13 



Even if it is necessary to estimate roughly the carrying capacity 

 of the pasture, this measure of magnitude of the farm business will 

 usually be more accurate than merely the number of acres in the 

 farm. 



c. Days of productive labor. Unless there is a very great dif- 

 ference in the type of farming on the different farms to be tabulated , 

 the total number of days of productive labor on the farm will be a 

 fairly accurate measure of the magnitude of the business conducted 

 on the farm. It is especially accurate where the relation of the 

 capital invested to the amount of labor required is about the same 

 on the different farms; but if on some of the farms there is a very 

 large amount of capital with relatively little labor, as is the case 

 on live-stock farms devoted largely to pasture, while on other farms 

 there is an enormous amount of labor with very little invested 

 capital, as is frequently the case in fruit and truck growing prop- 

 ositions, this measure of magnitude becomes quite inaccurate. 



d. Working capital. When the type of farming is similar, the 

 total amount of working capital is a very good measure of magni- 

 tude of business. The working capital is the sum of the value of 

 the live stock, machinery and tools, feed and supplies, and cash to 

 run the farm. Its calculation has already been provided for in 

 Preliminary calculations, No. 4. 



e. Cost of operation. The most accurate measure of the mag- 

 nitude of the farm business is the cost of operation for the year. 

 This consists of interest on capital, wages of the operator, current 

 expenses, decrease in feed and supplies, and depreciation of build- 

 ings, fences, and equipment. That this is the most accurate 

 measure of the magnitude of the business is shown by the fact that 

 this sum is the greatest amount a farmer can lose in any one year, 

 aside from the destruction of property by catastrophe. It should 

 be calculated for every farm if comparisons involving factors de- 

 pending on magnitude of business are to be made between groups 

 of farms of distinctly different degrees of intensity. The only case 

 in which it fails is that of a comparison between different localities 

 in which the price of real estate differs greatly although the land 

 is similar in productiveness; but such cases do not ordinarily arise 

 in a single survey. 



56. Measuring the magnitude of individual enterprises. It is 

 ordinarily assumed that the net receipts from an enterprise consti- 

 tute a measure of its magnitude. This would be true if the net 

 receipts from each enterprise were always in proportion to the 

 expense of operation, but unfortunately this is not always the case. 

 Not infrequently a large enterprise produces a negative net income 

 and small ones often do likewise. Since the quantity here under 



