Available data on the frequencies of escape clause adoptions under different contracts do not refute my suggestions.A survey conducted by the University of Nanking,covering four provinces in China in 1935,reveals that the escape clause（as in contract samples a and c）was adopted in 83 percent of the crop（fixed）rent contracts,63 percent of the cash（fixed）rent contract,and not at all in share contracts.[10] The higher frequency of adoption for crop rent than cash rent is what we would expect.In the event of a generally poor harvest,the market price of agricultural yield will rise,and with cash rent the tenant's income will be compensated by the rise in price more than with crop rent;hence,the escape clause will be less preferable to the tenant.
The existence of the escape clause in the market implies,other things being equal,a more frequent choice of fixed-rent contracts than of share contracts.Outside China in Southeast Asia,before the agrarian reforms,the escape clause was unpopular.There existed,however,some guaranteed minimum rents or wages associated with share contracts.These guarantees could be similarly analyzed with the suggested choice-theoretic approach if more information were available.The different market practices explain,in part,the higher frequency of share contracts in Southeast Asia than in China.Indeed,the fermiers of the French metayage,the escape clause associated with fixed rents in China,and the minimum guarantees associated with share rents elsewhere are market practices that serve as intermediate arrangements between pure fixed rents and pure share rents.Each of them has different risk distributions and transaction costs,thus widening the range of contractual choices.Why these intermediate arrangements differ in different markets is a question I do not seek to answer.
Turning to sample contracts of share rents in China,we find that their stipulations are more complex than those of fixed rents,owing to the added stipulations on tenant inputs and crops to be grown.
Sample d-share contract with uniform sharing percentages for all crops（Shantung Province）：
Tenant A agrees to cultivate[so many mows]of land for landowner B.We hereby stipulate that tenant A provides[so many head]of water buffalo,[so many bodies]of men;and every year the tenant must cultivate wheat once,Indian corn three times,and soybeans twice.Fertilizer expenses are to be shared[in certain proportions].The yields of all crops are to be shared[in certain proportions].The lease may terminate only after the autumn harvest.[11]
Sample e-share contract with varying sharing percentages（Honan Province）：
[Stipulations of land size and nonland inputs]……We hereby stipulate that the wheat yield will be split 20-80；millet,yellow beans,sesame,green bean-all will be split 30-70；cotton and sweet potatoes split 50-50……；millet straws,and bean and sesame stalks split 30-70.[12]
Samplef-share contract with some products unshared（Honan Province）：
Tenant A……voluntarily agrees to furnish[so many]men,[so many head]of water buffalo and donkeys……and all plowing equipment……We clearly stipulate that seeds of major crops are to be provided by the landowner,and seeds of minor crops by the tenant.All crop yields will be split equally,in dry and clean form……But the straws go to the[tenant's]water buffalo entirely;the droppings go to the[landowner's]soil;……and all fertilizer expenses are to be borne equally by both parties.All grinding equipment and living rooms are provided[by the landowner],which the tenant shall repair for his own use.These assets must be returned to the landowner at lease cancellation.[13]
For share contracts,several things should be noted.First,the explicit stipulations of tenant inputs and crop plantations are implied by the theory of share tenancy（see chapter 2）.[14] Evidence indicates,however,that only the actual yields are inspected,for by comparison with adjacent farms or past experience the landowner will be able to decide whether the contracted terms have been fulfilled:
The absentee landlords send their agents,or go themselves,to the fields and estimate the yield of the crop and the share given by the tenant is based on this estimate.Such men are very expert in approximating the true yield……[The tenant]commonly cheats by skilfully hiding some of the threshed grain before division takes place and also by giving the landlord inferior crops.On the other hand,the landlord or his agent often uses a large measure.When the agent collects rent the tenant has to treat the agent very well and often has to bribe him in order to keep the land for cultivation another year.[15]
Exaggerated as this quotation might be,an intramarginal tenant with specific farming knowledge（hence,with higher yields than marginal tenants）can"hide"as much as the rent imputed to his special skill and still retain his tenancy;an agent can collect enforcement cost in"bribes"from both the landowner and the tenant as much as other competing agents allow.Nonetheless,this justifies my claim that transaction cost is higher for a share contract than for fixed rent.
A second characteristic of share contracts is that the precise and at times complex delineation of resource rights between the contracting parties suggests that the sharing of investment inputs can be adjusted along with the rental percentage to use resources efficiently.This is consistent with a conclusion reached earlier,in chapter 2：The landowner may either require the tenant to invest more in land and charge a lower rental percentage,or the landowner may invest in land himself and charge a higher rental percentage.The investment will be made in one way or the other if it leads to a higher rental annuity.
