208 AGRICULTURAL ECONOMICS 



words, the development of a better home market ; (3) it may 

 be the result of an improvement in the means of communica- 

 tion which makes the land which was formerly more fertile 

 but less accessible, equally accessible, and hence, more valu- 

 able ; or (4) it may be the result of a rise in the prices of agri- 

 cultural produce, or a fall in the current rate of interest, either 

 of which would result in a more rapid increase in the value of 

 land which is more fertile and accessible, but which requires 

 relatively larger expenditures to bring it into cultivation, 

 than in the value of land which is less fertile or accessible but 

 much more easily brought into cultivation. All of these pos- 

 sible variations in the annual value of land must be properly 

 anticipated and included in the list of future incomes which 

 are discounted to find their present values. 



Perhaps enough has been said to impress the thoughtful 

 reader with the fact that to determine the value of a piece of 

 land is by no means a simple matter. When a man sells a 

 piece of land he transfers his right to a series of annual incomes 

 which may be greater or less as time passes by, but which will 

 probably increase as the years go by. In payment for this 

 land he is to accept another income-bearer which may yield a 

 larger or smaller annual income as the years go by, but which 

 will probably yield a smaller income in the future than at 

 present. This circumstance makes it impossible to do more 

 than approximate the actual present value of a piece of land. 



The presence of so many uncertainties makes the buying of 

 land partake more or less of the character of speculation, and 

 during times of prosperity the tendency is for men to be optimis- 

 tic and overestimate the probabilities of a rise in rents or 

 a fall in the rate of interest. On the other hand, when periods 

 of depression come, the tendency is for men to underestimate 

 the future possibilities. As a result of this psychological ele- 

 ment, the tendency is for the price of land to rise too high dur- 

 ing periods of prosperity and to sink too low during periods of 

 depression. As many years are usually required for one of 

 these changes from undervaluation to overvaluation to take 

 place, land does not lend itself so readily to speculation as does 



