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THE RICARDIAN RENT THEORY
IN EARLY AMERICAN ECONOMICS



BY THE SAME AUTHOR



INTRODUCTION TO ECONOMICS, 1919



THE RICARDIAN
RENT THEORY

IN EARLY
AMERICAN ECONOMICS



By

JOHN ROSCOE TURNER, PH.D.

Professor of Economics in New Tork University

With an Introduction by
FRANK ALBERT FETTER, Ph.D., LL.D.

Profesior of Economics in Princeton University




4793 4

THE NEW YORK uisTIVERSITY PRESS

J2 WAVERLY PLACE, NEW YORK CITY
I92I



Copyright 1921, by
Thb Niw Toek Univebbity Pebba



THE NEW YORK UNIVERSITY PRESS

COMMITTEE OF PUBLICATION

Abthtte Huntington Nason, Ph.D., Chairman
Director of the Press

Eaelb Bbownell Babcock, Ph.D.

Hakold Diceinson Sknioe, M.D., Sc.D., P.R.C.S.



KENNEBEC JOUKNAL PEESS. AUGUSTA, MAINE



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INTRODUCTION

BY

FRANK ALBERT FETTER

OF
PRINCETON UNIVERSITY



INTRODUCTION

THE writings of the early American economists
which are surveyed in this study have been
strangely neglected by the later generations
of American students. The article by Professor C. F.
f^ Dunbar, published in The North American Review in
r^ 1876, is the only previous American essay purporting to
"^^v treat the subject. But Dunbar's article consisted almost
entirely of a description of American conditions as
explaining what he declared to be the utter "sterility"
of American economic literature. The brief portion in
which he spoke of writers is hardly more than a cata-
logue of names and titles compiled from previous re-
«! views. Certainly in some cases, as Doctor Turner shows,
>^ and possibly in most, Dunbar was unacquainted with
the originals. Even if he had read the books, he, as
a representative of the classical school ^ (which he be-
lieved had arrived at ultimate truths within the limits
of its hypotheses), was not .qualified to render a just
estimate of the theories in question, however competent
he was in the field of money and banking.

Forty years have passed, and is it not indeed remark-
able that our generation of economic students, so thor-
oughly grounded otherwise in the world's literature of
economics, should know little or nothing of these, our
own, writers, and most of that little through Dunbar's
superficial and condemnatory article or through chance
and usually disparaging references in the writings of
English economists? That the American economists of

^ See his article in The Quarterly Journal of Economics, I, 1, 1886.



viii THE RICARDIAN RENT THEORY

the period preceding 1880 have been almost ignored in
Europe is not remarkable, but that they should have
been so forgotten and neglected by their own country-
men since economic studies have been so zealously fos-
tered in America, is indeed surprising.

If we speculate upon an explanation of this neglect,
two reasons suggest themselves. The first is the poor
estimate of the learning and equipment of the early
American economists in comparison with their English
contemporaries; the second is the dominance of the
Ricardian economics in America, especially after J. S.
Mill's work gave it a new appeal and a new vogue among
American readers. Perhaps these are but two aspects
of the same reason.

Doubtless the prevailing opinion is that, in the period
from 181 5 to 1870 (let us say), the development of eco-
nomics in England was in the hands of men of good
general and special education— trained economists, to use
the modern term — whereas, it is thought, American
writers of that time were ill-trained amateurs, publicists,
and pamphleteers. We forget that there were in Eng-
land at that time no "trained economists" whatever, such
as we now understand by that term applied to men who
prepare by long studies under competent teachers for
an academic life-career. British economists were self-
educated, having had the practical training, and retaining
many of the pecuniary interests as well as prejudices
of business men, as did Ricardo, Cobden, and Bright ;
or, having followed the life of a soldier, as Col. Torrens,
or of a lawyer and politician, as Lord Lauderdale; or
being occupied as government clerks as were James Mill
(a licensed preacher) and J. S. Mill (most peculiarly
trained by his father) ; and even when, by accident
rather than by design, one of them came to be a "pro-



INTRODUCTION ix

fessor," he had been educated as Malthus, Jones, and
Whately were, for the church, or as Nassau Senior,
Long^ield, McCulloch, and Cairnes, for the practice of
the law.

It must shake the preconceptions of many readers to
compare with these typical examples of the English
economists of that time, the American economists whose
education and experience are carefully described in the
following pages. These include graduates of nearly all
the leading universities or colleges of that time in Eng-
land and America — lawyers, business men, mathema-
ticians, natural scientists, philosophers, men of wide
travel and of varied experience in public and private
affairs, a large proportion of them being college teachers.
They would seem to have been quite as well — and as ill —
fitted as were their English contemporaries, either to
give a sound economic interpretation of their environ-
ment or to deal with abstract principles. But after J. S.
Mill had won for Ricardian economics its predominating
place in American thought, that system, with all its
unrecognized limitations of time, place, and logic, became
the standard of economic science with which any inde-
pendent thought upon our peculiar problems was meas-
ured and found wanting.

The time was not ripe for a re-examination of these
opinions until the new era of criticism dating from the
Seventies had slowly yielded some fruits in England and
America. Partly this criticism was of a historical nature
and tended to show the fallible, temporary, and local
character of the Ricardian economics. That too, was
seen to be of mortal nature like American economic
opinion, and not an eternal verity. An article in The
Fortnightly Review, October, 1880, by Cliffe Leslie, who
recognized something of "perspicuity," novelty, and dis-



X THE RICARDIAN RENT THEORY

tinctiveness, and some small measure of relative worth
in the American writings, was long the only result of
this impulse so far as it concerns the present subject.
The first American students who returned from Ger-
many imbued with historical teachings, made slight
beginnings at a re-examination of older doctrines ; but,
in most cases, their historical training was hardly more
than a veneer over the groundwork of their Ricardian
opinions earlier acquired at home. With all of its cul-
tivation of the historical sense and of the ideas of his-
torical relativity and continuity of doctrine, the first
generation of mature economists thus trained has mostly
been content to see these principles applied in explana-
tion of the origin of the rent doctrine in England, with-
out apparently permitting its faith in the logical com-
pleteness of that doctrine to suffer the least shock. Mean-
time, the earlier American material has lain almost un-
touched and unworked. It was with this need and oppor-
tunity in mind that, several years ago, I suggested the
subject of this study to the author.

Partly the newer criticism has been of an analytical
and logical character, applying new and more rigid tests
to old doctrines. It began with Jevons, Menger, and
Clark (in The Philosophy of Wealth, 1884), and has
been continued by many men in many lands. Probably
nowhere in the world has it had so wide and deep an
influence as here in America. In all the flowering of
opinions and publications in the field of theory, there
has been, to be sure, a tremendous waste of blossom ;
but the best fruitage is a small group of younger econo-
mists with better critical methods of study, with clearer
economic concepts as instruments of thought, with a
more consistent scheme of terminology, and with a spirit
of scholarship that is broader, less sectarian, and more



INTRODUCTION xi

detached from temporary interests when deaHng with
fundamental principles.

The present study is an outcome of this newer criti-
cism as applied to the earlier economic writings. It is
far from a full and perfect fruition, as the author recog-
nizes, but it contains promise of larger returns in the
future. The task undertaken was limited to one theme,
the rent doctrine and its necessary implications in the
theory of population and in the law of diminishing re-
turns. The author has pursued his task with diligence
and with affectionate interest through many libraries,
until he has made it peculiarly his own. Most of the
writers that he has studied had pronounced opinions on
the political issues of their day; but the reader will seek
in vain for any trace of partisanship in the following
pages. The study seems to have been made with an
eye single to the interpretation of the abstracter economic
doctrines of that period, and the author knows neither
.Greek nor Trojan as respects the practical interests and
influences that helped to shape these economic doctrines.
The author employs, however, as instruments of analy-
sis, certain concepts and terms found in the recent psy-
chological economics ; for, without a new point of view
and a new mode of attack, it would have been vain to
take up the study of these discarded materials. One
must have some thread in hand or be lost in the maze
of confused opinions.

The usual effect of the industrial environment upon
the economic theory of that period in America, appears
with striking clearness; even the exceptions, as pre-
sented by Doctor Turner, are instructive. Few of the
men whose opinions are reviewed had the slightest per-
sonal connection with one another ; and in few cases
were they even acquainted with one another's writings.



xii THE RICARDIAN RENT THEORY

Yet, with an approach to unanimity, they came to the
same conclusion on the population question, often, it is
true, by reasoning that is palpably erroneous. They
denied, with almost as close approach to unanimity, the
"orthodox" contrast between land and capital in the
sense of artificial agents (and again the exceptions are
suggestive). They conceived of capital in terms of
value in relation to investment, and of land as one of
the kinds of material agents in which capital was in-
vested. One after another, independently, various writ-
ers came to this view, usually supposed to have been
original with Carey and to have been confined to his
school. Many of them held to this idea persistently,
despite the influences of the English economic writings
which were almost their sole literary guidance. These
facts throw light, not less upon the relativity of the
English than of the American economic theory of that
era.

At the period at which this study stops, the English
classical system was reasserting its influence in America,
and, in the alluring form which J. S. Mill gave it, was
taking its dominating place in American collegiate in-
struction. There it continued for half a century — and
still in some measure continues — to exert its benumbing
effects upon American economic thought. Vigorous new
life-currents, however, began to stir with Francis A.
Walker's dissent from the wage fund, and with his
stimulating, though inconclusive, theory of profits. Then
in turn came vital impulses of one kind or another from
more recent authorities. A recent European critic, in
a review of this active intellectual movement — a review
most remarkable in its range and grasp of and insight
into the literature — plainly told his European readers
that America had become the new center of economic
theory. ^



INTRODUCTION xiii

Now the most notable impression left by Doctor
Turner's study, perhaps, is that of a certain likeness
between such of those earlier American opinions as
were not mere echoes of Ricardianism, and the more
recent American concepts and theories. True, it will
not do to press the comparison in all directions and
without limits (especially since, with changed conditions,
the population doctrine has taken on a new form differ-
ing from either of the older forms). But the likeness
appears clear in the recognition of the conflict between
individual and social interests (denial of the economic
harmonies), in the attitude toward the theory of value,
in the treatment of capital as an investment concept,
and in the rejection of the twofold classification of mate-
rial factors as land and artificial agents. Perhaps when
some Americans recently have fondly supposed that they
were discovering novel and original conceptions, they
were but beginning to regain a little of that independ-
ence of mind which once enabled the American econo-
mists in their theorizing to look past conventional ideas
and to catch, now and then, glimpses of the world of
reality about them.

It would, however, be a reproach to this generation
if, with a superior equipment, it did not attain to some-
thing more nearly ultimate in principles than did our
more or less empirical forebears. Progress is not to be
made by ignoring former opinions whether English or
American, but by more thoroughly appreciating the
truth and error in them when studying them with a new
critical spirit, by the aid of recent biology and psychol-
ogy, and in the light of the rich economic experience
of the hundred years between 1815 and 1915. Doctor
Turner's study fittingly appears after a century of the

*J. Schumpeter, in Jahrbuch fur Gesetzgehung, etc., 1910, 913.



xiv THE RICARDIAN RENT THEORY

Ricardian rent doctrine. As pioneer work in a part of
an almost untouched field, it will be helpful to every
economic student seriously striving to know "the God
of things as they are."

F. A. F.
Princeton University.



AUTHOR'S PREFACE

STUDENTS of the history of economic thought
have inexcusably neglected the early American
economists. This neglect was a subject of fre-
quent comment in the seminar of the professor under
whom I majored, Dr. Frank A. Fetter. He encouraged
me to make a study of their works, calling particular
attention to their attitude toward Ricardian rent. Fol-
lowing this suggestion, I read the life and works of
these economists. I found them worthy, but without
fame. I believed then, and now know, that no sys-
tematic study has been made of their contributions. It
is hoped that this essay, at least in part, may serve to
reveal their merit to public attention. Although I was
inadequately prepared for the task, this study was begun
and completed while I was a graduate student. It is
offered for publication precisely as when completed, now
eight years ago, with the exception that a tedious sixty-
page critique of Ricardo's rent doctrine for the most
part is omitted.

When the study was begun, I was fresh from a perusal
of the writings of the late General Francis A. Walker,
in which the reader was taught to believe that he who
differs from Ricardo's rent "simply does not know what
he is mouthing about." This faith was upset, however,
while reading the works of that keen witted philosopher,
economist, and statesman, George Tucker of Virginia.
The new faith received from Tucker caused me to do
battle against Ricardo, but my present judgment causes
me to eliminate the greater part of this critique ; for,
while interesting to the author, it would prove tiresome
for the reader.



xvi THE RICARDIAN RENT THEORY

The purpose of presenting Ricardo's views in the
beginning of the study is that they form a basis for the
controversial arguments presented by the economists we
shall study. To this end, a critical estimate of the essen-
tial features of the theory will reveal its elements of
strength and weakness, and will prepare the reader for
a more analytical study of its content. The logician
would doubtless know the theory first and hear the criti-
cism last : the pedagogue would find it both helpful and
interesting not to defer the criticism in order to open up
the question by setting forth the essential issues involved.

J. R. T.

New York University,
May, 192 1.



CONTENTS

Introduction by Frank Albert Fetter vii-xiv

Author's Preface xv-xvi

CHAPTER I

INTRODUCTION: CRITIQUE OF THE RICARDIAN.

RENT

English economics deduced from experience during war —
American economics different from English — Mal-adjustment of
productive factors — Ricardo's theory of value — Capital — Capital
used in two senses — Rent not a cost — Proportionality — Capital-
ization — The differential concept — Ricardo's statement of the
law of diminishing returns — Extension of the law of diminish-
ing returns — Ricardo's confused definition of rent — Rent a trans-
fer of value — Rent a monopoly return — Rent an addition to
national wealth — Relation of rent and tariff 3

CHAPTER II

THE EARLY NATIONAL ECONOMISTS: RAYMOND,
EVERETT, AND PHILLIPS

Raymond — Life — A national economist — Fundamental econom-
ic concepts— Theory of population and criticism of Malthus —
Rent obeys the law of supply and demand — Land is capital —
Teaches historical increasing returns.

Everett — Life — A national economist — Opponent of Malthus
— The "new idea" — Teaches historical increasing returns.

Phillips — Life — A national economist — Fundamental economic
concepts — Upholds Gray's theory of population — Criticism of
Ricardo's rent — Ricardo's one-cause method and Phillip's prac-
tical method contrasted — Rent — Teaches historical increasing
returns — Indebted to Dr. Franklin.

Other early national economists : Due, Vail, Potter, Opdyke,
Mathew Carey, Ware, Rae, and Colton 22

CHAPTER III

CLASSICAL ECONOMISTS: McVICKAR, COOPER,
NEWMAN, WAYLAND, AND VETHAKE

These writers were professors — Environment.
McVickar — Life and writing — Upheld McCulloch.



xviii THE RICARDIAN RENT THEORY

Cooper — Life and writings — Influence in the South — Answers
Everett and defends Mahhus — Rent a restatement of Ricardo.

Newman — Life and writings — Follows in the lead of Adam
Smith.

Wayland — Life and writings — Fundamental economic con-
cepts — The theory of population — Wage-fund doctrine — Upholds
Ricardian rent.

Vethakc — Life and writings — Wages — "Tendency" and theory
of population — Rent and the theory of diminishing returns.

Marcius Wilson 50

CHAPTER IV
JACOB NEWTON CARDOZO

Conflicting biographical references — An editor — Theory of
population — Criticism of Ricardian rent — Rent and historical in-
creasing returns 75

CHAPTER V

GEORGE TUCKER

Life and writings — An estimate of Ricardo — Fundamental eco-
nomic concepts — A statistical study of population — Density of
population and the rate of increase vary inversely — Ricardo's
theory of wages criticized — Slavery cannot exist in an advanced
stage of society — Land is capital — Profits — Tucker and Malthus
had similar ideas on rent — Summary of chief arguments — Criti-
cism of Ricardian rent — Rent and the theory of limited re-
turns 83

CHAPTER VI

HENRY CHARLES CAREY

Environment, career, and personal characteristics — Arguments
against Malthusianism — Relationship of wealth, utility, capital,
value, and cost of reproduction — Two arguments on rent : (a)
Land is capital; rents grow proportionately less; (b) The natural
order of cultivation — Three possible interpretations of Carey
on returns — An argument by the writer on interrelationships
in the problem of proportionality — Carey and Ricardo on returns
— Conclusion no

CHAPTER VII

FRANCIS BOWEN

Life and writings — A national economist — Assumptions —
Laisses faire — Fundamental economic concepts — Theory of pop-



CONTENTS xix

ulation and criticism of Malthus — Criticism of the Ricardian
theory of rent — Rent and historical increasing returns 143

CHAPTER VIII

JOHN BASCOM AND AMASA WALKER

Bascom — Life and writings — Theory of population — Rent —
The law of diminishing returns in agriculture and increasing
returns in manufactures.

Walker — Life — Political career — mercantile career — Objects to
Malthusianism — Land is capital — Four elements of rent: (a)
Location, (b) Difference in fertility, (c) Importations, (d)
Permanent improvements— Differences between Walker and
Ricardo on rent 159

CHAPTER IX

ARTHUR L. PERRY

Life and writings — An estimate of Perry — Fundamental eco-
nomic concepts — The theory of population — Land is capital —
Rent and the law of historical diminishing returns 179

CHAPTER X

RSiSUMe.

Wealth — Value — Capital — Population — Rent — Proportionality
191

BIBLIOGRAPHY

203



THE RICARDIAN RENT THEORY
IN EARLY AMERICAN ECONOMICS



CHAPTER I

INTRODUCTION: CRITIQUE OF RICARDIAN

RENT

A WELL-ROUNDED study of the attitude of
American economists toward the Ricardian the-
ory of rent would call for more than a review
of the expressions made by these economists; it would
call for a consideration of the environment which was
powerful in shaping their thought as well as for a deep
appreciation of the major problems confronting them.
Furthermore, the reader would profit little by studying
a criticism of Ricardo's teachings unless he knew what
it was that Ricardo taught. And he could not compre-
hend Ricardo's thought unless he knew the industrial
conditions in England during the first part of the nine-
teenth century, for indeed it was from these conditions
that his thought grew.

Fortunately, however, Edwin Cannan and others have
made familiar the circumstances which gave rise to the
Ricardian teachings on over-population, diminishing re-
turns, and differential land-rent. Then too, the differen-
tial theory of rent and the conclusions deduced there-
from have been repeated to the point of tiresomeness.
The language in which this theory was originally couched
is familiar to every economist ; but it is only the language
that is familiar, for there has never been agreement upon
the theory itself.

"The early nineteenth-century English economists de-
duced their doctrines, not from study of the works of



4 THE RICARDIAN RENT THEORY

their predecessors, but from the actual experience of
England during the war." ^ The history of this experi-
ence, as above indicated, has been told so frequently by
others that I shall not repeat it here. It was the nature
of this experience that gave the temper and tone to
the writings of the British economists. But, on this side
of the water, it was an entirely different type of experi-
ence that gave rise to an entirely different type of eco-
nomic thought. American writers regarded the Maltho-
Ricardian theory as an enemy of progress, and held it
in contempt as a doctrine that would hail a famine as a
deliverer and celebrate a pestilence as an occasion for
a thanksgiving. The outlook of American economists
was aggressive, versatile, and optimistic. No class was
over-rich, nor was any class miserably poor. Novel
conditions, both political and physical, were ours.
Charged with the mission of subduing a new world,
separated from the troubles of the old world by two
oceans, and possessed of a new form of government,
we had unique problems to face. If our development
of economic thought was less rapid than that of the
English, there is little wonder; for why should Ameri-
cans strive to develop a science for the correction of ills
that hardly existed? Industrial ills furnished the motive
for economic development in England: the insatiable
desire for the increased production of wealth furnished
the motive for economic development in the United
States. Following these motives, it was but natural that
reckonings on distribution should occupy a paramount
place in the writings of the English. Likewise we should
expect an economy of prosperity to be uppermost in
American thought.

* Caiman, Theories of Production and Distribution, 148.



CRITIQUE OF RICARDIAN RENT 5

Furthermore, our institutions of learning neglected
the development of this science. In our seminaries and
colleges, excessive importance was given to the classics
while little or no attention was given to the subject of
political economy. The study of constitutional law and
the interpretation of written instruments engaged the
attention of public men. In the early part of the period
we are to review, the currency and the tariff, and in
the latter part, the anti-slavery agitation, absorbed pub-