44 BULLETIN 874, U. S. DEPARTMENT OF AGRICULTURE. 
Thus, the average farm income in 1918 of owners in the Tama dis- 
trict was $4,272, and in the Warren district, $1,997, besides living 
obtained from the farm and such income as may be attributed to the 
labor of the farm family. 
However, even supposing an owner to be lear of debt, he would 
obtain a larger income by selling his farm property and becommg a 
tenant, investing the surplus wealth not needed for operating capital 
in sound bonds or mortgages. Thus, the owner of the average farm 
capital of $88,404 could invest $7,081 as farm operating capital, and 
under the conditions of 1918 could earn a labor income of $3,053 
after paying rent, besides 5 per cent interest on the $7,081 invested 
amounting to $354. The remaining capital, $81,323, invested at 
5 per cent would yield $4,066.15. Thus the total income obtained 
by this method would be $7,473.15 in addition to living obtained 
from the farm and such income as was credited to the labor of the 
farm family. 
The above analysis assumes that the farmer owns outright the 
total amount of the farm capitalization. If half the capital value 
as of August, 1919, were borrowed at 54 per cent, only $1,841 of the 
‘farm income in the Tama district would remain, and this under the 
favorable conditions with respect to crops and prices in 1918. In 
the Warren district such an owner would have had only $784.80 
left, after paying his interest, from which to live and reduce the prin- 
cipal of the loan. If the debt had amounted to three-fourths the 
value of the investment—and one-fourth of the sales involved at 
least this per cent of indebtedness—the remaining income after 
paying interest would have been $626 in the Tama district and $179 
in the Warren district. 
By inference from the above analysis we may derive the relation 
of the present high level of land values to the status of a tenant. 
It was shown clearly that even if a farmer has sufficient wealth to 
purchase a farm outright, he can obtain a larger total income by re- 
maining a tenant and investing in bonds or mortgages the remainder. 
of his wealth, above the amount needed for operating capital. Hence, 
there is _a financial premium on remaining a tenant rather than — 
becoming an owner. 
On the other hand, even if the tenant desires to become an owner, 
the financial handicap of paying 5 per cent or more on borrowed 
capital to purchase land which will yield 3 per cent or less on the 
investment demands serious consideration, with special attention 
to the possibility that prices of farm products may decline. Finally, 
it is obvious, since the average net worth of the tenant is so small 
as compared with the total value of the farm investment required 
to operate as an owner—about 11 per cent—that at least 89 per cent 
of the total investment must be borrowed by the tenant who buys 
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