HKB
MY DEAR SIR,
You, I think, agree with Mr. Torrens that a rise in the price of corn will be followed by a rise in the price of home commodities; but your theory requires that there should be no rise in the price of those commodities on which the wages of labour are expended, for, if they rose in the same proportion as corn, there could be no fall in the corn wages of labour. Is it not, however, very improbable that all manufactures should rise at home, and yet that those on which [the wages of] labour are expended should not rise? Is not the price of soap, candles, etc., though foreign commodities[102], necessarily affected by the rise in the price of those home goods which are given in exchange for them. Mr. Torrens' theory, however, on this part of the subject appears to me defective, as I think that the price of commodities will be very slightly affected either by a rise or fall in the price of corn. If so, every rise in the price of corn must affect profits on manufactures; and it is impossible that agricultural profits can materially deviate from them. I will, however, suppose that you and Mr. Torrens are correct, and that commodities do rise in price with every increased price of corn. The value of fixed capital as well as of circulating capital employed on the land will then rise also; and, although the money value of the produce should be increased on the old land, it will still bear the same proportion to the money value of the capital employed; and, as this produce will be divided in different proportions between the landlord and the farmer, the rate of profits of the latter will fall. For the purpose of examining the effects, let us suppose that all commodities rise, with the rise of the price of corn, excepting those only on which the wages of labour are expended, and that in consequence the corn wages of labour fall. Suppose the price of corn £4, and that on the old land the labour of eight men was necessary to raise eighty quarters of corn, that no rent was paid, and that each labourer had eight quarters annually for his wages, of which one half was expended on commodities. The gain of the farmer, when the price was £4, would be £64 or sixteen quarters, and, besides his fixed capital, horses, seed, etc., he would require the value of sixty-four quarters, or £256, to pay the annual wages of his labourers; consequently his profits would be in the proportion of £25 to £100 of wages, for 256:64::100:25. Now, suppose corn to rise to £4 10s., wages would vary only 10s. on four quarters, and consequently would rise to £34 annually per man, or £272 on the old land; but the eighty quarters of corn would sell for £360, leaving a produce of £88 to be divided between farmer and landlord; and 88 would be to 272 as 32 to 100.
But on the new land the labour of eight men and a half might be required to obtain eighty quarters or £360; the labour of eight-and-a-half men would cost, at £34 each, £289; consequently the profit would be £71, which is to the whole expense of £360 as £19·7 to £100.
£100 capital or expenses on the old land will yield £32 £100 capital or expenses on the new land " " £19·7. -------- Rent £[1]2·3.
It appears then that the profit on new land, which regulates the profit on all other land, would be 19·7 per cent. when the price of corn was £4 10s. It was 25 per cent. when the price was £4.