PROGRESS AND POVERTY. 729 



too many hands to enable the owners to get whatever share of the 

 produce they please. Competition determines the rate at which dif- 

 ferent lands will rent. The law, which in a condition of free competi- 

 tion determines this share of the landholder, is known as the law of 

 rent. Though not first stated, it was first prominently brought for- 

 ward by Ricardo. As formulated by him, it has been accepted by 

 every economist of position since his time, and is one of the few doc- 

 trines of current economics that in the conflict of opinion have re- 

 mained unshaken. Mr. George regards it as axiomatic, the terms 

 having only to be correctly apprehended in order to meet with accept- 

 ance. This law is that the rent of land is determined by the excess 

 of produce over that amount which the same application of labor and 

 capital will obtain from the least productive land in use. The returns 

 to capital and labor do not depend solely upon the amount and effec- 

 tiveness of each, but they also depend upon the productiveness of the 

 land upon which they are applied. When lands of different degrees 

 of productiveness are open to them, they will apply themselves to the 

 most productive, and their return will be the entire produce resulting. 

 As land less and less productive remains open to them, the amount 

 that they can produce on it decreases. Hence, on account of the com- 

 petition for the more productive lands, land-owners are able to appro- 

 priate to themselves all of the produce obtained above that which the 

 same labor and capital can obtain from the least productive land in 

 use — the most productive free to them. The law, of course, applies 

 to all lands used for any purpose whatever, though in the current 

 statement of it too exclusive attention is generally paid to its relation 

 to agriculture. 



The relations of the shares of the three factors in production may be 

 shown more clearly in the form of an equation : Produce = rent + wages 

 + interest, or produce — rent = wages + interest. How rent affects in- 

 dustry is now evident. The laws of both interest and wages appear as 

 corollaries of this law of rent. For this law states that, no matter what 

 the productive power of labor and capital, these two agents can only 

 receive in wages and interest that part of the produce that they could 

 have obtained on land free to them. The reward of labor and capital 

 does not depend upon what they have produced, but upon what is left 

 after rent is taken out. " The moment," says Mr. George, " this sim- 

 ple relation is recognized, a flood of light streams in upon what was 

 before inexplicable, and seemingly discordant facts range themselves 

 under an obvious law. The increase of rent which goes on in pro- 

 gressive countries is at once seen to be the key which explains why 

 wages and interest fail to increase with increase of productive power. 

 . . . When production increases, as it is increasing in all progressive 

 countries, wages and interest will be affected, not by the increase, but 

 by the manner in which rent is affected. If the value of land increases 

 proportionally, all the increased production will be swallowed up by 



