LAND AND OTHER AGENTS OF PRODUCTION 181 



the North. In fact, it is probable that there are enough varieties 

 of tree crops now in existence and fairly well proved to make the 

 rocky Massachusetts tree farm yield income to match the $150 per 

 acre land of the Illinois or Kansas farm. 



E. The Law of Diminishing Returns from Land 



51. THE CLASSIC STATEMENT OF DIMINISHING RETURNS 1 

 BY DAVID RICARDO 



If all land had the same properties, if it were unlimited in quan- 

 tity and uniform in quality, no charge could be made for its use 

 unless where it possessed peculiar advantages of situation. It is only, 

 then, because land is not unlimited in quantity and uniform in quality, 

 and because in the progress of population land of an inferior quality, 

 or less advantageously situated, is called into cultivation, that rent is 

 ever paid for the use of the original and indestructible powers of the 

 soil. With every step in the progress of society which shall oblige 

 a country to have recourse to land of a worse quality (second or third 

 degrees of fertility) to enable it to raise its supply of food, rent on 

 all the more fertile land will rise. 



It often, and, indeed, commonly, happens that before No. 2, 3, 4, 

 or 5, or the inferior lands are cultivated, capital can be employed more 

 productively on those lands which are already in cultivation. It may 

 perhaps be found that by doubling the original capital employed on 

 No. i, though the product will not be doubled, will not be increased by 

 100 quarters, it may be increased by 85 quarters, and that this 

 quantity exceeds what could be obtained by employing the same 

 capital on land No. 3. 



If, then, good land existed in a quantity much more abundant than 

 the production of food for an increasing population required, or if 

 capital could be indefinitely employed without a diminished return 

 on the old land, there could be no rise of rent; for rent invariably 

 proceeds from the employment of an additional quantity of labor with 

 a proportionally less return. The most fertile, and most favorably 

 situated, land will be first cultivated, and the exchangeable value of 

 its produce will be adjusted in the same manner as the exchangeable 

 value of all other commodities, by the total quantity of labor necessary 

 in various forms from first to last to produce it and bring it to 



1 Adapted from Principles of Political Economy and Taxation (Bohn edi- 

 tion), pp. 44-49. 



