628 Proceedings of the Royal Society 
not immediately terminable. These two conditions will for the 
first few years after the imposition of any new tax cause it to fall 
on the party from whom it is nominally levied. 
Precisely as a tax on trade not only falls on the traders, hut 
injures capitalists and labourers, a tax on house rents injures the 
capitalists who build houses and the labourers they employ— not 
that the capitalist pays the tax, hut he is prevented from finding a 
useful investment for his money owing to the diminution in the 
number or quality of houses required. 
Taxes on Land. 
The question of the incidence of taxes on land is peculiarly in- 
teresting. Land differs from all other commodities, inasmuch as 
the quantity of it does not depend on the will of any producer. 
The number of houses in a flourishing community does depend on 
the will of speculative builders; but land can only be increased in 
quantity by such processes as enclosing commons, or breaking up 
private pleasure grounds. We will neglect these small disturbing 
influences, and assume that all the land in a country is available for 
cultivation, where such cultivation is profitable; and that the absence 
of profit is the only reason for neglecting to cultivate any portion of it. 
It is well known that the rent of each acre of land is simply the 
excess of annual value of that acre over the annual value of the 
poorest land which tenants think it worth while to cultivate. We 
may classify all land according to the total return which it will 
yield per acre upon capital invested in its cultivation ; and we may 
draw a supply curve of land such that the ordinates will be the total 
quantities of land which will return each successive percentage on 
the capital required to cultivate it. The supply diminishes as the 
rate of percentage increases, that is to say, there is less land which 
will return ten per cent, on the capital than will return five per 
cent., and still less land which will return twenty or thirty per cent. 
If, therefore, tenants as a body, considered as capitalists, will not 
cultivate any land which does not yield twenty per cent., there will 
be far less land in the market than if they will be just satisfied with 
ten per cent. 
Again, all tenants are not of one mind, and we may construct a 
demand curve in which the ordinates are the total quantities of 
