Rural Wealth and Welfare: Economic Principles Illustrated and Applied in Farm LifeFairchild, Geo. T. (George Thompson)
Science
Rural Wealth and Welfare: Economic Principles Illustrated and Applied in Farm Life
Fairchild, Geo. T. (George Thompson)
Agriculture -- Economic aspects; Economics
Thus the rent, and correspondingly the value of farms, increases with the
increasing demand for farm products, whether that demand results from the
increased number of eaters at hand, from the increased ability of these
eaters to supply their wants, or from ready transportation to eaters
elsewhere. Many influences in various directions affect the tendency to an
increase of land values with the increase of population. Some have been
led to the assumption that only the multiplication of food-eaters,
increasing the need for land, makes rent possible. Connecting it with the
theory of Malthus that population tends to increase in geometrical ratio,
while food can increase only in arithmetical ratio, they have denounced
rent as a price paid to monopolists under stress of danger from
starvation. These forget that rent is payable as truly out of increasing
abilities of individuals to meet increasing wants as under the spur of
more distressing wants. Indeed, starvation, or the approach to it, never
pays rent, however strong an incentive it may be to promise rent.
_Rent in price of products._—Does the value of the land upon which my
wheat is raised enter into the price of my wheat? If all land values were
destroyed, would the wheat of the world be cheaper, because its cost would
be diminished? The price at any time is just enough to bring the supply to
market and keep it there. A portion of the supply has cost even more than
it brings to its owner. If any brings more than cost, the difference goes
either to the energetic raiser using improved methods, or to the fortunate
receiver of timely showers, or to the possessor of the fruitful field.
Neither the profit of the raiser, through his method and the shower, nor
the rent of the fertile field has made a bushel of wheat less or more
valuable in market. The value of the wheat in the market makes both the
profit and the rent. If the value of wheat falls, the value of best wheat
lands sometimes follows; but land values do not directly affect prices of
products, though they may be directly dependent upon those prices.
Indirectly, however, the value of land may affect prices of products.
Land, in certain speculative movements of society, gains a value for
future use. If the fertile fields are held for speculative purposes, less
fertile fields must furnish a limited supply at increased price. If the
fields are wanted for homes, the supply must come from a distance at
greater cost, or be raised on fewer acres by more costly tillage, and will
not come till the price is increased. Thus high rents, or land values, if
maintained by outward forces may diminish the total product, and so affect
prices. But no conspiracy of land holders can affect the price of their
products so long as their lands are employed in supplying the market.
Public-domain text, read in full here on John Shaqi.
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