The Profit of Landed Property

What is the profit of land independent of that accruing from the industry and capital, devoted to its cultivation; and to consider the profit of land in the abstract, and whence it originates, without any inquiry as to who may be the cultivator, whether the proprietor himself, or a tenant under him.

Land has the faculty of transforming and adapting to the use of mankind an infinity of substances, which, without its inter- vention, would be to them of no service; it yields nutriment and vegetative juices to the grain, the fruits, and vegetables, whereon we subsist; as well as to the forests, whereof we construct our houses, ships, and furniture, and whence we derive fuel to keep us warm. Its agency in the production of all these commodities may be called, the productive service of land.

And thence it is, that the profit of the proprietor originates.

Many writers think 76 that the value of products is never more than the recompense of the human agency or surplus, that can be set apart as the peculiar profit of land, and constitute the rent paid for its use to the proprietor.

The tenor of their argument is this= the proprietor of land lying waste or fallow having also a capital to dispose of, may, at his pleasure, expend it, either in cultivation, or in some other way.

If he reckons that the cultivation of his land will yield him as large a return as any other investment, he will give it the preference; and, indeed, it is found by experience, that this mode of investment is preferred, even though somewhat less advantageous than others, as being at all events more safe. Well= and what do they infer from this?

Why, that cultivation yields no return whatever, beyond the interest of the capital engaged in it; 77 and if so, what is there left for the profit on the productive powers of the soil?

Evidently nothing whatever. I have endeavoured to put the argument in the clearest and most intelligible light; and I have to observe upon it, that it proceeds upon a partial and imperfect view of the matter, and upon a total neglect of the influence of demand in the fixation of value. I will now endeavour to give a more complete view of the subject.

He derives a further benefit from the useful substances to be extracted from its entrails; the stone, metal, coal, peat, &c.

Land, as we have above remarked, is not the only natural agent possessing productive properties; but it is the only one, or almost the only one, which man has been able to appropri- ate, and turn to his own peculiar and exclusive benefit. The water of rivers and of the ocean has the power of giving mo- tion to machinery, affords a means of navigation, and supply of fish; it is, therefore, undoubtedly possessed of productive power. The wind turns our mill; even the heat of the sun co- operates with human industry; but happily no man has yet been able to say, the wind and the sun’s rays are mine, and I will be paid for their productive services. I would not be un- derstood to insinuate, that land should be no more the object of property, than the rays of the sun, or blast of the wind. There is an essential difference between these sources of pro- duction; the power of the latter is inexhaustible; the benefit derived from them by one man does not hinder another from deriving equal advantage. The sea and the wind can at the same time convey my neighbour’s vessel and my own. With land it is otherwise. Capital and industry will be expended upon it in vain, if all are equally privileged to make use of it; and no one will be fool enough to make the outlay, unless assured of reaping the benefit. Nay, paradoxical as it may seem at first sight, it is, nevertheless, perfectly true, that a man, who is himself no share-holder of land, is equally inter- ested in its appropriation with the share-holder himself. The savage tribes of New Zealand, and of the north-western coast of America, where the land is unappropriated, have the greatest difficulty in procuring a precarious subsistence upon fish and game, and are often reduced to devour worms, caterpillars, and the, most nauseous vermin= 75 not unfrequently even to wage war on one another, from absolute want, and to devour their prisoners as food; whereas, in Europe, where the appro- priation is complete, the meanest individual, with bodily The productive power of the soil has no value, unless where its products are objects of demand. Travellers, who have ex- plored the interior of America, and other desert parts of the globe, make repeated mention of tracts of the richest land, capable of every kind of culture, yet wholly destitute of any useful or valuable products. But no sooner is a colony estab- lished in the vicinity, or, by some means or other, a market found where the products of the soil will, in the way of ex- change, pay the usual rate of interest upon the requisite ad- vances, than cultivation begins immediately. Up to this point, there is no difference between us. But if any circumstance operate to aggravate the demand beyond this point, the value of agricultural products will exceed, and sometimes very greatly exceed, the ordinary rate of interest upon capital; and this excess it is, which constitutes the profit of land, and enables the actual cultivator, when not himself the proprietor, to pay a rent to the proprietor, after having first retained the full interest upon his own advances, and the full recompense of his own industry. faction and pleasure attached to territorial possession, the consideration, weight, and dignity it communicates, and the titles and privileges with which it is in some countries ac- companied, contribute greatly to increase this natural prefer- ence. Land is an agent gratuitously furnished to mankind at large, by whom it is afterwards exclusively appropriated; but its appropriation does not begin to be profitable to the individual, in whose favour it is made, until its products are an object of demand, and until their supply ceases to be co-extensive with the desire for them, as it is with respect to some other natural objects, air, water, &c. It is true, that land is more exposed than other property to the burden of public taxation, and to the arbitrary exactions of power, precisely because it can neither be removed nor con- cealed. A floating capital may take any shape whatever, and be removed at will It can escape tyranny and civil commo- tions more readily, than even the person of its proprietor. It is a safer object of property; for it is often impossible to attach it, or to make it specifically responsible for the debts of the proprietor. Moreover, it is much less exposed to litigation than landed property. Yet, it is clear, that all these advantages are more than counterpoised by the superior risk of invest- ment; and, that landed property is still preferred to floating capital; since land is dearer, in proportion to its annual re- turns. From those products of the soil only, thus raised in value by the demand, can there accrue that profit to the proprietor which has been called the profit of land; and which is paid in all civilized countries, and especially where manufacture and commerce multiply the objects of exchange. It may some- times happen, that in a particular district of such a country, the rent of land, may be very trifling; as in our own district of Sologne, where it is no more than 20 cents an acre; but this is owing to the want of roads, and particularly of water-car- riage, which makes the charge of bringing its agricultural pro- duce to market, added to the charge of cultivation, absorb nearly The whole value it will there sell for. In some coun- tries, highly civilized and productive in the extreme, land pays no more than 3 or 4 per cent upon its price or purchase-money. Yet, this is no proof of the poverty of the soil; it proves only, that it sells dear. A landed estate may yield 24 dollars the acre, and require very little expense of cultivation; as if it be laid down in pasture, for instance; in such case it must owe most of its value to its natural properties; yet, if it have cost the proprietor 800 dollars the acre, it will yield a return of 3 per cent only. And herein consists the difference between the profit and the rent of land= profit is high or low, according to the quantum of the product; rent, acctording to the quantum of the pur chase-money or price. An acre of land, yielding a profit of one dollar only, will bring as high a rent as an acre yielding a profit of 50 dollars, if 50 times as much has been paid for the one as for the other.

Whatever may be the exchangeable price of land and capital one to the other, it is proper to observe, that their interchange makes no variation in the supply of productive agency of land and capital respectively in circulation, and disposable for the purpose of production; consequently, that exchangeable price can nowise affect the real and positive profit of land and of capital. When Richard sells his estate to Thomas, the produc- tive service of the land is at the disposal of Thomas instead of Richard; and that of the capital, given in exchange for it, is at the disposal of Richard instead of Thomas.

The only thing, which really varies the amount of productive agency of land in circulation, is the actual amelioration of the soil, by clearing and bringing new land into cultivation, or enlarging the productive power of old land, and thus increas- ing its product. Savings and accumulations of capital are, in the shape of agricultural improvements, transformed into landed property, and made to participate in all the peculiar advantages and disadvantages attached to it. The same may be said of houses, and generally of all capital invested in a fixed and permanent object; it thenceforth loses the character of capital, and assumes that of landed property.

Whenever land is bought with capital, or capital with land, occasion is given for a comparison of the returns of the one species of property with the returns of the other. It is pos- sible, that an estate, bought with a capital of 100,000 dollars, may produce but 3 or 4000 dollars per annum, whilst the same amount of capital would yield 5 or 6000 dollars. The lower rate of interest, which the proprietor is content to take on a purchase of land, may be attributed, in the first place, to the superior stability of the investment.

Capital can seldom be made productive, without undergoing several changes both of form and of place, the risk of which is always more or less alarming to persons unaccustomed to the operations of in- dustry; whereas, on the contrary, landed property produces without any change of either quality or position.

The satis-

Whence we may draw this invariable maxim; that the pro- ductive agency of land is possessed of value, which value, like value in general, increases in the direct ratio of the de- mand, and the inverse ratio of the supply; and that, since land differs as much in quality, as in site and position, there is a peculiar demand and supply for each peculiar quality. A de- mand for so much wine, more or less, whatever it arise from, creates a specific demand for as much productive agency of the soil, as may be requisite for its growth; 78 and the extent of