t
upon his note. If he borrows the same machine from his neighbor under
contract to return the machine in good condition at the end of the season,
he pays rent for its use. The young man who borrows his neighbor's farm,
expecting at the end of five years to make that farm his own, gives a
mortgage note, promising at the end of five years to return an equivalent
value for the farm, with annual interest. If, on the contrary, he expects
to return the farm itself at the end of five years, without reduction in
value, he makes a lease, embodying this agreement, with annual rent for
use of the farm.

Both interest and rent are liable to involve the element of risk as to the
proper return of the valuable thing promised, and to that extent they
partake of the nature of profits. The true interest and rent are
independent of the possible risk, and have to do simply with the advantage
naturally accruing to the possessor of wealth from its use as capital, and
forming one of the chief reasons for accumulating wealth at all.

In technical discussion the term rent is usually confined to the
compensation secured from appropriation of space, peculiar location,
natural fertility, mineral deposits, water privileges, or any natural
advantage to be used in production. In this limited meaning rent is
confined to the advantage gained by the owner of wealth in any form so
affected by the law of supply and demand as to gain a scarcity value. The
term unearned increment,--meaning an increase of value without cost of
exertion,--has been largely applied to such cases, and illustrations are
taken chiefly from the ownership of land and similar natural forces. The
same unearned increment, however, accrues to the possessor of any article
of value or any personal attainment, which through increasing wants of the
community becomes, on that account alone, more valuable in market. Thus a
bin full of wheat, saved from a year of plenty to a year of scarcity, has
gained a value abnormal,--that is, from the fact of its scarcity. Yet no
one would think of applying the term rent in such a ease, because the
foresight which stored the grain gains its compensation in profits. If the
same kind of foresight has plotted a city upon wild lands, and held a
portion of those plotted lots until a crowded population competes for
their use, such wealth is said to be gained upon the principle of rent.
The difference seems to be chiefly in the greater permanence and the
gradu