RELATION OF LAND INCOME TO LAND VALUE. 
35 
in the other areas. With the expected increase in income due to 
prospective improvements allowed for in this area, it seems probable 
that the calculated i would correspond to the average increases in 
rent of the preceding 6 or 7 years as in all the other areas except 
Iowa. 
Can it be concluded, then, of old agricultural areas where important 
improvements are not expected, and whose type of farming is stable, 
that the average increase in land incomes of the preceding 6 or 7 
years are the basis for future forecasts? While a period of 6 or 7 
years is indicated in the table, it must be remembered that there is 
a slight upward bias in the land values, and that this bias is different 
from area to area. In view of this, and of the fact that Iowa is 
not in line with the other areas, it seems safer to say that the future 
forecasts are based upon the average increases of the preceding 7 to 
10 years. The average increases in rent in Iowa for the years pre- 
ceding 1920 are all very high, due to the unusual increase from 1919 
to 1920. The increase in this year was much greater for Iowa than 
for any other area. If it be left out in figuring the average increases, 
then the correspondence between the calculated i and the average 
increases in rent of the preceding years in Iowa is brought into line 
with the other areas. 
The forecasts of the future, then, are based upon a relatively re- 
cent past which probably ranges from 7 to 10 years. This is borne 
out by evidence drawn from areas in which land income advanced 
very rapidly, as well as in areas where it increased more slowly. 
The relation between the anticipated increases in income as cal- 
culated by the formula, that is, the increases in income necessary to 
justify the valuation at a given time on the assumption that the rate 
of capitalization is the mortgage rate of interest, and the average 
increases in rent of the preceding years, is further demonstrated in 
Table 12. 
Table 12. 
-Relation between computed i's and average increase in cash rents of 
preceding years in Iowa, 1910 to 1920. 
V 
a' 
r 
■ 
Average Increase 
in cash rents for preceding— 2 
Year. 
6 
years. 
7 
years. 
8 
years. 
9 
years. 
10 
years. 
11 
years. 
12 
years. 
13 
years. 
14 
years. 
15 
years. 
1910 
$96. 00 
$4.24 
4.36 
4.50 
4.63 
4.91 
5.19 
5.52 
5.83 
6.32 
7.02 
8.14 
Per 
cent. 
5.5 
5.5 
5.5 
5.5 
5.5 
5.5 
5.5 
5.5 
5. 5 
5.5 
5.5 
$0.06 
$0.12 
$0.12 
$0. 11 
$0.10 
$0.09 
1911 
1912.... 
106.00 
118.00 
125. 00 
134. 00 
153.00 
156.00 
174.00 
192.00 
255.00 
.07 
.10 
.11 
.12 
.16 
.15 
.18 
.19 
.32 
.14 
.14 
.18 
.18 
.21 
.24 
.32 
.43 
. 55 
.13 
.14 
.17 
.18 
.20 
.22 
.29 
.39 
.51 
.12 
.13 
.16 
.17 
.19 
.21 
.27 
.36 
.47 
.12 
.12 
.15 
.17 
.19 
.21 
.26 
.33 
.43 
.12 
.12 
.14 
.16 
.18 
.20 
.25 
.31 
$0.11 
.12 
.14 
.15 
.17 
.19 
.24 
.29 
$0.10 
.11 
.14 
.15 
* 16 
. is 
. 23 
.28 
.36 
1913 
*$0. 10 
.13 
.14 
.16 
.17 
.27 
.34 
1914 
$0.121... 
1915 
1916 
.13 
.16 
.17 
.21 
. 26 
* . 32 
*$0. 12 
. 14 
1917 
* . 16 
1918 
* . 19 
1919. 
* .24 
1920... 
. 10 . 37 
.31 
1 Based on the series in Table 6 showing average rent from 1905 to 1920. 
a Based on the series in Table 6 showing average rent from 1900 to 1920. 
* Period for which there was the closest correspondence between i and the uw>ra^> increase to tout for 
preceding years. 
