26 BULLETIN 1068, IT. S. DEPARTMENT OF AGRICULTURE. 



of the different tenure classes in this area. Considerations that are 

 not of an economic nature influence operators differently. For ex- 

 ample, some of the most efficient operators may not wish to grow large 

 acreages in cotton, thus running the risk of being compelled to keep 

 their children out of school to get it picked ; and prefer to grow small 

 grain on much of their land, even though their net return on capital 

 is thereby made smaller. 



The operator's labor income, as used in most farm-management 

 surveys, is the net surplus left to the operator, for his labor and man- 

 agement, after deducting all farm expenses (including interest on 

 the farm capital) from receipts, not including the family living fur- 

 nished by the farm as a receipt. The labor income given under item 

 4, Table 15, conforms to the above definition, deducting interest at 7-| 

 per cent — the average interest paid for first mortgage loans on the 

 farms surveyed. 23 In all" cases where land was rented, the actual rent 

 paid was deducted and not an assumed rate of interest on the esti- 

 mated value of the land. 



Item 5 is similar to item 4, except that the value of the family 

 living is included as a receipt. And item 6 is the same as 5, except 

 that on farms operated by owners the interest on land value deducted 

 was 4J per cent, which was the average return on the capital invested 

 in cash-rented farms, in 7 black-land counties in 1919. 29 



Item 6 represents more correctly the net value that the farmer re- 

 ceives for his farm labor and management than do either of the other 

 two items on labor income. 30 It will be noted that when a flat rate of 

 7-J per cent is deducted to arrive at labor income, both tenant classes 

 make a better showing than either of the owner classes. The 26 

 owners additional have the lowest average labor income — averaging a 

 loss of $61 each for their labor and management. Yet in this calcu- 

 lation the interest deducted on the value of the land was not in excess 



28 This is the average weighted interest rate on first mortgages, weighted by the total 

 amount of loans under the different interest rates. 



20 This rate of return on cash-rented farms is based on compilations made from 

 schedules of the 1919 census on 331 cash-rented farms in Collin, Falls, Lamar, Limestone, 

 Milam, Navarro, and Travis Counties. This ratio does not represent the net return to 

 the landlord, as taxes, upkeep, and other expenses are not deducted. 



30 The present price of land is the sum of a number of different values. It represents 

 use values in production, the value of anticipated increases in future income-yielding 

 power, and the value of the social, community, and home uses which go with the owner- 

 ship of the farm. The man who buys a farm gets all values attaching to the ownership 

 of the land, but the renter gets only its present use values (including in some cases part 

 or all of the home, social, and community values), and should pay for these only. For 

 this reason the cost of land, in calculating labor income, should be the cost of its present 

 hses. Since a current rate of interest on the capital invested in land and buildings covers 

 all values that go to make up the price of land, it may be too much to charge for the 

 use of the land for the year's operation. Share rent, besides paying for the use of the 

 land for the year, covers part of the risk in the business that the landlord assumes, 

 tout the landlord assumes comparatively little risk when he rents for cash. On account 

 of these conditions it is believed that cash rent offers the best available figure as a basis 

 for calculating the cost of land as a factor of production. 



