In the field of distribution and exchange Ricardo made great additions. Malthus and West had shown that rent was not an element in cost of production; but both Malthus and Ricardo seemed to have been familiar with the doctrine of rent long before the former published his book. Ricardo, however, saw into its connection with other parts of a system of distribution.34 The Malthusian doctrine of a pressure of population on subsistence naturally forced a recognition of the law of diminishing returns from land;35 then as soon as different qualities of land were simultaneously cultivated, the best necessarily gave larger returns than the poorest; and the idea that the payment of rent was made for a superior instrument, and in proportion to its superiority over the poorest instrument which society found necessary to use, resulted in the law of rent. Ricardo, moreover, carried out this principle as it affected wages, profits, values, and the fall of profits; but did not give sufficient importance to the operation of forces in the form of improvements acting in opposition to the tendency toward lessened returns. The theory of rent still holds its place, although it has met with no little opposition.36 A doctrine, quite as important in its effects on free [pg 019] exchange, was clearly established by Ricardo, under the name of the doctrine of “Comparative Cost,” which is the reason for the existence of any and all international trade.
The work of Adam Smith was soon known to other countries, apart from translations. A most lucid and attractive exposition was given to