Rent Analysis in The Wealth of Nations

Rent is a payment made in exchange for temporarily using or occupying property that belongs to someone else. Rents make up part of the cost of all goods and the national revenue, alongside wages and profits. Smith argues that landlords’ economic interests are actually aligned with society’s because, the more a society’s division of labor advances, the more demand for land grows and the higher rents become.

Rent Quotes in The Wealth of Nations

The The Wealth of Nations quotes below are all either spoken by Rent or refer to Rent. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:

As the price or exchangeable value of every particular commodity, taken separately, resolves itself into some one or other, or all of those three parts [wages, profits, and rent]; so that of all the commodities which compose the whole annual produce of the labour of every country, taken complexly, must resolve itself into the same three parts, and be parcelled out among different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land. The whole of what is annually either collected or produced by the labour of every society, or, what comes to the same thing, the whole price of it, is in this manner originally distributed among some of its different members. Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value. All other revenue is ultimately derived from some one or other of these.

Page Number and Citation: 74

Explanation and Analysis:

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Rent, it is to be observed, therefore, enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price; high or low rent is the effect of it. It is because high or low wages and profit must be paid, in order to bring a particular commodity to market, that its price is high or low. But it is because its price is high or low, a great deal more, or very little more, or no more, than what is sufficient to pay those wages and profit, that it affords a high rent, or a low rent, or no rent at all.

Page Number and Citation: 200

Explanation and Analysis:

No equal capital puts into motion a greater quantity of productive labour than that of the farmer. Not only his labouring servants, but his labouring cattle, are productive labourers. In agriculture, too, Nature labours along with man; and though her labour costs no expense, its produce has its value, as well as that of the most expensive workmen. [...] The labourers and labouring cattle, therefore, employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, together with its owner’s profits, but of a much greater value. Over and above the capital of the farmer, and all its profits, they regularly occasion the reproduction of the rent of the landlord. This rent may be considered as the produce of those powers of Nature, the use of which the landlord lends to the farmer.

Related Characters: Farmers, Landlords

Page Number and Citation: 462–463

Explanation and Analysis:

Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign, which, by protecting the industry either of the whole people or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon; or to make to its owner so much more than compensation for the loss which he might sustain by this use of it. Nothing can be more reasonable, than that a fund, which owes its existence to the good government of the state, should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government.

Related Characters: Landlords

Page Number and Citation: 1068

Explanation and Analysis:

Rent Term Timeline in The Wealth of Nations

The timeline below shows where the term Rent appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.

Capital Accumulation and Investment Theme Icon

...and the rate of return. Later, once all land has become privatized, landlords start demanding rent for the use of natural materials that were once freely available. Thus, the price of... (full context)

A nation’s overall revenue also consists of these three categories: wages from labor, rent from land, and profit from stock (including interest, the profit from lending one’s stock to... (full context)

Each society’s average rate of wages, profit, and rent depends on its specific circumstances—including its overall wealth, amount of fertile land, degree of economic... (full context)

...the supply of a commodity exceeds effectual demand for it and its prices drop, then rent, wages, and/or profit must fall below their ordinary rates. Thus, landlords, workers, and/or investors will... (full context)

...prices fluctuate more than cloth prices from year to year. These price fluctuations don’t affect rents, but they do affect wages and profits, which go up in times of scarcity and... (full context)

Ultimately, the natural price is made up of wages, profit, and rent, which all vary depending on a society’s wealth and rate of economic growth. The next... (full context)

Once land is privately owned, landlords start demanding rent. Then, they start making profit from the difference between what they pay their farmworkers (as... (full context)

...For instance, in Europe, skilled tradespeople (“mechanics, artificers, and manufacturers”) must first go through an apprenticeship. During this time, someone else needs to pay for the worker’s subsistence, and everything they... (full context)

Fifth and finally, the odds of success in any given business affect its wages. Shoemaking apprentices are likely to become master shoemakers, while most law students do not become successful lawyers.... (full context)

...they would otherwise. Similarly, even though London has the most expensive land prices in Europe, rent for a furnished room is relatively cheap there because most London tradespeople rent entire multi-story... (full context)

Institutions and Good Governance Theme Icon

...competition by giving professional associations (also called corporations) exclusive privileges over particular trades and defining apprenticeship requirements. For instance, most English tradespeople are only allowed two apprentices, who must work for... (full context)

...rules are oppressive, because they infringe on people’s sacred right to their own labor. Further, apprenticeships don’t actually guarantee the quality of work, since most inadequate workmanship comes from fraud, not... (full context)

...they would learn faster and more cheaply. Masters would lose out on their revenue from apprentices, and competition would likely drive tradespeople’s wages and profits down, but the public would benefit... (full context)

...it’s easier for people to organize into corporations. This is why there are no farming apprentices, even though their profession is far more complex than most urban ones. (It requires adapting... (full context)

...drives wage and profit inequalities is by preventing labor and capital from moving freely across different places and employments. Apprenticeship prevents people from switching occupations and local corporation privileges prevent them... (full context)

Landlords typically try to charge the highest rent their tenants can afford, which is everything the land produces, minus the tenant’s cost of... (full context)

“Part I. Of the Produce of Land which always affords Rent.” There is always demand for food, and nearly all land produces enough food to cover... (full context)

...expensive than meat, but as people start to occupy and cultivate land, this flips. Land rents are tied to the land’s production potential, and cattle require vast amounts of it, so... (full context)

...enclosed pasture is particularly valuable because the harvest requires cattle. Still, in most situations, the rent and profit for grainland determines the rent and profit for pasture. (full context)

Planting different grasses and vegetables has made pasture more efficient and reduced meat prices in London, which... (full context)

...price is much higher than grainland or pasture, and most of this difference goes to rent. This applies to specialty French wineries because other soils cannot produce the same wines. It... (full context)

If land could produce a larger quantity of a different staple food, then its value (and rent) would rise. While rice produces much more food... (full context)

“Part II. Of the Produce of Land which sometimes does, and sometimes does not, afford Rent.” Besides food, humans’ primary needs are clothing and lodging, which both also require land. Unimproved... (full context)

...are abundant, they have no value. For instance, a stone quarry would command a high rent in London, but none in Wales and Scotland, where there is plenty of stone. Similarly,... (full context)

...other trades. Thus, the improvement in food cultivation techniques makes land valuable enough to yield rent, and then determines how fast those rents increase. (full context)

Other land uses cannot always yield a rent. For instance, some coal mines are too barren to be profitable, while others are too... (full context)

...of the wages and profit involved in mining it, with no part left over for rent. Since coal is much heavier by value than precious metals, the value of coal mines... (full context)

This global competition keeps rents very low for most mines. Data from silver mines in Peru and tin mines in... (full context)

Since precious metal and gem prices are global, the rent for any single mine depends on its relative fertility, compared to the world’s best mines.... (full context)

...in the Proportion between the respective Values of that Sort of Produce which always affords Rent, and of that which sometimes does and sometimes does not afford Rent.” As food grows... (full context)

...grain prices for market prices, when they were really conversion prices. Farmers used to pay rent “in kind,” by giving the landlord a portion of whatever they produced, but landlords could... (full context)

But gold is closer to its lowest possible price—wages plus profit, with no rent—because the Spanish king’s tax on gold is lower than his tax on silver, and these... (full context)

...that reduce wool and/or hide prices naturally raise meat prices, as farmers must cover their rent and profit for raising animals with the revenue from selling those products. But in unimproved... (full context)

“Conclusion of the Chapter.” As a society’s circumstances improve, rents rise and landlords grow more powerful. Land improvement raises the rent directly: the real value... (full context)

The value of a country’s annual produce gets divided into rent, wages, and profit, which respectively go to landlords, workers, and employers. These are “three great,... (full context)

...of any particular enterprise, the revenue of society as a whole is divided into wages, rent, and profit. Any estate’s gross rent (what the farmer pays) is more than its neat... (full context)

...it themselves have two choices: they can give loans with interest or buy land to rent out. They will choose whatever yields higher returns, but interest rates fall if too many... (full context)

...took hold, with farmers using their own capital stock to cultivate land and simply paying rent to the landlord. (full context)

...their manors and even let tenants live comfortably off the land while charging them minimal rent. In turn, these tenants become loyal to the barons and readily take up arms to... (full context)

...surplus they could trade for manufactured goods, landlords dismissed most of their tenants and raised rents. But they offered the remaining tenants long-term leases, which led those tenants to improve the... (full context)

By increasing merchants’ profits, the exclusive trade also reduces wages, discourages land improvement, reduces land rents, and raises interest rates in Europe. In short, it benefits merchants but harms everyone else... (full context)

...so they should want to expand the population and productivity in order to increase the rents they can charge, their share of the annual produce, and demand for their goods. Yet... (full context)

...and farmers in planting and cultivating it, so the cost of these investments—plus the land rent and an ordinary rate of profit—should be exempt from taxation. (full context)

...a landed nobility across Europe. It served the Pope like a “spiritual army” and collected rent in the form of tithes, which made it wealthy. It spent its surplus supporting the... (full context)

Land is comparatively secure, and so most advanced countries fund the sovereign primarily through land rents. In ancient Greece, ancient Rome, and feudal Europe, large, landed estates could cover the sovereign’s... (full context)

...In most cases, the sovereign’s general revenue must come primarily from taxes. It can tax rents, profits, wages, or all three. Four key principles apply to all four kinds of taxes.... (full context)

“Article I. Taxes upon Rent. Taxes upon the Rent of Land.” Land can be taxed at a constant value, or... (full context)

French economists argue that the fairest tax is one proportional to the land rent. For instance, Venice taxes all land at 10% of its rent (or 8% for farmers... (full context)

Proportional land taxes can adapt to changes in land improvement, the economy, and silver prices. Different countries have administered them in diverse ways. Prussia, Silesia, and Bohemia actually conducted land surveys... (full context)

“Taxes which are proportioned, not to the Rent, but to the Produce of Land.” Proportional taxes payable in rude produce, like the church’s... (full context)

“Taxes upon the Rent of Houses.” House rent has two parts. Building rent pays for the cost of the... (full context)

Unlike land, houses are not productive, so people have to pay taxes on house rent from their other income sources. High house rent taxes would also encourage people to spend... (full context)

England applies its land rent tax to houses, too, but its valuations are very unfair. Holland taxes houses based on... (full context)

Taxing interest may seem advantageous, because interest is like ground rent: it is a market price which taxation will not change. (Rather, taxes effectively deduct a... (full context)

...reasonably under-cultivate their lands or pass costs onto consumers, so this tax just reduces land rents, passing the cost on to landlords. However, since the tax is based on the capital... (full context)

...of higher prices, while farmers pass them on to landlords in the form of lower rents. In manufacturing, such taxes deter hiring, harm industry, and reduce the nation’s annual produce. Yet... (full context)

“Article IV. Taxes which, it is intended, should fall indifferently upon every different Species of Revenue.” People must pay capitation taxes (yearly taxes assessed on... (full context)

...children, which reduces the supply of labor. By increasing wages, taxes on necessities also cause rents to fall and the price of manufactured goods to rise. In this way, they hurt... (full context)

...(They also earn much of the nation’s total profits and even some of its land rents.) But they should only be taxed for their luxury expenses, and never for their necessities. (full context)

...increase demand for malt and help maltsters in the long term. It certainly won’t lower rents and profits for barley land. Even if barley rents and profits fell, farmers would start... (full context)

Britain’s tax system has four parts: “the land-tax, the stamp-duties, and the different duties of customs and excise.” Landowners in Ireland, America, and the West Indies can certainly... (full context)

...import from it, but most of their landlords live in England and simply receive their rents in sugar and rum. The northern colonies’ gold and silver payments have been the most... (full context)

The Wealth of Nations

Adam Smith

Rent Term Analysis

Rent Quotes in The Wealth of Nations

Rent Term Timeline in The Wealth of Nations