HICARDO'S THEOEY OF EENT.
65
make this elear. Let farming jsrofits he 10 per cent.,
and the rate at which any surplus capital could he
invested 4 per cent. In this case it would be better
to employ ali the capital on the land at 10 per cent.,
than half at 12 per cent, on the land and half at 4
per cent, in investments. In the former case the re-
turn on £10,000 would be £1000, and in the latter
only £800. But suppose now that the owner lets
the land. If the farmer is allowed to employ only
£5000 of capital, and the return is 12 per "cent., he
will be able to pay £100 rent, since he only expects
10 per cent, on his capital, whereas if he employed
the additional £5000, and secured just the ordinary
rate of profit on the whole, viz. 10 per cent., he would
be able to pay no rent. It follows, then, that accord-
ing to the Bicardian theory of rent the landlord
must place a check on the application of the
farmer's capital if the latter is to receive the ordi-
nary rate of profit and the former a maximum rent.
To the landlord the amount of the gross produce
is a matter of indifference, except so far as it bears
on the net surplus ; when once the point of maxi-
mum rent is determined, any further application of
capital is resisted ; but the tenant is interested in
the gross produce and not in the net surplus ; so
long as he obtains the average rate of farming profits
it is perfectly indifferent to him whether his rent is
large or small.
The case just examined shows that the assertion
e