Merely for illustrating the method of calculation, let us assume this farm with its equipment to be worth $100 an acre, or $16,000. Let the farm manager be paid $840 a year. Assume the same gross income, $3,200, and the same cost of operating, $1,600, to which add $600, the additional salary of the manager. The total expense is then $2,200, and the net proceeds $1,000. If 4%, or $640, was charged on the investment, there would be $360 to be divided between landlord and manager, making the salary of manager $1,020. A simple calculation will show that if 5% were charged, the salary of the manager would be $940 a year, and if 6%, $860 a year. The advantage of the latter method of employment is that the young man runs less risk, while both receive equally any surplus beyond fair wages and fair interest on the investment. In this connection it is important to consider how much may be reasonably paid for managerial ability. A study of the figures on page 133 will show that the labor income from a considerable number of farms of the better class was about 7% of the capital invested in the farms. The inference is, therefore, that if a man has $10,000 wisely invested in a farm he may pay $700 for a working manager; or, to put it in another form, before the owner of a farm can afford to pay $1,200 a year for a farm manager, he should have about $17,000 invested. Moreover, this investment must be in a form calculated to return an income. If part of it consists of investments for pleasure or fancy, such investment will not only not add to the income, but will detract from it by increasing the cost of maintenance. This is scarcely less important to the employee than it is to the employer, since if the owner pays a higher salary than the manager can earn, he quite surely will sooner or later discharge his manager. This may result disastrously for the discharged young man, not merely on account of the loss of employment, but because his failure may militate against his securing satisfactory employment elsewhere. When an employer is seeking a man, he looks for one who has succeeded. There is an old saying, "Nothing succeeds like success," and it is only too true that nothing fails like failure. ----- [A] Profit is sometimes defined as that part of the product which the producer can consume without reducing his means of production. CHAPTER III FARM ORGANIZATION In the last chapter were discussed the most common methods by which a young man acquires an opportunity to engage in farming. This chapter will discuss some less common arrangements by which may be bridged that period between the time the son is ready to go into the business and the time he may assume the complete control of the ancestral or other farm. It will also suggest a method for the continuous business management of a farm enterprise.