136 THE LAND AND ITS PROBLEMS 



fixed valuation, of so much per acre, in his farm accounts. 

 It is an important point ; for it is misleading to show in 

 the net profit for the year sums which are not realized, 

 and often cannot be realized. The net profit should 

 be the sum that can be actually withdrawn, and 

 used as income, by the farmer. 



To give an example, in illustration, not of a farmer, 

 but of a man with ^20,000 in securities at 5 per cent. 



To Value of Securi- By Value of Se- 



ties at beginning curities at end 



of year . . ,{^20,000 of year . . ,(^20,400 



By Interest at 5 



Profit ... 1 ,400 per cent . i ,000 



5^21,400 5^21400 



But the man's income is not ;(^i400, but X^°oo '■> 

 and if he based his annual expenditure on the basis of 

 such a balance-sheet, he would soon find himself in 

 financial difficulties. There is no doubt that a consider- 

 able number of persons connected with agriculture have 

 become financially involved, because they have failed to 

 distinguish clearly between capital and income. 



Another point in farm accounts ; it is interesting to 

 see the total results of the operations of the farming year, 

 and not to carry profit belonging to one year on into the 

 next, or at least to as small an extent as possible. If on 

 April 6th, 1920, for instance, you have on hand corn 

 estimated at ,^400 from the 1919 crop, I like to see that 

 shown in the profit for the year 1919-20 and not 

 carried on into the next ; for probably that corn will be 

 sold within a few weeks of closing the accounts and a 

 subsequent adjustment can be made. 



So that the form of balance-sheet which I have adopted 



