We have noticed already that land, which is a short and expressive term for natural resources, is one of the factors of production; and that the other two chief factors, labor and capital, are useless without its cooperation. Now we may properly turn our attention to a more detailed examination of the part which land plays in the production of economic goods.
Land is the basis of all production, the source of all economic wealth. From it, directly or indirectly, come all of the raw materials on which the whole process of production rests. Labor and capital take the raw materials of nature, and then create, as we have seen, utilities of form, place, time, or possession, but farther than that they cannot go. Land as such labors without reward, and its products are free to him who will come and take them; who under conditions of modern society is the landowner. Of the three chief factors in production, land alone is incapable of being appreciably increased in amount: for all practical purposes the surface of the earth is fixed in area, and its productive qualities are fairly well known. At least they are predetermined, and merely wait to be utilized by labor and capital.
To get a clearer understanding of the term "land," let us divide it into its numerous subdivisions. There is the large area of farm land from which the world gets its food supply and a great deal of its material for clothing; the forests provide lumber and fuel; city lots furnish sites for dwellings, stores, warehouses, and factories; from the mines come fuel, iron, and precious metals, and from the quarries, stone for building and other purposes;
Relative Proportion of Improved and Unimproved Land Area in Farms to the Total Land Area of the United States: 1860, 1890, 1910.
Waterfalls generate power; while waterways, harbors, and railroad lands facilitate the transfer of goods from the producer to the consumer. All these are but different phases of the same factor - namely, land, or natural resources.