AGRICULTURAL ECONOMICS 



use of land, or from changes in the value of the 

 unit of the standard of value. 



Let it be assumed that the net rent of a given 

 piece of land is three dollars. On the further as- 

 sumption that this amount will not change, we may 

 think of this acre of land as a perpetual bearer 

 of an annual income of three dollars. Three 

 dollars this year, three dollars next year, and the 

 next, and so on so long as time shall last. The 

 total amount of rent which may be received from 

 this land is incalculable. If there is no limit to 

 the number of years during which rent may be 

 received for the use of this land, then the amount 

 of rent to be received may become infinitely great, 

 and if one were required to pay down the full 

 amount of all these possible rents, which the 

 future years may possibly yield, the price of land 

 would be such that no man could purchase it. 



As a matter of fact, however, the present mar- 

 ket value of the perpetual rent bearer is often not 

 more than twenty times the net rent, and it is 

 seldom more than thirty times the rent. This is 

 explained by the fact that present wants are esti- 

 mated more highly than future wants, which leads 

 to the discounting of future incomes 1 "at a rate 

 that reflects the prevailing premium on the pres- 

 ent." The rent which will be due one year from 



1 Frank A. Fetter, Publications of the Am. Econ. Assn., 

 Papers and Proceedings of the Sixteenth Annual Meeting, 

 Part I., p. 196. 



186 



