several alternative uses for a piece of land, it became evident that only the lowest of these uses yielded no rent at the margin. The worst hop-land paid a positive rent, the worst market-garden land, the worst building land, because the worst acre for any of these purposes was not “marginal” for wheat growing, pasture, or some other alternative use from which it was diverted.
This reflection made it obvious that “land” did not differ from capital and labour as regards price and productivity. There existed in any productive community capital, in the sense of plant, raw materials, etc., which was inferior to other capital, and was only just worth using at any particular time if its service could be purchased at a nominal price, just covering cost of maintenance or of replacement. So likewise with the labour available at any given time for some particular purpose: it varied in quality or efficiency and the least efficient worker only got a bare subsistence wage. The more efficient plant and labour got payments corresponding to their superiority over the “marginal” plant and labour. My mind, working along this comparison, sought to grade all the factors of production according to their degrees of efficiency, and to apply to industry in general the law of differential rents and of margins. Payments out of the price of the ultimate products thus emerged under several: heads, applicable to each of the factors: first, costs of maintenance or replacement, applicable
