FAEM ORGANIZATION IN SOUTHERN ARIZONA. 17 



STANDARDS USED IN THIS BULLETIN FOR MEASURING SUCCESS. 



The rate of interest earned on investment is important for our 

 purpose only on farms of large capitalization, where it may be 

 assumed that the most of the operator's time would bo required in 

 supervision to make his capital earn current interest rates, whether 

 invested in a farm or loaned on farm mortgages. On the majority 

 of farms, however, the farmer must be both a laborer and a capi- 

 talist, and the amount earned for his labor on the farm is frequently 

 of much greater importance than the interest earned on the invest- 

 ment. The amount so earned by the operator's labor is termed the 

 "labor income" 1 of the farm. It is the most important measure of 

 success for the renter, the farmer heavily mortgaged, or the farmer 

 with small capital. It is an important standard of measurement 

 when the farm is viewed from what has been termed the "cold busi- 

 ness standpoint," especially if the farm could be sold readily and 

 the money loaned at current interest rates. It then becomes a 

 measure of the value of the investment. 



But many farmers do not look upon the farm as an investment. 

 They regard it from the standpoint of a home and the means of 

 independence in earning a living. For them the standard of living 

 afforded by the farm is the most important consideration, and they 

 are chiefly interested in the magnitude of the farm income, which 

 determines this standard. 



It will perhaps be conceded that a minimum measure of success 

 in farming would be reasonable wages for the operator's labor, or 

 a farm income sufficiently large to provide the farm family a com- 

 fortable living. Both measures will be used in this bulletin, and a 

 brief discussion of how they are obtained is in order at this point. 



What constitutes "reasonable" wages for the farmer's time may 

 be determined by comparison with wages paid to farm laborers. 

 The minimum wage for steady farm help, paid in the majority of 

 cases to Mexican laborers, is $35 per month, with room and board. 

 American laborers usually get more, the amount varying up to $75 

 per month, with room and board, for the best dairy help. Foremen 

 and managers get still higher wages, up to $1,500 per year with house 

 and garden furnished and including the privilege of keeping poidtry 

 and at least one cow. The value of the board given to farm help 



1 The labor income is found by subtracting interest on the total investment at current rates from the 

 farm income. It represents the earning power on that farm of the farmer's labor and managerial ability, 

 and may be sometimes referred to in this bulletin as the "farmer's wages." In southern* Arizona the cur- 

 rent interest rate on farm mortgages is 8 per cent. The labor income has therefore been determined by 

 subtracting 8 per cent on the total investment from the farm income. 



The farm income is the net receipts from the year's business. It is found by subtracting the total 

 expenses, except interest on borrowed money, from the total receipts; gains from increased value of live 

 stock and other increase in inventory that may not have been converted into cash being included in 

 receipts and depreciation being included in expenses. If the farmer is out of debt the farm income repre- 

 sents all of his living and total savings except such items of food, fuel, and house rent as may be contributed 

 to the family living by the farm direct. If he is in debt he must pay interest on borrowed money out of the 

 farm income. 



