THE RENT AND VALUE OF FARM LAND 619 



of corn is regulated by the quantity of labor bestowed on its produc- 

 tion on that quality of land, or with that portion of capital which pays 

 no rent. Corn is not high because a rent is paid, but a rent is paid 

 because corn is high; and no reduction would take place in the price 

 of corn, although landlords should forego the whole of their rent. 

 Such a measure would only enable some farmers to live like gentlemen, 

 but would not diminish the quantity of labor necessary to raise raw 

 produce on the least productive land in cultivation. 



194. THE RENT OF AGRICULTURAL LAND 1 

 BY F. W. TAUSSIG 



The typical case of rent, and the one which serves most readily 

 to illustrate the principle, is that of agricultural land. Suppose that 

 the producers at O, A, and B have farms of different fertility. A 

 given application of labor and capital yields at O 25 bushels of wheat 

 to the acre, at A 20 bushels, and at B 15 bushels to the acre. The 

 price must be such as to make wheat-raising at B worth while; other- 

 wise the total supply will not be forthcoming. The supply which 

 can be raised at O and A is limited and an additional supply must 

 be got at B before an equilibrium of supply and demand is reached. 

 The price is high enough to bring normal returns to the producer at 

 B for 15 bushels to the acre. The receipts from these 15 bushels also 

 suffice to cover the expenses (including usual interest to capital) for 

 the producer at A. The extra 5 bushels got from his land thus con- 

 stitute an extra gain for him. Similarly the extra ten bushels at O 

 yield an extra gain for the producer at O. And if the owners of A 

 or O chose to let their lands, instead of cultivating for themselves, 

 they could secure rents of 5 and 10 bushels to the acre (or the equiva- 

 lent in money price). It is immaterial whether they secure the 

 advantage from the better site in the one form or the other. 



Rent is sometimes said to be the specific product of land. Simi- 

 larly, interest is often said to be the product of capital, and wages 

 the product of labor; and thus three elements in distribution wages, 

 interest, rent are set aginst three factors in production labor, capi- 

 tal, land. But this phraseology is to be used with caution. Labor 

 applied in some ways (through the use of tools) yields more than labor 

 applied in other ways; in this sense only is there a productivity of 



Adapted from Principles of Economics, II, 57-6o- (Copyright by The 

 Macmillan Co.) 



