Note 152-4 — Chapter II

John Stuart Mill, ch. 16, § 5. An example in Fawcett, Manual, 149 seq. This explains many objections to Ricardo's laws, which are the result of misconception. Thus, for instance, in Schmalz, Staatswirthschaftslehre, I, 81, Quarterly Review, XXXVI, 412 ff. Bastiat, Harmonies économiques, ch. 9, where rent is considered the interest on the capital laid out in bringing land under cultivation and improving it. If, however, we imagine an island to emerge suddenly from the waves in the vicinity of Naples, in consequence of an earthquake, no one can doubt that its land would sell at a very high rate and pay a very good rent. And yet no capital or labor has been laid out on it. A similar lesson is taught by the fact, that, in Scotland, rocks which are covered twice a day by the waves are leased for the sake of the sea-weed left on them. (Adam Smith, Wealth of Nations, I, ch. 11.) Also by the fact, that in Poulopinang, a cavity in which many edible swallows' nests are found, pays £500 a year rent. (Geogr. Ephemeriden, Oct., 1805, 134.) However, Bastiat, abstractly speaking, is right when he says, that every one by the importation of agricultural products from quarters which pay no rent, and still more by emigrating thither, may deprive the owners of land of the tribute imminent in rent.

But how would it be if the cost of transportation and emigration amounted to more than the rent? The case theoretically so important, in which all the land in the world is supposed to have been appropriated as private property, this writer, generally so lucid, treats in a surprisingly blind way (275 ff). It is remarkable that A. Walker, Science of Wealth, spite of his prejudices in favor of Bastiat's doctrines on the gratuitous nature of all natural forces, nevertheless follows, essentially, Ricardo's theory of rent, 294 ff.

A much more vulgar error yet is, that rent is the result of the capacity of the capital employed in the purchase of the land to produce some interest Thus Hamilton, Reports to the Congress on the Manufactures of the United States, 1793, and Canard, Principes, sec. 5. Per contra, compare Turgot's view, supra, § 42, note 1. Even Locke, Considerations on the Lowering of Interest, Works, II, 17 ff., maintained the closest parallel between rent and interest to be possible, with this difference only, that money was all of a kind but pieces of land of different degrees of fertility. Similarly Sir D. North, Discourse upon Trade, 1791, with his parallel of landlord and stocklord.