Rickards' objections, it will be desirable first to understand what the doctrine of rent is, as well as its proper limitations.

The object of a theory of rent is to explain the fact of rent, and the conditions which determine its rise and fall. In order, therefore, to judge of the theory, we must form a clear and definite idea of the fact of which it is designed to afford the explanation. The fact, then, which the theory of rent is adduced to explain is the existence in certain branches of industry of a permanent surplus value in the product, beyond what is sufficient to replace the capital employed in production, together with the usual profits which happen to prevail in the country. Thus a farmer, after replacing the circulating stock employed in cultivating his farm with the usual profits, and reserving, besides, interest on such capital as he may have sunk in outlay of a more permanent kind, finds that the proceeds of his industry still leave him an element of value. This element of value, if he be merely the occupier of his farm, goes to his landlord; or, should he, during the continuance of his lease, be able to retain a portion of it, he will at all events on its termination be compelled by the competition of other farmers to hand it over to his landlord. the other hand, if the farmer be himself the proprietor of the land which he tills, the sum in question will of course accrue to him along with his other earnings. In the same way the patentee of a successful invention, on selling the produce of his industry, finds himself also in possession of an element of value over and

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above what is sufficient to replace the cost of production, together with the ordinary profits. Now it is this surplus value, whether derived from agricultural or from manufacturing operations, whether retained by the producer or handed over to the owner of the productive instrument, which constitutes 'rent' in the economic sense of that word, and the existence of which is the fact to be accounted for.

You will observe, I say 'in the economic sense of the word,' because this is one of those cases in which the necessity under which political economists are placed of using popular phraseology in scientific discussions has led to much confusion of ideas and perplexity of reasoning. The term 'rent' is in popular language applied to the revenue which the proprietor of article derives from its hire. Such a revenue, any however, may owe its existence to different causes. The rent, e.g., which a landlord receives from a farmer for the hire of his land, is derived from a surplus value in the proceeds of the farmer's industry beyond what will cover the expenses and profits of his farm. On the other hand, the building-rent of a house represents no surplus value of this kind. It is not anything in addition to the ordinary profit, but is simply the ordinary profit or interest which the builder of the house receives on the capital which he has sunk. There may indeed be fluctuations in the

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1.It will perhaps occur that the rent of land may equally be regarded as the interest of the landlord's capital sunk either in the purchase or improvement of his estate. So far as the rent paid by the tenant is the consequence of improvements made in the land, the case is no doubt

returns upon building speculations, as upon any other speculations-the speculators receiving sometimes more, sometimes less, than average profits; but there is in this case nothing like what occurs in the case of agricultural rent a permanent surplus beyond what is sufficient to indemnify the capitalist. The existence of this surplus, then, is the problem which the theory of rent has to solve; and the question is, what are the causes to which it owes its existence, and what are the laws which regulate its amount?

Several theories have at different times been advanced in explanation of rent. That which was given by the French economists, and which, to a certain extent, was adopted by Adam Smith, traced the phenomenon to the superior productiveness of agricultural industry-to the positive fertility of the soil. Between agricultural industry and manufacturing, commercial, and other kinds, it was argued, there is this difference-that in the former alone is there a positive addition made to the commodity which analogous to that of building-rent, and the payment which the landlord receives in consideration of such improvements is properly regarded as the returns on the capital which he has sunk. But with regard to the remainder, the same explanation is not available. The payment of this by the tenant is not a consequence of the landlord's purchase of the land (in the same way as the increase in his rent, in consideration of improvements, is a consequence of these improvements): on the contrary, the money paid for the purchase of the land is a consequence of the rent. Farmers do not pay rent because landlords have invested money in the purchase of their estates; but landlords invest money in this way, because farmers are willing to pay rent. If landlords had obtained their estates for nothing, as many have so obtained them, farmers would not the less pay rent; on the other hand, if, owing to any cause, corn fell permanently in value, rents would fall, whatever might have been the amount of the purchase-money given for estates.

forms the subject matter of the industry. The manufacturer alters and adapts his material to some new use. The merchant transfers the article of his trade from the scene of its production to the place where it may be required. But the agriculturist alone employs the matter of his work in such a way as to lead to a positive increase in its quantity. Nature, it was said, co-operates here with human effort, and there consequently arises in agriculture a produit net, or 'rent,' which has no place in other fields of human effort. But, passing by other obvious objections to this theory, it suffices to consider that, whatever be the fertility of the soil and the abundance of the crop, the existence of a surplus value in the product depends not on these circumstances alone but also upon the price paid for the commodity, in order to see that it fails to solve the problem of rent. It offers no explanation of the causes which regulate the price of agricultural produce. It gives no account of the fact that this price remains constantly high enough, not only to replace to the farmer the expenses of his outlay with the usual profits, but to yield a revenue besides to the owner of the soil.'

Adam Smith's contribution to the doctrine of rent

1 M. Courcelle Seneuil claims that the true theory of rent was perceived by the Physiocrats, and quotes a passage from Turgot's work, 'Observations sur le Mémoire de M. de St. Péravy,' which shows that Turgot recognised the fact of the 'diminishing productiveness of the soil;' but there is nothing in the passage to show in what way this fact connects itself with the phenomenon of rent. I cannot hold, therefore, that the solution of the problem of rent is amongst the great services rendered by this distinguished philosopher to economic science.-See 'Traité d'Économie Politique,' par J. G. Courcelle Seneuil, tome i. pp. 179, 180.

as left by the Physiocrats consisted in the statement that the demand for human food was always, and the demand for other kinds of agricultural produce was generally, so great, that either could command in the market a price which was more than sufficient to indemnify the farmer, and that the surplus value naturally went to the landlord. This, however, still left the problem unsolved, and moreover implied an incorrect view of the laws of value; since, in the case of a commodity like corn, which may be produced in any quantity required, the price at which it sells does not, except during short intervals, depend on the extent of the demand for it, but on the cost of its production. An increase in the demand for a manufactured article, e.g., generally leads, as soon as the supply has had time to adjust itself to the change, to a fall in the price, owing to the circumstance that manufactured articles are generally produced at less cost when produced on a large scale. The demand for cotton goods has probably been decupled in the course of the last half century, but this has simply resulted in a decupled supply produced at a cheaper cost and sold at a proportionately lower price. How does it happen then, that the demand for human food does not operate in the same way? If, indeed, food were a strictly monopolized article, if only a limited quantity of it could be produced, we might understand how an increase of demand for it might permanently keep up its price above the cost of its production. But though land be a strictly monopolized article (at least in old countries), food is not so, since the