26 BULLETIN 1068, U. 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 ~\ 
per cent — the average interest paid for first mortgage loans on the 
farms surveyed. 2S 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 
1\ 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 
2S 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 1910 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 Avith the owner- 
3l ip of the farm. The man who buys a farm gets all values attaching to the ownership 
oi 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. Fur 
tliis reason tin' cost of land, in calculating labor income, should be the c< st of its present 
RSes. 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 
us of the land for the yeaf'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, 
but the landlord assumes comparatively little risk when he rents for cash. On account 
of these conditions 11 i> believed that cash rent offers the best available figure as a basis 
for calculating tie- - ost of land as a factor of production. 
