. Agricultural economics. Agriculture -- Economic aspects United States; Land tenure. 192 AGRICULTURAL ECONOMICS The motives that underlie the actions of men when bidding for the use of land are fundamentally the same as those that operate in determining the values of other useful things. The theory of rent is therefore an attempt to indicate the way in which the theory of value works itself out when applied to the annual value of land. While all land that is useful and scarce is valuable, all such land is not equally valuable, for the simple reason that all land is not equally useful. This va
. Agricultural economics. Agriculture -- Economic aspects United States; Land tenure. 192 AGRICULTURAL ECONOMICS The motives that underlie the actions of men when bidding for the use of land are fundamentally the same as those that operate in determining the values of other useful things. The theory of rent is therefore an attempt to indicate the way in which the theory of value works itself out when applied to the annual value of land. While all land that is useful and scarce is valuable, all such land is not equally valuable, for the simple reason that all land is not equally useful. This variation in usefulness may be due to variations in the fe'rtiHty of the land or to differences in the location of the land with respect to the market for the goods produced. Economists have usually thought of the least desirable land in use at a given time as being rent free. That is, it is assumed that the least desirable land will be in great abundance in proportion to the demand for such land, and, therefore, that no rent will be paid for its use. This " no- rent " land is then taken as the starting point for measuring the rent of the more useful grades of land. According to the Ricardian Theory,^ the rent of any given grade of land is m^eas- ured by the difiference in the value of the produce resulting from a given outlay of labor and capital on that land, and on the no- rent land. For example, suppose a farmer can, with the same effort and expenditure, produce goods as shown in Table XL TABLE XI Ricardian Remt On first-grade land . . On second-grade land . . On third-grade land . . On fourth-grade land . . On fifth-grade land . . On sixth-grade or no-rent land. fSoo 400 300 200 100 000 The assumption is that, if all these grades of land, and no more, are needed to supply the market, competition will tend to make the rent of the requisite quantity of fifth-grade land $100, that of fourth-grade $200, that of third-grade $300, that > David Ricardo, "Principle
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