« PreviousContinue »
remitted. We have seen that the price of agricultural produce is determined by the position of the margin of cultivation. The price of the produce must be such as to remunerate the capital and labour expended in tilling the worst land in cultivation which pays no rent. If prices were less, this land would cease to be cultivated, and the margin of cultivation would rise. But this cannot take place because the demand for agricultural produce would not be diminished by the remission of rents, and therefore as large a quantity of agricultural produce would be required as before; and, as previously stated, the demand for agricultural produce determines the position of the margin of cultivation.
The rent of land, regulated by competition and consisting of the excess of its return above the return of the worst land in cultivation, is called the rack-rent.
One of the objections sometimes urged against Ricardo's theory is, that there can be no cultivated land rent free, as all farmers have to pay rent. It is no doubt true that there are few farms entirely composed of land. which is so unproductive that it yields no rent; but many farms contain portions of such land, and though the rent may be reckoned upon the total number of acres of which the farm is composed, the rent would not be decreased if that land were subtracted which yields only sufficient produce to give the ordinary rate of profit to the cultivator, and to pay the wages of the labour expended in its cultivation. It is also objected to Ricardo's theory that farmers and landlords know nothing about it and do not regulate the rent of land in accordance with it. This is something like saying that the discoveries of anatomists must be wrong because most people live all their lives without knowing how their bodies are put together. People can eat what agrees with them without knowing anything of the process of digestion, and they can pay
or receive a rack-rent without ever having heard of Ricardo's theory.
The influence of custom on Rents. Throughout this chapter it has been assumed that rents are entirely regulated by competition. In England and Scotland this is almost invariably the case, but in most countries custom has a powerful influence in regulating rents. In some parts of Italy and France, for instance, a tenure prevails, called the metayer tenure, in which the produce of the soil is divided in a certain fixed proportion between the owner of the land and the cultivator. This proportion is usually one half, but in some districts the owner of the land receives as much as two thirds. The proportion allotted to the landlord is fixed by custom, and not by competition. Custom also regulates what part of the capital necessary for tilling the soil shall be provided by the landlord. In some places he supplies all the stock, implements and seed, which the cultivation of the land requires ; in other districts the landlord furnishes the cattle and the seed, and the labourer provides the implements. The customs seem to be quite arbitrary, and are controlled by no fixed rule. Political economy cannot therefore define what circumstance determines the proportion in which the produce of a farm is distributed between the metayer tenant and his landlord. It will, however, be useful to consider the influence of the metayer system on the rent.
The influence of the metayer system on Rent. In those cases where rents are regulated by custom rather than by competition, the landlords are compelled to sacrifice some part of what may be called the economic rent as defined by Ricardo's theory. In Tuscany, for instance, the metayer rent is two thirds of the produce, on soils of all degrees of productiveness. Now it is evident that if one third of the produce of the least productive farm in Tuscany is sufficient to remunerate the cultivator for his capital and labour, one third of the produce of the most productive farm in Tuscany must be more than sufficient to give the same rate of wages and interest to its cultivator. Under the metayer system the tenant shares with the landlord the advantage arising from the superior productiveness of the soil. Under the rack-rent or competition system all the surplus which remains after paying wages to labour and the current rate of profit to the farmer, is claimed by the landlord as rent, so that tenants do not reap any permanent advantage from the superior productiveness of their farms. Under the metayer system the cultivator obtains some part of this surplus, he therefore possesses a beneficial interest in the productiveness of the soil. It is probable that this fact exercises a powerful influence in stimulating his industry, and the metayer tenure, though disadvantageous to landlords, may be beneficial to the general community. The economic defect of the metayer system is that it tends to prevent the expenditure of capital in permanent improvements. For instance, a metayer farm might want draining; the landlord would know that if he provided the necessary capital for drainage the farm would be more productive, but that he would not be able to obtain more than one half or two thirds of its increased productive
Similar considerations deter the expenditure of capital on the part of the tenant. It must not however be overlooked that under the rack-rent system there no inducement for a tenant to employ his capital in permanent improvements, unless he holds a sufficiently long lease to enable him to secure a satisfactory return on his expenditure.
The custom of Ulster Tenant-right. In some parts of Ireland, especially in Ulster, the amount of rent received by landlords is reduced by what is called the Ulster
Tenant-right. According to this custom the in-coming tenant pays to the out-going tenant a certain sum, partly as a consideration for the good will of the farm, and partly as compensation for unexhausted improvements. The sum paid for good will is really a part of the economic rent. If the in-coming tenant had not to pay this sum, he would be obliged to pay more rent. The custom therefore divides the economic rent into two parts, one of which is capitalised and paid by the in-coming tenant to the out-going tenant; the other part is paid in the usual manner annually to the landlord. The economic advantage of this custom is that it.gives practical security of tenure to the tenant, by recognising that he has a proprietary right in the soil. On the other hand, it is stated that the custom is economically pernicious because it reduces the capital of the in-coming tenant just at the time when he wants it most to stock his new farm. In answer to this objection it may be urged that the capital of the tenant would not be invested in the land at all, if it were not for the security of tenure which the tenantright gives. The practical effect of the Ulster Tenantright seems to be most satisfactory. Those parts of Ireland where it operates present a most favourable contrast to those districts where no similar custom prevails. The Ulster Custom, although very prevalent, had formerly no legal sanction. Prior to 1870 there were really two laws in Ireland, one the law of the land, and one sanctioned by the customs and habits of the people. The Irish Land Act of 1870 reconciled these two conflicting systems by legalising the Ulster custom of tenant right.
The Cottier and Conacre Tenancies of Ireland. The cottier tenancy of Ireland may be described as a tenure in which the rent is forced up beyond the rack-rent, by the competition of an excessive population. The nominal rent of a cottier tenure is sometimes fixed at an amount exceeding in value the whole of the produce of the land. Under this wretched system the tenant knows that the landlord would be obliged to leave him just sufficient potatoes to keep himself and his family from starvation. He is never able to pay the full nominal rent; he is therefore constantly in arrears with his landlord. He has no motive for energy and industry, for the landlord would be able to appropriate all the result of his labour in payment of the arrears of rent. At the same time the tenant has no prudential motives to restrain him from marrying and having a numerous family, for he is aware that the landlord could not deprive him and his children of the bare necessaries of life. No system of land-tenure can be more mischievous in its economic, social and moral results than the cottier tenancy of Ireland. This tenure is now much less prevalent than it was before the Irish famine.
There is in Ireland another sort of tenure called conacre. Under this system it was the practice of a landlord who required work done on his estate to pay the labourers by giving them a small plot of manured land rent-free.
Having now described the nature of Rent as regulated by competition, and explained the character of some tenures which are controlled by custom, the wages of labour will be next considered.
QUESTIONS ON CHAPTER I. The Rent of Land.
What is Rent? Explain what is meant by rents being determined by competition.
What is the reason why landlords are able to require a rent for their land ?
3. What two elements must always exist in land which pays rent?
4. What determines the rent of any particular land?