634 READINGS IN RURAL ECONOMICS 



" Farm Management." Taxes are assumed to be six-tenths of 

 i per cent as an average for the whole country. This item will, 

 of course, vary in different sections. 



There are numerous other items of expense in the conduct of 

 a farm. In a number of farm-management surveys conducted 

 by the Office of Farm Management these remaining items have 

 amounted on the average to about 1 5 per cent of other expen- 

 ditures, and this is the factor assumed in the calculations here 

 made. The total farm expenses, omitting the item of live stock 

 purchased, are $340.15. 



THE FARM INCOME 



The farm income is obtained by deducting the total expenses 

 from the total receipts, and amounts to $640.40. If we assume 



5 per cent as the rate of interest to which capital invested in 

 agriculture is entitled, the farm income would then be distributed 

 between interest and labor income as follows : interest on invest- 

 ment, $322.18; labor income, $318.22. 



Out of the farm income as here calculated, increased by outside 

 earnings and by the value of milk and cream consumed on the 

 home farm, the farmer must pay interest on his indebtedness, 

 pay for any live stock purchased, and provide the living expenses 

 of himself and family. The average farm mortgage in this 

 country, based on the number of all farms, is $1715, which at 



6 per cent per annum amounts to $102.90. This amount deducted 

 from the farm income of S640.40 leaves $537.50 (to which must 

 be added the value of milk and cream consumed on the home 

 farm and any income from outside sources) as the sum to be 

 used in the purchase of live stock, in living expenses, and in 

 savings. 



In comparing the farmer's income with that of wage workers 

 in any other industry it must be remembered that a majority of 

 farmers are also capitalists. The interest on the farmer's capital 

 thus constitutes a portion of this income, and this interest added 

 to the small additional labor income he receives represents the 

 sum available for his living. The labor income is undoubtedly 



