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“The Best Farm Stories Ever Written” 
The Hope Farm man is known and loved in thousands of farm 
homes all over the country. His “Hope Farm Notes,” which appear 
in The Rural New-Yorker each week, are eagerly read by both young 
and old and are often called the "Best Farm Stories Ever Written.” 
A number of the best of these stories which have appeared during the 
past 20 years have been selected and printed in an attractive 224-page 
book called 
“Hope Farm Notes” 
These stories are filled with the subtle humor, the sound philosophy 
and the kindly spirit which are so characteristic of the author. 
The following are a few of the best stories contained in the book: 
“Louise”—The sad story of a self-sacrificing 
young girl who was a member of the 
Hope Farm Family. Her heroic efforts 
to become self-supporting, and her tragic 
death when victory was in sight, will 
bring tears to the eyes of the reader. 
“Uncle Ed’s Philosophy” —Uncle Ed was 
from the South and you will enjoy his 
humorous views upon the hustle and 
bustle of Northern Life. 
“Grandmother” —This is the story of n 
dear old lady who won a place in the 
hearts of all the Hope Farm Family. 
“The Sunny Side of the ltaru”— If you 
were ever a boy on a farm you will enjoy 
the Hope Farm story of his boyhood days 
on a Cape Cod Farm. 
There are many other stories contained in this book, which will 
hold the interest of the reader from, start to finish, and can be read 
time and time again with pleasure. 
SPECIAL OFFER 
The Hope Farm man has personally autographed 100 copies of 
this book, and we believe many readers will especially prize a copy 
of the book containing the author’s signature. We will therefore send 
an autographed copy of the book to the first hundred readers who 
order from this advertisement. The price is $1.50 per copy. Send 
money order or check. 
Rural New-Yorker, 333 West 30th Street, New York 
F - - 
When you write advertisers mention The R. N.-Y. and you’ll get a 
quick reply and a “square deal.” See guarantee editorial page. 
L. .. ■ - -----. -.—= ai 
A Primer of Economics 
By John J. Dillon 
Part XXIII 
What are profits? 
Profit is the difference between the 
money cost of producing goods and the 
amount realized for them by the business 
man or manufacturer, or, as the French 
say, by the entrepreneur. Profit is the 
surplus realized after paying all expenses 
in the sale of goods over and above the 
cost of producing or acquiring them. 
Some economic writers include interest 
on capital invested and also the salary or 
wages of the proprietor or business man 
as profits. But it would seem to be in 
the interest of clearness to keep distinct¬ 
ive factors separate. In corporations the 
managing service is always paid in sal¬ 
aries and fees. These are not included 
in profits. Two items which actually 
constitute profits, and which are always 
included, are risk and the surplus remain¬ 
ing after risk and interest and all other 
economic expenses are paid. If the pro¬ 
prietor does not draw a salary, his com¬ 
pensation is included in profits. If he 
does draw a salary, risk and the surplus 
make up the item of profits. 
Just who is meant by proprietor, busi¬ 
ness man or entrepreneur? 
By the term business man or its equiv¬ 
alent is meant the individual who fur¬ 
nishes the capital and directs or super¬ 
vises the business, whether he be store¬ 
keeper. grocer, blacksmith, tanner or 
farmer. In the ease of a corporation the 
company or artificial individual created 
by the State is the business man or en¬ 
trepreneur, because it first accumulates 
the profits before they are distributed in 
dividends to the stockholders. 
Is the business man a landlord or a cap¬ 
italist or a laborer? 
The business man or proprietor may 
own the land on which he operates and be 
a landlord, or he may rent the land for 
bis farm or shop, store or factory, and 
pay rent. He may be able to supply his 
own capital and be a capitalist, or he 
may borrow it and pay interest for it. 
He may borrow a part of his capital and 
still be a capitalist to the extent of his 
own capital. He may do all the work 
himself and he a laborer, or he may hire 
it done in whole or in part, but he can¬ 
not well escape some of the labor of man¬ 
agement, because if he hired a mauagi r 
he would yet have some supervision of 
him and responsibility for him. He is a 
laborer in proportion of the amount of 
work he does by hand or brain. Risk he 
always assumes, and gains, if any, de¬ 
pend when competition is free, on his 
ability and management. It is only when 
a business or line of industry is favored 
by special privileges or class legislation 
that competition is removed -and profits 
increased to unfair and alarming pro¬ 
portions. Sometimes the nullification of 
natural laws discriminates against a busi¬ 
ness and causes small profits or even 
serious losses. 
Are profits then uniform when competi¬ 
tion is unobstructed and free? 
Profits are not uniform in any particu¬ 
lar industry, or among the individual en¬ 
terprises of any industry. Profits, like 
wages, lure men to it in proportion to the 
attractiveness or disagreeableness of one 
business to another. In some employ¬ 
ment business is attended with, more haz¬ 
ard than in others. When allowances are 
made in cash equivalent for these circum¬ 
stances, profits, in competitive enterprises, 
teud to equality through the shifting of 
capital from one enterprise to another. If 
the capital does not actually shift, the 
new investments seek the best opportuni¬ 
ties for profit, and by their accumulations 
in the course of time tend to equalize 
the opportunities of the different employ¬ 
ments. 
The variation of profits among individ¬ 
uals is greater than between employments. 
Here profits depend on the experience, the 
ability, the enterprise, and a hundred and 
one other circumstances that cheapen pro¬ 
duction, encourage trade and widen the 
margin in various degrees between re¬ 
ceipts and expenditures. And this varia- 
able margin is profit. 
The farmer makes his home on the 
farm. His entire capital or saving is 
usually invested in an equity in the farm 
above‘the mortgage. Oftentimes he has 
floating debts besides, at the feed mill, 
fertilizer stores or other places. If the 
farm does not pay a profit, or even where 
it does not pay for the labor, and conse¬ 
quently is operated at a loss, it may not 
be possible to find a customer who will 
assume the mortgage and the equity. It 
cannot be sold without a sacrifice of the 
original investment, and perhaps many 
improvements. For these reasons the 
farmer continues an unprofitable business 
in the hope that ho can do better later on, 
and further because he cannot give up the 
farm without too great a sacrifice. The 
economist reasons that he would quit 
when losses occur, and so he would in 
time if losses continued; but while these 
adjustments are being worked out, there 
k an apparent contradiction unless we 
make the allowance for time between 
present experience and economic law. 
Does rent affect profits? 
It has been explained in another chap¬ 
ter that rent does not cause high prices, 
but is the result of them. So Ricardo, 
Mill and other economists have shown 
that agricultural rent does not increase 
or decrease profits. 
Suppose a farmer rents an acre of land 
to produce potatoes, and continues the 
lease from year to year with a uniform 
capital, yield and price for the potatoes, 
lie works another acre nearby with the 
same amount of capital, but it yields only 
enough to pay for the labor and profit, so 
this field pays no rent. 
Hater, however, with the increase of 
wealth and population, there is a greater 
demand for potatoes and the price rises. 
The old price for potatoes enables the 
farmer to work the poor field and pay for 
labor and profit. I'lie extra price enables 
the tenant farmer to pay for the use of 
the land, and the landlord demands the 
extra receipts as rent. But the tenant 
farmer was already paying a rental for 
the use of the fertile field where the po¬ 
tatoes were selling at the low price. He 
:nade cost of labor and profit before in ad¬ 
dition to the rent. Now his profit would he 
more, but the landlord increases the rent 
and leaves the tenant no more than be¬ 
fore. This does not affect the tenant’s 
profits. The extra rent is paid by the 
consumers in the extra price of the po¬ 
tatoes. 
The extra money comes out of tliQ con¬ 
sumer of potatoes, and in no way affects 
the tenant’s profits. So it seems that rent 
neither increases nor decreases profits of 
the food producer. 
Again, it must he said that the theorv 
of rent on tenant’s profits, while logical 
and correct under the assumed premises, 
does not always work out in practice un¬ 
der different conditions. The principle, 
however, holds good in many eases where 
its operation escapes the understanding of 
the tenant or landlord; hut like many 
natural laws the final results require time 
for their complete demonstration. It is 
not contended that economic laws can 
control individual transactions or tem¬ 
porary conditions. 
M hat is the relation of interest to 
profits? 
Interest, according to the accepted the¬ 
ory of economists, may be disregarded in 
the process of computing profits. The 
logic on which interest is desregarded in 
this computation is this: Interest is the 
share of production that goes to the cap¬ 
italist. as a capitalist, pure and simple. 
It includes the risk and supervision of 
the capitalist. If loans requiring no su¬ 
pervision and no risk drew say 4 per cent 
interest, then a 5 per cent loan would 
probably include one-third of 1 per cent 
for supervision and two-thirds of 1 per 
cent for risk. 
The possessor of wealth may hoard it 
in some form for future use. or he may 
consume it at once in necessities or lux¬ 
uries, and in entertainment and pleas¬ 
ures ; or by abstinauee of consumption 
for himself, he may loan it to others for 
.consumption in production. When he 
chooses so to loan it he demands a share 
of the production for himself to compen¬ 
sate him for his abstinence, and this share 
we call interest. But here the economist 
says the saving of the capitalist is only 
the product of previous labor. Trace back 
as far as you will, the materials and tools 
used in production originate in labor 
applied to natural or pre-existing agents, 
except that there is included the profit? 
that may have been taken by business men 
at the different stages in the preparation 
of raw material, such as the grower of 
wheat, the carrier and the miller before 
the flour reaches the baker. But these 
elements of previous profits that enter 
into the cost of these elements of capital 
instruments are such an insignificant fac¬ 
tor it would not affect the cost in the unit 
of production, and therefore we have 
nothing to consider hut the cost of labor 
in production to enable us to strike the 
profit balance. Rent, if any, is paid by 
the consumer in higher prices. Interest 
is but another name for wages of past 
labor. Hence the cost of present and the 
past labor, and profits, equal the selling 
price or income. If the cost of labor is 
high, profits fall. If the cost of labor is 
low, profits increase. Such is the theory 
and fairly correct explanation of the re-' 
lation of rent, interest and wages to 
(Continued on page 680) 
