THE FARMER'S MEANS OF ACQUIRING LAND 235 



discrepancy is not so disastrous as has been supposed by the 

 economists; yet this discrepancy has an important retarding 

 influence upon the movement from tenancy to the unencumbered 

 ownership of land. 



This difference between net rent and interest is due to many 

 causes. Many of these causes have already been discussed in 

 the chapter on the price of land; but we wish to emphasize 

 especially the influence of double taxation in this connection. 

 Double taxation, the taxing of both the farm and the mortgage 

 upon the farm, tends to increase the difference between the 

 rate which must be paid upon the loan and the returns received 

 upon investments in land. The man who lends money upon a 

 mortgage wants at least as large a return as if he had purchased 

 the land himself. Had the man who lent the money purchased 

 the land and rented it, he would have paid the land tax out of 

 the net rent. If he lends the money and has to pay tax at the 

 same rate on the mortgage, he will demand interest equal, at 

 least, to the net rent of that proportion of the farm represented 

 by the face of the mortgage. This means that the farmer will 

 have to pay interest equal to the net rent and then pay the land 

 tax besides ; thus paying more in interest and in the tax, by 

 the amount of the tax, than he would have paid as a tenant. 

 To tax a farm mortgage is, therefore, to tax a farmer for using 

 the mortgage as a means of acquiring landownership. 



While double taxation retards the farmer in acquiring land- 

 ownership, there are forms of taxation which facilitate this rise 

 in his status. Wherever there is a tendency for wealthy men 

 to buy farm after farm from their superabundance of income, 

 their bidding against the farmers drives the price of land too 

 high and thus forces men to remain tenants who would be better 

 farmers, better citizens, happier because they are paying out 

 on a purchased farm. To discourage this outside competition 

 which inflates prices and depresses farming, a progressive land 

 tax is suggested. The essence of this tax is that the more land 

 one owns beyond one farm of a specified maximum area, varying 

 with the quality of the land, the higher the tax rate which is 

 levied upon the land. When properly administered such a 



