426 



THE IKKIGATION AGE. 



would be 25 per cent, or one-fourth of the capital 

 invested. An investment of $16,000 would there- 

 fore be necessary. Suppose a gross income of 

 $4,000 per year is obtained, what becomes of it? In 

 a general way this sum may be divided into three 

 parts: (1) expenses, (2) interest on the investment, 

 (3) return to the farmer for his management and 

 labor. The latter may be called the labor income. 

 There have been gathered, for example, some data 

 on general farms tending to show that if a man has 

 invested wisely in land and equipment he may pay 

 about 7 per cent of the total investment for a work- 

 ing manager. This is equivalent to saying that a 

 farmer should receive 7 per cent on the capital in- 

 vested for his management, assuming that he is 

 himself actively engaged either in managing or 

 laboring or both. In reaching 

 this conclusion from data col- 

 lected, 5 per cent interest on the 

 capital invested was assumed. 

 On this basis the following will 

 result : 

 For labor income 7 per 



cent on $16,000 $1,120.00 



Interest on investment 



5 per cent on $16,000. 800.00 

 For expenses 2,080.00 



Total $4,000.00 



One thing that is at once 

 obvious from an examination of 

 the data is that if one must pay 

 10 per cent interest for money 

 to purchase land and equipment 

 there would be only 2 per cent, 

 cr $320, left for labor income. It 

 will be noted that for each per 

 cent which is added to the in- 

 terest charge an equivalent re- 

 duction must be made in the 

 labor income. Thus if the in- 

 terest is 6 per cent one may expect his labor in- 

 come to be only 6 per cent of the capital invested. 

 If the interest is 8 per cent, the labor income will 

 be but 4 per cent. Moreover, there is a tendency 

 for the labor income to be further reduced on farms 

 growing a single crop, since such farms furnish em- 

 ployment for a relatively small portion of the year. 

 However, on fruit farms, this condition is some- 

 what offset by the opportunity for employment in 

 the packing houses, thereby augmenting the in- 

 come of the owners and their families. Of course, 

 owners of fruit and other farms, who are not 

 actively employed thereon need not expect to se- 

 cure more than a fair interest on their investment 

 and then only when intelligently and efficiently 

 managed. 



Some surprise may be felt that any definite 

 relation can be assumed between labor income and 

 capital invested. The explanation seems to be that 

 the value of the land rises with the income and 

 thus the interest on the new capitalization prevents 

 the labor income from rising. Thus, if a man buys 

 a farm at $50 per acre and the subsequent income 

 justifies valuing the land at $200 per acre, the in- 

 terest upon the new valuation keeps the labor in- 

 come from rising. It is well known that this rise 



in the value of land has been the source of much 

 profit to farmers. 



Of course, very much will depend upon the 

 wisdom with which expenses are incurred. With- 

 out doubt there is in individual cases great oppor- 

 tunity for increasing the labor income by decreas- 

 ing expenses. What this paragraph suggests is 

 that it is not wise to assume a gross income greater 

 than one-fourth the capital invested and that one 

 must concede that one-half the gross income may 

 be required for running expenses. Unless a man 

 can estimate a satisfactory labor income on this 

 basis, it is prudent to proceed with caution. It is 

 obvious that if a man is satisfied with a labor in- 

 come of $560 per year an investment of $8,000 will 

 suffice. If the farm is paid for he may expect a 

 cash income over expense of $960 

 per year, since he has a right to 

 expect interest on the investment 

 plus his labor income. 



How large must a farm be 

 to furnish a satisfactory living? 

 From what has been said the best 

 practical measure with which to 

 answer this question is the gross 

 income. The area of land neces- 

 sary to obtain a gross income of 

 $4,000 will depend upon the crops 

 raised. Thus, if the land is to be 

 put into barley, from which may 

 be expected 40 bushels per acre, 

 worth 60 cents per bushel, or a 

 gross return of $24 per acre, 

 there will be required 167 acres 

 to return a gross income of 

 $4,000. If adapted to potatoes, 

 yielding 175 bushels per acre, 

 worth 70 cents per bushel, 33 

 acres would be required. An 

 orange grove, yielding 225 boxes, 

 netting the grower a dollar per 

 box, would require less than 18 acres in trees. As 

 there is more or less waste land in all types of 

 farming, it may be stated, in general terms, that 200 

 acres of land would be required for barley and 40 

 acres for potatoes, while 20 acres would suffice for 

 oranges. 



A similar estimate may be made concerning 

 dairying. Estimating a yield of 225 pounds of but- 

 ter fat per year and that three pounds of butter fat 

 are worth a dollar, the total income for butter fat 

 per year is $75 per cow. Each cow may raise a 

 calf, and some pigs and chickens may be kept. It 

 may be possible, therefore, to secure a gross income 

 from all sources of $100 per cow. The amount of 

 land which is required to keep a cow in California 

 varies at least as widely as from one to ten acres 

 where dairying is now actually practiced. Where 

 alfalfa is grown in the open valleys under irriga- 

 tion, it requires about 1% to \ l / 2 acres to support 

 a cow. Assuming the latter figure, it will require 

 60 acres to bring a gross income of $4,000. It is 

 interesting to observe that in a certain irrigated 

 region tracts of 20 acres each were sold for dairy 

 purposes. As time has gone on the farmers located 

 upon these tracts have acquired additional lands, 

 so that at present the one-family dairy farm, based 



Xew Mexico pears. 



