MEANS OF ACQUIRING LAND 



been supposed by the economists ; yet this discrep- 

 ancy has an important retarding influence upon 

 the movement from tenancy to the unencumbered 

 ownership of land. 



This difference between net rent and interest 

 is due to many causes. Many of these causes 

 have already been discussed in the chapter on the 

 price of land ; but we wish to emphasize especially 

 the influence of double taxation in this connec- 

 tion. Double taxation, the taxing of both the 

 farm and the mortgage upon the farm, tends to 

 increase the difference between the rate which 

 must be paid upon the loan and the returns re- 

 ceived upon investments in land. The man who 

 lends money upon a mortgage wants at least as 

 large a return as if he had purchased the land 

 himself. Had the man who lent the money pur- 

 chased the land and rented it, he would have paid 

 the land tax out of the net rent. If he lends the 

 money and has to pay tax at the same rate on the 

 mortgage, he will demand interest equal, at least 

 to the net rent of that proportion of the farm rep- 

 resented by the face of the mortgage. This 

 means that the farmer will have to pay interest 

 equal to the net rent and then pay the land tax 

 besides; thus paying more in interest and in the 

 tax, by the amount of the tax, than he would have 

 paid as a tenant. To tax a farm mortgage is, 

 therefore, to tax a farmer for using the mortgage 

 as a means of acquiring landownership. 

 15 225 



