CHAPTER III.

THE FERTILITY OF LAND, CONTINUED.

THE LAW OF

DIMINISHING RETURN.

§ 1. THE LAW OF DIMINISHING RETURN may be provisionally stated thus:

An increase in the capital and labour applied in the cultivation of land causes in general a less than Provisional proportionate increase in the amount of produce statement of raised, unless it happens to coincide with an Diminishing improvement in the arts of agriculture.

the Law of

Return.

We learn from history and by observation that every agriculturist in every age and clime desires to have the use of a good deal of land; and that when he cannot get it freely, he will pay for it, if he has the means. If he thought that he would get as good results by applying all his capital and labour to a very small piece, he would not pay for any but a very small piece.

When land that requires no clearing is to be had for nothing, every one uses just that quantity which he thinks will give his capital and labour the largest return. His cultivation is "extensive," not "intensive." He does not aim at getting many bushels of corn from any one acre, for then, he would cultivate only a few acres. His purpose is to get as large a total crop as possible with a given expenditure of seed and labour; and therefore general expehe sows as many acres as he can manage to bring under a light cultivation. Of course he may go too far: he may spread his work over so large an area that he would gain by concentrating his capital and labour on a smaller

It is based on

rience.

space; and under these circumstances if he could get com-
mand over more capital and labour so as to apply more to
each acre, the land would give him an INCreasing Return;
that is, an extra return larger in proportion than it gives to
his present expenditure. But if he has made his calculations
rightly, he is using just so much ground as will give him the
highest return; and he would lose by concentrating his capital
and labour on a smaller area. If he had command over more
capital and labour and were to apply more to his present
land, he would gain less than he would by taking up more
land; he would get a DIMINISHING RETURN, that is, an extra
return smaller in proportion than he gets for the last applica-
tions of capital and labour that he now makes, provided of
course that there is meanwhile no perceptible improvement
in his agricultural skill. As his sons grow up they will have
more capital and labour to apply to land; and in order to avoid
obtaining a Diminishing Return, they will want to cultivate
more land.
But perhaps by this time all the neighbouring
land is already taken up, and in order to get more they must
buy it or pay a rent for the use of it, or migrate where they
can get it for nothing.

Its relation to migrations.

This tendency to a Diminishing Return was the cause of Abraham's parting from Lot, and of most of the migrations of which history tells. And wherever the right to cultivate land is much in request, we may be sure that the tendency to a Diminishing Return is in full operation. Were it not for this tendency every farmer could save nearly the whole of his rent by giving up all but a small piece of his land, and bestowing all his capital and labour on that. If all the capital and labour which he would in that case apply to it, gave as good a return in proportion as that which he now applies to it, he would get from that plot as large a produce as he now gets from his whole farm, and would make a net gain of all his rent save that of the little plot that he retained,

1

Its relation to

farming.

It may be conceded that the ambition of farmers often leads them to take more land than they can properly manage. But when we say that a farmer would gain by applying his capital and labour to a smaller area, modern we do not necessarily mean that he would get a larger gross produce; we may mean only that the saving in rent would more than counter-balance any probable diminution of the total returns that he got from the land. If a farmer pays a fourth of his produce as rent, he would gain by concentrating his capital and labour on less land, provided the extra capital and labour applied to each acre gave anything more than three-fourths as good a return in proportion as he got from his earlier expenditure.

Again, it may be granted that much land, even in a country as advanced as England, is so unskilfully cultivated that it could be made to give more than double its present gross produce if twice the present capital and labour were applied to it skilfully. Very likely those are right who maintain that if all English farmers were as able, wise and energetic as the best are, they might profitably apply twice the capital and labour that is now applied. Assuming rent to be one fourth of the present produce, they might get seven hundredweight of produce for every four that they now get: it is conceivable that with still more improved methods they might get eight hundredweight, or even more. But this does not prove that, as things are, further capital and labour could obtain from land an Increasing Return. The fact remains that, taking farmers as they are, with the skill and energy which they actually have, we find as the result of universal observation that there is not open to them a short road to riches by giving up a great part of their land, by concentrating all their capital and labour on the remainder, and saving for their own pockets the rent of all but that remainder. The reason why they cannot do this is told in the Law of Diminishing Return.

The Law relates to the

produce.

It is important to remember that the Return to capital and labour of which the Law speaks, is measured by the amount of the produce raised independently amount of the of any changes that may meanwhile take place in the price of produce; such, for instance, as might occur if a new railway had been made in the neighbourhood, or a new town population had grown up close by. Such changes will be of vital importance when we come to draw inferences from the Law of Diminishing Return, and particularly when we discuss the pressure of increasing population on the means of subsistence. But they have no bearing on the Law itself, because that has to do not with the value of the produce raised, but only with its amount.

We may now formulate the limitations which were implied under the words "in general" in our provisional statement of the Law. The Law is a statement of a tendency which may indeed be held in check for a time by improvements in the arts of production and by the fitful course of the development of the full powers of the soil; but which must ultimately become irresistible if the demand for produce should increase without limit. Our final statement of the Law may then be divided into two parts, thus:Firstly, although an improvement in the arts of agriculture may raise the return which land generally affords to any given amount of capital and labour; and although the capital and labour already applied to any piece of land may have been so inadequate for the development of its full powers, that some further expenditure on it even with the existing arts of agriculture would give a more than proportionate return; yet these conditions are rare in an old country: and, except when they are present, the application of increased capital and labour to land will add a less than proportionate amount to the produce raised, unless there be meanwhile an increase in the skill of the individual cultivator. Secondly, whatever

Final statement of the

Law.

may be the future developments of the arts of agriculture, a continued increase in the application of capital and labour to land must ultimately result in a diminution of the extra produce which can be obtained by a given extra amount of capital and labour.

labour.

§ 2. Making use of a term suggested by James Mill, we may regard the capital and labour applied to A Dose of land as consisting of equal successive Doses'. As capital and we have seen, the return to the first few doses may perhaps be small and a greater number of doses may get a larger proportionate return; the return to successive doses may even in exceptional cases alternately rise and fall. But our law states that sooner or later (it being always supposed that there is meanwhile no change in the arts of cultivation) a point will be reached after which all further doses will obtain a less proportionate return than the preceding doses.

cultivation.

The dose which only just remunerates the cultivator may be said to be the MARGINAL DOSE, and the return to it the MARGINAL RETURN. If there happens to marginal reMarginal dose, be in the neighbourhood land that is cultivated turn, margin of but only just pays its expenses, and so gives no surplus for rent, we may suppose this dose applied to it. We can then say that the dose applied to it is applied to land on the MARGIN OF CULTIVATION, and this way of speaking has the advantage of simplicity. But it is not necessary for the argument to suppose that there is any such land: what we want to fix our minds on is the return to the marginal dose: whether it happens to be applied to poor land or to rich does not matter; all that is necessary is that it

1 The phrase a Dose of Capital and Labour may be taken provisionally to mean £1 of outlay distributed according to the exigencies of the case between the hire of labour, the payment for the use, the wear and tear of capital, and lastly management. Some difficulties connected with the phrase are discussed in a Note at the end of Principles, IV. III.