§ 2. In the law of Rent.

The degree of productiveness of this extreme margin is an index to the existing state of the distribution of the produce among the three classes, of laborers, capitalists, and landlords. When the demand of an increasing population for more food can not be satisfied without extending cultivation to less fertile land, or incurring additional outlay, with a less proportional return, on land already in cultivation, it is a necessary condition of this increase of agricultural produce that the value and price of that produce must first rise. The price of food will always on the average be such that the worst land, and the least productive installment of the capital employed on the better lands, shall just replace the expenses with the ordinary profit. If the least favored land and capital just do thus much, all other land and capital will yield an extra profit, equal to the proceeds of the extra produce due to their superior productiveness; and this extra profit becomes, by competition, the prize of the landlords. Exchange [pg 469] and money, therefore, make no difference in the law of rent: it is the same as we originally293found it. Rent is the extra return made to agricultural capital when employed with peculiar advantages; the exact equivalent of what those advantages enable the producers to economize in the cost of production: the value and price of the produce being regulated by the cost of production to those producers who have no advantages; by the return to that portion of agricultural capital the circumstances of which are the least favorable.