6 CIRCULAR NO. 132^ BUREAU OF PLANT INDUSTRY. 



Management and agrees with the estimate m Warren's Farm Manage- 

 ment. Taxes are assumed to be six-tenths of 1 per cent as an aver- 

 age for the whole country. This item will; of course, vary in different 

 sections. 



There are numerous other items of expense in the conduct of a 

 farm. In a number of farm-management surveys conducted by 

 the Office of Farm Management these remaining items have amounted 

 on the average to about 15 per cent of other expenditures, and this 

 is the factor assumed in the calculations here made. The total 

 farm expenses, omitting the item of live stock purchased, are $340.15. 



THE FARM INCOME. 



The farm income is obtained by deducting the total expenses from 

 the total receipts, and amounts to $640.40. If we assume 5 per cent 

 as the rate of interest to which capital invested in agriculture is enti- 

 tled, the farm income would then be distributed between interest 

 and labor income as follows: Interest on investment, $322.18, labor 

 income, $318.22. 



Out of the farm income as here calculated, increased by outside 

 earnings and by the value of milk and cream consumed on the home 

 farm, the farmer must pay interest on his indebtedness, pay for 

 any live stock purchased, and provide the living expenses of himself 

 and family. The average farm mortgage in this country, based on 

 the number of all farms, is $1,715, which at 6 per cent per annum 

 amounts to $102.90. This amount deducted from the farm income 

 of $640.40 leaves $537.50 (to which must be added the value of milk 

 and cream consumed on the home farm and any income from outside 

 sources) as the sum to be used in the purchase of live stock, in living 

 expenses, and in savings. 



In comparing the farmer's income with that of wage workers in 

 any other industry it must be remembered that a majority of farmers 

 are also capitalists. The interest on the farmer's capital thus con- 

 stitutes a portion of thii income, and this interest added to the 

 smaU additional labor income he receives represents the sum avail- 

 able for his living. The labor income is undoubtedly smaller than it 

 otherwise would be if the farmer did not also have the interest on 

 his capital. Thus, we have found that in the better agricultural 

 sections the labor income of tenants is considerably higher than that 

 of farmers who work their own farms, although the latter have larger 

 incomes than the tenants when we take into account the interest 

 on their investment. 



A very large percentage of American farmers live on the interest of 

 their investment and do not receive anything for their own wages. 

 Where the farm is of considerable size, such farmers arc able to live 



[Cir. 132] 



