farm enterprises, return a remarkable interest
on the capital employed. It does not follow, however, that a man can
make a living with fifty hens or even 500 hens. If a man has an
investment of $5,000, on which he obtains 10 per cent, his income
would be $500. If, on the other hand, he has an investment of $25,000
and obtains a return of only 6%, his income is $1,500, or three times
the former amount. In neither case, however, does this form of
statement tell a man how much of his income is due to his brain and
brawn and how much to the capital invested.
What the young farmer wishes to know is how much will he receive for
his own time, energy and skill, after deducting all expenses and a
reasonable interest charge on his investment--such a rate of interest
as he could get by placing his money in good securities or what he
would be required to pay for his capital if he borrowed it. This is
best obtained by the labor income method. With this method all
expenses are subtracted from all sales and to the cash balance thus
obtained is added or subtracted the increase or decrease in the
inventory. This balance may be called the farm income. Thus far the
procedure is just the same as the interest on the investment method.
From the farm income is now subtracted a reasonable interest on the
investment, the balance remaining is called the labor income. This is
the return which the farmer has obtained by and for his own efforts.
If this balance is zero, then he should change his methods or get into
some other business.
This statement of his income, whatever it may be, enables him to
compare his prosperity with that of the man who is employed upon a
salary. Here, again, however, it is difficult to make comparisons
because of the differences in expenses of living. The chief difference,
however, in the expense of the wage earner in the city and the farmer
is in the matter of house rent. For example, if the wage earner pays
$300 a year house rent that must be deducted from his income in
comparing it with the labor income of the farmer. It is often stated
that the farmer also has his living from the farm. This was much more
true formerly than it is at present. Under present methods of
distributing food products and with modern types of farming, the amount
of food supplied the table from the farm is comparatively small. The
rancher in Montana eats foods canned in Maine or Delaware, while the
New Hampshire farmer buys his vegetables
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