that a given rate should be awarded. This would not be regulating the rate of interest, but establishing justice between the different parties in those cases where, from any cause, no fixed rate of interest had been agreed upon. This legal rate would properly be the general average rate obtained for the use of money.

CHAPTER VII.

RENT.

RENT is paid for the use of land and its appendages, which together are called "real estate." The question of the rent of land is of much less practical importance in the United States than in Europe, since it is here generally held in fee simple by those who cultivate it. Yet, as an economic question, it deserves consideration. And there is an especial inducement, since we certainly have in this country the best opportunity to investigate, in their simple primitive form, all the phenomena connected with it. Constantly entering upon new lands, we have exhibited for our observation the working-out of problems which long puzzled the philosophers of the old world.

1st, Rent implies ownership, since no one would pay for the use of that to which all had an equal title. This may be called the first condition.

2d, It implies society, so that more than one person shall desire the use of the same land or appendages. If exchange, as M. Bastiat says, "is civilization," rent is society. This is the second condition.

From our definition, it will appear that rent is paid (a) for land, (b) for whatever is added to its value or desirableness. We cannot separate the two considerations, nor would it be of practical utility if we could; as, from what we have

already endeavored to show, value is not derived from the gifts of nature, but the labor of man: "land, water, steam, electricity, and the like, confer no value."

Land may be said to be the foundation of rent; and, since the rightfulness of appropriating it has been disputed, it may be proper to remark that we deem it a sufficient answer, that appropriation is indispensable to the production and accumulation of wealth, to the progress of civilization, and the welfare of the human race: therefore it is right.

Man, in his original or savage state, is a hunter. He needs no appropriation of land; for he roams at large through the forest. He accumulates little or nothing; and it is of small importance where he builds his temporary cabin. His means of living are precarious; he is often exposed to starvation, has nothing permanent, pays no rent, and population but slowly increases.

Nor in the second or nomadic condition, when man becomes a shepherd, does rent make its appearance. His business is no longer mere destruction, but preservation and use. This elevates his condition; the employment has a far more ennobling effect upon character; higher faculties and better feelings are developed. But still he lives in a tent, and removes from place to place to find pasturage for his flocks. In the natural progress of events, he becomes an agriculturist. His chief business now is to till the ground. How can he do this without preparation of the soil from which he is to draw his sustenance? And why should he do this, if another may at will dispossess him of his labors? The land must be divided, appropriated, and held by some tenure that can be relied upon; and, when this takes place, rent makes its appearance, and increases in intensity as man becomes more and more advanced in social condition; for with agriculture come the mechanic arts, manufactures, commerce, villages, towns, cities, civilization.

We now come to the elements which enter into the rental of land.

THE FIRST ELEMENT OF RENT.

Location. This grows out of the social condition of man, to which we have alluded. If men lived as isolate beings, and there were land enough for all, and the whole equally fertile, there would be no rent; but, once gathered into villages and communities, rent would make its appearance, although there were as much land as all desired, and each part equally productive.

This point we shall endeavor to make plain by an illustration. A colony of thirteen families settles along the shore, where all the land is unclaimed, and immigrants have only to choose where and how much they will occupy. We will suppose the land all equally fertile, agreeable, and accessible. In point of fact, there shall be no natural difference between one lot of one hundred and sixty acres (what each family desires) and another; absolutely no choice arising from any thing appertaining to the land. They accordingly lay out thirteen lots half a mile square. This allotment and location upon the shore we represent as follows:

In this arrangement, it will be seen, the lots commencing on the left are numbered 1 to 13. No. 7 is, of course, the middle lot.

Now, all being equally eligible, the land equally accessible and good, and there being as many lots as settlers, and each as large as any one desires, will there be any value to them? Yes: because all will prefer No. 7, for they perceive that it is most desirable, inasmuch as it is central; and, if public buildings are erected for the accommodation of all (schoolhouse, church, &c.), they must be

* This illustration was given by the author in the "Merchant's Maga zine," in 1860, vol. xlii. p. 306.

placed on that lot. If a landing-place is made, or a warehouse put up, for the commerce of the settlement, it must be on No. 7; for the obvious reason that it is the point at which the whole population can most readily assemble, and it thus forms the natural centre of business.

All this is so apparent, that each man prefers No. 7; but only one can have it. What follows? It must be sold to the man who will give the most for it. Some one will give one hundred bushels of wheat, or its equivalent, – six bushels rent per annum. All this does actually happen in every case of new settlement; not, indeed, in a manner always so distinct and striking as in the case we have supposed, but in principle as certain and absolute.

If this is so, we have established the fact, that, though all land were equally fertile, and there were enough for all, and all equally desirable in every other particular, yet that rent would arise from the social wants of man, which make mere location a circumstance affecting its value, and create a rental independent of all other considerations.

THE SECOND ELEMENT OF RENT.

Difference of Fertility. We will suppose four different tiers of land, of unequal fertility. The first will yield forty bushels of corn; the second, with the same labor, thirty; the third, twenty; the fourth, ten.

Now, while there was enough land of the first to produce all the corn wanted, nobody would give any rent for the first tier on account of its fertility; but when, by the increase of population, it became necessary to cultivate No. 2, which would only yield thirty, No. 1 would command a rental of ten bushels, because a man might as well give ten bushels rent for No. 1 as to cultivate No. 2 without rent.

When, again, necessity compelled the cultivation of No. 3, No. 2 would pay a rent of ten bushels, and No. 1 of twenty bushels. And further, when tier No. 4 must be

brought under culture to produce the quantity of corn needed for consumption, then, as it would with equal labor produce but ten bushels, No. 1 would yield a rent of thirty, No. 2 of twenty, and No. 3 of ten; while the last, or No. 4, would afford no rent.*

THE THIRD ELEMENT OF RENT.

We will further suppose, that, from the increase of population, more corn is wanted than can be raised; and, consequently, importations are made at an increased price,equal, say, to fifty per cent. Now if, for the sake of convenience, we take the price of corn to have been originally one dollar a bushel, and to have advanced to one dollar and fifty cents, it will come to pass that tier or quality No. 1 will have a rent of $45; No. 2, of $30; No. 3, of $20; and No. 4, which now for the first time produces rent, of $5.

This represents the condition of Great Britain, which, besides raising all the wheat her highly cultivated fields can profitably produce, imports some eighty millions of bushels annually. This causes a large increase of prices; consequently, of money rent.

FOURTH ELEMENT OF RENT.

Application of Capital to Land. This is done in various ways, by the use of fertilizing materials, drainage, deep ploughing, &c. For every such appliance, wisely made, a rent is received, supposed to be equivalent to the expenditure incurred.

And here it may be found that the same expenditure, applied to the different qualities of land, produces unequal results. Five dollars, expended per annum on No. 1, may return but a profit or additional rent of eight dollars; while

* Mr. Ricardo, we believe, first brought out this principle clearly in his "Political Economy," London, 1819.