Rent.

But in the course of this inundation the caprices of Nature begin to operate. That specially fertile region upon which Adam pitched is sooner or later all pre-empted; and there is nothing for the new comer to pre-empt save soil of the second quality. Again, division of labor sets in among Adam's neighbors; and with it, of course, comes the establishment of a market for the exchange of the products of their divided labor. Now it is not well to be far afield from that market, because distance from it involves extra cost for roads, beasts of burden, time consumed in travelling thither and back again. All this will be saved to Adam at the centre of cultivation, and incurred by the new comer at the margin of cultivation. Let us estimate the annual value of Adam's produce at £1,000, and the annual produce of the new comer's land on the margin of cultivation at £500, assuming that Adam and the new comer are equally industrious. Here is a clear advantage of page 6 £500 a year to the first comer. This £500 is economic rent. It matters not at all that it is merely a difference of income and not an overt payment from a tenant to a landlord. The two men labor equally; and yet one gets £500 a year more than the other through the superior fertility of his land and convenience of its situation. The excess due to that fertility is rent; and before long we shall find it recognized as such and paid in the fashion with which we are familiar. For why should not Adam let his patch to the new comer at a rent of £500 a year? Since the produce will be £1,000, the new comer will have £500 left for himself, or as much as he could obtain by cultivating a patch of his own at the margin; and it is pleasanter, besides, to be in the centre of society than on the outskirts of it. The new comer will himself propose the arrangement; and Adam may retire as an idle landlord with a perpetual pension of £500 rent. The excess of fertility in Adam's land is thenceforth recognized as rent and paid, as it is to-day, regularly by a worker to a drone. A few samples of the way in which this simple and intelligible transaction is stated by our economists may now, I hope, be quoted without any danger of their proving so difficult as they appear in the text books from which I have copied them.

Stuart Mill¹ says that "the rent of land consists of the excess of its return above the return to the worst land in cultivation". Fawcett² says that "the rent of land represents the pecuniary value of the advantages which such land possesses over the worst land in cultivation". Professor Marshall³ says that "the rent of a piece of land is the excess of its produce over the produce of an adjacent piece of land which would not be cultivated at all if rent were paid for it". Professor Sidgwick⁴ cautiously puts it that "the normal rent per acre of any piece" [of land] "is the surplus of the value of its produce over the value of the net produce per acre of the least advantageous land that it is profitable to cultivate".

¹ "Principles of Political Economy." Vol. I., Index to chap. xvi. (1865).

² "Manual of Political Economy," Book II., chap. iii., p. 116 (1876).

³ "Economics of Industry," Book II., chap. iii., sec. 3, p. 84 (1879).

⁴ "Principles of Political Economy," Book II., chap. vii., p 301 (1883).

page 7 General Walker¹ declares that "specifically, the rent of any piece of land is determined by the difference between its annual yield and that of the least productive land actually cultivated for the supply of the same market, it being assumed that the quality of the land as a productive agent is, in neither case, impaired or improved by such cultivation". All these definitions are offered by the authors as elaborations of that given by their master Ricardo,² who says, "Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil".