PROFITS THAT FARMERS RECEIVE 639 



beginning and end of the farmer's fiscal year. Normal values 

 (not assessed values) were used in all cases. The farm receipts 

 represent the income from the sales of all products, labor per- 

 formed by the farmer off the farm and gain from increased 

 investment. No gain was allowed for increase in value of land 

 unless justified by new buildings, drainage or other permanent 

 improvements. The farm expenses include all such items as feed, 

 seed, repairs, live stock, labor, taxes and insurance. In case the 

 farmer's sons worked, but were not actually paid, the value of 

 their labor was charged the same as if they had been hired. No 

 charge is included in the expenses for the owner's labor, as his 

 wages are represented in the labor income. 



The difference between the farm receipts and expenses is 

 called the farm income ; this represents the combined earnings 

 of the farmer's capital and his own labor. Assuming that the use 

 of capital is worth 5 per cent and deducting the interest at this 

 rate from the farm income, gives the farmer's labor income or 

 the amount he receives for his year's work. This labor income 

 represents the farmer's wages and profits, that is, if the farmer's 

 labor income is $439, and his labor is worth but $300, his profits 

 are $139. In other words, it is the amount left for his own labor 

 and for profit in the business. In addition he had the use of 

 a house to live in, and all those products furnished by the farm 

 towards the family living, the most important of which are milk, 

 eggs, meat, garden vegetables and fruit. In the farm receipts, 

 no credit is given for these items consumed by the farmer and 

 his family. 



If the farmer is free of debt, thereby having no interest to pay, 

 he will have in addition to his labor income the interest on his 

 investment to use for living and savings. In regions where the 

 farm capital is large, such as Illinois and other corn-belt states, 

 the farmer will be able to live comfortably and yet have a minus 

 labor income, the interest alone being sufficient to give him a 

 good living. In fact many farmers live on the interest of their 

 investment rather than on the real profits of their farms. Smaller 

 farms and cheap land make the average farm investment much 

 less in New York and New England. On such farms the amount 



