18 EIGHTEENTH REPORT. 



income. Allowing for this and other compensating advantages, 

 nevertheless, owners do continue to operate farms from year to year 

 at an actual unconscious loss of labor income. These annual losses 

 are due to a misinterpretation of results. To some of those wlio 

 have no system of farm accounts, success is measured by the size 

 of the cash balance at the end of the year. In reality whether or 

 not the degree of success is in direct proportion to the size of the 

 cash balance depends on the nature of the farm enterprise. Where 

 the farm produce consists of cash crops only, success may be so 

 measured. Those engaged in diversified farming, however, who 

 are imbued with this mercantilistic notion are apt either to over- 

 estimate or underestimate the degree of success with a greater 

 ]»robability of over-estimation as their efforts will be directed to- 

 wards securing a large cash balance to the detriment of u])keei» and 

 assets. 



This fact of actual loss is clearly proved by the results of in- 

 vestigations conducted by the Office of Farm Management of the 

 U. S. Department of Agriculture.^ While these results have been 

 questioned hy some due to the fact that much of the necessary in- 

 formation was given to investigators by the farmers from memory, 

 yet accurate accounts kept by many of the farmers indicate that 

 on the Avhole the figures are fairly reliable. This method of de- 

 termining profit or loss by the difference between the net assets 

 of two periods respectively furnishes but little useful information, 

 however, that will lead to a better reorganization of the produc- 

 tive factors. By an analysis and comparison of the results of 

 several farms in a given locality, some chance benefit may be de- 

 rived. Yet, there is nothing in this method to indicate in what 

 departments of the farm showing large gains, those gains have been 

 made. Chance and rule of thumb methods must be displaced 

 by a system of accounts which will serve to furnish such informa- 

 tion as will enable tlie farmer to push vigorously the paying en- 

 terprise or to stop an unwarranted exjjenditure. 



III. 



The straight single entry or double entry system of bookkeep- 

 ing such as may be used by a mercantile or manufacturing estab- 

 lishment is neither particularly serviceable nor essential to a farm 

 business. The buying and selling operations which make up most 



'Note: Figures Compiled by the States' Relation Service of the U. S. Department of Agri- 

 culture for use in Farm Management Demonstrations during lOlo, show that two fifths of 3414 

 farms investigated indiscriminately in 17 different states, including N. Y., Mich., Neb., Mo., 

 etc., incurred an average loss of labor income. 



