Note 1154 — Chapter II · : THE THEORY OF RENT AND ITS APPLICATIONS

This fact was noted by Hermann even as far back as 1832 in his very remarkable Staatswirtschaftliche Untersuchungen (Munich, 1832), p. 166: “A phenomenon that is exactly analogous to rent becomes manifest whenever a country employs imported machinery the multiplication of which is difficult, possibly because the producing country discourages such exportation. [Such was the case with English machinery at the time Hermann wrote.] … Suppose now that the price of the commodity manufactured with the aid of such machinery goes up. If the country under consideration can only manufacture with machinery that is more expensive but less efficient because of its defective character, the cost of production will still be higher than if the best [foreign] machinery were employed. The result is that the proprietors of the latter retain such advantages as the rise in price had secured them.” Mangoldt (in Die Lehre vom Unternehmergewinn, Leipzig, 1855) expresses his view in a somewhat similar fashion: “Rent shows itself clearest and on the largest scale in the case of agricultural land, but it is equally evident wherever the difficulty of multiplying capital prevails or where it can only be replaced by other capital of a more expensive character or a less productive yield.” Ricardo himself possibly had the rent of capital in mind when he said: “The exchangeable value of all commodities, whether they be manufactured or the produce of the mines or the produce of land, is always regulated, not by the less quantity of labour that ill suffice for their production under circumstances highly favourable, and exclusively enjoyed by those who have peculiar facilities of production, but by the greater quantity of labour necessarily bestowed on their production by those who have no such facilities, by those who contrive to produce them under the most unfavourable circumstances—meaning by the most unfavourable circumstances the most unfavourable under which the quantity of produce required renders it necessary to carry on the production.” (Principles, p. 37.) English writers, however, seldom speak of the rent of capital. Rent with them always signifies income due, not to the intervention of man, but to the natural resources of production.