CONTRACTS USED IN RENTING FARMS ON SHARES. 31 
result of mutual demands and concessions and is therefore for the 
most part the final outcome of the blind operation of economic forces 
rather than the result of a deliberately planned system of division. 
It would seem that the main physical factors which operate in 
the production of farm products are land, working capital, and 
labor. If, therefore, an agreement could be reached on a reasonable 
valuation of land and a reasonable rate of interest which this land 
should draw, and also upon a satisfactory payment for labor and a 
rate of interest on working capital, these three factors, namely, 
interest on land, interest on working capital, and wages for labor, 
could be used as a rational basis for a percentage distribution of 
products. 
One of the great difficulties in establishing such a rational basis 
for-the division of farm products under a share system of leasing is 
found in arriving at a proper estimate of the value of land. Farm 
land in the better farming sections is now held at prices which indi- 
cate the strong influence of speculative expectation of further rise 
in land prices. In fact much land is already capitalized at so high a 
price that the owner is forced to accept a lower rate of interest from 
_ the operation of the farm than could be reasonably expected from the 
same amount of capital otherwise invested. In estimating the value 
of the relative contributions of working capital and land to farm 
production, it is necessary to take into consideration the high relative 
risk and depreciation involved in the maintenance of live stock and 
farm machinery, as compared with the indestructibility of farm land. 
It may perhaps be fair to consider the relative contribution of a 
dollar invested as working capital as about three times that of a 
dollar invested in land, working capital yielding 10 per cent and 
land 34 per cent interest. 
The tenant’s services can not justly be considered as consisting 
merely of manual labor. His managerial ability is an important part 
of his services. It is unfair, therefore, to rate the tenant’s services 
to the partnership at the same value for all values of farms in a given 
neighborhood. A labor income of $500 might be an adequate recom- 
pense for a tenant’s services on a $10,000 farm, but on a farm worth 
$50,000 his tame and managerial ability are worth more. No business 
man would think of putting in charge of a $50,000 plant a man whose 
services were worth no more than $500. In order to obviate such an 
injustice to the tenant, it is necessary to assume that the value of his 
labor and managerial ability increases somewhat in proportion to 
the increase in the value of the farm. 
The tendency at present is for the land to take an increasingly 
large proportion of the joint product of land, working capital, and 
labor. In many of the richest farming districts land values have be- 
come so high that the landlord’s interest on his investment is only 3 
