DO HIGH RENTS CAUSE HIGH PRICES?
Persons, Warren M.
Do High Rents Cause High Prices? By WARREN M. PERSONS Asst. Prof, of Economies, Dartmouth College IN THE number of La Follette's Magazine, under date of February 26th, there is an article on...
...I am writing from New Hampshire, a state of many abandoned farms...
...Are the shoppers deceived, then, who go from Madison or Janesville, Wis., to Chicago in order to buy their goods of the great department stores...
...Herbert Quick says in La Follette's of Feb...
...Thus the landlord will receive more rent than f'rmerly...
...It is only through an increase in prices of agricultural products that an increase of rents or selling price of these lands can come about...
...26th, "Rent is paid over the counter in the price of the day's meal...
...Prices are determined entirely independently of rents...
...locations...
...Are the prices of goods at Wanamaker's in New York, or at Marshall Field's in Chicago, necessarily higher than the prices of other dealers who pay much less rent...
...A little consideration will show that the large rents on State Street in Chicago or on Broadway in New York are due to the fact that these streets are traffic centers...
...Secretary Wilson has a red-hot clue leading to the door of the retailer as the crimnal who makes life so truly dear to us all...
...The reason that the farms have been abandoned is because they cannot produce wheat, corn and oats in competition with the farms of Iowa and Minnesota at the present prices of those cereals...
...If this be true the owners of such abandoned farms must be entirely blind to their financial interests...
...If there is any economic proposition that can be said to be universally held by economists it is: High Rents do vot cau?e High Prices...
...Wanamaker is enabled to pay an enormous rental because his location enables him to make enormous sales...
...In considering agricultural lands Mr...
...A landlord of a location in the suburbs, or in a smaller city would be willing to take as much, but he can not obtain more than the site is worth for use...
...The farming lands of the West have increased in value from $50 to $100, or from $75 to $150 an acre because of the increase in the prices of their products and not vice versa...
...The State issues a booklet through the Secretary of State describing many abandoned farms which may be purchased for less than it would cost to duplicate the buildings on them...
...Quick says, "The 'abandoned farm' of which we hear so much is not worthless or naturally unproductive land, but merely land for which so much is asked in rent or purchase price that it cannot be economically worked...
...If higher prices can, for any reason, be obtained for goods than were formally received ar.J thereby the merchants are enabled to obtain greater profits than heretofore, they will bid against each other for favori...
...but if he will follow it earnestly, he will find that it runs out of the backdoor, and right to the strong-box of the landlord...
...The owners of favored sites simply absorb as rent what those sites are worth for business purposes...
...Quick claims that the difference in cost of living between Detroit and Windsor is illustrative of the difference between the costs in any larger city as compared with a small city, and that this difference is due to the fact that the purchaser in the large city contributes much toward the higher rents of its retailers...
...It is the increase in prices that ^uses the increase in urban rents...
...If prices should continue to rise it is probable that the time will again come when it will be profitable to work the abandoned farms of New Hampshire and Vermont...
...Any number of farms can be bought for $5 to $20 an acre...
...Prof, of Economies, Dartmouth College IN THE number of La Follette's Magazine, under date of February 26th, there is an article on "What Makes High Prices" that runs counter to economic notions that have been generally accepted since the time of Adam Smith and Ricaido...
...No ore expects to get a cheaper suit of clothes by leaving New York and going to Jersey City...
Vol. 2 • March 1910 • No. 12
