rs or sacrifices
required to produce the land itself, but the curtailment of the
natural resources available for productive use elsewhere. This is the
real cost of which rent is the money measure, and generally speaking
an accurate measure at the margin of transference between one
occupation and another. A somewhat fanciful use of the term cost, this
may seem perhaps, one not quite in accordance with our instinctive
sense of what real costs should be. But possibly the real costs
represented by wages and profits may turn out to be not so very
different, and we had best leave the matter there, until we have
examined the nature of these other costs.

Sec.7. _Rent and Selling Price_. In this chapter we have spoken mainly of
the rent rather than the price of land: the relation between the two
things is fairly obvious and well understood, but it will be well not
to close the chapter without a brief account of it. The price of any
piece of land is affected by all the considerations on which its rent
depends, but it is also affected by another factor which has no
influence whatever upon rent. This factor is the rate of
interest. The higher the rate of interest, the higher the return which
a man could obtain by buying gilt-edged securities, the lower will be
the price that he will pay for a piece of land which yields a given
rent. We can express the relation more precisely by the formula Price
= (Rent * 100)/(Rate of Interest), though we must be careful, in
applying this formula in practice to allow for the possible deviations
between the nominal and the true rent, and similar complications. The
price, it must be observed, is derived in this way from the rent, not
the rent from the price.[1] Rent is thus logically the simpler, price
the more complex thing. It is well, therefore, to analyze in the
first instance the principles of rent, if we live in a country where
the practice of leasing land for annual rent is less common than it is
in Great Britain, even if, for whatever reason, it is the price of
land with which we are concerned in practice. The problem of price
contains two distinct elements which it is not easy to handle when
mixed up together. For the rate of interest represents in itself an
important branch of economics, which will require a separate chapter
to itself.

[Footnote 1: In this the rent of land differs fundamentally from that
of other things, such as houses. For the price of a house is largely
influenced