26 1816 . • Rent, Wages and Capital A BOOK FOR THE TIMES & ROGER S. WELTY & 1886. LA PORTE PRINTING CO., PRINTERS, LaPorte, Indiana. 1 COPYRIGHT, 1886, By R. S. WELTY. PREFACE. Should the reader of this volume decide that it is only "one more" added to the great catalogue of books, he is at least asked to remember that there has been an effort to avoid the footsteps of those economists whose theories make one class the creature of another. It has been the desire, herein, to show that all the elements that constitute the State, are inter-dependent, and may, and must advance together. It has been the endeavor to take a hopeful view, and to look at things from their brighter side. The object has been to discourage the arbitrary antagonisms that exist between employers and employed. But, as will be perceived, the principal object has been a discussion of some phases of the Land Question, special reference being had to Henry George's proposition to make land common property. Given the essence, there is, perhaps, little in "Progress and Poverty" that has not previously, been advanced in some form. But the author of that work is elaborate and plausible and has generally avoided the muscular recommendations that have made Socialism disreputable. The writer will be considered heterodox on the subject of Rent, and by none, more so, than the Social Revolu- 4 RENT, WAGES AND CAPITAL. tionists, who must be supremely orthodox on the subject of Rent, for, if no Rent, no confiscation thereof. And the schools, from behind the fortification of authorities, are indisposed to receive innovations upon their accepted dogmas. The subjects of Labor and Capital are considered only in their necessary relations to the Land Question ; that will answer for what may appear to be important omissions on those subjects. CONTENTS. CHAPTER I. The- uncertainty of Economic Theories. — The strength of Socialism. — The present distribution not unassailable. — The proposition to make Land common property. — What is Rent? — How Rent arises. — Pop- ulation. — The efficiency of Labor and improvements in the Arts. CHAPTER II. Francis A. Walker and Henry George. — The amount of Rent not per- manently fixed. — The Ricardian theory modified. — The effect of modern methods. — Rents have not increased. — The effects of trans- portation. — The selling price of Land does not effect Rent. — The effect of the diminishing productiveness of Land. — Virginia an example.— H. C. Cary's theory. — Land draws its principal value from its surroundings. — The susceptibility of Land to improvement. CHAPTER III. Improvements in the Arts. — Labor saving Machinery. — Rent is reduced as a proportion. — Capital more effective. — Labor is a partaker of the benefits of modern progress. — Speculation in Land. CHAPTER IV. Land holding not a monopoly. — The number the United States may subsist. — Land holders cannot withhold Land from use. — The testa- mentary divisions of Estates. — Large holdings of Land do not represent the accumulative power of Rent. — The Patrons of Husbandry. 6 RENT, WAGES AND CAPITAL. CHAPTER V. The effects of modern distribution. — All classes dependent. — The prop- osition to confiscate Rent. — Taxation. — Capital largely represented in Land. — Land is reduced to a Capital basis. — Withholding Land from use. — The proposition to confiscate improvements. CHAPTER VI. The law of Wages. — Natural Wages. — No inflexible Law. — The division of the joint produce of Labor and Capital. — The relation of machin- ery to production. — No distinct remuneration for superintendence. — No extra compensation for risk. — No overproduction of Labor. — The benefits of machinery go to the community. — Labor the prin- ciple consumer. CHAPTER VII. The condition of Labor greatly improved. — The Wages fund Theory. — The return to Capital, or interest a declining per cent. — Labor not the servant of Capital. — The permanent tendency is toward an im- provement in the condition of Labor. CHAPTER VIII. Some disadvantages of modern methods. — Actual overproduction im- possible. — Disproportioned effort a cause of "hard times." — Nat- ural laws of trade disregarded. — The influence of Strikes. — How the government may contribute to depression. — Money. — Restrictions upon production no Remedy. — The effects of extravagance not im- portant. — No heroic remedy for "hard times." CHAPTER IX. Capital and Labor. — Capital a necessity. — The disadvantages of Capital. — The cost of a loaf of Bread. — The power of Capital. — But Labor assured of its Reward. CHAPTER X. Utopian Dreams. — The Materialism of Socialism. — Inequality is funda- mental. RENT, WAGES AND CAPITAL, CHAPTER I. The adjustment of social forces remains a complex and half-solved problem. Writers in the field of economic science have multiplied in recent years. Their beliefs have been presented, apparently, in mathematical lines, that, for the moment, seemed conclusive. The opinions of the early writers have, many of them, been cast aside and are valued, mostly, as the avenues to more correct thought; they have only given the key-note. The modern econo- mist has laboriously wrought out theories, that, to himself seem as indisputable as the multiplication table; but when he has looked up from the finished page, it is to behold that other thinkers, as learned, as profound, and as diligent as himself, are presenting ideas the very opposite to his own. In the meantime, the great multitudes jostle each other with an utter disregard of the economy contained in the books. We cannot put from us the fact, that that great element, designated as " Labor " is inoculated with discontent. It is quick to note the unequal distribution of material advant- ages. It sees the distance between the rich and the poor becoming greater each day. Believing in equal political 8 RENT, WAGES AND CAPITAL. rights, and being taught that one man's gain is another's loss, it infers a natural antagonism between those who have wealth and those who have not. The discontent of the masses is the opportunity of Socialism. Never, until the present, have the theories of Community of property had respectful audience. Earlier, its efforts were spasmodic and revolutionary. It has learned wisdom, and now appeals to reason and not to pas- sion. It attaches itself to current forms and popular opinions, and while its influence is felt, its presence creates no apprehension, but while it learns conservatism, it remains aggressive. Its advocates advance boldly into the council chambers of the strongest government of civil- ization, and in the face of its Bismarck demand revolution and a re-organization of economic society from its founda- tions. It is significant that in the German Empire where power approaches the absolute, and political organization and discipline seem complete, that there, the opposition to the established order of society has its most determined advocates. And it is not less significant that in France, where the efforts to establish the liberties of Republicanism might be supposed to pacify discontent, that there Social- ism has its most enthusiastic adherents. The strength of Socialism is under-estimated by its opponents. Current estimates of the system are based upon the rabid utterances of agitators, who would violate every principle of law and order, thereby to overthrow the existing State. Popular opinions of Socialism are formed by the violent action of those who look upon secret murder and dynamite, as legitimate methods of warfare against RENT, WAGES AND CAPITAL. 9 property-holders. But these are not the representatives. There are advocates, who bring talent and learning, and research to bear, and who thereby command respect. They recognize the danger, as well as the impossibility of a sudden overthrow of society as constituted. The con- servative advocates of Community cannot be charged with the attempt to appropriate the property of others, because they only expect, in their day, to establish the beginning of a system they believe better than the present. Socialists of force and learning command recognition from the highest places. Of Lassalle, Bismarck thus speaks: "Lassalle was one of the most gifted and amiable men with whom I have ever associated. * * * Our conver- sations have lasted for hours, and [ have always regretted their close. * * * It would have given me great pleasure to have had a similarly gifted man for a neighbor in my country home." {French and German Socialism, by R. T. Ely.) Praise of this kind, by the German Chancellor, is exceptional, and the individual upon whom it was bestowed was unreservedly a Socialist. He demanded State inter- ference and the abolition, not only of private property in land, but also, in Capital and the products of Labor. The violent type of European Communists has been represented in the United States by such characters as Herr Most, whose incendiary utterances disgusted the nation; but we cannot judge of the whole by such as he; he was repudiated by his party at home, and at a Socialist congress held in Switzerland, was, by an almost unanimous vote, expelled from his party. The abuses of present society are many. It requires no 10 RENT, WAGES AND CAPITAL. great skill to bring together a long array of indictments against it. If the evils of the present were placed side by side with the prospective ones of the Socialist period, it would not be at all certain that the latter would be the most formidable. What with our wealth, poverty; our thieves, robbers, tramps; our alms-houses and prisons: our "Maiden tributes;" can we look with scorn upon the fancies of the dreamers ? The greatest strength of the present economic distribu- tion is, after all, in the fact that it is in possession. With the great majority, the fact that things are, and for a long time have been, is the best reason why they should con- tinue to be. Generations ago the people of Ireland were dispossessed of their lands, and the wrong is considered sanctified by the lapse of time. Perhaps those Englishmen, who so greatly admire Henry George's Semi-Socialism, will still adhere to the existing conditions, lest, in the con- fiscation of Rent, tardy justice would prevail on the Emerald Isle. But we must confess that society is vulner- able in the heart as well as in the heel, and the Political Economy that justifies all, is a doubtful, as well as a '"dismal" Science. But I do not desire to limit myself to the generalities of the subject. The strength and merits of Socialism we may admit, but that it is a better system is not thereby proven. The deductions of that analytical, though erratic Socalist, Henry George, as set forth in his " Progress and Poverty," are unique in this, that the unequal distribution of wealth, and all the evils that attend, are attributed to a single RENT, WAGES AND CAPITAL. II cause ; namely, to Rent paid for natural forces ; principally for the natural qualities of land. In illustration I quote as follows: — "We have traced the unequal distribution of wealth, which is the curse and menace of modern civiliza- tion, to the institution of private property in land. We have seen that as long as this institution exists no increase in productive power can permanently benefit the masses; but, on the contrary, must tend to still further depress their condition. We have examined all the remedies, short of the abolition of private property in land, which are cur- rently relied on or proposed for the relief of poverty and the better distribution of wealth, and have found them all inefficacious or impracticable." " There is but one way to remove an evil — and that is, to remove its cause. Poverty deepens as wealth increases, and Wages are forced down while productive power grows ; because land, which is the source of all wealth and the field of all labor, is monopolized. To extirpate poverty, to make Wages what justice commands they should be, the full earnings of the laborer, we must therefore substitute for the individual ownership of land a common ownership. Nothing else will go to the cause of the evil — in nothing else is there the slightest hope." Of his theory he further says that, " Every step has been proved and secured," and " In the chain of reasoning no link is wanting and no link is weak." He states his opinions with the courage of a Napoleon. But when we remember the innumerable forces and cir- cumstances that unite to mould the conditions of human 12 RENT, WAGES AND CAPITAL. existence, to be told that a single one of them contains all the others is incredible. The proposition is to confiscate Rent, which is equiva- lent to the confiscation of Land. To correctly understand the effect of this proposition it is necessary to know how Rent arises; and, also, whether the amount of it is sufficient to allow the prominence that has been given it in the distribution of wealth. For the information of those who have not made themselves familiar with economic studies, it is sufficient to say that Rent, proper, is the amount paid for the natural qualities of land or for natural forces. All improvements, houses, barns, fences, stores, manufactories; all fertilizing, irrigation, ditching; all plowing, sowing and reaping — in fact, all improvements whatsoever, represent the expenditure of Capital and Labor; and the nominal Rent paid for these is not Rent in fact, but interest on Capital and Wages for Labor. Economic Rent is equal to that portion of the product that remains after the cost of production, including Wages and interest, has been deducted. Rent arises from a combination of three causes: ist, The difference in qu ality and productiveness of land : 2d, The difference in the susceptibility of land to the re-production of exhausted fertility: 3rd, The increase of population. The first and last of these causes arise in the first instance and are held generally to contain the entire phenomena of Rent. The influence of the second is felt last, and I shall, therefore, leave it to assert itself in its proper connection. The illustration following is similar to the one that most writers on this subject have adopted: — We shall say that RENT, WAGES AND CAPITAL. 1 3 land is of three grades of productiveness, yielding twenty for the first, fifteen for the second, and ten for the third grade. With the settlement of a country it is assumed that the land yielding twenty will be occupied first. It is further assumed that the occupation will be confined to the land yielding twenty until that grade is all taken. If pop- ulation still increases it will be compelled to resort to the second grade of land, the product of which is fifteen. At this point Rent arises, and the amount of it will be deter- mined by the difference between twenty, the product of the first, and fifteen, the product of the second; the latter being the margin of cultivation. It will be a matter of indiffer- ence to the settler whether he occupies the second grade that yields fifteen, and pays no Rent, or whether he leases a portion of the first grade, producing twenty, and pays five as Rent to the owner: in either case he would have fifteen as the product of his labor, and the owner of the first grade cannot command more than five for Rent until the second grade is all taken. If population still increases until the second grade is all occupied, the same process will be repeated and production forced down to the third grade, yielding ten. The margin of cultivation is now reduced from land yielding fifteen, to land yielding ten, the last paying no Rent. By a repetition of the same process the second grade will now yield five in Rent and the first will yield ten. It will again be a matter of indifference to the settler whether he occupies the third, which yields ten and pays no Rent, or again whether he occupies the second, yielding fifteen, and sur- renders five of the product as Rent; or, still again, wheth- 14 RENT, WAGES AND CAPITAL. er he leases the first, and pays the owner ten, as Rent; in either case he will have ten as the product of his labor. I have divided land into three grades of quality for simplicity of illustration. There are many more grades, however, and there is no regular gradation. It will be perceived that, as population increases, production will be forced upon poorer, and again upon* poorer land, until the poorest is occupied, and which may yield a bare subsistence. As population increases and is compelled to occupy the poor lands, there arises the phenomena known in political economy as a "press upon subsistence." This is the sub- stance of the Malthusian theory, that population may increase to its own injury, or beyond the means of sub- sistence. From the foregoing, Rent appears a prominent factor in distribution, and if this prominence can be maintained to the last, it is evident that the law of Rent must be to a considerable degree the law of Wages. As production is lowered to the poorer lands, the predisposition of Wages is to fall until they are the equivalent of the return of labor on the poorest land in use, which pays no Rent. If the Wages paid by the owners of the good lands, or those obtainable in industrial pursuits, were greater than the return to labor on the margin of cultivation, then, the working of the poor lands would be abandoned, and labor would gradually find its way to where it is better paid. If the Wages paid in the industries were less than the return to labor on the margin of cultivation, then the course of labor would be to the lands that pay no Rent. If there are no circumstances that incline to abrogate this seemingly RENT, WAGES AND CAPITAL. 1 5 large portion of Rent, then, as increasing population necessitates the lowering of the margin of cultivation, it will be impossible for Wages to go higher, and there must,, on the contrary, be a leveling down to uniformity with the smallest return. The law of Rent as outlined above, is known as the Ricardian law, and is generally accepted. The law of Wages here shown, which is the parallel of the law of Rent, is not common, and it is thus formulated by Mr. George: — "Wages depend upon the margin of production, or upon the produce which labor can obtain at the high- est point of natural productiveness open to it without the payment of Rent." I shall show hereafter that there are conditions which greatly modify that which now seems the overshadowing power of Rent, if, in fact it is not made to disappear as a controlling factor in distribution. If this is shown, then Wages must seek some other law or com- bination of circumstances by which they are controlled. The author of "Progress and Poverty," having elevated Rent to the position of supreme dictator in distribution, thereupon proceeds to show that it is the prolific source of vice, crime, and ignorance — that it creates periodical de- pressions, enslaves laborers; and, finally, ends in want and starvation. As a remedy for these cumulative evils, the proposition is, that Rent shall be appropriated by the State and equally distributed, or expended for the public good. The well known theories of Malthus, that population may increase beyond the means of subsistence, are entirely repudiated, only, as Rent and the alleged monopoly oi land contribute to that end. 1 6 RENT, WAGES AND CAPITAL. The effect of an increase of population beyond a certain point, is, undoubtedly, toward a press upon subsistence, although this tendency is neutralized by opposing influences. Mr. George allows the Malthusian theory full force if Rent is appropriated by land-owners, but none at all if paid to the State. It is impossible to conceive how the confiscation of Rent can arrest the effects of an increase of population, and it does not. In a former illustration we have divided land into three grades, yielding ten, fifteen, and twenty. Let us suppose that Rent is paid to the State and equally distributed among the people, or expend- ed for the public benefit. When only the first grade of land is occupied the average return would, of course, be twenty, but when cultivation is forced upon the second grade the average falls to seventeen and one-half; and again when increasing population necessitates the taking of the third grade, yielding ten, the average again falls, and is fifteen, and thus, while Rent increases in amount, it is, compared with population, reduced as a proportion. As cultivation is forced upon still poorer lands the propor- tion is still further reduced. The equal distribution of Rent cannot prevent this; it only distributes the disadvan- tage upon the whole community. But to disprove the Malthusian theory and affirm his own, Mr. George makes the astonishing assertion that an increase of population and the increasing efficiency of labor have the same effect as increasing the fertility of land — that with equal distribution, an increase of popula- tion should make every man richer, instead of poorer. It is thus expressed: — "For the increased powers of co-op- RENT, WAGES AND CAPITAL. 1 7 eration and exchange which come with increased popula- tion are equivalent to — nay, I think we can say without metaphor, that they give — an increased capacity to land," and that "an improvement in tools and machinery, which will double the result of labor, will manifestly, on a par- ticular piece of ground, have the same effect on the produce as a doubling of the fertility of the land." And again: — "For the power of producing wealth in any form is the power of producing subsistence." He evidently confounds the natural productiveness of land with the increasing efficiency of labor, and makes them subject to the same law. Population, efficiency of labor, and improvement in the arts, may increase indeffi- nitely, but there is a limit to the possible return and fertility of land beyond which it cannot be carried. The limit to the productiveness of land is two-fold — it is limited in amount, the earth being a fixed quantity, and it is limited in resource; but its resources may be increased, though not indefinitely. To illustrate: The average product of land may be fifteen bushels of wheat per acre, but with im- proved methods of agriculture it may be raised to forty bushels or more; but, it does not follow that, as population and improvement in the arts increase, the product of an acre can be increased likewise and made to yield a hundred, or two or three hundred bushels. There is an absolute limit to the capacity of land that cannot be exceeded. When that point is reached and population still increases, then there is a diminishing per capita return and a "press upon subsistence" — not neces- sarily to the starvation point, but to the lessening of 1 8 RENT, WAGES AND CAPITAL. enjoyments. The largest per capita return may be reached before land reaches its largest possible production, for the reason that, as the limit draws nearer, the rate of approach will be slower; just, as when a ball is thrown into the air it will at first rise rapidly, and then slower. When the rate of increase of population passes the rate of increase in the productiveness of land, the effect will be the same as a decrease in the productiveness of the land. But, do the improvements in the arts, in machinery, and the methods of cultivation have the "same effect on the produce as doubling of the fertility of the land?" Is Mr. George right when he says, "The power of producing wealth in any form is the power of producing subsistence?" Utility must not be confounded with value and wealth. Sub- sistence holds in the direct or indirect life sustaining power of a product, and not in the cost of its production, or in its exchange value. Things of great usefulness are some- times of small value, while others of great value do not contribute much to subsistence. The fine plate on the tables of the wealthy may be of great value, but they contribute no more, perhaps not as much, to the sustaining of life as the earthenware upon the poor man's board. An artizan may carve a fine table and thereby create an article of much value: by so doing he has added to the amount of its value, to the wealth of the country, but he has not added, to that amount, to the subsistence present; nor again, does it represent to the amount of its value, the pro- ductiveness of land. An agriculturalist raises one hundred bushels of wheat and becomes the producer of that much wealth and sub- RENT, WAGES AND CAPITAL. 1 9 sistence; an artizan produces a musical instrument of the same value — do we say that subsistence to the equivalent of two hundred bushels of wheat has been produced? No, because the instrument is a contribution to enjoyment, to refinement and culture, and no more life is sustained on account of it. Its use cannot be classed with that of food and shelter. The instrument is the equivalent of the wheat in value, and an equal contribution to wealth, but not in utility to subsistence. An exchange is made, the wheat for the instrument, do we now say that the artizan has produced the subsistence in his possession? No, because the agriculturalist has been credited with having produced it and it cannot be twice accounted for. We see, therefore, that wealth has been produced to the equal of two hundred bushels of wheat, but subsistence only to the amount of one hundred bushels. The confusion arises from the fact that the artizan, having produced an instrument of value, with which he commands subsistence, is held as having produced it. He commands subsistence, not because the instrument he has produced contains that element, or quality, but because his production contains the element of value, which is everywhere a similar quality, and ex- changable. When the instrument was exchanged for the wheat, it was not an exchange of utilities, or an exchange of subsistence, but an exchange of values. There were no estimates made to discover whether the usefulness of the one was equal to that of the other, but simply to find whether their values were the same. As the commercial world estimates, there are no exchanges of utilities, or the means of existence but only an exchange of values. 20 RENT, WAGES AND CAPITAL. The following will illustrate: A house is being built; to that end it is necessary that timber shall be brought from the forest and placed in position in the most substan- tial and servicable manner. The workmen, who do this, contribute to subsistence, because the house is necessary for shelter and protection, and, in fact, for the very exist- ence of the man who occupies it. But, suppose that the builder is a man of wealth — that he is not satisfied, simply, that the timber is placed in position to do its greatest service, but that the workmen are employed to multiply their labors upon it until it becomes an elegantly wrought and finely finished mansion — can we say that in all this there has been a contribution to subsistence? Certainly not ; the labor done to place it in the position of its greatest utility was that, but from that point, the character and object of their labor changed — from that point it becomes a contribution to the taste, or perhaps the vanity, of the builder — from that point it brings no greater shelter, nor does it turn more rain or storm. But to further illustrate: A thousand persons have set- tled upon an island, all available space being occupied. By the adoption of the best methods of cultivation, the land yields its highest possible production, and all of its product is necessary for the support of its population. Let it be supposed that the population remains stationary and that there is no communication with the outside world — that invention and the increasing intelligence of the people increase the efficiency of labor by gradual process — how will this greater efficiency and power of production exert itself ? Not by increasing the product of land, or the RENT, WAGES AND CAPITAL. 21 means of subsistence, for that limit has been reached. The natural course would be to refined pursuits; to the refine- ment of the product now stationary in amount. Using the same materials, houses might be more finely finished; furn- iture of ordinary workmanship might be made more luxurious; their clothing, though not made more substan- tial, might be of finer fabrics. In innumerable ways their increasing capacity to labor may employ itself. Thus it is that more labor, and consequently more wealth, would be represented in their products, but not more subsistence, or greater quantity, or greater utility. I deny therefore that the power of producing wealth in any form, is the power of producing subsistence. In the foregoing, it is shown, I think, satisfactorily, that there is a limit to the productiveness of land; that to double the efficiency of labor does not in effect double the capacity of land, and that to produce wealth is not always to pro- duce subsistence. It now remains to be shown that another proposition of Mr. George's made in the same connection, is, at least, only partly true. He says in substance that, with increasing population the productiveness and efficiency of labor is greatly en- hanced. In support of his theories he finds it necessary to give this proposition the largest possible importance. To this end, he draws an elaborate picture of the pioneer settler, who goes beyond civilization, to make himself a home in the wilderness. It is shown that away from easy communication with his fellows the pioneer has many disadvantages — that he has long distances to go to get necessary supplies — that he has no neighbors to whom he 22 RENT, WAGES AND CAPITAL. can go in case of need — that if he raises more grain than he can use he has no market — that he is without schools, churches, or postoffice. But now comes another settler, and another, and another, and he has neighbors with whom he can co-operate; soon they have a store, a postoffice, then a railroad, and a market for his surplus. A town is started and he has churches and schools. As a result of this increase of population his labor becomes much more profitable, and his products more valuable, although his land is not more fertile or productive. Upon an argument similar to the above he relies to show that increasing population creates no press upon subsist- ence, but ought with equal distribution enhance the enjoy- ments of life. Frontier life, as it used to be, may serve as a foundation for a story of romance and adventure, but frontier life as it is now must have precedence in illustration of present social phenomena. A few years have revolutionized the settlement of new countries. Now, instead of the settler, the railroad has "taken to the woods;" it has been carried even hundreds of miles beyond the settlements, connecting separate civilizations. Stations are established in the wilderness and on the plains — the country is laid out into counties, townships, and sections. Emigration now begins and immediately an embryo town springs up, and with it comes a postoffice, and stores, schools, churches, doctors, lawyers, preachers, and always that other evidence of civil- ization — a drinking saloon! The stations and towns become distributing points for agriculture, which now begins and spreads in every RENT, WAGES AND CAPITAL. 23 direction. For the crude methods of the early settler there is substituted the latest inventions. The Western farmer breaks land for his first crop with the latest improved plow. He plants his first crop of corn with a patent planter; for the old plantation hoe he substitutes a sulky cultivator. He sows his first crop of wheat with the best drill in use— he cuts his first harvest with a self-binder — he thrashes it with steam power, and hauls it to market in a wagon of the latest Chicago pattern! He secures his first crop with a saving of labor and an efficiency of method that would astonish the drudging farmer in countries cen- turies old! And yet, Mr. George would have us believe that labor is not efficient, and production profitable in new countries, but that efficiency and profit increases with population and reaches their highest in those centers. Values are not as high in new countries, but this is off-set to a great extent by the greater fertility of land and the larger product. Mr. George expects to add much strength to his argu- ment by proving the great inefficiency of labor in new countries, and that the productiveness and return of labor increase indefinitely with the increase of population. This increasing efficiency of labor, it is claimed, ought to result in an increase of Wages, but that, on the contrary, as wealth and population increase, Wages are lowered and laborers reduced to poverty— and all because of Rent! This is a false representation. He tells us distinctly that Wages are higher in new countries than in old. Now it is almost an impossible economic proposition that Wages should be high where labor is so very inefficient and the 24 RENT, WAGES ANd CAPITAL. return small. When, in another connection, he attempts to prove, that the increase of values attending an increase of population should accrue to the State, he draws a very gloomy picture of the great labor of, and small return to, the pioneer settler; if this is a correct portrayal, it is impos- sible to conceive how wages could be gradually lowered from what they would be under such unfavorable circum- stances. Instead of Wages decreasing, they are, in populous countries, sufficient to enable the laborer to have advantages that are not to be obtained on the frontier. The increase of enjoyments that the laborer should have with an increase of population, he secures up to the point of "diminishing return." When we remember the great change in frontier methods, these arguments lose their force. It is true, how- ever, that the efficiency of labor does increase with population, but that increase is scarcely perceptible beyond a certain point. When population reaches that point which admits of an easy sub-division of labor, its influence to a greater efficiency is slight. Labor is as productive and efficient in the United States as it is in England, although the density of population is much greater in the latter country. There ought to be an immense difference, if the arguments of " Progress and Poverty " are to be trusted. England has some commercial advantages that the United States have not, but there are other reasons therefor, not considered in this connection. Of improvements in the methods of labor, and their effects, I shall have occasion to again refer. RENT, WAGES AND CAPITAL. 25 But must we, in view of the foregoing, accept the Mal- thusian theory of population? Is there a danger of a " press upon subsistence " that should make us welcome epidemic, disaster and disease, as a means of keeping down population? Should society place artificial restrictions to reduce the number of births? We trust the world has out-grown these absurdities. This theory represents the earth as a boat lost at sea, with insufficient provision to keep alive those who are in it, and thus making necessary the sacrifice of some of their number. Such a theory makes life a grab game. It tells man, by inference, that there is not enough for all, and authorizes him to prey upon his fellows. The predisposition of population is to increase to its own disadvantage, but with millions of acres of unem- ployed lands, such an increase must be local and can assume no alarming proportions. But the supposed dangers of over-population are neutralized by the same causes that reduce Rent as a factor in distribution, as shall appear in succeeding chapters. 26 RENT, WAGES AND CAPITAL. CHAPTER II. I have thus far allowed Rent the importance claimed for it by the majority of economic writers, including Mr. George. If the amount of Rent proper, or that paid for natural forces only, is not large, then the elaborately wrought pages of "Progress and Poverty" contain only meaningless effusions. Francis A. Walker, in a recent volume, entitled "Land and its Rent," has, by considerable length of argument, shown that Mr. George has overestimated Rent; but Walker, in his turn, has elevated Rent to a position, in importance, not much short of that given it by the other. The difference between them is one of degree only, and if the amount of Rent is as much as the latter claims it to be, then Mr. George's arraignment of society is good; and if his subsequent reasonings can be sustained, his theory of State interference is reasonable. How then, shall we determine the amount of Rent and the position to which it must be assigned in economic distribution? It is impos- sible to determine with exactness; many of the conditions that raise and lower it are local and temporary, others are permanent. The best estimates are only approximate. The Ricardian doctrine of Rent, has, heretofore, been generally accepted ; but the developments of recent years have greatly modified this theory. The minute sub-di- RENT, WAGES AND CAPITAL. 27 vision of labor, in conjunction with modern facilities of transportation, have assumed an active and controlling force in the determination of the current rates of Rent. The cost of many of the necessaries of life, in the popula- tion centers, is the cost of their production in new countries, and on the margin of cultivation, to which is added the cost of their transportation. Steam power and electricity have practically annihilated time and space. In more primative times, the greater part of subsistence was drawn from the same community, or, in fact, from the particular piece of land upon which an individual lived. But to-day, the laboring, as do all other classes, draw their supplies from the four quarters of the globe. Com- merce knows no political boundaries, unless artificially raised. As a rule, agriculture is most profitable in new countries, while in the centers of population, where capital has accumulated, the refinement of the raw material can be accomplished with less expense. Hence, England buys raw cotton abroad, manufactures, re-exports, and ex- changes it for food products that are obtained in Russia, the Indies, South America, or Dakota; and the cost is less than if that country was dependent on home production. In fact the subsistence of a considerable portion of the population of England is drawn from without her bound- aries, almost as absolutely as if they lived in another country. The close relation of distant parts of the globe is phenominal and modern. International commerce has become a veto upon civil war and strife between nations, more effective than all others. The facilities of transfer, and the systems of universal exchange, have created recip- :-28 RENT, WAGES AND CAPITAL. rocal needs, and equalized interests, and also prices. If distant points of the earth are being brought into closer, and still closer, relation, must not this equalizing and level- ing influence effect Rent in like manner? And Rents are thus effected. In England, the effects do not appear prominently on the surface. Suppose that country had to depend for the equivalent of its present large consumption, upon the domestic product, must not Rents have increased enormously? Such must have resulted from her increase of population; but while con- sumption must have increased immensely, Rents have increased little; if, indeed, they have increased at all. We •can judge of the amount of Rent by the comparative price of land products when they reach the consumer, and all production is from land. M. Leroy Beaulieu, a French economist, has endeavored to show that transportation has reduced Rent to insignifi- cance. Walker, in reply thereto, cites Sir James Caird as saying that on live meat the English producer has an advantage over his American competitor, equal to four pounds on an average ox; and that, "of this natural advan- tage nothing can deprive him ; and with this he may rest content." The same authority is quoted as saying that, "fresh meat from America, from the costly methods necessary to produce it, will, on an acre, cost equal to forty shillings ($12.00) for transport to this country. " Upon this authority Walker relies to prove Beaulieu "hopelessly in the wrong." Now what are the facts? By a recent method of refrigeration, dressed beef from America has been trans- RENT, WAGES AND CAPITAL. 2^ ported and sold in Liverpool at less than the cost of its production in England. The English producer of whose natural advantage, Caird says, "nothing can deprive him," now cries lustily for State interference and protection — free trade predictions to the contrary notwithstanding. The advantage of four pounds to the average ox vanishes at a single advance of the methods of transportation, and the refrigerating process, as also the transport of live animals, has scarcely passed the experimental stage. Walker quotes the same writer as saying, that the cost of transportation of cereal and other vegetable crops from California, the Black Sea, and India, "is seldom less, and often more, than forty shillings" on the produce of an acre; and adds "forty shillings ($12.00) an acre is a very pretty Rent, neither to be despised by the landlord, nor to be neglected by the economist in discussing the distribution of Wealth." I lay down the book containing these state- ments, and take up a Chicago paper of the date of this writing — the latter part of the year, 1885 — and find the following: — "On 'change in this city last Saturday dis- patches were claimed to have been received from London stating that October and November deliveries of Indian wheat were at 31 shillings the quarter," which is about 85 cents per bushel, or within five cents of the price of No. 2 spring wheat in Chicago. If this is true, and there seems to be no reason to doubt it,, it is one of the most im- portant announcements in its bearing on our trade that has been made in many a day. Accepting Caird as authority, Walker continues, "It is true that during the five years since Sir James Caird wrote 30 RENT, WAGES AND CAPITAL. these words, the increasing severity of American competi- tion has very considerably reduced the rental value of the Lands in the United Kingdom ; but there is no reason to suppose that this effect has proceeded far enough to neutralize the gain of the twenty years preceding, not- withstanding all those improvements in the means and agencies of transport and intercommunication upon which M. Leroy Beaulieu dwells with so much emphasis and eloquence." Scarcely seven years have passed, and the difference in the price of wheat between London and Chicago — five cents per bushel — instead of being $12.00 per acre is not more than $1.00; and London is a center of population, and among the farthest from the great grain growing districts. Chicago is, comparatively speaking, on the margin of cul- tivation, where, as Mr. Walker and Mr. George both admit, Rents are only nominal. After the English agriculturist pays the cost of production, including the interest on Capital, and receives only five cents more than the price per bushel near the margin of cultivation, where the rental is inconsiderable, what possible amount can there be left for Rent proper ? Walker certainly makes a weak argument when he admits that five years of competition has " very considerably reduced" English rentals. That period of time contains but a small portion of the progress of the ages, and if so much is effected in that time, there is a great reason to suppose that that, which has been held to be a great advantage may be entirely overcome. Some Continental countries seek to prevent the importation of American RENT, WAGES AND CAPITAL. 3 1 pork, upon the pretext that it is diseased, but this is known to be only a thin covering for the real cause, that their agriculturists are unable, longer, to compete, notwithstand- ing the long distance of transport. Walker further says, that, "the Capital Wealth of the owners of landed property has increased, in Great Britain and Ireland, by £331,000,000 in 20 years, at a cost to them which probably has not exceeded £60,000,000." This statement is also made upon the authority of Caird; but we are not told whether this increase of " Capital Wealth" represents the increase in the value of lands, only, or whether it represents the " Capital Wealth " accumulated from all sources. For the support of the dignity of the patented and trade-marked nobility, great wealth is neces- sary, and to secure it, " shop " is no longer despised. Much of the wealth of all classes in England has been accumulated in the field of trade, and by enterprise in the four quarters of the globe. But the inference seems to be, that the increase is in the price of land only, although the term " Capital Wealth " scarcely allows it. It is implied that this increase in the price of land — if such it is — is due mainly to the greater profits in agriculture; or, which is the same the increase of actual Rent. Now it does not follow that this increase of price results from an increase of Rent, or that Rent must increase in the same proportion, or, in fact, that it must increase at all, except nominally, to pay the interest on additional Capital invested in agricultural improvements. The increasing Capital Wealth of England has resulted in the gradual reduction of the rate of interest, and an 32 RENT, WAGES AND CAPITAL. increased demand for opportunities of investment; this results in an increase of the price of land, but does not necessarily increase annual Rents. In a country of exten- sive commercial relations, and universal enterprise, such as England, there is a steadily increasing number of wealthy men who desire to retire from active business life and invest their Capital in some permanent and safe place. These turn naturally to land, and the effect must be higher prices, although the product is not more valuable, or in greater demand. Recent years have demonstrated the profitableness of investing Capital in improvements on land in the shape of fertilizers and such other improve- ments as will increase the yield; this will raise the price of land in a much greater proportion than the rate of interest. It is natural with men to desire the possession of land — to have an estate. The idea of a home, which almost every intelligent being desires, cannot be held, separate from land. Furthermore, the possession of land is, in England, associated with rank and social distinction, in fact it is in some degree the foundation of rank. It is clear then that there are great incentives to the purchase of land, other than financial considerations, and the effect may be an increase in the price of land, even in the face of a declining rate of Rent, especially when there is a strong national or home feeling. When an Englishman desires to build up an estate, and establish a home, the purchase of land on the prairies of North America would not be considered as contributing to that end. His purpose is accomplished, only, by the purchase of land in his own country; consequently the lands in other portions of the 33 world, are not, for this purpose, in competition with that in his own; at the same time, however, the products of land in all nations, almost, are in full competition with that in his own. Here, then, are two influences, the one oper- ating forcibly to raise the selling price of land, the other, with even greater force, to lessen the rate of Rent. The modern facilities of intercourse between distant points and between the different nations and races of men, must have an equalizing effect upon the conditions under which they live, and especially in matters of price and value. It is not assumed, however, that the facilities of exchange are, in themselves, sufficient to overcome Rent. Economic Rent may be equal to the cost of transportation from the margin of cultivation, where Rents are only nominal; they cannot be more, they may be less. But the condition that most effects Rent, to lessen it, is the diminishing productiveness of land. It is known to every one, that its greatest natural productiveness is when it is first reclaimed, and put under cultivation; but land can be new only once, and with continued cultivation the natural fertility is quickly exhausted. It must be raised, and renewed, and kept in a condition that will insure a profitable return, by artificial means — that is to say, by the expenditure of Capital in improvements, by the use of fertilizers, by ditching, by irrigation, and other means. The increased productiveness arising from these, or other improvements, goes, of course, to the repayment of Capital and the interest thereon and adds only in a limited degree to Rent proper. It is not an over estimate to say, that land, the first 3 34 RENT, WAGES AND CAPITAL. productive power of which is 20, will be by continued cultivation, reduced to 10, or even 5, provided the amount of the product is not kept up by the outlay of labor and Capital. On the margin of cultivation where Rent does not exist, and in new countries where it is very low, the amount of the product will be the maximum, which we have placed at 20; in old countries the amount of the product on unaided land will be the mini- mum, 10. Now it is evident that the difference in the amount of the product between the old and the new country, which is 10, will pay for the transport, and there will be still 10 remaining, which goes to the payment of labor and the replacement of Capital, Rent being only nominal. If the land owner in the older countries should attempt to exact any considerable sum for Rent, the reply will be " No, I will not pay it, because the product of your land is only 10, and I can have as much on the margin of cultivation, and no Rent to pay." The figures used here are only for convenience in illustration; I have, undoubtedly, overestimated the cost of transportation, as also, the product of long used lands, upon which Capital has not been expended to maintain the yield. But, to the above Mr. George is ready to answer, and his argument is so entirely unique that I quote at some length, marking in italics the gist of it: "For, that man cannot exhaust or lessen the powers of nature follows from this indestructibility of matter and the persistence of force. Production and consumption are only relative terms. Speaking absolutely, man neither produces nor consumes. The whole human race, were they to labor to infinity, could RENT, WAGES AND CAPITAL. 35 not make this rolling sphere one atom heavier or one atom lighter, could not add to or diminish by one iota the sum of the forces whose everlasting circle produces all motion and sustains all life. As the water that zue take from the ocean must again return to the ocean, so the food we take from the reservoiors of nature is, from the moment we take it, on its way back to those reservoirs. What we draw from a limited extent of land may temporarilly reduce the productiveness of that land, because the return may be to other land, or -perhaps, all land; but this possibility lessens zvith increasing area, and ceases when the whole globe is considered. * * * * * * * Life does not use up the forces that maintain life. We come into the material universe bringing nothing; we take nothing away when we depart. The human being, physically considered, is but a transient form of matter, a changing mode of motion. The matter remains and the force persists. Nothing is lessened, nothing is weakened. And from this it follows that the limit to the population of the globe can only be the limit of space." A very little observation must convince anyone that this argument is insufficient. It is simply saying that the fer- tility of the soil will recuperate by natural process — that substance taken from the soil will return again and restore the native fertility; but who does not know that the return of the scattered elements is a very slow process? The rate of return is far beneath that by which it is taken there- from with steady cultivation. It is the fact that the natural process is entirely inadequate that makes artificial fertiliz- 36 RENT, WAGES AND CAPITAL. ing necessary. There is on all sides abundant evidence that places this matter beyond dispute. A convincing illustration of the insufficiency of the above mentioned method we have in the agricultural system of Virginia before the late Civil War. The practice there was to cultivate a body of land for a number of years in succession, or, until its fertility was about exhausted and then repeat the same process on other land, leaving the first to renew itself by the methods of nature. But little attempt was ever made to restore the productiveness of the soil by the expenditure of Capital or Labor. The result of this method was to impoverish lands that were, originally, of surpassing fertility. This result may have been hastened by the cultivation of tobacco, but it must have come under any circumstances with such a system. This routine of agriculture held in Virginia for a long time. James Parton, in his life of Thomas Jefferson, gives us an interesting sketch, from which I clip the following: "The usual routine was this: When the forest was first cleared, laying bare the rich, deep, black, Virginia soil, the slow accumulation of ages of growth and decay, tobacco was grown for five successive years. That broke the heart of the land, and it was allowed to rest awhile. Then tobacco was raised again, until the crop ceased to be re- munerative; and then the fields were abandoned to the crops sown by the methods of nature; and she made haste to cover up with a growth of evergreens the outraged nakedness of the soil. But Jefferson had, long before, abandoned the culture of the exacting weed on the Alber- marle estate. His overseers, therefore, had another RENT, WAGES AND CAPITAL. 37 rotation, which exhausted the soil more completely, if less rapidly. They sowed wheat in the virgin soil among the stumps; next year, corn; then wheat again; then corn again; and maintained this rotation as long as they could gather a harvest of five bushels of wheat or ten bushels of corn to the acre; after which Nature was permitted to have her way with the soil again, and new lands were cleared for spoliation." Ten bushels of corn to the acre! Tell it not in the "Great West! " But while the last crop was only five bushels of wheat, the first may have been considerable more, perhaps ten bushels, and dividing this with five the product of the last, we have an average of only seven and one-half bushels. But while this small average was being produced from an acre, there were opposed to it, tw 7 o, three, or four acres that produced nothing, having been exhausted and left to renew r themselves by Mr. George's process of nature. In an economic estimate the product of an acre in use must be averaged with every acre that at the same time is held out of use, because its productiveness has been exhausted, and hence, with the old Virginia methods there would have been, instead of seven and one-half bushels, an aver- age of only one-third or one-fourth of that amount. But it may be allowed, that, at that time and place the modes of agriculture were crude, and the people unpro- gressive — although Jefferson himself was an innovater and ahead of his fellows — and that upon land of the same fertility, there might have been, with better methods, an average of, we will say, double the amount; that is, with better plowing, better sowing, better implements, with a 38 RENT, WAGES AND CAPITAL. judicious rotation of crops, there might have been, without fertilizing, or an additional outlay of Capital, a much greater average. With improved methods and better management the original virtues of the soil may be retain- ed for a much longer period, but eventually, there will be arrived at a condition similar to that of Old Virginia. Does any one suppose that England, or New England, would yield a greater average under continued cultivation, if the voluntary return of the elements to the soil was alone depended upon? You may say that the average named above is too low, but you may raise it considerable and still there is no margin for Rent. I must remind the reader, at the risk of repetition, that actual Rent must be based upon the native force of the soil, and as unaided land in new countries, where Rent is an unimportant factor, yields a much larger product, the effect must be to make Rent in the older countries disappear and more than disap- pear, only as it is protected by the cost of transportation. If further illustration is necessary, we have it in a comparison of the agricultural systems of England and Ireland. In the latter country the native qualities of the soil were as good as those in the former ; but in Ireland, as in Virginia, nature is left to effect a renewal of the land, although for different reasons. The difference in the agricultural products of the two countries fairly illustrates how much of England's product is due to Capital and Labor expend- ed. But some may suppose that the illustration makes Rent certain, because the poor and exhausted lands of Ireland pay an exacting Rent; but the Rents of Ireland are burdensome because there is so little to pay them with. RENT, WAGES AND CAPITAL. 39 The condition of the Irish people does not arise in the natural operation of economic laws. Theirs is a social status arising from outside and arbitrary interference, that began with confiscation, and has run through the genera- tions subject to the influences that always debase a sub- jected people. The government policy that rules [reland, and all countries similarly situated, practically places her outside the pale of economic laws; the writer must, of necessity, formulate a new set of theories for all such. H. C. Cary affirms that Rent disappears entirely because few farms will sell for the cost of producing them — that is to say, they will not sell for as much as will replace the Capital, with the interest thereon, that has been expended to improve them. Walker, with eager- ness to overthrow Cary's argument, makes haste to say that the object of the expenditure of Capital on land is not to secure its return, with interest, in an ultimate sale of the land, but that repayment is expected, in great part, from the increase of the annual crop. Walker is nearer right; the agriculturalist does expect to be repaid by the increase of the annual product, or by some saving of labor that an improvement will bring; but where is the difference in the effect upon Rent? Cary accounts the Labor and Capital expended in improvements, against the selling price of the land, which is nothing more than Capitalized Rent. Walker accounts it against the annual product or annual Rent. In either case the deduction must be from Rent. Walker thus states it: "That this proposition is correct is, I think, proved conclusively by the fact that there are few classes of improvements known to agriculture which 40 RENT, WAGES ANCE CAPITAL. a tenant for 33 years will not make at his own expense, notwithstanding the certainty that he will cease to enjoy the benefits of them at the expiration of his lease. Even a much shorter period of enjoyment, as 21 years; or as so common in Scotland, 19 years, may give the tenant time enough to get back the value of the most expensive im- provements, if judiciously made. Capital is, in fact, e\en in its most durable forms, rapidly consumed. If production was to cease absolutely the visible effects of human labor would disappear with sur- prising rapidity. Capital must be constantly renewed and replaced. Now it is very evident that the more rapid is the consumption of Capital the greater must be the percentage of the annual product necessary to replace it, and the amount that remains and from which Rent must be paid, is small in the same proportion. When, therefore, Walker calls to witness the short period in which Capital is replaced he makes an argument against Rent. But further, Walker does not state one of the principal elements that enter into a lease or sale of land to effect the price of it. He states that extensive improvements will be made upon a lease for years with a full knowledge that improvements and all must be surrendered at the expira- tion of the term ; and the inference is that the sum paid to the owner of the bare land, upon which the improvements may be made, is a contribution made wholly to Rent. This is entirely a mistake, for in some instances, at least, not a particle of this nominal Rent is for natural forces of the land. In illustration we shall say that an individual owns an acre of land, entirely unimproved, in the heart of a RENT, WAGES AND CAPITAL. 41 great city; for this he can obtain a very large sum, either to sell or lease it. Many of the economists assume that, there being no improvements, this sum is for Rent abso- lute, but what the owner actually sells, or leases, is not the native force or utility of the land, but the commercial advantages arising from its surroundings; its value springs not from within, but from without; it arises from the millions of Capital invested around it — from the thousands of a population, from the public improvements, from the theatres, churches, and schools, from the paved and lighted streets, from the railroads that center around it. The actual or intrinsic qualities of the land are scarcely consid- ered, those who desire to buy or lease it consider only the surroundings. Mr. George strikes the same rock. He dwells upon the large price that the owners of land in the cities can com- mand and estimates it as Rent entire. And yet he recognizes the truth at another point in his argument, but fails to make it apply all around. He proposes to confis- cate improvements when they become inseparable from land, and in justification of that proposition, endeavors to show that they derive much of their value from the com- munity, and from their surroundings, and hence may be appropriated. But, when he comes to lands in the cities he seems to forget that they also derive most of their value from Capital expended in their vicinity, and that it is not the natural forces of the lands that are sold. To this part of his argument I shall refer again. The man who holds land out of use, especially in towns and cities, is not considered a public spirited man, or a 42 RENT, WAGES AND CAPITAL. benefit to the community; but the complaint is not that he derives a benefit direct from the land which he holds, but that he profits by the active Capital and Labor of those about him, while he remains inactive, and employs neither Capital or Labor by which the community is benefitted in return. The man who thus holds land, if he drew his profit from the increase of its native power, could not be reproached by the community, because his profit would not be drawn from public progress. It is because his wealth is increased by public enterprise and advancement, to which he has contributed nothing, that makes him a parasite in the eyes of the people. I have, as much as possible, allowed the argument to take its natural course, and as a result we have seen Rent almost disappear. Following the logical course indicated by the above, will, at the next stage, partially restore Rent as a factor in distribution and bring it nearer its true position ; but it does not still become an established portion, because in the complication of human affairs many influ- ences and conditions arise that unsettle the best proven theories. We have seen that the original fertility of the soil is soon exhausted and that the processes of nature are much too slow to enable it to recover, while under cultivation, and hence the soil becomes dependent to a great extent upon the expenditure of Labor and Capital to restore its fertility, and this being true, the principal part of the product must go to the payment of Wages and the interest on Capital ; this I have repeated at the risk of repetition. Where, then, does Rent arise ? Principally upon the RENT, WAGES AND CAPITAL. 43 susceptibility of land to improvement. Land varies in its composition. There is some, that with a determined amount of improvement, or fertilizing, will yield an addi- tional product greater than some other equally improved, but differently composed or situated; as, for instance, in the use of lime as a fertilizer its effects are more marked upon some lands than upon others. Some soils have more staying qualities than some others, and hence artificial raising will last longer; low lands are different in this respect from those upon hills. A limestone is. different from a gravel soil. It is in these differences that Rent princi- pally arises. But Rent is also, in part, determined by the availability of means of improvement or renewal of the soil. If fertili- zers and other means of improvement are near by so that they may be brought to bear at small expense, that is a natural advantage that adds to Rent; if these materials are remote the cost must be greater and less is left for Rent. The gain of Rent, however, from these causes is not great. With an equal expenditure of Labor and Capital the amount of the product of the different grades of land are brought nearer together. Now, it is held that Rent rises in the difference in the productiveness of land, and hence, if improvements have a tendency to equalize products, they operate against the very foundation of Rent. It may be said, that whatever the difference in the susceptibility of land to improvement, it will not effect the difference in ex- change values by which Rent is greatly supported ; but it must be remembered that the difference in exchange 44 RENT, WAGES AND CAPITAL. value in modern times is not marked except it be on long distances. Rent may be augmented by the increase of the product above the cost of the improvement. The cost of an im- provement may be 5 but the increase may be 6, the differ- ence may go to Rent, although it is not incumbent that it should always do so. The limestone is imbeded in a quary, a poor soil is on the hill; there are present in each, elements, that, if brought together, would enlarge the pro- duct of the soil. The Labor and Capital necessary to bring these together must first be repaid at the current rates of Wages and interest. If there is any surplus it goes to Rent, other conditions permitting. And this is the whole of the law of Rent. Under these conditions it arises, when it arises at all. Local and tem- porary causes may sometimes, seem to give rise to more Rent, but these do not count in an economic estimate. Mr. George, realizing, no doubt, that the current doctrine of Rent does not show a sufficient amount to support his preconceived ideas relative thereto, refers to Rent all the increase of the product resulting from an increase of popu- lation and the settlement of the country. Of this I shall speak again. RENT, WAGES AND CAPITAL. 45, CHAPTER III. Mr. George sees Rent in every thing, and every availa- ble circumstance, and some that are scarcely available, are made to fashion themselves to the magnifying of Rent. But at no point in his arguments does he place himself more in opposition to facts, as well as to correct theories, than when he enters into a discussion of the effects of labor- saving machinery and improvement in the Arts. He says in substance, that, with private ownership of land, all the benefits of these improvements go to the landlord in the shape of Rent. His statement is as follows: "And so, every improvement or invention, no matter what it be, which gives to labor the power of producing more wealth causes an increased demand for land and its direct products and thus tends to force down the margin of cultivation, just as would the demand caused by an in- crease of population. This being the case, every labor- saving invention, whether it be a steam plow, a telegraph, an improved process of smelting ores, a perfecting printing press, or a sewing machine, has the tendency to increase Rent. * * * * * * * "If invention and improvement still gt> on, the efficiency of labor will still be further increased, and the amount of Labor and Capital necessary to produce a given result fur- 46 RENT, WAGES AND CAPITAL. ther diminished. The same causes will lead to the utiliza- tion of this new gain in productive power for the production of more wealth; the margin of cultivation will be again extended, and Rent will increase, both in proportion and in amount, without any increase in Wages and interest. And, so, as invention and improvement go on, constantly adding to the efficiency of labor, the margin of production will be pushed lower and lower, and Rent constantly increase, though population should remain stationary. "And, as we can assign no limits to the progress of invention, neither can we assign any limits to the increase of Rent, short of the whole produce." The reader must make some fine distinctions if he can harmonize the several statements of Mr. George. When he discusses population he says there can be no press upon subsistence, because an increase cf population increases productive capacity just as do improvements in the Arts and labor saving machinery, and that improvement in produc- tive power has the same effect as increasing the produc- tiveness of land; if this means anything, it means that improvements in the Arts increase the aggregate of human production without extending the margin of cultivation, for, otherwise — as he asserts — population would press upon subsistence. But in the present statement he gives us to distinctly understand that any increase consequent upon improvements extends the margin in the same pro- portion, that it is pushed "lower and lower and Rent constantly increases, though population should remain stationary." It seems incredible that a man of Mr. George's sagacity RENT, WAGES AND CAPITAL. 47 should thus entangle himself in contradictions; it can only be accounted for by his eagerness to lay upon Rent about all the wrongs of the present social state. The tendency of improvements may be to increase Rent, that is, if there is a scarcity of land or natural forces, but such an increase is not in proportion to the increase of the product. Labor, as it increases in efficiency, has a twofold effect upon production, one being to increase the amount of the product, and the other to increase the quality, neatness, and finish. The first may increase Rent, the latter does not. It is said that desire has no limit, but this is scarcely true as to quantity; we can imagine a limit to the amount, either of food or clothing that any one may desire to consume. Every one desires an abundant sup- ply, but beyond a varying limit desire takes the direction of elegance and finish; beyond a certain sufficient supply consumption is that of the epicure rather than that of the gourmand. The care, labor, and expense of the rich man's dinner is not in the amount of it, but rather in the quality — the cooking and serving. The remarks made in the first chapter with reference to the efficiency of labor will apply here. Undoubtedly, then, beyond a certain point, the efficiency of labor expends itself in the refining of the product rather than increasing the amount of it, and labor thus expended increases wealth but does not increase the demand for land, and, consequently does not add to Rent. It is certain, that, with improvements and inventions that increase productive power the percentage of labor expended in creating articles of luxury will be increased. It is certain, that, with an 48 RENT, WAGES AND CAPITAL. increase of wealth a large percentage of labor is expended in producing works of Art — in building monuments and painting tine pictures — in building fine houses, making fine furniture, providing fine clothing, or beautifying sur- roundings. The more elegant and finely wrought an article the greater must be the percentage of labor repre- sented in it and the less the percentage of land. With the increase of wealth more pianos are used, the amount of land necessary to produce the materials used to make a piano is not large, but in its construction much labor and skill is expended, and an instrument of much value is pro- duced. Nothing has yet been produced so elegant and grand, or exquisitely finished that still greater results are not aimed at, the effect of this must be to still further increase the percentage of labor in production and reduce the percentage of land, and thus the tendency is to reduce Rent as a proportion. With further invention and increase of wealth this proportion becomes greater and greater, and Labor and Capital is the gainer. I shall not enter into the details to enumerate the effects in the different industries. The advances made in the methods of transportation are the most prominent in reduc- ing Rent, but these have been noticed in the second chapter. Leroy Beauleiu, as we have seen, makes Rent disappear entirely and if he is to have credit for recognizing at least part of the truth, Mr. George's claims are considerably reduced. At this point we find Mr. George making an argument that involves a positive contradiction of terms. He says: "Poverty deepens as wealth increases, and Wages are RENT, WAGES AND CAPITAL. 49 forced down while productive power grows." This is simply saying that production increases while consumption decreases, for if the Wages of labor are forced down, con- sumption is reduced in the same proportion. This is almost an impossible condition. What is the object of production except to consume? And if consumption decreases what becomes of the steadily increasing product? Consumed by the rich do you say? The rich consume no more as a proportion than they did in earlier times ; in fact, with the present efficiency of labor less human effort is necessary to supply a rich man's wants and demands than before. The number of the rich may have increased but they no longer retain long trains of servants and attend- ants, and a less percentage of the aggregate of labor is necessary to supply their wants. Who then consume the increased and increasing product of labor? Evidently it is consumed by the laboring masses — by those who produce it. Pre-eminently the machines work for the common people. Who consume the immense products of our cotton and woolen factories? Who wear the millions of pairs of machine made boots and shoes? Who consume the gigantic crops of wheat, corn, sugar, coffee and tobacco? Who, but the laboring classes that are employed in their production? That the common people are the principal consumers of machine made goods we know from the fact that there is a wide spread prejudice on the part of the rich against this class of goods ; to wear them is not fashionable in many circles. The boots that a rich man wears are usually hand-made; while those on the feet of the laborer are made 50 RENT, WAGES AND CAPITAL. in a factory, where a thousand or more pairs of the same kind are produced in a day. The rich man's son has his clothing made at a fashionable tailor's; a laborer buys a suit from a dealer in ready made goods. The rich man's wife wears a robe made by the hand of a skilled seam- stress; the clothing of the laboring man's wife is made upon the sewing machine now of universal use. A prin- cess wears rare point lace, laboriously wrought by hand, a women of the common people wears some unpretentious machine made finery. The statuary in the halls of the millionaire has been laboriously wrought by a master hand; the unambitious plaster cherub in the laborer's dwelling has common fellowship with many others cast in the same mould. The fine paintings on palace walls are the studied efforts of artistic minds: the chromo in the poor man's cottage is literally machine made. I repeat it, then, that machinery works for the workers and labor is greatly benefited. It cannot be said in reply that it is the rich that consume the increased product, consequent upon the improvements in the Arts, because, as we have seen, the consumption of the rich takes the direction of finely finished goods, or, so, at least, does that portion of it beyond the necessaries of living. The pro- ducts of machinery are, for the most part, of common grades of material and having a great sameness of style, such, in fact, as are usually of common use. We see then, that Mr. George's theories become a two- edged sword to reduce Rent, as a proportion, when he says that machinery reduces Wages; that is to say, that the consumption of the laborer is reduced in the same pro- RENT, WAGES AND CAPITAL. 5 1 portion, and as that consumption is of necessaries requiring the largest amount of land to produce, the effect must be to lessen the demand for land and thus reduce Rent. At the same time the supposed increased consumption of the rich, taking the direction of finely finished goods, requiring the largest amount of labor to produce, must still further reduce Rent as a proportion. Machinery and improvements are beneficial to labor, because they increase the effectiveness of Capital — that is, they have the same effect as increasing the amount of it; the amount that may be produced with a given amount of Capital is greater with modern and improved methods. And not only the effectiveness, but also, the volume of Capital is increased by improvements in the Arts. With greater and increasing effectiveness of Labor and Capital the accumulation, both of Wealth and Capital, becomes more easy. When, with primitive methods and imple- ments of labor, the greatest product was only sufficient to provide the necessaries of life, the accumulation and, con- sequently, the amount of Capital, must have been small, and interest, or the return to Capital correspondingly high. But at the present, when it is possible to produce an abun- dance of the necessaries and many of the luxuries of life, it becomes easy, with abstinence that causes no suffering, to accumulate Capital. Mr. George assumes that although Capital loses, Labor gains nothing, and Rent gets all; of the truth of this the foregoing will show. He also assumes to reduce Capital to insignificance as a factor in production, but of this I shall speak in another chapter. 52 RENT, WAGES AND CAPITAL. From "Progress and Poverty" I again quote: "As has been before said in the improvements which advance Rent, are not only to be included the improvements which directly increase productive power, but also such improve- ments in government, manners, and morals as indirectly increase it. * * * * * * And if the corrupt governments of our great American cities were to be made models of purity and economy, the effect would simply be to increase the value of real estate, not to raise either Wages or interest." There is nothing in this that demands serious considera- tion; I only introduce it here as an example of the extravagant utterences that abound in that book. Even improvements in manners, morals and customs are held to increase only Rent, and good government benefits only land-holders! Mr. George's discoveries are, some of them, like that of the astronomer who thought he had discovered a monster on the sum, but who, upon examination, found the monster to be only a fly on the object glass of his telescope ! But, aside from all these these theories, we have before us the demonstration of the fact that improvements and machinery are a benefit to all classes, and to the laboring no less than any other. In countries where improvement and invention have made the most progress, where machinery is in the most general use, and where wealth accumulates the most rapidly, it is there that Wages are the highest, it is there that laborers are the best educated, the most intelligent, the most independent and enjoy most of the benefits of life. For example, compare Russia, RENT, WAGES AND CAPITAL. 53 Spain, or Mexico with England, Germany, France, or the United States. Is not the condition of the common people infinitely better in the last named countries? Are they not better educated, and more intelligent? And why, if not because they share in the advances made in wealth and invention? Why, if not because they are partakers of the material progress of their age and countries? But it is positively asserted that poverty increases with advancing wealth and improvement in the Arts: if this were true, then the general condition of the laboring classes would be better in Mexico than in the United States, better in Ireland than in England; better in Spain than in France or Germany. I deny all that "Progress and Poverty" says on this part of the subject and assert that the condition of labor is better in countries of the greatest material progress. I may appropriately, in this connection, refer to specu- lation in land, to which Mr. George attaches great influ- ence in raising Rent. " Whether we formulate it as an extension of the margin of production, or as carrying the Rent line beyond the margin of production, the influence of speculation in land in increasing Rent is a great fact which cannot be ignored in any complete theory of the distribution of wealth in progressive countries." And again, " In such communities, the confident expectation of increased prices produces, to a greater or less extent, the effects of a combination among land-holders, and tends to the withholding of land from use, in expectation of higher prices; thus forcing the margin of cultivation further than required by the necessities of production." 54 RENT, WAGES AND CAPITAL. There is not much in this that need detain us long. The holding of land on speculation, together with the with- holding of it from use, is entirely an exceptional holding, and no great influence can be attached to it. Only the unim- proved and unused land on the margin of cultivation, that may be held upon speculation, can increase Rent; and there only very little, for it is admitted on all sides, that there, the amount of Rent is only nominal. Very little land that is held on speculation is held out of use for that reason. Land, unlike the products thereof, may be used, and not consumed, and in settled portions of the country, land thus held is used as any other; this is universally true of agricultural lands. To hold land out of use upon which improvements have been made would result in the decay of the improvements and a loss of the interest, and is not to be thought of. In the cities some land ma}' be held out of use, but the percentage thus held is so small that the effect is scarcely perceptible. Moreover, the burden of municipal taxes is such that it is seldom prof- itable to withhold valuable land from use. Upon the margin of cultivation land is frequently held out of use, but not often from design. Many of the holders would gladly have their lands brought into use, if thereby they might realize only enough to pay the onerous taxes generally imposed; it is the practice in Western countries to tax heavily the unimproved property of non- residents. The possession of land on the frontier is not always a bonanza; witness, the many confiscations of land for unpaid taxes; and with the land may be lost the sum of the taxes that may have been paid for a series of years. RENT, WAGES AND CAPITAL. 55 Speculation in land, as, indeed, speculation in any thing else, is not for the general good; but wherein this except- ional holding of land can have such an immense influence upon the economies is hard to discover. 56 RENT, WAGES AN