230 FOREST VALUATION 



to farming or forestry. Unfortunately, the uncertainties affect- 

 ing the determination of these future items, in both cases, prevent 

 a satisfactory mathematical comparison of such values. Yet 

 whatever the basis on which the comparison is made, it is 

 founded on the economic relations which such calculations set 

 forth. 



237. Expectation Value of Agricultural Land. The basis 

 of agricultural value is the net revenue from crops. The actual 

 cost of labor and use of machinery is deducted from the sale 

 value of the crops and the average net return is capitalized. 

 Owing to the fact that on small farms the proprietor puts in 

 his own labor and raises food for his family, this net income is 

 not often accurately computed. Cash rent paid for farm land 

 separates the costs from the income, since the tenant presumably 

 gets only his just share, including profit, and the rent represents 

 the net income earned by the soil. Since this is annual, it is 



capitalized by the formula (XII), on the basis that the 



o.op 



farm will produce this rental without deteriorating. A farm 

 earning $5 per acre rent will, at 5 per cent, be worth $100 per 

 acre. 



238. Sale Value of Agricultural Land. Improved farm 

 land is transferred with sufficient frequency to establish sale 

 values, in any region where farming is a well-developed industry. 

 These sale values will, on the whole, coincide quite closely with 

 the capital or appraised values of farms based on net income. 

 But traditions, demand, and increasing or declining population 

 affect farm values and prices to a great extent. Values of farm 

 property are sluggish at times and again, in boom periods, out- 

 strip conservative appraisals of income. In this the human 

 element in price making is seen to play a large part (17, 



59, 69.) 



239. Timber as an " Agricultural " Value. Improved farm 

 land is not the true basis of comparison with forest land. 

 Land in its wild state ranges from heavily timbered tracts 

 through all degrees of stocking and of young timber, to natural 

 prairies needing only to be broken for a crop. Land which 



