limits, inefficient production of crops, the area of production of which is naturally or economically restricted, must exert an influence similar to a crop shortage, which often results in a greater relative rise in prices per unit than the relative decline in aggregate production.56 In so far as inefficient farming is promoted by tenants the effect may be somewhat to stimulate land prices through this "shortage" influence on production. As the areas of land suited to the production of staples become more definitely fixed, and as a greater demand is made by population for the products of those areas, the influence of inefficient production must become greater in this respect.

Still it is probably true that the rise of land prices has exerted a greater influence upon tenancy than tenancy has exerted upon the rise of land prices. Lands increasing in value so as to give a high annual rate of return on previous valuations tend to be capitalized at a more conservative rate of interest on the earning power than lands increasing in value more slowly. The tenant is not in a position to pay prices based on such a conservative interest rate. The rise in land prices has doubtless exerted this kind of influence most pronouncedly in the cerealgrowing counties. In five counties in Central Illinois the average prices of land and buildings per acre increased over five-fold between 1880 and 1910,57 as against an increase of about half as great for the state as a whole. Between 1900 and 1910 the relative increase in the value of land and buildings per acre was about twice as great in the East Central counties as in the Southern counties. The greater multiplying power of capital invested in the old prairie district has had much to do in increasing the size of holdings among land owners and of decreasing the chances for tenants to become owners in those districts.

The historical study shows that tenancy became more prevalent during the time when the state underwent an increase in (1) the percentage of land area improved, (2) the average number of acres per farm, and (3) the average value per acre of

56 Thompson, J. G., in Publications of the American Economic Association, IX, 68-70.

57 The percentage of increase in the value of land and buildings per acre in the five counties was as follows: Champaign, 551; Douglas, 514; Ford, 545; Moultrie, 596; and Piatt, 518. See Census, 1910, VI, 426-435; and 1880, Agriculture, 111, 112.

products and of farm property. To a large extent tenancy has been increased and operation by owners diminished by the changes in these accompanying conditions. The rate of increase in tenancy has been augmented, no doubt, by the declining rate of increase in the farm area. The rate of increase in tenancy has been less than the increase in the value per acre of products and of land, and greater than the increase in the average size of farms.

Considering both sectional and historical aspects of tenancy growth in Illinois it seems to the writer that the extent, distribution and growth of land leasing is best explained in terms of the purchasing power of the rental income of the farms. The ability of an owner to retire from the operation of a farm is not to be measured solely in all cases by his income from that farm. He may have other income-bearing property, although, so far as farm property is concerned it is fair to say that the representative holding is one farm.58 Again he may have income from some supplementary occupation, although this condition does not seem to characterize any great number of retired farmers. Landlords whose ownership of land is incidental to their careers in non-agricultural lines are somewhat numerous in some parts of the state. After allowing for these exceptions, it is probable that the purchasing power of the rental income of a farm is the main factor in determining whether the owner rents his place to a tenant or farms it himself.

The rental income of a farm is, of course, only the landlord's share of the economic rent of the place.

The tenant's portion of this annual surplus of returns from cultivation over costs is probably subject to less variation in absolute value than the landlord's portion. This means that the tenant's share in the surplus is probably smaller, relatively, when the surplus is large, and smaller, absolutely, when the surplus is small. The possibility a tenant has of saving is probably greater where the kind of farming operations he engages in is such as to place a premium upon diversified knowledge, operating capital and managerial ability. Such a condition prevails more especially in Northern Illinois. In Central Illinois the farming method does not require such diversification of

59

58 See below, p. 76.

59 See Stewart, C. L., An Analysis of Rural Banking Conditions in Illinois, 19, 20.

technical knowledge, and competition for farms to rent is especially severe.60 In Southern Illinois the surplus of operations and the acreage per farm are both small. In Southern Illinois tenancy has undergone very little change; in Central Illinois it has been highest and increasing somewhat; while in Northern Illinois it has been increasing at a rapid rate. In Northern Illinois the prosperity of tenants appears to have been responsible for their tendency to multiply in numbers, while in Southern Illinois the opportunity for tenants to rent seems to have been restricted. In the prairie district of the state tenancy has probably been stimulated by the higher rental income per owner, which has not only freed owners from the necessity of operation, but has caused the land to be capitalized at such a low rate that the tenants are not able profitably to own farms.

To summarize, it appears that the forms of tenure have been phases accompanying, limited by and modifying the conditions and changes in the agricultural economy of the state. The prevalence, sectional character and growth of farming by tenant operators is chiefly governed by the real value of the shares of the owners and tenants in the surplus of operation. Tenancy forms a sort of cumulative index of the effectiveness of the desire of the owners to escape the operation of their land, and of the ineffectiveness of the desire of tenants to become owners.

6o For several years nearly all news items in Chicago papers relating to cases where from 25 to 50 bids were made for farms offered for rent came from towns in Central Illinois.