or a reward for the risk he incurs: or finally he may himself superintend the employment of his capital, in which case his profits must include all the three elements, interest, insurance, and wages of superintendence. We have already seen how the aggregate rate of profits is depressed by the population principle, and the evils thus produced in the commercial world. That part of profits which consists of interest, is also depressed by the same cause. The rate of interest depends on the demand and supply of loans: in other words, on the proportion between the sums demanded by borrowers and those offered by lenders. Now when the aggregate rate of profit falls, producers, dealers, and other borrowers, cannot afford to pay so high an interest, but either borrow less money, or give a smaller sum for it; and thus the rate of interest is diminished, and the condition of all those who live on the interest of their money deteriorated. The rate of interest, like the aggregate rate of profit, is in ordinary times very much lower in England than in America or Australia. In Holland it is lower still: the interest given by the Dutch government being only about two per cent.

3rd. The Law of Population raises rent. The manner in which it produces this effect, will be understood by a consideration of the law of rent.

The Law of Rent is, that the worst land under cultivation pays no Rent, but that Rent consists in the excess of produce yielded by all lands of a better quality; rising as this excess of produce rises, and falling as it falls. "This is the theory of rent," says Mr. Mill, "first propounded at the end of the last century by Dr. Anderson, and which, neglected at the time, was almost simultaneously rediscovered, twenty years after, by Sir Edward West, Mr. Malthus, and Mr. Ricardo. It is one of the cardinal doctrines of political economy: and until it was understood, no consistent explanation could be given of many of the more complicated industrial phenomena." The proofs of the law of rent may be stated as follows.

Land in all countries is of different degrees of fertility: and it depends on the price of corn and other agricultural produce, to what extent its cultivation will yield a profit. In any given state of the price of corn, some land is so barren as not to repay its cultivation at all: some will yield the bare minimum of produce, in other words will just support the laborers who till the soil and their secondaries, (by which term is meant the laborers who make the tools, clothes, buildings, &c., of the husbandmen): some will give in addition to the necessaries of the laborers, the ordinary, and no more than the ordinary, profits of the capitalist; others will yield more than this. Now the worst land which can be cultivated at all is that which barely yields the laborer's necessaries: this may be cultivated by the laborer for subsistence, but not by the capitalist for profit. The worst land which can be cultivated by the capitalist, is that which yields in addition just the ordinary profits of capital, and no more. It is evident that the latter description of land, and still more the former, cannot afford to pay any rent. But it is also evident, that though it

can pay no rent, it will be cultivated: for there is nothing to prevent the farmer from cultivating as much of his land as he pleases, or from cultivating it as elaborately as he pleases; and he will naturally cultivate it just so far and no further, than it yields him the ordinary rate of profit. After he has once taken a lease of his farm, he may indeed be willing to lay out capital upon it for less than the ordinary profit; but before he takes it, he will naturally expect, like all other capitalists, to obtain the ordinary rate of profit on the whole of his capital.

In a country such as England therefore, where almost all the land is cultivated by capitalist farmers, it may be laid down as a general rule, that the worst land under cultivation at any given time, is that which just yields the ordinary profits of capital; and that this land pays no rent. Cultivation descends to, and takes in, this land, for the price of corn renders it remunerative to do so but it cannot descend lower, until either the price of corn rises from an increase of population, or until the progress of agricultural improvement enables corn to be raised at the same price from inferior lands. This land then is the standard which determines the amount of rent. Rent consists in the excess of produce yielded by all lands of a better quality than the worst under cultivation: and the competition among farmers enables the landlords to appropriate to themselves this excess. -The lower cultivation descends, the wider grows the difference between the best and worst land, and the larger does the excess of produce which constitutes rent, become.

It is evident therefore that rent rises in proportion as cultivation descends. Cultivation is enabled to descend by two causes: either by a rise in the price of food, or by agricultural improvements. Food rises in price whenever the advance of population increases the demand relatively to the supply; and this rise of price makes it profitable to cultivate an inferior quality of land. Agricultural improvements tend to benefit the laborers in the first place, by increasing the productiveness of labor: and thus their first and abstract tendency, as Mr. Ricardo and Mr. Mill have shown is to diminish rent, by enabling society to dispense with some of the worst kinds of cultivated land. However, in the usual course of things, these improvements, instead of diminishing rent, have the effect of greatly augmenting it, as they enable inferior lands to be taken in, and thus make room for a further increase of population. Hitherto their ordinary action has been, not to cheapen food, but merely to prevent its growing dearer: not to benefit either the laborer or capitalist, but only to permit a further increase of population and capital. cultural improvement then," says Mr. Mill, "is always ultimately, and in the manner in which it generally takes place, also immediately beneficial to the landlord. We may add that when it takes place in that manner, it is beneficial to no one else. When the demand for produce fully keeps pace with the increased capacity of production, food is not cheapened: the laborers are not, even temporarily, benefited: the cost of labor is not diminished, nor profits raised. There

“Agri

ist a greater aggregate production, a greater produce divided among the laborers, and a larger gross profit: but the wages being shared among a larger population, and the profits spread over a larger capital, no laborer is better off, nor does any capitalist derive from the same amount of capital a larger income."

Rent is the effect of what is called "a natural monopoly:" that is, it necessarily arises from inherent differences in the productive powers of the soil, and, as such, cannot be prevented from existing. The better qualities of land are like machines of superior power, and the excess of produce which they yield, must accrue to some one. The only question is, whether private individuals or society at large should profit by it? Hitherto every increase of rent has gone to the landlord class: but in so far as this increase has been due to the progress of population, and not to individual exertions on the part of the proprietors, the latter have done nothing to deserve it. "They grow richer," says Mr. Mill, "as it were in their sleep, without working, risking, or economizing." It would therefore be no violation of the great principle on which private property is based, namely the right of producers to what they have produced, if the state were to appropriate this spontaneous increase of rent: and Mr. Mill proposes that it should in future do so by a land tax; from which the present value of all land should be texempt, and which should be levied with due pre caution, so as not to affect any rise in rent which may be owing to individual skill and expenditure on the part of the proprietor.

Mr. Porter, in his Progress of the Nation, makes the following statements, showing the vast extent of uncultivated land which has been brought under cultivation in this country within the last century, and the consequent increase of rent. "The whole number of acres brought into cultivation," says Mr. Porter, "from the beginning of the reign of George the Third (1760) to the end of the year 1844, has been 7,076,610." This statement moreover, as far as I understand it, refers only to the common lands, which have been enclosed by acts of parliament. "With scarcely any exception," he says again," the revenue drawn in the form of rent from the ownership of the soil, has been at least doubled in every part of Great Britain since 1790. This is not a random assertion, but, as regards many counties of England, can be proved by the testimony of living witnesses, while in Scotland the fact is notorious to the whole population." "The increased rental of real property in England and Wales during the thirty-five years that we have now been at peace in Europe, exceeds forty millions."

From the foregoing description of the laws of wages, profits, and rent, it may be seen that a good test of the actual state of the distri bution of wealth in any given country, is afforded by the productives ness of the land which forms the extreme margin of cultivation. "It is well said by Dr. Chalmers," says Mr. Mill, "that many of the most important lessons in political economy are to be learned at the exIreme margin of cultivation, the last point which the culture of the soil has reached in its contest with the spontaneous agencies of nature. The degree of the productiveness of this extreme margin, is an index

to the existing state of the distribution of the produce among the three classes of laborers, capitalists, and landlords." When the marginal soil is unproductive, as is at present the case in this country, it is a certain sign that both wages and profits are low and that rent is high. It shows, in the first place, that population is pressing too heavily on the soil and the capital, and therefore that real wages (that is, the necessaries and comforts obtained by the laborers) are low. Secondly, it shows, that money wages are comparatively high; for money wages have a close connection with the price of food, and the latter, as will be shown presently, must be high when the worst land is unproductive. If the standard of comfort among the laborers (which alone decides their real wages) do not vary, and they receive the same amount of commodities, it is obvious that their money wages must depend on the price of these commodities. Hence money wages will, generally speaking, be high in proportion to the price of food: a truth which is illustrated by the gradual rise in money wages, as well as in the price of food, which has taken place in the progress of society. Now whenever money wages rise, profits fall; for profits, as we have seen, vary inversely with money wages or the cost of labor. Therefore, whenever the worst land under cultivation is of a low quality, it is a sure sign that profits, as well as real wages, are low. It is a sign also, in the third place, that rent is high; for rent depends on the excess of produce yielded by all lands of a better quality than the worst land under cultivation, and rises in proportion as cultivation descends to lands of an inferior quality. Labor therefore cannot possibly be dear, nor food cheap, unless the margin of cultivation consist of a very productive soil; and all schemes for benefiting the working classes which do not keep this truth in view, are necessarily fallacious.

EXCHANGE.

We may next proceed to consider the laws of the Exchange of wealth, or in other words, the laws of Value and of Price. In a society like our own, exchanges are of such constant occurrence, that without a knowledge of the laws which govern them, it is impossible to have any clear or correct idea of the nature of economical transactions.in

"In a state of society," says Mr. Mill, "in which the industrial system is entirely founded on purchase and sale, each individual, for the most part, living not on things in the production of which he himself bears a part, but on things obtained by a double exchange, a sale followed by a purchase-the question of Value is fundamental. Almost every speculation respecting the economical interests of a society thus constituted implies some theory of Value; the smallest error on that subject infects with corresponding error all our other conclusions; and anything vague or misty in our conception of it creates confusion and uncertainty in everything else. Happily there is nothing in the laws of Value which remains for the present or any future writer to clear up: the theory of the subject is complete."

irst, with regard to the definition of the principal terms, we have already seen that the word "value" has two meanings: that people sometimes employ it to denote simply usefulness, and at other times exchange value or power of purchasing; and that it is in the latter sense that the term is used in political economy. This must be carefully remarked, for the ambiguity in the word has very often been the source of misconceptions and false reasoning. The distinction between value and price should also be noted. The value of a commodity means its general power of purchasing; whereas the price means the value in money, that is, the quantity of money for which it exchanges.

When we consider the meaning of the word "value," it is evident that it expresses no quality inherent in a commodity itself, but only a relation between it and other commodities. The value of a thing is the quantity of other things for which it exchanges. Value is therefore a relative term. When one thing rises in value, something else must necessarily fall. There cannot be a general rise or fall of values; the very idea of such an occurrence involves a contradiction. There may however be a general rise or fall of prices, from variations in the quantity of the circulating medium, whether of coins or notes. This distinction between values and prices, with regard to their general rise or fall, is obvious, and yet it is frequently overlooked. In fact, there is scarcely any topic in political economy, on which there has been so much false reasoning and baseless speculation, as on the advantages of a general rise of prices. Many writers (for example, the celebrated David Hume, Mr. John Gray, Mr. Attwood, Sir A. Alison, Mr. Thomas Doubleday, and others) have asserted that this is of vast importance to national welfare; and many schemes have been devised for effecting it, such as the adoption of an inconvertible currency, and large issue of paper money. There seems to be a vague idea, that when prices rise, values rise also, and every one grows richer. But such a thing as a general rise of values is impossible; and with regard to the rise of prices, instead of being an advantage, it is a great evil. Society in general are unaffected by a general rise of prices; for although people receive more money for their goods and services, they have also to pay more. The value of commodities in relation to each other remains as before, that of money alone being altered; and all the difference which this makes to society at large, is that they have more counters or pieces of paper to reckon by. It is therefore immaterial to the community at large, whether the amount of the currency be great or small. "The uses of money," says Mr. Mill, "are in no respect promoted by increasing the quantity which exists and circulates in a country: the service which it performs being as well rendered by a small as by a large aggregate amount. Two million quarters of corn will not feed so many persons as four millions; but two millions of pounds sterling will carry on as much traffic, will buy and sell as many commodities as four millions, though at lower nominal prices." The only persons who are really affected by a general rise or fall of prices (which is equivalent to a fall or rise in