234 AGRICULTURAL ECONOMICS 



this has resulted in an increase in the income of a young man 

 from thirty dollars a month and board to a thousand dollars 

 a year. Integrity gives opportunity to realize upon one's 

 managerial ability by operating the capital which belongs to 

 others. 



How should one inventory his resources? The capitalist 

 values his stocks according to the income they yield. If a 

 given certificate of stock yields $60 a year, and the correct 

 rate of interest is 6 per cent he will value the stock at $1000. 

 This is the capital value of the stock. If a young man can 

 increase his annual income $360 by establishing a reputation 

 for integrity, and thus securing an opportunity to manage 

 the capital of others, why should he not look upon this stock 

 of integrity as the capitalist does his stock? It would take 

 $6000 loaned at 6 per cent to yield $360 annually. In counting 

 his net worth at any given time the young man may well capi- 

 talize his integrity. It is better to overestimate than to under- 

 estimate the economic value of simple honesty as a resource, 

 and as a source of income from which it is easy to save money 

 and buy a farm. 



Taxation. It has been noted by economists that the market 

 price of land is often greater than the capitalization of the net 

 rent at the current rate of interest. That is, men are willing 

 to take a lower return on investments in land than on loans, 

 even where the security is a farm mortgage. This is said to 

 increase the difficulty of paying off farm mortgages. The man 

 whose farm is mortgaged must pay, for example, 6 per cent 

 for the use of money which, as an investment in land, is yielding 

 him no more than 4 per cent. 



With the Ricardian theory of distribution in mind, which 

 assumes that all farmers possess the same degree of efficiency, 

 economists have concluded that this discrepancy between the 

 net rent and the interest would make it practically impossible 

 for the farmers to pay off their mortgages. It will be readily 

 understood from the discussion of profits due to superior ability, 

 that all but the less efficient farmers are able to counterbalance 

 this loss by earning personal profits, so that the fact of the 



