According to § 34, a continual increase in the amount of labor and capital lavished on the fertilization of land, agricultural science remaining the same, leads, sooner or later to this, that every new addition of capital or labor becomes relatively less remunerative than the preceding.[150-5] The worse the land is, the sooner is this point reached. Hence, it necessarily happens that, with an increase in the aggregate want of agricultural products, greater and greater amounts of labor and capital are employed in the further fertilization of land, and that there comes to be a greater difference between the fertility of the worst and better lands, in consequence of which the rent of the latter rises.[150-6]
[150-1] Flotow, Anleitung zur Abschätzung der Grundstücke nach Klassen, 1820, 50 ff., estimates the cost of production of a scheffel of rye on land of the first class, at scarcely 1½ thalers; on land of the tenth class, at 3 thalers. In Hanover, it is estimated that about 60 per cent. of the land devoted to gardening and agricultural products produces only from 2 to 4 times the quantity of seed sown; over 35 per cent. from 5 to 8 times, and 4.5 per cent. from 9 to 12 times. (Marcard, Zur Beurtheilung des Nat. Wohlstandes im Königreich Hanover, Tab. 3.) In Prussia, the rates of net produce adopted by the central commission in 1862 vary from 3 to 420 silver groschens per morgen, in the case of agricultural land; from 6 to 420 in the case of meadow land; in the case of pasturage, from 1 to 360. (v. Viebahn, Statist. des Zollvereins, II, 966.) In England, parliamentary investigations (1821) have shown that the best land produces from 32 to 40, and the worst from 8 to 12 bushels per acre of wheat. (Edinburgh Review, XL, 21.) As to the influence of the elevation of land, the royal Saxon commission for the assessment of the value of land, estimated that the net product of an acre of land at a height above the level of the sea,
| In the case of 2d class land— | In the case of 11th class land— | |
| feet, | per cent. | per cent. of the gross yield. |
| Of 500 | 55 | 42.9 |
| Of 800 | 52½ | 39½ |
| Of 1600 | 48 | 34 |
| Of 2400 | 43.8 | 26 |
[150-2] The English are very fond of assuming that the worst land for the time being under cultivation pays no rent. (Ricardo, Principles, II, 2.) This fact is frequently obscured by the aggregation into one economic whole of land that pays no rent and land that is able to pay rent. (John Stuart Mill, Principles, II, ch. 16, § 3.) True it is that there is a great deal of land which cannot be farmed out, but which can be used only by its owners. Compare Salfeld, in the Landwirthsch. Centralb., 1871, II, 182 ff. On land near Wetzlar which, notwithstanding the high price of land in the neighborhood, could not be farmed out at auction, because no one was desirous to lease it, and which was therefore turned over to the highest bidder for the preceding piece, see Stöckhardt, Zeitschr. für deutsche Landwirthe, 1861, 237. Where, however, all the land has its own proprietors, the competition of farmers may easily produce a rent for the worst land. It is a matter of complete indifference to the theory of rent, whether the worst land when possessed only by right of occupation or used as pasturage for cattle previous to its cultivation, had value or not. Compare Nebenius, Oeff. Credit, I, 29; Hermann, Staatswirthsch. Unters., 170 seq.
[150-3] The analogous gradation in mining may make this clearer.
[150-4] Ricardo illustrated this by the following example. An uncultivated tract of country is settled by a small colony. As long as there is here an excess of land of the best quality, and everyone may take possession of it without paying anything therefor, no rent of the land which is merely occupied is possible. But if all the first class land is under cultivation—land which perhaps with the employment of a small amount of capital yields 5 quarters an acre per annum; and the increasing population necessitates the cultivation of land of the second class, which with the same outlay of capital yields only 4 quarters an acre per annum, there arises a rent of 1 quarter an acre per annum for land of the first class. For the price, 4 quarters is now high enough to cover the cost of production per acre, and it must be a matter of complete indifference (complete indifference?) to a new comer whether he obtains 5 quarters from land of the first class as a farmer and pays out 1 quarter, or whether he harvests 4 quarters from second class land as proprietor. If there is a further increase of population, so that land of the third class also, which yields only 3 quarters per acre per annum, must be brought under cultivation, the price of corn rises again because the cost of production has now to be covered by three quarters. Land of the first class now pays a rent of 2 quarters and second class land of 1 quarter. (Ch. 2.)
[150-5] von Thünen, der isolirte Staat, II, I, 179, estimates that a bed of manure 1/3 of an inch thick on an acre of ground, increases the production by ½; that a second ½ inch of manure increases the yield only by a + of 5/8 corn; the third of ¼ corn, etc. Geyer is of opinion that, in Saxony, land of the average quality will yield a gross product of 60 thalers per acre, and 14 thalers net product per acre, in case it is managed with the greatest intelligence and the employment of a large amount of capital; when managed in a very ordinary way, it would yield 20 thalers gross, and 7½ thalers net product. Thünen gives the following formula determining when it is more advantageous to cultivate the old land with more intensiveness (higher farming) than to begin the cultivation of new: As long as p - aq is less than √ap, so long is an increase of the outlay of capital on the same land more profitable than the cultivation of new land, and vice versa. Here p = aggregate product obtained by a workman in a year from the amount of capital used by him; a = sum of his necessary yearly wants; a = the interest per annum of a capital = p; q = the amount of capital given to assist the individual workman.
[150-6] Ricardo had, in every case in which outlay of capital and labor of different degrees of productiveness had to be used on the same land, to suppose a price of the products = the cost of the least productive outlay. See the tables in Ricardo's work, On the Influence of a low Price of Corn on the Profits of Stock, 1815, 14 seq. Schmoller, on the other hand, rightly applies the principle of united costs of production in as far as the usual amount of profit of the producer is added to the cost of the commodity with the highest cost of production. Mittheilungen des Landwirthsch. Instituts zu Halle, 1865, 128. Compare supra, §§ 106, 110.
THEORY OF RENT.—LAND FAVORABLY SITUATED.