{06 ECONOMIC PRINCIPLES

difference provides the fund from which the rent of the site
may be paid. The price which is worth offering for the site
depends on this prospective difference, and is limited by it.
As in the case of agricultural land, it is with reference to
the most advantageous utilisation of the area, under the
circumstances of the time, that the rent-paying power of the
site is determined. If, for any reason, the site be utilised
for a less advantageous purpose, those interested must be
supposed to see some indirect compensation for the sacrifice
involved in devoting to a less productive purpose what was
suitable for a more productive one. When once the site has
been improved, the building erected may, in course of time,
become not fully suited to the needs which have developed.
Its actual usefulness will determine the rent-yielding power
of site and building together so long as it remains, and a
comparison of this with the best use that could be made of
the site, if unencumbered, will determine whether it is more
profitable to leave the building as it exists, or with minor
adaptations to existing needs, or to replace it with a new
building, more fully adapted to the new conditions of the
locality. It is almost obvious that high rental values of
building-sites can only exist where there can profitably be
made costly improvements to the site; only where large
amounts of capital can be turned to use in connection with
the site can it be worth a large rent. The rent arises
because of the opportunity for using the capital so as to
secure a return in excess of the cost of securing the use and
replacement of the capital. The rent is, in fact, the price of
that opportunity. As in all cases of rent, if equal opportunities
 of profit could be found without using the rented
object, there would be no stimulus to the payment of rent
for its use, Because land affords opportunities, and in the
degree in which it affords opportunities, for using capital and
labour with greater profit than elsewhere, it becomes worth
while to pay for the privilege of access to those opportunities,
and to pay any price which leaves some residue of advantage
to the purchaser of the said opportunities,
In passing, special attention may be directed to a
difference already noted between agricultural and building