INTERPRETATION OF COST ACCOUNTS 341 



"The average return on investment from the farms in 

 Illinois was 3.6 per cent, in Iowa 3.2 per cent, and in Indi- 

 ana 3.5 per cent. The income is a moderate return on 

 the large capital, considering the enormous rise in land 

 values during the past 10 years. In computing this in- 

 come no credit has been allowed for the rise in value of real 

 estate, except in case of actual improvements. 



"There has been a marked tendency throughout the en- 

 tire country to consider the farm more and more as a busi- 

 ness proposition. The landlord who is receiving 3.5 per 

 cent net from his farm, with the bare land figured at $150 

 or more an acre, has a good, safe investment. It would 

 seem from the results that if the year studied was a normal 

 one, land in the corn belt is not overvalued. Changes in 

 the price of the staple products, such as corn or oats, or 

 material changes in the cost of production of these crops 

 would be reflected in the price of farm land. Unless the 

 price of corn becomes much higher for the next period of 

 years, a pronounced increase in the value of land in this 

 region can not be expected. 



"The advisability of buying a farm as an investment 

 with the intention of not living on it is often a perplexing 

 question. 



Variation in the Profits of Absentee Landlords. "Table 

 VI (Illustration 61) gives the variation in the landlords' 

 returns in the three States studied. 



* * Out of 247 men 6 received less than 1 per cent on their 

 investments. The same number received between 7 and 

 8 per cent; none received over 8 per cent. It is clear that 

 no phenomenal returns can be expected from capital put 

 in farm land in those States at the present time. It is be- 

 lieved that the data in Table VI (Illustration 61) are a 

 very good indication of the returns one may expect from 

 a farm investment in those districts. The chances of mak- 

 ing more than 5 per cent are about 1 in 10." 



