Sec.1. The Special Characteristics of Land.  In the great process of co-operation by which the wants of mankind are supplied, Nature is an indispensable participant.  She renders her assistance in an infinite variety of ways, of which the properties of the soil which man cultivates form only one; but the sunshine and rain which enable the farmer to grow his crops; the coal and iron ore beneath the surface of the earth, can be regarded for our present purpose as forming part of the land with which they are associated.  We can thus concentrate upon land as the representative of the free gifts of nature, which are of economic significance.  Land in modern communities is for the most part privately owned.  It can be bought and sold for a price, and acquired by inheritance.  Moreover, it is a common practice, particularly in the United Kingdom, for an owner who does not wish himself to cultivate or otherwise use the land, not to sell it to the man who does, but to lease it to him for a term of years for an annual payment which we term rent.  It is therefore natural and convenient to envisage the problems, which we shall consider in this chapter, as problems concerning the price and rent of land.  But, once again, the laws and principles which we shall state and illustrate in terms of the current systems of ownership and tenure, possess a much deeper significance than this terminology might suggest.

The fact that land is a free gift of Nature distinguishes it in various ways from commodities which are produced by man.  The peculiarities which are most important from the economic standpoint are (1) that the supply of land is, broadly speaking, fixed and unalterable, and (2) that its quality and value vary, from piece to piece, with a variation which is immense in its range, but fairly continuous in its gradation.  These are thus two aspects from which the phenomena of price and rent can be regarded; aspects which it is usual to call, (1) the scarcity aspect, (2) the differential aspect.

Sec.2. The Scarcity Aspect.  The fact that the supply of land is fixed has the following significance.  If the demand for land increases, the price will tend to rise.  This is also true, for a short period at least, of an ordinary commodity.  But, in the latter case, there would ensue an increase in supply which would serve to check the rise in price, and possibly, if production on a larger scale led to improved methods of production, bring the price down eventually below its original level.  In the case of land, no such reaction is possible.  There is nothing, therefore, to restrain the price (and the rent) of land from rising indefinitely, and without limit, if the demand for it should continue to increase.  Conversely, if the demand for land falls off, there is nothing to check the consequent fall in price and rent.  In the case of ordinary commodities, the supply would be diminished, because most things are either consumed by being used, or wear out in the