the high rate of profits. The last two are closely connected. Land is abundant, cheap, fertile, and easily cultivated. Hence a little money invested in agriculture gives good returns. Labor as well as money is scarce: the product of the laborer, in proportion to his wages, is greater than almost anywhere else. In all the industries, not only is the rate of wages and of profits higher, but the aggregate of profits is larger. As it is this which determines the pros perity of the community, the people are generally in better condition than in other countries, in spite of the high rate of interest. Yet we see, that just in proportion as industry becomes varied, and commerce increases, in any section of the country, the rate of interest diminishes.

3. The rate of interest is affected by both the scarcity and the uncertainty of capital. (a) If the people are vicious, indolent, and reckless of their obligations, it will be unsafe to invest property in such a community; and capitalists will not do it except at a high rate of interest. (b) The character of the government will have much influence. If it is weak and inefficient; if the laws are inadequate, and feebly executed; if contracts are not enforced, and crime is unpunished, capitalists will not loan, except on usurious conditions. If the government is of the opposite character, other things being equal, the rate is likely to be low. (c) The general thrift of the community has something to do with the security of capital. It is safer in a community where men are enterprising and public-spirited, where there is frugality and economy, than in one of an opposite character. A declining community, where property is constantly depreciating, is not a good one in which to invest capital.

4. Finally, the rate of interest depends on the facility with which the evidences of debt can be re-converted into money. It is frequently the case, that persons have money which

they would be glad to loan temporarily, even at a low rate : but they are liable to need it at any time; and they must either keep it on hand, or so loan it that they can claim it again at the shortest notice. Borrowers will not be willing to pay as much for the use of money for the return of which they may be suddenly called upon, as for that which may be retained for a definite and stipulated time. To many loaners of money, it is also of the greatest importance that the interest be paid regularly and punctually. They would rather have a lower rate, and have an assurance in this respect, than to be subject to uncertainty with a higher rate.

It is partly on account of the complete security, ready conversion, and prompt payment of interest, that the bonds. of stable governments are considered the best investments. It is largely for this reason, that the rate of interest on these is lower than on other securities. They are always in the market, and can be bought with little difficulty by any one who wishes to invest in them. whenever the holder needs the

They are as readily sold money for any other purpose.

13

CHAPTER X.

RENT.

1. RENT, or the portion of the product going to the owner of any land on which any industry depends, has always been a subject of leading importance in political economy. Yet what is strictly signified by rent is of less consequence here in the United States than in most other countries. Here, to a greater extent than elsewhere, the owner and the occupier of land are the same person. The agricultural interest among us is supported mainly by men who own farms of moderate size; and, though in some parts of the country there are those who severally hold estates of thousands of acres, still the owners are usually also the managers of the whole business of their plantations. In many parts of the Continent of Europe, and more largely still in Asia, the occupants of the soil are not the owners. The proprietor leases the land to certain parties, who convey to him a stipulated proportion of the product. Sometimes this is paid in kind, but frequently there is a commutation in money.

It might seem more in accordance with the condition of things in our own land, to have discussed this subject in another connection. Still, as rent is closely connected with the occupancy and value of land, and as these subjects have been so largely discussed under this title, and there are so many both errors and valuable doctrines that have been

evolved under this method of treatment, we shall probably get a better view of the phenomena in this way than in any other.

2. Land is altogether the most important instrument and condition of wealth which is furnished to man. Out of it originally come all the materials upon which the labor of man can confer value. Though it is not independent of extraneous conditions, and though its products would be of small account without the co-operation of other agencies, yet other things are more dependent upon it than it upon any of them.

It is furnished by nature, like air and water and sunshine; but, unlike them for the most part, it can be appropriated. It can also be cultivated as they cannot It may not merely be made to produce something, but its capabilities may be indefinitely increased. It is also capable of deterioration. Like other instruments, it may be worn out and spoiled.

3. What constitutes value in land? J. S. Mill and others hold that it has what is called a "monopoly value,” and that this makes an essential difference between it and other property. Commodities have a value bearing some sort of relation to the amount of labor requisite to their reproduction. But land, it is said, cannot be produced by labor; hence its original value is not determinable by this standard. Nor is it valued merely according to the improvements made on it. When a man purchases a piece of land, he is supposed to calculate the amount of profit he can make from it by employing his own labor or that of others upon it. The reason for the peculiarities in the character of land is represented to be, that certain individuals, having acquired a command or control of the land in a country, intercept the bounty of nature, and exact a price for that which was de

signed to be freely bestowed. This comes, according to Mr. Mill, from "the limitation of its quantity."

Mr. Carey, on the other hand, teaches that land is under the same law as that which affects the value of all other commodities; that whatever value it has, has been created by labor, and is to be estimated, as in the case of other valuables, by the amount of labor which would be necessary to bring it to its present condition could it be again taken in its primitive estate. Land itself, in its natural relations, has no value. It is that which is done on it, or in some relation to it, which gives it value.

4. Ricardo's theory of rent has been accepted by a large and reputable class of economists, both in Great Britain and the United States, for the last fifty or sixty years. It is here presented in the words of the author.

"On the first settling of a country in which there is an abundance of rich and fertile land, a very small portion of which is required to be cultivated for the support of the actual population, or indeed can be cultivated with the capital which the population can command, there will be no rent; for no one would pay for the use of land when there was an abundant quantity not yet appropriated, and therefore at the disposal of whomsoever might choose to cultivate it. . . . If all land had the same properties, and if it were boundless in quantity and uniform in quality, no charge would be made for its use unless where it possessed peculiar advantages of situation. It is only, then, because land is not unlimited in quantity and uniform in quality, and because, in the progress of population, land of an inferior quality or less advantageously situated is called into cultivation, that rent is ever paid for the use of it. When, in the progress of society, land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality;