64 
BULLETIN 1224, U. S. DEPARTMENT OF AGRICULTURE. 
farm is underimproved according to these standards, the cash rent 
will be less than the farm rent. In other words, a farm will sell on 
the basis of its earning power when brought to a proper state of 
improvement less the costs of bringing it to that state, but its cash 
rent will be determined by its given state of improvement. From 
a correlation study of the factors that determine the market price 
of land, G. C. Haas found that for every dollar added to the cost of 
buildings land values were increased SI. 07 up to a certain point ; that is, 
as long as the farms were relatively underimproved. (See Technical 
Bulletin No. 9, Minnesota Agricultural Experiment Station.) This 
shows that adding more buildings to land increases the value of the 
real estate by the cost of the buildings only. In other words, farms 
are valued on the basis of what they will earn when properly im- 
proved, less the costs of making those improvements. Therefore, if 
the one-year tenant farms on which average cash rents are based are 
underimproved, the ratio of cash rent to land value as reflected by 
the average rents on these farms will be too low. From Table 22, 
however, it appears that the one-year tenant farms are on the average 
about as well improved as all farms, so that average cash rents do 
not fail to measure farm rents because of being greatly underimproved. 
Table 22. — Ratio of building value to total farm value on one-year tenant farms 
and on all farms, by groups. 
Group. 
Ratio of building 
value to total 
real estate value. 
One-year 
tenant 
farms. 
All farms. 
1 
Per cent. 
43 
15 
20 
10 
11 
12 
Per cent. 
50 
18 
22 
12 
12 
14 
7 
9 
10 
11 
13 
Group. 
11 
L6 
2.". 
26 
:>,- 
BEARING OF THIS STUDY ON OTHER PROBLEMS. 
TENANCY. 
There is a causal relationship between land values and tenancy, 
but it is not simple or direct. It has sometimes been asserted that 
high land values cause a high percentage of tenancy and low land 
values a low percentage of tenancy. It is true that the correlation 
between them is positive and fairly high, but this correlation does 
not establish the existence of a direct causal relation between the 
two. High or low land values, as such, explain a high or low per- 
centage of tenancy only to a limited extent. As between very high 
land values and very low ones, there will be a larger percentage of 
tenancy found on the high value lands for reasons explained later. 
But in the main, in so far as there is a relationship between land value 
and tenancy, it is to be found in the composition of the land values 
rather than in their absolute amounts. 
Ratio of 
building 
value, to total 
real estate value. 
One-year 
tenant 
All farms. 
farms. 
Per cent. 
Per cent. 
14 
17 
12 
12 
9 
13 
9 
9 
14 
14 
27 
23 
