Note 181-4 — Chapter IV

In other words, the more fixed they are. Thus, for instance, dwelling houses in declining cities, canals, etc. which have been supplanted by better commercial routes; or again, the shafts and stulms of a mine which has been abandoned. When Versailles ceased to be a royal residence, the value of inhabited houses sank to one-fourth of what it had been. (Zinkeisen in Raumer's histor. Taschenbuch, 1837, 426.) A rate of interest greater than that usual in a country is seldom found where freedom of competition prevails, since it is necessary there to distinguish between rent and interest on capital. When in an open city, the capital employed in the construction of dwelling houses detractis detrahendis pays 8 per cent., while the rate of interest customary in the country is only 4 per cent., the supply of houses will grow continually greater. Only the difficulties in the way of transferring capital from one business to another could here retard the leveling process, which where the political prospect for instance was bad, might last a long time—one of the principal reasons why, in 1848, the rent of houses declined much less than their purchase prices. The conjuncture was not serious enough to prevent the increase of population; but it entirely stopped the building of new houses. On the other hand, a bridge or railroad company may maintain a high rate of profit because competition cannot exist in the face of the great expense such enterprises require; but especially because the party who has here the advantage of priority may lower the price of transportation to such a point as to entirely discourage his rival. Compare Hermann, Staatsw. Untersuchungen, 145 ff. Interesting example of the London gas and water companies in Senior, Outlines, 101.