Chapter VI: Section CXLIX: Theory of Rent

Rent is that portion of the regular net product of a piece of land which remains after deducting the wages of labor and the interest on the capital usual in the country, incorporated into it.[149-1] Hence it is the price paid for the using of the land itself, or for what Ricardo calls the original inexhaustible forces of the soil which are capable of being appropriated.[149-2] This price also depends, of course, on the relation between demand and supply; the demand in turn, on the wants and means of payment of buyers, but the supply by no means on cost of production, which, from the definitions above given, is here unthinkable. However, land has this in common with other means of production, that its price is mainly determined by that of its products.

[Footnote 149-1: According to _von Thünen_, Der isolirte
Staat. in Beziehung auf Landwirthschaft und Nat. Oek, 1850,
I, 14: "what remains of the revenue of an estate after
deducting the interest on all the objects of value which may
be separated from the soil." According to _Whately_, it is
surplus profit. The expression "regular product" supposes,
among other things, an average skillfulness of the economic
individual. Thus, for instance, the farm-rent of a piece of
land generally includes besides the real rent of the land,
interest on much capital which is more or less firmly fixed
in the soil. The importance of the latter may be
approximately determined from the fact that in the
electorate of Hesse, for instance, the value of all meadow
lands, woods, and agricultural lands is estimated at from
205 to 206 millions of thalers, and the value of all the
houses at 100 millions. (_Hildebrand_, Statist. Mittheil.
über die volkswirthschaftlichen Zustände Kurhessens, 1852,
37.) In the English income tax of 1843, the annual value of
all lands in Great Britain was estimated at over 45 millions
sterling, that of all houses at over 38 millions. However
the farm-rent of a piece of land does not by any means
always embrace the entire rent. A part of the rent is paid
to the state in the form of taxes, and another portion to
the payment of tithes. Short leasehold terms, frequent land
sales, the comparatively great difficulty of disengaging
capital invested in the cultivation of land, the union of
landed proprietor, capitalist and laborer in one person
easily obscure the law of rent.]

[Footnote 149-2: The stores of immediate plant food in a
piece of land, of minerals in a mine, of salt in a salt
mine, etc., are subject to the law of rent only in so far as
they may be considered inexhaustible; that is, they are not,
strictly speaking, subject to it. Our definition applies all
the more to the capacity for cultivation, and of support or
bearing capacity mentioned in § 35; and hence it is easier
to follow the law of rent in the case of land used for
building purposes than for agriculture. When _v. Mangoldt_
claims that the exhaustibility or inexhaustibility of the
soil has nothing to do with rent so long as it flows evenly
(_so lange sie eben fliesst_) he is in harmony with his own
general conception of rarity-premiums
(_Seltenheitsprämien_).]