Rack-rent denotes two different concepts:
# an excessive
rent
Rent may refer to:
Economics
*Renting, an agreement where a payment is made for the temporary use of a good, service or property
*Economic rent, any payment in excess of the cost of production
*Rent-seeking, attempting to increase one's share of e ...
.
# the full rent of a
property, including both land and improvements if it were subject to an immediate open-market rental review.
The second definition is equivalent to the
economic rent of the land plus
interest on
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
improvements plus
depreciation and
maintenance—the normal market rent of a property—and is not inherently excessive. Also, this may be different from the rent actually being received.
Historically, rack-rent has often been a term of protest used to denote an unjustly excessive rent (the word "rack" evoking the medieval
torture device
Torture is the deliberate infliction of severe pain or suffering on a person for reasons such as punishment, extracting a confession, interrogation for information, or intimidating third parties. Some definitions are restricted to acts c ...
), usually one paid by a
tenant farmer. The two conceptions of rack-rent both apply when excessive rent is obtained by threat of eviction resulting in uncompensated dispossession of improvements the tenant himself has made. I.e., by charging rack-rent, the
landowner unjustly uses his power over the land to effectively confiscate wages, in addition to merely charging the tenant interest and depreciation on the capital improvements which the landlord himself has made to the land.
When there is no accessible rent-free land, any improvements in the condition of society, be they in the form of civilizational progress or local improvement, are recaptured in the form of higher land values, and the leftover wages after rent is paid will tend towards subsistence, as described by
David Ricardo's
Law of Rent
The law of rent states that the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use, relative to the advantage obtained by using marginal (i.e., the best rent-free) land for the same purpos ...
. Such rents can be described as rack-rent, and this sense of the term is economically meaningful, and distinct from other forms of rent.
In Ulster in the 1700s, "... landlords were able to 'auction off' leases to the highest bidders. That practice, known as 'rack renting', forced renters to bid more than they could afford to pay."
[H. Tyler Blethen and Curtis W. Wood Jr., ''From Ulster to Carolina,'' Revised Edition, North Carolina Dept. of Cultural Resources, Office of Archives and History, Raleigh, North Carolina, circa 2013, p. 17.]
See also
* ''
Castle Rackrent''
References
External links
Dictionary definition
{{DEFAULTSORT:Rack-Rent
Renting