RELATION OF LAND INCOME TO LAND VALUE. 3 
regularly and promptly? The first question asked by the lender 
involves a knowledge of the long-time relationship. Will the rate of 
return on the investment in the long run be sufficiently high to enable 
the borrower to repay the loan at maturity ? Although the lender is 
primarily interested in the actual long-time relationship, he is also 
interested in the anticipated rate of return on the investment in the 
long run. In other words, if he knows the anticipated future incomes 
and the rate of capitalization, he can determine what percentage of 
the present value, which is offered as security for the loan, is based 
upon anticipated increases in income. Knowing this he is in a better 
position to judge how much he can lend with safety on a given 
valuation. 
If the rate of return on the value, at the time the loan is made, 
is very low and the loan is a large percentage of the value, the borrower 
may have difficulty in meeting his interest payments for several vears 
after the loan is made, so that it becomes important for the lender to 
know the rate of return on the value at a given time, and particularly 
the time at which the loan is made. 
A measurement of the relationship between land income and land 
value is also of great importance in dealing with problems of tenancy, 
land taxation, and farm organization and cost-accounting studies. 
A fuller discussion of the practical applications of this study is made 
on pages 64 to 69 
SOURCES OF DATA AND SELECTION OF AREA. 
Data collected in the census of 1920 constitute the basis of this 
studv. In 1920 for the first time the Census Bureau obtained data 
on tne amount of cash rent paid on farms which were leased on the 
cash basis. This cash-rent figure is here used as a measure of all land 
income. While not without objections when employed as such a 
measure, it is the best one that is practically obtainable. The value 
of farm real estate was likewise obtained from the census. Since 
these land values are based on estimates, they are not free from the 
suspicion of bias. In order, therefore, to get a check on the census 
values, data on the average sale price of farm land were obtained 
from a considerable number of counties. All the average values 
based on sales prices are based on the considerations stated in deeds. 
These data were obtained from tax commissions, who assemble such 
data for their own use, from T. A. Polleys, of the Chicago & North 
Western Railway Co., and from some special studies made by this 
bureau. 
This study is based on 154,653 cash-rented farms in 567 counties. 
In selecting the counties no attention was paid to State lines. The 
effort was made to choose groups of counties which are representative 
of the principal agricultural regions. It was impossible to cany out 
this purpose as completely as desirable, because in many areas the 
number of cash-rented farms is too small to give reliable averages 
The map (fig. 1) on page 4 shows the areas represented. 
The 567 counties were then grouped into districts. The purpose of 
this grouping was to show the averages for typical regions and to give 
s The Census Bureau did not tabulate the question relating to the amount of rash rout paid by cash 
tenants, so that it was necessary to make this tabulation directly from the original schedules. The numtior 
ofcash tenants by counties as reported in this bulletin will ool agree with the number of cash tenants as 
reported in the census, because all farms of 10 acres or less were excluded from this study. 
