DISTRIBUTION OF AGRICULTURAL INCOME 319 



good his losses, is not to be classed as profits. Only that which 

 he wins because of favorable changes in the market over and 

 above what he loses because of unfavorable changes can be so 

 classed. How does there happen to be a surplus in this case ? 

 It must be, as in the former case, because the risk to him is less 

 than it would be to those whom he relieves of it. As compared 

 with the laborers, it is probable that a given loss would affect 

 him less seriously than it would them. The loss of any consid- 

 erable part of their wages, which would frequently happen if 

 they bore their own risk or took their own chances with the 

 market for their products, would mean serious deprivation. But 

 there is no reason for believing that a given loss would, on the 

 average, affect the farmer less seriously than it would the land- 

 lord and the capitalist of whom he hires his land and capital. 

 They are usually in as good a position to bear a loss as he is. 

 But there are reasons for believing that the skillful farmer will 

 experience fewer losses than would be experienced by those 

 whom he relieves of risk, whether they be laborers, landlords, 

 or capitalists. This is due to no actuarial principle, as in the 

 cast; of the insurance company, but to the farmer's superior fore- 

 sight and skill in avoiding losses. That is a part of his special 

 function, and in the performance of it he can be assumed to 

 develop special skill. This part of his income is, therefore, due 

 to the fact that he is able to avoid losses more effectively than 

 the others whom he relieves of their risks. Even if he pays 

 them what they might be expected to earn on the average and 

 in the long run, counting the losses with the gains resulting 

 from fluctuations of the market and other fortuitous circum- 

 stances, by so managing the business that the losses are re- 

 duced and the gains increased, the farmer will find himself in 

 the possession of a surplus without having robbed or outbar- 

 gaii ied any one. This means that this part of his surplus is due 

 to the fact that he is able to reduce the risk which he assumes 



