880 



SUCCESSFUL FARMING 



new ones alongside of them with lesser grades. Such investment is for the 

 purpose of increased efficiency. Farmers often work with antiquated tools 

 and inefficient teams when, with a little more working capital, their effi- 

 ciency could be materially increased by replacing these with a better 

 equipment. 



One buying a farm should have enough money to pay a reasonable 

 part of the purchase price, to buy an adequate equipment, the necessary 

 stock, and have some cash left on which to do business. 



Investigations at the "University of Wisconsin relative to the relation- 

 ship between the percentage of capital on farms as working capital and the 

 net profits are as follows: On fifteen farms on which only 13.5 per cent of 

 the total capital was in the form of working capital, the average net profit 

 was $167; on twelve farms where it was increased to 17.7 per cent the 

 profit was $433; on six farms having 28 per cent as working capital the 

 profit was $1628; and on six farms where one-third was working capital the 

 net profit was $3511. The number of farms investigated is too small to 

 draw sweeping conclusions, but the results are certainly very suggestive. 



In Scotland and England, where 90 per cent of the farms are rented, the 

 tenants regard $50 an acre as the necessary working capital in order to farm 

 profitably. The amount of working capital necessary depends on the kind of 

 farming and also on the fertility of the soil. The extensive purchase of com- 

 mercial fertilizers very materially increases the need of a working capital. 



Distribution of Capital. — The proportion of capital to be invested in 

 land, stock and equipment varies with the price of land and kind of stock 

 and the type of farming. There will always be a distribution between 

 these various parts that will give best results. This distribution may be 

 settled for a given time, but a marked rise in land values will necessitate 

 changing it. Any change in the type of farming is also likely to disturb it. 

 We have already found that the size of the farm is also a factor, and that 

 the larger the farm the smaller the relative investment in buildings and 

 equipment. The average distribution of capital on farms in the United 

 States is given in the following table: 



Average Capital and Its Distribution on Farms in the United States. 



(U. S. Census, 1910.) 



Land, exclusive of buildings [ $2285 



Buildings , 620 



Implements and machinery 133 



Livestock 536 



Tota' ! $3574 



64% 



17% 

 ■ 4% 

 15% 



100% 



1910 



$4476 

 995 

 199 

 774 



$6444 



70% 

 15% 



3% 

 12% 



100% 



Capital Related to Area. — No matter how small a farm may be, the 

 owner demands a respectable house, and on the small farms of the United 



