QUESTIONS OF PRINCIPLE 57 



completely ignores the true origin of rent. In spite of this, 

 an apportionment of rent is sometimes necessary. In cases 

 where farms have attached to them an area of upland 

 grazing a rent distribution on an acreage basis is impossible, 

 for a large part of the holding, very often the greater part 

 of it, is unreclaimed land, upon which no capital has been 

 laid out beyond possibly a small expenditure on inclosure. 

 In such instances there are, in fact, two separate units to 

 be considered, and it will be legitimate arid necessary to 

 differentiate between each by assigning to the hill-land 

 some small portion of the rent and confining the distribution 

 of the major part to the enclosed and cultivated lands. 



In the case of farms owned by the occupier, no rent is 

 paid and no charge must be made against production in 

 respect of it. The owner-occupier is in the same position 

 in respect of interest on capital sunk in purchase as in respect 

 of that on working capital, and this will now be considered. 



Interest on Capital. If it be accepted that the cost of 

 an article can be nothing more than that which is paid for 

 it, it is perfectly clear that interest on capital is not a charge 

 against cost. As a general rule accountants appear to be 

 agreed about this, though in certain trades, printing, for 

 example, there is a recognized custom to the contrary 

 (introduced apparently to secure uniformity in tendering 

 for contracts), and with the demand by the public, which 

 has arisen recently, for the publication of costs of all kinds 

 compiled hitherto solely for the private information of those 

 responsible for the control of productive enterprises, there 

 seems to be a general tendency to inflate the figures with 

 items not previously included. Consumers, however, are 

 not likely to be deceived by these expedients for very long. 

 In estimates of agricultural costs appearing from time to 

 time in the press the practice of charging interest is one of 

 the commonest errors, the argument being, apparently, 

 that the farmer is entitled to charge as part of his cost such 

 a sum as the capital involved could have earned had it been 

 invested in some other security. Money in the form of 

 capital invested in, say, War Loan, cannot be used to produce 



