32 EIGHTEENTH REPORT. 



case of dwellings it depends partly on the amenities of life, the 

 attractiveness of the town as a place of residence, and parth' on 

 the opportunities for profitable emplojmient. There seems to be a 

 close relation between wages and rentals, if we compare one year 

 with another in the same place, and also if we compare different 

 places at the same time. Statistical investigations show a very 

 small variation in the ratio of rent to family income, for incomes 

 of the same size and families in the same locality. In fact it seems 

 reasonable not only to regard the rent of a site as a residum after 

 deducting the necessar}^ expenses connected with utilizing the site 

 from the rental obtainable, but also to regard the rental paid by 

 an individual for this housing accommodation as a residum ob- 

 tained bv deducting from his total income the necessary costs of 

 living, such as those of food, clothing, and fuel. It has been said, 

 for example, that one reason wh}- house rents are lower in Boston 

 than in New York is because the price of food is higher. It is a 

 well known fact that neighboring suburbs are continually com- 

 peting for prospective residents, and that in the district which has 

 the best accommodations, especially schools, the rentals of identical 

 buildings will be higher than in the rival districts. 



I said that land is practically a fixed supply good. The propor- 

 tion of laud which might be added to the natural supply of sites by 

 means of extraordinary' outlays is very small — so small that we 

 may fairly declare that the supply is incapable of enlargement. 

 On the other hand it cannot be greatly restricted. Land may be de- 

 liberately kept out of use, but this involves a great loss of in- 

 terest and can only be done by wealthy owners, and only when 

 land is not heavily taxed. In some cases land can be devoted 

 to use which is not so highly taxed, e. g., agriculture, under 

 the English system of local rates. But it is obvious that, if the 

 profits to be derived from building are great enough to more than 

 offset the added tax, the land owner, if guided by economic motives, 

 will prefer to pay the tax for the sake of the extra profits. And 

 if the system of taxation is one that minimizes the difference be- 

 tween the amounts paid in the two cases (i. e. if taxes are based on 

 the selling value of property, or, even more, on bare land value) 

 this preference will become almost a compulsion. The onh' ex- 

 ception Avill be when the owner anticipates a future increment in 

 land value which is incompatible with immediate development and 

 which is great enough to offset the loss of interest. Such an in- 

 crement is ratlier uncommon, both because of the difficulty of an- 

 ticipating the exact direction of suburban growth and because 



