§ 12. Unsuitability of the renting-contract in commerce. The renting-contract has always proved to be unsuited to most transactions of commerce and manufactures. As these classes of industry were developing rapidly in cities near the end of the Middle Ages and throughout the sixteenth, seven teenth, and eighteenth centuries, borrowing and lending in the form of or in terms of money was more and more employed, and in this respect there was a striking contrast between city industries and agriculture, where the renting-contract was almost universal.
The materials and appliances needed for manufacture and commerce are so manifold, and are so varying in quality, that the renting-contract is very cumbersome and difficult to en force. A merchant embarking on a trading journey would find great annoyance in renting a ship and a stock of goods. He must agree to repay the loan in goods of the same kind and quality as those received, a contract most difficult to inter pret and execute, and giving occasion to costly tests and count less disagreements. It was much easier for the merchant if he had not means enough for his enterprises to get others to go in on shares (a very common method) or to obtain a loan under the interest contract, i.e., either a money loan, with which to buy the goods, or an agreed price in money for all the goods borrowed. With the growth of industry and com merce, wealth increased in towns, more and more taking the form of goods which could not conveniently be rented, such as ships, wagons, tools, and stocks of merchandise! This simple difference in practice created and long fostered an illusion in the minds of economists, that land-rent was an income of a peculiar nature, governed by quite different laws from those that govern the income yielded by the machines, tools, and other agents in manufac turing and commerce. Various curious explanations of this contrast were given, all resting on the notion of some inherent differences in the kinds of goods, rather than in the form of contract. Traces of this notion still appear in the classification of wealth into land and artificial agents (often called capital) and in the assumption that rent and interest must in the very nature of things proceed from different classes of goods.
§ 13. Definition of rent. Let us now consider the term applied to the payment made under the renting-contract. The word rent comes from the Low Latin renta from renda, or rendita, in turn from redditus, that which is given, yielded, given back or returned. The French rendre (English
render), to give or return that which belongs to one, was used very early. Chaucer used "rente" as income: "Cat tle had he enough and rente," "cattle" probably meaning chattels (goods, wealth) and "rente" meaning income. The larger incomes of that time were derived as payments from vassals or tenants of estates. Rental is a collective term for a number of rents; the total yield of an estate was called its rental, and a list of the various sources of income, including all payments due from tenants in money, produce or services, constituted its rent-roll.
The word rent has continued to be used popularly as the amount paid by one person to another for the use of material things which must be returned to the owner after the time of use agreed upon. We speak of the rent of a house, boat, etc., using the word as a synonym for hire. In the European lan guages the word is used generally in that sense, tho with various shades of meaning. In French la rente means the income from any kind of property ; but corporate securities and national bonds particularly are called les rentes (prob ably because they are a form of investment yielding a per manent income), and one who has a fixed income from rents is called a rentier. In German the term Rente is used more broadly than in English, as an income of any sort, (Irund rente meaning the rent of land, and Capitalrente (like Capi talzins) the income usually in English called (according to conditions) either dividends or interest.
With this usage and the problem in view, we may define rent as the price paid for the temporary possession and use of a more or less durative agent which is to be returned to the owner at the end of the specified period. Thus broadly understood, rent as a contractual payment includes not only the price of the true usance, but usually also something more to cover repairs, wear and tear, services of the owner in pre paring and taking care of the use-bearer, collecting the rent, etc. It is useful to distinguish between the whole payment, the gross rent and the true, or net, rent which is that part of the payment that is left, after making due allowance for all the other items of cost. Net rent is the estimated price of the net usance.