RELATION or LAND INCOME TO laxd VALtTE. 3d 
Table 13. — Ratio of gross cash rent to land value in Towa, by decades. 
Year. 
Ratio of 
gross cash 
rent to land 
value. 
1900 
1910 
1920 
Per cent. 
7.7 
4.3 
3.6 
Increasing land incomes do not always produce declining ratios of 
income to value. It depends on how the incomes are increasing. If 
they increase a constant amount each year for a considerable period 
then the trend in the ratio of rent to value during such a peri 1 
will be upward, provided the mortgage rate of interest is about 
constant. This is brought out in Table 14. 
Table 14. — Direction of trend in ratio of rent to value when rents increase a con- 
stant amount each year over a long period. 
Year. 
a 
r 
•' 
c 
a 
1 
$2.00 
2.25 
2.50 
2.75 
3.00 
3.25 
Per cent. 
5 
5 
5 
5 
5 
5 
$0.25 
.25 
.25 
.25 
.25 
.25 
140 
145 
150 
155 
160 
165 
1.4 
2 
1.6 
3 
1.7 
4 
1.8 
5 
1.9 
6 
2.0 
20 
7.01) 
5 
.25 
240 
2.9 
Under such conditions as are assumed in Table 14, the ratio of 
rent to value would become greater and greater year after year. 
The reason is obvious. The anticipated increases in income, being 
based on the average increases of the past, are constant throughout 
the period. Therefore, the percentage of the value in each year. 
which is based on this anticipated increase in income, is constant 
throughout the period. The percentage of the value, however, which 
is based upon the rent in the given year is becoming greater and 
greater with each succeeding year, so that the ratio of rent to value 
must increase as time goes on. In other words, a increases relative to 
i when i is constant. 
Figure 6 shows that up to 1913 or 1914 the annual increase in aver- 
age rents was about constant for all the areas except Iowa. That is. 
straight lines would fit these series better than any type of curve. 
Nevertheless, the ratio of rent to value declined throughout the peri oil 
1900 to 1914 at least in Ohio and probably in the other areas also. This 
is accounted for, in part, by the decline in the interest rate on farm 
mortgages during this period. But for the most part, it is explained 
by the fact that the straight line increase in rents which apparently 
prevailed in Ohio from 1900 to 1914 can not be projected backward 
beyond 1900 more than 2 or 3 years at most. The buyers and seller- 
of land in the early years following 1900 were therefore not expecting 
