ON THE LAND.

Northern Advocate, 21 August 1919, Page 1

ON THE LAND.

THE FARMER A CAPITALIST

SHOULD WATCH HIS INVEST-

MENTS,

Every farmer should recognise the fact that the capital invested in his farm should be expected to earn interest for him just as clearly as money deposited in a savings bank earns interest. A farmer who invests his money in a farm simply chooses the farm as offering an opportunity for better returns . than would the same money return if deposited in a savings bank or invested irivgt-farm mortgage, and it is just as muoh his business to see that it earns five or six or ten per cent as it is for any man investing money in other lines of business to see that it earns a good rate of interest. One of the most effective ways in which to make capital earn interest is to correctly porportion the amount of capital that goes into operating forms. Statistical data covering his point aeem to indicate that from 25 to 33 per cent of the total capital available should be used as operating capital. If used for the purchase pf good live stock, for the purpose of suitable machinery, for the employment pf labour, and for the purchase of feeds and other material with which to keep the farm going, it will bo in the safest form of operaating capital. On well-equipped dairy farms, and especially where purebred stock is kept, the proportion of capital in forms for operating may run as high as 40 per cent, with excellent results. One starting in tl.c" farming business should borrow money on the real estate and invest it in operating expense, first for th , reason that it can be borrowed at a lower rate of interest on real estate; and, second, because if ready cash is available more stock and equipment is likely to be purchased. With available capital for buying and selling and for making a quick turnover when opportunity offers, the farmer if good judgment is used, has many opportunities for making gains on his investment. On every farm there is a certain amount of labour which must be used on non-productive enterprises. On some farms this may. run as high a,s 42 per cent, Qn welldiversified farms, and especially on dairy farms, it may run even as low a"s 2 per cent. On highly- specialised farms it may run even as low as 20 to 22 per cent. Obviously . where 80 per cent of the labour is expended on productive enterprises, such as heavy yielding dairy cows, quickly fattened hogs, and large yielding crops, the returns are bound to be larger than where only 60 per cent of the labour is used for that purpose.