We have, thus far, noticed only the rent of land, without reference to what may be placed upon it for other purposes than direct production.

We now come to speak of real estate, consisting of dwellings, stores, warehouses, and the like.

When buildings are placed upon farms, they form a part of the preparations which are indispensable to agriculture; and, if erected with suitable reference to economy, will add to the value of land as much as shall be equal to their fair annual rent. Farming cannot be carried on without buildings; therefore, so. far as buildings are absolutely necessary, they will command a rent as certainly as the land itself. This must be true; and yet all know that "improvements," as they are called, in the shape of buildings, seldom increase the value of farms in proportion to their cost. For example, if the land alone is worth three thousand dollars, and buildings are put up costing two thousand dollars, the whole will not, ordinarily, sell for five thousand dollars. Facts of this sort are observed everywhere. Farms may, as a general rule, be bought, especially in all the older States, at much less than their cost, after making all due allowances for depreciation of buildings, &c. We observe, first, that buildings are not generally put upon farms for the purpose of selling or letting them. They are almost invariably erected by the owners of the land, in order to create for themselves a home. To make that home pleasant and desirable, a dwelling is erected according to the tastes of the owner and his family, rather than the direct profit of the farm. There is a natural and becoming competition among agriculturists to have pleasant, and, as far as may be, elegant residences. Hence, they build upon a more expensive scale than the business of agriculture will fully justify; and though they may be able to keep on, and even thrive, with their establishments, these are, nevertheless, a heavy charge upon their industry. Whenever, therefore, such farming properties must be sold, the purchaser will rarely, if ever, give more than a fraction of the original cost of the buildings. If, as is generally the case, he must make the money off his land to pay for the estate, he cannot afford the cost of buildings erected to gratify the taste of somebody else. He gets the extra improvements gratis, really paying only for the useful and necessary.

And, in the competition of cultivation in a community like the United States, it is to be remembered that its agriculture is a unit; that the products of the accessible and fertile prairies of the West are brought into the same markets as those of the hard and sterile hills of New England. And it is also to be taken into account, that a farm in Illinois, for example, with a productive power of five thousand bushels of corn, will probably not have upon it buildings worth more than one thousand dollars; while on many Eastern farms, of a productive power of but two thousand bushels, the buildings may have cost three thousand dollars. Now, as these farms are, in fact, competing in the same general markets, it is clear that the extra expenditures upon Eastern farms can pay but little, if any, rental, though they may be very pleasant to the occupant.

It is on the same principle that the amount expended in clearings, building walls around farms, and the like, do not, in the aggregate, return much rent or income, compared with their cost. They become, in the progress of years, to a considerable extent, like the gifts of nature, gratuitous. This is true of all countries, at all times.

In cities, where the value of real estate consists principally of buildings, and improvements made upon the land, we find that the land itself feels the operation of the first cause of rent or value, viz. location, far more intensely than anywhere else. An acre of land, once of the value of fifty dollars for agriculture, becomes worth five hundred thousand dollars for city purposes. Such, and even more extraordinary, instances may be found, showing to what extent the principle of location may be carried. The estimated wealth of cities consists, to a considerable extent, of the appreciation in the value of land which the increasing density of population and the concentration of business enterprise has occasioned.

Investments in commercial cities depend, of course, for success, upon commercial prosperity. Changes likewise take place in the business centres of every great city. There is much of mere whim and fashion in this; but, whether the commerce and trade of the city moves "up town "or" down town," rents move with it.

City property, in all thrifty communities, is sure, on the whole, to advance in value with the lapse of time; and hence it is always a favorite investment. Yet so great is the competition, so large the amount of capital in cities, that the net average rental is probably not greater than the ordinary rate of interest. Rents are based on permanent property that requires much care; interest, upon securities that may prove worthless, but which demand but little attention.

The absence of all restrictions upon the ownership and transfer of landed property and real estate, of all entails and mortmain holdings, makes the question of rent one of small practical importance. Where owning is the rule, and hiring the exception, as is the case with us, rents regulate themselves; or, in other words, are governed entirely by the operation of the laws of value. They advance or recede with trade and population.