Such crises have occurred in Germany and North America during thelast fifty years more than once, and in this manner a largeproportion of the German nobility find themselves no longer inpossession of property or landed estate, without having clearlyperceived that they really owe this fate to the policy adopted bytheir brothers in England, the Tories whom they regard as so welldisposed.The condition of the agriculturist and landed proprietoris, however, totally different in countries where manufacturesflourish vigorously.There, while the productive capabilities ofthe land and the prices of produce are increased, he not merelygains the amount by which the value of his production exceeds thevalue of his consumption; he gains, as landed proprietor, not onlyan increase of annual rent, but the amount of capital representedby the increase of rent.His property doubles and trebles itself invalue, not because he works more, improves his fields more, orsaves more, but because the value of his property has beenincreased in consequence of the establishment of manufactures.Thiseffect affords to him means and inducement for greater mental andbodily exertions, for improvement of his land, for the increase ofhis live stock, and for greater economy, notwithstanding increasedconsumption.With the increase in the value of his land his creditis raised, and with it the capability of procuring the materialcapital required for his improvements.
Adam Smith passes over these conditions of the exchangeablevalue of land in silence.J.B.Say, on the contrary, believes thatthe exchangeable value of land is of little importance, inasmuchas, whether its value be high or low, it always serves equally wellfor production.It is sad to read from an author whom his Germantranslators regard as a universal national authority, suchfundamentally wrong views about a matter which affects so deeplythe prosperity of nations.We, on the contrary, believe itessential to maintain that there is no surer test of nationalprosperity than the rising and falling of the value of the land,and that fluctuations and crises in that are to be classed amongthe most ruinous of all plagues that can befall a country.
Into this erroneous view the school has also been led by itspredilection for the theory of free trade (as it desires the latterterm to be understood).For nowhere are fluctuations and crises inthe value and price of land greater than in those purelyagricultural nations which are in unrestricted commercialintercourse with rich and powerful manufacturing and commercialnations.
Foreign commerce also, it is true, acts on the increase of rentand the value of land, but it does so incomparably less decidedly,uniformly, and permanently, than the establishment of homemanufactures, the continuous regular increase of manufacturingproduction, and the exchange of home manufacturing products forhome agricultural products.
So long as the agricultural nation still possesses a largequantity of uncultivated or badly cultivated land, so long as itproduces staple articles which are readily taken by the richermanufacturing nation in exchange for manufactured goods, so long asthese articles are easy of transport, so long also as the demandfor them is lasting and capable of annual increase at a ratecorresponding with the growth of the productive powers of theagricultural nation, and so long as it is not interrupted by warsor foreign tariff regulations, under such circumstances foreigncommerce has a powerful effect on the increase of rents and on theexchangeable value of land.But as soon as any one of theseconditions fails or ceases to operate, foreign commerce may becomethe cause of national stagnation, nay frequently of considerableand long-continued retrogression.
The fickleness of foreign demand has the most baneful effect ofall in this respect, if in consequence of wars, failure of crops,diminution of importation from other parts, or owing to any othercircumstances and occurrences, the manufacturing nation requireslarger quantities especially of the necessaries of life or rawmaterials, or of the special staple articles referred to, and thenif this demand again to a great extent ceases, in consequence ofthe restoration of peace, of rich harvests, of larger importationfrom other countries, or in consequence of political measures.Ifthe demand lasts merely for a short time, some benefit may resultfrom it to the agricultural nation; but if it last for years or aseries of years then all the circumstances of the agriculturalnation, the scale of expenditure of all private establishments,will have become regulated by it.The producer becomes accustomedto a certain scale of consumption; and certain enjoyments, whichunder other circumstances he would have regarded as luxuries,become necessaries to him.Relying on the increased yield and valueof his landed property, he undertakes improvements in cultivation,in buildings, and makes purchases which otherwise he would neverhave done.Purchases and sales, contracts of letting land, loans,are concluded according to the scale of increased rents and values.
