CHAPTER XVII 

 RENTS AND PROFITS 



IN this chapter the effort will be to describe the economic 

 forces which determine the amount paid for the annual use of 

 land. This is important from the point of view of one making 

 a rent contract, and it is important from the point of view of 

 the improvement of the well-being of the succeeding genera- 

 tions of land workers. 



The important economic questions regarding rent relate to 

 the causes which determine the amount of rent paid at a given 

 time for a given farm, the difference in the amounts of rent paid 

 for different farms at the same time, and the changes in the 

 amounts of rent on a given farm during a period of years. Rent 

 is paid for only such farms as are useful and scarce. Useful 

 farms with improvements may be scarce while raw land of the 

 same quality is abundant, in which case a price may be paid 

 for the improvements and not for the land. In any densely 

 populated country, however, highly productive land is scarce 

 and people are willing to pay for the privilege of using it. 



The supply of farm land may be increased by settling unoc- 

 cupied prairie regions, clearing forest lands, draining marshes, 

 irrigating arid regions, etc., but it is generally true that the land 

 to be secured in these ways is less inviting to the farmers in 

 competition for the use of land, either because of the large in, 

 vestments required to bring the land into cultivation, which 

 reduces greatly the return per unit of investment in the land, 

 or because of lack of fertility or desirable location. For these 

 reasons it has been common to think of the new increments of 

 land supply as having a lower degree of economic productivity 

 per unit of investment, that is, lower efficiency, than the land 

 already in use. On this assumption Ricardo based his theory 



190 



