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BULLETIN 1224, U. S. DEPARTMENT OE AGRICULTURE. 
ACTUAL RATE OF RETURN ON INVESTMENTS IN FARM LANDS. 
What the actual rate of return on investments made in farm lands 
in 1920 will be can not be determined, but it is possible to show what 
the trend in the rate of return on investments made in years previous 
to 1920 has been. Table 15 shows the ratio of cash rent lor each 
year from 1900 to 1920 to the average value of Iowa land in 1900. 
This analysis does not apply to the Cotton Belt where a different 
tenure situation prevails. There the landlord is a farm operator 
and he does not retire in the same sense that the northern farmer 
does. 
Table 15. — Ratio of annual average gross cash rent from 1900 to 1920 to the average 
value of land in Iowa in 1900. 
[$43 per acre— average 
value of land in Iowa in 1900.] 
Year. 
Average 
cash 
rent. 
Ratio of 
rent to 
1900 
value. 
Year. 
Average 
cash 
rent. 
Ratio of 
rent to 
1900 
value. 
Year. 
Average 
cash 
rent. 
Ratio of 
rent to 
1900 
value. 
1900 
1901 
1902 
1903 
1904 
1905 
Dollars. 
3.29 
3.30 
3.31 
3.39 
3.52 
3.57 
3.65 
Per cent. 
7.7 
7.7 
7.7 
7.9 
8.2 
8.3 
8.5 
1907 
1908 
1909 
1910 
1911 
1912 
Dollars. 
3.75 
3.88 
4.07 
4.22 
4.30 
4.47 
4.60 
Per cent. 
8.7 
9.0 
9.5 
9.8 
10.0 
10.4 
10.7 
1914 
1915 
1916 
1917 
1918 
1919 
1920 
Dollars. 
4.95 
5.14 
5.47 
5.73 
6.38 
7.17 
8.19 
Per cent. 
11.5 
12.0 
12.7 
13.3 
14.8 
16.7 
1906 
1913 
19.0 
This table may be interpreted as showing the trend from 1900 to 
1920 in the gross rate of return received by the average investor in 
Iowa farm lands in 1900. But it shows only the trend, if or the farms 
on which the average cash rents are based may not be typical of all 
the farms in the State. Furthermore, these rents are gross rents. 
Whether or not the rate of return figured on a net-rent basis would 
have shown as great an increase during this 20-year period depends 
upon the increase in real-estate taxes during this period It seems 
probable that they increased slightly in proportion to the rents and 
that the net rate of return did not increase as much as the gross 
rate. But even on the net-rent basis, buyers of land in 1900 have 
enjoyed excellent returns on their investments. This has been largely 
due to the fact that in 1900 a very small increase in incomes was 
anticipated, so that the values at that time were relatively low. A 
great increase, however, actually took place, which gave these buyers 
a large and unexpected return. 
At later dates, after land incomes had been increasing for several 
years, a greater increase in land income was anticipated and capi- 
talized into the values, so that investors in these years did not receive 
as large returns on their investments made between 1900 and 1920 
as those who bought land in 1900. However, they did get larger 
returns up to 1920 than they expected. This applies to average 
investments made in farm land in any year between 1900 and 1920. 
The difference between expected and actual returns from 1910 to 
1920 on investments made in 1910 is shown in the Table 16. 
