FARMERS EARNINGS IN SOUTHEASTERN PENNSYLVANIA 
41 
Table 38. — Average values and rents on cash rented farms, Chester County, Pa., 
1922-23 
Item 
Average 
per farm 
Item 
Average 
per farm 
Farm value, 1922 
Dollars 
14,554 
3,555 
547 
81 
40 
Taxes on land.. . 
Dollars 
41 
Working capital, 1922 
132 
Cash rent paid. . 
32 
Total rent paid by tenant in cash and 
Taxes on stock and equipment (esti- 
588 
mated) 
Total rent, in per cent of farm value 
4.04 
As shown in Table 38, the gross rent paid by the tenant, including 
land taxes in the cases where they were paid by tenants, came to 
little over 4 per cent on the value of the farm. Deducting from the 
average cash rent of $547 received by landlords their average payment 
of $164 for taxes and insurance, the net rent left was but $383, or 
but 2.6 per cent on investment. Even this is not a true net rent, 
because repairs and depreciation on the buildings would have to be 
paid out of this. 
Although it is true that so few faims are rented for cash in the area 
surveyed that it may be questioned if there is a very active market 
for " the use of farms," still the fact that the average rate of rent from 
these few r farms agrees so closely with the average rate as shown for 
the whole county by the census would indicate that 4 per cent is a 
fairly reliable estimate of the average gross rent. This is therefore 
used to represent "the contribution of land" to the product of 
Chester County farms. This actual market rate is evidently much 
low r er than the land charge on the " labor income basis," which 
included taxes, insurance, repairs, and depreciation, plus a 5 per cent 
interest charge. As shown in Table 37, this would have made a 
gross rental of about 9 per cent, or more than twice what the same 
service actually sold for "on the market." 
This conclusion does not indicate that Chester County farms are 
over-valued, but merely that their value does not rest entirely upon 
their current annual return from agricultural production. Only that 
part of their value w^hich does rest upon such return can fairly 
be considered in making a deduction from a farmer's return to cover 
the use of land in agricultural production, and that is what has been 
done in this particular case. 
This "appeal to the market" satisfies two of the three questions 
previously raised as to the method of evaluating the use of land. 
The question as to the value of the dwelling houses remains to be 
considered. 
There are but two logical alternatives: Either include the value 
of the rent of the dwelling as part of the farm production to offset 
the charges connected with it, or eliminate from the farm expenses 
those items due to the dwelling, and make no attempt to estimate 
the value of its use in the receipts. (One additional reason why the 
"labor income" figure has been a rather unsatisfactory measure of 
farmers' earnings is that all the charges in connection with the dwell- 
ing were included on the debit side, without crediting the value of 
its use on the other.) 
