lower rents. Improvements in the science of agriculture may make lands productive which were once thought useless. Swamps may be drained and dry lands may be made productive by irrigation. Rents of agricultural land in New England have fallen with the opening of rich western land and it no longer pays to grow wheat in New England.

Urban Rents.-Location is the one thing that affects rents in cities. The land in the centre of the city always commands the highest rents. The centre of the city is always devoted to business. Some portions are more desirable than others and for this reason rent for larger amounts. If you were considering opening a clothing store in a city, you might find that the best available location would require $20,000 a year rent for the land. Another piece of land might be rented for $5,000 a year. The $20,000 plot might be the better bargain because the sales would much exceed those that could be made in the cheaper section of the city. Ten thousand sales at an average profit of $5 per sale in the better location would yield a gross return of $50,000. After paying $20,000 rent there would be left $30,000. Out of this sum perhaps $5,000 would be taken for the services of clerks who would not be required in the cheaper location. In the cheaper section of the city 2,000 sales at a profit of $5 per sale might be made. This would produce a gross return of $10,000, and after paying rent there would be only $5,000 left. It is seen from the above illustration that high rents do not necessarily mean high prices.

Within the business section of a city, rentals vary from place to place. The business which can afford to pay the

highest prices gets the best locations. Outside the business portion of the city lies a belt which may be used for manufacturing, trade, or residences. This belt may be regarded as the margin for purposes of trade. Near the railroads or water are the best sites for manufacturing.

Rents for residence purposes differ with the demand for land in each section. Land used for poor tenements may command a high rent because of the income which may be obtained from such tenements. Land in the fashionable section of the city will yield high rent because people are willing to pay high prices for it. On the other hand there may be "no-rent land" on the outskirts of the city where "squatters" are living on land in little hovels of their own construction and from which the owners of the land do not take the trouble to evict them because for the present there is no profitable use to which the land may be put.

Changes in Urban Rents.-Rent of urban lands does not continually rise as is often supposed. Changes in lines of transportation and changes in the population of a section of a city may cause rents to fall. The erection of a jail or a hospital often depresses the value of adjoining land. The building of the Brooklyn Bridge caused rents to fall in sections of Brooklyn that had been on lines of communication with the ferries and caused rents to rise on the new lines of communication with Manhattan Island. New suburbs made available by new means of transportation may cause rents to fall in certain residential sections of a city.

Summary.-Economic rent is the payment for the use of land, mines, water-power, or other natural agents of production. Two items enter into the rent of agricultural

land. They are fertility of the soil and location. The poorest land actually used for raising any agricultural product is the margin of cultivation for that product. There may be rent paid for the use of this poorest land or it may be no-rent land. The rent of better lands varies with the advantages they afford. Rent is not the cause of high prices of farm products, because poorer lands are not cultivated until rise in prices makes it profitable to till these lands. Rents of agricultural lands do not always rise with increase of population as the margin of cultivation may be raised by new and fertile lands being opened to cultivation. Rents of city lands depend wholly upon location. The rents of these lands depend upon what people are willing to pay for them for business purposes or for residences. High rents for stores do not necessarily mean high prices. Rent of urban lands is measured by the degree of superiority of the land in question over the poorest land devoted to the same use. Rents of urban land rise or fall with changes in the desirability of such land.

TOPICS FOR DISCUSSION, DEBATE, AND SPECIAL REPORTS I. Do you know of any "no-rent land" in your community? Have there been any recent changes in rental values in your city? What has caused these changes?

2.

3.

Some retail dealers advertise that they can sell goods cheaper than others because they pay less rent. Are such claims always well taken? Are they sometimes true? Explain. What portions of the business section of your city rent for the highest amounts? Why? Why are rents on one side of a street sometimes higher than those on the opposite side?

4.

Ask some old resident of your city what was the fashionable part of your city for residence purposes forty years ago. What changes have occurred since then?

5. Give an example of the rise and fall of rents in urban property. In agricultural lands.

6. Suppose that 60,000 bushels of potatoes are required to satisfy the wants of a small city and 10,000 bushels are supplied by one farmer. Suppose further that this farmer, owning his own land, should decide to sell his potatoes without including any charge for rent and without regard to the current scale of prices. What would be the effect (1) upon other producers of potatoes? (2) upon prices? (3) upon supply?

CHAPTER XXV

WAGES

Wages are the laborer's share in the products of industry. They are advanced by the employer before the goods are sold but they must finally come out of the product. Labor in the economic sense includes all efforts, whether of mind or body, devoted to the creation of wealth. The salary of a superintendent of a mine is a wage just as is the pay of a miner. Wages may vary from a hundred thousand dollars a year paid to a railroad president to a few dollars a day paid to a section-hand.

Limits of Wages. Since wages are paid out of the products of industry, it is apparent that in the long run a laborer cannot receive more wages than the value he adds to the article he produces. The lowest limit of wages is an amount barely sufficient to support the laborer and his family. Should wages fall below the point of subsistence there will be, in the long run, fewer laborers and therefore wages must rise. The lower limit of wages is seldom fixed at the point of subsistence. Usually it is fixed by the standard of living. At any one time the laborers in any employment are accustomed to a certain amount of necessaries, comforts, and luxuries. This is their standard of living and they will not abandon it without a struggle. The standard of living cannot affect wages except as it influences the supply of labor. So long as laborers will not marry unless they can maintain a high standard of