land remains relatively limited, the marginal land, in common with all other land, will be able to secure an additional surplus, due to scarcity. This last surplus is enjoyed by the marginal producer in common with every other member of the group, and enters into the determination of the price of the commodity produced by the group.

Let us now return to the above quoted passage from Mill. In this it is clear that Mill approached this question from the standpoint of the Ricardian theory-value is determined by cost. He therefore regarded scarcity value, and hence the surplus due to scarcity as of rare occurrence. Professor Patten, on the other hand, urges that Ricardo himself had made serious breaches in this theory of value. "He was compelled to make so many exceptions to it that its utility in explaining the relation of value to cost was much reduced.

In fact, when money, the products of land and of international trade are excluded from the operation of the general law of value, in a modern nation there does not remain much of the general law to follow. Scarcity has become almost as important and universal an element in value as has the quantity of labor." *

But whether we agree with Mill or with Patten, it still remains true that both forms of surplus may and do arise. Again, since the "surplus due to scarcity" enters into the determination of price, it stands in direct antithesis to the older form of surplus, which does not determine, but is determined by price. Hence, confusion will result, if, without any further attempt to distinguish between them, we continue to speak of both forms of surplus as "rent."

These two forms of surplus might be called, as they sometimes are, the "differential" and "marginal surplus;" or the first might be called the "individual " and the second the "group surplus;" or we might call the first a "pricedetermined" and the second a "price-determining surplus."

"The Theory of Dynamic Economics," page 30.

The question now arises: Which of these terms brings out in the clearest manner the essential economic difference between these two forms of surplus? We can only answer, that since the first inception of the doctrine of rent, the "price-determined" element of the concept has been recognized as the fundamental condition of "rent." Hence, though the last pair of terms are cumbersome, we will have recourse to them throughout the present discussion, because they keep before the mind the fundamental antithesis between these two forms of surplus; one "price-determined " and the other "price-determining." As the argument proceeds, it will be seen that the use of other terms, like marginal” and “differential surplus," has resulted in some confusion, for the reason that they do not keep this fundamental distinction ever before the mind. Again some writers, while recognizing this distinction in connection with the entrepreneur's surplus, are not so clear when they come to discuss the surplus from land.

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Professor Commons, in his "Distribution of Wealth," mars the usefulness of an otherwise excellent book, in this way. In his discussion of the entrepreneur's profit, he endeavors to maintain this distinction, speaking of the first form of surplus as "personal or temporary profits," and of the second as "permanent or monopoly profits." How

apt these terms are we will not here stop to inquire; they have, however, this merit; they are a conscious endeavor, to preserve the distinction between these two forms of surplus, in our terminology. But it can, we think, be shown, that he has not been so careful in his discussion of the surplus from land. To that end let us inquire as to his use of the term "rent."

First, note that this writer follows President Walker, calling the surplus from land-rent, and the surplus of the entrepreneur-profit. Again, he subdivides the latter; his "personal" or "temporary profits" being identical with our "price-determined surplus," while his "permanent" or "monopoly " profits are identical with our "price-determining surplus." With this in mind let us turn to page 229, where he writes, "A continually growing surplus falling to the owners of monopoly privileges, which becomes petrified in the form of rent and permanent or monopoly profits." It is, I think, fair to assume, that he here means by "rent:" that surplus from land which is the same in kind as the "permanent or monopoly profits" of the entrepreneur. In other words, he is speaking of the "price-determining surplus" from land as the "rent" of land.

On the other hand he says, page 203: "If adjoining land is better, it will pay more rent; if poorer, less rent." That he is here speaking of the "price-determined surplus,”— the old Ricardian rent-need hardly be urged. Or, he applies the term "rent," to both forms of the surplus from land, without any attempt, so far at least as the context of these passages is concerned, to distinguish between them. Nor can he plead ignorance of the existence of the two forms of surplus; on the contrary, he quotes quite freely from Professor Patten in support of the contention, that there is a surplus which enters into the determination of price. Again, in his discussion of the entrepreneur's return, he endeavors to preserve the distinction between the two forms of surplus by giving them separate names.

In one instance at least, he has endeavored to find separate names for the two forms of surplus from land. On page 221, he says: As soon as land is cultivated at all successfully, it yields a permanent rent, and this, if it be the poorest land in use for the production of the commodity in question, becomes a permanent part of the expenses of production of that commodity. The superior rents paid out of the same commodity where it is produced on superior land, are again an additional surplus growing out of the superior advantages of such lands, and are only partly to be considered as expenses of production."

Here corresponding to his "permanent or monopoly profits," we have "permanent rent;" while for "personal or temporary profits," we have "superior rent." If he had called the last "temporary rent," it would have the merit of being coherent with his terminology of profit, no matter how faulty that may be. Instead, he preserves this terminology in one case, only to depart from it in the other. That this lack of persistency or consistency in terminology will prove confusing to the average reader, need hardly be urged.

In the Quarterly Journal of Economics,* J. A. Hobson writes: "Now these limitations to the statement that rent does not form an element in price amount to the admission that the rule only applies where the margin of employment stands at no-rent, and this is only the case in unqualified agricultural land. Wherever the worst land in cultivation for a special purpose draws a rent, that rent figures in prices.” Notice that we have here, nothing by which we can distinguish between the "price-determined" and price-determining surplus;" the term "rent" being used indifferently for either of them. On page 275, however, he says: "It will be open to us, if we prefer it-for it is entirely a question of convenience in the use of terms-to say that land, ..at the margin of employment, pays no rent,

April, 1891, p. 275.

that is, we may take the lowest return for the use of land, and call it by some other name than rent. We would thus be able to maintain as a general proposition, that rent forms no element of price. But to do this, we would be compelled to an elaborate grading of industries, according to the prices paid for land, labor and capital, at the margin of employment in each respective industry.

"If, on the other hand, as seems more reasonable, we should prefer to measure by a single line of fixed money value applied through the whole of industry, we must call by the name rent all payments for the use of land, and all payments beyond three per cent and five shillings for the use of capital and labor. But whichever mode of reckoning we prefer will be equally applicable to all three requisites of production."

Now it may be true that "it is entirely a question of convenience in the use of terms," whether we employ separate and distinct terms for these two forms of surplus, or take "rent" as a general term applicable to both; and then distinguish between them by employing additional qualifying terms, "price-determined rent," and "price-determining rent." But it is hardly a question of mere convenience, whether or not the fundamental cleavage plane in all questions of distribution shall be recognized in our terminology. In other words, we can only confound confusion by including both forms of surplus under a common name.

And yet upon this point the very elect themselves, in the person of Professor Clark, are betrayed into confusion. In the same number of the Quarterly Journal of Economics (p. 313), he writes: "There is another element in the composite returns of employes that is profit in an accurate sense of the term. It results from an unbalanced condition of industrial groups. Conditions are continually appearing in which too little is produced of certain commodities to meet the normal demand for them, and in which they sell for more than enough to pay interest on pure capital and wages