58o 



READINGS IN RURAL ECONOMICS 



SIZE OF BUSINESS 



Ways of measuring size. There are many ways of measuring 

 size of business. Farms may be compared as to the amount of 

 capital invested, number of men kept, number of cows or other 

 animals, number of work animals, acres of land, or acres of crops 

 grown. So long as we are dealing with fairly uniform conditions, 

 each of these comparisons gives about the same average results. 

 If comparisons are made between widely different types of farm- 

 ing, as between truck growing and general farming, then capital 

 is the best measure of size. 



Relation of capital to profits. Very few farmers who use less 

 than $5000 worth of capital are making good labor incomes. 

 With a fair amount of capital, it is easier to make wages and 

 interest on the larger capital than to make wages and the smaller 

 interest on a small capital. The capital need not all be owned. 

 Part or all of the land may be rented, or the land may be owned 

 but mortgaged. Results in Bulletin 295 of this station agree with 

 this, as they do with all the results in this bulletin. The relation 

 of capital to profits is shown by Table 2 below, and Tables 3 and 

 4 on the next page. 



TABLE 2. CAPITAL RELATED TO LABOR INCOME. 578 FARMS, 

 NORTHERN LIVINGSTON COUNTY, NEW YORK 



Capital 



$5000 or less . 

 $500 1 -$7500 . 

 $7 50 1 -$10,000 

 $io,ooi-$i 5,000 

 $15,00 1 -$20,000 

 $20,00 1 -$30,000 

 Over $30,000 . 



The reason why tenants and part owners make more than 

 owners, as shown in Table 4, is because with a given capital they 

 have a larger business. A tenant who has $3000 may rent a farm 

 worth $15,000 and be running a business many times larger than 



