INCOME AND CAPITAL

writers. The income from land is thus both rent and in-terest just as truly as the income from a typewriter or abond. We can and do capitalize land rent just as truly aswe do house rent. For example, land worth “20 yearspurchase” yields 5 per cent interest. All this is true quiteirrespective of the question of distinctions between landrent, on the one hand, and house rent, piano rent, type-writer rent, and so forth on the other. 12 It is a questionof that sort of price which links one point of time withanother point of time in the markets of the world. Andit is a question concerning every branch of economic the-ory in which the time element enters. The rate of interestis the most pervasive price in the whole price structure.

As to profits, I believe the most fruitful concept is alsothat of the man in the street. When risk attaches to anyone of the aforementioned forms of capital—humanbeings, land, houses, pianos, typewriters and so forth—the man in the street calls the net income profits. Andprofits, likewise, may be measured either (as rent) inrelation to the physical units producing them, or (as in-terest) in relation to the values of these profits; that is,either as dollars per acre,. per room, per piano and soforth; or dollars per $100 worth of land (houses, pianos,and so forth) ; or as dollars per share of ownership in anyof these; or dollars per $100 worth of such shares. Topretend that either interest or profits is the income solelyfrom capital goods other than land and that these twoconcepts are inapplicable to land—to pretend, in short,that wages, rent, interest and profits are four mutually

“ Cf. Fetter, Frank A., Interest Theories Old and New, American Eco-nomic Review, March, 1914, pp. 76 and 77; Fetter, Principles of Eco-nomics, pp. 122-127; Davenport, H. J., Interest Theory and Theories,American Economic Review, Dec., 1927, pp. 636, 639.

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