CONTRACTS USED IN RENTING FARMS ON SHARES. 33 



Expenses : Tenant. Owner. Farm. 



Hired labor and board $200 $200 



Family labor 25 25 



Cash expense of operation and repair 300 300 



Depreciation of equipment, 14 per cent of $500— 35 35 



Depreciation of buildings, 6 per cent of $2,000__ 60 60 



Interest on working capital, 6 per cent of $2,500_ 75 75 



Taxes on real estate and equipment 80 80 



Total 775 775 $1,550 



Farm income 1, 650 



Reward for tenant's management and labor 825 



Reward for use of real estate 825 



Interest on real estate (per cent) 3.3 



The tenant receives $825, half of the net profit, as a reward of his labor 

 and management, also an allowance for half of the value of the family labor, 

 and board of hired labor furnished, and the interest on his half of the working 

 capital. His working capital is maintained at the same value at which he 

 turned it into the partnership or is replaced. 



The landowner receives, in addition to his $825, an allowance of the interest 

 on his half of the working capital, as well as having all taxes paid on his real 

 estate and an allowance for depreciation. 



Interest on working capital in the above example is charged at 6 per cent. 

 The rate would be about 10 per cent if it included depreciation charges. 



SUGGESTIONS TOWARD A RATIONAL LEASE CONTRACT. 



The conditions under which the various existing types of share 

 farming have developed have led landowners to include in lease 

 contracts such a bewildering variety of rights and privileges of 

 unspecified money value that at first sight it would seem impossible 

 to say whether the contract is just or not. The approximate value 

 of all these items, however, is generally known. Shrewd judgment 

 and local experience enable the landowner and tenant to estimate 

 closely what the thrashing, twine, feed, seed, and fertilizer bills will 

 be. Nevertheless, lease contracts in which various items of expense 

 and privilege are empirically adjusted and assigned to tenant or 

 landlord are never, except by mere accident, strictly fair, but are 

 always slightly in favor of landlord or tenant. Any injustice of 

 this sort may become a source of friction between landlord and tenant 

 and may lead to more frequent moving on the part of the tenant. 



In some cases the tenant is a son or other relative of the landlord, 

 in which event other considerations than those of strict business 

 principles may be reflected in the stipulations of the lease. Or the 

 owner may be a speculator merely holding the land for sale at an 

 advanced price, being willing to accept a low rent pending sale and 

 expecting to take his profit from the rise in the price of land rather 



