irremediable ruin. But this state of things has been in so far obviated, that the poor man may now readily deposit his smallest savings in banks, where they are faithfully preserved, with the interest accruing upon them, to assist his future wants: and as there are but few who are insensible of the blessings of independence, the system has made an extraordinary progress, the deposits in the savings' banks of the United Kingdom having amounted, in 1846, to the sum of £31,743,250.

Still, however, it must be admitted, that these banks do not fully remove the difficulty that has always existed in England of profitably investing small sums. They are, in fact, applicable only to the exigencies of servants and labourers, and not to those of little tradesmen, farmers, &c. No depositor can contribute more than £30, exclusive of compound interest, at the rate of £3, 0s. 10d. per cent per annum, to a savings' bank in any one year; the total amount of the deposits to be received from one individual is not to exceed £150; and whenever the deposits and the compound interest accruing upon them, standing in the name of an individual, amount to £200, no farther interest is paid upon such deposit. But it is exceedingly desirable that this system should be extended as widely as possible. In Scotland, it has long been customary for the public banks to receive deposits of such small sums as £10, or even £5, and to allow interest upon them at about one per cent less than the interest obtained by investing in the funds. And perhaps no single circumstance has done more than this to generate and diffuse those habits of foresight and economy by which the Scotch peasantry and small tradesmen are so honourably distinguished. Such facilities of accumulation have not been at any time afforded in England; and tradesmen in London and other places, who wish to invest a small sum so as to make it profitable, have had either to lend it to a private individual, which is in most cases attended with risk, or to buy funded property with it. This latter mode

of investment, however, though extensively practised, has several drawbacks: it renders the sum invested liable to be affected by fluctuations of the funds; the investment cannot be made without the assistance of third parties; the money cannot be drawn out at once without any sort of trouble; and some little acquaintance with the nature of stocks and the business of stock-jobbing is required. These inconveniences have now, however, been partially obviated by the formation of joint-stock banks, which generally, we believe, grant interest on deposits, in the same way as the Scotch banks. It would be very desirable, provided it could be done without involving the establishment in any risk, were the plan of giving interest on deposits also adopted by the Bank of England and her branches.

CHAPTER V.

Conflicting Opinions with respect to the Origin of Rent-Theory of Dr Anderson-Nature and Progress of Rent-Not a Cause but a Consequence of the High Value of Raw Produce-Does not enter into Price-Distinction between Agriculture and ManufacturesRents depend partly on the Extent to which Tillage has been carried, and partly on Situation-Inequality and Mischievous Operation of

Taxes on Rent.

M. QUESNAY and Dr Smith supposed, as has been already seen, that rent formed the recompense of nature for services rendered to the husbandman after all that part of the produce had been deducted which could be considered as the recompense of the work of man. Others supposed that rent originated in the circumstance of the landlords enjoying a monopoly of the soil, and being, in consequence, enabled to obtain an artificially enhanced price for its produce. The latter contended, of course, that rent entered as an important element into the cost of corn and other agricultural products. But in the system of the Economists, rent, being looked upon as a free gift of nature, was not supposed to affect prices. Smith, though he adopted the opinions of the Economists in regard to the origin of rent, is not very consistent in his statements as to its operation on prices: on the whole, however, it would seem that he considered it as directly influencing them.2

The fallacy of these contradictory statements is sufficiently obvious. Were rent really the recompense of the work of nature, it would always exist, wherever cultivation is practised, and would be equal at all times; neither of which is the case. Το suppose that it is the result of a

1 Ante, p. 45, and "Wealth of Nations," p. 161.

2 "Wealth of Nations," p. 23.

monopoly, in the ordinary sense of the term, on the part of the landlords, is still more visionary. No combination of any sort exists among them; and at the very moment that some are receiving high rents, the rents of others are so trifling as to be next to nothing—a sufficient proof that they depend on something else than monopoly.

The true theory of rent was, for the first time, satisfactorily unfolded, very soon after the publication of the "Wealth of Nations," by Dr James Anderson. He showed, by an original and able analysis, that rent is not the recompense of the work of nature, nor a consequence of land being made private property; but that it owes its origin to the latter being of various degrees of fertility, and to the circumstance of its being impossible to apply capital indefinitely to any quality of land without, generally speaking, obtaining from it a diminished return. He further showed, that corn is always sold at its natural price, or at the price necessary to obtain the required supply, and that this price is totally unaffected by the payment of rent; and he deduced from this doctrine many important practical conclusions, particularly with reference to the influence of tithes and other taxes over raw produce. These doctrines have since been illustrated and enforced by others. But the subject is not yet exhausted; and we shall endeavour to place it in a somewhat novel point of view, and to obviate some of the objections that have been made to the theory. 1

1 Dr Anderson was born at Hermandston, in Midlothian, in 1740. He was long engaged in the business of farming in the neighbourhood of Aberdeen. In 1777 he published a pamphlet, entitled, "An Inquiry into the Corn Laws," in which (pp. 45-50) he has explained the theory of rent with a sagacity and discrimination that have never been surpassed. Having left Aberdeenshire, Anderson resided for some time in the neighbourhood of Edinburgh, where he projected and edited the "Bee," a respectable weekly publication. In 1797 he removed to the vicinity of London, where he edited "Recreations in Agriculture, Natural History, Arts," &c. In this work (vol. v. pp. 401-405) he gave a new and able exposition of the nature, origin, and progress of rent. But notwithstanding these repeated publications, it does not appear that his profound and important disquisitions attracted any attention. And so completely were they forgotten, that when

To acquire clear and correct ideas with respect to the nature and origin of rent, it is necessary to discriminate between the sources whence it arises; that is, between the portion of the gross rent of an estate or farm which is really paid for the use of the natural and inherent powers of the soil, and the portion paid for the use of the buildings, fences, drains, roads, and other improvements (if such there be) made upon the soil. Two farms may be naturally of about equal goodness, and equally well situated; but, if little or no capital have been expended upon the one, while a great deal has been judiciously expended upon the other, they will let for very different sums. It is usual, no doubt, to call all sums derived by the landlords from land, whatever be their origin, by the name of rent; but, in an inquiry of this sort, it is necessary to distinguish between the sums paid for the use of the land and those paid for improvements, or for the use of the capital laid out upon the land. The latter are obviously profits; and their amount, at any given period, must consequently depend on the principles which govern the rate of profit. And hence, to obviate confusion and inaccuracy, we shall, in this inquiry, regard rent as consisting of that portion of the gross sum paid for the land, which is paid for the use of its natural or inherent powers, or which would be paid for it, supposing it were in a state of nature, without any improvement upon it. Whatever the landlords receive beyond this, is profit,

not rent.

On the first settling of any country abounding in large tracts of unappropriated land, no rent is paid; and for this obvious reason, that no person will pay rent for what may be procured in unlimited quantities for nothing. Thus, in Australia, where there is an ample supply of unappropriated

Mr Malthus and Sir Edward West published their tracts on rent, in 1815, they were universally supposed to be the real authors of the theory! There is, perhaps, no good reason to doubt their originality; but it may well be doubted whether they explained the theory as satisfactorily as it had been explained about forty years before. Anderson died in 1808.