all of the products were of the same kind and quality. Like wise the comparison of costs might be made accurately in terms of day's labor provided labor were the only cost and were all of the one kind and value. But these conditions are rarely, if ever, present. To compare the items, therefore, it is necessary to express them all in common terms of monetary prices. A comparison may thus be made between the most varied products, and between costs of most varied kinds and the most varied kinds of agents.
The commercial rent paid the user of a durative agent of any kind is a gross sum which usually is more (or conceiv ably may be less) than the price of a true usance, according as repairs and depreciation have been attended to by the bor rower (see Chapter 14, section 3). A net or true rent, however, is that which leaves the use bearer in condition to yield an unchanging income (see above, section 2).
§ 7. Dependence of rent on proportionality. It may here be clearly seen that the origin and the existence of rent is de pendent on the operation of the law of proportionality. If intensive use of field A met with no resistance there would be no motive ever to cultivate another field. A whole nation could be fed from the single acre of land. But in fact, ap plying more and more labor and other agents to tract A will not increase the crop of grain proportionally. In applying any fund of complementary agents a point is found where it is better to go over to the cultivation of the tracts B, C, D, successively, each less fertile (case 1), or more difficult to cultivate (case 2), or less accessible and costing more for transportation (ease 3), than to go on cultivating tract A with more and more labor or, it may be, at higher and higher money costs. When this is done the return imputable to the additional (marginal) unit of cost on the intensive mar gin of cultivation in A just equals that of the additional unit on the extensive margin of B, C, D, etc. There comes about a static equilibrium, a best apportionment of agents to the different tracts under the existing circumstances.
This best ap rtionment of complementary agents has, of course, the re t of maximizing the net incomes from the various tracts. The better agents are more intensively culti vated than the orer agents for the reason that in this way labor is most advantageously utilized. This difference in degree of use appears generally in the form of differences in the kinds of products as well as in the amounts, each agent being used for the purpose in which it promises to yield the maximum usance, and, consequently, rental. A may be given
to commerce, manufacturing and residences, uses of varying degrees of intensiveness ; B, to market-gardening, C, to ordi nary farming, D, to grazing, forestry, and other extensive modes of use. And the simple guiding principle in the matter is this: that each thing is put to the use which. seems to prom ise the maximum income. This, of course, is true of labor, buildings, tools and machinery of all kinds, as well as of land.
§ 8. Rent and intensive utilisation. The origin and ex istence of usance- alue and hence of rent is essentially due to the limitation f supply of uses in the better grades and not to the exis ce of poorer grades forming an extensive margin of util' tion. If A were the only grade, rent must arise when it is used intensively. If in accordance with the principle of proportionality the successive units of labor (or of all money costs) are applied so that they become less ef fective, usance-value must arise. If now, B is there wait ing to be used, the rent on A would have to equal about 2 bushels per acre before cultivation could go over to B. The effect of the presence of the poorer grade B, is not to cause the rent on A, but merely to ch ck the rise of usance-value through affording a substitute od. And so, in turn suc cessively lower grades of agents become part of the supply as rent rises, and thus they limit its rise. The problem of usance-value and of rent here touches on the border of the problem of the value of the complementary agent, labor, and may better be explained under wages.' Rent is not an iso 4 This is the same principle explained above under usance-value, sated price problem, but it is interrelated with that of the prices of all agents uniting to obtain a product.
§ 9. Divergent valuations of different bidders. In ex plaining the differences in the rents of agents we have thus far mentioned as affecting the result only the limitation and variation in the physical qualities of the agents themselves, whether it be the fertility of the soil, the height of the water fall, the mechanical efficiency of the machine, the convenience of location, or anything else. These are solely objective dif ferences, whereas there are many subjective (that is, human, personal) differences that influence the result, causing the individual bidders, either borrowers or lenders, to value a particular usance differently.