Decorah public opinion. (Decorah, Winneshiek County [Iowa]) 1895-1928, 1914-01-28
TEE ADVANCE IN LAND.
The Three Elements i'm Land Prices
Discussed by Wallaces' Farmer.

and have been for years, whether
land in the corn belt will continue to
advance, how far it will advance,
when it will reach the highest point
and whether it Will hold firm at that
point or whether it will fall, and if
so, how far, and when it will reach
the lowest point and again begin to
advance. To expect us seriously to
answer any Of these questions would
be to endow us with the spirit of
prophecy. Not wishing to buy land,
and having no land for sale, we
might be in position to answer
these questions at least impartially,
merely giving our opinion for what
it is worth. Our own private opin-
ion Of our opinion on this is that it
would not be worth much; and hence
we don't give it.
These often repeated qustions,
however, have set us to analyzing the
subject, to try TO answer to our own
satisfaction at least this problem !:
What determines the price of land
anywhere in the wide world? AS far
as we can think it out, there are at
least three elements in land prices
the speculative, the productive, the
social. [
By the speculative we mean the
prices that men pay because they
believe the present price will go
higher. In other words, their esti-
mate of the future unearned incre-
ment. By "unearned increment" we
mean the advance in price because of
the limitation in the supply, the set
Ting up of the country, the growth
of the cities, the improvement in the
roads, the opening up of new and
better markets; in short, the in
crease that will come, apart from
that due to improvements that the
owner himself will make on the land.
This is the speculative element in
land prices; and between the years
1889 and 1909 it has been very
great in the corn belt-10.8 per cent
per annum, if we are to trust the
census reports. We don't doubt it.
There have been good reasons for it.
1t has been continuous, though we
think at less rapid rate, for the
four years since the date of that CEN
sus. The limit of the best land has
been reached. The population of the
entire country has been increased.
Eaters have increased much more
rapidly than producers. The rail-
roads have given better opportuni-
ties for marketing.
The question that is troubling
good many people now is Has the
price of land gone higher than condi-
tionst warrant? Has it been pure
speculation, guessing at the future;
or have the prizes been justified?
How will the new tariff affect the
price OF land? How will the new
currency bill affect it? There are
some who believe 1--WE do not say
reason) that because land prices
have been advancing for fourteen
years and longer, they will continue
to advance. Others believe that for
that very reason they have reached
their limit and will not continue.
There is this to be said about
speculative value: that the farmer
had little or nothing to do with it one
way or another. He did not make
the land in the first place. The cit
les grew without his help except in
the way Of feeding them. He did
not build the railroads. or if he did.
1t was a gratuity and not an invest
ment. The upward swing of the
speculative wave came along, caught
him up and carried him with it.
When it stops, he will stop: and i'll
1t should recede, it will carry him
with it.
The second element in the price
of land is its productive value. its
capacity for producing crops. The
actual productive value of land has
had something to do with prices in
the last fourteen years, but not very
much. The farm growing thirty
bushels Of corn to the acre has been
selling, other things being equal.
about as high as the neighboring farm
that produces fifty bushels. The mol
tential producing value has had a |
good deal more to do with prices. !
Ihat Is, rich lands in state of rich
lands have sold relatively higher
than rich lands in a poor state or a
poor part OF state, because poten-
tlaliy more productive; but the per-
centage of increase has not varied
greatly whether the land was in a
poor section or rich one. All this
shows that the advance has been all
most altogether speculative.
speaking generally, land that now
sells at 500 an acre does not nro-
luce more bushels of grain than it
lid when IL cold % era go -