Need of an Economical Digression—The Hegemony of Adam Smith’s School—Cardinal Doctrines of the Malthusian Economy—Scope, Method, Details—Malthus doing Injustice to his Economics—Human Character of his Doctrines—Agricultural Situation in 1794—History of Corn Laws—Malthus on Rent in 1803 and afterwards—Observations on the Corn Laws—Grounds of an Opinion—Nature and Progress of Rent—Ricardo’s Criticisms—Agricultural Improvements—Malthusian Ideal of Commercial Policy—The Wall of Brass—Limits to Commercial Progress.
The Essay on Population deals with the past, the present, and the future. We have tried to follow its account of past and present, and must now consider the author’s view of future prospects and of the various schemes (including his own) for making the future better than the present.
To do justice to this half of the essay, we must take further liberties with its arrangement. For the sake of explaining the historical genesis of the essay, we have already taken first[455] that criticism of Godwin and Condorcet which in the later essay comes in the centre of the work,[456] on the heels of the account of population in the United Kingdom, the point where we have now arrived; and the chapter on emigration has been used before its time. There remain, out of the fourteen chapters of the third book of the essay, eleven still untouched; and in all but one[457] a knowledge of the general economical doctrine of Malthus is indispensable to a clear and just understanding of him. No apology is needed then for a somewhat long digression, in which the chief economical writings of our author are briefly analyzed. It is not wholly a digression, as the substance of seven[458] out of ten chapters will be found incorporated with it, and their logical connection with the author’s economical theories (so far as it exists) will be shown.
As a thoroughly practical man, Malthus knew that philanthropy can do little without sound doctrine; and his economical theories belong to the substance of his work. They were developed, unlike the Essay on Population, in quiet controversy among friends; Ricardo, James Mill, and Jean Baptiste Say, who were critics of the Political Economy, had been converts of the Essay. These were, however, the very men who came nearest to identify orthodox economics with rigorous abstraction. Malthus himself, labouring to build up the neglected pathology of economic science, was not chargeable with this fault. His first work had happily fixed into an intellectual principle his natural inclination to look at speculative questions in their relations to practice, and to look at “things as they are”[459] rather than as they might be. Ricardo’s first work, bearing wholly on finance,[460] had unhappily fixed for him his inclination to treat every social question as a problem in arithmetic. In both cases the excitement of controversy would make the impression deeper.
The two economists both start from Adam Smith,[461] as theologians from the Bible. It was becoming clear that these Scriptures were of doubtful interpretation. Men were to choose between the Calvinism of Ricardo and the Arminianism of Malthus; and, when the two writers turned from their debates with the public to debates with each other, no less a prize was in question than the hegemony of the school.
This was won by Ricardo, whose Principles of Political Economy and Taxation (1817) were accepted by James Mill, MacCulloch, Nassau Senior, to say nothing of others, as the Institutes of their creed. MacCulloch thought it not worth his while to print what Ricardo had thought it worth his while to write, in vindication of his positions against Malthus.[462] The strongest ally of Malthus was Sismondi. It was not till Ricardo had reigned for thirty years that there was serious sign of defection, when the son of James Mill broke with his father’s traditions;[463] and, though in the hands of Thornton, Cliffe Leslie, Walker, and others, the reaction has been carried to the utmost, the eclipse of Ricardo has done nothing to rescue Malthus from obscurity. The very success of the Essay on Population may have deepened the oblivion of the other writings in virtue of the popular fallacy that a man cannot be equally great in general theory and in the advocacy of one particular reform.
The Political Economy of Malthus has its faults; but it contains in outline the main truths which writers of our own time think they have established against Ricardo. First and foremost, he maintains with them that the proper study of the science is not Wealth, but Man, or more definitely, Wealth in relation to Man. The qualities of man and the earth he cultivates are according to Malthus so many and variable in relation to each other that a study of their relations cannot be an exact science like mathematics; it may contain “great general principles” to which there are few exceptions, and “prominent landmarks” that will be safe guides to us in legislation or in life; but “even these when examined will be found to resemble the most general rules in morals and politics founded upon the known passions and propensities of human nature.”[464] Human conduct is characterized by such variation and aberration that we must always be prepared for exceptions to our principles, and for qualifications which spoil the charm of uniformity, but are faithful to facts,[465] like George Eliot’s “analyses in small and subtle characters,” which stimulate no enthusiasm but alone tell the whole truth. In the second place, we are told that the nature of the subject makes a peculiarly cautious Method necessary. Our first business being to account for things as they are,[466] till we are sure that our theories do so we cannot act on them.[467] A good economical definition must conform to the ordinary usage of words. We must take if possible a meaning which would agree with the ordinary use of words “in the conversation of educated persons.”[468] If this does not give sufficient distinctness, we must fall back on the authority of the most celebrated writers on the science, particularly of the founder or founders of it; “in this case, whether the term be a new one born with the science, or an old one used in a new sense, it will not be strange to the generality of readers, or liable to be misunderstood.”[469] If any word must have a different meaning from that adopted by either of these authorities, the new sense must not only be free from the faults of the old, but must have a clear and recognizable positive usefulness. The new definitions should be consistent with the old; and the same terms should be used in the same sense, except where inveterate custom insists on an exception. When all is done, it is still impossible in a social science like political economy to find a definition entirely beyond cavil.[470]
“Wealth” must include all the “material objects that are necessary, useful, or agreeable to mankind;”[471] “productive labour” must be the labour which realizes itself either in such material objects or the increased value of them; or else we wander from common language, and our discussions travel off into indefiniteness. Economical reasoning must be a deduction from observed facts of nature and of human nature verified by general experience. Malthus professes to have used this cautious method throughout, and the theory of population was only the particular instance where circumstances enabled him to make his verification most complete. “I should never have had that steady and unshaken confidence in the theory of population which I have invariably felt, if it had not appeared to me to be confirmed, in the most remarkable manner, by the state of society as it actually exists in every country with which we are acquainted.”[472] On the other hand, Ricardo, legislating for Saturn, gives us little or no verification by experience. It is true that he admits qualifications and exceptions to his own statements; and he would have winced a little at his own biographer’s assertion that “Mr. Ricardo paid comparatively little attention to the practical application of general principles; his is not a practical work.”[473] But he makes no use of the admissions; his illustrations as a rule are not historical, but imaginary cases and the verification is wanting. In a letter to Malthus (written on the 24th November, 1820) he says: “Our differences may in some respects, I think, be ascribed to your considering my book as more practical than I intended it to be. My object was to elucidate principles, and to do this I imagined strong cases, that I might show the operation of these principles.”[474] In Malthus and Adam Smith, imaginary cases are rare exceptions, actual examples from life or history are the rule. Malthus goes so far in this direction that (to use his own phraseology) he is tempted to subordinate science to “utility.” Even Adam Smith, though he had abundance of good-will to his kind, did not write to do good but to expound truth. To Malthus the discovery of truth was less important than the improvement of society. When an economical truth could not be made the means of improvement, he seems to have lost interest in it. His pointed warning to others against this error[475] may be regarded as a confession of his own liability to it; and, if he obeyed his own warning at all, his position was at the best like that of the latter-day utilitarians, who try to reach happiness by making believe not to think of it. If his science had been less biassed by utility, it might have been more thorough; and we might not have had in our own time a Ricardian socialism, appearing like the ghost of the deceased Ricardian orthodoxy sitting crowned upon the grave thereof. He has the virtue of refusing to join the economical Pharisees,[476] who would not admit the elasticity of economical laws, lest they should discredit their science; but he is to blame for not pushing his quarrel against Ricardo with the same energy as against Godwin. His forces, in this campaign, were worse drilled and worse handled. It is justly said by Garnier (Dict. de l’Écon. Pol., art. ‘Malthus’), that in spite of its title, the Political Economy of Malthus is not the exposition of a system, but simply a collection of economical papers on various subjects that had been brought specially under his notice in discussion with his friends, or (we might add) in his college class. This itself would lead him to present a much less solid front to the enemy than he did in the Essay.
To come, in the third place, to Details, we find the human character of the Political Economy of Malthus appearing not only in his view of population, where all is at last made to depend on the personal responsibility of the individual man, and legislation is good or bad according as it strengthens or weakens that responsibility,—but in his view of the Value of goods, as measured by human labour,—in his view of demand and supply, as sharing the inconstancy of the human desires that enter into both of them,—in his view of the Rent of land, as determined by the effects of human industry and skill as well as by the natural qualities of the soil,—in his view of the Wages of labour, as regulated not by an unchangeable but by a progressive minimum,—in his view of luxury, as being equally with parsimony necessary to production, and preventive of over-production,—and in his view of free trade, as a rule to which we must make exceptions if we would not cause sufferings.
These doctrines had a distinct relation to current events. Political and social changes were reacting on political economy. As Godwin and Pitt provoked the essay of 1798, the scarcity of 1799 and 1800 called forth the pamphlet on High Prices (1800). As the latter bears directly on the Poor Law, it will best be considered when the thread of the Essay on Population is taken up again;[477] and the same applies to the letter of Malthus to Whitbread (1807). The distresses of a time when wheat went so high as £6 the quarter instead of its normal 40s. or 50s., would naturally make the relief of the poor a question of the day. The high prices of corn increased the number of enclosures and Enclosure Bills. More than three millions of acres, or about a twelfth part of the entire area of England and Wales, are said to have been taken from waste into cultivation between 1800 and 1820. The average price of wheat, always the staple food of the people when they could get it, had been 55s. 11d. for the years preceding, viz. from 1790 to 1799 inclusive; it was 82s. 2d. from 1800 to 1809 inclusive, and 88s. 8d. from 1810 to 1819 inclusive, after which it fell (for the next decade) to 58s. 5d.[478] In 1883–4 it was 35s. 8d. a quarter, which means a four-pound loaf (of medium quality) at 4½d. or 5d.; but at its lowest during the war (in 1803) it was at 57s. 1d., and the loaf was at 6¾d. or 7d.
Yet agriculture had not been standing still. Arthur Young, whose eccentric energy benefited every one but himself, and fell little short of genius, betted his nineteen volumes of Annals of Agriculture against Sir John Sinclair’s twenty-one volumes of the Statistical Account of Scotland, that the Government of Pitt would not establish a Board of Agriculture. But Farmer George did establish one, in 1793;[479] Young paid his bet and became Secretary; Sinclair gained his nineteen volumes and became President of the new Board; and together they did much to make farmers and landlords aware of the rotations of crops, disuse of fallows, new manures, road-makings, that the Secretary had been preaching in vain for thirty years.[480]
When the great scarcities of 1799–1800 took place, the Board was equal to the occasion. It urged the Government to get supplies of rice from India; it preached earnestly the cultivation of waste lands and the temporary conversion of grass lands into cornfields. The last was done widely enough when the prices of corn were high. The second, except when it meant enclosure of commons, was hardly done at all; and there was a strange impression that the efforts of the Board were at bottom a political movement against ecclesiastical titles and the Established Church. The importation of rice would have been of immense immediate service; but by the time the order had reached India and the rice ships had come back to England,[481] the famine was over, the people preferred wheat, and £350,000 of bounty were thrown away.[482] Nothing shows the insularity of English commercial policy better than the remedies generally proposed in those days for curing the evils of a bad harvest. The House of Commons passed self-denying ordinances[483] and brown-bread bills, and offered a bounty on potatoes.[484]
There was some talk inside the House of enforcing a minimum rate of wages, and outside of enforcing a maximum price of bread. The people were told to eat red herrings instead of bread; philanthropic soup shops were opened; distilleries and starch manufactories were threatened with prohibition. Relief from the poor rates was, however, the favourite way of cutting the knot. Better that our people should depend on each other than on the foreigner. This fear of dependence was the more pardonable then, as there were times, in the war with Napoleon, when England was more completely alone against the world than she is ever likely to be again. It was a much more culpable folly to pretend[485] that the scarcity was due to “forestalling and regrating,”[486] and that England could have provided for herself well enough, even in 1799 and 1800, but for the corn-dealers and the large farms and the enclosures and the new-fashioned husbandry. The new learning, however, went on its way.[487] The benefits of it may have gone to farmer[488] or to landlord,—the question was much debated,—but they did not go to the labourers. The same is true of the improvements in cattle-breeding introduced by Bakewell of Leicester and Chaplin of Lincoln, and encouraged by the Smithfield Club (1798), which has long outlived the Board of Agriculture. The life of the country labourers was little changed. They and their wages could not remain entirely unaffected by the growth of manufacturing towns. But custom still had the chief power over wages, and had no little influence on rents. From the reports sent from the Scotch, English, and Welsh counties to the Board of Agriculture in 1794, it does not appear that wages were at all, or rent very closely, in correspondence with the amount of the produce.[489] Rents were far from being rack rents, and wages were far from varying with the necessary expenses of the labourer. In truth each country district in the days before railways and steamboats was nearly in the same isolation with regard to the rest as all England was with regard to foreign nations. The price of farm produce was indeed tending to be equal over England, as now over the world. Wages were displaying no such tendency. Of all goods a man is the most difficult to move,[490] for you must first persuade him; and human inertia by making men stationary will keep wages low. So it was in 1794. The exertions of landlord and tenant were directed therefore rather to keep up corn than to keep down wages. They were beginning to fear for their monopoly of the corn market. The English Government had done its best to keep their market for them. A law of Charles II. passed in 1670 virtually prohibited importation of foreign wheat till the price of home wheat was over 53s. 4d. a quarter, and made it free only when the home price was 80s. The Revolution of 1688 brought a new phase of commercial policy. The new rulers, to conciliate the agricultural classes and atone for the burdens which had been transferred to them from the industrial classes, granted a bounty of 5s. a quarter on the exportation of wheat so long as the home price was not over 48s. In this way, after exportation in the days of the Romans, and alternate exportation and importation according to the seasons in after times, there was, after the Revolution, exportation encouraged by a bounty, while importation was still hindered by duties. The intention was at once to attract capitalists to agriculture and to reward those already engaged in it. By this means not only would the farmers be attached to the new dynasty, but England would provide all her own food.[491]
But the very increase of tillage kept down prices and gave the landowners little benefit. Whenever a scarcity occurred the laws were suspended, and the bounty and duties were taken off together.[492] Exportation, however, was the rule till a little after the middle of the century, say at the beginning of George III.’s reign, when the tide had fairly turned. Especially after the Peace of Paris (Nov. 1762), commerce was extended and population with it. Canals were made, roads improved, and home trade prospered.[493] We could no longer raise enough corn for our own wants.[494] In 1766, the year of our author’s birth, there were scarcities, Corn Riots, and suspensions of the Corn Laws;[495] but the bounty was kept up in name to the end of the century. In 1795 and 1796 the price of wheat rose to 80s. a quarter, in 1797 and 1798 it sank to 54s.; but, at the end of harvest, 1799, it rose to 92s., in 1800 to 128s., and before the harvest of 1801 to 177s. The quartern loaf (under 6d. in 1885) was once within ½d. of 2s.! Then came a cycle of comparative plenty. Wheat between 1802 and 1807 was at 75s. on an average, and a new Corn Law in 1804 prohibited importation till the home price should rise to 63s. Between 1808 and 1813 it was 108s. on an average; and it was as high as 140s. 9d. in the severe winter (1812–13) of Napoleon’s retreat from Moscow. But in the spring of 1815 wheat was at 60s. If it should rise to 63s. the ports would be opened, and there was not even the Protection of war. The farmers and landowners were terror-stricken, the political economists divided, and the bill for raising the importation price to 80s. was hurried through the House. The bounty, relaxed in 1773, had been finally repealed, in 1814.[496] As the sliding scale of duties was not introduced till 1827, we are to regard Malthus and Ricardo as writing on rent (in 1815 and 1820) under the severe Corn Law of 1815, as well as when the wisdom of passing that measure was still under debate. All their discussions on rent bear consciously or unconsciously upon the Corn Laws of their own time.
Malthus is rightly considered the first clear expounder in England of the economical doctrine of rent. Dr. James Anderson, a contemporary of Adam Smith, was no doubt before his age in his view of the subject;[497] but, perhaps because he was better known as an agriculturist than as an economist, he does not seem to have made converts. The “simultaneous rediscovery” of the true doctrine by West and Malthus in 1815 may be compared with the simultaneous discovery of the Darwinian theory by Wallace and Darwin in 1859. The times were ripe for it. Malthus gives no certain sound on the subject in the early editions of the Essay on Population. In the second he even says that “one of the principal ingredients in the price of British corn is the high rent of land” (p. 460; cf. p. 444). However, needing to lecture on Rent to his pupils at Haileybury in 1805, he saw the unsoundness of this position, and in 1806, in the third edition of the essay, the passage is dropped, and we are told, “universally it is price that determines rent, not rent that determines price” (vol. ii. p. 266). The passage is repeated in the fourth edition (1807).[498] But when the time came for a fifth edition, in 1817, the whole of the chapters on Corn Laws and bounties, which are the only chapters of the essay that deal much with rent, were recast, to express the clearer views which the author had already expounded elsewhere. In the spring of 1814, in the excitement of debates on the abolition of the bounty and on new laws to keep out foreign grain, Malthus was led for the fourth or fifth time in his life to take the field as a pamphleteer.[499] This time, however, he came forward, he said, not to take a side but to act as arbitrator. His “Observations on the effects of the Corn Laws, and of a rise or fall in the price of corn on the agriculture and general wealth of the country” (1814),[500] professed to balance the arguments for and against the Corn Laws, and did it, he said, so judiciously, that his own friends were in doubt to which opinion he leaned.[501] To later readers the bias is not doubtful. It appears even in such a passage as the following, which, incidentally, shows us his view of rent, nearly matured:—“It is a great mistake to suppose that the effects of a fall in the price of corn on cultivation may be fully compensated by a diminution of rents. Rich land, which yields a large nett rent, may be kept up in its actual state, notwithstanding a fall in the price of its produce, as a diminution of rent may be made entirely to compensate this fall, and all the additional expenses that belong to a rich and highly-taxed country. But in poor land the fund of rent will often be found quite insufficient for this purpose. There is a good deal of land in this country of such a quality, that the expenses of its cultivation, together with the outgoings of poor’s rates, tithes, and taxes, will not allow the farmer to pay more than a fifth or sixth of the value of the whole produce in the shape of rent. If we were to suppose the prices of grain to fall from 75s. to 50s. the quarter, the whole of such a rent would be absorbed, even if the price of the whole produce of the farm did not fall in proportion to the price of grain, and making some allowance for a fall in the price of labour. The regular cultivation of such land for grain would of course be given up, and any sort of pasture, however scanty, would be more beneficial both to the landlord and farmer.”[502] The drift of the pamphlet may be shortly stated. The writer refused to go with Adam Smith in identifying corn with food, and attributing to it in that capacity an unchangeable value, which made any rise of price futile for the encouragement of tillage. He thought that it was perfectly possible to encourage tillage by Corn Laws; but was it good policy? Before he could answer this question, he felt bound to consider several others.[503] Under free trade would Great Britain grow her own corn?—if not, ought Government to interfere to secure this?—if so, would laws to hinder importation be the best kind of interference? The answer to the first is, that other countries have soils more fertile than Britain; Poland can ship corn at Dantzig for England at 32s. a quarter;[504] and, if there were free trade over Europe, the rich lands which are not English would send their plenty to relieve the wants of their neighbours. If Corn Laws have not made us grow our own corn, free trade would not. In answer to the second question, no doubt it is sound economy to buy in the cheapest market and sell in the dearest; and, if we had regard to nothing but the greatest “wealth, population, and power,” the rule would be invariable; foreign imports of food are in every case a good thing for the country, and, if there is evil in the matter, it is not in them but in the bad season which makes them necessary; moreover, a free trade in corn secures a steadier as well as cheaper supply of grain.[505] But, on the other hand, dependence on other nations for the first necessary of life is a source of political insecurity to the nation so depending; and, though the dependence is mutual, identity of commercial interests seldom prevents nations from going to war with each other; “we have latterly seen the most striking instances, in all quarters, of Governments acting from passion rather than interest.”[506] And it might be argued that, if we give up agriculture for manufacture, we change the character of our people; manufacturing industry conduces to mental activity, to an expansion of comforts, to the growth of the middle classes, and to the growth with them of political moderation; but it is more subject than agriculture to the fluctuations of fashion, which lead to chronic destitution and discontent, and the conditions of artizan life are “even in their best state unfavourable to health and virtue.”[507] Virtue and happiness after all are the end; wealth, population, and power are but the means. Malthus himself believes in something like a golden mean, a balance of the two industries, which legislation might possibly preserve.[508] There is another and less plausible argument on the same side. Assuming that wages vary with the price of corn, high money wages, and therefore high prices of corn, are an advantage to working men, who would have more money to buy the goods of the foreign countries where prices of corn were low and goods were cheap. This argument, though our author is inclined to yield to it, is inconsistent with his own views of wages and the facts he cites in support of them.[509] More cogent is the plea that it would be unfair suddenly to withdraw a long-established protection, though (it might be replied) we are no more bound to be gradual in abolishing protection than in concluding peace during war. But the real question is, whether once protected is to mean always protected, and protected in an always increasing degree, for it was this increased protection that was proposed in 1814 and 1815. It may be true that if we protect manufacture we ought to protect agriculture; but, instead of protecting both, why not set both free? Statesmen had no courage, however, to be free-traders, in days when the separate articles protected were as many as the millions in the National Debt, and each article represented a vested interest. Malthus does not seem to expect Parliament to give free trade a moment’s consideration. But the friends of the new Corn Laws, besides using the commonplaces of protectionism, argued from the change in the value of the English currency. When paper were paper prices,[510] the importation price of the law of 1804 could be soon reached, and foreign corn came in much faster than the real or the bullion prices of it would have allowed. There was also the long array of standing arguments for Corn Laws that lay stress on the heavy taxation of the country, and are meant to show that the agricultural classes bear most of it, and are thus handicapped against the foreigner. From Malthus himself the old leaven of protectionism was never wholly purged away. Like Pitt, though in a less degree, he suffered his politics to corrupt his political economy, and drag him back from the “simple system of natural liberty” into “the mazes of the old system.”[511] English people since the Repeal of the Corn Laws will hardly care to thrash the old straw out again. Perronet Thompson’s Catechism of the Corn Laws is the best storehouse of the old arguments and their refutations, set forth with a liveliness to which no other English economical writing has the slightest claim.[512]
The real opinion of Malthus came out in the second Corn Law pamphlet on the Grounds of an Opinion on the Policy of restricting the Importation of Foreign Corn (1815). Between the two came the tract on Rent, which is rather an economical book than a political pamphlet, and will be noticed immediately. He now declares himself in favour of a temporary duty on imported corn to countervail the artificially low value of the currency,—“to get rid of that part of our prices which belongs to great wealth, combined with a system of restrictions.”[513]
He warns the Government that they should not take such a step to benefit a particular trade, but only to benefit the public. The motives are those constantly professed by defenders of the Navigation Act—not private interests but public policy. Since he wrote his Observations circumstances had changed. The sudden peace had brought the then unprecedented combination of a bad harvest and low prices; the value of the currency had fallen fast; and last, and not least, France, the best corn country in Europe, had begun to prohibit the exportation of grain[514] in dear years. We must therefore, he says, keep up the high farming which the war taught us, by keeping up the high prices of the war. Eighty shillings might not be too high a price, for the limit of prohibited importation.
It seems extraordinary that, after so clearly recognizing that “wealth does not consist in the dearness or cheapness of the usual measures of value, but in the quantity of produce,” and that exports are not so good a criterion of wealth as the “quantity of produce consumed at home,”[515] Malthus should recommend the increase of abundance by means of artificial dearness. It is a poor consolation to us that he was no worse than Brougham, who voted for the Corn Law in 1815, and for the support of the Navigation Act in 1849,—and little worse than Ricardo, who would allow a temporary restriction for the sake of leaseholders.[516] A better is that he was advocating a policy that was against his private interests as a holder of a fixed salary and owner of three per cents.[517] But at the best the atmosphere of these two tracts is a little depressing.
The tract on Rent is more bracing. It was the first-fruits of the larger work on Political Economy (1820); and its substance had been delivered in the professor’s lectures at Haileybury. It expounds the Nature and Progress of Rent with clearness and intelligibility, if without the liveliness of 1798. Malthus gives us to understand that, to explain this or any other economical notion, we must keep as closely as possible to the usage of ordinary language, the language of clear-thinking ordinary men.[518]
To them, rent does not mean, as by derivation, simply produce or profit; nor, as to a Frenchman now and to Bailie Nicol Jarvie in his days, interest on a debt. It means a certain price paid to a landlord for the use of his land. But such a definition is too wide. It might include the proceeds of a monopoly, or an interest on capital, or a Government tax, or a legal rate, or a toll, or a payment for service rendered. We must define the term a little more clearly.
There is a certain portion of a landlord’s income and of a peasant proprietor’s earnings that has an origin and character distinct from the rest, and demands the economist’s separate attention, whether it alone receives the name of rent or not;—this is, the excess of the produce of land beyond the cost of production and the current rate of profits. Represent these in money; and suppose the current profit five per cent. Suppose that a tenant lays out £500 on his farm, and gets by the harvest and farm produce not only £500 plus £25, but £600; the additional £75, which would if retained by him be over or extra profits as compared with the rate usual among farmers and men of like business, is the value of his rent; and the landlord can take that from him without impoverishing him. Rent is that portion of the produce which remains, after all the outlay of the cultivator has been repaid him together with the current profits. From accidental or temporary causes the money rents of land may be more or less than this; but this is the point to which actual rents will gravitate.[519]
So far as this account goes, it might seem that Malthus’ description is too general; it would include the extra profits, for example, of any monopoly or a royalty for the use of a patent; and Ricardo’s definition, “the price paid for the indestructible powers of the soil,” might seem more definite. But Malthus is rather too specific than too general. He is thinking of agricultural land only, and that mainly as producing food for man. If his description of the Nature of rent adds little to that of Adam Smith,[520] his account of its Causes, which he himself was the first to grasp, is characteristic and peculiar.
First, he says, fertile[521] soils yield a produce that more than feeds the producer. This may be put more generally than Malthus has put it. If rent is to be paid, there must be wherewithal to pay it; and there cannot be so if production does no more than repay cost. There may, however, be a production beyond mere repayment of cost, not only in farming but in all trades. The very principle of the division of labour and the separation of trades implies that devotion to one occupation makes men so dexterous in production that, besides providing for themselves, they have an overplus wherewith to supply their other wants and the wants of others.[522] This overplus, where the facilities for trading were specially good, might be so much above the overplus of an ordinary profit that the granter of the facilities, who is usually the ground landlord, might get the lion’s share of it, and still leave the user of the facilities as thriving as his neighbours. On the other hand, if no such overplus can be earned, no such rent can be paid. Rent, in short, when it is paid by men of business, either in town or in country, means over-profits, and ground-rents mean advantage of situation.
The second cause of rent, according to Malthus, who is considering, be it remembered, the cause of the Progress of rents as well as of their actual volume at any given time,[523] is the peculiarity belonging to agricultural land, that the demand increases with the supply; in other cases the demand is external to the supply, but in this case[524] the supply creates its demand. Where there is food there will be mouths. In the supply of food no over-production is possible.[525]
It is here that the Essay on Rent is connected with the Essay on Population. By the law of population the tendency is that where food enough for six is being produced by two, the other four will soon make their appearance; and so, thinks Malthus, the farmer makes his customers by simply making his wares. Something like this, we might add, would happen in a completely developed co-operative society, where the makers would sell to each other and buy from each other. It is even true, in a sense, of all manufacturers as things now are, in proportion as their articles come near to being necessaries;—if they supply that without which people cannot live, they go far to bring people into being. Malthus, however, regarded it as much more true of agricultural production than of any other. He regarded food as the chief necessary, and thought with Adam Smith, that “when food is provided it is comparatively easy to find the necessary clothing and lodging.”[526] Against this we need only remember, how the Essay on Population showed that it was only in the lower stages of existence that increase of mere food involved increase of population; and so the tendency of the supply to create its own demand was, on the author’s own showing, nothing more than a tendency.[527] His economical reasoning was swayed a little by his circumstances. The insularity of English life in his days prevented him from conceiving how a nation could safely derive half its food from abroad; what Adam Smith had thought too good to be likely,[528] he thought too dangerous to be desirable. Good or bad, it is our position now, and the result is, first, that the supply of food does not, in the same degree or way, produce its own demand as formerly, and, second, that our other productions are, even more truly than the agricultural, the supply that creates its own demand, for they give the power of buying the food that feeds new demanders. The production carried on, on the surface of the land, has come in this way to be a more potent cause of the Progress of rents than production from the soil itself. With this restatement the second of Malthus’ causes of rent becomes perhaps a little more intelligible.
His third cause is that good land is scarce. Lands differ in fertility, and there is not, as in a new country, enough of the most fertile to supply all our wants. When the produce of the inferior begins to be absolutely necessary, the inferior will be cultivated at a price enough to repay cost and give ordinary profits to the farmer. But what is simply enough to do that for him will do much more than that for all the holders of superior lands, and all that is much more can be taken by a landlord as rent without placing the tenant at any disadvantage as compared with his neighbours. As soon as this happens in a country, the extra profits, which are called by economists rent, will appear in it; and the growth of population, by leading to an increased demand for food and to an increased price of it, will cause the cultivation of inferior lands, or else a more expensive cultivation of the old ones; and again, since the necessary new supplies cannot be permanently kept up without one or other of these two resources, the price, and with it the rent, will, in the absence of inventions, remain permanently higher. In other words, this third cause is the “law of diminishing returns.”
It is this law of diminishing returns which bulks most largely in the tract of Sir Edward West, written in the same year as that of Malthus. West’s theory of rent is simply, “that in the progress of the improvement of cultivation the raising of rude produce becomes progressively more expensive, or in other words, the ratio of the net produce of land to the gross produce is continually diminishing.”[529] He sees how near Adam Smith came to it when he said, that in the progress of cultivation the total amount of rent increased, but the proportion of it to the produce diminished, so that from being e. g. half the produce it became one-third.[530] He sees, as even in 1798 Malthus had seen,[531] that but for this law population might increase indefinitely on a few fertile lands instead of spreading over the globe (West, p. 13), whereas because of this law inventions in agriculture are not able to remove “the necessity of having recourse to inferior land, and of bestowing capital with diminished advantage on land already in tillage” (p. 50). He pushes the principle so far as to say broadly that whatever increases agricultural production increases cost, while whatever increases manufacturing production diminishes cost (p. 48), inferring that the former must tend abroad and the latter at home to prevent the displacement of English agriculture by foreign competition. As he had little or no influence on Malthus, his tract need not be noticed in detail; it is enough to say that, while West is superior in style and arrangement, Malthus is the more comprehensive. West is clearer and simpler because he includes less.
Looking at the three causes together, we see that the first and last relate to the statics, and the second to the dynamics of the subject. We need to remember that Malthus is having regard in the first instance not to the value but to the quantity of the produce. Now, apart from questions of value, it is possible there might be, in a country, land yielding to the sower more than he sowed; but it might be an ordinary excess, secured by all producers in that country, for the land might be all equally fertile, and production from land might be the most fertile of industries. In that case, even if the land was a State monopoly and the producer’s gains could be taken from him by a tax, there would be nothing corresponding to rent, in the received sense. But, as soon as there were differences in the fertility, and therefore differences in the quantity produced at the same cost, the farmer who had the difference on his side could be said to have a rent. It is this surplus, conjoined with the institution of private property, that, according to Malthus, makes leisure and mental progress, and even great material prosperity, possible.[532] The rent is properly the extra profits, and not the equivalent paid over for them to a landlord; rent can easily exist without a landlord. “It may be laid down, therefore, as an incontrovertible truth, that, as a nation reaches any considerable degree of wealth, and any considerable fulness of population, which of course cannot take place without a great fall both in the profits of stock and the wages of labour, the separation of rents, as a kind of fixture upon lands of a certain quality, is a law as invariable as the action of the principle of gravity. And that rents are neither a mere nominal value, nor a value unnecessarily and injuriously transferred from one set of people to another, but a most real and essential part of the whole value of the national property, and placed by the laws of nature where they are, on the land, by whomsoever possessed, whether the landlord, the crown, or the actual cultivator.”[533]
It is the second cause that brings the first and third into operation in such a way as to produce the rents that we actually know in an old country. The fertility which secures a produce beyond cost makes extra profits possible; the growing population, which gives the produce a value, makes them actual; and the gradations in fertility, whereby a uniform increase in the value of produce creates far from uniform extra profits to different cultivators, give the extra profits the peculiar graduated character, which is characteristic of rent in the economical sense of the word.
Malthus believed himself to have included, in this theory of rent, what truth there was in the view of the French economists and of Adam Smith, when they spoke of rent as due to the qualities of the soil and not to an ordinary monopoly. His contemporaries admitted him to have been the first clear expounder of the subject. But his most eminent brother economist found general agreement quite consistent with emphatic divergence in details,[534] not wonderful in a writer who regarded every economical question as a particular case of the problem of value rather than of wealth.
Ricardo admits that his own theory of rent is simply a farther development of the Malthusian. In an essay on The Influence of a low price of Corn on the Profits of Stock, showing the inexpediency of Restrictions on Importation (1815),[535] published in answer to the two tracts of Malthus above mentioned, he makes this quite clear, and, unlike his disciples, is warm in praise of his rival’s powers as an economist.[536] He agrees with the definition (of the Tract on Rent) that rent is “that portion of the value of the whole produce which remains to the owner after all the outgoings belonging to its cultivation have been paid,” including an ordinary rate of profits for the employed.[537]
But, whereas Malthus regards rent as increased by whatever lessens the outgoings in any shape or form, Ricardo considers that can happen in one way only, namely, by the increased cost of raising the last part of the necessary supplies. Arithmetically it was clear that, if you had four items making up the total expense of cultivation, whatever reduced any one of the items pro tanto reduced the total.[538] Accordingly, Malthus said that rent could be increased by such an accumulation of capital as will lower the profits of stock,—such an increase of population as will lower the wages of labour,—such agricultural improvements or such increase of the cultivator’s exertions as will diminish the number of labourers needed,—or such an increase in the prices of produce from increased demand as will increase the difference between the expense of production and the price of produce.[539] Ricardo, on the other hand, says that profits can never be reduced by mere accumulation of capital or competition of capitals, but only by the progressively less fruitful character of the investments to be found for capital as accumulation goes on. As long as there is fertile land to be had, yielding a rich return to capital, no one will accept a poor return. “If in the progress of countries in wealth and population new portions of fertile land can be added to such countries with every increase of capital, profits would never fall nor rents rise.”[540] In things as they are, capital soon accumulates beyond the rich investments and has to take the poorer. Sooner or later, even in a new colony, a point is reached where fertile land will not supply food enough for the growing population except at an increased cost.[541] Now, if the supply is absolutely required, the most costly portion of it, whether it be got by an extension of cultivation to poorer lands, or by a more thorough cultivation of the richer, will determine the price of all the rest, for there cannot be two prices in the same market; and the profits of the producer of it will determine the profits of all his fellow-cultivators, for there cannot be two rates of profit in the same business. Furthermore, the agricultural profits will determine the rate in other businesses, for in a full-formed society the rate in the others must bear a fixed relation to the rate in this business, so that the one cannot materially vary without the other.[542] Therefore the greater cost of the last portion of the necessary supply of food will lower profits generally, will thereby increase the range of extra profits from the richer soils, and will thereby raise rents.
The difference between the two men is, that what Malthus makes only one cause, Ricardo makes the only one, the increased cost of cultivation.[543] Ricardo and his friends have certainly put cause for effect.[544] It is of course in the first instance the high prices that lead to the costly cultivation, and not vice versâ, for without the high prices the produce of the costly cultivation would not be profitable.
Malthus was asked by the Committee on Emigration: “Among other effects of resorting to a soil inferior to any now in cultivation, which is involved in the proposition of cultivating waste lands, would not one be to raise the rents of all the landlords throughout Great Britain and Ireland?”—He answered: “I think not. The cultivating of poor lands is not the cause of the rise of rents; the rise of the price of produce compared with the costs of production, which is the cause of the rise of rents, takes place first, and then such rise induces the cultivation of the poorer land. That is the doctrine I originally stated, and I believe it to be true; it was altered by others afterwards.”[545]
On the other hand, what makes the high prices permanent instead of temporary, is the fact that the cultivation essential to the completeness of the supply cannot be other than costly.[546] It is, therefore, not wrong to consider costly cultivation as one cause of the permanence of high prices, and therewith of high rents. But Ricardo goes further, and counts it the only cause.
Through the whole progress of society, he says, profits are regulated by the difficulty or facility of procuring food; and, “if the smallness of profits do not check accumulation, there are hardly any limits to the rise of rent and the fall of profit.” Nothing can increase the general rate of profit but the cheapening of food;[547] as by improvements in agriculture, which, by securing the same production with less labour, for the time increase the profits and lower the rents.[548] The landlord’s interest is therefore at all times opposed to that of every other class in the community,[549] for it means dear food, low profits, and high rents. Still, high rents are not the cause either of the dear food or the low profits, but are, equally with them, the effect of a common cause, more costly cultivation. The effect of a costly cultivation on wages might seem vi terminorum to be a raising of them, for wages depend on the proportion of the supply of labourers to capital’s demand[550] for them, and by assumption there was a greater demand. But since the cause of the rise of price was in the first instance an increase of population, it follows that the increased cost of raising the most costly supplies of corn will be incurred not by higher payment of old labourers, but by employment of new. Wages again will buy less corn, for corn has risen. “While the price of corn rises ten per cent., wages will always rise less than ten per cent., but rent will always rise more; the condition of the labourer will generally decline, and that of the landlord will always be improved.”[551] In his statement of the doctrine of wages, Ricardo is perhaps more careful in 1815 than he is in 1817, saying that, “as experience demonstrates that capital and population alternately take the lead, and wages in consequence are liberal or scanty, nothing can be positively laid down respecting profits as far as wages are concerned.”[552] But even in 1817 his exposition is hardly more rigid than that of Malthus himself. So far is he from recognizing an iron law driving wages down to “the natural price” or bare necessaries, that he thinks the market rate may be constantly above the natural for an indefinite period, and he regards the natural itself as expansive. The whole chapter on wages[553] shows a just understanding of the Essay on Population. Nevertheless, if Ricardo in one sense made too much of the principle of population in relation to Rent, in another sense he made too little of it. He does not see that in a progressive country it counteracts the tendency of improvements in agriculture to cheapen produce, and thereby reduce rents;[554] agricultural rents have risen since 1846 largely because of high farming. He does not grant that high or low wages can affect rent, because he regards them as purely relative to profits, and making with profits a total amount, of which only the proportions vary; but it is difficult to believe that the rise in agricultural wages since 1873 or so can have failed to play a part in keeping down farmers’ rents since that date. As, however, our view of the power or powerlessness of lowered profits or lowered wages to increase rent will be found to depend on our view of the causes of value, and as the difference of the two economists on the relation of wages to profits might have the appearance of a technical subtlety, these two items of the total may be passed by for the present.
In regard to agricultural improvements the issue seemed plainer, and the evidence seemed all for Ricardo and against Malthus. In a country depending chiefly on itself for grain, a general adoption of improvements would seem to make supplies cheaper because less costly, and therefore to lower rents because forcing farmers to lower prices. Even Mr. Mill did not break away from Ricardianism at this point,[555] though he speaks less unreservedly than Ricardo upon it. Malthus, on the other hand, who regards rent as depending largely on the ability of the agricultural supply to create its own demands, regards rent, accordingly, as at all times keeping pace with the increase of grain caused by improvements, unless the improvements outrun population. What cheapness does in other cases is to make an article accessible to a circle of buyers previously excluded from it. Every one is a buyer of agricultural produce and no one is excluded; but the temporary cheapness of grain creates new buyers by making marriage accessible to a wider circle.
The progress of rents in fact results from the conflict of two economical tendencies—the tendency of economical expedients to lower prices, and the tendency of an increasing population to raise them. If Malthus’ ripest view of population be true, then a cheapening of food among a civilized people by no means leads to a corresponding increase of their numbers, and therefore the course of improvement would tend so far towards a diminution of price, and therewith of rent. If rents depended on the price of corn alone, economical expedients (including not only the direct aids to tillage, mechanical and chemical inventions directly applied to it, but the indirect aids, free trade, railways, and steamers) must certainly have lowered rents in the last hundred years. But the reverse is true,[556] chiefly because the produce of a farm is ceasing to mean wheat, and coming more and more to mean cattle and dairy produce, which have not fallen but risen in price in one hundred years, while corn has actually fallen. This variety of productions has proved financially an equivalent to what Malthus (seventy years ago) considered the main cause of greater extra profits to the farmer and greater money rents to the landlord——the increased fertility of the soil in the matter of grain, and an increased price keeping pace with it.
The commercial policy of England has become what Malthus describes in the latter part of the Essay on Population as a combination of the agricultural and the commercial systems. His views on this subject became modified as he grew older. In the second edition he says:[557] “Two nations might increase exactly with the same rapidity in the exchangeable value of the annual produce of their land and labour; yet ... in that which had applied itself chiefly to agriculture, the poor would live in greater plenty, and population would rapidly increase; in that which had applied itself chiefly to commerce, the poor would be comparatively but little benefited, and consequently population would either be stationary or increase very slowly.” “In the history of the world the nations whose wealth has been derived principally from manufactures and commerce have been perfectly ephemeral beings compared with those the basis of whose wealth has been agriculture. It is in the nature of things that a state which subsists upon a revenue furnished by other countries must be infinitely more exposed to all the accidents of time and chance than one which produces its own.”[558] It is not, he thinks, because of her trade, but because of her agriculture that England is so rich in resources; it is not without danger that our commercial policy has diverted capital from agriculture into manufacture and commerce. About the middle of the eighteenth century we were strictly an agricultural nation, and we were safe, for in a country whose commerce and manufacture increase from and with the improvement in agriculture there is no discoverable germ of decay. But all is changed now; and there is reason to fear that our prosperity is temporary, and we have only risen by the depression of other nations.[559] When the nations that now supply us with cheap corn shall have prospered like ourselves and increased their population till corn is dear among them, then we shall be ruined. The evils of scarcity are so dreadful that it is worth our while to give special encouragements to agriculture, and, in order to be certain to have enough, to have in general too much.[560] Otherwise “we shall be laid so bare to the shafts of fortune that nothing but a miracle can save us from being struck.”[561] “If England continues yearly her importations of corn, she cannot ultimately escape that decline which seems to be the natural and necessary consequence of excessive commercial wealth; and the growing prosperity of those countries which supply her with corn must in the end diminish her population, her riches, and her power,”—not indeed in the next twenty or thirty years, but “in the next two hundred or three hundred.”[562] In 1803 Malthus had much in common with the author of Great Britain independent of Commerce, to say nothing of the French economists. He cannot be said to have entirely lost the bias in favour of Agriculture in later years. In the Political Economy, reviewing the last five centuries of English work and wages,[563] he tries to explain away the instances where rising prices of corn and an “influx of bullion” seem to have injured the condition of the labourer; and there can be little doubt he was indirectly answering an objection to Corn Laws. When depreciation of the currency, whether through American discoveries or suspensions of cash payment, has occurred, the rebound from it (he says) has made prices fall much more than wages, and so (we are to infer), when prices are kept high, wages will follow. It may be doubted if he had weighed the full consequences of such a contention in the light of his own principles of free trade. Professor Rogers[564] has had the valuable aid of old College accounts. Malthus had little besides Eden, Arthur Young, and the Reports to the Board of Agriculture; and it is doubtful if he fully understood the effects on the labourer of Henry VII.’s debasement of the currency, or could apply the analogy to the depreciation in his own day.[565] But on the whole, as years went on, he became less physiocratic. He came to acknowledge that, if a purely agricultural country might in some cases, like America, be the best possible for the labourer, it might in other cases, like Poland or Ireland, be the worst possible for him. If we hear that the labourer in one country earns in a year fifteen and in another nine quarters of wheat, we cannot be sure that the former is the better off till we know the value of other things in the country in comparison with wheat. If manufactures were very dear in comparison, then the labourer’s wages except in food would go very little way, unless in a case like America, where the quantity is so great that it makes up for the little value of corn wages. In Poland the value of corn is so low, and there is so little capital in the country, that the high corn wages mean low real wages, and the population is either stationary or very slow in its increase. The prosperity of an agricultural country, then, depends on other causes than the direction of its attention to the one industry of agriculture, and without knowing these we could not infer or predict it.[566]
Malthus in fact reached the point at which he was always glad to arrive, the medium between two extreme views.[567] He would neither approve of a purely agricultural nation, whose danger was want of capital, nor of a purely commercial, whose danger was want of food. In a purely commercial, everything depends on a superiority in industry, machinery, and trade, which from the nature of things cannot last. Not only foreign but domestic competition will bring down profits, and thereby, by discouraging saving and enterprise, diminish the demand for labour and bring the population to a standstill. Christendom has seen Venice, Bruges, Holland lose their trade by their neighbours’ gain.[568] To say that the nations of the world ought to be allowed to develope their trade as freely as the provinces of a single empire, is, in his opinion, to overlook the reality of political obstacles. If England were still separated into the kingdoms of the Heptarchy, London could not be what it is. The interest of a province and the interest of an independent state are never the same.[569] To one who believes political divisions inevitable, there can be little hope for universal free trade. Malthus is unable to rise to the cosmopolitan view of Cobden, and he never seems to see that by ignoring political barriers, free trade may really weaken them. His ideal is a state which combines agriculture and commerce in equal proportions.[570] The prosperity of the latter implies the decay of feudalism and the establishment of secure government; with security comes the spontaneous extension of enterprise and a steady demand for labour. Since the two great classes of producers provide a market for each other, wealth will constantly grow, and without risk of sudden check by a foreign influence. The prosperity of such a country may (he thinks) last practically for ever, and we might answer in the affirmative for our own country the query of Bishop Berkeley about his.[571] “The countries which unite great landed resources with a prosperous state of commerce and manufactures, and in which the commercial part of the population never essentially exceeds the agricultural part, are eminently secure from sudden reverses. Their increasing wealth seems to be out of the reach of all common accidents, and there is no reason to say that they might not go on increasing in riches and population for hundreds, nay almost thousands of years.”[572] They would go on in fact till they reached the extreme practical limits of population, which under the system of private property would mean such a state of the land as would “enable the last employed labourers to produce the maintenance of as many probably as four persons,” the man, his wife, and two children. As soon as the labour ceases to produce more than this, it ceases to be worth the employer’s while to give the wages and employ the labour. These practical limits are far from the limits of the earth’s power to produce food, and a Government which compelled every member of society to devote himself wholly to the raising of food and necessaries, would succeed in coming nearer to those farther limits, though at the expense of everything we mean by civilization.[573] As a matter of fact, even the practical limit is not approached by way of a uniform decline of profits and of population. Various causes, acting at irregular intervals, stave off the event. The decline of general profits, the introduction of long leases and large farming, would bring more capital to the land; improvements in agriculture will increase the produce, inventions in manufacture will lessen the cost of the agriculturist’s comforts, and make his wages and profits go farther; the opening of a foreign market may raise home prices; a temporary rise in the value of agricultural produce may stimulate the investment of capital in farming. So Malthus concludes, for reasons not unlike Cliffe Leslie’s,[574] that, though there is a tendency of profits to fall, yet the tendency is often defeated. Though there is much truth still in many of his statements, the conclusion he draws from them,[575] that we ought by a judicious system of corn duties and corn bounties to keep the price of food steady and secure a large home supply, is quite out of court now. The variations in price have been under free trade very moderate; and the supply from one quarter or another has never failed us. Free trade is no longer among our problems.
It must be added, however, that there is no reason why the “practical limits” should not exist under a paternal or fraternal socialism as well as under the present social system. Even if industry were initiated and directed not by individuals but socialistically by Government, the sole motive need not be to increase the mere numbers of the people, and therefore the mere total quantity of food needed for a bare life. The motive of socialistic government would be to secure a high degree of comfort, not a bare subsistence, for all; and therefore, at the cost of a limitation of numbers, society would still remain at a distance from its greatest possible production of food. Whether such a limitation of numbers is likely to take place in the reconstituted society is discussed elsewhere.[576]