40 
BULLETIN 1400, U. S. DEPARTMENT OF AGRICULTURE 
not be so high as the interest obtained from mortgage investments, 
on which there is no possibility of additional return due to later 
increases in value. 
Table 37. — Charges for use of land and buildings, on the "labor income" basis and 
on the "operator's earnings 1 ' basis 
Type of farm 
Items 
Dairy 
Small 
dairy 
Mush- 
room- 
dairy 
Mush- 
room 
Crop 
Real estate value 
Dollars 
12, 050 
Dollars 
10, 189 
Dollars 
16,097 
Dollars 
13, 842 
Dollars 
14, 389 
Taxes 
164 
42 
343 
632 
124 
29 
262 
509 
202 
77 
407 
805 
130 
66 
274 
692 
156 
36 
294 
5 per cent on real estate investment.. 
719 
Total 
1,181 
377 
924 
280 
1,491 
492 
1,162 
381 
1,205 
Charge made by "operator's earnings" method ' 
443 
804 
644 
999 
781 
762 
i At 4 per cent on value of real estate used in farm business, which covers taxes, insurance, and repairs 
as well as "economic rent." 
A much closer approximation to what the land is really contribut- 
ing to the value of the product can be obtained by using annual 
rents. At a time when conditions are fairly stable, the average 
net return to landlords furnishes an actual measurement of payment 
for the use of land, in a market where merely the current uses, and 
not future increments, are valued. Where the taxes, insurance, 
and building upkeep are paid by the owner, the gross rental (under 
fairly stable conditions) is the market price for the annual use of the 
farm, regardless of what part of that payment goes to taxes, what 
part to insurance and building upkeep, and what part to net return 
to the landlord. For the purposes for which the charge for the use 
of land is to be made in farm-management studies, therefore, a 
charge equal to the current gross rent in the area, ignoring other land 
costs, will be sufficient to serve as a market estimate of the value 
of the use of the farm for the year. 
The actual level of rent prevailing may be most accurately obtained 
by considering cash rents, because with share forms of rent the land- 
lord is really a partner in the business, in many cases furnishing a 
good part of the management needed in organizing and operating 
the farm as well as furnishing livestock, sometimes equipment, and 
sharing in much of the expense as well as the receipts. Cash rent, 
on the other hand, is a much better approximation to the price of 
the use of the farm, unobscured by other items. 
As shown by the entries on the census farm schedules in 1920, the 
average cash rent paid in Chester County at that time was equal 
to 3.9 per cent on the value of the farms (4)- This was merely 
the cash rent reported on the schedules, and did not show what 
expenses the landlord had to pay out of his cash rent, nor what 
land taxes the tenant paid in addition. 
The farm-survey schedules obtained in 1923 gave data for a check 
on this average rate of cash rent, and showed the distribution of 
taxes as between landlords and tenants. Excluding the farms 
rented from fathers or other near relatives, 15 cash-rented farms 
were included in the survey. The average values, rents, and ex- 
penses on these farms are given in Table 38. 
