CHAPTER XVIII 

 THE VALUE OF FARM LAND AND EQUIPMENTS 



It is easy to say that the price of land, like the price of any 

 other economic good, is determined by the forces and conditions 

 which regulate the demand and the supply; but this is too 

 general to be of any help to the farmer who is trying to esti- 

 mate the value of a particular piece of land. 



The net rent, or the share of the gross returns which, under 

 conditions of free competition, is credited to land, above what 

 is necessary to keep the land intact, is the starting point for 

 figuring the value of a piece of land. When a man invests in 

 land, the thing for which, he really pays is the perpetual right 

 to use the land and to be free from the payment of rent, or to 

 receive the income which the land will yield if leased to some one 

 else. 



The essential difference between the buying of a piece of 

 land and the buying of a perpetual annuity bond lies in the fact 

 that while the income from the latter is fixed in terms of a money 

 income, the former may rise or fall as a result of changes in 

 the conditions of competition for the 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 acre of land is 

 six dollars. On the further assumption that this amount will 

 not change, we may think of this acre of land as a perpetual 

 bearer of an annual income of six dollars. Six dollars this year, 

 six 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 in- 

 finitely great, and if one were required to pay down the full 



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