RELATION OF LAND IXCOMi; TO LAND VALUE. 37 
It is often stated that the high land values of the war period were 
the result of speculation in bind. If by speculation it is meant 
that the purchasers of land in these years bought with the idea of 
selling again at a higher price, it is only to a very limited extent 
that land values were forced upward because of this kind of specu- 
lation. This has been indicated by studies made at the time of the 
land boom. 14 These studies showed that a large percentage of 
purchasers bought without any thought of reselling. Land values 
went up in these years in the main because land incomes went up, 
and because buyers of land did not discount the fact that these 
incomes were based upon abnormal conditions. Thus in Iowa the 
greatest increase in land values was from 1919 to 1920, and this 
was also the period in wdiich the increase in cash rent was greatest. 
If by speculative values are meant values based upon estimates 
of the future, then the land values of 1920 were speculative values, 
but in this sense land values have always been speculative. Lane 1 
values have always, of necessity, been based upon estimates of future 
income and must continue to be, for the future is not known and 
can only be guessed. 
Again, when one speaks of speculative land values he may have 
in mind that part of the value which is based upon anticipated 
future increases in income. It is true that a larger percentage of the 
land values of 1920 was based upon such anticipated increases in 
income than in previous years, but to state that this was due to 
speculation helps in no way to understand why land values were 
what they were in 1920. 
The land values of 1920 can not be explained in terms of land 
speculation any more than the land values of any other period can. 
To understand land values they must be studied in relation to land 
income and the past changes in land income. Because these incomes 
were influenced by abnormal conditions in the 5 or 6 years preceding 
1920, land values were less sound than in 1910, for instance, but to 
state that they were more largely the result of speculation in 1920 
than in 1910 helps in no way to understand the values of 1920. 
The buyers and sellers of land in 1920 based their estimates of the 
worth of land on its earning power in 1920 and the average increases 
in this earning power in the years preceding 1920, in much the 
same way that buyers and sellers in 1910 had done. The land incomes 
on which these buyers and sellers based their estimates of value were 
less sound than those in 1910 in the sense that they were the 
result of w T ar conditions and could not continue, but they did not 
know this. 
LONG-TIME TENDENCY IN THE RATIO OF LAND INCOME TO LAND 
VALUE. 
As was previously pointed out, Table 7 indicates that there has 
been a downward trend in the ratio of cash rent to the value of the 
land. This fact is brought out more strikingly in Figure 7. which 
shows the ratio of cash rent to land value in Ohio from L900 to 1920 
inclusive. 
14 See United States Department of Agriculture Bulletin 874, Farm Land \ ah* s in Eov . by 1 . C. Gray, 
and Bulletin 240 of the Kentucky Agricultural Experiment Station on Land Prices and Land Speculation 
in the Bluegrass Region of Kentucky, by G. W. Forster. 
