SECTION I. - RENT.

Rent is the compensation paid for the use of land and its appendages, commonly called real estate. It implies ownership of land, and a right on the part of the owner to receive a compensation for its use when he lets it to another.

In Great Britain and other countries, where the influence of the old feudal system is still felt, the problems of rent are many and complicated, because the titles to lands are encumbered by entails and mortmains. But in our country lands are held in fee-simple, which makes the ownership absolute, and the transfer by sale or lease easy and simple.

For agricultural purposes, the amount of rent which land will command must depend mainly on its productiveness, which is determined by the fertility of the soil, and the situation with reference to a market for the produce. Fertile lands near to a good market command the highest rent, because the farmers are assured of both good crops and good prices. With reference to a new country inland, the opening of railways and other facilities for tranportation enhances rents: first, by virtually bringing the lands near to the old markets; and, second, by favoring the emigration of population to build cities and develop varied industries, and so to form new markets.

Beauty of situation, good neighborhood, and proximity to schools and churches, are also minor con

siderations of more or less weight in determining the rents of agricultural lands.

In this country, farms are quite commonly rented 66 on shares; that is, the landlord receives in compensation for the use of his land a certain proportion of the crops. The capitalist thus shares with the laborer the risks as well as the profits of the business.

In cities, rents for lots and buildings are determined almost entirely by location, with respect to centers of business, the character of the neighborhood, and the freaks of fashion. A store in the center of business will rent for much more than one half a mile off, because a merchant there will sell ten times as many goods as in the other location. A residence in a respectable or fashionable quarter of the city commands the highest rent, because it secures pleasant surroundings, or gratifies pride and vanity. With the growth of cities, the centers of business and the fashionable quarters are subject to change from time to time, so as materially to vary the rent-value of property; and this fact needs to be considered when capital is invested in that form.

Generally, except in the favorite locations of great cities, rents are fixed at a lower percentage on the market value of the property than the average rate of profits from business, and less than the average rate of interest. The chief reasons for this are the greater security of capital in real estate, and the probability, that, with the advance of society, the value of real estate will be increased. Property

in land cannot be run away with, nor destroyed, nor fraudulently disposed of; and not infrequently, by. the mere rise of value, a small capital in this form grows into a fortune.

EXERCISES.

1. What would be the effect on industry if a rule were established, that an owner of capital could have no compensation for its use when loaned to another?

2. Under such a rule, which would suffer most, laborers, or capitalists?

3. If it is right for one to borrow capital for his own advantage, is it wrong for the lender to claim a share in that advantage?

4. What does the term "real estate" include?

5. Could the resources of the earth be developed to advantage, if there were no private property in land ?

6. Why will a poor farm near a seaport command higher rent than one of richer soil a hundred miles away?

7. How has the opening of railways to the West affected the value of New-England farms?

8. Why does the character of its neighborhood affect the value of a farm?

9. Illustrate the great inequalities in the rate of rent for city property, and the reasons therefor.

10. Why should the average rent for real estate be but five per cent on its value, when the average interest for money is eight per cent?

11. Can you give an instance, and the facts, of a fortune made by the purchase and management of real estate ?

SECTION II. -INTEREST AND DIVIDENDS.

Interest is the compensation paid for the use of capital estimated in money. This is to be preferred to the more common definition of interest as "the price paid for the use of money," because it covers the whole ground. Money as the medium of exchange is the most convenient form in which loans. can be made. When credit is extended in any way, the value is set down in terms of money on which interest may be reckoned as the parties agree, or as the law may prescribe. But it should always be borne in mind that what the borrower wants is not the money, but the capital which it represents, or for which it is immediately expended.

Thus one may buy land for a site, and have a building erected on it, and purchase a steam-engine and machinery for a mill, and cotton to be worked up, at each step giving his note for a part of the value, to be paid at a future date with interest. Or, instead of doing this, he may borrow of a friend or at the bank money enough to meet his deficiency, giving his note for the whole with interest; and then set up his establishment complete, by purchases made for cash. The transactions are essentially the same. In the first case, the loan is made of the capital directly, without passing any money; in the other case, the money is only a means of reaching the capital. The land, the mill, the engine, the machinery, and the cotton are what the manufacturer

wants, and what he actually borrows as capital for his business.

Interest is reckoned at a certain per cent of a certain value defined in terms of money, which is called the principal. The percentage is called the rate, and is usually stated as the rate per annum, though often payable at shorter intervals than a year.

The word interest is a Latin verb, and means, “it is of advantage." The term implies a mutual advantage to borrower and lender, and thus recognizes the natural and necessary partnership of capital and labor. It is for the advantage of the skillful laborer to borrow, at a reasonable interest, as much as it is for the advantage of the capitalist to loan. Were there no money-lenders, there could be no moneyborrowers; and, were there no money-borrowers, the industrious artisan would be the greatest sufferer. The parties come together for their mutual advantage. Why, then, should it be thought any more odious for one to lend for his own advantage, than for another to borrow for his own advantage? So far as the transaction itself is concerned, both must be regarded as equally honest and honorable. This mutual advantage marks the chief difference between a loan and a gift. A gift implies benevolence: a loan implies interest. A giver sacrifices his own advantage for the benefit of the receiver: a lender and a borrower confer each a benefit on the other, adjusted as equitably as possible. Lenders are sometimes avaricious, exacting, oppressive. So, too, borrowers are sometimes profligate, negligent, fraudulent. These are abuses which selfishness