part, of the selling price of land represents, on any theory
capital, capital surely commanding the use or fee of land;
and finally that no small part, often by far the greatest
guishably with the original productive powers of the soil,
racing alike the proprietors of land and the owners of
of rent, the actual investment of capital merged indistin-
great part of all the land in possession to-day in civilized
always practically having its price in denominations of
fixed and circulating capital is constantly taking place, land
payment of undoubted capital; that this interchange of
Countries was actually acquired by purchase, through the

bears its price proportioned to this annual income; that a
justification of rent, the facts that land almost everywhere
But whatever be the economical nature or the social
the poorest soils under cultivation), are, these writers hold,
the proper returns of labor (as determined by the yield of

's theory of rent applies to land only

cess

wa

other forms of wealth which may be used productively, in one capital-class.

Capital, then, whether in land or in some other form, if it be employed productively, yields a return to its owner over and above the remuneration of the labor applied. The laws which govern these returns of capital it is not necessary to discuss here. My only concern with the capital class is to define its membership and ascertain how far that coincides with the membership of the employing class.

But, first, a definition. When capital is employed reproductively by the owner, the generic term, returns, sufficiently describes the increase of production effected thereby. When capital is employed by a person not the owner, "returns" still describe the increased product; but the special terms, rent and interest, come into use to characterize the sums paid out of those returns to the owner. I say "out of those returns," for commonly rent and interest are something less than the amount by which the product has been enhanced, otherwise it would not ordinarily be worth the while to borrow and become responsible for the capital so applied, though it may happen, and not infrequently does, that the desire of the borrower (I use the term here generically, to include the occupier of land) to relieve himself of dependence on an employer, by coming into possession himself of the agencies and instrumentalities of production, may lead him to pay more, as interest or rent, than the returns of capital, measured by the excess of the product over the value of his labor expressed in wages at current rates.

It seems to me best that the words rent and interest should only be used where capital is actually leased or loaned. There is, indeed, highly respectable authority for

unimproved. Differences of fertility wrought by actual applications of capital, are to be compensated on the same principles as investments of equal safety and permanence.

saying of a man cultivating his own land, that he pays rent to himself, or of one using his own circulating capital, that he pays interest to himself. But it is better to avoid all such strained uses of words which have a precise meaning, by which they fill an important place in economical terminology. Let the returns of capital remain the generic term, while rent and interest are employed only with respect to payments for capital actually leased or loaned.

Who, then, constitute the capital class? Who receive the returns of capital?

With that vast body of property, real and personal, which is employed in production by peasant proprietors, or occupiers of land under a practically indefeasible tenure, whether guaranteed by law or imperative custom, this treatise has nothing to do, except that it may be noted in passing that those who speak of the capitalist as the employer of labor, are obliged to regard these peasant proprietors or occupiers as their own employers, another instance of a perversion of economical terms made necessary by a false analysis.

If we turn to England and Scotland, where the soil is cultivated under farmer-rents, we do not find the owners of land employing agricultural labor to any considerable extent, except in the ornamentation of grounds, payment for which is made out of revenues already acquired, and the sums so paid are hence, according to our definition, not wages, but salary or stipend. Where agricultural laborers are employed for profit in England, it is almost universally by a middle-man, a farmer, who, on the one hand, leases the land from the owner, and on the other agrees with the laborer for his work, by the year, the month, or the day, obligating himself to pay landlord and laborer at fixed rates, and looking to his own enterprise and economy to secure his own remuneration out of a product which varies continually with good or ill fortune, with good or ill management. The English farmer is, however, almost

necessarily the owner of circulating capital to some extent, not only to guarantee the landlord's rent and the laborers' wages, but also to purchase live stock, seed, tools, and machinery, and to make advance of wages while the crops are growing. But he is not necessarily the owner of circulating capital to anything like the extent to which he uses it; good character and a reputation for business capacity will enable him, under the modern organization of credit, to command the use of far more than he actually possesses.

In France, peasant proprietorship gives form to the agriculture of the country; but even under the old régime the seignior-capitalist did not directly employ labor, and Arthur Young pokes fun at the great lords who, desiring the reputation of cultivating the soil, when that had become a fashion in France, let out on shares portions of their estates immediately about the chateau! In the United States the land is, as a rule, held either by persons corresponding industrially to the "peasant proprietors" of Europe, but rejecting that term, and calling themselves very inappropriately "fariners," or by larger operators who hold the fee of the land and cultivate it by hired labor. Land leased for purposes of agriculture is here highly exceptional. But while the legal owner of the land is thus in a considerable degree the employer of labor, it is to a very large extent capital borrowed on note or mortgage which enables him to eke out the purchase money of the "farm," to stock it, and to pay wages in anticipation of the crop.

We thus see that even in agriculture, where the effects of lordship still survive, the capitalist is not necessarily the employer of labor, nor is the employer of labor limited in his operations by the extent of his personal ownership of capital. But if we turn to the department of mechanical industry, in which lordship never had existence, and al. that has survived from feudal times (the trades unions, as

the illegitimate successors of the ancient guilds) is antago nistic to the employer's authority; a department which it eminently the field of " new men," and in which the hereditary principle is reduced to a minimum, we find the assumption that the capitalist is the employer, the employer the capitalist, monstrously unreal. True it is that the employer should be a capitalist, that he should have possession of some accumulations, not only to guarantee 1 the loans he contracts and the wages he becomes responsible for, but also to steady his own operations, lest he should act as one who has everything to gain and nothing to lose; true it is that able employers come to own an increasing share of the capital used in their increasing business; and that the larger their accumulations become, the greater the freedom and strength with which they conduct business. Yet it still remains that the employer is not an employer because he is a capitalist, or in proportion as he is a capitalist. Of capitalists under our modern organization of in dustry, but a small minority employ labor; of employers few but use capital far in excess of what they own. Moreover the employer who owns little capital; the employer who owns much, and the employer who owns perchance all he employs, are not to be distinguished in their industrial attitude and relations, or in the nature, or, generally we may say, in the extent of their operations; but differ only in the ease, freedom, and security with which they conduct their respective businesses. And that difference is, in ordinary times, not very noticeable. One employer, indeed, is down on the books of the Commercial Agency with A five times repeated, and his paper is known as

1 Mr. Ricardo makes this distinction in respect to the banker himself. "The distinctive function of the banker begins as soon as he uses the money of others." Yet, though it is the use of other people's money that characterizes the banker, it is important that he should be known or supposed to have money of his own to afford guaranty of his good faith and prudence.