Adam Smith's Simplified Wealth of Nations, Book 1, Chapter 11b: Rent -- Crops: The produce that always affords rent
Chapter 11b, Part 1: Rent -- Crops
37 An undoubted maxim in ancient agriculture and in all the modern wine countries was that the perfected vineyard was the most valuable part of the farm.
Columella says that the ancient Italian husbandmen disputed whether it was advantageous to plant new vineyards.
Like a true lover of cultivation, Columella sided with planting new vineyards.
He presents it as a very profitable improvement by comparing its costs and profits.
Such comparisons between costs and profits in new projects are commonly very fallacious, especially in agriculture.
Had new vineyards been really profitable, there could have been no such dispute.
Even today, the profitability of vineyards is still controversial in the wine countries.
Their agricultural writers favour the vineyard.
In France, their opinions are supported by the proprietors of old vineyards who want to prevent the plantation of new vineyards.
To those proprietors, this profitability is made possible only by the laws which restrain the free cultivation of the vine.
In 1731, they obtained an order of council:
prohibiting new vineyards
renewing old ones with certain conditions
Its pretence was:
the scarcity of corn and pasture
the super-abundance of wine
But if this super-abundance were real, it would have discouraged new vineyards.
Because it would reduce wine profits lower than the profits of corn and pasture.
In France, wine is always more carefully cultivated than corn, especially in the wine provinces of Burgundy, Guienne, and the Upper Languedoc.
The many workers employed in wine cultivation encourage the workers in corn cultivation by affording a ready market for corn.
To reduce wine to encourage corn is most unpromising as discouraging manufactures to promote agriculture.
38When the rent and profit of the produce, which need more expensive improvement and cultivation, only compensate their added expence, they are in reality regulated by the rent and profit of corn and grass.39 Sometimes, the land for a certain produce is too small to supply the effective demand.
The whole produce can be sold only to those willing to pay more than the natural price.
The natural price is the price paid for the same produce in most other cultivated lands.
In this case only, the surplus of the price, after deducting the costs, bears no regular proportion to the like surplus in corn or pasture.
The surplus price of such produce may exceed the surplus price of corn or pasture in any degree.
Most of this excess naturally goes to the landlord's rent.
40 The natural proportion between the rent and profit of wine and those of corn and pasture happens only with common wine vineyards which can be grown on any soil.
Only the common land of the country can compete with common vineyards.
41 The vine is more affected by the difference of soils than any other fruit tree.
It derives a flavour from the soil which no culture or management can equal.
This flavour is sometimes limited to a few vineyards.
The production of such wines falls short of the effective demand, raising its price.
Its price varies according to the wine's fashionableness and scarcity.
Most of its price goes to rent.
The high price of wine in those carefully cultivated vineyards is the cause of this careful cultivation.
Wine is so valuable that it forces the most careful attention.
A small part of this high price is sufficient to pay:
the wages of its extraordinary labour
the profits of its extraordinary stock
42 The sugar colonies in the West Indies may be compared to those precious vineyards.
What is there called the quintal weighs from 150 to 200 Paris pounds, or a hundred and seventy-five Paris pounds at a medium, which reduces the price of the hundred weight English to about eight shillings sterling, not a fourth part of what is commonly paid for the brown or muskavada sugars imported from our colonies, and not a sixth part of what is paid for the finest white sugar.
Their produce falls short of the effective demand of Europe, raising their prices.
Mr. Poivre was a very careful observer of the agriculture of South Vietnam.
He says that in South Vietnam, the finest white sugar commonly sells for 3 piasters the quintal or 162 pence.
A 'quintal' there weighs an average of 175 Paris pounds.
The quintal reduces the price of the English hundred weight to around 96 pence.
96 pence is not:
1/4 of the price commonly paid for the brown or muscovado sugars imported from our colonies
1/6 of the price for the finest white sugar.
Most of the cultivated lands in South Vietnam produce corn and rice, the food of the people there.
The prices of corn, rice, and sugar, are there probably in the natural proportion.
Their prices compensate the landlord and farmer according to the original expence of improvement and annual cultivation.
But in our sugar colonies, sugar prices bear no proportion to the produce of rice or corn fields in Europe or America.
A sugar planter expects that the rum and molasses to defray his cultivation costs.
His sugar should be all clear profit.
If this is true, then a corn farmer should defray his expences with the chaff and straw.
The grain should be all clear profit.
London merchants frequently buy waste lands in our sugar colonies.
They expect to cultivate them with profit through agents despite:
the great distance, and
the uncertain returns from the defective justice in those countries.
Nobody will attempt to cultivate the most fertile lands of Scotland, Ireland, or North American provinces though there might be more regular returns from their better justice system.
43 In Virginia and Maryland, tobacco cultivation is preferred as more profitable than corn.
Tobacco is discouraged in Europe because it is taxed heavily.
Tax collection on tobacco plantations is more difficult than taxing it on its importation at the custom-house.
Tobacco cultivation has been absurdly banned in most of Europe.
It gives a monopoly to tobacco countries, specifically Virginia and Maryland which produce most of it.
However, tobacco cultivation seems not to be so advantageous as sugar cultivation.
No tobacco plantation or colony sends us wealthy planters as we see frequently arriving from our sugar islands.
European sugar supply appears less than the tobacco supply despite the preference to tobacco cultivation over corn.
The natural price of tobacco is still less than the natural price of sugar, all relative to the natural price of corn.
Our tobacco planters, accordingly, feared the super-abundance of tobacco in the same way the proprietors of old French vineyards fear the super-abundance of wine.
By act of assembly, they have restrained its cultivation to 6,000 plants yielding 1,000 weight of tobacco, for every negro between 16 and 60 years old.
Such a negro can manage four acres of Indian corn.
To prevent the market from being overstocked, Dr. Douglas (I suspect he has been ill informed) says they burnt a quantity of tobacco for every negro, in the same way the Dutch burnt their spices.
If such violent methods are needed to keep up tobacco prices, its superiority over corn will probably not remain long.
44In this way, the rent of the cultivated lands for human food regulates the rent of most other cultivated lands.
No produce can long afford less because the land would immediately be turned to another use.
If any produce affords more, it is because the land is too small to supply the effective demand.
45 In Europe, corn serves immediately as human food and is the principal produce.
Except in particular situations, the corn rent regulates all other cultivated lands in Europe.
Britain does not need to envy the French vineyards or Italian olive plantations.
Except in particular situations, their value is regulated by corn.
British corn fertility is not much inferior than France or Italy.
46 The rent of common land would be higher if the production of the favourite vegetable food of the people were more than corn.
This greater surplus could always:
maintain more labour
enable the landlord to buy more of it, increasing the real value of his rent.
47 A rice field produces more food than the most fertile corn field.
Two crops in the year from 30-60 bushels each, are the ordinary produce of an acre.
Rice cultivation needs more labour than corn.
But rice produces more surplus after maintaining all that labour.
In those rice countries, more of this surplus should belong to the landlord than in corn countries.
the planters are both farmers and landlords
the rent is confounded with profit
Rice cultivation is more profitable than corn in Carolina even though:
their fields produce only one crop per year
rice is not the people's common and favourite food
48 A good rice field is a bog at all seasons.
In one season, it is covered with water.
It is unfit for corn, pasture, vineyard, or any other vegetable produce.
The lands which are fit for corn, pasture, vineyard are not fit for rice.
Even in the rice countries, rice rent cannot regulate the rent of other cultivated lands which can never be turned to that produce.
49 The amount of food produced by potato fields is:
not inferior to the amount produced by rice fields
much superior to what is produced by wheat fields
12,000 weight of potatoes from an acre is not a greater produce than 2,000 weight of wheat.
The food drawn from potatoes and wheat is proportional to their weight because of the water content of potatoes.
If half of a potato's weight is water, an acre of potatoes will still produce 6,000 weight of food, three times that of an acre of wheat.
An acre of potatoes is cultivated more cheaply than an acre of wheat.
The fallow which precedes wheat sowing is more costly than the hoeing given to potatoes.
The same quantity of cultivated land would maintain more people if potatoes:
become a common and favourite food of the people in any part of Europe
occupy so many lands
The landlord and the labourers, fed with potatoes, will have more surplus.
The population would increase.
Rents would rise much beyond what they are at present.
50 The land fit for potatoes is fit for other vegetables.
If potatoes occupied the present corn lands, they would likewise regulate the rent of most other cultivated lands.
51 In some parts of Lancashire and Scotland, it is pretended that oatmeal bread is heartier for labouring people than wheaten bread.
I doubt it.
The common people in Scotland who eat oatmeal are not as strong, handsome, nor work nor look so well as those of England who eat wheaten bread.
Oatmeal is not so suitable to the human constitution as wheat bread because there is no difference between richer people who eat wheat bread in both countries.
But potatoes are different.
The chairmen, porters, prostitutes and coal-heavers in London are the strongest men and the most beautiful women in Britain.
They come from the poorest people in Ireland who eat potatoes.
This proves the nourishing quality of potatoes.
52 It is difficult to preserve potatoes through the year.
It is impossible to store potatoes like corn for two years.
The fear of not being able to sell them before they rot discourages their cultivation unlike bread which is the principal vegetable food of all.