they will obtain additional supplies; if they do not, they must be without them. Suppose, now, that the price rises so as to pay the expense of raising corn on soils which, in return for the same expenditure that would produce 100 quarters on lands of the first quality, will only yield 'JO quarters; it is plain it will then be indifferent to a farmer whether he pay a rent of ten quarters for the first quality of land, or farm the second quality, which is unappropriated and open, without paying any rent. If the population went on increasing, lands which would yield only 80, 70, 60, 50, . quarters in return lor the same expenditure that had raised 100 quarters on the best lands, might be succe ively brought under ciiltivation. And when recourse has been had to these inferior lands, the corn rent of those that are superior would plainly be equal to the difference between the quantity of produce obtained from them and the quantity obtained from the worst quality under tillage. Suppose, for example, that the worst quality cultivated yields GO quarters, then the rent of the first quality will be 40 quarters, or ICO — 60; the rent of the second quality will, in like manner, be equal to the difference between 90 and 60, or 30 quarters; the rent of the third quality will be equal to 80 — 60, or 20 quarters, and so on; the produce raised on the land last cultivated, or by means of the capital last applied to the soil, being all the while sold at its nece ary price, or at that price which is sufficient merely to cover the cost of its production, including therein the ordinary rate of profit on the capital of the cultivators. If the price were above this level, agriculture would be a peculiarly profitable busine , and tillage would be immediately extended: if, on the other hand, the price fell below this level, ' capital would be withdrawn from the soil, and the poorer lands thrown out of cultivation. Under such circumstances, it is clear that rent could not enter into the price of that portion of the nece ary supply of produce raised by means of the capital last applied to the soil. Its price is exclusively made up of wages and profits. The proprietors of the superior lands obtain rent; but this is the nece ary result of their greater fertility. The demand cannot be supplied without cultivating inferior soils, the produce of which must nece arily sell for such a price as will afford the ordinary rate of profit to their cultivators. This price will, however, yield a surplus over and above the ordinary rate of profit to the cultivators of the more fertile lands; and it is this surplus that forms rent. In so far, therefore, as rent is a return for the use of the soil, and not for the capital laid out on improvements, it results entirely from the nece ity of resorting, as population increases, to soils of a decreasing degree of fertility, or of applying capital to the old land with a le return. It varies inversely as the produce obtained by means of the capital and labour employed in cultivation; increasing when the profits of agricultural labour diminish, and diminishing when they increase. Profits are at their maximum in countries like Australia, Indiana, and Illinois; and generally in all situations in 3X [s. 1054]