1921.] 



The Control of Farm Management. 



•2-29 



to differences in the productivity of different pieces of land, the 

 users of which are working for the same market, differences over 

 which the owners have no control. From this the corollnrv is 

 drawn that rent does not enter into the cost of production. 

 Corn, in Ricardo's words, is not high because a rent is paid but 

 <'i rent is paid because corn is high."* This theory of rent is 

 interesting as an economic conception which, in certain special 

 cases, may- even have a practical application, but to the English 

 farmer in most places it is merely an abstraction, and to give the 

 term the peculiar limitations assigned to it by economists, and 

 then to say that rent does not enter into cost of pi-oduction, is 

 to create a set of conditions having no existence in fact on most 

 of the farms of this country. The rent paid by the farmer has 

 little or nothing to do with the inherent capabilities of the soil, 

 except in particular cases which do not bulk large in the agri- 

 culture of the country as a whole, for it represents nothing more 

 than a certain return to the originator of the enterprise, or his 

 successors, on the cost incurred in bringing virgin soil into 

 the condition precedent to the production of food and other 

 a gricultural produce . ' 



Rent is the interest which the capitalist expects to get as an 

 inducement to him to invest money in draining, enclosing, road 

 making, erection of houses and buildings, and in other works of 

 reclamation and equipment necessary to turn virgin soil into 

 farm lands. It is true that farms created at equal unit cost in 

 the past may let to-day at different unit rentals, but this is not 

 to say that those commanding higher annual values include in 

 this value an element of rent as defined by economists ; rather 

 does it mean that those letting at the lower figures are giving to 

 the capitalist a lesser reward for his enterprise. 



Tt follows that rent paid by the farmer, except in particular 

 and relatively unimportant cases, is an element in the cost 

 of production and must be included in cost determinations. 

 There seems to be no common agreement as to its distribution 

 over the farm, but if it be accepted that rent represents some 

 return on the cost of reclamation and equipment and nothing 

 more, it is obvious that it should bo divided over the farm 

 upon an acreage basis. 



The question of a charge for Interest also requires considera- 

 tion. If it be accepted that the cost of an article can bo nothing 

 more than that which is paid for it, it is clear that interest 

 on c:ipital is not a oha^-'je aj^aiii^t cost, arul ps n o(Miornl rule 



Clay, H., Econoiiiici', p. 



