QUESTIONS OF PRINCIPLE 55 



because the balances of all other accounts are themselves 

 distributed over the production accounts in due course. 



Rent. In the sense in which the term is used by economists 

 rent is not an element of cost, for it represents nothing more 

 than the measure of the value of production due to varia- 

 tions in situation and to the inherent capabilities of different 

 soils. ' Rent is due to differences in the productivity of 

 different pieces of land, the users of which are working for 

 the same market, differences over which the owners have no 

 control. From this the corollary is drawn that rent does 

 not enter into the cost of production. Corn, in Ricardo's 

 words, is not high because a rent is paid but a rent is paid 

 because corn is high.' 1 This theory of rent is interesting 

 as an economic conception which in certain special cases 

 may even have a practical application, but to the English 

 farmer in most places it is merely an abstraction, and to 

 give the term the peculiar limitations assigned to it by 

 economists and then to say that rent does not enter into cost 

 of production is to create a set of conditions having no 

 existence in fact on most of the farms of this country. 

 The rent paid by the farmer has little or nothing to do with 

 the inherent capabilities of the soil except in particular 

 cases which do not bulk large in the agriculture of the 

 country as a whole, for it represents nothing more than 

 a certain return to the originator of the enterprise, or his 

 successors, on the cost incurred in bringing virgin soil into 

 a condition precedent to the production of food and other 

 agricultural produce. If we imagine a tract of unreclaimed 

 wild in an average agricultural district its rental value, both 

 ' economic ' and actual, is virtually nil, and it can only 

 be brought into a rent -earning condition by the application 

 of capital. 2 Rent paid by the farmer is the interest which 



1 Clay, H., Economics, p. 356. 



2 In fact, there is no need to exercise the imagination, for a case can be cited 

 of virgin soil in the heart of England, surrounded by reclaimed land letting at 

 some two pounds per acre, and within reach of transport facilities and markets 

 as good as any in the kingdom, which has been handed over for a term of years 

 at a peppercorn rent to an enterprising individual who is prepared to sink capital 

 in the work necessary to make it available for food production. 



