DISTRIBUTION OF AGRICULTURAL INCOME ? O I 



\J 



unscientific or mediocre farmer. Consequently it may remain for 

 a considerable period in the hands of poor farmers. But land 

 which makes a more vigorous response to skillful treatment at- 

 tracts the skillful farmer. To him this land in particular is worth 

 more- than it is to the unskillful, and consequently he will get 

 possession of it by offering more for it, either as rent or as pur- 

 chase price, than the unskillful can afford to offer. Thus there 

 gro\\s up a territorial distribution of agricultural skill, the more 

 capable farmers gaining possession of the better lands, and the 

 less capable remaining on the poorer lands, though the least 

 capable tend to be crowded out altogether. 



Another phase of the differential theory of rent, not less im- 

 portant but more difficult to explain than the last, is based upon 

 the law of diminishing returns from labor and capital applied 

 to land. Under this law, since the marginal product of labor 

 and capital diminishes when increasing quantities are applied to 

 the cultivation of a given piece of land, if intensive cultivation 

 be carried far enough, the marginal product from this piece of 

 land, however fertile it may be, will eventually fall to the level 

 of that of the poorest land in cultivation. That is to say, if in- 

 tensive cultivation be carried far enough on a piece of fertile 

 land, the point will eventually be reached when another unit of 

 labor and capital added to that already applied to its cultivation 

 will add so little to the total product as to make it a question 

 whether that unit produces as much when thus applied as it 

 would if applied to the cultivation of some of the free land. 



The relation of rent to the price of products. One of the least- 

 understood questions in economics is that of the relation of the 

 rent of land to the prices of agricultural products. It is a very 

 common opinion that high rents are a cause of high prices. In 

 reality that is putting the cart before the horse, high rents being 

 the effect rather than the cause of high prices. When prices 

 are high farmers make money, and this increases their desire 



