66 BULLETIN 1224, U. S. DEPARTMENT OF AGRICULTURE. 
be relatively great, and vice versa. But the correlation here will not 
be perfect, because there are other factors than land values deter- 
mining the amount of tenancy. 
Tenancy has not been promoted in this country by a rate of return 
on farm land investments that was permanently lower than the rate of 
return on borrowed capital, but because the rate of return was low at 
the time the purchase was made and was expected to continue so for 
a number of years. In other words, prospective purchasers of farm 
lands have not been deterred because farm lands were expected to 
yield a rate of return in the long run that was considerably below the 
rate of interest on borrowed capital, but because this rate of return 
was lower than the mortgage rate of interest in the early years after 
the purchase. Those tenants who were able to buy outright and who 
purchased farms previous to 1916 or 1917 made good investments. 
(See pp. 46 and 47.) Many of those who would have had to borrow 
in order to purchase would have been wise to do so had they been 
able to borrow capital at rates of interest adjusted to the rate of 
return on investments in farm lands. If tenants had been able to 
borrow money at rates of interest which were low in the year in which 
their purchases were made and which were gradually increased as the 
rate of return on these investments increased, they would have been 
wise to have purchased farms rather than to have remained tenants. 
It is, then, not correct to say that tenants during the period from 1900 
to about 1916 were wise to remain tenants, because they were getting 
the use of farm lands at lower rates as tenants than they could get as 
farm owners. They were wise to remain tenants, for the most part, 
because of their inability to meet interest payments on borrowed 
capital in the early } T ears after purchase. 19 
The proposition, however, that high or low land values as such do 
not cause high or low percentages of tenancy must be qualified. If 
values are very low there is not likely to be a very great amount of 
tenancy, even though the greater percentage of these low values is 
based upon expected increases in incomes. If values are low enough, 
tenants can save enough from their earnings in a relatively short 
time to pay for a farm, but if values are high they can not. In other 
words, as between high-value lands and very low-value lands, the 
high-value lands will have the larger percentage of tenancy, pro- 
vided the high and low values have the same composition. But in 
all areas where land values are high, relative to earnings of tenants 
and other prospective purchasers, variations in tenancy can not be 
explained by variations in land values as such. This is a matter of 
the composition of land values and not of their absolute amounts 
The great increase in tenancy in this country in the last two decades 
has been a matter of considerable concern to students and statesmen 
alike. As a result, various methods of promoting farm ownership 
have been proposed. One of the methods most often urged is that 
of granting liberal credit to prospective purchasers at relatively 
low rates of interest. To what extent would such a credit policy 
bring about the desired result ? 
When proposals have been made to increase the percentage of 
owner-operated farms by granting liberal credits at low rates of in- 
19 In this connection the reader is referred to pp. 48 to 53, where the attempt was made to show that the 
rents paid by tenants must normally equal the rents capitalized by purchasers. 
