XVII 



PROFITS IN AGRICULTURE 

 Introduction 



Profits are commonly defined as that part of the return to a 

 business which remains in the hands of a proprietor after operating 

 expenses, rent, wages, and interest have been paid. Now, since 

 agriculture is a business in which a large proportion of the workers 

 are directors of their own enterprises, it might seem that the question 

 of profits in agriculture would early have been made the subject of 

 careful and extended study. A mere glance at the readings in this 

 chapter, however, would suffice to dispel any such illusion. The 

 fact is that agriculture is one of the forms of business in which least 

 progress has been made toward identifying and explaining the phe- 

 nomena of economic or pure profits. The gross return of the farmer, 

 after deducting cash expenses, has commonly been spoken of as his 

 profit, and only recently have we begun to allocate any part of this 

 lump sum to other accounts rent upon the land he owns, interest 

 upon invested capital, wages for his family and himself. The fact 

 that there are relatively few contractual incomes in farming has 

 made it difficult to ascertain what the amount of the residual share 

 would be if all such prior claims were recognized. 



Such exposition of profits as we do possess has been developed 

 largely from the Study of industrial and mercantile enterprises. 

 There, functions were more specialized, the sources of income more 

 clearly differentiated, and contract payments more common. The 

 economist readily perceived a fourth share of the total gains of business 

 enterprise, which remained frequently, and sometimes in strikingly 

 large amounts, after all the participating land, labor, and capital 

 had been rewarded at the contract rate. He noted that this entre- 

 preneur surplus might be due to skilful selection of helpers, shrewd 

 or lucky purchase of materials, or clever organization of the operating 

 plant (all of which lower his costs) ; or to a particularly canny selection 

 of the enterprise on which he should embark, to a superior selling 

 ability, or to the artificial advantages of a monopoly position 

 (all of which enhance price and the gross returns of the business). 



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