8.This case may be represented by diagrams.If the produce rises in real value in the ratio of OH' to OH (so that the amount required to remunerate the farmer for a dose of capital and labour has fallen from OH to OH'), the surplus produce rises only to AH'C', which is not very much greater than its old amount AHC, fig.12, representing the first case.The second case is represented in fig.13, where a similar change in the price of produce makes the new surplus produce AH'C' about three times as large as the old surplus, AHC; and the third in fig.14.The earliest doses of capital and labour applied to the land give so poor a return, that it would not be worth while to apply them unless it were intended to carry the cultivation further.But later doses give an increasing return which culminates at P, and afterwards diminishes.If the price to be got for produce is so low that an amount OH" is required to remunerate the cultivator for a dose of capital and labour, it will then be only just profitable to cultivate the land.For then cultivation will be carried as far as D"; there will be a deficit on the earlier doses represented by the area H"AE", and a surplus on the later doses represented by the area E" PC": and as these two are about equal, the cultivation of the land so far will only just pay its way.But if the price of produce rises till OH is sufficient to remunerate the cultivator for a dose of capital and labour, the deficit on the earlier doses will sink to HAE, and the surplus on the later doses will rise to EPC.the net surplus (the true rent in case the land is hired out) will be the excess of EPC over HAE.Should the price rise further till OH' is Sufficient to remunerate the cultivator for a dose of capital and labour, this net surplus will rise to the very large amount represented by the excess of E'PC' over H'AE'.
9.In such a case as this the earlier doses are pretty sure to be sunk in the land; and the actual rent paid, if the land is hired out, will then include profits on them in addition to the surplus produce or true rent thus shown.Provision can easily be made in the diagrams for the returns due to the landlord's capital.
10.Of course his return may diminish and then increase and then diminish again; and yet again increase when he is in a position to carry out some further extensive change, as was represented by fig.11.But more extreme instances, of the kind represented by fig.15, are not very rare.
11.If the price of produce is such that an amount of it OH(figs.12, 13, 14) is required to pay the cultivator for one dose of capital and labour, the cultivation will be carried as far as D.and the produce raised, AODC, will be greatest in fig.12, next greatest in fig.13, and least in fig.14.But if the demand for agricultural produce so rises that OH' is enough to repay the cultivator for a dose, the cultivation will be carried as far as D', and the produce raised will be AOD'C', which is greatest in fig.14, next in fig.13, and least in fig.12.The contrast would have been even stronger if we had considered the surplus produce which remains after deducting what is sufficient to repay the cultivator, and which becomes under some conditions the rent of the land.For this is AHC in figs.12 and 13 in the first case and AH'C' in the second; while in fig.14 it is in the first case the excess of AODCPA over ODCH, i.e.the excess of PEC over AHE;and in the second case the excess of PE'C' over AH'E'.
12.Rogers (Six Centuries of Work and Wages, p.73) calculates that rich meadow had about the same value, estimated in grain, five or six centuries ago as it has now; but that the value of arable land, similarly estimated, has increased about fivefold in the same time.This is partly due to the great importance of hay at a time when roots and other modern kinds of winter food for cattle were unknown.
13.Thus we may compare two pieces of land represented in figs.
16 and 17, with regard to which the law of diminishing return acts in a similar way, so that their produce curves have similar shapes, but the former has a higher fertility than the other for all degrees of intensity of cultivation.The value of the land may generally be represented by its surplus produce or rent, which is in each case represented by AHC when OH is required to repay a dose of capital and labour; and by AH'C' when the growth of numbers and wealth have made OH' sufficient.It is clear that AH'C' in fig.17 bears a more favourable comparison with AH'C' in fig.16 than does AHC in fig.17 with AHC in fig.16.In the same way, though not to the same extent, the total produce AOD'C' in fig.17 bears a more favourable comparison with AOD'C' in fig.
