COST PRICE AND COSTS OF PRODUCTION 177 



commodities produced by that group. 1 Animals are not reared 

 to the same extent as previously on certain areas, because, as it is 

 said, the land "has become too valuable" that is, under the 

 current methods of stock farming ; nor can they be raised as cheaply 

 as before on the remaining areas, because with the rise in rent or 

 in the interest charges upon capital invested in freehold land, the 

 old price is no longer a profitable one. Higher land values are 

 a symptom of a comparative shortage of effective agricultural re- 

 sources, and when this appears, the well-being both of the producer 

 and of the consumer requires the introduction of more intensive 

 farming methods. These, however, tend to spread slowly in the 

 conservative agricultural world, and whatever effect their general 

 adoption may ultimately have in reducing the costs of production 

 of foodstuffs, they tend in the initial stages to increase rather 

 than to diminish those costs for the individual producer by adding 

 to his outlays for capital and labour. 



It is to be noted that, although increase in population relative 

 to the area of productive land is the most potent cause for the 

 increase in land values, the intensity of the demand per capita 

 for animal foodstuffs is a contributing cause. A rise in the pro- 

 portion of animal foodstuffs in the diet of a stationary population 

 living upon a limited area of land would, in the absence of more 

 intensive methods of production, cause an increase in the values 

 of land in that limited area, owing to the operation of monopoly 

 conditions. Now pressure of population and the increased standard 

 of living tend to introduce monopoly conditions as a controlling 

 factor in the prices of land, in all parts of the world under the com- 

 mercial influence of the white races. 



The development of world-trade has been such that the prices 

 of agricultural land tend quickly to the same level, when allowance 

 is made for differences in fertility, accessibility and ordinary social 

 amenities. Only in a few areas, and notably in Great Britain, 

 does a distinct non-productive factor, namely, the special social 

 status and the increased political power conferred by land owner- 

 ship operate strongly as a factor in raising the market value of land 

 above the competition level in the strict economic sense. It may 

 be noted, however, incidentally, that extensive speculation in land 

 may raise its capital value to a point above its actual productive 



1 See Schmoller. Grundriss der Allegemeinen VolkswiYtschaft, p. 609 : The 

 restricted area of good and accessible land has caused demand to make higher 

 offers, has raised prices so that rent has emerged, and it forms now with its 

 result of enhanced capital value of the land an essential element in the whole 

 process of production of all single enterprises among themselves, and in the 

 setting forth of all estimates of the costs of production." 



Compare also the following quotation : " The rental value of land is not 

 ordinarily considered by farmers as an item of expense, especially in new 

 farming regions, where prospective rises in land values are included in the 

 expectancy of profits. This item cannot be ignored, however, in determining 

 costs of production or net profits. " U.S. Dept. Agric. Bureau of Statistics, 

 Bulletin 48. p. 36. 



