Rent in United States

Rent Definition

A return or compensation for the possession of some corporeal inheritance, and is a certain profit, either in money, provisions, or labor, issuing out of lands and tenements, in return for their use. Some of its common-law properties are that it must be a profit to the proprietor, certain in its character, or capable of being reduced to a certainty, issuing yearly, that is, periodically, out of the thing granted, and not be part of the land or thing itself. Co. Litt. 47; 2 Bl. Comm. 41. At common law there were three species of rent, rent service, having some corporeal service attached to the tenure of tha land, to which the right of distress was necessarily incident; rent charge, which was a reservation of rent, vrith a clause authorizing its collection by distress; and rent seek, where there was no such clause, but the rent could only be collected by an ordinary action at law. These distinctions, however, for all practical purposes, have become obsolete, in consequence of various statutes both in England and in this country, allovnng every kind of rent to be distrained for without distinction. See Tayl. Landl. & Ten. § 370.

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A return or compensation for the possession of some corporeal inheritance, and is a certain profit, either in money, provisions, or labor, issuing out of lands and tenements, in return for their use. Some of its common-law properties are that it must be a profit to the proprietor, certain in its character, or capable of being reduced to a certainty, issuing yearly, that is, periodically, out of the thing granted, and not be part of the land or thing itself. Co. Litt. 47; 2 Bl. Comm. 41. At common law there were three species of rent, rent service, having some corporeal service attached to the tenure of tha land, to which the right of distress was necessarily incident; rent charge, which was a reservation of rent, vrith a clause authorizing its collection by distress; and rent seek, where there was no such clause, but the rent could only be collected by an ordinary action at law. These distinctions, however, for all practical purposes, have become obsolete, in consequence of various statutes both in England and in this country, allovnng every kind of rent to be distrained for without distinction. See Tayl. Landl. & Ten. § 370.

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This definition of Rent Is based on the The Cyclopedic Law Dictionary . This definition needs to be proofread..

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Rent in 1899 (United States)

The following information about Rent is from the Cyclopaedia of Political Science, Political Economy, and the Political History of the United States by the Best American and European Writers.

RENT. This is the term recognized in political economy, to denote the net product of the land, i.e., that portion of the total product, which, after deducting what covers the expense of production, remains, and constitutes a surplus. This surplus naturally reverts to the owners of the soil; they gather it themselves when they work their own lands; they receive it from the hands of farmers, or metayers when they leave to others the care of making them productive; in all cases. the rent forms part of the property. We must not, however, confound it with the price paid by one who hires a farm, (called sometimes farm rent), although it is one of the elements of the latter. Every case of farm rent, every leasing price, whether payable in money or in kind, includes something additional, viz., the remuneration due the land owners for expenditures made by them at various times in the past, to facilitate labor or increase its results. The buildings for farm service or for residence, the fences, ditches and plantations which the farm embraces, have often cost considerable sums, and it is just that those who enjoy the advantages connected with their existence, should pay all or a part of the interest [570] on the capital that had to be devoted to them. On the other hand, the conditions of the lease of lands have been discussed by the contracting parties, and may have been so determined as to favor either. Nevertheless, wherever the price for the use of the farm is payable in money, there is a constant tendency for it to include the entire rent. Rent is a net product, it is only realized when active industry has been fully remunerated, and it is not less difficult for farmers to reserve any of it for themselves, than for proprietors to induce farmers to sacrifice to them a part of the profits due to their improvements. But, whatever may be the nature of the circumstances which determine the apportionment of the rent of land between the owner and farmer, they can neither permanently effect its real amount nor alter its original character.

-Among the great facts to which the attention of economists has been drawn, few have given rise to so many controversies as the rent of lands. What it is, its origin, its proportions, its effects, its legitimacy even, everything connected with its existence, has been the object of long and patient investigations, and still harmony has not yet been established between the differing opinions. This is the more to be regretted, because, in this very question of rent are involved many other problems of deep social import, and the effects of its solution naturally extend far beyond the limits which scientific investigation has attained.

-We will here commence by pointing out the order in which the opinions on the matter of rent originated; we will note their characteristic differences; then we will take up the question in its whole extent, and, in our course, we shall find occasion to show how far each of the theories before us seems to depart from or to approach the truth, so far as the best established facts permit us to discern it.

-It was the physiocratic school who first enunciated an opinion on the nature of rent. They characterized it as the net product of the land, and in this they were not in error; but soon, attributing to it an extreme and exclusive importance, they made it the only source of public and private wealth. We know how erroneous a doctrine must be, which is based on the idea that no other labor than that on land can obtain more than the equivalent of the values it consumes, a doctrine denying productive power to employments without which most things produced from the land would themselves remain unsuited to use, and not admitting that men could realize any other riches than that which the natural fertility of the soil put at their disposal. However, in spite of this fundamental error which vitiated all their conclusions, we can not deny the physiocrates the merit of having apprehended well the character of rent and having given a pretty accurate definition of it. Among their observations on the natural increase of rent, there are also some which are both just and important. The net product, rent, in the excess which is left from the crops after the expenses of cultivation are reimbursed; it is the portion of the fruits of the earth from which the non-agricultural classes subsist; and, doubtless, in the normal and regular order of things, the greater or less amount of this excess has a strong influence on the degree of power and prosperity in reserve for nations.

-With and by the illustrious Adam Smith, began what may rightfully be called true economic science. The opinion of Smith on the subject of rent is much like that of the physiocrates. It is substantially as follows. In labor on land, nature acts conjointly with man, and rent is the product of its co-operative power. It is this co-operative power of the earth, the enjoyment of which landholders grant in consideration of a price for the lease based upon a proportional share of the sum at which it figures in the results of production.

More about Rent in the Cyclopaedia of Political Science, Political Economy, and the Political History of the United States

-The opinion of Adam Smith has obtained the assent of most economists. J B. Say, Storch, Rossi and Rau adopted it, or varied little from it. Dr. Anderson, however, had previously presented a harmonious series of ideas on the subject, which were at the same time more complex and better developed. 68 But his system did not attract attention until after having been reproduced again in the writings of Malthus and Ricardo, and it is under the name of the latter that he has taken a place in economic science.

-The starting point of Ricardo is in reality the same as that of Adam Smith. What the latter calls the co-operative power of land, Ricardo calls natural fertility, or original powers; but what he has added to the fundamental notion is, an exposition of the rules which, in his opinion. govern the fo
rmation and progressive increase of rent. According to Ricardo, rent is not solely the result of a natural fertility which permits the land to return, to those who cultivate it, harvests superior to their needs; it arises from the unequal distribution of this fertility. So long as the population, having plenty of room, can work only the best lands at their disposal, there is no rent: but just as soon as, on account of their increase in numbers, the same population are compelled, in order to procure means of subsistence, to attack lands of inferior quality, rent arises and becomes the share of the proprietors of the portions of the soil that were first cultivated. And the following is his explanation. Being less fertile than the others, the lands on which the labor is expended can not return, for a like expenditure in cultivation, as great a product. The crops they yield require additional expense and labor. and as it has become impossible for society to do without its complement of supplies, it is compelled to pay for provisions whatever price is necessary to insure production on land that has just been cleared. In this inevitable movement. it is the net cost of the produce on the worst land to which recourse must be had, which fixes the general price, and consequently determines the [571] profits of the proprietors of the land first cultivated, the realization of which secures them a rent. They sell at a higher price what they obtain without increased cost or advances, and find themselves masters of a greater surplus than they had before prices had risen. A like effect is again produced whenever the necessity of increasing the arable domain is felt. Worse lands are continually being brought under cultivation; the price of produce rises because of the increased outlay they require; and, at each advance in prices which takes place, rent is seen to arise where it did not previously exist, and to increase where it had already arisen. Such are the ideas on which the theory is based which is called by Ricardo’s name. This theory affirms, or at least appears to affirm, that rent has no other source than the difference in the degree of fertility between different portions of the soil: it attributes its origin and development to no other principle than the continual rise in the market price of food, and it makes the difference between a general price current, regulated by the expenses connected with production in localities where these expenses are greatest, and the particular net cost in the other portions of the soil, the measure of the rent that each of the latter affords or is adapted to afford.

-Ricardo’s theory was of course widely taken into consideration by the economic world. It gave, or seemed to give, the explanation of a certain number of facts. which, at the time when it originated, were receiving much attention from the public. Moreover, many writers accepted it fully; and it was not until our day that it found decided opponents. Attacked first in England by Prof. Jones, of Hailebury, it was afterward assailed by adversaries whose denials extended even to the principle to which Smith had given his adhesion.

-A very distinguished American economist, Mr. Carey, has denied that the natural fertility of the soil is among the causes productive of rent. In his view, rent has no other source than the expenses successively incurred in the interest of production. And among these expenses he includes, besides those of which the lands under cultivation have been the direct object, the construction of roads, canals, and any means of communication designed to facilitate transportation and to render the markets accessible to products which, if they could not have reached them, would not have been demanded of the soil. Mr. Carey, moreover, has endeavored to demonstrate that Ricardo was entirely wrong in regard to the order in which cultivation has taken place, and that it has not begun with the most fertile lands, but with those most easily cleared, or the nearest to centres of consumption. Taking Mr. Carey’s opinions in their plain signification, they consist in denying to the land itself any participation in the formation of rent, in attempting to prove that all this rent represents only the remuneration for advances made to render the soil amenable to culture; in a word, that rent is and can be only a simple creation of human industry.

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-Such is also the point of view from which rent was regarded by a man whose premature loss science can not too deeply deplore. M. Bastiat, dreading the consequences of any doctrine which seemed to authorize the admission that wealth could exist which was not exclusively the product of services or of human efforts, started with the same idea as Mr. Carey. According to him, rent is and can be only the interest on the capital invested in clearing the soil and preparing it for production. Only M. Bastiat recognizes that rent may occur without the proprietor having to make any sacrifice to reap the benefit of an unexpected increase: and this case he explains by remarking that there is nothing peculiar in landed property; that what creates the value of the services rendered by every employment of human industry, whatever agent it may use, is not alone the efforts made by the producer, but also the efforts spared to the consumer; and that the latter, whenever his wants increase, pays more for the service rendered him in saving him the more costly efforts he would have to make to provide for himself without such aid. It is much to be regretted that M. Bastiat did not have time to make a precise and well-arranged statement of his ideas before his death. It was in connection with the treatment of real estate that he announced them, in the clever book he published under the title of Economic Harmonies.

The special chapter that he proposed to devote to rent was scarcely outlined. and what has been preserved of it consists only of incomplete fragments, in which the author’s ideas are not clearly discernible.

-Such are the principal opinions to which the existence of rent has given rise. Their antagonism is very marked. While some attribute the formation of rent to the co-operative action of nature in agricultural labor, others, denying all influence to this action. consider rent only as the remuneration for the expenses and efforts by which mankind have succeeded in transforming the earth into an instrument of production. We will review the whole subject, and attempt to ascertain the truth amid the obscurities and complications which have hitherto hindered its successful investigation.

-Origin of Rent. There are, in the first place, two things which it seems to us impossible to contest. One is, that the earth is endowed with fertility; the other, that it is not equally so in all parts. It is a fact no less evident, that this fertility does not even need the co-operation of man in order to manifest itself. In the most uncultivated condition the land never fails to be covered with vegetable growths, some of which can supply food and support animals whose flesh may be eaten; and it is the land which, by insuring to the human race at the beginning harvests already produced, has permitted it to escape the destructive effects of famine. Of course, men had to be at the trouble of gathering the fruit, pulling up the roots, and catching the game and the fish on which they subsisted; but if such efforts had [572] alone the power of conferring value on the products which the earth of itself put within their reach, it is none the less true that where these products were more abundant or more easily obtainable, less effort was needed to appropriate them, to adapt them to use; in a word, to convert them into exchangeable wealth. Well, it is to this natural fertility of the earth, which has from the beginning put its inhabitants in the way of obtaining means of subsistence which were not wholly the fruit of their labor even, that rent owes its origin. Rent is the surplus realized over the expense of production, and wherever it was p
ossible to those who, in any way whatever, labored to gather the fruits of the earth, to amass more of them than their personal necessities required, there was a surplus to their advantage, which was rent, and rent very evidently due to the fertility of the portion of the soil on which their industry had been employed.

-The most savage tribes have nothing to learn in this regard. They contest with each other the occupation of places where the waters most abound in fish, or where the land furnishes the most game or fruit; and this is because they well know that as long as they keep exclusive possession of it, they will derive from a given amount of effort, time and fatigue, a quantity of the means of subsistence superior to what they would obtain on less favored portions of the soil; in a word, an actual excess over the expenses of production, which would be everywhere else less amply repaid.

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-We will say more. From the first, the earth must, in certain places, have conferred a rent on those who as yet knew only how to gather its spontaneous productions, as otherwise civilization could not have arisen and commenced to advance. While most of the savage tribes were exhausting themselves in efforts to find enough to prevent them from dying of starvation, others, more favored, obtained, without any more skill or effort, resources more than sufficient to supply their necessities; and the latter were not long in bettering their condition. Free to provide in advance for future consumption, it became possible for them to devote leisure to occupations other than the mere search for food. They could make weapons, the implements needed in fishing and hunting, and the means of deriving more profit from their labor; and in the end, they could amass the provisions or capital whose possession would enable them to undertake the breaking up and cultivating the land. We may safely assert, that, if Providence had not so disposed things that the earth offered in some places, to its earliest inhabitants, products which it did not take all their time and care to obtain, the savage manner of life would never have come to an end: men would to-day be still wandering naked and hungry, a prey to invincible poverty, distinguished in no respect from the animals called into existence at the same time with themselves.

-The invention of the art of agriculture did not alter the nature of the primordial fact. There had been, during previous periods, lands which had yielded to those who sought their products, more than they needed for subsistence: there were, under the new order of things, lands which yielded to those who cultivated them, more than was necessary to compensate them for their trouble and expense. Wherever, after deducting the amount of the advances they required, lands left a surplus, this surplus constituted a rent. Wherever, for example, two workmen succeeded in realizing, beyond the returns due to capital immobilized with a view to production, products in a quantity sufficient to provide for the consumption of three, the rent was equivalent to the part of the resources necessary for the subsistence of a man and to pay for his services; and this rent was the result of the fertility of the soil; for, at points less favored, the same amount of work would not have obtained a like surplus; and at certain points it would not, had it been employed, have even obtained enough to indemnify those who had made the expenditure.

-The reader will see, that, like Adam Smith, we attribute the origin of rent to the existence in the soil itself of forces or properties naturally productive. Thanks to the assistance these forces give men whenever they require it, their efforts obtain, besides the remuneration which is their due, an excess which may be so disposed of as to favor other kinds of consumption than that of agricultural laborers. Never has this aid been lacking to those who have sought it. It was this which, even before agriculture was commonly resorted to, supplied unfortunate savage tribes, in possession of good fishing and hunting districts, with means of subsistence sufficiently abundant for them not to be compelled to sacrifice all the time at their disposal in search for food: this it was, too, which, in ages more advanced, by permitting proprietors of cultivated land to harvest more products than they expended in production, gave them the power to remunerate labors other than those expended on the soil, and to call into existence manufacturing and commercial classes and give them a position of continually increasing importance in the ranks of the population.

-Before examining the systems which are not in harmony with this opinion, or which differ from it, there is one assertion in reference to which we must enter into some explanation; for if it were well founded, rent could be regarded as having no other original cause than the power of the earth co-operating with the labor devoted to obtaining its products. This assertion is, that there is no rent in countries where land is so abundant that every one is free to appropriate to himself such a portion as he likes without compensation, or for a trifle. Rossi and some other economists have freely admitted the fact, and M. Bastiat has found in it a point of support for his system. Let us see where the truth lies. It is certain, that, where land is abundant, its products have little sale value, because they have few consumers and lack a market; but does it follow, that, on the few portions where cultivation exists, those who employ [573] it do not find in the original properties of the soil an aid eminently profitable, and do not obtain crops out of proportion to their efforts for subsistence? Suppose a country where all the people cultivated land, and where they could not sell provisions to neighbors because the latter were as well provided for as themselves: the beneficent effects resulting from the co-operative action of the soil would still be felt. In such a country, no one would try to realize a surplus which could find no purchasers: every one would only demand of the soil the means of subsistence required for his own family: but, as little labor would be necessary to obtain this, the husbandman would enjoy long periods of leisure; and leisure is always, to those who know how to employ it, a source of wealth. The time not required in cultivating land, they would employ in making articles adapted to satisfy other demands than those of hunger. They would make clothing, furniture and dwellings; and these are products whose acquisition would be due to the co-operation of the land with their efforts. A relief from incessant labor, and leisure that can be employed in reproductive occupations, are what the earth gives those who cultivate it, whenever they do not know what to do with the surplus it yields. This is, in reality, rent, under a form sufficiently characterized.

-But, let us observe, things have never occurred altogether in this manner. Wherever cultivation of the soil has become established, it has never alone attracted all persons, and it has always found consumers who did not share in its labors. So far back as we can trace in history, we find no social aggregation without magistrates, priests, soldiers and artisans, all supported from the portion of the crops which the agricultural population could spare; and this portion was no other than the excess produced by the land. It has often been affirmed that rent long was, and still is, unknown in some parts of North America.

But lately, says M. Rossi, in speaking of the ideas of the physiocrates on the net product of the land, there was no rent or scarcely any rent in America, and yet there was a great abundance of all the necessaries of life, and the course of society was toward great prosperity and rapid development.

It is true that the conditions under which the colonization of North America has been effected, differ in all respects from those which governed the formation of social bodies in the old world; but the opinion o
f M. Rossi is, nevertheless, incorrect. One thing which does not exist in America, or exists there only in a very few localities, is the practice of hiring farms, and the reason for it is simply this: As land there costs very little, those who wish to till it, buy the ground on which they settle; and the acquisition counts but little in the list of expenses incurred in their industry; but there is in America a town population, who buy, either for consumption or export, the surplus which the local circumstances bring into market, and the agriculturists retain, by their right as proprietors, an actual rent. It is also true that nowhere in America does the surplus bear a definite relation to the expense of production; nowhere in that country does the agricultural class, after having recovered its advances, offer the other classes as much of the means of subsistence and remunerate as well their services; and it is just this which causes such an abundance and so many elements of life and prosperity in the Union. Some writers have thought that the surplus which American cultivators have to dispose of should not be considered as the result of the natural fertility of the soil, but simply a return for the capital invested in their operations. One need but examine the matter closely to see that it is quite otherwise. It is not because the general rate of profit is very high in America, that the land there brings in a good return to those who take advantage of its fertility: it is, on the contrary, because the land cultivated, which is still wholly choice land, returns much, that the rate of profits is high. Capital goes where it brings most. In America, as everywhere else, it is not invested in manufactures or commerce, except when it will yield as much as if employed in agriculture; and it is the amount of the net income from the soil which largely repays cultivation, that secures to all investments of savings, and to every employment of human activity, the ample remuneration they receive. Assuredly, if the vast territory of America were only composed of lands of a low degree of fertility, the expense necessarily incurred to obtain subsistence from them, would be more considerable, agricultural capital would produce less, and neither the general rate of profits nor that of wages would be maintained at the height they have now attained and are continuing to keep.

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-Europe does not lack countries where land is abundant, and has only a low sale value. It is incontestable that rent exists in these places; and as the facts which give it a distinguishing characteristic are of a nature to throw much light on the question, we will say a few words in regard to them. In Hungary, Russia, and many parts of the original Poland and the principalities of the Danube, the rural population, held in servitude, or but recently having ceased to be so held, are, in general, too poor and too ignorant to purchase the land and subject themselves to the risks and perils consequent upon settlement. What is the result? It is that the proprietors, like American agriculturists, cultivate and harvest on their own account. Ordinarily, they leave the laborers, as their wages, the use of a piece of land, which the latter cultivate for the support of their families, and for which they are bound to give two or three days’ labor per week to the rest of the estate. This arrangement clearly shows wherein consists the rent of the proprietor. It is the result of the employment, on his land, of the time which the laborers can spare from that which gives them their own subsistence. And let it be observed, that this time can be attributed by the laborers to nothing else than the natural fertility of the soil whose cultivation furnishes them their whole living. Whenever [574] the laborers devote to other fields than those which they are permitted to enjoy, two days’ work per week, the surplus over the general expenses of production, the rent is but little inferior to two-thirds of the total product.

-Now, there are, in these same countries, some places where reside either colonists of foreign origin, or peasants in full possession of the lands they cultivate, who often have more land than they can till. This is the case in America. Does any one think that rent does not exist in such places, as well as in the rest of the country? If so, he is greatly mistaken. The part which reverts to the proprietors, in cases where the laborers give their fields two days’ labor every week, the cultivators retain for themselves when they are absolute masters of the soil, and if they do not harvest it, it is because they find they can more profitably employ the time which they refrain from devoting to agriculture.

-In whatever way we look at the question, on whatever side we take hold of it, we must always end by recognizing that the earth gives rise to rent, and that, even where the conditions of society are such as to prevent all being derived from land which it might produce, there is a compensation for this in the leisure it affords that can be employed in other avocations.

-Let us come to the theory adopted by both Carey and Bastiat. They deny that the earth can add anything of its own to the results of labor. In their view, land is only an instrument, an agent, of production, which man employs, and not a single element can be found in rent which is not wholly the product of the expense incurred to render the land fertile. M. Bastiat thought, that to admit the co-operative action of the soil in the benefits connected with production, would be to recognize that wealth might exist which was not due to labor, and that the earth had the power to create such wealth. Let us look at this point. No one, surely, of any repute among economists, has maintained that anything which nature has prepared for the use of human beings, has value before having been the object of some kind of labor;69 but, positing this principle, is it the less true that the earth, if it does not furnish things which already have value, does afford those adapted to receive it, and that, whenever it furnishes these things in such abundance or so easily obtainable that the labor employed in communicating value70 to them costs less than it produces, there results an excess over the expense incurred, which is not found when the efforts of man are otherwise exerted? Here is the fundamental point of the discussion, the point of fact. To affirm that this surplus would not be realized without taking the trouble to obtain it, is to say little; for that is not contested. What should be proved is, that it would be possible without the co-operation of the earth, and that there are industries not agricultural or extractive which have also the power to produce rent.71 Now, this proof is wanting, and surely never will be given. As to the objection that it is demand, which, by assuring a value to the agricultural surplus, has alone the power to create it and to convert it into wealth, and that demand constitutes an action purely human, it has its response72 in what has just been said in reference to the assertion, that there is no rent in regions where the land, while waiting for a more complete private appropriation. has as yet little or no exchange value.

-It is in vain for one to seek to delude himself. The land alone returns more than is needed to pay wages, interest and profit on the capital required to cultivate it; and as there is no other way in which labor can be applied to obtain a like surplus, we must recognize in the existence of rent the result of a co-operative action exercised by the earth itself. It would be wrong that the fear of having to admit that there is a gift from God, new the exclusive share of a certain number of his creatures, should influence our opinions; for this gift is an evident fact; and besides, without it, it would have been utterly impossible for humanity to fulfill its destiny in this world; and, if this gift has not continued the common domain, it is because it has pleased its author that it should produce its beneficent effect only
on condition of becoming an object of private appropriation. All this it would be very easy to demonstrate, were this the place to do so.

-It remains for us to make a few observations on the particular points which characterize the theory called Ricardo’s. This theory fully admits the existence of productive properties in the soil, which belong to it; but it accords to it the power of creating rent only in virtue of the fact that these qualities are not equally distributed through it. This is taking one of the circumstances which concur in producing the differences in the price of rents for the cause which gives rise to them. The origin of rent, as we have said, is the power of the land to return to those who cultivate it more products than they need for their subsistence and the recovery of the amount of their advances; and wherever the lands are adapted to do that, any one who desires can obtain from them this excess that is to say, a rent. Nor is there any need, as Ricardo supposes, of a rise in prices in order for rent to begin; rent appears the moment when the [575] gathered crops leave a part disposable, and it is realized when those who harvest, finding consumers for that part, devote more time to their work than they would have to sacrifice if they limited their efforts to gathering only for themselves. Finally, it is a very simple matter to state how far Ricardo’s theory conforms to the reality. One has only to examine what would happen in a country where the lands were all of the same quality, all adopted to remunerate labor liberally, and all so situated as to enjoy the same advantages for the sale of their products. Well, in t

Author of this text: E. J. L.

Rent