The Concept of Usance-Value 1 1

THE CONCEPT OF USANCE-VALUE 1 1. Usance and usufruct: definitions. 1 2. Usance-value of agents yielding products of like grade. 5 3. Usance-value of agents yielding products of different grades. 5 4. Effect of the presence of one agent upon the usance-value of another. § 5. Usance-value determining utili zation. 5 6. Time as a factor in usance-value. 5 7. Usance-value and the margin of utilization. § 8. Usance-value of complementary agents.

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1. Usance and usufruct : definitions. As the use of a consumptive good involves the using up of the good itself, the value of the consumptive use is identical with the value of the good itself. But when the uses are separable, the problem of value presents more complicated aspects. The whole use of the good consists then of a sum of separable uses, capable of being separately evaluated. The concrete object which yields the uses may, by repairs and replacement, be treated as a durative use-bearer, capable of yielding either an unending or a definitely limited series of like uses. This theoretical possibility appears in a number of practical problems. It is involved in the careful use of any durative agent by the owner himself. It is the important consideration in the defi nition of the legal right of usufruct. In law, usufruct is "the right of using and enjoying the income of an estate or other thing belonging to another, without impairing the substance." One heir may have the usufruct for a term of years and an other heir have meantime only the reversionary right, which, however, entitles him to sue for waste if the substance of the estate is being impaired, as by cutting standing timber, neg lecting repairs, etc. The tenant of a rented farm has the usufruct, but must not impair (with minor exceptions) the substance of the farm. The value of the usufruct in any 135 given period may be called the usufructuary value, or usance value, as distinct from the value of the estate, or of the con crete object. We have now to consider how the usance-value is related to the value of the products, be they indirect goods, direct goods, or psychic income.

§ 2. Usance-value of agents yielding products of like grade. Consider the simple case where the products are themselves immediately enjoyable goods, such as fruit. The value of the use of the tree is simply the net-value (deduct ing costs of cultivation, etc.) of the fruit that the tree yields in the season. It is clear that if the farmer has his choice between a tree that yields 30 bushels and one that yields 20 bushels of like apples (this being the net difference after de ducting costs), he will value the season's yields of the two trees in the ratio of 3 to 2. The tree yielding the most fruit

is counted by so much the better, and relative values are at any given moment expressed by the relative quantities of products.

In a like manner, orchards (groups of agents) may be eval uated. In the Santa Clara valley, as in other parts of Cali fornia, there is a frostless belt, marked off by a narrow belt of uncertain climate from the laiids where, because of the prob ability of frost, it is quite unsafe to attempt to cultivate the delicate orange-tree and other semi-tropical plants. The usance-values of the orchards show gradations corresponding with the average Amount of net products from the frostless belt to the region of frost. In manifold ways differences in geolog ical formation affect the use of land and the success of many industries. On one side of a little creek may be limestone land, on the other shale, and the limestone land produces larger crops and therefore has the greater value. The value is plainly a reflection or derivative of the net-v lue of the products yielded during the period, and if other hings are equal the usance-values of two use-bearers in th same market will differ as do the quantities of like uses whit they yield.

§ 3. Usance-values of agents yielding products of differ ent grades. If now two ents be compared whose products are equal in quantity but of different grade or quality, the agents will obviously have ifferent usance-values correspond ing with the differences i quality. Take a well-known ex ample in the case of land. A peculiar mineral quality in the soil of a vineyard may impart to wine a choice flavor that can at once be recognized by experts, while other fields, distant but a few rods, cannot by any effort be made to produce wine of the same rare quality. There is said to be a marked dif ference in the success of orchards and of vineyards lying only a short distance apart on the shores of the larger lakes of New York. Nearness to the water moderates the tempera ture, often prevents frosts, and hence insures the ripening and enhances the quality as well as increases the quantity of the fruit. Where the peculiar nature, slope, or location of the land is found to be the cause of the exceptional quality of its fruits, the land acquires an exceptional usance-value as com pared with ordinary land in the neighborhood.