It may be proper to recall the conditions under which any individual has been able to secure the absolute control of land as a proprietor: First, by preëmption, involving temporary residence until the land is purchased and patented, at the nominal price of $1.25 an acre, or $2.50 within ten miles of such railroads as may have been subsidized by a gift of one-half the land within the same limits. Second, by homestead preëmption, by which any head of a family, present or [pg 295] prospective, can secure 160 acres of land by payment of certain registration fees, amounting in all to less than $20 upon the average, and making his residence upon the land for a period of five years. The issue of a patent at the end of the five years establishes ownership. The soldier's homestead, offered to those who had served as volunteers in the army of the nation, varied from this only in a reduced term of residence. Third, homesteaders, as well as others, could secure additional lands under a provision for tree culture on the treeless prairies, the requirement being the planting of a few acres of trees and the maintenance of culture on those acres for a period of eight years. Even the establishment of trees in permanent growth was not a requisite. Fourth, by certain outlay for irrigation purposes in arid lands a tract of 640 acres could be secured. In addition to these, certain land grants to the several states led to the issue of scrip, entitling the possessor to locate on government lands upon payment of only fees of registration. Certain states, within whose borders public lands did not exist, being unable to hold lands in other states or territories, sold scrip at less than half the price asked by the government for lands.
All these methods operated not only as a stimulant to the settlement of new territory, but as a check upon rising values of land in the older communities. Nevertheless, this rapid development has given the best of opportunities for watching the tendencies of land values.
Propriety of land rent.—The right of property in land, like every other property right, rests upon its [pg 296] advantage in the welfare of communities. Among savage tribes individual control of plots of ground would interfere with welfare, as hindering the only use to which the land is put in hunting. Among people living by herding no nice dividing lines are needed, though strife between herdsmen, since the days of Abraham and Lot, results from the mingling of herds upon the same feeding grounds. With the actual tillage of soil, control of the space tilled becomes absolutely necessary, and more necessary with every improvement in agriculture which takes the nature of permanent improvement upon the soil. No agriculture beyond the merest skinning of the surface has ever existed without permanent occupation. Even where the land is distinctly owned, but used under temporary leases, few permanent improvements in agriculture are possible.
The necessary permanence of control over the products of toil makes an essentially permanent control of land necessary to the common welfare. For this reason the progress of civilization everywhere demands more distinct boundaries of landed property, and this in the interest of the whole community, which shares in the progress. The more intensive and far-seeing the methods of farming become, the greater the necessity for fixed boundaries. This necessity is recognized in all provisions for exact surveys, complete records of transfers in ownership; and finally for government guaranty of title. Such ownership underlies all prudential consumption of wealth for future returns. The loss to communities from want of it is seen in the waste [pg 297] of game in unappropriated countries and the destruction of the seals in the seal fisheries. Yet this ownership is still subject under all circumstances to the law of welfare for the entire community. The community's right of eminent domain has always been recognized in the need of public highways and other public improvements, and is likely to be still further recognized with any new necessity, like the control of injurious insects or quarantine against disease. Yet none of these restrictions diminish the necessity of ownership, in the sense of individual control for all purposes of agriculture, manufactures, commerce and social relations. This individual control is intimately connected with our ideas of rent, and would be still, though all the lands were managed under one proprietorship, and that a public one. Rent would accrue and be paid, though the whole people held title to the land.
The sources of land values.—The value of land, like every other value, is the result of comparisons. Whatever advantage is given to a producer by his possession of land is likely to form his estimate of its value. In the comparison of two farms of equal dimensions every difference in fertility, location as to drainage, exposure, or convenience to market or social advantages, adaptability to improved methods in agriculture and convenience of arrangement, will enter into the estimate of worth. If one of the farms can be had for the asking, the other will be worth just what its advantages will add to the power of the owner in the production of wealth, provided both are considered alike as simply machines for producing food. Usually, however, [pg 298] economy in the consumption of wealth is considered also. In a new country lands most easily accessible and readily tillable are chosen first. With added demand for food, less accessible or less easily tillable lands are occupied. At once the more accessible have a value equal to the greater ease with which the same product can be offered in market. If the difference were only a mile of hauling all produce and all commodities for which produce is exchanged, that cost of transportation would make the value of the nearest land. If the difference is simply in yield for a given amount of labor, the land which yields thirty bushels of wheat to the acre, when land which yields twenty bushels can be had for the taking, will be worth ten bushels of wheat a year, and its value will be estimated in dollars at a sum which securely at interest will bring a similar return. If, by and by, the demand for food or improvement in transportation or an easier method makes it worth while to cultivate land yielding only ten bushels of wheat to the acre, the annual value of land yielding twenty bushels will be ten bushels, and that of the land yielding thirty bushels will have become twenty bushels.
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 [pg 299] 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 [pg 300] 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.
Variation in land values.—Rents vary in different countries under various customs of those countries, and so land values can be compared only by knowing the customs and laws which influence the transfer of landed property, either by deed or by lease. Differences in value are often due to considerations entirely distinct from production. Farms are homes as well as machines; and the privileges of home life, with all the relations of family, friendship and patriotic associations, may rouse competition that greatly influences the market value of farms. In any community, whatever custom or law hinders competition in farming affects the relative value of farms in productive industry. Peculiarities in the method of holding lands have much to do with their value. The hopes and expectations of the people have large influence. Whatever stimulates enterprise and increases speculative energy enlarges the estimate of land value. Whatever depreciates abilities or discourages enterprise diminishes land value. Whatever encourages [pg 301] permanent improvements and far-sighted plans in farming increases land prices. Whatever discourages the spirit of improvement reduces such prices.
In some of these ways it is possible to account for great differences of value in regions apparently equal in natural advantages. Thus nobody wants lands in Turkey, however fertile, in comparison with lands in a free country like ours. Countries under a poor system of agriculture with inefficient labor cannot maintain high value of land. Ignorance and thriftlessness in a community of laborers operates in the same way. Thus the habits of the people, as well as their laws, enter into the question of rent. In countries where large estates are parceled out to renters, generation after generation, the customary terms of leases as to time, method of payment, adjustment of improvements, restrictions as to methods of tillage, and requirement of capital, enter largely into the question of rents. In some the fear of eviction under arrearages cuts a prominent figure; in others the confiscation of improvements destroys all enterprise. Upon the continent of Europe, in some places, the payment of rent in produce,—what we call working of land upon shares,—greatly limits individual enterprise, though it gives to the land owner a direct control in the methods employed on the land. Restrictions of law or of custom upon transfer of ownership always have the effect of diminishing the general productiveness by hindering the natural competition of productive enterprise. The result of all laws of entail, by which enormous estates are held from generation to generation under control of the same family, is universally deprecated because of its interference [pg 302] with the natural law of supply and demand as to farms and homes. All such restrictions favor the spirit of monopoly and cultivate arbitrary power, which in every way hinders progress.