exactly the reverse—and that wheat was expensive for other
reasons entirely. The price of wheat was high, he said, both
because there was a shortage, caused by the Napoleonic Wars,
and because England had tariffs (import taxes) applying to the
importation of foreign-grown wheat. Because wheat was
profitable to produce at high prices, there was keen
competition among farmers to obtain land on which to grow
wheat. This competition in turn forced up the rental price of
wheat land. Ricardo advocated removing the existing tariff on
wheat so that plentiful imported wheat could come into the
country. The increase in imports would lower the price of wheat
and this would, in turn, reduce the rent on land.
The essentials of Ricardo’s argument were these: The supply of
land was fixed. Land was regarded as having only one use, the
growing of wheat. Nothing had to be paid to prevent land from
transferring to a different use because it had no other use. No
landowner would leave land idle as long as some return could
be obtained by renting it out. Therefore, all the payment to land
—that is, rent in the ordinary sense of the word—was a surplus
over and above what was necessary to keep it in its present
use.
Given a fixed supply of land, the price of land depended on the
demand for land, which depended in turn on the price of wheat.
Rent, the term for the payment for the use of land, thus
became the term for a surplus payment to a factor over and